Thursday's analyst upgrades and downgrades

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Inside the Market's roundup of some of today's key analyst actions. This file will be updated during the trading day.

Analysts are expressing renewed confidence in the Brookfield group of companies after attending investor meetings this week.

Canaccord Genuity upgraded Brookfield Asset Management to "buy" from "hold" with a price target of $55 (US). And Raymond James says "the time is right for investors to be adding more aggressively" to their positions in both Brookfield Infrastructure Partners LP and Brookfield Renewable Energy Partners LP.

"As with last year, we came away thinking Brookfield Infrastructure (BIP) and Brookfield Renewable (BREP) boast all of the key attributes our clients look for in an investment. Both are led by seasoned industry veterans and own high-quality assets with perpetual franchise rights and strong organic growth prospects," said Raymond James analyst Frederic Bastien in a research note. "Just as importantly, they follow a prudent investment strategy that helps produce healthy, sustainable and growing distributions per unit over the long run. However, in contrast to last year, we believe both partnerships are noticeably more attractive on a relative value basis."

Mr. Bastien raised his price target on Brookfield Infrastructure Partners to $48 (U.S.) from $44, and on Brookfield Renewable Energy Partners to $35 (U.S.) from $33. He has "outperform" ratings on both.

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Vermilion Energy Inc.'s Corrib natural gas development offshore Ireland is poised to have a "transformative impact" on the company's free cash flow, leading to sizeable dividend increases over the next couple of years, said RBC Dominion Securities analyst Greg Pardy as he upgraded his rating to "outperform" from "sector perform."

Corrib is set to ramp up to peak rates of 58 million cubic feet per day of gas starting in mid-2015. That should boost Vermilion's operating cash flow from $811-million in 2014 to $1-billion in 2015 and to $1.2-billion in 2016, even with relatively weak Brent crude prices, Mr. Pardy predicted.

"In our view, Vermilion's rising free cash flow opens the door to dividend growth of 13 per cent in 2015. Our dividend per share outlook is now $2.59 in 2014, $2.92 (vs. $2.75) in 2015, and $3.29 in 2016," he said in a research note.

Mr. Pardy, who upgraded his recommendation after a corporate update by chief financial officer Curtis Hicks, maintained an $81 (Canadian) one-year price target. "Supported by its two-thirds oil weighting, 35 per cent exposure to Brent-linked pricing, and well defined growth profile, Vermilion remains well positioned to execute a high yield growth model with a dividend stream that should rise in the future," he concluded.

The analyst consensus price target for Vermilion Energy over the next year is $79.07, according to Thomson Reuters.

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A wet crop in Western Canada should not be an issue for Alliance Grain Traders Inc., according to Canaccord Genuity analyst Keith Carpenter.

Mr. Carpenter says that unlike a similar situation in 2010, a lower than normal average quality crop in 2014 will not harm AGT's earnings prospects. The current quality downgrade should not be as severe as it was in 2010 and global inventories are much tighter in 2014, he explains. In addition, India is in the midst of its third consecutive production-constrained year and exports have been very strong over the past two years.

"As a result, we expect the demand-pull market to continue to benefit AGT's business through our forecast period," he says. "In addition, we expect an imminent announcement on the third line expansion at the Minot food ingredient facility, which we see as a further positive catalyst to the shares of AGT."

Mr. Carpenter maintained his "buy" recommendation and raised his target price to $33 (Canadian) from $29. The analyst consensus price target is $26.96, according to Thomson Reuters.

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Air Canada's introduction of a fee for checked bags will provide a modest bump to the airline's bottom line, says AltaCorp Capital Research analyst Chris Murray.

The company announced on Thursday morning the introduction of first bag fees on certain fares for travel within Canada and to and from the Caribbean and Mexico, charging customers purchasing the company's lowest Economy Class Tango fare a $25 fee for a first checked bag. Rival WestJet introduced a similar measure just days earlier.

"The company estimates that the change will affect about 20 per cent of Air Canada passengers on domestic flights within Canada, representing approximately 5 per cent of the airline's customers system-wide," says Mr. Murray.  "We estimate based on the ratios provided and our estimate for 40.7 million passengers in 2015 that the fee adds approximately $50-million to our EBITDAR estimates or $0.17 per share."

Mr. Murray maintains his "outperform" rating and $14 (Canadian) target price. The analyst consensus price target is $12.24, according to Thomson Reuters.

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Labrador Iron Ore Royalty Corp.'s dividend is safe and is expected to grow, according to Desjardins Securities analyst Jackie Przybylowski.

The company declared a 50 cents (Canadian) per share dividend on Wednesday, and while the distribution was higher than her estimates, Ms. Przybylowski expects the company to continue to build a cash balance "which helps to ensure a safe, stable dividend even in a prolonged period of depressed iron ore spot prices," she says. She expects dividends will rise as production volumes increase and capital spending falls.

Ms. Przybylowski maintains her $36 (Canadian) target price and "buy–average risk" rating. The analyst consensus price target is $34.11, according to Thomson Reuters.

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In other analyst actions:

RBC Dominion Securities cut its price target on Oncolytics Biotech to $3 (Canadian) from $5 and maintained an "outperform" rating.

Merrill Lynch upgraded Arcelor Mittal to "buy" from "neutral" with a price target of $17.55 (U.S.).