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Analyst sees big upside as D-Box gets set for its close-up

Two rows of D-Box's robotic theatre seats.

D-Box Technologies Inc. may soon have a starring role in bringing new cutting-edge technology to a theatre near you - and at least one analyst sees some entertaining days ahead for shareholders.

D-Box owns the patented D-Box Motion Code, a software and robotics package that encodes digital signals into movies, television programs or video games. It then synchronizes the onscreen action with a motion-generating unit integrated within a platform or seat.

Dozens of cinemas have already signed on, and the company hopes to be present in 1,000 of the approximately 150,000 theatres in the world within five years.

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Avavinda Galappatthige, analyst with Canaccord Genuity, noted today that D-Box is making rapid progress both in terms of securing content for films and building its distribution by contracting with new exhibitors. Cineplex Entertainment recently signed an agreement to add about 250 D-Box seats in 10 theatres across Canada, with an options for an additional 10 locations.

"D-Box has the potential to be the next major premium product available in commercial theatres, following on from the recent growth in 3-D, IMAX and the exhibitor-branded premium screens," such as XD, RX and ETX, Mr. Galappatthige said in a note to clients.

The company is also pursuing deals to use its technology in flight simulators.

Upside: Mr. Galappatthige initiated coverage with a "speculative buy" rating and $1.00 target price, implying a 79 per cent upside from the current share price.

Chartwell Seniors Housing REIT is set to outperform its peers thanks to unusually strong prospects for occupancy-driven net operating income growth, an attractive and secure 6.4 per cent yield, a discounted valuation, and significant progress that's been made in resolving joint venture difficulties, said CIBC World Markets Inc. analyst Alex Avery.

Upside: Mr. Avery upgraded his rating to "sector outperformer" from "sector performer" and hiked his price target by 75 cents to $9.75.

Imperial Oil Ltd. is likely to allocate at least $1-billion more annually towards capital expenditures over the next two years, mostly because of rising costs at its Kearl oil sands project in Alberta, said CIBC World Markets Inc. analyst Andrew Potter. Mr. Potter estimates Imperial will outspend cash flow by $1.5 billion a year, with net debt reaching greater than $4-billion by 2012. "Surprisingly high capex intensity and higher levels of execution risk should weigh on the stock in 2011," Mr. Potter said.

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Downside: Mr. Potter cut his target price by $1 to $42 a share.

Foraco International SA, a contract drilling company based in France, reported mixed third-quarter results, with gross margins of 22.6 per cent continuing to disappoint, said Beacon Securities Ltd. analyst Michael Mills.

Downside: Mr. Mills lowered his rating to "hold" from "buy" but maintained his 12-month price target of $2.75.

Cascades Inc. failed to meet earnings expectations in the third quarter, and renewed inflation in recycled paper costs will put pressure on fourth-quarter performance, a seasonally slow period, said Desjardins Securities analyst Pierre Lacroix.

Downside: Mr. Lacroix cut his price target to $8.25 from $10.00 but maintained his "buy" rating.

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About the Author
Investment Editor

Darcy Keith is The Globe and Mail's Investment Editor. He has been a business journalist since 1992 and joined the Report on Business in 2010 from Yahoo! Canada, where he was the senior editor of finance. More

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