A Canadian Natural Resources pump jack pumps oil out of the ground near Dorothy, Alberta, in this file photo.© Todd Korol / Reuters/Reuters
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.
Canaccord Genuity analyst Phil Skolnick has added Canadian Natural Resources Ltd. to the research firm's "focus list" - its favourite investing ideas - urging investors to look past the current widening in price differentials between Canadian crude and global oil pricing. He increased his price target on the stock by $3 to $42 (Canadian)
Canadian Natural announced a 60 per cent boost in its dividend on Thursday, and that in itself is a promising sign, argued Mr. Skolnick.
"We believe the large dividend raise demonstrates three things: a) management's confidence that the Primrose issue is just mechanical; b) where the company is in the spending cycle on the Horizon expansion - i.e., the company sees a path to being in harvest mode and thus ever increasing free cash flow; and c) the benefit of long life oil sands projects," he said in a research note.
Meanwhile, he believes the increase in differentials between Western Canadian Select crude and West Texas Intermediate oil is temporary and much different than at this time last year.
"While differentials are about as wide as they were a year ago, the difference this time is that there is a clear line of sight on infrastructure improvements in less than a year's time owing to increased coker, pipeline, and rail capacity. As such, CNQ will be the go-to stock given roughly 40 per cent of its production is heavy oil and it lacks downstream operations, which would act as a partial offset. Additionally, it is essentially a household name for non-Canadian investors (the incremental buyer) on this theme given its market cap and liquidity," he said.
RBC Dominion Securities also raised its price target today on Canadian Natural Resources to $41 (Canadian) from $40 while reiterating an "outperform" rating.
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Tim Hortons Inc. on Thursday missed Street expectations on third-quarter profit but beat on revenues, and those mixed results are being reflected in analyst reaction today.
Canaccord Genuity downgraded the coffee and doughnut chain to "hold" from "buy" and kept a $67 (Canadian) price target. But Desjardins Securities upgraded the company to "buy" from "hold" and raised its target price to $70 from $60.
Canaccord Genuity analyst Derek Dley explained that his downgrade mostly reflected the stock's strong run of late, and that he remains "constructive on the company's recent shareholder friendly initiatives," which includes a $900-million share buyback.
"Tim Horton's core markets remain highly competitive," he commented.
Desjardins Securities analyst Keith Howlett is more optimistic the stock is heading for more gains, especially given the short-term price support that the share buyback will provide. He also has a "favourable impression" of new CEO Marc Caira and thinks investors should "get on board" before he unveils his team's strategic plan for the next three to five years in early February.
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Canaccord Genuity analyst Scott Chan upgraded Gluskin Sheff + Associates to "buy" from "hold," believing that the asset manager will soon declare a special dividend amid continued strong portfolio performance.
Mr. Chan also raised his price target to $24.50 (Canadian) from $21.50.
"Including compensation changes, we estimate six-months performance fees (ending Dec/13) would result in a special dividend of about $0.60/share (implying 2.7 per cent yield)," Mr. Chan said in a research note. "Historically, investors have bid up the shares of GS in anticipation of a material special dividend providing a favorable short-term outlook, in our view."
"With strong free cash flow, we believe a combination of dividend increases and potential share buybacks could further benefit shareholders," he added.
Gluskin Sheff reported on Thursday that its assets under management grew 3 per cent in the third quarter from the second quarter, or 12 per cent from a year earlier, to $6.3-billion.
CIBC also raised its price target on Gluskin Sheff to $22 from $20 and maintained a "sector performer" rating.
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Based upon recent share price appreciation, Quebecor Inc. was downgraded to "sector perform" from "outperform" by RBC Dominion Securities analyst Drew McReynolds.
The company posted a loss in profit in the third quarter, though the adjusted EPS beat analysts' consensus estimate. Quebecor announced back in July that it would cut hundreds of jobs and close down several of its publications due to declining print advertising revenue, though its telecommunications arm continues to perform modestly.
"We expect slowing wireline subscriber growth to become an net asset value headwind and we would look for more attractive and/or timely accumulation points," he said.
Mr. McReynolds kept a price target of $27 (Canadian).
Meanwhile, Desjardins Securities analyst Maher Yaghi increased his target to $27.50 from $24.50 and maintained a "hold" rating, citing confidence in Quebecor's management in the face of increased competition.
However, "we believe increased regulatory risk, in addition to a much more competitive environment from BCE, will make it difficult for Quebecor to generate strong organic growth in future years," he said.
Similarly, CIBC World Markets also raised its price target to $28 from $25.50 as it maintained a "sector outperformer."
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Canadian Tire Corp. had its "buy" rating reiterated by Keith Howlett of Desjardins Securities after handily holding its own against new rival Target Corp. in the third quarter.
Mr. Howlett raised his price target to $109 (Canadian) from $100, citing strong third-quarter profit and a well-received REIT IPO which will acquire a majority of the real estate that the company already owns.
In addition, "the financial services business is posting very strong results, and has now succeeded in stimulating new credit card account growth in a flat market," he said.
The company has done well so far with its strategy to return to its roots of selling tires and automotive products, and has found success with its acquisitions of major Canadian sporting goods retailers.
"In our view, the retail business is still relatively modestly valued, both in the market and in our target price," he said.
CIBC also raised its target to $107 from $105 and maintained a "sector outperformer" rating.
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In other analyst actions today:
Beacon Securities downgraded High Liner Foods to "hold" from "buy" and maintained a $43.50 price target.
Raymond James upgraded Trinidad Drilling to "strong buy" from "outperform" and maintained a $11.75 (Canadian) price target. CIBC upgraded the stock to "sector outperformer" with an unchanged $11.50 price target.
RBC Dominion Securities took CAP REIT off its 'top pick' list; it's now rated "outperform" with an unchanged $25 (Canadian) price target.
Hudson Square initiated coverage on Twitter with a "sell" rating and $20 (U.S.) price target. Wedbush started coverage with a "neutral" rating and $37 price target.
National Bank upgraded Vermilion Energy to "outperform" from "sector perform" with a $64 (Canadian) price target.
Desjardins hiked its target on Manulife Financial to $22 (Canadian) from $18.50 and maintained a "buy" rating. Credit Suisse raised its target to $21 from $20 and maintained an "outperform" rating.
CIBC World Markets raised its price target on Great-West Lifeco to $34 from $31 and maintained a "sector performer" rating. Desjardins raised its target to $34 from $30.50.
Desjardins raised its price target on Sun Life Financial to $37 from $33.50 and maintained a "hold" rating.
CIBC World Markets raised its price target on CI Financial to $36 from $33 and maintained a "sector performer" rating.
Credit Suisse raised its price target on Pacific Rubiales to $21.50 (Canadian) from $24 and maintained a "neutral" rating.
Industrial Alliance Securities upgraded BrightPath Early Learning to "buy" from "hold" and raised his price target by 5 cents to 50 cents.
CIBC World Markets downgraded Long Run Exploration to "sector performer" and cut its price target to $6.50 form $7.25.
CIBC World Markets raised its price target on Genivar to $33 from $25.50 and maintained a "sector outperformer" rating.
Desjardins raised its price target on Saputo to $57 (Canadian) from $53 and maintained a "buy" rating. RBC cut its price target to $52 from $54 and maintained an "outperform" rating.
CIBC World Markets downgraded Sierra Wireless to "sector underperformer" from "sector performer" and maintained an $11 (U.S.) price target. Raymond James cut its price target to $17 (U.S.) from $20.
RBC raised its price target on Groupon to $11 (U.S.) from $10 and maintained a "sector perform" rating.
Canaccord Genuity downgraded Tremor Video to "hold" from "buy" and cut its price target to $9 (U.S.) from $12.50.
UBS raised its price target on Priceline to $1,220 (U.S.) from $1,060 and maintained a "buy" rating.
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For more analyst actions, breaking investing news and analysis, follow Darcy Keith on Twitter at @eyeonequities