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Pedestrians pass by the Scotiabank location near Yonge and Bloor Streets in Toronto in this file photo.

Inside the Market's roundup of some of today's key analyst actions. This file will be updated during the trading day.

National Bank Financial downgraded Bank of Nova Scotia to "sector perform" from "outperform" after its fiscal fourth-quarter earnings came in below forecasts and pointed to more challenges ahead.

"We find BNS facing unfavourable near-term micro-concerns (about its performance in International Banking) and macro-concerns (about commodity price levels and the risk to Latin America's economies)," commented analyst Peter Routledge. "As compelling as BNS' relative valuation is, we suspect the stock price has more relative, and probably absolute, downside to it over the next several months. We head off to the sidelines for the time-being."

Scotiabank's core cash EPS came in at $1.31, missing the Street consensus of $1.40. While the bank's exposure to faster-growing emerging economies in Latin America and Asia is the fundamental rationale for owning the stock, the bank has not performed up to market expectations in those regions for all of fiscal 2014, he said. "In fact, net income (on a Canadian dollar basis) from the International Banking segment has flat-lined for three years and BNS stated on the quarterly conference call that the segment's earnings in the first half of f2015 will remain as anemic as they were in fiscal 2014."

"Depressed commodity prices have compromised the defensive attributes and growth potential of BNS' highly diversified international platform. Value investors will ultimately come back into BNS when it becomes apparent to them that the greatest valuation threat to Canadian bank valuations does not come from their relative foreign exposures, but rather their exposure to Canadian households," he said.

Mr. Routledge cut his price target to $73 (Canadian) from $78. The average price target is $73.40, according to Bloomberg data.

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Canadian Natural Resources Ltd. will reduce its 2015 capital spending plans by nearly 20 per cent due to the drop-off in crude oil, according to Citigroup, which significantly lowered its outlook on the stock today.

"We now expect Canadian Natural will curtail capital spending on their primary heavy, North Sea and Kirby North oil assets," said analyst Robert S. Morris. "While on the road with the company in November, management stated that $70/barrel (WTI) is the level it would likely look to reduce its $8.6-billion budget by up to C$2 billion."

Citi sees WTI crude oil averaging $72 per barrel next year.

The analyst projects that lower levels of capital spending will weigh on production, revising his forecast for growth to 7.5 per cent from 11 per cent and also slashing his estimate for earnings per share in 2015 by roughly three-quarters to 72 cents.

Mr. Morris downgraded the stock to "neutral" from "buy" and lowered his price target to $36 (U.S.) from $50. The average target is $42.92 (U.S.).

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The swift deterioration of oil prices over the last four months is still being absorbed by the market, and the selloff of energy stocks could continue, ultimately creating good bargains among weakened equities, Desjardins Securities analyst Kristopher Zack said.

"Markets typically overshoot both on the way up and on the way down, as we have learned through past episodes of extreme volatility and rapid shifts in investor sentiment," Mr. Zack said. "We believe that patience will be rewarded with rapidly emerging attractive buying opportunities when the market stabilizes."

In the short term, the oversupplied oil market could extend the losses in commodity prices, and the focus of the market will be on potential production cuts, lower spending and dividend decreases for oil and gas producers.

Reducing production, of course, would help to rebalance markets and support pricing. Desjardins forecasts a 2015 average price of West Texas Intermediate of $70 (U.S.), down from $90 previously.

That magnitude of downward revision has required significant adjustments to earnings forecasts, with Desjardins lowering its target prices on more than two dozen of the oil and gas stocks it covers.

"Based on this analysis, we believe that a number of stocks on our coverage list are currently discounting 2015 oil prices below $70 per barrel, with the notable exception of the large caps," Mr. Zack said. As a result, "there could be some very compelling opportunities for investors with a more constructive view on oil prices, particularly if the selloff continues."

Desjardins upgraded Husky Energy Inc. to "buy" from "sell," and lowered its target price to $29 (Canadian) from $35. Mr. Zack sees potential upside over the next year, with Husky "nearing completion of the Sunrise oil sands project, the second major project in the past year, and given the total return profile."

Among the dividend-paying energy stocks, Mr. Zack upgraded Peyto Exploration & Development Corp. to "buy" from "hold," based on its natural gas focus and minimal exposure to oil prices. He raised his target price on the stock to $40 from $37.50.

While Tourmaline Oil Corp. is also highly leveraged to gas, the company has limited growth prospects at current spending levels, Mr. Zack said. He downgraded the stock to "hold" from "buy" and lowered his target price to $44 from $50.

Meanwhile, high debt levels will likely require both Baytex Energy Corp. and Penn West Petroleum Ltd. to cut their dividends. The analyst downgraded Baytex to "hold" from "buy" and lowered his price target to $25 from $49. Penn West was downgraded to "sell" from "hold" at a target price of $3, down from $7.50.

"We believe that Penn West will need to cut its dividend and potentially its 2015 capex program," Mr. Zack said. "Debt levels are high pending the sale of non-producing assets, and we believe the company will be challenged to transact in the current environment, let alone sell assets at metrics that will appear positive to investors."

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Enbridge Inc.'s hefty increase to its quarterly payout and changes to its corporate structure are positive moves, according to RBC Dominion Securities analyst Robert Kwan.

On Wednesday, the pipeline company announced plans to "drop down" a segment of its Canadian pipelines business into the Enbridge Income Fund and raised its dividend by one-third effective March 2015. Management signalled that it plans to continue boosting its quarterly payout by an average of 14 to 16 per cent per year through 2018.

"Due to the portfolio of mostly liquids pipelines projects under construction, we expect that Enbridge will be able to grow EPS at an over 10 per cent (compound annual growth rate) over the next few years, with some visibility into a similar growth rate in the post-2018 time frame," said the analyst. "Following the asset transfer, Enbridge Income Fund will transform into a high-growth vehicle (10 per cent target dividend growth rate from 2015-2018) with cash flow growth underpinned by contractually secured new pipeline projects (e.g., L3R, Norlite, etc.) instead of previously possessing a very low core growth rate of roughly 1 per cent augmented by drop downs from time to time."

These moves prompted the analyst to raise his estimate for adjusted diluted EPS in 2015 and 2016 by 5 per cent and 10 per cent, respectively.

Mr. Kwan also hiked his price target to $71 (Canadian) from $65 and maintained an "outperform" rating on the stock. The average target is $62.29, according to Bloomberg data.

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In other analyst actions:

M Partners upgraded Golden Queen Mining to "hold" from "sell" and maintained a $1 (Canadian) price target.

FirstEnergy Capital downgraded Bankers Petroleum to "outperform" from "top pick" with a price target of $5.75 (Canadian).

Beacon Securities upgraded Major Drilling Group International to "buy" from "hold" with a price target of $7 (Canadian).

TD Securities cut its price target on Precision Drilling to $11 (Canadian) from $15 and maintained an "action list buy" rating.

Macquarie upgraded National Bank of Canada to "neutral" from "underperform" with a price target of $56 (Canadian).

FirstEnergy Capital downgraded Pacific Rubiales Energy to "underperform" from "market perform" with a price target of $7 (Canadian).

GMP upgraded Yamana Gold to "buy" from "hold" with a price target of $6.40 (Canadian).

RBC Dominion Securities cut its price target on Melcor Developments to $29 (Canadian) from $35 and maintained an "outperform" rating.

Merrill Lynch downgraded Norfolk Southern to "neutral" from "buy" and cut its price target to $111 (U.S.) from $122.

BMO Nesbitt Burns raised its price target on Apple to $123 (U.S.) from $113 and maintained an "outperform" rating.

Nomura Securities downgraded Philip Morris International to "reduce" from "neutral" but raised its price target to $77 (U.S.) from $71.80.

Bernstein downgraded Wells Fargo to "market perform" from "outperform" with an unchanged price target of $56 (U.S.).

Keefe Bruyette upgraded Nasdaq OMX Group to "outperform" from "market perform" with a price target of $55 (U.S.).

With files from Bloomberg

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