Inside the Market's roundup of some of today's key analyst actions. This file will be updated during the trading day.
Algonquin Power & Utilities Corp.'s agreement to acquire water utilities in California and Montana should add to earnings as well as free cash flow, said Desjardins Securities analyst Bill Cabel.
"The assets provide a good strategic fit, leveraging existing operations, and offer organic investment opportunities and accretive cash flows," he wrote in a research note. Algonquin will probably need to raise $150-million through an equity offering by mid-2015, he said.
"This acquisition adds to the existing growth opportunities, augmenting a tangible path to continued dividend increases and enhances Algonquin's strong total return value proposition. We continue to view Algonquin as the best opportunity for outsized cash flow growth in the sector at a reasonable valuation."
Target: Mr. Cabel raised his target price to $10.25 from $10 and rates the stock "top pick."
Rising volumes are bolstering North American activity for Trican Well Service Ltd., with its U.S. fleet operating at about 70 per cent utilization and its domestic fracking fleet fully utilized, said Canaccord Genuity analyst John Bereznicki.
"While cognizant of recent commodity price headwinds, the company retains solid visibility through year-end in Canada and positive momentum in several of its U.S. markets," he wrote in a research note. "The company enjoys positive pricing tension in select markets, although sand logistics cost inflation remains a challenge."
"Despite recent commodity price weakness, we believe Trican will continue to enjoy improving fundamentals through our forecast horizon based on our commodity price outlook."
Target: Mr. Bereznicki rates the stock "buy" and has a $20 price target.
A tour of Barrick Gold Corp.'s key Nevada operations has reaffirmed Raymond James Ltd. analyst Phil Russo's take on the struggling mining giant.
Mr. Russo toured Goldrush, Barrick's most significant recent discovery in the Nevada region, which confirmed his opinion that Barrick's core operations are "top-tier mines" supported by an advancing project pipeline.
"However, technical risk is poised to grow at Goldstrike [another Nevada-based project] during 2015 as the mine introduces a yet unproven process at this scale into its gold recovery circuit, while Goldrush faces a prolonged development period, ultimately placing greater weight on Cortez to continue its strong results unimpeded," says Mr. Russo. "Combined with a heightened concern regarding Barrick's corporate outlook and strategy, we maintain our neutral outlook on the name."
Target: He maintains his "market perform" rating and $19.50 (U.S.) target price. The analyst consensus price target is $20.58, according to Thomson Reuters.
TransCanada Corp. is facing a growing activist investor element, but is unlikely to take drastic action to appease them, says CIBC World Markets analyst Paul Lechem.
Mr. Lechem explains that TransCanada stock jumped approximately14 per cent in the past few weeks, mainly due to activist shareholders building positions in the stock "with a view to value creation opportunities." He says the options being considered by activists include the potential break-up of the company into its pipeline and energy components; a substantial drop-down of assets to its subsidiary TCP Pipelines; and/or more significant dividend increases.
"While management has confirmed an intent to continue dropping-down U.S. gas pipeline assets into its U.S. master limited partnership TC Pipelines (TCP) "over the coming years", this falls far short of more aggressive actions which the company could take," he says. "We do not believe that activist shareholders at present have sufficient support to force through more substantive measures."
"Unless the activist group gains sizable support, we believe the company will select more modest value-creation goals, including dropping down US gas pipelines to TCP and slightly higher dividend increases."
Target: Mr. Lechem maintains his "sector performer" rating and is raising his price target to $63 (Canadian) from $54. The analyst consensus price target is $57.09, according to Thomson Reuters.
A delay at one of Capstone Mining Corp.'s projects will likely be offset by technical support in the price of copper, says Jennings Capital Inc. analyst Peter Campbell.
Capstone announced on Monday morning that it had received an amended "quartz mining licence" related to its Minto North deposit. However, the company lacks a water use license amendment, which is required before work can begin.
"Importantly, the company says that production guidance at Minto for 2014 is unchanged, and production in 2015 is not expected to be materially different than 2014," says Mr. Campbell.
He adds that copper has recently been trading within a range of approximately $3.11 to $3.18/lb, and closer to the lower end as of late. However, he believes there to be good technical support for copper at $3.10/lb.
Target: Mr. Campbell maintains his "buy" rating and $3.85 (Canadian) target price. The analyst consensus price target is $3.52, according to Thomson Reuters.
In other analyst actions:
Alibaba Group Holding Ltd. (BABA US) was rated new "buy" at MKM Partners by equity analyst Rob Sanderson. The 12-month target price is $125.00 (U.S.) per share.Enerplus Corp. was raised to "outperform" from "sector perform" at RBC Capital by equity analyst Greg Pardy. The 12-month target price is $28.00 (Canadian) per share.
Gildan Activewear Inc. was raised to "strong buy" from "buy" at Industrial Alliance by equity analyst Neil Linsdell. The 12-month target price is $76.00 per share.
Mapan Energy Ltd. was rated new "buy" at Clarus Securities by equity analyst Robert Pare. The 12-month target price is $3.25 per share.
- With files from Bloomberg