MICHAEL BUHOLZER/Reuters
Inside the Market's roundup of some of today's key analyst actions. This file will be updated during the trading day.
Although Mullen Group Ltd.'s future earnings potential has declined, the stock's outsized selloff warrants an upgrade, said Raymond James analyst Andrew Bradford.
On Wednesday, the oilfield services and trucking company released third-quarter earnings which fell short of analyst expectations. "As far as the magnitude of beats or misses go, an 8-per-cent deviation from the consensus figure isn't unusual, though it does force us to lower our expectations for the balance of 2014 and 2015," Mr. Bradford said.
He lowered his target price on the stock to $25 (Canadian) from $27.50. Considering, however, that Mullen's stock has declined by 25 per cent since late August, the analyst raised his rating the stock to "market perform" from "underperform."
The analyst consensus price target for Mullen Group over the next year is $29.58, according to Thomson Reuters data.
=======
RBC Dominion Securities is expecting TransAlta Renewables Inc. to benefit from asset "dropdowns" from its parent company, TransAlta Corp.
"TransAlta has a large portfolio of facilities that could eventually be dropped down to TransAlta Renewables," RBC analyst Nelson Ng said. "We believe the market is sending a clear message to management to provide better visibility on drop-downs."
Mr. Ng said he expects these transactions to occur in 2015, driving dividend growth at TransAlta Renewables.
He upgraded the stock to "outperform" from "sector perform" and raised his target price to $14 (Canadian) from $12. The analyst consensus price target for TransAlta Renewables over the next year is $11.96, according to Thomson Reuters.
=======
Ongoing troubles with Boeing Co.'s 787 Dreamliner program will push the breakeven point further out into the future, Credit Suisse analyst Robert Spingarn said.
The company had been expecting cash breakeven on the 787 by 2014 year end, but "underlying cash costs are still not declining at the pace we had modeled," Mr. Spingarn said.
He downgraded the stock to "neutral" from "outperform," and lowered his target price to $133 (U.S.) from $162.
"We also feel that shares may struggle to find traction until lingering cycle concerns are alleviated, or Boeing can offer a clearer path to the higher free cash flow that we think the bull case requires," Mr. Spingarn said. "Until then, we will move to the sidelines."
The analyst consensus price target for Boeing over the next year is $152.95, according to Thomson Reuters.
=======
Cowen & Co. analyst Charles Neivert downgraded Axiall Corp. to "market perform" from "outperform," believing that a significant improvement in margins at the chemical maker will take longer to achieve as stronger sustained housing fundamentals have failed to materialize.
"Higher costs, combined with limited PVC (polyvinyl chloride) price increases, have resulted in stronger margin compression than we originally anticipated. There was a 3 cents per pound increase for contract ethylene prices for September to 54.5 cents per pound from August due to tight supply and high spot prices. This resulted in higher cash costs for PVC and other building products as Axiall purchases about 2-billion pounds of ethylene per year. Additionally, as we enter the seasonally weak winter months during 4Q14 and 1Q15 it becomes more difficult to see a recovery in PVC prices as there is little momentum going into the season."
Mr. Neivert reduced his price target to $45 (U.S.) from $50. The analyst consensus price target for Axiall over the next year is $43.78, according to Thomson Reuters.
=======
TMX Group Ltd. looks set for a solid third quarter, says CIBC World Markets analyst Paul Holden.
TMX is scheduled to report third-quarter 2014 results on Nov. 6. Mr. Holden says it should be a solid quarter driven by better-than-expected equity financing volumes.
He has increased his EBITDA estimate for the third quarter from $83-million to $89-million and his operating earnings per share estimate from 89 cents to 97 cents. However, he is keeping his estimates for the fourth quarter and 2015 largely unchanged. He is also introducing his 2016 estimates, which imply EBITDA growth of 5 per cent and operating EPS growth of 6 per cent.
Mr. Holden maintains his "sector performer" rating and $60 (Canadian) price target. The analyst consensus price target is $58 (Canadian), according to Thomson Reuters.
=======
In other analyst actions
Raymond James cut its price target on First Majestic Silver to $12.75 (Canadian) from $15.50 and maintained an "outperform" rating.
Desjardins Securities raised its price target on TS03 to $2 (Canadian) from $1.25 prior to it put the stock under review.
Raymond James cut its price target on Sandstorm Gold to $6 (Canadian) from $8 and maintained a "market perform" rating.
Credit Suisse downgraded Mercer International to "neutral" from "outperform" and reiterated a price target of $12 (U.S.).
Jefferies upgraded Alcatel-Lucent to "hold" from "underperform" but cut its price target to $2.53 (U.S.) from $3.
JPMorgan downgraded Owens Corning to "neutral" from "overweight" with a price target of $36 (U.S.).
Barclays initiated coverage on Alibaba Group Holding with an "overweight" rating and $107 (U.S.) price target.
Deutsche Bank upgraded Dow Chemical to "buy" from "hold" with a price target of $58 (U.S.).
Argus upgraded Lockheed Martin to "buy" from "hold" with a price target of $193 (U.S.).
Tim Shufelt