Thursday'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.

Strong fourth-quarter results prompted several analysts to raise their price targets on Linamar Corp. - but there's disagreement on the Street whether the recent rise in its share price means it's too late for investors to get in.

On the one side is CIBC World Markets analyst Perry Caicco, who upgraded the auto parts maker to "sector outperformer" from "sector performer" as he raised his price target to $60 (Canadian) from $42.

"Linamar should continue to see net new business to drive it towards $5-billion in sales. We believe investors should buy the shares for 2014 earnings growth," Mr. Caicco commented in a research note. His price target is based on his forecast that Linamar will trade at 13 times estimated 2015 earnings per share of $4.50.

Mr. Caicco believes a strong backlog of business makes Linamar a "low-risk buy opportunity" and notes that slower first-quarter North American light vehicle sales aren't impacting the company and that March is off to a very strong start.

But Canaccord Genuity analyst David Tyerman sees things differently. He downgraded his rating to "hold" from "buy" because shares have already rallied sharply. He increased his price target to $50 (Canadian) -- about where shares are now trading at -- from $43.

"Linamar's share price has more than doubled since the start of 2013 and the company's valuation has increased from roughly 4x EV/EBITDA to over 6x EV/EBITDA in that timeframe," Mr. Tyerman said in a note. "We think the company is now trading modestly above a peak sustainable multiple."

RBC Dominion Securities also downgraded Linamar to "sector perform" from "outperform" and raised its price target to $49 (Canadian) from $47.

The analyst consensus price target for Linamar over the next year is $47.67, according to Thomson Reuters.

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The U.S. carbonated soft drink industry, already hit hard by consumers favouring healthier options, has another major problem that's less publicized: pricing wars.

That trend has prompted CIBC World Markets analyst Perry Caicco to downgrade his rating on Cott Corp. -- maker of private-label soft drinks -- to "sector performer" from "sector outperformer" while cutting his price target to $9 (U.S.) from $10.

He notes that prices on branded two-litre bottles were lowered late last year, reducing the gap to private labels. "Now 12-packs of branded products are appearing at major national accounts at pricing that is below private label. This will effectively dry up Cott's volume in those venues," Mr. Caicco warned in a research note.

The new lower pricing will mean Memorial Day - when demand rockets for soft drink beverages in the second quarter - will be "a horror show" for Cott.

Mr. Caicco lowered his first-quarter and second-quarter volume forecasts for Cott, which reduced his fiscal 2014 and 2015 EBITDA, earnings per share and cash flow forecasts.

"The U.S. carbonated soft drink industry, which is in a structural decline of -3 per cent to -4 per cent annually, is further degenerating into irrational pricing. Despite claims that industry volumes can only be regained with marketing, innovation and execution, the most apparent tactic is price," he said.

How will Cott deal with this problem? Despite recent reports, the company is not likely to sell itself, said Mr. Caicco. "This is not because Cott would not accept a bid for the company, but more likely because there are no apparent buyers," he said.

Instead, it may close some plants and refocus its business into other food segments, he thinks. "We see the company simply re-financing its 2018 debt, and then beginning to return cash to shareholders. Over time, it will have to remove capacity and, although that is difficult, there could be a plant or two slated for closing. As well, the company will continue to seek tuck-in acquisitions. These acquisitions would be designed to fill plant volume, and should involve some form of beverage or liquid food product. Although it would like to remain in the core beverage business, the possibility remains that over the long term it may be forced to branch into sauces, dressings or soups. As long as these types of products lever the company's expertise at filling packages, and reduce the long-term exposure to commodities, there could be value-creation opportunities over time," he said.

The analyst consensus price target for Cott over the next year is (U.S.) $9.56.

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Recent underperformance of Cabot Oil and Gas Corp. shares offers an attractive buying opportunity, said UBS analyst Betty Jiang.

Cabot has underperformed its peers by roughly 15 per cent year-to-date, noted Ms. Jiang. She says Cabot is one of the highest quality explorer/producers, with sector-leading debt-adjusted cash flow per share growth that is on the cusp of generating material free cash flow.

Ms. Jiang upgraded Cabot to "buy" from "neutral" and maintained her price target of $42 (U.S.). The analyst consensus price target over the next year is $46.50, according to Thomson Reuters.

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Parex Resources Inc.'s management team has proven its ability to consistently grow reserves and shareholder value, said Canaccord Genuity analyst Christopher Brown.

But with a stock price that has appreciated nearly 60 per cent over the past two quarters, there's little near-term upside left for the Colombian energy exploration company, he argued.

"Although we believe a potential surprise to the upside remains, given the risk/reward benefit, we believe the current share price reflects a fair value for the company," he said in a note.

He downgraded his rating to "hold" from "buy" but nudged up his price target to $9 (Canadian) from $8.50. The analyst consensus price target for Parex Resources over the next year is $9.42.

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Trinidad Drilling Ltd. investors should look closely to fully understand the company's eye-popping fourth-quarter results, says Raymond James analyst Andrew Bradford.

Mr. Bradford explains that $20-million of the company's EBITDA of $84-million -- which beat the $64-million consensus forecast -- came from early drilling rig termination fees. When accounting for that, the results were actually in-line with guidance.

He maintained a "strong buy" rating and raised his target price to $13.50 from $12.50 (Canadian). The analyst consensus price target over the next year is $12.69, according to Thomson Reuters.

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Citing its "slow but safe" growth path, Desjardins Securities analyst Michael Goldberg cut his price target on Laurentian bank of Canada.

With the integration of recently acquired MRS Companies and AGF Trust approaching completion, attention turns to growing the business, says Mr. Goldberg.

"Laurentian continues to shift its business mix toward less direct competition with the major banks. This is likely to be a slow but relatively safe growth path," he said.

Mr. Goldberg maintained his "buy" rating but reduced his target price to $51 (Canadian) from $53. The analyst consensus price target over the next year is $50.30, according to Thomson Reuters.

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TD Securities downgraded Argent Energy Trust to "reduce" from "hold" and cut its target price to $5.75 (Canadian) from $7.50.

Desjardins Securities upgraded Primero Mining to "buy-above average risk" from "buy-speculative" and hiked its price target to $8.25 (Canadian) from $6.25. Cantor Fitzgerald Canada upgraded its rating to "buy" and raised its rating to $9.10 (Canadian).

CIBC World Markets hiked its price target on Painted Pony Petroleum to $10.25 (Canadian) from $9 and maintained a "sector performer" rating.

Goldman Sachs downgraded Alpha Natural Resources to "sell" from "neutral" and cut its price target to $4 (U.S.) from $6, citing a challenging metallurgical coal outlook.

Goldman Sachs cut its price target on RadioShack to $1 (U.S.) from $2.25 and reiterated a "sell" rating.

UBS upgraded H&E Equipment to "buy" from "neutral" and hiked its price target to $41 (U.S.) from $29.

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