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.
The analyst downgrades for Bombardier Inc. are piling up.
Today, Canaccord Genuity downgraded its rating to "hold" from "buy" and cut its price target to $4.25 (Canadian) from $6. RBC Dominion Securities also downgraded the stock today to "sector perform" from "outperform" and cut its target to $4 (Canadian) from $6.
There were at least two other downgrades on Thursday - from Stonecap Securities and Cormark Securities - after the company's disclosure that the C Series aircraft won't be in service until the second half of 2015. Both Stonecap and Cormark also lowered their ratings to the equivalent of hold.
Analysts are disappointed by the severity of the delay for the C Series in service date and warn the company now faces the possibility of budget increases and a slower pace of orders for the new aircraft that's been many years in the making.
"We continue to see the C Series program having three specific risk buckets," commented RBC analyst Walter Spracklin. "Namely, development, demand, and production risk. With a successful first flight occurring in September, we thought development risk was beginning to decline. However, the latest delay pushing entry into service out to 2H/15 (versus our previous 1Q/15) was not only longer than expected but clearly indicates that a significant development risk discount remains."
Mr. Spracklin cut his price target to $4 (Canadian) from $6.
Canaccord Genuity analyst David Tyerman said the delay could force Bombardier into issuing new equity, which would instantly force down the value of existing shares.
"We are concerned that continued cash outflows from the program could put pressure on the company's liquidity position, possibly resulting in a dilutive equity issue," Mr. Tyerman said. "Our work suggests the company has adequate liquidity to see the C Series program to full production, but the buffer is not large in our forecast and there is a high degree of uncertainty in the cash flows in our forecast."
Mr. Tyerman cut his target to $4.25 from $6.
Bombardier shares fell 7.7 per cent on Thursday in response to news of the delay, ending the Toronto trading day at $4.17. The stock is down a further 1.9 per cent this morning at $4.09.
SNC-Lavalin Group Inc. stock has risen so much over the last few months that investors are no longer concerned about the corruption allegations against the company from last year and believe that its industry reputation hasn't been scarred, said BMO Nesbitt Burns analyst Bert Powell.
He thinks, however, that the new higher trading price means the risk-reward isn't very compelling, and he downgraded his rating to "market perform" from "outperform."
His price target remains at $52 (Canadian) on the stock, which has risen 18 per cent since its earnings guidance on Oct. 15 of last year.
"We believe the stock is reflecting the absence of corruption issues distracting management, a new slate of senior managers that has SNC looking forward rather than backward, full value for the ICI (Infrastructure Concession Investments) portfolio, prospects that the Autorite des marches financiers (AMF) of Quebec will authorize SNC to do business in Quebec, and that SNC's reputation is not impaired as evidenced by some recent small new contract wins," Mr. Powell said in a research note.
He thinks fourth-quarter results will show further improvement on costs and won't see the number of charges and provisions that produced unsettling third-quarter results. But he doesn't expect the fourth quarter to show any growth in its backlog of work, nor any further visibility on future earnings growth.
"With most of the near-term catalysts reflected in the stock price, we do not see the risk reward as compelling at these levels.," he said.
TD Securities analyst Aaron Bilkoski upgraded Pengrowth Energy Corp. to "buy" from "hold" and raised his price target to $9 (Canadian) from $7 after a site visit to the company's Lindbergh thermal crude oil project in Alberta.
"Although it is too early to declare Lindbergh a commercial success, strong pilot results combined with Pengrowth's ability to keep the project on schedule/budget point to a favourable outcome, in our view," he said in a research note. "With a wave of cash flow from Phase 1 expected in about 12 months and the company proceeding with phase 2, we believe that the potential upside of a successful project is too large to ignore."
He's now incorporating phase 2 of the project into his valuation of the company, leading to his revised outlook.
In other analyst actions today:
RBC Dominion Securities hiked its price target on Open Text to $110 (U.S.) from $90 and maintained an "outperform" rating.
RBC Dominion Securities upgraded Oryx Petroleum to "outperform" from "sector perform" and raised its price target to $18 (Canadian) from $17.
CIBC World Markets raised its price target on Saputo to $53 (Canadian) from $50 and maintained a "sector performer" rating.
M Partners initiated coverage on Rambler Metals & Mining with a "buy" rating and $1 (Canadian) price target.
Goldman Sachs downgraded Best Buy to "neutral" from "buy" and cut its price target to $28 (U.S.) from $45. UBS also downgraded the stock to "neutral" from "buy" with an unchanged price target of $29.
National Bank downgraded Intel to "hold" from "buy" and maintained a price target of $28 (U.S.).
RBC Dominion Securities raised its price target on American Express to $77 (U.S.) from $65 and maintained an "underperform" rating.
Stifel initiated coverage on Twitter with a "buy" rating and $75 (U.S.) price target.
Credit Suisse upgraded Forest Laboratories to "outperform" from "neutral" and hiked its price target to $85 (U.S.) from $60.
Credit Suisse cut its price target on Alamos Gold to $11 (U.S.) from $15 and maintained a "neutral" rating.
Topeka Capital initiated coverage on LinkedIn with a "hold" rating and $230 (U.S.) price target.
UBS raised its price target on BlackRock to $330 (U.S.) from $305 and maintained a "neutral" rating
UBS raised its price target on Charles Schwab to $28 (U.S.) from $23 and maintained a "neutral" rating.
For more analyst actions, breaking investing news and analysis, follow Darcy Keith on Twitter at @eyeonequities