Aimia Inc. is poised to enter a new era in 2014 with TD Bank as its new partner and long-standing ally CIBC both offering credit cards linked to Aimia’s Aeroplan rewards.Ryan Remiorz/The Canadian Press
Inside the Market's roundup of some of today's key analyst actions. This file will be updated often during the trading day so check back for new details.
Loyalty program management company Aimia Inc. missed on its fourth quarter earnings and its guidance for the upcoming fiscal year was disappointing, said Raymond James analyst Kenric Tyghe.
Gross billings from its Canadian segment beat estimates and that "highlights the markedly increased resonance of the Aeroplan currency," the analyst said.
"The challenges on yield moderate through 2015E (on lower bonus activity); however mix (on higher U.S. dollar priced Star Alliance and Market Fare Flight Rewards in excess of 50 per cent of redemptions) is expected to remain a headwind through the majority of the year," the analyst said.
The analyst kept his "outperform" rating but cut his price target to $18 (Canadian) from $21. CIBC kept its "sector performer" rating on Aimia, but cut its 12-to-18 month price target to $14 from $17. Canaccord Genuity maintained its "buy"rating on the stock, but cut its target price to $15 from $16.50. However, TD Securities has a different view on Aimia Inc., and upgraded the stock to "action list buy" from "buy" with a 12-month price target of $17. The consensus on the stock is $17.04, according to Thomson Reuters.
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CIBC is reinstating coverage of Bombardier Inc. after its equity and debt financing which raised a total of $3.1-billion ($868-million in equity and $2.25-billion in debt).
Now that the company's CS300 jet is in the flight test program, after its maiden flight last week, "its entry into the flight test program could help accelerate the overall CSeries sales campaign," said CIBC analyst Kevin Chiang.
"While Bombardier's [free cash flow] FCF burn is a concern with Bombardier Aerospace's capex again expected to hit around $2-billion in 2015, we believe a turnaround may not be far off. As the CSeries development program winds down, BA's capex should decline (the company has noted BA capex should normalize to about $1 billion). As well, BT's restructuring should improving its FCF conversion. Both of these developments will be significant tailwinds to cash flow. An improving FCF will be a key catalyst in helping lift Bombardier's valuation," Mr. Chiang said.
He maintained his "sector performer" rating on the stock but cut his 12-to-18 month price target to $2.75 from $3.50.
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Canaccord Genuity Research is forecasting a strong quarter for Alimentation Couche-Tard Inc. when the company reports its fiscal 2015 third quarter on March 17.
Canaccord is forecasting earnings before interest, taxes, depreciation and amortization of $626-million, up from $413-million in the same quarter last year.
"In our view, Couche-Tard offers investors an attractive combination of both organic and acquisitive growth, which coupled with a healthy balance sheet, will allow the company to capitalize on accretive growth opportunities," said analyst Derek Dley.
"We note ownership of Couche-Tard shares offers investors an attractive hedge within a declining oil price environment."
The analyst kept his buy rating and raised his target price to $55 from $52. "Our $55 (Canadian) target price represents 21.1-times our 2016 EPS estimate of $2.04," Mr. Dley said.
The consensus is$42.53, according to Thomson Reuters.
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With Extendicare Inc. selling its U.S. business, RBC Capital Markets is more positive on the company's stock.
"We believe that exiting the U.S. business is a prudent move and were pleased to hear that the closing is on track [for the second quarter of 2015]. This, combined with a significantly positive [foreign exchange] FX move, a material decline in Canadian Government of Canada yields and some share buybacks, makes us incrementally more positive," said analyst Michael Smith.
Selling the U.S. business simplifies the company, reduces risk for the business and its stock, he said.
The analyst kept his "sector perform" rating but removed its "speculative risk" rating and increased its price target to $7.50 from $6.50.
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CIBC World Markets analyst Alex Avery has a laundry list of reasons to explain his upgrade of Crombie Real Estate Investment Trust.
"We rate Crombie REIT 'sector outperformer,' from 'sector performer,' reflecting a discount valuation, unit price underperformance, a high and sustainable 6.6-per-cent yield, above-average remaining lease (11.8 years) and mortgage (7.4 years) terms, broad geographic diversification, defensive grocery-anchored retail focus, and the pending disclosure of more details of the REIT's intensification strategy," he says.
Mr. Avery is upgrading the REIT to "sector outperformer" from "sector performer" and is boosting his target price to $15.50 (Canadian) from $14. The analyst consensus price target is $14.53.
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In other analyst actions:
Kicking Horse Energy Inc. was rated new "outperform" at FirstEnergy Capital. The 12-month target price is $5 (Canadian) per share.
Pembina Pipeline Corp. was raised to "outperform" from "market perform" at BMO Capital Markets. The 12-month target price is $47 (Canadian) per share.
Pason Systems Inc. was downgraded to "market perform" from "outperform" at FirstEnergy Capital. The 12-month target price is $20 (Canadian) per share.
PrairieSky Royalty Ltd. was downgraded to "market perform" from "outperform" at FirstEnergy Capital. The 12-month target price is $31 (Canadian) per share
Weight Watchers International Inc. was cut to "underweight" from "equal weight" at Morgan Stanley.
BlackRock Inc. was downgraded to "neutral" from "buy" at Citigroup.
Joy Global Inc. was lowered to "neutral" from "buy" at Bank of America.
Alaska Air Group Inc. was raised to "buy" from "hold" at Stifel. The 12-month target price is $85 (U.S.) per share.
Cloud Peak Energy Inc. was downgraded to "hold" from "buy" at Brean Capital.
Isis Pharmaceuticals Inc. was downgraded to "hold" from "buy" at Stifel.
SBA Communications Corp. was downgraded to "outperform" from "top pick" at RBC Capital. The 12-month target price is $140 (U.S.) per share. Canaccord Genuity reiterated its "buy" rating on the stock and increased its target price to $137 from $124.
Time Warner Cable Inc. was downgraded to "underperform" from "hold" at Needham & Co.
With files from Bloomberg News