Shaw Communications Inc. 's fourth-quarter results released last week didn't exactly blow the Street away with rosy financials, but some analysts are nonetheless gaining optimism in the company's future given its position in the increasingly wireless world and the expected acquisition of the former CanWest television empire.
Adjusted earnings per share of 30 cents was 3 cents below the consensus, but analysts Vince Valentini and Eli Papakirykos of TD Newcrest noted that subscriber adds were better than expected. They were also upbeat about the CanWest purchase given recent favourable trends in advertising markets and a possible downward trend in program costs for the industry.
"We believe an over-reaction to the fourth-quarter results and 2011 guidance has presented a good buying opportunity," the TD Newcrest analysts said.
CIBC World Markets Inc. analyst Robert Bek feels that Shaw remains a "solid buy and hold," due to residual growth in cable, wireless growth opportunities and the CanWest acquisition, which received CRTC approval last week.
Analyst Maher Yaghi of Desjardins Securities was sounding a little more cautious, downgrading the stock to hold from buy. He believes wireless expansion will weigh on free cash flow and has valuation concerns given that the stock has already gained 18 per cent since he upgraded it to a buy in May. That compares with a return of 11 per cent for the S&P/TSX telecom Index.
Upside: TD Newcrest hiked its price target by $2 to $26, while CIBC raised its target by $1 to $25.00. Desjardins Securities lowered its target price by $1 to $23.50.
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Open Text Corp. is set to report mixed fiscal first-quarter results Wednesday, as pockets of strength in the software industry will be offset by currency-related losses related to Euro-denominated sales, said Versant Partners analyst Tom Liston. He expects total revenue to rise 5 per cent year-over-year, to $223.0-million.
Upside: Mr. Liston hiked his 12-month price target by $3 to $47 (U.S.) on the back of slightly higher profitability assumptions.
International Forest Products Ltd. reported a third-quarter adjusted net loss of 2 cents per share, narrower than the Street view of 7 cents - "solid" results at a time of challenging North American dimension lumber markets, said TD Newcrest analyst Graham Meagher. By focusing on relatively stronger markets overseas, it has been able to replace shipments that would have gone to the weaker U.S. market, he said.
Upside: Mr. Meagher hiked his 12-month target price by 50 cents to $6.00 while increasing his earnings estimates to reflect an improvement in mill operating costs and overseas price realizations.
Lundin Mining Corp. will now hold a 24-per-cent ownership stake in the Tenke mine following an agreement between Freeport-McMoRan Copper & Gold Inc. and the government of the Democratic Republic of Congo. The deal clears the major road block for further investment to expand the mine, said CIBC World Markets Inc. analyst Alec Kodatsky.
Upside: Mr. Kodatsky hiked his price target by 50 cents to $8, and reiterated his "Sector Outperformer" rating.
CI Financial Corp.'s acquisition of Hartford Investments could contribute 3 cents to CI's 2011 earnings per share, said TD Newcrest analyst Doug Young. "We are encouraged by Hartford's strong growth momentum and the distribution relationship with Edward Jones that they are bringing to the table," said Mr. Young.
Upside: Mr. Young raised his 12-month target price by $2 to $24 and continues to recommend the stock as a buy.
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