The CAE headquarters is seen Thursday, May 14, 2009 in Montreal.Paul Chiasson/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.
CAE's shares are "priced for perfection" and investors should wait for a better entry point, Raymond James analyst Ben Cherniavsky said.
"Despite flat growth and a series of uneventful quarterly reports, CAE's stock has risen 20 per cent over the past three months," he wrote in a research note, comparing that to a 4 per cent rise in the S&P/TSX Composite Index.
"With CAE's stock commanding an historically high multiple on estimates that already assume big operating improvements, we view the current risk-reward profile as being relatively unattractive. Accordingly, we prefer to wait for a more attractive entry point before assuming a more bullish stance towards CAE's shares."
Target: Mr. Cherniavsky rates the stock "market perform" and raised his price target to $16.00 from $12.50 . The analyst consensus price target over the next year is $13.64, according to Thomson Reuters.
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Cineplex Inc.'s free cash flow yield is likely to come under pressure this year because of rising capital spending, said Canaccord Genuity analyst Aravinda Galappatthige.
"While recognizing the low risk profile of the business and the upside potential from new initiatives, we believe that these yield levels could serve to cap further upside potential to the stock," he wrote in a research note. The movie theatre operator also missed 2013 earnings estimates because its costs were high, while revenue surpassed forecasts, he noted.
Target: Mr. Galappatthige rates the stock "hold" and cut his price target to $39.00 from $40.00. The analyst consensus price target over the next year is $42.25.
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SunOpta Inc. has reported stagnant earnings per share from continuing operations over the past 10 years, even though its annual revenues have almost quadrupled to more than $1-billion (U.S.), said Desjardins Securities analyst Keith Howlett.
"Each year, an earnings breakthrough is eagerly anticipated, given both the industry in which the company operates and the company's growing scale of operations," he wrote in a research note.
"While 2014 might be the year, earnings visibility remains poor."
Target: Mr. Howlett rates the stock "hold" and cut his price target to $8.50 from $9. The analyst consensus price target over the next year is $11.27.
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Unpleasant surprises on two fronts have resulted in a ratings downgrade for Amazon.com.
According to UBS analyst Eric J. Sheridan, an unexpected deceleration in revenue and paid-unit growth trends hit Amazon in fourth quarter 2013. However, a more alarming development has surfaced in the results of a survey of U.S. Amazon Prime customers, a large number of which said they will not renew if their $79 annual fee is raised.
"The key finding of the survey was that while 94 per cent of Amazon Prime customers surveyed indicated a likelihood of renewing ('definitely will renew' or 'probably will renew') at the current $79 annual fee, these percentages dropped precipitously when price increases of $20 and $40 were introduced (to 58 per cent and 24 per cent, respectively), says Mr. Sheridan. "If Amazon were to raise Prime fees, such a fee increase might need to be accompanied by either a) a higher level of value in the service offering (additional media content, streaming music and/or Fresh (supermarket) offerings) and/or b) an increased level of marketing around the perceived value of Prime to the general public."
Target: Mr. Sheridan is downgrading Amazon to "neutral" from "buy" and cutting his target price to $375 from $450. The analyst consensus price target over the next year is $432.85 (U.S.).
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Favourable market conditions have led Credit Suisse analyst Brandon Heiken to upgrade Veeco Instruments Inc.
Expected higher margins and yields for LED manufacturers, and an approaching end to a period of oversupply in the market, favour Veeco, says Mr. Heiken.
Target: He is upgrading Veeco to "outperform" from "neutral" and raising his target price to $50 from $30 (U.S.). The analyst consensus price target over the next year is $31.25.