A pedestrian walks past the SNC-Lavalin Group Inc., headquarters in Montreal, in this file photReuters
Inside the Market's roundup of some of today's key analyst actions. This file will be updated during the trading day. For breaking analyst actions prior to market open every day, read our Before the Bell morning report.
The worst is now behind SNC-Lavalin Group Inc., said BMO Nesbitt Burns analyst Bert Powell as he upgraded the engineering company to an "outperform" rating.
"It has been just over a year since the new CEO took the reins and he has made sweeping changes," noted Mr. Powell in a research note. "There have been substantial new hires at the senior levels, a focus on ridding the organization of its waywardness, more stringent ethics, costs seem to be coming down, and the assets in the ICI (Infrastructure Concession Investments) portfolio are in a sweet spot for demand and valuations."
While more bad news concerning SNC-Lavalin is possible, "as investors become comfortable that SNC issues are related to the past we believe they will increasingly gravitate back to the stock," he argued. "The brand appears to have withstood this test and the foundation looks like it can support earnings growth in the Engineering business."
Target: Mr. Powell raised his price target to $52 (Canadian). The average analyst price target is $48.46, according to Bloomberg data.
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CIBC World Markets analyst Paul Holden downgraded Fairfax Financial Holdings Ltd. to "sector underperformer" from "sector performer" after its third-quarter investment losses - reported last week - were much worse than he expected.
The losses totaled $829-million versus Mr. Holden's estimate of $392-million. Meanwhile, book value per share declined to $335 compared with his estimate of $351.
"Q4 is shaping up to be better for investment returns. However, there was no material change in portfolio positioning and we continue to expect minimal gains in 2014," Mr. Holden cautioned.
Target: Mr. Holden cut his price target to $400 (Canadian) from $425. The average target is $430.
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Canaccord Genuity analyst Mark Rothschild downgraded First Capital Realty Inc. to "hold" from "buy," concerned that the value creation initiatives going on at the company will take considerable time to bear fruit.
Much of the company's portfolio is comprised of properties that are being expanded or re-developed. Management has indicated that occupancy rates and operating margins at the assets should improve materially as activity is completed, leading to strong growth in funds from operations (FFO) per share.
"However, it is not clear how long it will take for this to occur. Although we ultimately expect FCR to produce above-average growth in FFO per share, this is not likely to occur in the near-term," he said.
Target: Mr. Rothschild raised his price target to $18.30 (Canadian) from $17.15. The average target is $19.72.
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It's sunny skies ahead for Canadian Tire Corp., says Cannacord Genuity analyst Derek Dley, who maintained his "buy" rating ahead of the company's third-quarter earnings to be announced Thursday before markets open.
So far in the year, share prices have been buoyed by strong earnings growth, with third-quarter forecast to be much of the same. Its especially lucrative financial services division, whose credit card unit accounts make up the bulk of the company's profit, is also looking to expand.
"We expect an update related to Canadian Tire's progress in developing a partnership for its credit card business. We believe this could unlock roughly $700-million in equity for Canadian Tire," he said.
Target: Mr. Dley raised his price target to $109 (Canadian) from $99. The average target is $101.17.
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Fortis Inc. has hit a rough patch due to weakness at its Canadian regulated businesses, said Juan Plessis of Cannacord Genuity in downgrading the country's largest investor-owned gas and electric utility to "hold" from "buy" following a disappointing Q3 earnings report.
Shares had only begun to recover from its steep plunge over the summer following falling regulated rates of return on its utilities business and rising bond yields. A third-quarter earnings per share result well below the consensus estimate has kickstarted another downturn.
However, notes Mr. Plessis, Fortis' other operations were strong, "particularly at Fortis generation where the Belize generating facilities benefited from a more normal rainfall in the quarter."
"With close to 90 per cent of its assets consisting of regulated operations, we believe Fortis remains an attractive investment for investors seeking secure and stable earnings, cash flow and dividends," he said.
Target: Mr. Plessis reduced his target to $34 (Canadian) from $35. The average target is $34.42.
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National Bank Financial downgraded BlackBerry to "underperform" from "sector perform" and slashed its price target to $3 (U.S.) from $9 after today's news that an earlier Fairfax Financial deal will not proceed. Several other analysts cut their price targets, including at Credit Suisse (to $7 from $9 and Canaccord Genuity (to $6 from $7.) The average price target on the Street is down to $7.85 (U.S.), according to Bloomberg data. (For more detailed analyst actions, read Mike Babad's Business Briefing.)
Canaccord Genuity upgraded Manitoba Telecom to "hold" from "sell" and reiterated $30 (Canadian) price target.
BMO Nesbitt Burns downgraded Norbord to "underperform" from "market perform" and cut its price target to $28 (Canadian) from $30.
Canaccord cut its price target on Barrick Gold to $20.50 from $21.50 and maintained a "hold" rating.
Canaccord added Goldcorp to its "focus list" - its best investing ideas. It kept a $35.50 (Canadian) price target.
Industrial Alliance Securities downgraded Tecsys to "hold" from "buy" and maintained a $4.75 (Canadian) price target.
Goldman Sachs upgraded the U.S. steel sector to "neutral" from "cautious," believing the industry could see a recovery in coming years and that oversupply risks are priced in. AK Steel Holding was upgraded to "buy" with a $6 price target; United States Steel was upgraded to "buy" with a $30 price target; Steel Dynamics was upgraded to "buy" with a $22 price target; and Reliance Steel & Aluminum was downgraded to "neutral" with a $82 price target.
UBS upgraded Kohl's to "buy" from "neutral" and raised its price target to $69 (U.S.) from $54.
Barclays upgraded Occidental Petroleum to "overweight" from "equalweight" and raised its price target to $108 (U.S.) from $93.
Goldman Sachs downgraded Gap to "neutral" from "buy" and cut its price target to $40 (U.S.) from $42.
Atlantic Equities initiated coverage on Twitter with an "overweight" rating and $34 (U.S.) price target.
BMO Nesbitt Burns upgraded Omnicom to "outperform" and raised its price target to $77 (U.S.) from $63.
UBS raised its price target on Salesforce.com to $65 (U.S.) from $55 and maintained a "buy" rating.
Credit Suisse raised its price target on Chevron to $140 (U.S.) from $135 and reiterated an "outperform" rating.
RBC Dominion Securities cut its price target on Newmont Mining to $35 (U.S.) from $41 and reiterated a "sector perform" rating.
RBC Dominion Securities downgraded Calumet Specialty Product Partners LP to "sector perform" from "outperform" and cut its price target to $31 (U.S.) from $36.
RBC Dominion Securities cut its price target on Cisco Systems to $24 (U.S.) from $26 and maintained an "outperform" rating.
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For more analyst actions, breaking investing news and analysis, follow Darcy Keith on Twitter at @eyeonequities