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A Royal Bank of Canada (RBC) sign is seen in downtown Toronto in this March 3, 2011 file photo.Reuters

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.

Canaccord Genuity analyst Gabriel Dechaine has initiated coverage on the Canadian Big Six banks, believing that the sector overall still offers attractive investment opportunities despite slowing growth prospects compared to previous years.

He is recommending Bank of Nova Scotia, Canadian Imperial Bank of Commerce, and especially Royal Bank of Canada as buys right now.

He cited four key reasons for his bullish thesis on the sector:

1. Expectations for steady, albeit slower, earnings per share growth of nearly 6 per cent in 2014, accelerating to 8 per cent in 2015 when margins should expand marginally;

2. Strong capital levels and excess capital generation;

3. Attractive dividend yields; and

4. Reasonable valuation levels.

"We believe the potential for multiple expansion exists, particularly if our call for EPS growth acceleration in 2015 materializes and if investors further diminish expectations of a negative credit event," said Mr. Dechaine, who Canaccord recently hired from Credit Suisse to replace previous banking analyst Mario Mendonca. Mr. Mendonca is now covering the banking industry for TD Securities.

That negative credit event is a threat given Canada's slow economic growth and concerns over a housing bubble. But, with regards to a housing crash, he said "we do not believe this risk has a high probability of occurring if Canadian GDP growth is approximately 2.5 per cent, which is supportive of job creation (a condition that supports stable credit trends)."

Mr. Dechaine set a target of $71 (Canadian) on Bank of Nova Scotia; $105 on CIBC; and $80 on Royal Bank, which implies a return of 13 per cent over the next 12 months. Royal Bank is also a Canaccord Genuity Focus List pick - the dealer's short list of its very best investment ideas.

"We believe these stocks correspond best to our stock selection criteria of: (1) relative Canadian P&C (Personal and Commercial) financial performance; (2) most attractive "valuation weighted" growth rates in segments outside of Canadian P&C Banking business segments ; (3) excess capital generation; and (4) potential for re-rating," he said.

"We prefer CM and RY in the shorter term, while we believe patience is required for BNS as market sentiment towards its International segment (and performance therein) needs to improve."

Mr. Dechaine has "hold" ratings on the other three Canadian banks. Bank of Montreal was given a $78 price target; National Bank of Canada a $47 target; and Toronto Dominion Bank a $53 target.

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Rogers Sugar Inc. should cut its quarterly dividend by a penny given its weakening financial state and its seven straight quarterly declines in earnings before interest, taxes, depreciation and amortization, said TD Securities analyst Evan Frantzeskos.

Mr. Frantzeskos forecasts the company's payout ratio at 112 per cent in fiscal 2014, up from 92 per cent last year. It's expected to remain around that level if the dividend is not cut.

"Given the deteriorating fundamentals, we believe that it would be prudent for RSI to trim its dividend to 8 cents a quarter from 9 cents currently by the second quarter of fiscal 2015 in order to push its payout ratio back just below 100 per cent," he said in a research note.

A payout ratio is the proportion of earnings paid out as dividends; a ratio above 100 per cent often signals the income payout may be unsustainable.

The sugar processor reported disappointing basic earnings per share of 5 cents in its fiscal second quarter, down from 8 cents a year ago and below the consensus forecast of 8 cents. Margins were pressured by competition in the sector, and the company has had to contend with higher-than-expected energy costs.

"We expect recurring battles for market share over the forecast horizon amid new competition and relatively stable demand. Hence, Rogers Sugar's opportunity to grow volumes over the next few years is limited and margins will remain under pressure with risk continuing to the downside, in our opinion," he said.

Mr. Frantzeskos reduced his earnings per share estimates for the company through to fiscal 2016 and reiterated a "reduce" rating.

He cut his price target to $4 (Canadian) from $4.25.

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At least seven analysts raised their price targets on CGI Group Inc. in the wake of the company's better-than-expected earnings this week.

Its adjusted fiscal second-quarter earnings per share of 72 cents beat the Street consensus of 69 cents, with the help of a surge in cash flow from operations. Of note was a 20 per cent rise in contract bookings in Europe from the previous quarter, which Raymond James analyst Steven Li believes foreshadows positive organic growth returning to its operations on the continent, where CGI now has a large presence thanks to its recent acquisition of British IT services company Logica.

"With strong cash flows expected through the rest of the year and U.S. margins expected to rebound, we reiterate our outperform," said Mr. Li, who raised his price target to $46 (Canadian) from $44.

TD Securities raised its price target to $46 from $43, but lowered its rating to "buy" from "action list buy."

The median price target on CGI shares is now $45.50, up from $43 a month ago, according to Thomson Reuters data.

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Several analysts raised their price targets on Jean Coutu Group (PJC) Inc. after the drugstore chain reported a rise in earnings it its most recent quarter and announced a 17.6 per cent rise in its quarterly dividend to 10 cents a share.

"The company is faring well in the face of new competition in Quebec and ongoing drug reform. The first issue will fade later this year; the second issue is a modest drag," summed up CIBC World markets analyst Perry Caicco, who raised his price target to $23 from $19.50 and maintained a "sector performer" rating.

"Jean Coutu has a clean balance sheet (net cash) and is still generating $190 million-$200 million of cash per year. Its recent history of special dividends and exceptional buybacks indicate that material acquisitions are unlikely, and that cash will continue to be returned to shareholders," he added.

He thinks Jean Coutu could add between 16 per cent and 27 per cent to its share value over the next couple of years, depending on which cash-return method it uses: dividends or share buybacks.

Other price target hikes include Desjardins Securities raising its target to $22 (Canadian) from $19 and BMO Nesbitt Burns raising its target to $26 from $24.

The median price target is now $20.50, up from $19.50 a month ago, according to Thomson Reuters data. There are two buy ratings on the stock, eight holds, and two sells.

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Canaccord Genuity has elevated TransGlobe Energy Corp. to its Canadian Focus List - the research firm's top investing ideas - believing that a number of direct and indirect catalysts will materialize in the short term that will send shares of the producer of oil and gas in Egypt and Yemen higher.

Among them: an improving political climate in Egypt amid expectations for a presidential win by former military leader Abdul Fattah al-Sisi on May 27; TransGlobe's plans to issue a one-time dividend of 10 cents a share; and Egypt's ongoing efforts to pay down funds owed to oil and gas producers, said Canaccord analyst Christopher Brown.

"TransGlobe is also working on plans to market its own crude, a step we believe would further strengthen the company's cash position," he said.

Also, TransGlobe's balance sheet remains strong, and the shares trade at a deep discount relative to peers, he added.

Mr. Brown has a $13.50 (Canadian) price target.

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In other analyst actions:

Macquarie downgraded Cenovus Energy to "neutral" from "outperform" and cut its price target to $35 (Canadian) from $36. National Bank Financial also downgraded its rating to "sector perform" from "outperform."

Desjardins Securities upgraded Canfor to "hold" from "sell: and kept a $25 (Canadian) price target, after recent share price decline.

Credit Suisse initiated coverage on Bankers Petroleum with a $7 (Canadian) price target and "neutral" rating.

Credit Suisse elevated Facebook to its U.S. Focus List - its top investment ideas. It rates the company "outperform" with a $90 (U.S.) price target.

RBC Dominion Securities upgraded Yelp to "outperform" from "sector perform" with a price target of $88 (U.S.). Piper Jaffray upgraded the company to "overweight" from "neutral" with a price target of $80.

Credit Suisse cut its price target on Hornbeck Offshore to $50 (U.S.) from $70 and maintained an "outperform" rating.

Jefferies upgraded Abercrombie & Fitch to "buy" from "hold" and raised its price target to $50 (U.S.) from $37.

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