A pedestrian is reflected in a Suncor Energy sign in Calgary in this file photo.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.
Suncor Energy Inc.'s announcement this week of a 15 per cent hike to its dividend wasn't enough to please Canaccord Genuity analyst Phil Skolnick. He cut his price target on the stock to $45 (Canadian) from $50, as Canaccord removed Suncor from its "Canadian Focus List" - its favourite investing ideas.
Mr. Skolnick was expecting a dividend hike closer to 40 per cent, and the market consensus was for an increase of about 25 per cent.
"Suncor isn't a play on our positive heavy oil thesis, and therefore large dividend upside potential was key to its Focus List status as it would've yielded greater investor interest, in our view," Mr. Skolnick explained in a research note. "In fact, compared to the other integrated producers we cover, while it ranks highly with respect to the Canadian dollar depreciating, it is least levered to Western Canadian Select (heavy crude) pricing improvement amongst the four integrateds."
Suncor announced an additional $1-billion share buyback program, but Mr. Skolnick thinks more of that cash should have gone toward the dividend. Share buybacks, he says, only provide temporary support to the share price and don't make the stock more expensive for short sellers.
The disappointing dividend boost also "came on the heels of an underwhelming Investor Day in December where: 1) investors were disappointed in the lack of transparency on the returns potential of the de-bottleneck plans; 2) SU didn't provide enough focus on dividend upside (now we know why); and 3) the company stated it would like to get more exposure to Norway (hint of possible acquisition)," he said.
Nevertheless, Mr. Skolnick maintained a "buy" rating on Suncor shares, believing it still has strong free cash flow potential and it is trading at a "compelling" valuation compared to peers. The average analyst price target for Suncor is $43.49, according to Thomson Reuters.
Canaccord's top pick among senior Canadian integrated energy producers remains Canadian National Resources.
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Influential tech analyst Peter Misek of Jefferies Equity Research has raised his price target on BlackBerry Ltd. to $9 (U.S.) from $6 after conducting an in-depth scenario analysis for each of the company's six key business segments.
"While the stock has rallied on decreased near-term liquidity concerns, our analysis highlights that BBRY faces a difficult tightrope walk as it needs to balance quickly ramping its iOS/Android MDM business while drastically reducing costs," Mr. Misek said in a research note.
He made it clear that several scenarios could still play out for BlackBerry and there's a lot of uncertainty over how it will all unfold. In the bear case, he thinks shares could plummet to near $2, but the bull case could mean a stock price of $16. His "base case" scenario is $8. He assigned a 50 per cent probability for the base case to pan out, and 25 per cent each to the bull and bear cases.
Taking all that into account, he came up with a "probability-weighted" average price of $9 - his new price target. He continues to rate the stock as a "hold."
Mr. Misek's higher price target follows a relatively upbeat but cautious outlook on BlackBerry on Monday from CIBC World Market's Todd Coupland. After meeting with BlackBerry chief financial officer James Yersh, he believes the company will be cash flow positive by the fourth quarter of fiscal 2015. He also saw potential for higher-than-expected operating expenditure cuts. But Mr. Coupland didn't change his recommendation on the stock, still rating it as a "sector underperformer" with a price target of $5 (U.S.).
The average analyst target is $7.18 (U.S.).
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Atlantic Power Corp.'s plan for an $800-million (U.S.) debt refinancing is a "modestly positive step in the right direction," but a debt overhang remains and the company may need to take further action, such as a cut to its dividend, said Desjardins Securities analyst Jeremy Rosenfield.
The new debt will replace at least $415-million of near-term maturities and chip away at higher yield obligations.
Mr. Rosenfield cut his price target to $4 (Canadian) from $6 "to reflect weaker market valuation for the shares during the company's turnaround."
"We expect the shares to remain volatile over the near term and we would remain on the sidelines at this point," Mr. Rosenfield said. He maintained a "hold" rating.
The average analyst target is $3.50.
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Shares of WestJet Airlines Ltd. should remain rangebound and investors seeking airline plays would be better off with U.S. names, said Raymond James analyst Ben Cherniavsky.
WestJet's challenges boil down to costs exceeding revenue, said Mr. Cherniavsky. He expects the airline's non-fuel cost per available seat mile to rise approximately 2 per cent in 2014, while revenue per available seat mile is forecast to rise by 1.8 per cent.
Mr. Cherniavsky maintained his "market perform" rating and cut his price target to $28 from $31. The analyst consensus price target is $31.50.
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A slowing growth profile in Canada and underperforming operations in the U.S. have garnered Tim Hortons Inc. a target price cut from Canaccord Genuity analyst Derek Dley.
Mr. Dley anticipates a dividend increase announcement when the coffee and doughnut chain reports fourth-quarter results on Feb. 20. He also expects new CEO Marc Caira to outline plans to increase return on investment in Tim Hortons' U.S. division and growth strategies for its sluggish Canadian operations.
Mr. Dley reiterated his "hold" rating and decreased his target price to $61.00 (Canadian) from $67.00. The analyst consensus price target for Tim Hortons is $65.29.
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In other analyst actions:
BMO Nesbitt Burns upgraded Copper Mountain Mining to "market perform" from "underperform" and instituted a $1.75 (Canadian) price target.
CIBC World Markets downgraded InnVest Real Estate Investment Trust to "sector performer" from "sector outperformer," citing the REIT's recent outperformance against peers. CIBC hiked its price target to $5.25 (Canadian) from $4.75.
Desjardins Securities hiked its price target on Kirkland Lake Gold to $3.50 (Canadian) from $2.50 and maintained a "hold" rating.
Bernstein raised its price target on Google to $1,500 - believed to be the highest target on the Street - from $1,350. It maintained an "outperform" rating.
Wunderlich Securities downgraded Sirius XM Radio to "hold" from "buy" and cut its price target to $3.80 (U.S.) from $4.20.
Scotia upgraded Archer Daniels Midland to "outperform" from "sector perform" and raised its price target to $44 (U.S.) from $43.
Jefferies upgraded Steel Dynamics to "buy" from "hold" with a price target of $19 (U.S.).
Nomura Securities cut its price target on Arch Coal to $3 (U.S.) from $4 and reiterated a "neutral" rating.
Goldman Sachs downgraded Oasis Petroleum to "buy" from "conviction buy" and cut its price target to $53 (U.S.) from $63.
Topeka Capital raised its price target on Twitter to $70 (U.S.) from $54 and maintained a "buy" rating.
For more analyst actions, breaking investing news and analysis, follow Darcy Keith on Twitter at @eyeonequities