The Dollarama discount store near Bloor St. West and Bathurst St. in Toronto, is photographed Feb. 12 2014.Fred Lum/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.
Dollarama Inc. still has plenty of room to expand in Canada, Desjardins Securities analyst Keith Howlett said as he upgraded his rating to "buy" from "hold" citing the stock's recent weakness over the last month.
"Dollarama appears to be gaining share from its direct dollar store competitors, as well as from small-format discount retailers," he said. "Dollarama is also gaining share from a diverse array of competitors at opening price points within specific product categories."
Competitors in the discount retail space have yet to threaten Dollarama's growth plan, which could accommodate another 500 stores in Canada, Mr. Howlett said.
He maintained a $99 (Canadian) price target.
The analyst consensus price target over the next year is $101.86, according to Thomson Reuters data.
=======
BMO Nesbitt Burns analyst Troy Maclean initiated coverage on Choice Properties Real Estate Investment Trust with a "market perform" rating and $11.25 (Canadian) price target.
He likes the REIT, which was created from the real estate portfolio of Canadian grocery giant Loblaw, but notes that it's already trading at about a 2 per cent premium to his net asset value estimate.
"Choice is a defensive real estate investment due to its less economically sensitive asset base (primarily grocery anchored retail properties), its geographic diversity, long average remaining lease term, and limited near-term debt maturities (no debt maturities until 2016)," Mr. Maclean said in a research note.
His $11.25 price target represents an 8 per cent premium to his net asset value estimate. "We believe a premium to net asset value is justified by the REIT's large, hard-to-replicate portfolio, internal management, as well as its acquisition pipeline from Loblaw," he said.
The analyst consensus price target is $11.04.
=======
Cervus Equipment Corp.'s acquisition of an Ontario truck manufacturer has received cautious praise from Raymond James Ltd. analyst Ben Cherniavsky.
Cervus announced an agreement to acquire Peterbilt of Ontario for approximately $25.5-million, which is expected to close at the end of July.
"While we view the acquisition of Peterbilt of Ontario Inc. favourably, we continue to believe that there is a certain 'show me' component to Cervus with respect to driving measurable synergies from recent acquisitions," says Mr. Cherniavsky. "Furthermore, our outlook in the ag business remains cautious as we believe that ag industry fundamentals — while still trending at historically elevated levels — are poised to take a breather in 2014."
Mr. Cherniavsky maintains his "market perform" rating and $22 (Canadian) price target. The analyst consensus price target over the next year is $24.47, according to Thomson Reuters.
=======
Canaccord Genuity analyst Corey Davis is initiating coverage on Aerie Pharmaceuticals Inc. with an enthusiastic "buy" rating.
The U.S.-based company specializes in the treatment of glaucoma, and has two products in the testing phase.
"We are extremely bullish on both of Aerie's drugs for glaucoma," says Mr. Davis. "If ultimately approved, we think the combination of the two would have well over $1-billion in peak potential."
Mr. Davis set a $40 (U.S.) price target. The analyst consensus price target for over the next year is $32.33, according to Thomson Reuters.
=======
A successful share offering will allow Descartes Systems Group Inc. to make acquisitions and improve logistics, says Cantor Fitzgerald Canada analyst Blair Abernethy.
Descartes announced on Wednesday the closing of its $147-million fully-marketed equity offering which issued 10.925 million shares at $13.50 per share.
"While Descartes already had a solid balance sheet and debt service coverage, we believe the extra capital enhances Descartes ability to take advantage of M&A opportunities to more rapidly build its global logistics network," says Mr. Abernathy.
Mr. Abernathy maintains his "buy" rating and lowered his price target to $15 (Canadian) from $15.50. The analyst consensus price target over the next year is $16.56, according to Thomson Reuters.
=======
In other analyst actions:
National Bank Financial initiated coverage on PrairieSky Royalty with an "outperform" rating and $45 (Canadian) price target.
National Bank Financial added Superior Plus to its "action list" - its favourite investment ideas - and raised its price target to $16 (Canadian) from $15 while affirming an "outperform" rating.
Paradigm upgraded Pulse Seismic to "hold" from "sell" and raised its price target to $3 (Canadian) from $2.75.
CIBC World Markets downgraded Partners Real Estate Investment Trust to "sector performer" from "sector outperformer" after the REIT's 21 per cent total return since the start of May. It also cut its price target to $5.25 (Canadian) from $5.50.
CIBC World Markets raised its price target on AltaGas to $52 (Canadian) from $48 and maintained a "sector outperformer" rating.
Beacon Securities upgraded PanTerra Resource to "buy" from "speculative buy" and raised its price target to 75 cents (Canadian) from 45 cents.
Laurentian Bank Securities initiated coverage on Tecsys with a "buy" rating and $8.25 (Canadian) price target.
Credit Suisse slashed its price target on Coach to $30 (U.S.) from $39 and maintained a "neutral" rating.
Oppenheimer upgraded Cree to an "outperform" rating from "perform" with a $59 (U.S.) price target.