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.
Alaris Royalty Corp.'s stock has been punished enough after a string of recent disappointments, and is due for a resurgence, Raymond James analyst Theoni Pilarinos said in a note.
The company, which indirectly invests in private businesses, one of which went under late in December 2013, has seen its share price decline by one-third in less than two months.
"We believe a return to deal flow and an imminent dividend increase will drive Alaris' stock higher over the next six to 12 months," Mr. Pilarinos said, raising his rating on the stock to "outperform" from "market perform," while maintaining a $33.50 (Canadian) price target.
Alaris provides financing to small companies in order to generate royalties, which are mostly paid out to shareholders as dividends. Expected royalties were cut after SHS Group, which sold home-installed products for Sears Home Services, filed for receivership.
Then another of Alaris's portfolio companies, Labstat International, which offers tobacco toxicology testing services, ran into delays with U.S. regulators.
And then the Canadian Revenue Agency piled on, proposing a tax reassessment related to Alaris's past non-capital losses.
But the focus is now shifting back away from "fighting fires" and back to deal flows, Mr. Pilarinos said.
SHS only comprised 3 per cent of Alaris's assets. Labstat's earnings are ahead of estimates this year. And the CRA arbitration is not likely to materially affect operations, he explained.
"We expect a return to its business model of increasing its dividend as it funds new and existing partners."
The analyst consensus price target for Alaris Royalty over the next year is $35.29, according to Thomson Reuters data.
Apple Inc.'s increased share buyback program and issuance of $12-billion in bonds should have a net positive impact on the stock, said RBC Dominion Securities analyst Amit Daryanani.
After an analysis of the debt and share buyback plans, he raised his fiscal year 2015 earnings per share estimates by $1. He also increased his price target to $645 (U.S.) from $625 while reiterating an "outperform" rating.
"We believe AAPL's current stock price creates an attractive entry point for investors to benefit from AAPL's ability to sustain revenue and EPS growth through fiscal year 2014," Mr. Daryanani commented in a research note . "We believe multiple catalysts remain as the company benefits from: 1) iPhone 5s and iPhone Mini ramps; 2) continued MacBook refresh cycle; 3) potential iTV launch or other major product lines; and 4) improvements in capital allocation policy.
"We believe the fundamental reality remains that AAPL's valuation is materially sub-par to what we anticipate its long-term revenue and EPS potential is," he added.
The analyst consensus price target is $624.22.
CIBC World Markets analyst Mark Kennedy upgraded Canfor Corp. to "sector outperformer" from "sector performer," expecting the company to benefit as lumber prices gradually strengthen throughout the rest of this year.
Canfor reported first quarter 2014 earnings per share of 33 cents, which matched Mr. Kennedy's estimates, with its pulp and paper operations posting stronger-than-expected results.
The company's plans to spend $160-million in capital expenditures in its lumber operations this year should help returns in that segment to continue to improve, he said. Meanwhile, Canfor's balance sheet is heading to zero debt by the end of this year.
"We believe lumber prices (currently at US$340/mfbm for Western spruce pine fir) will see gradual strengthening as we proceed through the balance of 2014 and the lumber equities like Canfor will also see gradual price improvement," Mr. Kennedy said in a research note.
He maintained a $32 (Canadian) price target. The consensus price target is $31.09.
Brookfield Renewable Energy Partners L.P. is on track to deliver dividend growth at the higher end of its 3- to 5-per cent target, says RBC Dominion Securities analyst Nelson Ng.
Brookfield reported better-than-expected results last quarter, thanks to higher power prices in the U.S. Northeast (related to the polar vortex) and Brazil, which was hit by drought.
"Management continues to be bullish on Brazil and believes the company is well positioned to benefit from the significant need for power infrastructure," said Mr. Ng. "Management expects to invest $500-million (U.S.) of equity into organic development projects over the next five years, and the majority of the investment is expected to be in Brazil."
Mr. Ng maintains his "sector perform" rating and raised his target price by a dollar to $33 (Canadian). The analyst consensus price target is $33.55.
The Charles Schwab Corp. is sitting on a pile of cash that could soon be put to profitable use, says Credit Suisse analyst Christian Bolu.
Mr. Bolu believes Schwab will launch a "client cash optimization strategy" that could drive 25 cents to 30 cents in incremental earnings per share over the next two- to three-years.
"We estimate Schwab currently has about $50-billion in yield insensitive client cash (largely tied to the RIA & retirement businesses) in money market funds which could be more optimally deployed within Schwab bank at incremental yields of about 150 basis points," he said. "Expect bank growth to accelerate as Tier 1 leverage approaches 7 per cent (currently 6.6 per cent) and post an increase to the dividend--both of which we expect by early 2015."
Mr. Bolu upgraded Charles Schwab to "outperform" from "neutral" and raised his target price to $32 (U.S.) from $27. The analyst consensus price target over the next year is $28.19, according to Thomson Reuters.
In other analyst actions:
CIBC World Markets upgraded Partners REIT to "sector outperformer" from "sector underperformer" and hiked its price target to $5.50 (Canadian) from $5.
FirstEnergy downgraded Canadian Oil Sands to "underperform" and cut its price target by $1 (Canadian) to $21.
TD Securities raised its price target on TMX Group to $59 (Canadian) from $53 and maintained a "hold" rating.
Credit Suisse initiated coverage on Gildan Activewear with an "outperform" rating and $70 (Canadian) price target.
MKM Partners downgraded Target to "neutral" from "buy" and cut its price target to $63 (U.S.) from $71.
Citigroup upgraded Anadarko Petroleum to "buy" from "neutral" and raised its target to $115 (U.S.) from $112.
Oppenheimer upgraded Valero Energy to "outperform" from "perform" with a price target of $70 (U.S.).
Credit Suisse downgraded Swift Energy to "underperform" from "neutral" and maintained a $10 (U.S.) price target.
Wells Fargo upgraded Bill Barrett to "outperform" from "market perform" and raised its valuation range to $33-37 (U.S.) from $26-30.
Société Générale downgraded Continental Resources to "hold" from "buy" but raised its price target to $143 (U.S.) from $129.