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.
Frosty weather conditions and an increasingly competitive retail environment will likely mean negative same-store sales and earnings growth in Metro Inc.'s fiscal first quarter, warned RBC Dominion Securities analyst Irene Nattel.
But, she expects investors to overlook the impact of this brutal winter and focus on a potential announcement from the company aimed at improving its balance sheet.
Metro's management had indicated it would make an announcement on optimizing its balance sheet in conjunction with its first quarter 2014 results, which is when the company has historically raised its annual dividend. Those results are due Jan. 28.
Ms. Nattel is forecasting about a 10 per cent dividend hike to about 28 cents per share on a quarterly basis, representing a payout rate of about 23 per cent. She also thinks Metro could announce an additional $800-million buyback of shares, which could be staged between the fiscal second quarter of 2014 through to the first quarter of fiscal 2015. That could drive a 10 per cent rise in earnings per share by fiscal 2015 and bolster the share price by about $10, she said.
As for the first-quarter results, Ms. Nattel is forecasting earnings before interest, taxes, depreciation and amortization to contract 5.8 per cent to $177.3-million, driven by a drop in same-store sales of 200 to 250 basis points.
"Our Q1 EPS forecast of $1.11 (consensus range: $1.08-$1.19 with a mean of $1.15) is down 5 per cent year-on-Year," she noted.
Ms. Nattel raised her price target to $74 (Canadian) from $72 and reiterated an "outperform" rating. The average price target among analysts is $66.73, according to Thomson Reuters.
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Endeavour Silver Corp.'s production guidance for 2014 exceeded expectations and its balance sheet appears to be strengthening, said Raymond James analyst Chris Thompson.
Still, the miner is a highly leveraged, high-cost producer that trades at a premium to its peers and operates at, or very close to, its marginal cost of production, he said.
"We continue to see limited free cash flow at spot metal prices in 2014," he wrote in a research note. "We continue to expect EDR's share price to trade in a highly volatile fashion swinging significantly with the silver (and gold) price."
Mr. Thompson raised his price target on the stock to $5.50 from $5 and rates it "market perform." The analyst consensus price target for Endeavour Silver over the next year is $4.66, according to Thomson Reuters.
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Despite the dramatic rise in its share price in 2013, Netflix Inc. should continue to outperform this year, RBC Dominion Securities analyst Mark Mahaney said after the streaming movie service beat Street forecasts for both fourth-quarter earnings and revenue.
"Netflix is becoming an Internet video utility," summed up Mr. Mahaney as he raised his price target to $500 (U.S.) from $440 and reiterated an "outperform" rating.
"Fundamentals are getting stronger: Subscribers are increasing (both in U.S. and International), churn is falling, contribution margins are rising, etc. Full flywheels are in effect."
Mr. Mahaney said several catalysts are starting to emerge that could take shares further aloft, including possibilities for tiered pricing, improving profitability in global markets, and more successful original content offerings, such as House of Cards.
His price target is one of the more optimistic on the Street, where the average is about $347, according to Thomson Reuters data. Cowen and Co. also raised its target today to $355 from $330 and maintained a "market perform" rating.
Shares are up 17 per cent in early trading today at $392.22 (U.S.).
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Canaccord Genuity has added Orezone Gold Corp. to its "Focus List" - the stocks it considers as its best investing ideas - after the firm released the results of a study looking at the potential for an open pit, heap leach operation at its Bomboré gold project in the West African nation of Burkina Faso.
The Preliminary Economic Assessment demonstrated the potential for a heap leach operation, which would allow for an expansion to a carbon-in-leach operation if warranted under better capital market and gold price conditions.
"Highlights include a lower mineable resource (9-10 per cent to 1.27 million ounces), lower strip ratio, (15 per cent to 1.8:1), higher throughput rate (10 per cent to 5.5 Mt/y of ore) and capital adjustments combined with a more detailed plan of operations, specifically an annual grade profile," commented Canaccord analyst Joe Mazumdar.
"The delivery of the scoping study has further de-risked the heap leach scenario at the Bomboré gold project...further de-risking is expected to follow with additional metallurgical test-work and the delivery of a feasibility study," he said. That could come in the fourth quarter of this year.
Mr. Mazumdar reiterated a "buy" rating and raised his price target to 90 cents (Canadian) from 80 cents. The average analyst target is $1.48.
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Canaccord Genuity analyst Ken Herbert thinks Boeing Co. had a strong finish to 2013 and will report fourth-quarter results on Jan. 29 that are better than the Street expects.
"We believe a better-than-expected Q4/13 print (we are at $1.65 vs. consensus of $1.57) will provide confidence in BA's ability to exceed initial 2014 expectations," he said in a note. "With dwindling catalysts, the focus will increasingly be on execution, and upside to estimates. We are raising our 2014 and 2015 EPS estimates to $7.72 and $8.47, respectively. We believe the initial 2014 guidance will be for EPS between $7.10-$7.30, with commercial deliveries of over 700 aircraft."
Mr. Herbert maintained a "buy" rating and raised his price target to $160 (U.S.). The average target is $153.26.
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In other analyst actions:
Topeka Capital downgraded EBay to "hold" from "buy" and reduced its price target to $60 (U.S.) from $64. Credit Suisse raised its price target to $62 from $55 and maintained a "neutral" rating.
Credit Suisse cut its price target on U.S. retailer Target to $55 (U.S.) from $62 and kept a "neutral" rating.
Credit Suisse upgraded Allegheny Technologies to "outperform" from "neutral" and raised its price target to $41 (U.S.) from $34.
Raymond James downgraded Valero Energy to "outperform" from "strong buy" and maintained a $63 (U.S.) price target.
Nomura Securities upgraded Motorola Solutions to "buy" from "neutral" and raised its price target to $72 (U.S.) from $65.
Credit Suisse raised its price target on General Dynamics to $117 (U.S.) from $96 with an "outperform" rating.
Nomura Securities downgraded F5 Networks to "neutral" from "buy" but raised its price target to $111 (U.S.) from $100.
Credit Suisse raised its price target on SanDisk to $85 and $75 and maintained an "outperform" rating. UBS raised its target to $80 (U.S.) from $74.
UBS downgraded Rowan Cos. to "neutral" from "buy" and cut its price target to $33 (U.S.) from $43.
UBS cut its price target on Transocean to $45 (U.S.) from $59 and maintained a "neutral" rating.
UBS cut its price target on Diamond Offshore to $52 (U.S.) from $60 and maintained a "neutral" rating.
UBS cut its price target on Ensco Plc to $53 (U.S.) from $58 and maintained a "neutral" rating.
For more analyst actions, breaking investing news and analysis, follow Darcy Keith on Twitter at @eyeonequities