Joy Global makes high-productivity mining equipment, such as this gear, for high-volume global producers.Rick Wood
Inside the Market's roundup of some of today's key analyst actions. This file will be updated during the trading day.
The slump in commodity prices and "some of the most challenging end markets in the last decade" will continue to adversely affect Joy Global Inc., according to Raymond James.
Though the mining equipment manufacturer's adjusted profits in the fourth quarter surpassed the consensus estimate by a considerable margin, the company's 2015 guidance was underwhelming, calling for sales volumes and margins to shrink in the first quarter.
Analyst Theoni Pilarinos revised her estimate for full-year earnings per share to $3.30 (U.S.) from $3.70 in light of the company's outlook for the year ahead.
"At the risk of sounding like a broken record, commodity markets continue to be oversupplied, miners are maintaining focus on the bottom line and geopolitical issues add a new challenge to the mix," she said. "We prefer to wait for more concrete signs of end market stability before taking a more constructive view."
The analyst cut her price target to $50 (U.S.) from $60 while maintaining a "market perform" rating on the stock.
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ProMetic Life Sciences Inc.'s new partnership has the firm "firing on all cylinders," says Canaccord Genuity.
On Monday, the company announced that it had entered into a strategic alliance with Generium Pharmaceuticals in which it will give the Russian biotech firm exclusive rights to manufacture and commercialize two biopharmaceuticals in the country and surrounding region in exchange for a mid-single digit royalty on sales and $17-million (U.S.) in licensing and milestone fees.
"Given management's goal of having four to five plasma-derived drugs in late-stage development by the middle of next year, we believe ProMetic remains one of the best opportunities in our Canadian small cap healthcare research universe," said analyst Neil Maruoka. "Generium has commenced building a 600,000 litre plant to serve Russian and Commonwealth of Independent States markets, which will further expand ProMetic's footprint into developing markets."
He upped his price target to $3 (Canadian) from $2.50 and kept a "buy" rating on the stock.
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Northern Blizzard Resources Inc.'s hefty cut to planned capital expenditures for 2015 in order to maintain its dividend is a "prudent" move, according to CIBC.
The heavy oil producer slashed its 2015 capital budget by 40 per cent to $130-million on Monday, citing the large decline in crude oil prices.
The company's ability to keep its dividend and still target per-share production growth of 7 per cent next year "is testament to both its financial flexibility and operational efficiency," said analyst Jeremy Kaliel.
The analyst also highlights that the company has hedged 55 per cent of its production in the first half of 2015 at an average price of $101 (Canadian) per barrel.
Mr. Kaliel lowered his price target to $17 (Canadian) from $19 in recognition of the slower development profile and maintained a "sector outperformer" rating on the stock.
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Deep cuts to expected capital spending in the oil patch have abruptly changed the outlook for energy services stocks, particularly those companies specializing in drilling, pumping and fracking, said Mackie Research analyst Russell Stanley.
"Until last week, the aggregate capex budgets announced by the 20 largest TSX-listed exploration and production (E&P) companies suggested that F2015 capex would be roughly in line with 2014 levels, suggesting another strong year for energy services demand," Mr. Stanley said.
But in response to OPEC refusing to cut production in late November, leading to a new round of energy selling and energy price declines, several Canadian E&P companies have taken a much more conservative approach to the coming year.
Mackie calculates that the companies that made budget announcements in the last month or so, are guiding to a spending decrease in 2015 of about 28 per cent from 2014 levels.
With that change in guidance in mind, Mackie made the following cuts to energy services stocks:
Ceiba Energy Services Inc. to $0.80 (Canadian) from $1.25; CERF Inc. to $3.25 from $5, Enterprise Group Inc. to $0.60 from $1.25; Gemini Corp. to $0.70 from $1.25; Great Prairie Energy Services Inc. to $0.30 from $0.75; and Strad Energy Services Ltd. to $5 from $7.
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Granite Real Estate Investment Trust's acquisition of three properties from Ingram Micro gives it a presence in a key neighbourhood, says Desjardins Capital Markets analyst Michael Markidis.
Granite's $69-million (U.S.) purchase in Plainsfield, Indiana provides exposure to a key distribution market in the U.S., says Mr. Markidis, as the city is located within a day's drive of approximately 50 per cent of the U.S. population and is home to one of FedEx's major hubs.
"Granite is an anomaly in the Canadian REIT space, owing to its significant balance sheet capacity," he says. "Over time, net capital deployment should (1) act as an earnings growth driver, and (2) assist in management's efforts to reduce its Magna exposure and overall portfolio risk."
Mr. Markidis maintains his "buy" rating and $45 (Canadian) target price.
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In other analyst actions
Achillion Pharmaceuticals Inc. was downgraded to "beutral" from "outperform" by Robert Baird analyst Brian Skorney. The 12-month target price is $16.00 (U.S.).
Alliqua Inc. was rated new "buy" by HC Wainwright analyst Swayampakula Ramakanth. The 12-month target price is $10.00 per share.
Avon Products Inc. was downgraded to "underperform" from "market perform" by BMO Capital Markets Constance Maneaty. The 12- month target price is $7.00 per share.
Ms. Maneaty also upgraded Church & Dwight Co Inc. to "outperform" from "market perform". The 12- month target price is $85.00 per share.
Douglas Emmett Inc. was raised to "hold" from "sell" by Stifel analyst John Guinee.
Intra-Cellular Therapies Inc. was rated new "market outperform" by JMP Securities analyst Jason Butler. The 12-month target price is $26.00 per share.
Kimberly-Clark Corp. was raised to "outperform" from "market perform" by BMO Capital Markets analyst Constance Maneaty. The 12- month target price is $125.00 per share.
Red Hat Inc. was rated new "buy" by Cantor Fitzgerald analyst Brian White. The 12-month target price is $81.00 per share.