Inside the Market's roundup of some of today's key analyst actions. This file will be updated during the trading day.
TD Securities analyst Greg Barnes upgraded Potash Corp. of Saskatchewan Inc. to "buy" from "hold," believing that the outlook for the fertilizer is better than what is being reflected in the company's stock price.
"We believe that after the pullback in the company's share price over the past three months, it is reflecting weaker crop prices and bumper harvests in North America," Mr. Barnes was quoted as saying by StreetInsider.com. "Our model suggests that the stock is discounting a flat global potash market for 2015 (at about 58 million tonnes), a decline in the Midwest West price to an average of $375/st (versus the current price of about $410-415/st) and a lower forward EBITDA multiple of 9x."
"These assumptions run counter to what appears to be happening, at least into H1/15 – global potash prices are climbing higher (albeit slowly), there is a growing consensus that 2015 global demand should be about 60 million tonnes, and we note that POT's average forward EBITDA multiple over the past 15 years is 10.1x," Mr. Barnes said.
He adds that while increased potash supply next year could dampen prices, that impact would be mostly felt in the second half of the year. In the meantime, the company is expanding its production capacity to take advantage of any future spikes in demand.
His price target is $38 (U.S.).
CIBC World Markets has reduced its forecasted activity levels for both conventional oil and oil sands, resulting in a downgrade of Ensign Energy Services Inc.
"Ensign has a well-earned reputation of being one of the most conservatively managed oilfield services companies in Canada which has been able to deliver leading financial returns, consistent dividend growth and steady expansion throughout industry cycles," CIBC analyst Jon Morrison said.
"Although we view as an attractive potential return, given that it is in line with our sector performer-rated names, but at a discount to our sector outperformer-rated, we believe it is pragmatic to downgrade the stock."
He reduced his rating on Ensign to "sector performer" from "sector outperformer" and cut his target price to $18 (Canadian) from $21.50.
AutoCanada Inc.'s shares have been sold off at twice the rate of its U.S. peers, even though the Canadian dealership group is growing almost three times faster, RBC Dominion Securities analyst Steve Arthur said.
Since June, AutoCanada's has declined by 36 per cent, far exceeding the losses experienced by U.S. names.
"We see no fundamental reason for the decline – Canadian auto sales are strong, operating performance is solid, and the robust acquisition pace continues," Mr. Arthur said.
The analyst did reduce his forecasted earnings for AutoCanada as result of acquisition timing and the reduction in operating improvement associated with acquiring larger, more profitable dealerships. As a result, his price target on AutoCanada's stock declined to $84 (Canadian) from $92. But he maintained an "outperform" rating, citing a "compelling risk/reward after the recent share price decline."
Several analysts cut their price targets on Amazon.com Inc.'s stock after the company posted its biggest quarterly loss in several years on Thursday.
The online retailer reported a $437-million (U.S.) loss for the third quarter, amounting to 95 cents per diluted share, which was substantially worse than the 75-cent loss expected by analysts, according to Bloomberg data.
Among the "negatives" for the company's quarter were weak revenue growth in Amazon's media division, and the probability of sub-20-per-cent revenue growth in the fourth quarter, RBC Dominion Securities analyst Mark Mahaney said.
Some of the resulting price target cuts were: Credit Suisse to $395 (U.S.) from $422, UBS to $315 from $360, J.P. Morgan to $307 from $340, Cantor Fitzgerald to $365 from $400, and Goldman Sachs to $360 from $400.
The consensus target now sits at $359.39, according to Bloomberg.
Mr. Mahaney also reduced his target on Amazon to $420 from $435, but maintained an "outperform" rating.
He cited Amazon's "proven profitability in the past," and the "elective/offensive" nature of the company's expense growth.
"We'll be patient," he said. "We highly doubt that all these investments won't pay off in the form of eventual revenue growth reacceleration and eventual margin expansion."
In other analyst actions:
TD Securities upgraded Loblaw to "action list buy" from "buy" with a price target of $68 (Canadian).
TD Securities upgraded Metro to "buy" from "hold" with a price target of $84 (Canadian).
Scotia upgraded Mullen Group to "sector outperform" from "sector perform." But BMO Nesbitt Burns cut its price target to $25 (Canadian) from $33, and reiterated a "market perform" rating, commenting that it sees little growth on the horizon for the company.
Macquarie upgraded Cenovus Energy to "outperform" from "neutral" with a price target of $33.50 (Canadian).
National Bank Financial downgraded Corus Entertainment to "underperform" from "sector perform" with a price target of $20.50 (Canadian).
TD Securities upgraded Dorel Industries to "buy" from "hold" with a price target of $45 (Canadian).
Canaccord Genuity cut its price target on Africa Oil to $7 (Canadian) from $10 and maintained a "speculative buy" rating.
TD Securities upgraded Canexus to "hold" from "reduce" with a price target of $4.50 (Canadian).
Paradigm Capital initiated coverage on Arsenal Energy with a "buy" rating and $13.25 (Canadian) price target.
Cormark Securities initiated coverage on Integra Gold with a "speculative buy" rating and 45 cents (Canadian) price target.
National Bank Financial initiated coverage on Virginia Mines with a "sector perform" rating and $13 (Canadian) price target.
Cowen downgraded Amazon.com to "market perform" from "outperform" and cut its price target to $325 (U.S.) from $390. RBC Dominion Securities cut its price target to $420 from $435 but maintained an "outperform" rating. Citibank lowered its target to $325 (U.S.) from $358 and maintained a "neutral" rating.
BMO Nesbitt Burns initiated coverage on Alibaba Group Holding with an "outperform" rating and $110 (U.S.) price target.
B. Riley downgraded KLA-Tencor to "neutral" from "buy" with a price target of $82 (U.S.). Credit Suisse downgraded the stock to "neutral" from "outperform" but raised its target to $83 from $75.
Citibank upgraded Halliburton to "buy" from "neutral" and raised its price target to $68 (U.S.) from $56.
Citibank upgraded Weatherford International to "buy" from "neutral" and raised its price target to $23 (U.S.) from $18.
With files from Bloomberg