Inside the Market's roundup of some of today's key analyst actions. This file will be updated during the trading day.
Several analysts today cut their price targets on Major Drilling Group International Inc., as the mineral drilling company continues to suffer from lacklustre demand for its services.
On a conference call Friday, management discussed a weak fiscal fourth quarter, as customers shunned new activities given a lack of financing in the junior mining sector as gold and base metal prices remained volatile.
"Management's timely cost cuts, solid balance sheet and a modern rig fleet, position MDI to react quickly to a turn in drilling activity, yet visibility remains uncertain," commented Industrial Alliance Securities analyst Ben Jekic in a research note. "Moreover, while MDI retained key employees over the last year, the risk that the ongoing softness in drilling activity will push some drillers to pursue jobs in other industries remains a concern."
Mr. Jekic said he does not foresee a pickup in activity until later next year.
CIBC World Markets analyst Kevin Chiew sees some potential silver linings. Continued pricing pressure for mining drilling services will likely drive some of the company's weaker competitors out of business. And while the mineral drilling business is likely to remain challenged in the near- to medium-term, "an extensive downturn is likely to generate pent-up demand," he said.
Both Mr. Jekic and Mr. Chiew cut their targets by $1 to $8.50 (Canadian). Mr. Jekic reiterated a "hold" rating while Mr. Chiew reaffirmed a "sector outperformer" rating.
Elsewhere, Mackie Research cut its target to $6 and reiterated a "hold" rating and TD Securities cut its target to $8 and maintained a "hold" rating.
The average target among analysts is now $8.25, down from $9 a month ago, according to Thomson Reuters data.
Cantor Fitzgerald Canada upgraded Ritchie Bros. Auctioneers Inc. to "buy" from "hold" and hiked its price target to $26 (U.S.) from $24, citing increased momentum in auction proceeds.
After markets closed on Friday, the world's largest auctioneer of heavy equipment and trucks said it received $299-million in gross auction proceeds in May, up 30 per cent from a year earlier.
"Although performance from any one particular month should be treated cautiously, the trend suggests that RBA has exited a lull (following a harsh winter) and is gaining traction from a number of factors," said Cantor Fitzgerald analyst Peter Prattas in a note. "We are increasingly confident that RBA can achieve the top end of its 2014 guidance and that growth can accelerate into 2015."
Mr. Prattas sees earnings per share improving from 84 cents in 2014 to 91 cents this year and to $1.04 in 2015.
The average price target among analysts is $23.50.
Shares in the company are up about 6 per cent in early trading today.
Credit Suisse analyst Colin Moore raised his price target on Transcontinental Inc. to $11 (Canadian) from $10, but continues to recommend investors stay away from the stock amid continued headwinds in the print media industry.
Transcontinental reported second-quarter revenues and earnings that were higher than he expected, as the company had success at keeping margins up. But printing margins should moderate in future quarters, even though recent cost cutting in its media operations should help, Mr. Moore said.
"Transcontinental continues to effectively manage its platform," said Mr. Moore, who maintained an "underperform" rating because of the growing trend of ad revenues shifting to digital platforms.
"Free cash flow generation remains healthy, although we believe TCL will have to continue to deploy its free cash flow to acquire assets to replace legacy revenue pressure while future synergies in non-traditional verticals may be more limited," he said. "Working capital should also remain a modest drag owing to recently restructured contracts."
The average price target among analysts is $14.94.
RBC Dominion Securities analyst Greg Pardy has downgraded Enerplus Corp. due to a recent runup in the company's share price.
In the wake of solid execution and improved production growth visibility over the past couple of years, Enerplus' share price has risen 33 per cent year-to-date and 51 per cent since he upgraded the stock in October 2013, Mr. Pardy notes.
"At current levels, we believe the shares have moved into fair value territory," he says. "We could become more bullish towards Enerplus amid a share price pullback, or improving prospects for common share dividend growth."
Mr. Pardy downgraded Enerplus to "sector perform" from "outperform" and maintained his $25 (Canadian) price target. The analyst consensus price target over the next year is $26.23, according to Thomson Reuters.
A string of recent acquisitions by TransForce Inc. should push the company's shares higher, says Canaccord Genuity analyst David Tyerman.
TransForce announced three acquisitions last week, which will add $70-million of earnings before interest, taxes, debt and amortization in their first full year.
"We continue to recommend Buying TransForce, as we expect strong investor returns from operating improvements," he says. "We expect these improvements to translate into: 1) substantial EPS growth, mainly from increased margins, and 2) valuation multiple expansion."
Mr. Tyerman maintains his "buy" rating and is increasing his price target to $31 (Canadian) from $29. The analyst consensus price target over the next year is $26.96, according to Thomson Reuters.
In other analyst actions:
TD Securities raised its price target on Royal Bank of Canada to $85 (Canadian) from $82 and maintained a "buy" rating.
TD Securities raised its price target on Bank of Montreal to $84 (Canadian) from $81 and maintained a "hold" rating
TD Securities raised its price target on Bank of Nova Scotia to $80 (Canadian) from $75 and maintained an "action list buy" rating.
TD Securities raised its price target on Canadian Imperial Bank of Commerce to $110 (Canadian) from $105 and reiterated a "buy" rating.
TD Securities raised its target on National Bank of Canada to $50 (Canadian) from $49 and maintained a "hold" rating.
RBC Dominion Securities downgraded Enerplus to "sector perform" from "outperform" and maintained a $25 (Canadian) price target. It cited the stock's recent share price appreciation for the downgrade.
RBC Dominion Securities cut its price target on Just Energy Group to $7 (Canadian) from $8 and maintained a "sector perform" rating.
RBC raised its price target on SNC-Lavalin Group to $60 (Canadian) from $57 and reiterated an "outperform" rating.
Jefferies upgraded both Dollar General and Family Dollar Stores to "buy" from "hold" with price targets of $75 (U.S.) and $79 (U.S.), respectively. Jefferies speculates that Family Dollar could put itself up for sale following Carl Icahn's new stake in the company, and thinks the combination of the two retailers would provide "enormous" synergies.
Wells Fargo upgraded J.M. Smucker to "market perform" from "underperform" and raised its price target to $102-$104 (U.S.) from $90-82.
Oppenheimer upgraded L Brands to "perform" from "underperform" with a price target of $56 (U.S.).
Nomura Securities upgraded Capital One Financial to "buy" from "neutral" and raised its price target to $94 (U.S.) from $75.
BMO Nesbitt Burns raised its target on Broadcom to $41 (U.S.) from $27 and maintained a "market perform" rating.
Merrill Lynch cut its price target on Yamana Gold to $10.80 (U.S.) from $12 and maintained a "buy" rating.
Credit Suisse upgraded BioMarin Pharmaceutical to "outperform" from "neutral" and maintained a $73 (U.S.) price target.