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 reacting to news that Potash Corporation of Saskatchewan Inc. will soon have a new CEO with general approval - but with some degree of caution given that he comes from outside the company.
The potash-producing giant announced Sunday that Jochen Tilk, a 30-year veteran of the mining industry, will take over from Bill Doyle effective July 1. Mr. Tilk most recently served as CEO of Inmet Mining.
"While we assess Mr. Tilk to be a very worthy successor, the change in leadership does create an added element of near-term uncertainty pending communication of the strategy going forward," said Cantor Fitzgerald Canada analyst Peter Prattas, who maintained a "hold" recommendation and $35 (U.S.) price target.
Providing comfort to analysts is Mr. Doyle agreeing to stay on as an adviser through to June 2015. Mr. Doyle has been CEO for the past 15 years, and has largely been credited for the success of the company. He has been an advocate for the industry to use price discipline rather than focusing just on moving volumes of potash to the market.
The board has been active for the past few years looking for a successor to Mr. Doyle, who turns 64 years old in May and previously stated he would like to retire when he reached 65. The board reviewed both internal and external candidates.
"The selection of an external candidate is a bit of a surprise, and we will have to monitor how the internal candidates that did not get the approval to transition to CEO will react and if they stay within the firm," said AltaCorp Capital Research analyst John Chu. "The fact that Doyle will remain with the company for a year after the official transition is an important signal that the board and the entire executive team is committed to making this role work for Tilk and most importantly the shareholders."
Mr. Chu reiterated an "underperform" rating and $28 (U.S.) price target.
The analyst consensus price target over the next year is (U.S.) $33.23, according to Thomson Reuters.
Shares are down 2.1 per cent at $33.72 (U.S.) in early afternoon trading.
Shares in CCL Industries Inc., already up 15 per cent since fourth-quarter results were released on Feb 21, are probably not finished rallying yet, said Industrial Alliance Securities analyst analyst Ben Jekic, who recently met with company management.
He boosted his price target on the maker of labels and specialty packaging to $122 (Canadian) from $102.50 and reiterated a "buy" rating.
Mr. Jekic met with CCL's chairman, Donald Lang, along with chief financial officer Sean Washchuk, for an update on the business.
"In our meeting, management reinforced our belief that global labeling regulations that are on the rise across most industries should support the demand in CCL's core markets. The company has developed competitive advantages over the years when meeting labeling requirements of their large global customers, which should continue to benefit CCL going forward," he said.
In the meantime, the company's profit growth outlook remains robust, with plenty of financial capacity for acquisitions. Multiple targets are currently under consideration.
"CCL's formula of organic business growth, free cash flow generation and significant acquisition potential in a fragmented labeling market, can produce ample catalysts to drive the stock higher through 2016 through profit growth and/or trading multiple expansion," Mr. Jekic said. He raised his earnings estimates for both 2014 and 2015.
The analyst consensus price target over the next year is $105.83.
Desjardins Securities analyst Jackie Przybylowski reiterated a "sell" rating and significantly cut her price target on Labrador Iron Mines Holdings Ltd. as the company quickly runs out of funds to run its operations.
Labrador Iron Mines could delay the spring start-up of its seasonal operations, or even cancel the calendar year 2014 operating season all together due to lack of funds, warned Ms. Przybylowski. "We believe the company will require funding of $20-million (Canadian) to $30-million within the month to avoid material delays to the operating season," she said.
She cut her target to 10 cents (Canadian) from 25 cents, anticipating that the company may have to issue new shares and dilute the value of existing stock to fund working capital.
The analyst consensus price target over the next year is 32 cents.
BMO Nesbitt Burns analyst Gerrick L. Johnson downgraded Mattel Inc. to "underperform" from "market perform," warning that the company may report disappointing earnings over the next two years amid sluggish sales for several of its toys.
He also slashed his price target to $33 (U.S.) from $40.
"We are downgrading shares as we see risk to MAT's earnings estimates for 2014 and 2015 owing to cyclical declines in core product lines like Barbie and Hot Wheels, deteriorating sales of Monster High, and disappointing performance of new lines like Max Steel and Ever After High," Mr. Johnson said in a research note.
"The toy market in mature markets continues to be weak, while emerging markets face challenges from declines in equity markets and weakening currencies. Finally, we think there could be risk to MAT's gross and operating margins owing to mix, lack of sales leverage, and an exhaustion of cost savings opportunities," he said.
Mattel's Fisher-Price division, which represents about 30 per cent of sales, has been mired in a slump since 2008, and he expects this to continue due to declines in birth rates in the U.S. and other developed markets. While toys are considered by many to be recession-resistant, recessions depress birth rates, which have an impact of the infant and preschool toys that Mattel sells under the Fisher-Price brand.
The stock's 3.8 per cent dividend yield could provide some downside support. But should earnings continue to deteriorate, "we believe MAT shares will still find themselves in the proverbial doghouse and underperform the overall market and publicly traded peers," Mr. Johnson said.
The analyst consensus price target is $41.63.
Deutsche Bank upgraded Alcoa Inc. to "hold" from "sell," citing expectations that the producer will enjoy higher realized aluminum prices "for the foreseeable" future.
The bank also raised its price target to $10 (U.S.) from $7.50.
Alcoa shares are up more than 50 per cent since last fall, underpinned by an improvement in sentiment for the aluminum market amid the rebound in the aerospace and automotive industries.
The analyst consensus price target for Alcoa over the next year is $10.57.
In other analyst actions:
Deutsche Bank upgraded Newmont Mining to "hold" from "sell" and raised its price target to $21 (U.S.) from $19.
Standpoint Research upgraded General Motors to "buy" from "hold" with a price target of $43 (U.S.).
Pacific Crest upgraded Intel to "outperform" from "sector perform" with a price target of $31.
Goldman Sachs upgraded JetBlue Airways to "neutral" from "sell" and raised its target to $10.50 (U.S.) from $8.20.
RBC Dominion Securities upgraded B&G Foods to "outperform" from "sector perform" and hiked its price target to $36 (U.S.) from $31.
Goldman Sachs downgraded Avago Technologies to "buy" from "conviction buy" but raised its price target to $70 (U.S.) from $66.
BMO Nesbitt Burns upgraded Rocket Fuel to "outperform" from "market perform" with a price target of $58 (U.S.).
UBS raised its price target on Envision Healthcare to $40 (U.S.) from $37 and maintained a "buy" rating.
Standpoint Research upgraded Diamond Offshore to "buy" from "hold" with a price target of $62 (U.S.).
For more analyst actions, breaking investing news and analysis, follow Darcy Keith on Twitter at @eyeonequities