Inside the Market's roundup of some of today's key analyst actions. This file will be updated often during the trading day so check back for new details.
Open Text Corp. (OTEX-Q; OTC-T) needs to emphasize growth in its cloud business through acquisitions and push its sales team to lock up more multi-year subscription licenses in order to remain competitive going forward, said Beacon Securities analyst Gabriel Leung, who downgraded the stock today.
Mr. Leung feels Open Text has been proactive in increasing its exposure to the cloud business through acquisitions, including GXS Group Inc. and EasyLink Services. But he downgraded the stock from "buy" to "hold" while waiting for signs of "meaningful traction" in its cloud and subscription licence focus.
On Wednesday, the company unveiled a $25-million (U.S.) restructuring plan, including a workforce reduction of 5 per cent, to support its cloud strategy and enhance operational efficiencies. That announcement came after the release of preliminary fiscal fourth-quarter guidance in which it expects revenue and adjusted earnings per share of $440-million to 455-million and 64 cents to 72 cents, below the consensus forecast of $489-million and 89 cents.
"In our opinion, the growing adoption of cloud-based solutions amongst enterprise customers represents the greatest risk for any on-premise-based software company," Mr. Leung said.
He added: "While we agree the Enterprise Information Management industry will likely maintain a hybrid status for the foreseeable future, clearly, there will likely be risks to the company's near-term license growth profile."
Mr. Leung also lowered his price target from $58 to $50 (U.S.). The analyst consensus is $61.14, according to Thomson Reuters.
The stock was also downgraded to "hold" from "buy" at Dundee Securities. The 12-month target price is $54 (U.S.) per share.
RBC Capital Markets analyst Dan Rollins said Torex Gold Resources Inc. (TXG-T) currently offers a "favourable risk/reward opportunity" for investors.
Torex, which Mr. Rollins called "an up-and-coming mid-tier gold producer," is on track to pour its first gold from its El Limon-Guajes project in Mexico later this year. Though he admitted there is little room for cost overruns or delay, the analyst said he believes the project can be funded internally. He did suggest securing additional capital to provide a greater cushion and avoid potential financing headwinds going forward would be prudent.
"Although El Limon-Guajes (ELG) remains in a higher risk phase (transition from construction to commissioning to production), we expect Torex's share price to re-rate as investor confidence in future cash flow improves," he said.
He lowered his price target to $1.60 from $1.85 (Canadian) to reflect the relative recent strength of the Canadian dollar. The analyst consensus is $2.01.
He maintained his "outperform" rating.
Birchcliff Energy Ltd. (BIR-T) has been "neglected" without a proper rationale and should be on investors' radar, said Beacon Securities analyst Michael Zuk.
Initiating coverage of the oil and gas producer with a "buy" recommendation, Mr. Zuk is impressed by its "strong" full-cycle returns in a challenging market.
"Birchcliff scores very highly on at least three of our four key questions, but also fares very strongly on a number of metrics much of the Street neglects," he said. "We believe therein lies the investing opportunity for the somewhat contrarian-biased investor."
He added: "On our preferred [Proved Developed Producing] finding efficiency, the company has consistently improved year over year and now leads many of its peers on said metric. Secondly, we contend Birchcliff still makes a full-cycle profit when one accounts for PDP finding cost and cash-lifting costs – few others can claim the same right now."
Pointing out the stock currently trades below its historic range and at a discount to its peers (of 1.3x), Mr. Zuk set a price target of $11.50 (Canadian). The consensus is $10.19.
Raymond James analyst Alex Terentiew has lowered his production estimates for the 2015 fiscal year for Teck Resources Ltd. (TCK.A-T; TCK.B-T; TCK-N) in the wake of the company guidance of 6 Mt of coking coal sales in the second quarter, assuming production is adjusted to match sales.
"It remains possible, however, that some customers may just be deferring sales, with sales in the second half of the year stronger than we estimate, leading our new forecast to be conservative," said Mr. Terentiew. "With met coal prices continuing to drift lower and global crude steel production down 1.8 per cent year to date (Jan to March), however, assuming a rebound in sales may be optimistic."
He noted the company's copper and zinc businesses are performing well and cost-reducing initiatives have delivered. But, given their performance and further reductions planned, he also lowered his unit cost expectations in the copper division by 3 per cent and zinc by 1 per cent.
The analyst dropped his price target to $19 from $20 (Canadian) after adjusting his forecasts to include lower met coal prices in 2015 and 2016 and a slight rise in the Canadian dollar. The analyst consensus is $19.01.
He maintained his "market perform" rating.
Following the completion of its acquisition of the Westeel division of Vicwest, Inc. and a debt and equity raise, CIBC World Markets analyst Jacob Bout reinstated coverage of Ag Growth International Inc. (AFN-T) with a "sector performer" rating.
Factoring in the $221.5-million acquisition, Mr. Bout increased his 2015 earnings before interest, taxes, depreciation and amortization forecast to $98.3-million from $89.4-million. His 2016 EBITDA estimate is $119.7-million.
"Strategically, the Westeel acquisition is expected to transform Ag Growth into a global grain storage provider," the analyst said.
He emphasized the company's ability to provide the best-in-class grain storage; gain better steel pricing due to volume discounts; gain traction in the market for smooth wall bins (for the storage of fertilizer and seed storage) and diversify toward Canadian agriculture. He notes that is "a good thing given the principal crop outlook in Canada much better than that in the U.S.."
He raised his price target to $53 from $51 (Canadian). The analyst consensus is $57.06.
TD Securities raised its rating on the stock "buy" from "hold" with a 12-month target price is $60 (Canadian) per share.
In other analyst actions:
TORC Oil & Gas Ltd. (TOG-T) was raised to "buy" from "market perform" at Cormark Securities. The 12-month target price is $13 (Canadian) per share.
American Hotel Income Properties REIT LP (HOT.UN-T) was rated new "buy" at Industrial Alliance. The 12-month target price is $12 (Canadian) per share.
InnVest Real Estate Investment Trust (INN.UN-T) was rated new "hold" at Industrial Alliance. The 12-month target price is $6 (Canadian) per share.
CDW Corp. (CDW-Q) was rated new "buy" at Cross. The 12-month target price is $43 (U.S.) per share.
Charter Communications Inc. (CHTR-Q) was raised to "buy" from "hold" at Wunderlich. The 12-month target price is $221 (U.S.) per share.
Crocs Inc. (CROX-Q) was rated new "neutral" at B. Riley. The target price is $16 (U.S.) per share.
Dynegy Inc. (DYN-N) was rated new "outperform" at RBC Capital. The target price is $42 (U.S.) per share.
Esperion Therapeutics Inc. (ESPR-Q) was rated new "overweight" at Barclays. The target price is $150 (U.S.) per share.
Intercept Pharmaceuticals Inc. (ICPT-Q) was rated new "overweight" at Barclays. The target price is $425 (U.S.) per share.
NIKE Inc. (NKE-N) was rated new "buy" at Jefferies. The 12-month target price is $120 (U.S.) per share.
NetApp Inc. (NTAP-Q) was downgraded to "Hold" from "Buy" at Summit Research and Needham & Co. The 12-month target price is $32 (U.S.) per share. The stock was also downgraded to "underweight" from "neutral" at JPMorgan with a target price of $29 (U.S.) per share.
Plum Creek Timber Co. Inc. (PCL-N) was rated new "sell" at Dundee. The target price is $42 (U.S.) per share.
Rexnord Corp. (RXN-N) was downgraded to "neutral" from "outperform" at Wedbush. The 12-month target price is $27 (U.S.) per share.
Stratasys Ltd. (SSYS-Q) was raised to "outperform" from "market perform" at Oppenheimer. The target price is $50 (U.S.) per share.
Cablevision Systems Corp. (CVC-N) was raised to "buy" from "hold" at Pivotal Research. The 12-month target price is $31 (U.S.) per share.
Keurig Green Mountain Inc. (GMCR-Q) was downgraded to "Hold" from "Buy" at Argus by equity analyst John Staszak.
Unit Corp. (UNT-N) was rated new "buy" at National Securities. The 12-month target price is $40 (U.S.) per share.
Cimarex Energy Co. (XEC-N) was raised to "overweight" from "sector weight" at KeyBanc. The 12-month target price is $135 (U.S.) per share.
With files from Bloomberg News