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A computer screen shows eBay's website (Mike Blake)
A computer screen shows eBay's website (Mike Blake)

Eye on Equities

More upside seen for Apple shares. eBay? Not so much Add to ...

Shares in eBay Inc. are enjoying a tremendous rally after the company’s quarterly results last night surpassed expectations - but Canaccord Genuity analyst Michael Graham thinks the stock doesn’t have much more to give.

At midday, shares were up 15 per cent to $41.30, just past Mr. Graham’s new price target of $41 (up from $34). He’s maintaining a “hold” rating on the stock, commenting that the impressive first quarter will be tough to follow-up on.

eBay’s revenues and earnings per share of $3.28-billion and 55 cents, respectively, easily beat consensus, and management raised its earnings per share guidance for the year by 2 per cent.

Mr. Graham attributed the strong performance primarily to much better margins in its Payments division and the rapid popularity of fixed pricing in the Marketplaces unit.

“We don’t expect either of these to have a similar magnitude impact on EPS in 2013,” said Mr. Graham. “While we are more confident than ever in our estimates, we note that several key metrics are at the high end of what management has laid out as probable.”

Related: EBay quarterly results surpass expectations


Canaccord Genuity analyst T. Michael Walkley is the latest on the Street to hike his price target on Apple Inc. , but it comes with a word of caution. Canaccord’s latest channel checks indicate modestly slowing iPhone 4S sell-through trends in developed markets, prompting Mr. Walkley to lower his fiscal 2012 iPhone unit estimates.

“Our recent channel checks indicated iPhone sell-through share has modestly declined in certain developed markets, and we expect this could continue as Android competitors ramp new smartphones during the June and September quarters and consumers start to hold off iPhone purchases in anticipation of the iPhone 5,” he said in a research note. “For example, our March channel checks at Verizon indicated a stronger mix of LTE smartphones, and we believe Verizon has strong June quarter promotions planned for LTE Android smartphones.”

That said, he believes Apple’s potential smartphone share losses during the June quarter will prove temporary. He anticipates “very strong” demand for an LTE iPhone 5 during the December quarter and a potential LTE iPhone 5 next year designed to work in the Chinese marketplace.

He lowered his fiscal 2012 earnings per share estimate to $43.13 from $44.58, but raised his 2013 estimate to $52.79 from $50.68.

Upside: Mr. Walkley raised his price target to $740 (U.S.) and maintained a “buy” rating

Related: Related contentGoldman Sachs hikes price target on Apple

Earnings preview: Apple investors brace for more turbulence


Analysts are speculating that Denison Mines Corp.’s decision to sell its U.S. uranium assets - which are plagued with production difficulties and high cash costs - will set the company up as a takeover target. Versant Partners Inc. analyst Rob Chang thinks Rio Tinto could be an interested suitor, given expectations that it will want to expand its North American uranium footprint after its recent acquisition of Hathor Exploration’s Roughrider deposit in Saskatchewan.

“What Rio Tinto was likely not interested in was Denison’s U.S. assets, which are too small to be meaningful for the multinational but an excellent fit for [acquiring firm]Energy Fuels. With the recently announced sale, Denison effectively ‘cleans up’ to be a better fit for Rio Tinto,” Mr. Chang said in a note.

Upside: The average price target for Denison is $1.96, according to Bloomberg. Mr. Chang, who covers the uranium sector, doesn’t cover the stock specifically.


National Bank Financial analyst Robert B. Winslow has slashed his price target on Alliance Grain Traders Inc. to the lowest on the Street, citing new data showing a sharp decline in Canadian lentil exports.

The February figures from STAT Publishing showed February exports dropped 24 per cent year-over-year to 88,000 tonnes, which followed a 13 per cent year-over-year decline in the fourth quarter of last year. Persistent credit and liquidity issues among major pulse buyers in Africa and the middle East have largely been blamed for the reduced demand for these products, which are exported by Alliance Grain Traders.

Mr. Winslow also believes that the drop-off could be related to growing competition from emerging pulse producers.

“We believe Russia in particular, which has a freight advantage to consumption markets plus suitable climate and soils to grow pulses, could lift pulse production 2 to 4 times in the coming years, ultimately surpassing Canada as the world’s largest pulse exporter. Should Russia and others evolve into major pulse suppliers, we see increased risk that Alliance Grain will be challenged to achieve healthy utilization of the Company’s extensive Canadian processing facilities, though this could arguably be solved by rationalizing assets.”

He lowered his fiscal 2013 earnings before interest, taxes, depreciation and amortization estimates to $68.6-million from $73.3-million, which is well below the consensus estimate of $79.8-million.

Downside: Mr. Winslow cut his price target to $12 from $17.50 and maintained a “sector perform” rating. The average analyst target is $17.90, according to Bloomberg.


Desjardins Securities Inc. analyst Keith Howlett believes that Alimentation Couche-Tard Inc.’s acquisition of Norway’s Statoil Fuel & Retail ASA adds value for shareholders. But while Couche-Tard has a “long, successful track record as an effective and integrator of assets,” the share price now already reflects that value, he said.

Upside: Mr. Howlett raised his price target by $7 to $42 and downgraded the stock to “hold” from “buy.”


Pacific Rubiales Energy Corp.’s first ever investor day presentation this week has Canaccord Genuity analyst Frederick Kozak feeling bullish. “In our view, Pacific Rubiales is the pre-eminent Colombian independent E&P company with a defined strategy to support future production growth,” he said. “The forward thinking nature of the management team is one of the reasons the company continues to be our ‘top pick.’ ”

Upside: Mr. Kozak maintained a “buy” rating and $43 price target.


For more of the latest analyst actions and investing ideas, follow Darcy Keith on Twitter

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