Magna International founder Frank StronachFRANK GUNN/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.
RBC Dominion Securities says it is increasingly confident that Magna International Inc. is poised for significant earnings growth.
Recent investor meetings have reinforced drivers of future growth for Magna, said RBC analyst Steve Arthur. He reiterated his "outperform" rating and raised his target price on Magna's shares to $118 (U.S) from $113. But he also said he sees plausible scenarios in which Magna's shares could increase beyond the $150-mark.
The company's stock, which is up by more than 30 per cent year to date, has already substantially outperformed its peer group recently. And yet, Magna still represents good value as there good reasons for a premium valuation, Mr. Arthur said.
"Meetings over the past several weeks highlight key drivers of earnings growth all amplified by aggressive share buybacks and potentially acquisitions," Mr. Arthur said.
Growth contributors include North American industry growth, margin improvement, and aggressive capital expenditures.
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Yamana Gold Inc. trades at "an unjustifiable 29 per cent discount to its larger peers" and deserves to be re-rated, said Canaccord Genuity analyst Tony Lesiak.
The miner has been downgraded recently because of the underperformance of its growth assets in Brazil, yet they account for just 10 per cent of the net asset value of the company and may well be sold shortly, Mr. Lesiak wrote in a research note.
Yamana's acquisition of Osisko Mining Corp. gives it the Malartic mine in Quebec, "a new, high-quality cornerstone asset in a favourable jurisdiction," he said. "The acquisition also allows for the development of two high-quality but jurisdictionally challenged (Argentina) assets in Cerro Moro and Suyai without compromising the geopolitical risk profile of the company," he said. Yet, the acquisition would be "modestly dilutive" to Yamana, he said.
Mr. Lesiak rates the stock "buy" and lowered his price target to $13.75 from $14.50. The analyst consensus price target over the next year is $10.75, according to Thomson Reuters.
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Constellation Software Inc.'s plan to raise as much as $100-million through debentures should prove positive for shareholders and may be simply the first of many debt offerings, said Cantor Fitzgerald analyst Blair Abernethy.
"Our initial view on this offering is positive as it provides a long-term debt instrument that helps enable Constellation to maintain, or possibly accelerate, its current pace of acquisitions, without common equity dilution. In addition, if successful, in our view this financing helps to reduce the possibility of a common share dividend cut this year. We expect further debt-based instruments to be forthcoming from Constellation as it seeks to boost its balance sheet," he wrote in a research note.
Mr. Abernethy rates the stock "buy" and has a $270 price target. The analyst consensus price target is $262.18.
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Nevsun Resources Ltd. "is compelling as a significant producer of copper that operates in the lowest quartile of industry costs, and remains undervalued," given its robust balance sheet, strong free cash flow, plentiful exploration potential and a notable dividend yield of 3.9 per cent, said Raymond James analyst Adam Low.
Assay results from Nevsun's Aderat property highlight the exploration potential in close proximity to its Bisha mine, Mr. Low wrote in a research note. "As such, it has the potential to extend the mine life of the Bisha operation for minimal incremental capital expenditure."
Mr. Low rates the stock "outperform," with a price target of $5.50. The analyst consensus price target over the next year is $4.93.
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A promising feasibility study has substantially lowered the risk on Alacer Gold Corp.'s development of its Turkish mining assets, Raymond James analyst Phil Russo said.
The study examined the prospects for a processing facility that is crucial to production expansion at Alacer's Copler project in Turkey.
"The study defines a pathway forward for the company, supported by a balance sheet and projected cash flows capable of largely funding the planned expansion phase," Mr. Russo said.
He upgraded the stock to "outperform" from "market perform" and raised his target price on Alacer's shares to $3.50 (Canadian) from $3. The analyst consensus price target for Alacer Gold over the next year is $2.94, according to Thomson Reuters.
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Investors in AGF Management Ltd. will need to be patient, says CIBC World Markets analyst Paul Holden.
"AGF is a turnaround story and the focus remains on strategic priority over earnings," says Mr. Holden, in a research note. "A new CIO started June 17, which is a catalyst for change. Fixing performance will be the obvious priority. Results will take time."
Mr. Holden maintains his "sector performer" rating and $13 (Canadian) price target. The analyst consensus price target over the next year is $12.61, according to Thomson Reuters.
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In other analyst actions:
BMO Nesbitt Burns is raising its price target for BCE Inc. to $52 from $50, and maintaining its "outperform" rating.
RBC Capital Markets is raising its target price for Kelt Exploration to $17 (Canadian) from $15, and maintaining its "outperform" rating.
BMO Nesbitt Burns is resuming coverage of Agnico Eagle Mines with an "outperform" rating.
National Bank Financial is resuming coverage of LoneStar West with an "outperform" rating and a $4.75 price target.
Dundee Capital has cut NGEx Resources Inc.'s target price to $3.40 (Canadian) from $3.50, maintains "buy" rating.
Dundee Capital is initiating coverage of Detour Gold Corp. with a "neutral" rating and a target price of $14.50 (Canadian).