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.
Shares in Alcoa Inc. surged in early trading after JPMorgan upgraded the stock to "overweight" from "neutral" and significantly boosted its price target.
JPMorgan analyst Michael F. Gambardella said aluminum markets are getting increasingly tight and physical premiums for metal are on the rise.
He increased his 2014 earnings estimate on Alcoa to 78 cents -- or roughly double the Street consensus -- from 40 cents a share.
"While LME aluminum prices have remained relatively flat (currently at $0.81/lb) despite the tightening physical market, regional premiums have been escalating rapidly over the past several weeks," he said. "The Midwest premium has increased from roughly $0.12/lb at the end of the year (after having averaged $0.11/lb in 2013 and $0.10/lb in 2012) to roughly $0.20/lb now."
"Given the pace and amount at which premiums have recently increased, it is clearly difficult to forecast for how long they will remain near current levels, which we believe provide a significant amount of earnings support to the company's primary aluminum smelting operations," Mr. Gambardella said.
He raised his price target to $15 (U.S.) from $9. The average target among analysts is $8.70, according to Thomson Reuters data.
Shares are up nearly 6 per cent in early trading.
RBC Dominion Securities' Steve Arthur has joined a chorus of analysts in hiking the outlook for Magna International Inc., after the auto parts maker revealed plans last week to take on more debt and redeploy cash through possible share buybacks, dividend payouts and acquisitions.
Mr. Arthur raised his price target to $101 (U.S.) from $93 while maintaining an "outperform" rating.
He said the new balance sheet strategy suggests Magna is gearing up to deploy up to $5.2-billion in cash over the next two years. Depending on the level of acquisitions and share repurchases, he sees the strategy leading to a boost in earnings per share of between $1 to $2.50.
"MGA shares have somewhat closed the valuation gap to most peers, though still trade at an attractive 5.6x 2015E EBITDA vs. the group average of 5.9x," Mr. Arthur said in a research note. "With MGA's earnings growth outlook, diversification, global footprint, dividend and balance sheet, we believe that MGA should trade at least inline, if not at a small premium, to this group."
Last week, BMO Nesbitt Burns raised its target to $98 (U.S.) from $92 and Canaccord Genuity hiked its target to $92 from $91.
The average price target among analysts is $93.63 (U.S.).
Raymond James hiked its rating and price target on Lundin Mining Corp., saying it expected the resource producer's "cash-generating ability to improve substantially by year end."
"Over the course of 2014 and 2015, we expect Lundin to begin realizing significant cash flow growth, benefiting from higher cash distributions from Tenke (net of the Kokkola cobalt refinery purchase), high-grade driven cash flow from Eagle, and an improving zinc price coupled with higher zinc production out of Neves Corvo. As a result, we expect its share price to move higher and we recommend buying the stock," analyst Alex Terentiew wrote in a research note.
Lundin may also benefit from an unexpected boost from its nickel operations, after Indonesia banned exports of unprocessed nickel ore, he said.
Mr. Terentiew raised his price target from $5.50 (Canadian) to $6.25 and his rating to "outperform." The average target among analysts is $5.57.
Global Hunter Securities analyst Sameer Uplenchwar upgraded Canadian Natural Resources Ltd. to "buy" from "accumulate," believing the company will be the primary beneficiary of improving differentials between light and heavy oil over the next 18 to 24 months. He also thinks the company's diversified asset base should deliver significant shareholder value over the long term.
"Management has shown confidence in the company's expected strong cash flow growth by proactively increasing the dividend by 60 per cent with third-quarter earnings," StreetInsider.com quoted Mr. Uplenchwar as saying. "We expect skeptics on the story to turn into believers as operational performance at Horizon Phase 1 as well as future expansions continue to improve."
He raised his price target to $44 (U.S.) from $40. The average analyst target is $39.55.
In other analyst actions:
National Bank Financial upgraded CAE to "outperform" from "sector perform" and raised its target to $17 (Canadian) from $12. It cited a record year for orders for full-flight simulators, more certainty in the military market, and the expectation of better results in CAE's training business. Also, BMO Nesbitt Burns raised its target on CAE to $15 from $13.50 and maintained an "outperform" rating.
Credit Suisse upgraded Paladin Energy to "neutral" from "underperform" and raised its price target to 70 cents (Canadian) from 55 cents.
Dundee Securities initiated coverage on Goldcorp with a "neutral" rating and $25.50 (Canadian) price target; on Barrick Gold with a $22 (Canadian) price target and "neutral" rating; and on Kinross Gold with a "buy" rating and $6.50 (Canadian) price target.
BMO Nesbitt Burns raised its price target on Raging River Exploration to $9 (Canadian) from $7.50 and maintained an "outperform" rating.
AltaCorp Research upgraded Rock Energy to "outperform" from "sector perform" and raised its price target to $5 (Canadian) from $3.75.
Cowen downgraded Target to "underperform" from "market perform" and cut its price target to $47 (U.S.) from $66.
Goldman Sachs downgraded Starbucks to "buy" from "conviction buy" and cut its price target to $86 (U.S.) from $91.
Credit Suisse raised its price target on Google to $1,450 (U.S.) from $1,200 and maintained an "outperform" rating. Pacific Crest also raised its target to $1,450 from $1,135 and maintained an "outperform" rating.
Barclays raised its price target on Herbalife to $94 (U.S.) from $78 and maintained an "overweight" rating.
Goldman Sachs upgraded Burger King Worldwide to "conviction buy" from "buy" and raised its price target to $28 (U.S.) from $25.
Sterne Agee upgraded The Gap to "buy" from "underperform" and boosted its price target to $44 (U.S.) from $38.
Sterne Agree downgraded The TJX Cos. to "neutral" from "buy" and cut its price target to $66 (U.S.) from $68.
Merrill Lynch downgraded SanDisk to "underperform" from "neutral" and cut its price target to $65 (U.S.) from $75.
Nomura Securities downgraded Time Warner Cable to "neutral" from "buy" and maintained a price target of $125 (U.S.).
With contributions from Sonali Verma
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