Wednesday's analyst upgrades and downgrades

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Inside the Market's roundup of some of today's key analyst actions. This file will be updated during the trading day. For breaking analyst actions prior to market open every day, read our Before the Bell morning report.

Analysts are warming up to Thomson Reuters Corp. after the news and information service giant beat Street forecasts for adjusted earnings in its third quarter and announced a plan to focus on growth markets and boost profitability.

Several brokerages have raised their price targets and at least two upgraded their ratings: National Bank Financial, which now rates the company "sector perform" instead of "underperform," and RBC Dominion Securities, which raised its rating to "outperform" from "sector perform."

Thomson Reuters Tuesday reported profit, excluding some items, of 48 cents a share in the third quarter, beating the 44 cents per share analysts had estimated in a Bloomberg tally. The company, still struggling with the lingering slump on Wall Street after the financial crisis, also said it plans to cut 3,000 more jobs, or about 5 per cent of its global workforce.

"Importantly, several inflection points emerged in the quarter that significantly enhance the growth and risk profile of the stock," commented RBC analyst Drew McReynolds as he raised his price target to $40 (U.S.) from $35.

"(i) Management will be taking a new enterprise approach to operating the business, versus a portfolio approach previously, which should have positive implications for organic revenue growth and margin and capex efficiencies; (ii) management is committing to $1B in share repurchases through the end of 2014, funded mainly through lower M&A, which represents a new capital allocation strategy that should incrementally benefit shareholders; and (iii) net sales within F&R turned positive in Q3/13, which was 2-3 quarters earlier than we expected," he said in a research note.

Mr. McReynolds now sees a "multi-year leg up" for the stock, driven by growth in net asset value.

Canaccord Genuity analyst Aravinda Galappatthige said the financial results were generally in line with his estimates, but the restructuring program that was announced was substantially ahead of his cost-reduction expectations. He was also impressed that the financial and risk division posted positive net sales in the third quarter for the first time in over two years.

"Alongside this, management indicated that the previously stated goal of reaching a 30 per cent EBITDA margin (originally set for 2016) may be 'nearly' reached by fiscal 2015. This too was ahead of our originally estimates," he said.

"All this gives us better visibility into F2015, which the Street generally views as the year when TRI's transformation plans would see results. With the improved net sales, we believe TRI is in a position to transition to low single digit revenue growth (2-3 per cent) by 2015, up from -1 per cent currently," he added.

Mr. Galappatthige raised his price target to $40.50 (U.S.) from $36 and maintained a "buy" rating.

Elsewhere, BMO Nesbitt Burns raised its target to $43 (Canadian) and maintained an "outperform" rating. Credit Suisse raised its price target to $36 (U.S.) from $34 and maintained a "neutral" rating.

The median price target among analysts is $34.50 (U.S.), according to Thomson First Call data.

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Sears Canada Inc. shareholders should expect the retailer to pay out a special dividend of $4-5 (Canadian) per share before year-end now that the company has agreed to sell five leases back to landlords for $400-million (Canadian), said Desjardins Securities analyst Keith Howlett.

He forecasts that the company's cash balance will exceed $600-million by mid-November given the proceeds from the store lease sales, which now total 12 since it started the process of closing down certain stores.

Mr. Howlett raised his price target on Sears Canada stock to $14.50 from $11, but reiterated a "hold' rating and warned of the speculative risks of investing in its shares.

"Purposefully downsizing an already shrinking business is challenging, as follow-on cost reductions must be swift. To move toward a complete exit, Sears Canada needs to find one buyer for 60–80 leases, in our view," Mr. Howlett said in a research note.

Sears Canada has 110 department store locations left and the need to find one buyer for at least half of them is intensifying, he said, "as the business is likely to begin an irreversible, albeit slow-motion, death spiral. Macy's is the only possible suitor for that many locations, in our  view, but management of Macy's has been dismissive of the idea of entering Canada at this time," he said.

But, "as long as consumers do not perceive that Sears Canada is going out of business and desert it, Sears may be able to manage its demise slowly over time, selling  prime and non-core assets, and waiting for the elusive purchaser of 60–80 store locations to appear," he added.

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Canaccord Genuity analyst Laura Champine downgraded Bed Bath & Beyond to "hold" from "buy," believing that upside potential in the stock is limited given the difficult near-term retail environment.

"Recent trends suggest the consumer is pulling back on discretionary purchases, with those that are still spending focused more on big-ticket investments," Ms. Champine commented in a research note. "We expect BBBY will be more aggressive promotionally, including a greater online marketing push, amid this tough environment."

Target: Ms. Champine maintained an $84 (U.S.) price target. The median target among analysts is $85.

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Many analysts hiked their price targets on LinkedIn Corp. today even after the company reported better-than-expected quarterly earnings and revenues late Tuesday. But investors, mindful of the stock's dizzying valuation of about 158 times forward earnings - aren't as upbeat. Shares are down nearly 7 per cent at midday.

Investors were disappointed with the company's fourth-quarter outlook, which called for a revenue range of $415-million to $420-million compared with analyst estimates of $438-million.

"Management issued somewhat muted growth guidance, citing tougher comparisons and greater Q4 traffic seasonality due to the rapid pace of product rollouts driving very high engagement and a tougher comparison in Q4 2012," conceded Canaccord Genuity analyst Michael Graham. But "with several positives on the horizon, including the continued ramp of Sales Solutions, China expansion, and continued operating leverage, we continue to like the stock despite its super-premium valuation." Mr. Graham raised his price target to $270 (U.S.) from $230.

UBS analyst Eric Sheridan noted that this was the third consecutive quarter of the company guiding both revenue and adjusted EBITDA to below Street forward estimates.

"We think there is nothing in this earnings report that changes our fundamental bias to be positive as to the secular growth potential that sits inside LinkedIn's mix of businesses. Unlike many social networking peers, we believe LinkedIn's model successfully pairs monetization with disruption, which should support high growth into the future," Mr. Sheridan said in a research note.

He raised his price target to $250 from $230 and maintained a "neutral" rating.

Elsewhere, Jefferies raised its price target to $280 from $255 and reiterated a "buy" rating and Credit Suisse raised its target to $288 from $251.

The median target among analysts is $257.

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Interest to short shares in Bombardier Inc. is beginning to rise again, as investors increasingly shift their focus from development risks of the C Series to customer demand for the new aircraft,  said RBC Dominion Securities analyst Walter Spracklin.

The C Series, which saw first flight in September, so far has seen 177 firm orders.

"Should Bombardier announce new C Series orders in the next few months (and we believe they will), it would act as a significant positive catalyst to the BBD shares, in our view," he concluded while reiterating an "outperform" rating on the company's shares.

Target: Mr. Spracklin raised his price target to $6 (Canadian) from $5.50. The median target among analysts is $5.50.

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In other analyst actions today:

Canaccord Genuity upgraded African Barrick Gold to "hold" from "sell" and maintained a price target of 125 pence.

Canaccord Genuity raised its price target on Genworth MI Canada to $33 (Canadian) from $29.50 and maintained a "hold" rating.

RBC Dominion Securities raised its price target on AutoCanada to $41 (Canadian) from $36 and reiterated a "sector perform" rating.

Canaccord Genuity raised its price target on LinkedIn to $270 (U.S.) from $230 and reiterated a "buy" rating. Jefferies raised its price target to $280 from $255 and reiterated a "buy" rating. UBS raised its price target to $250 from $230. Credit Suisse raised its target to $288 from $251.

Canaccord Genuity raised its price target on Nokia to $8 (U.S.) from $5.50 and reiterated a "hold" rating. BMO Nesbitt Burns raised its target to $7 from $5 and maintained a "market perform" rating.

Needham & Co upgraded Electronic Arts to "strong buy" from "hold" with a price target of $33 (U.S.).

Canaccord Genuity downgraded Bed Bath & Beyond to "hold" from "buy" with an unchanged price target of $84 (U.S.).

BMO Nesbitt Burns raised its target on Pfizer to $36 (U.S.) from $33 and maintained an "outperform" rating. UBS raised its price targeet to $36 from $32 and maintained a "buy" rating.

UBS cut its price target on Rubicon Technology to $9.50 (U.S.) from $14.25 and maintained a "neutral" rating.

Canaccord Genuity cut its price target on Edwards Lifesciences to $76 (U.S.) from $94 and reiterated a "buy" rating.

UBS raised its target on Valero Energy to $45 (U.S.) from $39 and reiterated a "buy" rating.

Topeka Capital initiated coverage on Twitter with a "buy" rating and $54 year-end 2014 price target.

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For more analyst actions, breaking investing news and analysis, follow Darcy Keith on Twitter at @eyeonequities