Monday'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.

Rogers Communications Inc.'s stock has been driven down this year by overblown concerns over regulatory risks and operational issues, Canaccord Genuity analyst Dvai Ghose said.

Concerns over possible regulatory changes to wholesale roaming rates mandated by the Canadian Radio-television and Telecommunications Commission have negatively affected shares in the Big Three cellphone carriers this year.

"We believe that wireless regulatory risk has been greatly overblown by the market," Mr. Ghose said. "In our view, the CRTC has to ensure that roaming rates are not artificially low and thereby disincentivize incumbents and new entrants from investing."

Meanwhile, Rogers shares have underperformed all of its peers so far this year as a result of disappointing wireless and cable results.

Mr. Ghose said he believes that pressure on Rogers' average revenue per user is easing.

"Rogers is no longer pursuing aggressive wireless promotions to make up for its poor service and high churn," he said. "New management has also acknowledged that poor customer service is a significant issue and we expect gradual improvements in churn and service."

Mr. Ghose said he sees Rogers stock as oversold and improved his rating to "buy" from "hold" as a result of the selloff, while maintaining a $46 (Canadian) price target.

National Bank financial also upgraded Rogers today to an "outperform" rating from "sector perform," while raising its price target to $46 from $44.50.

The analyst consensus price target for Rogers Communications over the next year is $44.60, according to Thomson Reuters data.

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Amaya Gaming Group Inc. should experience higher earnings over the next year following its acquisition of the world's largest online poker company, Industrial Alliance analyst Neil Linsdell said.

In August, Amaya completed a $4.9-billion (U.S.) deal to acquire the Oldford Group, parent company of PokerStars and Full Tilt Poker online sites.

Mr. Linsdell rolled forward his valuation of Amaya to forecasted 2016 earnings, upgrading the stock to "buy" from "hold," and raising his target price to $31 (Canadian) from $26.

The new valuation represents a premium to Amaya's peers, "which we feel is justified by PokerStars' industry leading position, leading profitability, and its opportunities in the newly expanding U.S. market, the opportunities to leverage the brands into other online gaming segments, and Amaya's other growing business segments," Mr. Linsdell said.

The analyst consensus price target for Amaya Gaming Group over the next year is $30.91.

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Canexus Corp. is trading substantially below its fair value estimate, even amid headwinds in the energy sector, CIBC World Markets analyst Jacob Bout said.

Although the recent decline in energy prices has reduced the price Canexus is likely to fetch for its North American Terminal Operations (NATO) facility northeast of Edmonton, proceeds from the sale of NATO, if used to pay down debt, could still result in a healthy return for shareholders.

"Canexus has engaged financial advisors to help with the sale process of its NATO facility and the company still believes that a deal should be announced by year-end," Mr. Bout noted.

He upgraded Canexus stock to "sector outperformer" from "sector performer" and left his price target unchanged at $5.25 (Canadian). The analyst consensus price target for Canexus over the next year is $4.96.

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Solid investment gains, declining bond yields and a quiet hurricane season should make for good third-quarter results for Fairfax Financial Holdings Ltd., says CIBC World Markets analyst Paul Holden.

Fairfax is scheduled to release its third-quarter 2014 results after market close on Oct. 30.

Mr. Holden estimates investment gains of $360-million, implying a return of 4.6 per cent on beginning book value of equity per share on a pre-tax basis. "The bulk of the gains should come from the equity portfolio, net of hedging, ($300-million) as the Russell 2000 declined more than Fairfax's individual holdings," he says "Fairfax's fixed income portfolio should generate positive investment gains ($74MM) attributable to a modest decline in U.S. Treasury yields (down about 5 basis points quarter/quarter)."

He also assumes catastrophe losses will be below average as it was the quietest hurricane season in more than 30 years and there were no notable insurance events around the globe.

Mr. Holden maintains his "sector underperformer" rating and is boosting his price target to $450 from $425. The analyst consensus price target is $478.22.

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A positive outlook and recent share price weakness have resulted in an upgrade for Align Technology Inc. from Credit Suisse analyst Glen Santangelo.

Mr. Santangelo explains that after significant outperformance in 2013, shares of Align have lagged the broader market year-to-date, losing roughly 20 per cent versus the S&P 500, which is up around 3 per cent.

He also says that despite market skepticism about the sustainability of Align's revenue growth (15- to 25 per cent over the past 4-plus years), he sees nothing to suggest that growth is about to decrease.

"We would also highlight management has built an increasingly solid execution track record over the last several years, beating quarterly earnings by an average of 18 per cent over that timeframe," he says.

Mr. Santangelo is upgrading Align to "outperform" from "neutral" and maintains his $58 (U.S.) target price. The analyst consensus price target for is $65.30.

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In other analyst actions:

Goldman Sachs upgraded Intrawest Resorts to "buy" from "neutral" with a price target of $11.50 (U.S.).

Jennings Capital upgraded Timmins Gold to "buy" from "sell" with a price target of $1.75 (Canadian).

CIBC World Markets raised its price target on Intact Financial to $84 (Canadian) from $76 and maintained a "sector outperformer" rating.

Euro Pacific Canada upgraded Theratechnologies to "speculative buy" from "hold" and raised its price target to $1 (Canadian) from 55 cents.

Sandler O'Neill upgraded American Express to "buy" from "hold" with a price target of $92 (U.S.).

Deutsche Bank downgraded Mead Johnson Nutrition to "hold" from "buy" with a price target of $103 (U.S.).

JPMorgan downgraded Stillwater Mining to "neutral" from "overweight" with a price target of $20 (U.S.).

Credit Suisse upgraded Allison Transmission to "outperform" from "neutral" with a price target of $35 (U.S.).

With files from Bloomberg