Hotel Saskatchewan is back in Canadian hands after Winnipeg-based Temple Hotels purchased the Regina landmark last month for for $32.8-million (U.S.) from the U.S.-based chain Radisson Hotels Corp.
Inside the Market's roundup of some of today's key analyst actions. This file will be updated often during the trading day so check back for new details.
Canaccord Genuity says now is the time to buy healthcare REITs. "With interest rate fears driving the sector down 21 per cent from its January peak, fundamental drivers remain strong and we see healthcare REIT valuations at their best entry point in 18 months."
Canaccord is recommending a "Buy" on Health Care REIT (HCN-N), with a price target of $79 (U.S.); New Senior Investment Group (SNR-N), with target of $18; CareTrust REIT (CTRE-Q), with target of $15; Physicians Realty Trust (DOC-N) with target of $18; and LTC Properties (LTC-N) with target of $47. All figures U.S.
"A relationship-driven investment platform and sharp focus on asset quality are establishing HCN as a blue-chip large-cap REIT. Among small caps, new market-entrant SNR also offers strong core growth from its private-pay, managed senior housing portfolio. We see the SNR's near-term earnings power as capable of producing a $1.19 dividend, equating to a compelling 9 per cent yield."
"Our bias favours sharpshooter REITs that demonstrate well-articulated investment niches and competitive advantages in execution: (1) CareTrust spun out of leading SNF operator Ensign Group in 2014 and the company is positioned to execute a senior-care growth strategy off a rock-solid initial lease platform; (2) Physicians Realty is sourcing medical office investments via referrals by physician networks that are expanding in a post-reform landscape; and (3) LTC's memory care development program addresses an underserved Alzheimer's population that due to aging trends is projected to grow 40 per cent by 2015, according to the Alzheimer's Association.
"Our proprietary REITs versus rates analysis suggests that downside risk from a shift in Fed policy is largely priced into healthcare REITs, which are down 21 per cent from their 2015 peak. Additionally, with RIDEA managed structures, healthcare revenues are more pro-cyclical than last cycle, with greater core growth and value-creation upside potential. REITs focused on such higher-growth investments (e.g., HCN & SNR) are most likely to find partial shelter from the REITs versus rates debate, in our view."
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Canaccord Genuity is lowering its hardware unit, revenue and technology licensing sales estimates on BlackBerry Ltd., citing "soft" BlackBerry smartphone sales. It maintains a price target on the stock of $8 (U.S.), with a "hold" rating.
"On June 23, BlackBerry lowered its FY2016 total software-related sales expectations from $600M to ~$500M due to lower BBM expectations, and the $500M target includes licensing revenue. Further, management anticipates the core EMM business should grow 20-25% YY versus FY'15 and expects gradually increasing contributions from the introduced value-added services (VAS) through the year. Given these trends, we believe the company would need to close substantial additional technology licensing deals through F2016 to meet its lowered target. However, we believe this is the first time BlackBerry is pursuing such broad cross licensing deals. Given the lack of visibility for the cadence of these first time deals and whether these deals would have a recurring revenue component, we remain cautious on the long-term sustainability of this new licensing revenue stream and lower our F2016 technology licensing revenue estimates from $154M to $129M."
"Further, we believe the continued steep decline in high margin services business and ongoing tepid hardware sales will remain a headwind to meaningful and sustained profitability during F16/F17," it said.
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After reporting "slightly better than expected" first quarter results, Credit Suisse is increasing its price target for The Container Store (TCS-N).
"Specifically, the TCS Closet initiative contributed to a healthy lift in comps in the first seven stores. While its early days, there are reasons to believe the metrics and comp benefits could ramp significantly in 2H and into 2016, potentially supporting a return to low single digit comp growth, as well as SG&A leverage as the company moves past this investment period," said Credit Suisse.
As a result, Credit Suisse boosted its 2015 EPS estimate to 35 cents (U.S.) per share, and increased its price target to $20 from $18.
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Taseko Mines Ltd. (TKO-T; TGB-A) reported strong production and sales results for the second quarter that were also better than Desjardins Capital Markets' estimates.
"We expect continued strong production, sales and cost result through 2015 as the improvements achieved are expected to continue to benefit operations. We maintain our Buy–Above-average Risk rating; Taseko continues to be our preferred small- to mid-cap producer based on our expectation for continued production improvement in the near term," analyst Jackie Przybylowski said.
The analyst maintained its rating but increased its one-year price target to $1.90 per share, up from $1.75.
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Silver Wheaton Corp.'s (SLW-T;SLW-N) tax troubles have been factored into its stock price, said BMO Nesbitt Burns. Silver Wheaton announced Tuesday that it had received a notice from the Canada Revenue Agency that a reassessment of income earned from foreign subsidiaries in the period 2005 to 2010 means that its taxable income has been increased by $715-million. Silver Wheaton estimate its potential tax liability -- although it plans to fight the tax ruling -- is $150-million (U.S.).
While this announcement gives some "clarity on the potential impact to SLW. Offsetting this clarity, the CRA reassessment has implications for income earned subsequent to 2010 that we estimate to be around $440-million (U.S.) for the 2011-2014 period," analyst Andrew Kaip said.
Silver Wheaton's shares fell 11 per cent on the news and "now trades in line with the silver producers despite providing exposure to superior growth and higher operating margins."
BMO continues to rate the stock as "Outperform" but reduced its target price to $20 (U.S.), down from $25.
In other analyst actions:
Temple Hotels Inc. (TPH-T) was downgraded to "Market Perform" from "Buy" at Cormark Securities. The 12-month target price is $2.40 (Canadian) per share.
DataWind Inc. (DW-T) was raised to "Outperform" from "Sector Perform" at National Bank by equity analyst Auritro Kundu. The 12-month target price is $4 (Canadian) per share.
Jean Coutu Group PJC Inc. (PJC.A-T) was downgraded to "Reduce" from "Hold" at TD Securities. The 12-month target price is $20 (Canadian) per share.
Tidewater Midstream and Infrastructure Ltd. (TWM-X) was rated new "Buy" at Paradigm Capital. The 12-month target price is $2.45 (Canadian) per share.