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A MasterCard logo is seen on a door outside a restaurant in New York, on Feb. 3, 2010. (SHANNON STAPLETON/REUTERS)
A MasterCard logo is seen on a door outside a restaurant in New York, on Feb. 3, 2010. (SHANNON STAPLETON/REUTERS)

Eye on Equities

Strong U.S. dollar hurting MasterCard Add to ...

MasterCard Inc.'s mixed-second quarter results has prompted RBC Dominion Securities analyst Daniel Perlin to cut his target price for the credit card giant.

The strong U.S. dollar ate into MasterCard's overseas earnings, leading to reduced revenue growth for the Purchase, N.Y.-based company.

MasterCard reported that revenue increased 9 per cent for the second quarter to $1.82-billion (U.S.) versus a year ago, but that was less than what Wall Street analysts were expecting. The number was $73-million below his forecast.

"Overall the quarter was quite strong considering the overall global economic environment, but the revenue miss and the deceleration in recent trends data will likely weigh on the stock in the near-term," the analyst said in a report on Wednesday.

Second-quarter profit of $5.65 a share was 10 cents above his estimate and 7 cents ahead of the Street.

"MasterCard remains one of our best ideas in the space given that investors should look to focus on long-term secular driven stories, which provide solid organic growth with opportunities for margin expansion," he wrote.

Management has provided a "cautiously optimistic outlook for the rest of 2012 despite the overall mixed global economic statistics," he added.

Downside: He cut his one-year target by $18 to $500 a share, but maintained his "outperform" rating.


Norbord Inc.

BMO Nesbitt Burns analyst Stephen Atkinson raised his target price on wood panel maker Norbord Inc. because of improving fundamentals. Rising demand, along with industry discipline not to restart idled capacity or add shifts to existing capacity has led to price spikes, he said.

Upside: Mr. Atkinson raised his one-year target by $4 a share to $13, but maintained his “underperform” rating.


Lousiana-Pacific Corp.

The outlook for wood panel producers has improved, and “overall we expect higher average panel prices than we have witnessed in recent years,” said BMO Nesbitt Burns’s Stephen Atkinson.

Upside: The analyst raised his one-year target on Louisiana-Pacific Corp. to $11.25 (U.S.) a share from $8, but kept his “market perform” rating.


Canadian National Railway Co.

TD Securities analyst Cherilyn Radbourne downgraded her rating on Canadian National Railway Co. due to a runup in its stock. “Our estimate and the consensus forecast are running somewhat ahead of the company’s guidance,” she said. “With an uncertain economy, we believe that the company will have a harder time surprising relative to expectations.”

Downside: Ms. Radbourne cut her rating to “hold,” but kept her one-year target of $100 a share.


Inter Pipeline Fund

Canaccord Genuity analyst Juan Plessis raised his target price on Inter Pipeline Fund after it announced that it was proceeding with its $2.1-billion of expansion plans on its Cold Lake and Polaris pipeline systems.

Upside: Mr. Plessis, who maintains his “buy” rating, boosted his one-year target by $1 a share to $22.

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