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Inside the Market’s roundup of some of today’s key analyst actions

Desjardins Securities downgraded Plaza Retail Real Estate Investment Trust (PLZ-N-T) to “hold” from “buy” due to the stock’s recent climb on the back of better-than-expected third-quarter results.

Analyst Michael Markidis, however, bumped up his price target to $4.75 from $4.50, and stressed his lower rating reflected a more modest potential total return going forward.

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“PLZ’s third-quarter results were ahead of expectations. The 3Q19 beat and the announcement that Morguard Corp. and Paros Enterprises Ltd. had acquired a 15% equity stake have both served as catalysts to PLZ’s unit price, which is up by 10% since the latter was announced on September 26 (vs -0.8% for the TSX Capped REIT Index),” he said in a note.

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BMO Nesbit Burns analyst Thanos Moschopoulos raised his target price on Real Matters Inc. (REAL-T) to $13, citing the company’s good execution of its business in recent quarters.

“While its recent performance has been helped by a stronger industry backdrop, REAL has also achieved ongoing market share gains and impressive operating leverage,” the analyst commented.

BMO said it is becoming “more constructive on the story, but struggles with the volatility/unpredictability of REAL’s end markets, and believe the stock is valued appropriately in that context.”

As such, it stuck with a “market perform” rating on the stock

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Desjardins Securities analyst Doug Young says he’s sticking with his “buy” rating and $81 price target on Toronto-Dominion Bank (TD-T) in the wake of news reports that Charles Schwab is in talks to acquire TD Ameritrade for US$26-billion. TD owns a 42 per cent stake in Ameritrade and, according to Mr. Young’s estimates, would account for about 7 per cent of his fiscal year 2020 earnings per share estimate for the Canadian bank.

“It has been our view that TD would eventually either step up and assist AMTD in pursuing acquisitions (to consolidate the market) or sell its stake; to be clear, we believed the former was more likely. We see no reason to change our views at this time,” Mr. Young said in a note.

“Nothing is certain, but there are positives to consider: (1) A deal with SCHW would hitch TD’s horse to a bigger player which is strategically well-positioned with arguably better growth prospects. This also helps alleviate concerns following last month’s trading commission cuts by US discount brokers. We believe there would be material cost synergies for SCHW, with a portion trickling down to TD. (2) It would be much easier for TD to get off this stake, if it chose to, down the road. (3) Clearly, the market likes the deal,” according to the TD note.

Finally, “(4) Logic would tell us that with a ~42.7% stake in AMTD, TD has a say in what happens and in our view, it would only support a transaction that is good for TD longer-term," he said.

Rumours of a deal sent Schwab shares up 7.3 per cent on Thursday while Ameritrade shares surged 16.8 per cent, reflecting optimism that the merger will generate substantial cost savings from consolidated branches and marketing expenses.

The news had little impact on TD’s shares, though. The shares rose just 0.9 per cent, even though its stake in Ameritrade increased to US$11.3-billion, up US$1.6-billion. Ameritrade is now valued at more than US$26-billion, based on its outstanding shares.

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Stifel Nicolaus analyst Scott Devitt upgraded Uber to ‘buy’ from ‘hold’, commenting that the stock’s valuation is now “more reasonable.” He maintained a price target of US$34, which is still well below the $45 initial public offering price on May 10.

“We like Uber’s growth opportunity, scale, and market leadership in most regions, with an opportunity to consolidate some international markets,” Devitt wrote in a note, according to MarketWatch. “Some competitive rationalization in ridesharing and related progress in reining in costs has pulled forward breakeven expectations meaningfully versus six months ago.”

With a file from David Berman and Clare O’Hara

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