A Sirius satellite radio unit is shown installed in a vehicle.Jason Reed/Reuters
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.
Sirius XM Canada Holdings Inc. appears to be on track for improved performance in the second half of the 2015 fiscal year, said CIBC World Markets analyst Tony Rizzi.
The company reported a solid second quarter with results meeting or exceeding Mr. Rizzi's expectations.
"More importantly, operating metrics saw improvement right across the board, with a number of reassuring trends for a further recovery into [the second half of 2015]," he said.
However, a formal notice of assessment received from the Canadian Revenue Agency following an audit of the company's August, 2006 tax return changes Sirius' financial picture. A portion of the company's tax loss carryforward will not be allowed, and further interest and penalties are expected. The CRA reassessment forces Sirius' cash taxes to kick in ahead of schedule. Mr. Rizzi said he does not expect a "favourable outcome" as the company aims to stand by its original filing.
He maintained his "sector outperformer" rating, but he lowered his target price from $8 to $7.50. The analyst consensus is $7.13, according to Thomson Reuters.
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CCL Industries Inc. has been able to keep its revenue "essentially recurring" by forging a strong relationship with its large customers and through short product and packaging cycles, said Industrial Alliance Securities analyst Ben Jekic.
He said CCL is following a similar path that led to a series of 2013 acquisitions, resulting in a 20-per-cent year-over-year increase in free cash flow in 2014.
The company is set to utilize its strong free cash flow and reduce its net debt to total capital to 16.7 per cent in 2015 (from 26.4 per cent in 2014). That should lead to more flexibility for adding $900-million in debt for acquisitions in the next two years, said Mr. Jekic.
He maintained his "strong buy" rating and increased his target price to $180 from $150. The consensus is $153.75.
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BMO said low expectations for AbbVie Inc.'s Hep-C franchise and competition for Humira, its anti-inflamatory and pain-relief drug that targets a number of autoimmune diseases, are priced into its stock now. And after an extensive review of the company's Imbruvica leukemia drug BMO analyst Alex Arfaei upgraded the stock to "outperform" from "market perform."
"More importantly, although we were initially skeptical about the Pharmacyclics acquisition, after extensive review of Imbruvica's potential, we now believe that it can mostly offset Humira's decline in biosimilar years," he said in a note.
BMO expects that the Imbruvica "can generate revenues of $7.8-billion for AbbVie by 2025, thus mostly offsetting our expected decline of $8.2-billion (~50 per cent) for Humira from 2017-2025 because of biosimilar competition," he said.
He kept his price target at $68 (U.S.).
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Netflix Inc.'s growth prospects in the United States and overseas remain strong, while fears over possible content restrictions by media companies are overblown, according to UBS.
"We believe Netflix is a: (1) a unique play on global online video growth; (2) has sufficient scale to sustain business model even in the face of any irrational behaviour by competitors/content suppliers; (3) its scale advantages are only widening; (4) has an advantaged, differentiated competitive position; and (5) an attractive business model," said analyst Doug Mitchelson.
Shares have been volatile and range-bound for the past year despite a 26-per-cent increase in revenues, the analyst observed, making for "an attractive risk/reward entry point."
UBS has increased confidence that international net subscriber growth will accelerate.
The stock is soaring on Monday, up more than 5 per cent, on the heels of this upgrade as well as a regulatory filing on Friday that suggests the company plans on splitting its shares.
Mr. Mitchelson upgraded the stock to "buy" from "neutral" and hiked his price target to $565 (U.S.) from $370.
The average analyst price target is $455.83.
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Credit Suisse analyst John Pitzer said the recently closed merger with Spansion Inc. is a positive for Cypress Semiconductor Corp.
He said the $5-billion (U.S.) deal will provide increased scale ($2-billion in annual revenue compared to $700-million) and product synergies with complementary market exposure.
Mr. Pitzer said he originally expected the merger to be accretive within a year of closing. He now forecasts it could come as soon as the second quarter of the 2015 calendar year, and could exceed expectations long term.
He raised his earnings per share estimates from 60 cents to 85 cents (U.S.) for the 2015 calendar year and 80 cents to $1.15 in 2016.
The analyst maintained his target price of $14.50. The consensus is $16.55.
In other analyst actions:
Cameco Corp. was raised to "buy" from "neutral" at Bank of America.
HudBay Minerals Inc. was lowered to "neutral" from "buy" at Bank of America.
West Fraser Timber Co. Ltd. was upgraded to "outperform" from "sector perform" by RBC Dominion Securities.
Teck Resources Ltd. was cut to "neutral" from "buy" at UBS. The 12-month target price is $18 (Canadian) per share.
Vale SA was downgraded to "sell" from "neutral" at UBS. The 12-month target price is $4.80 (U.S.) per share.
Goldman Sachs BDC Inc. was rated new "neutral" at Credit Suisse. The target price is $21 (U.S.) per share. The company was also rated new "outperform" at Wells Fargo.
Nielsen NV was downgraded to "hold" from "buy" at Pivotal Research. The 12-month target price is $49 (U.S.) per share.
Omnicom Group Inc. was downgraded to "sell" from "hold" at Pivotal Research. The 12-month target price is $66 (U.S.) per share.
Precision Drilling Corp. was downgraded to "underperform" from "hold" at Jefferies. The 12-month target price is $5 (U.S.) per share.
Hilton Worldwide Holdings Inc. was downgraded to "hold" from "buy" at Evercore ISI. The 12-month target price is $31 (U.S.) per share.
Host Hotels and Resorts Inc. was raised to "buy" from "hold" at Evercore ISI. The 12-month target price is $22 (U.S.) per share.
IPC Healthcare Inc. was raised to "overweight" from "sector weight" at KeyBanc. The 12-month target price is $56 (U.S.) per share.
Interpublic Group of Cos Inc. was downgraded to "hold" from "buy" at Pivotal Research. The 12-month target price is $23 (U.S.) per share.
Lazard Ltd. was downgraded to "hold" from "buy" at Sandler O'Neill. The 12-month target price is $57 (U.S.) per share.
Patterson-UTI Energy Inc. was raised to "hold" from "underperform" at Jefferies. The 12-month target price is $20 (U.S.) per share.
Qualys Inc. was downgraded to "neutral" from "outperform" at Robert Baird. The 12-month target price is $50 (U.S.) per share.
Seventy Seven Energy Inc. was downgraded to "hold" from "buy" at Jefferies. The 12-month target price is $5 (U.S.) per share.
St. Jude Medical Inc. was raised to "Neutral" from "Underperform" at Credit Suisse. The target price is $74 (U.S.) per share.