BMO Nesbitt Burns is reaching out to prospective employees with a new Web page aimed at attracting female investment advisers.AARON HARRIS/Reuters
Inside the Market's roundup of some of today's key analyst actions. This file will be updated during the trading day.
Canadian Imperial Bank of Commerce stands alone in the eyes of Citi Research analyst Stefan Nedialkov after he downgraded Bank of Montreal.
"CIBC is our only Buy among the Canadian banks: we like the bank's strong profitability, capital generation and focus on execution domestically," he says. "CIBC has also done a good job of addressing the issue of low credit risk weights. Eventually, we believe, most Canadian banks would need to return more capital to shareholders (higher dividend payouts and buybacks) and CIBC is likely to be at the forefront of this trend."
Mr. Nedialkov downgraded Bank of Montreal to "neutral" from "buy", mainly on valuation grounds as he feels most upside from its Canadian and U.S. business is fully priced in.
He is raising his price target for BMO to $90 (Canadian), from $80. He is also boosting his price target for CIBC to $123 from $102.
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Canaccord Genuity analyst David Tyerman has added Bombardier Inc. to his "focus list" of favourite investing ideas due to new products and potential margin expansion.
Mr. Tyerman believes Bombardier has the potential to generate superior shareholder returns from improving CSeries order flow and accelerated flight testing, margin expansion efforts at Bombardier Aerospace and Bombardier Transportation, margin improvement potential from the weak Canadian dollar and potential for improved free cash flow.
Mr. Tyerman maintains his "buy" rating and $5.50 (Canadian) price target. The analyst consensus price target is $4.10, according to Thomson Reuters.
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Yahoo Inc.'s focus should be on extracting the value of its Asian assets, says Credit Suisse analyst Stephen Ju.
"With the ambiguity of Alibaba's valuation now well behind us, the next leg of YHOO's share price appreciation in the near to medium term will have to come from the company's efforts to realize the value of its ownership stake(s) in its Asian assets in a tax-efficient manner," says Mr. Ju.
He adds that Yahoo's recent focus on mobile product development is beginning to materialize in the form of contribution to paid click and display ad volumes, as the company has demonstrated its ability to stabilize and grow traffic. "Longer term, initiatives such as Gemini (launched in 1Q14), a self-serve ad buying platform that unifies mobile/search/native inventory, should pave the way for YHOO to more fully monetize its inventory."
Mr. Ju is reinstating coverage of Yahoo with a "neutral" rating and target price of $54 (U.S.). The analyst consensus price target is $51.06, according to Thomson Reuters.
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BHP Billiton Ltd. is at a self-defined crossroads that leaves investors with a number of questions, says CIBC World Markets analyst Ben McEwen.
"In mid-2014, the company announced its intentions to split the company, creating a "NewCo" that would house a suite of assets no longer considered core to the business," says Mr. McEwen. "We believe that investors (existing or prospective) are now presented with a number of "multiple choice" questions, aside from the standard criteria associated with an investment decision in a company as large and complex as BHP."
The three questions are as follows:
- Will the demerger create value for shareholders in the short term (pre and post-event)?
- Will the demerger create value for shareholders over the medium to long term?
- Finally, on a relative basis, how will NewCo perform versus "New" BHP and peers over the medium to long term?
On a short-term basis, Mr. McEwen does not believe the demerger will lead to a value unlock, as he finds no evidence of a diversification discount in BHP's current share price and he does not believe that NewCo suffers from an information asymmetry with the market.
"However, we believe that the demerger does have the capability of creating shareholder value as BHP is allowed to focus on higher-margin, higher-return assets, thereby facilitating improved capital returns to shareholders, while at the same time NewCo can embrace value-accretive opportunities and build a track record of delivery, providing that the promises of delivery are not too onerous," he adds.
Mr. McEwen is initiating coverage of BHP with a "sector performer" rating and a $28.25 (U.S.) target price.
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Plunging oil prices have resulted in a downgrade for Penn West Petroleum by BMO Capital Markets analyst Gordon Tait.
Mr. Tait believes the sinking price of oil will force the company to lower either its capital expenditure or its dividend.
"In addition to the weaker commodity price environment: (i) the company is relatively more leveraged than its peers and has no oil production hedged for 2015; (ii) Penn West is targeting additional asset sales that would strengthen the balance sheet but may have difficulty selling low cash flow generating assets in the current commodity price environment," he says. "We are lowering our dividend per share forecast by 35% next year to $0.36/share (annualized) from $0.56/share."
Mr. Tait is downgrading Penn West to "underperform" from "market perform" and lowering his target price to $6.00 from $6.75 (Canadian).
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In other analyst actions
Raymond James downgraded Canadian National Railway to "market perform" from "outperform" with a price target of $85 (Canadian).
Baird upgraded Deere to "outpeform" from "neutral" with a price target of $105 (U.S.).
Goldman Sachs downgraded Carnival to "neutral" from "buy" with a price target of $43 (U.S.).