A Telus store is seen on Bloor Street West in Toronto on Aug. 15, 2013. Wind Mobile is criticizing BCE Inc. and Telus Corp. for challenging the CRTC’s authority to regulate the wholesale fees that carriers pay each other for domestic roaming services.The Canadian Press
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.
Telus Corp. offers dividend investors the greatest potential for income growth and share buybacks within the telecom sector, said Desjardins Securities analyst Maher Yaghi, who reiterated a "buy" rating and raised his prediction for the stock price.
Telus reported third-quarter results on Friday that showed improving customer satisfaction. That's key, said Mr. Yaghi, because in a maturing industry, customer retention remains the best tool to deliver continued improvement in subscriber growth. "As a testament to this, Telus delivered a churn rate of just 0.99 per cent in postpaid wireless subscribers in the quarter - by far the best in its industry," he said.
"On the back of the strong results seen over the last few quarters and our outlook for the company, we believe Telus is well positioned to continue to deliver strong dividend and cash flow growth in the coming years," Mr. Yaghi said. "With a net-debt-to-EBITDA ratio of 1.8x, Telus has strong financial flexibility to continue to invest in its networks in order to keep growing its market share in wireless and TV, and provide 10 per cent dividend growth for the next few years."
He raised his price target to $40 (Canadian) from $35.50. He wasn't alone: RBC Dominion Securities today also raised its price target to $40 (Canadian) from $38 and maintained an "outperform" rating, while CIBC World Markets raised its target to $35 from $34 and maintained a "sector performer" rating.
The average target among analysts is $38.83, according to Bloomberg data.
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Citing the ongoing uncertainty that surrounds the start-up of its namesake mine, Canaccord Genuity downgraded Detour Gold Corp. to "hold" from "speculative buy."
While the ramp-up of the Detour Lake mine in northeastern Ontario has progressed better than many other large mine developments in the gold sector, completion of the project is still a long way off, pointed out Canacccord analyst Rahul Paul.
"Despite the attractive leverage to gold and the longer term re-rating potential, we are concerned that the levered balance sheet with limited financial flexibility, stringent debt covenants, and limited visibility into 2014 plans could prove to be an overhang in light of the prevailing gold price volatility and challenging capital market conditions," Mr. Paul said in a research note. "In that regard, our hold rating reflects what we believe to be a prudent, cautious approach until some of the risks have been addressed and/or we see a sustained improvement in market conditions."
Canaccord cut its price target to $8 (Canadian) from $12. Other analysts also sliced their forecasts for the stock: Raymond James cut its target to $15 from $18.50 and maintained an "outperform" rating; Desjardins Securities cut its target to $10 from $13 and maintained a "buy" rating; and Credit Suisse cut its target to $12 from $14 and maintained an "outperform" rating.
"In our view, while an inadequate working capital position will weigh on the name in the short-term, those investors with a long-term focus will likely be attracted at current levels given Detour's ultimate profile as a large scale, geo-politically superior producer post this ramp-up phase," commented Raymond James analyst Phil Russo.
The average target among analysts is $12.35.
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Air Canada has finally turned a corner, according to Kevin Chiang of CIBC World Markets, who reiterated a "sector outperform" rating on the heels of another strong quarter.
Mr. Chiang raised his target to $8 (Canadian) from $5. The airline reported a surge in third-quarter profit on Friday, after having reported back in August its best-ever second-quarter revenues.
The company has suffered in recent years from a weak airline industry and controversy over employee strikes and its union agreements. Restructuring, however, has led the airline to focus its efforts on creating a sustainable business model by refinancing debt, switching to more efficient aircraft and starting its new low-cost carrier Rouge.
While there is no guarantee that the airline's recent upward swing will last, Mr. Chiang cites the performance of other U.S. legacy airlines.
"As the U.S. legacy carriers have embarked on their own turnaround strategies, we have seen an improvement in unit profitability and a re-rating in valuation. At this juncture then, while AC.B does need to continue to execute on its plan, there is significant earnings and valuation upside," he said.
Chris Murray of Altacorp Capital Research echoed the sentiment, raising his target to $9 from $8 and maintaining an "outperform" rating.
"We believe there is a strong valuation argument to be made in support of Air Canada shares as they continue to trade at a substantial discount to peers," he said.
Raymond James also hiked its price target on Air Canada to $8 from $7 and affirmed an "outperform" rating. The average Street target is now $7.69.
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Disappointed by the lack of improvement in the company's debt levels, Raymond James analyst Frederic Bastien downgraded Armtec Infrastructure Inc. to "market perform" from "outperform."
"Although management deserves a lot of credit for taking the necessary actions to save Armtec from ruin, we need to see it materially elevate the firm's free cash flow generation before returning to a more constructive recommendation," Mr. Bastien said in a research note. "Until this happens, we expect the shares to trade range bound."
Armtec last week reported third-quarter EBITDA that met Mr. Bastien's estimates, but at $19-million, fell about $1-million short of the consensus view. As of the end of September, Armtec was saddled with $40-million more debt than at the same time last year.
"All of this has given us reason to believe the path to meaningful debt reduction for Armtec will be a longer journey than we had previously anticipated (hence, our decision to wait on the sidelines at this juncture)," Mr. Bastien said.
Mr. Bastien cut his price target to $2.50 (Canadian) from $3. The average target among analysts is $2.50.
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Credit Suisse analyst Jim Wicklund maintained Halliburton Co.'s "outperform" rating after the company raised its dividend by 20 per cent last week and held a meeting between executives and analysts.
Mr. Wicklund hiked his price target to $70 (U.S.) from $63, citing the unveiling of the company's new data system to optimize productivity in unconventional reservoirs, where oil is difficult to extract.
The oil-and-gas giant also pledged during the meeting to raise North America profit margins by 2 percentage points, in addition to growing deepwater revenues at a faster rate than the overall market and tripling revenue from its mature fields business.
"While aggressive, the confidence and pathway to those commitments result in a level of confidence, growth and returns that make for an exceptionally compelling case to own the stock," he said.
The average target among analysts is $65.94.
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In other analyst actions:
National Bank Financial hiked its price target on IGM Financial to $56 (Canadian) from $53 and maintained a "sector perform" rating. On Friday, BMO Nesbitt Burns upgraded the stock to "outperform" from "market perform" and raised its price target to $57.50 from $52.
Desjardins Securities downgraded Copper Mountain Mining Corp. to "hold" from "buy" and cut its price target to $2.25 (Canadian) from $2.75, due to a surprise equity issue.
M Partners downgraded Crombie REIT to "hold" from "buy" and cut its price target to $14.25 from $15.50.
M Partners downgraded Retrocom REIT to "hold" from "buy" and cut its price target to $5 from $5.75.
Raymond James downgraded ZCL Composites to "market perform" from "outperform" and raised its price target to $7.50 (Canadian) from $6.50.
Industrial Alliance Securities upgraded Canadian Energy Services & Technology to "strong buy" from "buy" and maintained a $22 (Canadian) price target.
Canaccord Genuity raised its price target on Brookfield Asset Management to $41 (U.S.) from $38 and maintained a "hold" rating. RBC Dominion Securities raised its target to $45 (U.S.) from 42 and maintained an "outperform" rating.
RBC Dominion Securities raised its price target on AutoCanada to $45 (Canadian) from $41 and maintained a "sector perform" rating.
Goldman Sachs downgraded Eli Lilly to "sell" from "neutral" and cut its price target to $48 (U.S.) from $52.
UBS upgraded Best Buy to "buy" from "neutral" and raised its price target to $49 (U.S.) from $35.
Raymond James raised its price target on Heroux-Devtek to $9.50 (Canadian) from $8.50 and maintained a "market perform" rating.
Raymond James upgraded TD Ameritrade to "outperform" from "market perform" with a price target of $33 (U.S.).
Canaccord upgraded Concho Resources to "buy" and raised its price target to $130 (U.S.) from $101.
UBS raised its price target on HudBay Minerals to $8.50 (Canadian) from $8 and maintained a "neutral" rating.
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For more analyst actions, breaking investing news and analysis, follow Darcy Keith on Twitter at @eyeonequities