Tuesday's analyst upgrades and downgrades

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

Citing expectations for a stronger 2016 than previously expected, Desjardins Securities analysts Michael Parkin and John Sclodnick upgraded New Gold Inc. (NGD-T; NGD-N) to "hold" from "sell" and raised their target to $4.50 from $3.20.

"After following up with management on a number of items on the 4Q15 earnings results and investor day, we feel far more comfortable with New Gold's financial position and its ability to fully fund the development of the Rainy River project," the analysts said in a report.

Overall, New Gold offers "very good EBITDA growth over the medium term," they added.

At the company's most recent investor day, management provided details about the Cerro San Pedro mine that point to a "better financial outlook for the company," said the analysts.

The analyst consensus price target over the next year is $4.92, according to Thomson Reuters data.

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CIBC analyst Ben McEwen downgraded Endeavour Silver Corp. (EDR-T) from "sector performer" to "sector underperformer" and reduced his price target from $2.45 to $1.50.

The Mexican silver producer has three operating mines: Guanacevi, Bolanitos, and El Cubo. The company plans to put El Cubo on care and maintenance by the fourth quarter of 2016, and suspend exploration and mine development at current metals prices at Bolanitos.

Production in 2016 is expected to decrease by 23 per cent year over year, Mr. McEwen said, with an additional 35-per-cent decrease Y/Y in 2017.

"Given $22-million loan repayments over the next two years, we calculate average negative FCF over that period (before considering the potential of a Mexican VAT receivable)," the analyst said in a report. Cash and equivalents of $22.8-million are "insufficient to internally fund any potential development of the Terronera project, which is an important part of EDR's future."

The analyst consensus price target over the next year is $2.33.

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More write-downs have spoiled solid fourth-quarter results at Primero Mining Corp. (P-T), says CIBC analyst Jeff Killeen, who downgraded to company to "sector performer" from "sector outperformer."

The Canadian-based mining company is focused on continued optimization at San Dimas in Mexico and resource expansion at Black Fox in Canada.

Mr. Killeen reduced his price target to $4 from $4.75, citing a legal claim filed by Mexican tax authorities.

"Primero indicated that protracted court proceedings are possible and a resolution could be two-plus years away. That said, we think P shares have found a base valuation post-announcement of the tax review and that they will perform in line with peers until a resolution is achieved."

The analyst consensus price target for Primero Mining over the next year is $3.92.

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Canaccord Genuity initiated coverage of Richmont Mines Inc. (RIC-T) with a "buy" rating and target price of $8.50.

Analyst Rahul Paul said the recommendation was based on attractive annual production and free cash flow growth.

Richmont's flagship asset is the Island Gold underground mine. "Relative to 2015, we forecast 106-per-cent production growth at Island Gold to 113 koz by 2020, with all-in-sustaining costs (AISC) declining 48 per cent to $636/oz (U.S.)," Mr. Paul said.

Mr. Paul also cited growth driven by higher grades at depth and upside from potential resource expansion as reasons for the buy rating. He said Richmont is a low-cost producer with low financing, low technical risk and a strong balance sheet.

"Under the leadership of CEO Renaud Adams (ex. Primero, IAMGOLD), we believe the management team has the technical and capital markets expertise to advance Island Gold. Management track record has been excellent so far, evidenced by guidance beats in 2014 and 2015," Mr. Paul said.

The analyst consensus price target over the next year is $7.16.

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The scale and success of Home Depot Canada, in combination with the high level of industry competition, is likely to lead the Competition Bureau to require minimal store divestitures by the combined Lowe's Canada–Rona Inc. (RON-T), commented Desjardins Securities analyst Keith Howlett.

In its quarterly conference call today, Home Depot's CEO stated that revenue in Canada exceeds $7-billion (Canadian) annually. "This makes Home Depot Canada the clear market leader and about 25 per cent larger than the proposed combination of Lowe's Canada and RONA," Mr. Howlett said in a research note.

Meanwhile, Mr. Howlett continues to believe that the combination of Lowe's Canada and Rona will result in a stronger competitor to Home Depot Canada. Rona shareholders will vote on the transaction on March 31. Competition Bureau and Investment Canada clearances are still required. The transaction is expected to close in the second quarter of this year.

He reiterated a "hold" rating on Rona shares, with a price target of $24 (Canadian).

The analyst consensus price target for Rona over the next year is $22.67.

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In other analyst actions:

Dean Foods Co (DF-N) was downgraded to "Hold" from "Buy" at BB&T Capital by equity analyst Brett Hundley.

Fitbit Inc (FIT-N) was downgraded to "Market Perform" from "Outperform" at Leerink Partners by equity analyst Steven Wardell. The 12-month target price is $18.00 per share. it was also downgraded to "Neutral" from "Outperform" at Robert Baird by equity analyst William Power. The 12-month target price is $16.00 per share.

ArcelorMittal (MT-N) was downgraded to "Market Perform" from "Outperform" at Cowen by equity analyst Anthony Rizzuto. The target price is $4.00 per share.

SolarCity Corp (SCTY-Q) was downgraded to "Neutral" from "Overweight" at JPMorgan by equity analyst Paul Coster. The 12-month target price is $29.00 per share.

Twitter Inc (TWTR-Q) was raised to "Outperform" from "Market Perform" at Raymond James by equity analyst Aaron Kessler. The 12-month target price is $25.00 per share.

United States Steel Corp (X-N) was downgraded to "Market Perform" from "Outperform" at Cowen by equity analyst Anthony Rizzuto. The target price is $8.00 per share.

With files from Bloomberg