Canadian Pacific was among our list of large Canadian stocks with downside risk.DARRYL DYCK/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.
Canadian Pacific Railway Ltd. should realize significant earnings growth fuelled by higher margins and higher revenue, Credit Suisse analyst Allison Landry said in a note.
"The company is on the precipice of the next leg of growth – transforming from a cost-turnaround story to one of controlled, sustainable, profitable revenue generation," Ms. Landry said, raising her target price on CP stock to $205 (U.S.) from $183, while maintaining an "outperform" rating.
Credit Suisse forecasts both revenue and earnings growth higher than consensus estimates, and expects CP to surpass Canadian National Railway as the country's low-cost carrier by 2016.
CP's margins should be helped by: increased train length and weight, both of which translate into improved productivity and lower labour costs; fuel efficiency; and savings as a result of centralized train control, Ms. Landry said.
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CIBC World Markets analyst Paul Holden is downgrading Onex Corporation after seeing his 2014 expectations for the company realized.
Onex has already sold Tomkins Plc and Warranty Group, and the dividend was increased, notes Mr. Holden. He still sees smaller opportunities, a good environment for organic growth and a potential currency lift.
Mr. Holden is downgrading Onex to "sector perform" from "sector outperform" and lowering his price target to $70 (Canadian) from $71. The analyst consensus price target over the next year is $65.33, according to Thomson Reuters.
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Boardwalk REIT missed analyst estimates with its first-quarter earnings, largely because of harsh winter weather, yet its "high-quality portfolio, balance sheet and management" suggest the property company deserves to be valued at a premium, said Raymond James analyst Ken Avalos.
The REIT's British Columbia portfolio is likely to be sold for $140-million, or for net proceeds after debt of $76.5-million, Mr. Avalos wrote in a research note. Management intends to use the proceeds to buy back enough shares to ensure the sale does not dilute funds from operations, he said. The REIT's units yield 3.2 per cent.
Mr. Avalos rates the stock "strong buy" and raised his target price from $65 to $70. The analyst consensus price target for Boardwalk REIT over the next year is $68.72, according to Thomson Reuters data.
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CAE Inc. delivered "solid" fiscal fourth-quarter results and a positive outlook that suggests the flight-simulator company's order backlog will reach a record level in 2015, said Desjardins securities analyst Benoit Poirier.
"Despite the uncertainty surrounding the military business outlook, the company's military segment has remained resilient by focusing on the training & services sub‐segment," Mr. Poirier wrote in a research note. "We also believe the civil outlook remains robust."
"While the stock has enjoyed a good run over the past year (the shares are up 48 per cent since hitting their 52-week low), we believe there is more upside ahead on the back of key positive factors, including a solid backlog, improved margins and a shift in the company's strategy toward providing a differentiated solution to customers."
Mr. Poirier raised his rating to "buy" from "hold" and his target price to $17 from $16. The analyst consensus price target over the next year is $16.37, according to Thomson Reuters.
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Martinrea International Inc. provided stronger-than-expected earnings guidance for the year ahead and is likely to cut its debt load, said Canaccord Genuity analyst David Tyerman.
"We think Martinrea has strong share price appreciation potential from returning margins to more normal levels. We expect the two current margin issues, underperforming assets and unusually high launch costs, to dissipate over the next one to two years. This should generate very strong EPS growth per our forecast," Mr. Tyerman wrote in a research note.
He noted that he used an earnings multiple of 5.5 times for Martinrea, lower than the multiples used for rivals Linamar Corp. and Magna International and below the sector average, "reflecting greater risk potential in our Martinrea forecast and Martinrea's smaller capitalization."
He raised his target price to $14 from $13 and rates the stock "buy." The analyst consensus price target over the next year is $13.63, according to Thomson Reuters.