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The Canadian Natural Resources Ltd. Horizon oil sands facility near Fort McMurray, Alberta. (LARRY MACDOUGAL/The Canadian Press/The Canadian Press Images)

The Canadian Natural Resources Ltd. Horizon oil sands facility near Fort McMurray, Alberta.

(LARRY MACDOUGAL/The Canadian Press/The Canadian Press Images)

Eye on Equities

Canaccord drops Canadian Natural as a favourite Add to ...

Production delays at Canadian Natural Resources Ltd.’s Horizon oil sands project have prompted Canaccord Genuity to remove the energy firm from its “Focus List” - a handful of its favourite stocks that it considers the best investing ideas.

The company announced Monday that the Horizon upgrader in northern Alberta would stay shut until mid- to late March - several weeks longer than originally expected - so it could fix a fractionator unit. That forced the company to cut its 2012 production target for Horizon to 93,000-103,000 barrels a day from the previous forecast of 105,000-115,000 bpd.

“On the surface, the impact of the aforementioned is immaterial to our target; however, there is a lack of clarity in CNQ’s press release on what the actual issue is,” commented Canaccord analyst Phil Skolnick in a research note. “Consequently, we believe the market will start to place a higher risk factor on Horizon and start questioning the reliability of the project.”

“Strong Horizon reliability was a key element to our Focus List rating on the stock.”

He noted that production rates at the end of the fourth quarter of last year -- prior to the latest incident - were already below the company’s guidance.

Downside: Mr. Skolnick cut his price target by 4 per cent to $50 a share but maintained a “buy” rating.

More: Canadian Natural stock falls on oil sands outage


RBC Dominion Securities Inc. analyst Drew McReynolds has upgraded Manitoba Telecom Services Inc. to “outperform,” commenting that the telecom’s ability to generate low-single-digit earnings before interest, taxes, depreciation and amortization proves business fundamentals “have turned the corner.” He believes MTS’s valuation compared to peers is attractive and the cash and debt on its balance sheets provides flexibility.

Upside: Mr. McReynolds raised his price target by $3 to $35.


UBS analyst Chad Friess is maintaining a “buy” rating on TransCanada Corp. despite a disappointing fourth quarter for the pipeline giant.

Adjusted earnings per share of 52 cents were a few pennies shy of consensus, partly due to broad-based weakness across most of TransCanada’s natural gas pipelines, Mr. Friess commented.

Meanwhile, TransCanada also had further bad news in reporting that its Keystone XL project won’t enter service until early 2015 at the earliest, later than its previous guidance of year-end 2014.

TransCanada’s application for Keystone was rejected by the Obama administration and the company is now looking at alternative solutions that will permit a re-filing.

Upside: Mr. Friess maintained a $46 price target.

More: TransCanada pushes back Keystone start-up date


RBC Dominion Securities Inc. analyst Geoffrey Kwan had downgraded IGM Financial Inc. to “sector perform” from “outperform,” believing that the shares are fairly valued at current levels. The company released fourth-quarter results last week that were largely in line with expectations.

“Although we believe there are better investment opportunities over the next 12 months, we believe IGM’s shares are attractive for investors with a longer investment horizon reflecting exposure to one of Canada’s largest asset managers which generates significant economies of scale benefits and should result in strong free cash flow and dividend growth,” Mr. Kwan stated.

Upside: Mr. Kwan maintained a $49 price target.

Related: IGM posts 21-per-cent profit increase


Kodiak Oil & Gas is attractively priced for a company with its growth and resource-building potential, said Canaccord Genuity analyst Marcus Talbert. “The company has the right combination of oil leverage, superior capital productivity and catalysts on the horizon that should contribute to its investor momentum and further increase its valuation relative to its peers,” he maintained.

Upside: Mr. Talbert initiated coverage with a “buy” rating and $12.50 (U.S.) price target.

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