Inside the Market's roundup of some of today's key analyst actions. This file will be updated during the trading day.
Big cuts to Suncor Energy Inc.'s spending plans should not affect the company's production levels this year or next, said CIBC World Markets analyst Arthur Grayfer. But the company's share price forecast continues to fall as a result of the ongoing slide in oil prices, he said.
On Tuesday, Suncor announced it will cut about 1,000 jobs and remove about $1-billion from its 2015 capital budget. "Notwithstanding that the capex cuts affect longer-term growth initiatives, we view the choice as prudent given the deteriorating commodity price environment," Mr. Grayfer said.
He cut his target price on the stock to $45 (Canadian) from $48, while maintaining a "sector outperform" rating and reiterating Suncor as a top pick in the battered sector.
Raymond James also reiterated its view on Suncor as its top choice among Canadian large cap energy names.
"Key to our positive stance on the revised budget is that the 2015 production guidance is unchanged – a contrast to some of the company's peers that have announced original and/or revised budgets which have reduced the near-term growth outlook noticeably," analyst Chris Cox said.
He maintained an "outperform" rating and a $41 target on the stock.
Chorus Aviation Inc. reached an agreement with Air Canada that diminishes Canaccord Genuity's biggest worries about the firm.
Chorus' subsidiary, Jazz Aviation LP, extended its Capacity Purchase Agreement with Air Canada by five years to 2025, a deal which will be finalized once its pilots have ratified a proposed 11-year contract. This agreement will provide for substantial reductions in costs, according to the companies.
"Importantly, CHR indicated it anticipates that the new contract will support the current dividend and ensure the sustainability of the company," said analyst David Tyerman. "This is a much more positive outcome than we had feared."
The stock's dividend yield currently sits north of 9 per cent.
Mr. Tyerman upgraded the stock to "buy" from "sell" and hiked his price target to $5.50 from $3.25.
Corus Entertainment Inc.'s quarterly results failed to reach a bar that had been set quite low, says CIBC.
The company released its first quarter results for fiscal 2015 on Tuesday morning, and a 4.6-per-cent increase to its quarterly payout propelled shares 7 per cent higher.
However, analyst Robert Bek notes that its top and bottom line performance came in short of analysts' expectations, and that the bump to its payout "shouldn't overshadow the persistent structural issues that are clearly hampering fundamental results now."
"We remain skeptical that ad markets will meaningfully turn for the better anytime soon, with the macro-economic backdrop arguably more in-flux now, than in the past (lower oil prices and its effect on Western Canada, declining Canadian dollar, etc.), and structural changes also seemingly accelerating in pace," he added.
Mr. Bek reduced his estimate for earnings per share in 2015 by 6 per cent to $1.88 following the earnings report.
The analyst maintained a "sector performer" rating on the stock and trimmed his price target to $23.50 from $24.50.
Credit Suisse analyst Stephen Ju is bullish on Google Inc. shares, despite recent underperformance.
Google failed to meet Mr. Ju's expectations in 2014 due to a combination of a softer-than-expected top line compounded by higher operational and capital expenditures.
"As we circle back to the reasons why we carried an Outperform investment rating on the stock, we do not believe they are in any way impaired as we look forward to 2015," he says. "We believe Google can grow revenue and earnings at a mid-to-high teens CAGR over the next five years, based on: 1) Core Search: Search advertising is not a mature business and we expect mobile traffic monetization to close the gap with desktop over time. 2) Display: Google is poised to materially grow its share in online display advertising. 3) Mobile: Google is building a comprehensive mobile presence which places it in the center of the mobile Internet ecosystem."
Mr. Ju maintains an "outperform" rating on the stock and is cutting his target price to $700 (U.S.) from $722. The analyst consensus price target is $639.18.
Credit Suisse is downgrading U.S. home builder KB Home to "neutral" from "outperform" with a price target of $16 (U.S.), down from $20, as anaylst Michael Dahl expects slowing in the company's key U.S. markets.
"While [the] valuation is relatively attractive, KBH has outsized exposure to markets negatively exposed to lower oil prices, which will likely translate to order growth headwinds," he said in a note.
Credit Suisse reset its estimates and now expects the company's earnings per share for 2015 to be 80 cents, down from $1.07 on a fully taxed basis, and its 2016 estimate is now 94 cents, down from $1.38. Credit Suisse is also cutting its gross margin estimates to 17.1 per cent for 2015, down from 18.9 per cent, and its 2016 estimate is 17.3 per cent, down from 18.9 per cent.
In other analyst actions
Raymond James raised its rating on Conifex Timber Inc. to "outperform" from "market perform" with a target price of $9 (Canadian).
Raymond James also downgraded Canfor Corp. to "outperform" from "strong buy" with a target price of $35 (Canadian).
Cormark Securities downgraded Temple Hotels Inc. to "market perform" from "buy" with a target price of $3.25 (Canadian) per share.
Macquarie downgraded Allstate Corp. to "underperform" from "neutral" with a target price of $60 (U.S.).
JPMorgan downgraded Altera Corp. to "neutral" from "overweight" with a target price of $38 (U.S.).
Pacific Crest raised Garmin Ltd. to "sector perform" from "underperform."
Jefferies rated Intelsat SA a new "hold" with a targe price of $17.50 (U.S.) per share.
JPMorgan downgraded iRobot Corp. to "underweight" from "neutral" with a target price of $34 (U.S.).
Avondale Partners downgraded JB Hunt Transport Services Inc. to "market perform" from "market outperform" with a target price of $75 (U.S.).
HSBC downgraded JPMorgan Chase & Co. to "underweight" from "neutral" with a target price of $55.50 (U.S.) per share.
Cowen raised Monster Beverage Corp. to "outperform" from "market perform" with a target price of $130 (U.S.) per share.
BMO Capital Markets raised Mosaic Co. to "outperform" from "market perform" with a target price of $51 (U.S.) per share.
Macquarie downgraded Travelers Cos Inc. to "underperform" from "neutral" with a target price of $90 (U.S.) per share.
With files from Bloomberg