A Scotiabank branch on Bay Street South of Queen Street in Toronto in this file photo. The bank reported its latest earnings Tuesday.Ryan Carter/The Globe and Mail
Inside the Market's roundup of some of today's key analyst actions. This file will be updated during the trading day.
The next few years will be tough enough for Rogers Sugar Inc. to warrant a downgrade from TD Securities Inc. analyst Michael Van Aelst.
The sugar maker will experience a host of margin pressures over the next 24 months, including rising domestic competition, lower sales volumes and the threat of new importers setting up in Canada, say Mr. Van Aelst.
"This, coupled with the loss of exports to Mexico and the lack of any other incremental export opportunities, will make for a challenging couple of years for Rogers Sugar, in our view," he says.
Target: He is downgrading Rogers Sugar to "sell" from "hold", and is maintaining his $5 (Canadian) target price.
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The most international of Canada's Big Six banks is also the most vulnerable to emerging markets, prompting a target price cut from TD Securities Inc. analyst Mario Mendonca.
"With approximately 30 per cent of [Bank of Nova] Scotia's earnings coming from the International segment, Scotia's often touted emerging markets exposure is now a decidedly negative attribute," says Mr. Mendonca.
"Reflecting the drop in margin near the second half of 2013, as well as higher credit losses, we expect international earnings growth to be weak at only 3 per cent–4 per cent in the first half of 2014. By the second half of the year, we should see earnings growth accelerate to the high single digit, low double-digit territory."
Target: Mr. Mendonca maintains his "buy" rating but has decreased his target price to $73, from $76.
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Chemtrade Logistics Inc.'s recent $900-million acquisition of General Chemical Corp. "is expected to provide greater stability of cash-flow generation" for investors, said BMO Capital Markets analyst Alexandra Syrnyk.
"The acquisition of GCC provides a complementary suite of specialty chemical products that diversifies CHE's end-market exposure," she wrote in a research note. She estimated 2014 and 2015 distributable cash flow per unit would increase to $2.40 and $2.08 from $1.72 and $1.80, respectively.
Target: Ms. Syrnyk rates the stock "market perform" and raised her target price to $21, from $17.50. The company already trades at more than eight times expected earnings for 2014 and 2015, at the higher end of the broad chemicals peer group range because of its higher yield and risk-mitigated business model, she said.
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Metro Inc. increased its dividend 20 per cent on Tuesday and "will continue to be an active buyer of its own shares during the present difficult competitive period," said Desjardins analyst Keith Howlett.
The retailer's operating earnings declined by 3.8 per cent to $177.5-million as revenue declined 0.1 per cent, the impact on investors but was offset by a lower share count, he wrote in a research note. Metro will continue to face tough competition until the fall of 2014, he said.
Target: Mr. Howlett rates the stock "hold" and has a $67 target price, which is in line with the analyst consensus price target provided by Thomson Reuters.
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Gildan Activewear Inc.'s retail strategy, a continued improvement in the U.S. economy and and a modest increase in cotton prices all support a higher target price for the apparel maker, said Raymond James analyst Kenric Tyghe.
"Gildan is delivering on brand extensions (levering the Gold Toe brand), a differentiated (and margin-accretive) apparel program solution for retailers, and increasing share in the Lifestyle Brands segment," he wrote in a research note. " Our narrow focus on the retail growth trajectory...is deliberate, and allows us to highlight what we believe is a disconnect in the target multiples currently attached to Gildan."
Target: Mr. Tyghe rates the stock "outperform" and raised his target price to $65.00 (U.S.) from $55. The analyst consensus price target for over the next year is $50.92, according to Thomson Reuters data.