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Wednesday's analyst upgrades and downgrades

Barrick Gold chairman Peter Munk speaks at the company's annual general meeting in Toronto on Wednesday May 2, 2012.


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.

CIBC World Markets analyst Alec Kodatsky raised his price target on Barrick Gold Corp. as he speculated that 2014 could be the year investors return to a more bullish stance on the struggling bullion producer.

Barrick has streamlined its portfolio and improved its balance sheet without sacrificing operating stability, and more of that progress should be seen this year, said Mr. Kodatsky. "The market has warmed-up to the story, but we sense is not yet completely sold, awaiting clear indications that recent efforts have tangible results," he said in a research note.

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Despite expectations that gold prices will be lower this year than in 2013, Barrick should be able to keep EBITDA margins flat. That, he said, could be the sign the market needs to get more encouraged by Barrick's turnaround.

"We think substantially better core reserve grades and a greater proportion of ounces coming from Barrick's best assets should benefit profitability," Mr. Kodatsky added.

Barrick is still trading at a discount to peers, at about 7 times estimated 2014 cash flow, he noted. He thinks Barrick will soon trade at 8 times cash flow.

He raised his price target to $23 (U.S.) from $21. Given the relatively low return that would still represent to investors, he maintained a "sector performer" rating.

The average price target among analysts is $20.10 (U.S.), according to Thomson Reuters.


BRP Inc.'s current stock price is a buying opportunity because its products are continuing to gain market share, making the stock a "compelling growth play in the powersport market," said Desjardins Securities analyst Benoit Poirier.

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Its new manufacturing facilities in Mexico should help the company save $20-million to $25-million in costs annually by 2017, which will strengthen its margins, he said.

BRP is scheduled to report its fourth-quarter results on March 28. "Based on the cold winter, our channel checks and positive comments from peers with regard to snowmobile sales for the industry, we expect a strong quarter," Mr. Poirier wrote in a research note. BRP should also benefit from a weaker Canadian dollar, he noted.

Mr. Poirier raised his target price to $35 (Canadian) from $32 and rates the stock "buy." The average analyst target is $32.80.


Agnico Eagle Mines Ltd.'s fourth-quarter production results were better than expected and the company modestly improved its three-year production outlook, noted Dundee Securities analyst Josh Wolfson as he raised his price target to $40 (Canadian) from $33.

While year-end reserves decreased by 10 per cent, reflecting lower gold prices and ore depletion, this was largely offset by 11 per cent higher grades, he observed.

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"Overall, results reflect a solid performance, while opportunity for further upside is forecast. Although we expect AEM's operating momentum to continue into the first half of 2014, we view this as balanced by the company's premium valuation," he said. As such, he maintained a "neutral" rating.

Credit Suisse today also raised its price target on Agnico Eagle, to $38 (U.S.) from $35. The average analyst target is $34.31.


Raymond James analyst Frederic Bastien raised his price target on Canam Group Inc. after a recent site visit in Romania gave him even more confidence in the steel fabricator.

"We came away from our trip thinking there is more sophistication to the steel fabrication business than meets the eye. More importantly, the time we spent with management reminded us Canam is doing all the right things to maintain its leading position in the competitive sector," Mr. Bastien said in a research note.

"Given this, and the upside potential we still see in the firm's earnings, we reaffirm our strong buy rating on the stock."

He raised his price target to $18 (Canadian) from $15. The average target is $15.70.


BMO Nesbitt Burns analyst Andrew Kaip upgraded Pan American Silver Corp. to "market perform" from "underperform," citing the 11 per cent jump in the price of silver so far in February and the company's strong operational results across all of its producing mines.

"The company's unit costs continue to track lower, and BMO Research expects positive momentum to continue in 2014," Mr. Kaip said. "Further, the recently announced La Colorada expansion study demonstrated strong economics amid a weak metal price environment."

"BMO Research views the La Colorada expansion as an opportunity to weight production towards one of the company's lower-cost operations and improve free cash flow," he added.

He raised his price target to $15 (U.S.) from $10. The average target is $12.63.


In other analyst actions:

Raymond James cut its price target on Teck Resources to $27 (Canadian) from $30 and maintained a "market perform" rating.

Raymond James downgraded Royal Gold to "outperform" from "strong buy" and kept a $74 (U.S.) price target.

TD Securities downgraded Mercer International to "reduce" from "hold" and cut its price target to $8.50 (U.S.) from $10.

Wunderlich Securities downgraded Waste Management to "hold' from "buy" and cut its price target to $45 (U.S.) from $52.

Wells Fargo downgraded Dollar General to "market perform" from "outperform" and cut its price target to $55-58 from $59-63.

UBS downgraded Calpine to "neutral" from "buy" and maintained a $22 (U.S.) price target.

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

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Investment Editor

Darcy Keith is The Globe and Mail's Investment Editor. He has been a business journalist since 1992 and joined the Report on Business in 2010 from Yahoo! Canada, where he was the senior editor of finance. More


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