AutoCanada first moved into Calgary last year when it bought Courtesy Chrysler Dodge.Jeff McIntosh/The Globe and Mail
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.
Canaccord Genuity Analyst Derek Dley was surprised by the level of weakness AutoCanada Inc. expects in Alberta. He's downgrading the stock to "hold" from "buy" and slashing his target price.
Though AutoCanada reported relatively strong fourth-quarter 2014 earnings, the company warned of a weak outlook for new car sales in the Alberta market.
"While we remain positive on the longer term growth potential of the business, through a recovery in new car sales, along with future acquisition activity, we believe the next couple of quarters will be challenging, and we are moving to the sidelines for the time being," the analyst said.
Mr. Dley cut his target price to $38 from $66. Consensus is $48.22, according to Bloomberg data.
AutoCanada was also lowered to "sector perform" from "outperform" at Altacorp and RBC Dominion Securities cut its price target to $50 from $64 while reiterating an "outperform" rating. Meanwhile, Cormark Securities downgraded th stock to "market perform" from "buy" with a target price of $40.
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The recent price depreciation of Canadian Real Estate Investment Trust makes the company an "attractive" investment right now, says BMO Nesbitt Burns.
Since November, 2014 the REIT's unit price has fallen 8.3 per cent, while the S&P/TSX Capped REIT Index price has appreciated by 2.4 per cent.
"We view current pricing as an attractive entry point into a high quality REIT with significant financial flexibility, a high quality portfolio and a track record of delivering above-average AFFO [adjusted funds from operations] growth and distribution increases," BMO Nesbitt Burns analyst Heather Kirk.
CREIT's units are currently trading slightly below its net asset value, even though the REIT's financial metrics "remain strong to develop or acquire" other properties and it has an activie development pipeline and sufficient liquidity, the analyst said.
She upgraded the REIT to "outperform" from "market perform" and boosted her 12-month target price to $49.
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Surge Energy Inc. reported a slight cash flow miss due to realized pricing that was lower than consensus estimates. On the news, Canaccord Genuity analyst Anthony Petrucci maintained his "hold" rating but cut his target price, while Paradigm Capital upgraded the stock to "buy" from "hold."
Surge reported cash flow per share of 25 cents, below consensus estimates of 27 cents. Surge also announced plans to maintain its production output of 20,000 barrels of oil equivalent per day through the first half of 2015 and will reassess market conditions at the end of June before releasing its guidance for the rest of the year.
Mr. Petrucci cut his target price to $3.50 from $4. Consensus is $3.98, according to Thomson Reuters.
In addition, Paradigm Capital upgraded the stock to "buy" from "hold" with a 12-month target price is $3.75 (Canadian) per share.
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IBI Group Inc. reported fourth-quarter results that were in-line with estimates, said Dundee Capital Markets analyst Maxim Sytchev.
"On geographic basis, U.S. is strengthening across the board; Canada East is showing good momentum while West is holding up with 80 per cent of committed work already in company's backlog; transit is a very active market for the company while high-rise expertise is being exported (successfully) internationally," he said.
The analyst kept his "buy" rating but trimmed his target price to $3.50 (Canadian) from $4. Meanwhile, Raymond James downgraded IBI Group to "market perform" from "outperform," and cut its target price to $2 from $3.75.
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Westshore Terminals Investment Corp. is unlikely to see a significant increase in shipping volumes until its $270-million major capital project is completed in early 2019, according to CIBC World Markets analyst Jacob Bout.
Westshore reported EBITDA of $34.5-million in the fourth quarter of 2014, down from $40.2-million and below a consensus of $46-million. The shipping company loaded only 6.7 metric tonnes in the fourth quarter, a decline of 11 per cent year over year due to unscheduled downtime to replace two stacker reclaimers and a torn conveyer belt.
"While guidance is higher than 2014 levels of 30.6 metric tonnes , last year's volumes were impacted by inclement weather in the first quarter and equipment replacement in the fourth quarter," said Mr. Bout.
The capital project involves replacing the three older stacker reclaimers, a 30-year-old ship loader, and consolidating the company's offices. When completed, capacity is expected to increase to 35-36 metric tonnes annually.
Mr. Bout maintained his "sector performer" rating but lowered his price target to $32 (Canadian) from $35. The analyst consensus is $34.08.
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UBS Securities analyst Michael Lasser thinks the market is underestimating the ability of Staples Inc. to close its acquisition of Office Depot Inc., a variable that will heavily impact its share price.
Mr. Lasser estimates the market is only assigning a 35-per-cent chance of the deal's success. Based on discussions with Federal Trade Commission experts and enterprise operating system customs, he thinks the probability should be pegged at about 65 per cent.
Based on that estimate, he is raising his target price from $18 to $20 (U.S.), which he points out represents a 23-per-cent potential upside. The consensus price is $18.1 (U.S.).
He feels the pull-back on Staples shares, which have declined 11 per cent in 2015, has "created an attractive entry point, with the upside potential far outweighing the downside risk."
"If the FTC blocks the deal or places onerous conditions on a transaction, we think [Staples] will still be fine," said Mr. Lasser. " Most likely, it will face a far weakened competitor in [Office Depot] as this player will probably face heavy staff attrition and operational disruption between now and when the ruling on the deal comes down."
He is also raising his rating from "neutral" to "buy."
In other analyst actions:
Desjardins downgrades HNZ Group to hold from buy, with a price target of $20 (Canadian).
Big Rock Brewery Inc. was raised to "market perform" from "reduce" at Cormark Securities. The 12-month target price is $10 (Canadian) per share.
Baylin Technologies Inc. was downgraded to "market perform" from "buy" at Cormark Securities. The 12-month target price is $4.50 (Canadian) per share.
Pacific Rubiales Energy Corp. was downgraded to "underweight" from "neutral" at HSBC. The target price is $1.60 (Canadian) per share.
Perseus Mining Ltd. was raised to "outperform" from "neutral" at Macquarie. The 12-month target price is 39 cents (Canadian) per share.
With files from Bloomberg News