Algonquin Power & Utilities Corp.’s 2.6 MW Riviere-du-Loup hydroelectric generating facility near the town of Riviere-du-Loup, Quebec, 2010.Andre Kedl/Handout
Inside the Market's roundup of some of today's key analyst actions. This file will be updated during the trading day.
Brookfield Renewable Energy Partners LP's big push into the Brazilian market should provide a boost to the company's bottom line, RBC Dominion Securities analyst Nelson Ng said.
On Thursday, Brookfield Renewable announced a deal to acquire a number of renewable energy projects in Brazil. The company will end up owning about 40 per cent of a total 488 megawatts of wind, hydro and biomass power generation.
The biomass facilities use residue from sugar cane pulp to produce electricity, which involves higher costs and lower margins than wind and hydro projects.
"The acquisition introduces biomass into Brookfield Renewable's portfolio, which may concern some investors," Mr. Ng said. "We would not be surprised if Brookfield Renewable were to take a cautious approach to growing its biomass generation capacity in Brazil."
But the company is likely to continue to pursue acquisitions, Mr. Ng said. He raised his target price on the stock to $37 (Canadian) from $35 and maintained a "sector perform" rating.
A number of other analysts raised their targets on Brookfield Renewable: Desjardins Securities to $38.50 from $38, National Bank Financial to $37 from $36, BMO Nesbitt Burns to $39.55 from $38.71, and TD Securities to $39.30 from $37.57.
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CIBC World Markets analyst Paul Lechem upgraded Algonquin Power & Utilities Corp. to the equivalent of a buy rating in the wake of a pair of recent acquisitions.
The action came as Mr. Lechem resumed coverage of Algonquin, which has completed its acquisition of the 200-megawatt Odell wind power project, expected to be in service in the fourth quarter of next year. Algonquin has also announced a deal to acquire Park Water Company, a water distribution utility, for $327-million (U.S.).
Mr. Lechem raised his price target to $10.50 (Canadian) from $9.
"Our price target implies a 12.3x 2016 EBITDA, deservedly above the group average of 10.6x in light of Algonquin's strong, low-risk growth profile. With a total return to price target of 16 per cent, we are upgrading Algonquin from sector performer to sector outperformer."
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Osisko Gold Royalties Ltd.'s proposed acquisition of Virginia Mines Inc. may appear dilutive over the short term, but the deal could end up enhancing the long-term profitability of the combined entities, RBC Dominion Securities analyst Dan Rollins said.
The $461-million deal, which was announced on Monday, combines two mining royalty companies drawing cash from Quebec's two biggest gold mines.
Virginia Mines' Eleonore mine is a "lower cost operation that should be able to withstand a lower gold price environment," Mr. Rollins said. "In addition, Eleonore has significant exploration upside that is likely to drive further value over the next few years."
He raised his target price on the stock to $18 (Canadian) from $17, while reiterating an "outperform" rating.
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In other analyst actions:
Jennings Capital initiated coverage on Blackbird Energy with a "speculative buy" rating and 65 cents (Canadian) price target.
Stifel Nicolaus initiated coverage on Caterpillar with a "buy" rating and $122 (U.S.) price target.
Raymond James upgraded DR Horton to "market perform" from "underperform."
Evercore downgraded eBay to "sell" from "hold" with a price target of $49 (U.S.).
Nomura initiated coverage on Amazon with a "buy" rating and $410 (U.S.) price target.