Inside the Market's roundup of some of today's key analyst actions. This file will be updated during the trading day.
After a big pullback in share price, Groupon Inc. is no longer the unreasonably valued stock it was last year, RBC Dominion Securities analyst Mark Mahaney said.
Groupon shares are down by more than 40 per cent year to date, while analysts have substantially reduced their earnings estimates for the company.
"The bar has been lowered, and we see forward earnings-per-share catalysts as now equally weighted positive and negative," Mr. Mahaney said.
"We remain skeptical of the company's long-term ability to successfully expand into the Goods and Travel segments, given the fiercely competitive conditions of those markets. That said, we believe the company is likely to see continued near-term progress against its operating initiatives."
He upgraded the stock to "sector perform" from "underperform" and raised his price target to $6 (U.S.) from $5. The analyst consensus price target for Groupon over the next year is $6.94, according to Thomson Reuters data.
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Shares in Tesla Motors Inc. hit a record high today with the help of Stifel Nicolaus analyst James Albertine upgrading the electric vehicle manufacturer to "buy" from "hold."
Mr. Albertine announced the upgrade this morning shortly after he toured Tesla's production facility in Fremont, Calif., which increased his confidence level that the company is on track to achieve a 1,000 unit per week output rate by the end of this year.
"Simply put, the rate of change vs. our last tour (May 2013) was staggering. We sense TSLA may be currently running at an 800 unit/week production rate. Stacks of finished goods inventory (front bumpers, battery packs, various body panels) suggests the demand backlog remains strong," StreetInsider.com quoted Mr. Albertine as saying.
"Given the pace at which production is ramping and the fact TSLA has only recently entered the European Union and Asian markets, we are incrementally confident in management's ability to leverage its brand advantage globally over the next two to three years," he added. "The key risk remains demand, in our view, but given (a) competitors' apparent unwillingness to fully invest (resources/managerial autonomy), and (b) TSLA's brand resilience in spite of high-profile accidents/fires/recalls, it seems demand deceleration may be a late decade call at the earliest."
His price target is $400 (U.S.), representing significant upside to the current trading price near $276. The analyst consensus price target over the next year is $251.06.
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Raymond James analyst Chris Cox has raised his price target on Athabasca Oil Corp., but shares are struggling to gain ground this morning after the company closed the sale of its 40 per cent stake in the Dover oil sands project to a unit of PetroChina on Friday.
Athabasca shares rose 4.4 per cent on the Toronto Stock Exchange on Friday after the company disclosed the deal had gone through, but were down 2.9 per cent at $7.69 in mid-morning trade today. While ending more than four tumultuous months in which the deal got caught up in uncertainty surrounding a political scandal in China, it came with a wrinkle: PetroChina is making the payments in four instalments over two years, with nearly half the total in the form of promissory notes.
"While the resolution to the Dover put saga significantly de-risks the story, we believe investors will be looking for more clarity around longer-term development plans for the Duvernay and results from the Hangingstone SAGD project before we see more meaningful upside in the name," Mr. Cox said in a statement. "That being said, we note that recent results from the company's Duvernay drilling program have been very encouraging in our view and we suggest investors pay attention to longer-term test results over the coming months, particularly from wells in the oil-window, as this could pleasantly surprise to the upside, in our view."
Mr. Cox maintained his "market perform" rating and increased his target price to $9.00 (Canadian) from $7.50. The analyst consensus price target is $9.43, according to Thomson Reuters.
Also today, TD Securities cut its target to $10.50 from $11 and maintained a "buy" rating. The analyst consensus price target over the next year is $9.43.
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With the completion of a $2-billion deal to acquire energy services company Kentz Corp., SNC-Lavalin Group Inc. has taken "its first step toward becoming a top-tier player in the global resources sector," Desjardins Securities analyst Benoit Poirier said.
He raised his target price on the stock to $67 (Canadian) from $63 and reiterated a "buy" rating.
"We have a bullish stance on SNC in the near to medium term in light of it being shortlisted for big-ticket projects that are scheduled to be awarded in late 2014 and early 2015," Mr. Poirier said. "We believe SNC is at last emerging from its recent challenges armed with substantial financial firepower and a reinvigorated senior leadership with a mandate for growth in key end markets."
The analyst consensus price target for SNC-Lavalin Group over the next year is $62.48.
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Clarus Securities initiated coverage on Romarco Minerals Inc. with an enthusiastic "speculative buy" rating and $1.25 (Canadian) price target.
"In our view, Romarco is a must-own gold developer for exposure to its best-in-class 4.8-million-ounce Haile project in South Carolina," commented analyst Jamie Spratt. "We expect that Haile's scalable, high -margin production profile in a good jurisdiction will see Romarco join the ranks of the premier gold producers over time. With permitting and development milestones ahead, we expect a significant re-rating in the next 6-12 months and in the longer term."
The analyst consensus price target for Romarco Minerals over the next year is $1.21.
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Dundee Securities has added oil and gas company Yangarra Resources Ltd. to its top picks list.
Yangarra Resources, engaged in the production and development of resource properties in the Medicine Hat, Jaslan and Viking areas of Alberta, has seen its production grow organically to about 3,500 barrels of oil equivalent per day, and is focused on cost control.
Dundee has a $5 (Canadian) price target on the stock, and provided four reasons to buy the stock.
"• Value - one of the lowest cash flow valuations in our domestic oil & gas coverage universe.
• Top quartile results – Yangarra is top quartile in cash costs (operating costs + G&A + interest costs), recycle ratio, and insider ownership amongst our coverage universe.
• Improved running room – a recent update to the company's low risk Cardium and Glauconite drilling opportunities will provide years of drilling. The Company now has 147 gross (107 net) Cardium locations (half cycle IRR's of 106%, 13 month payout) and 41 gross (34 net) Glauconite locations (122% IRR, 11 month payout). The majority have not been booked in the reserve report.
• Duvernay upside – we consider this a free option in the stock. Very little capital is devoted to these assets, but they could be worth as much as the rest of the Company if solid results are achieved by nearby competitors."
Dundee's top picks for September total 20 stocks, seven of which are in the energy sector: Raging River Exploration, Tamarack Valley Energy, NuVista Energy, Bellatrix Exploration, Whitecap Resources, Surge Energy and Yangarra.
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In other analyst actions:
Goldman Sachs cut its price target on Bombardier to $3 (Canadian) from $3.20 and reiterated a "sell" rating. (Read more here)
TD Securities upgraded ATS Automation Tooling Systems to "buy" from "hold" and raised its price target to $16 (Canadian) from $15.
Cantor Fitzgerald Canada upgraded Uranium Energy to "buy" from "hold" and hiked its price target to $1.75 (U.S.) from $1.45.
BMO Nesbitt Burns raised its price target on Alimentation Couche-Tard to $38 (Canadian) from $32 and reiterated an "outperform" rating.
RBC Dominion Securities hiked its price target on CIBC to $104 (Canadian) from $98 and reiterated a "sector perform" rating.
Haywood Securities initiated coverage on Panterra Resource with a "buy" rating and 70 cents (Canadian) price target.
M Partners cut its target on Marlin Gold Mining to $2 (Canadian) from $2.50 and maintained a "buy" rating.
Credit Suisse upgraded Staples to "outperform" from "neutral" with a $15 (U.S.) price target.
RBC Dominion Securities upgraded Northrop Grumman to "outperform" from "sector perform" with a price target of $148 (U.S.).
FBR Capital Markets downgraded PulteGroup to "market perform" from "outperform" with a price target of $22 (U.S.)
With files from Bloomberg
Darcy Keith