Inside the Market's roundup of some of today's key analyst actions. This file will be updated during the trading day.
WestJet Airlines Ltd.'s recent decline in share price does not reflect the company's solid growth prospects over the next three to five years, RBC Dominion Securities analyst Walter Spracklin said.
Since mid-September, WestJet's stock has dropped by 18 per cent as airline valuation multiples have declined.
"With a solid balance sheet and a management team we view as among the best operators in the airline industry, we continue to believe WestJet is set to deliver profitable growth in the coming years through new growth initiatives," Mr. Spracklin said.
At WestJet's current valuation, he estimates a 30-per-cent return over the next year.
Outlook: Mr. Spracklin upgraded the stock to "outperform" from "sector perform" and maintained a price target of $35 (Canadian). The analyst consensus price target over the next year is $36.69, according to Bloomberg data.
Shares of BRP Inc. are "attractively valued," said Canaccord Genuity analyst Derek Dley, who expects "a healthy rebound" in earnings growth during the second half of the 2015 fiscal year.
"We believe the company is poised for market share gains over the medium/long term, as new products are introduced and the company extends its product lines into additional powersport categories," Mr. Dley wrote in a research note titled "DOO-ing the right things."
The number of U.S. dealers that carry BRP products is growing, which provides a "significant" revenue opportunity, while its margins are likely to swell due to its revamped manufacturing network, he said. "We believe BRP should warrant a premium valuation to its peers, given its strong potential for market share gains and healthy new product pipeline."
Outlook: Mr. Dley rates the stock "buy," with a $33 price target. The analyst consensus price target over the next year is $26, according to Thomson Reuters data.
Teck Resources Ltd. will be negatively affected by China's decision last week to impose a tariff on imported coal, said Credit Suisse analyst Ralph Profiti.
Tech's 2015 earnings before interest, taxes, depreciation and amortization would be affected by about $30-million and its earnings per share by 2 cents, he wrote in a research note. "In our view, the tariff may not fully address oversupply and slowing demand growth in China's coal market, with future risks to tariffs rates to the upside."
"We suspect that poor sentiment in the space with respect to prices and demand will continue to weigh on the shares until coal prices recover – a thesis that has yet to work in our favor," he added.
Outlook: Mr. Profiti rates the stock "outperform" and lowered his target price to $27.50 from $28.50. The analyst consensus price target over the next year is $27.32, according to Thomson Reuters data.
First Quantum Minerals Ltd. faces "a heightened level of risk" from a possible decline in copper prices following Zambia's decision on Friday to raise royalties for open pit copper mines to 20 per cent from 6 per cent, said Raymond James analyst Alex Terentiew.
The government also decided to eliminate the 30 per cent corporate tax and the up to 13 per cent variable income tax, which could be "slightly near-term cash-flow positive," he wrote in a research note. "As this royalty is more punitive for lower margin producers, we expect there will be opposition to its implementation and for the royalty to be modified prior to its implementation in 2015," he said.
Outlook: Mr. Terentiew rates First Quantum "outperform" and has a $28 price target on the stock. The analyst consensus price target over the next year is $25.15, according to Thomson Reuters data.
SNC Lavalin Group Inc. 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," said Desjardins Securities analyst Benoit Poirier.
"Ultimately, we believe that SNC continues to offer exposure to three game changers," he wrote in a research note, citing a seasoned management team with a successful track record in project execution and organic growth; "transformative growth" from its Kentz purchase and future mergers and acquisitions; and "a massive, multi-year opportunity tied to CANDU refurbishment and new-build."
Outlook: Mr. Poirier rates the stock "buy" and has a $67 price target. The analyst consensus price target over the next year is $63.02, according to Thomson Reuters data.
In other analyst actions today:
- Midway Gold Corp. was downgraded to "market Perform" from "speculative Buy" at Cormark Securities by equity analyst Kyle Mcphee. The 12- month target price is $1.20 per share.
- Taseko Mines Ltd. was downgraded to "hold" from "buy" at TD Securities by equity analyst Craig Hutchison. The 12-month target price is $2.50 per share.
- WestJet Airlines Ltd. was raised to "outperform" from "sector perform" at RBC Capital by equity analyst Walter Spracklin. The 12-month target price is $35.00 per share.
- Google Inc. was raised to "buy" from "hold" at Hudson Square by equity analyst Daniel Ernst. The 12-month target price is $700.00 (U.S.) per share.
- Juniper Networks Inc. was downgraded to "hold" from "buy" at Argus by equity analyst James Kelleher. The 12-month target price is $33.00 per share.
- Yahoo! Inc. was raised to "buy" from "hold" at BGC Partners by equity analyst Colin Gillis. The 12-month target price is $50.00 per share.
- Astoria Financial Corp. was raised to "buy" from "neutral" at Guggenheim Securities by equity analyst David Darst. The 12-month target price is $14.50 per share.- Cigna Corp. was downgraded to "neutral" from "buy" at Sterne Agee & Leach by equity analyst Brian Wright. The 12-month target price is $110.00 per share.
- Costco Wholesale Corp. was downgraded to "underperform" from "outperform" at Williams Capital by equity analyst Marc Riddick. The 12-month target price is $131.00 per share.
- Graco Inc. (GGG US) was rated new "buy" at Wunderlich by equity analyst Liam Burke. The 12-month target price is $80.00 per share.
- Home Depot Inc. was downgraded to "neutral" from "buy" at SunTrust Robinson by equity analyst Keith Hughes. The 12-month target price is $95.00 per share.
- Lowe's Cos Inc. was downgraded to "neutral" from "buy" at SunTrust Robinson by equity analyst Keith Hughes. The 12-month target price is $55.00 per share.
- Orbitz Worldwide Inc. was raised to "outperform" from "market perform" at FBR Capital Markets by equity analyst Jake Fuller. The 12-month target price is $9.00 per share.
- VimpelCom Ltd. was raised to "buy" from "hold" at Renaissance Capital by equity analyst Alexander Kazbegi. The target price is $7.70 per share.
- With files from Bloomberg