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Nokia gets two downgrades as new smartphones fail to impress

A Nokia executive shows the new Lumia 920 phone with Microsoft's Windows 8 operating system at a launch event in New York, September 5, 2012

Brendan McDermid/Reuters

These are some of the key analyst actions on the Street today.

Nokia Corp.

Deutsche Bank and Société Générale both downgraded Nokia today to "sell" from "hold" recommendations, in a sign that many analysts are just as turned off by the company's two new smartphones as investors are.

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Shares in the company skidded 13 per cent on Wednesday as the Finnish handset maker revealed the new units, although the company is up modestly in trading today.

Nokia has yet to say when the new Lumia devices will be available to consumers. But when they do, they'll be entering an ultra-competitive marketplace and Deutsche Bank and Societe Generale analysts believe they won't be a game changer for the struggling handset maker.

"Nokia's new Windows 8 devices will unlikely alter its muted smartphone market share trajectory in an ever more competitive smartphone market," Deutsche Bank said in a research note.

Apple next week is widely expected to announce the latest iPhone. And rival Samsung Electronics' new Galaxy S3 has proven to be very popular among consumers.

Meanwhile, Reuters is reporting today that Nokia has slashed prices of its older smartphone models using Microsoft Windows software. Citing two industry sources, Reuters said that Nokia cut the price of its mid-range Lumia 800 Windows Phone by around 15 per cent this week and made smaller reductions on other Windows models.


Intact Financial Corp.

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Now is a good time to accumulate shares of Intact Financial, given the pullback in its shares and the benefits of its acquisition of Jevco Insurance Co., the largest underwriter of non-standard auto and motorcycle insurance, said CIBC World Markets analyst Paul Holden. He upgraded Intact to "sector outperformer," noting that Intact's warning that severe weather in the third quarter may affect earnings per share is only "a short-term headwind."

Upside: Mr. Holden raised his price target by $4 to $71.


AuRico Gold Inc.

AuRico Gold Inc. reduced production guidance for this year and 2013, and increased its forecasts for cash costs, as it announced plans to de-empasize run rates at its Ocampo project in Mexico in favour of more underground development work for the next six to nine months. A raft of analysts cut their price targets, expecting the stock to stay largely range-bound until the project reaches more optimal levels.

Downside: CIBC World Markets analyst Barry Cooper downgraded AuRico to "sector performer" and cut his price target by $3 to $7. National Bank Financial analyst Paolo Lostritto cut his target by $1 to $8 and Desjardins Securities analyst Brian Christie cut his by $3 to $7.50 while downgrading the stock to "hold."

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Agnico-Eagle Mines Ltd.

While the change of government in Quebec could result in higher royalties and taxes, Agnico-Eagle Mines will still benefit from low political risk, given its operating mines are located in Canada, Mexico and Finland, said UBS. Meanwhile, the company's shares should benefit from this week's decision to develop the $158-million La India open pit project in Mexico, where commercial production is projected to start by the second half of 2014, UBS notes.

Upside: UBS raised its price target to $50 (U.S.) from $46.50 and affirmed a "neutral" rating.


Harry Winston Diamond Corp.

Harry Winston Diamond reported earnings that were less than half of what analysts were expecting, with the shortfall driven primarily by disappointing diamond sales at the company's mining division. While diamond production guidance for the year remains intact, Desjardins Securities analyst John Hughes believes the company is likely to come up short.

Downside: Mr. Hughes cut his price target to $14.25 a share from $14.70 and maintained a "hold" rating.


WesternOne Equity Income Fund

WesternOne Equity Income Fund offers investors an attractive income stream as well as an opportunity for capital appreciation, concludes Raymond James analyst Frederic Bastien in initiating coverage with an "outperform" rating. "We view WesternOne as a compelling investment opportunity in that it offers leverage to Western Canada's infrastructure and construction markets and direct exposure to increasing demand for workforce accommodations," he said.

Upside: Mr. Bastien set a $10 price target.

For more analyst actions, investing news and exclusive analysis, follow Darcy Keith on Twitter at #eyeonequities

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