Canadian Tire’s proposed new REIT will acquire a majority of the company’s real estate, including 255 retail properties and one distribution centre.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.
RBC Dominion Securities analyst Tal Woolley initiated coverage on CT Real Estate Investment Trust with a "sector perform" rating and $11.50 (Canadian) price target. The REIT was created by Canadian Tire to unlock the value of its real estate holdings; the retailer has an 83 per cent stake in the REIT.
"Our price target is at a 2 per cent premium to our net asset value/unit estimate one year out versus an 11 per cent premium for large cap retail REIT peers, reflecting CRT's modest float, controlling unitholder, tenant diversification, growth prospects and development pipeline," explained Mr. Woolley in a research note.
While he doesn't see tremendous upside over the coming year in the REIT's price, Mr. Woolley was overall upbeat about its prospects.
"CT REIT offers investors a stable distribution, driven by long-term leases to a high-credit quality tenant, matched with similarly long-term financing," he said.
The average Street target is $11, according to Thomson Reuters.
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CIBC World Markets downgraded Fortress Paper Ltd. two notches to "sector underperformer" from "sector outperformer," after a preliminary determination ruled that China will be able to levy a 13 per cent anti-dumping duty on output from the company's Thurso cellulose mill in Quebec.
The duty lowers CIBC's net asset value estimate on Fortress Paper by $13 a share. As such, analyst Mark Kennedy cut his price target all the way to $4.50 (Canadian) from $17.50.
In early February of this year, China's Ministry of Commerce, following complaints by China's viscose dissolving pulp producers, announced it was launching an anti-dumping investigation into dissolving pulp manufacturers based in the United States, Canada and Brazil.
A preliminary ruling earlier this month said an investigation found the existence of dumping and that the Chinese pulp industry has been substantially damaged by the action. Various duties came into effect immediately for certain U.S., Brazilian and Canadian companies. Fortress was said to be evaluating its legal options.
Mr. Kennedy didn't agree with the ruling.
"From the get go, this investigation has been puzzling to us. Now with the announcement of preliminary duties on certain dissolving pulp producers, this has turned into a case of political cronyism triumphing over free trade, economics and common sense," he said in a research note.
He listed several reasons for this view, but said one stands out in particular: China's lack of fiber self-sufficiency. "It is and always will be the high-cost producer of dissolving pulp. Nations like Brazil, the U.S. and Canada will always have a lower cost structure because their delivered fiber costs are half or in some cases one-third of the delivered fiber cost in China for dissolving pulp," he said.
Dumping occurs when products are sold into a foreign market at prices either below the price charged domestically or below its cost of production.
The average target among analysts is $8.28.
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There is little chance that Coastal Energy Co. will receive a higher takeover bid than the one offered by Spanish firm Cepsa, said Canaccord Genuity analyst Christopher Brown as he changed his recommendation to "sell" from "buy."
"Additionally, based on our discussions with shareholders and management, we believe the offering is in the best interest of investors," he said.
Under the deal, Cepsa will pay $19 per Coastal Energy share in cash. Mr. Brown reiterated his $19 (Canadian) price target.
Shares in early TSX trading were down 1 cent at $18.83. While that may indicate a slight hesitation on behalf of investors in believing the deal will close, Mr. Brown suggested there should be no major regulatory issues.
"Following a comprehensive review process by Cepsa and a number of other companies (which included technical evaluations and risk assessments), we are confident that Cepsa is an informed bidder that has made the best available offer," he said.
The average target among analysts is $23.71.
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CIBC World Markets analyst Perry Caicco cut his price target on George Weston Ltd. to $92 (Canadian) from $96 and maintained a "sector performer" rating after the company reported lacklustre quarterly EBITDA due to troubles within the frozen dough business.
The company's food operations saw frozen dough buyers turn to partly baked and frozen bread instead, though gains in that category failed to make up for losses in the former.
However, "fresh bread had its second consecutive positive volume quarter, due partially to product innovation and partially to sales strength at both its largest customer and in some alternate channels," he said. Still, he noted that there seemed to be limited upside for further volume gains.
The ongoing auction of Canada Bread by Maple Leaf Foods Inc. has also put a damper on the Canadian bread business, with Mr. Caicco affirming that "a new valuation could be placed on the bakery business depending on the outcome of the Canada Bread situation."
The average target among analysts is $92.36, according to Thomson Reuters.
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Canaccord Genuity analyst Derek Dley reiterated his "buy" rating on Alimentation Couche-Tard Inc., forecasting positive growth driven by robust margins on fuel ahead of the company's second-quarter fiscal 2014 results next week. Mr. Dley also hiked his price target to $79 (Canadian) from $69.
Shares for the convenience store chain have shot up almost 50 per cent over the past year on the heels of the company's acquisition of Statoil Fuel and Retail, which included thousands of gas stations across northern Europe.
"We are forecasting merchandise same-store sales growth of 1.5 per cent and 1.0 per cent in the U.S. and Canada, respectively, as the impact from changes in tobacco pricing should continue to subside. However, we believe the environment remained competitive and Couche-Tard likely continued to invest in margin to support sales growth," he said.
The company also recently announced further acquisitions in New Mexico to add to its portfolio of gas stations and stores throughout the U.S., Canada, Europe and Asia.
"Given Couche-Tard's healthy growth profile, both organic and through acquisitions, coupled with its attractive balance sheet, we believe the shares remain attractively valued at current levels," he said.
The average target among analysts is $66.10 according to Thomson Reuters.
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In other analyst actions:
BGC Partners downgraded Potash Corp. to "hold" from "buy" and reduced its price target to $33 (U.S.) from $35.
BGC Partners downgraded Mosaic to "hold" from "buy" and cut its price target to $47 (U.S.) from $50.
Cantor Fitzgerald downgraded Twitter to "hold" from "buy" and maintained a $32 (U.S.) price target.
Goldman Sachs adds Priceline to "conviction buy" from "buy" and raised its price target to $1,500 (U.S.) from $1,260.
Citigroup upgraded Best Buy to "buy" from "neutral" and raised its price target to $48 (U.S.) from $44.
CIBC cut its target on Sears Canada to $16 (Canadian) from $21 and maintained a "sector outperformer" rating, expecting shares to drop by $5 after going ex-dividend.
Credit Suisse cut its target on Campbell Soup to $41 (U.S.) from $46 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