The Potash Corp logo at the entrance of the company's office tower in downtown Saskatoon on Nov. 3rd, 2010.Liam Richards/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.
Potash Corp. of Saskatchewan shares have had a strong run in recent months, trading at a "lofty" level that no longer offer investors a suitable margin of safety, Raymond James analyst Steve Hansen said.
"While recent industry data continue to support our view that global potash fundamentals remain on the mend, we believe that recent share price gains, coupled with a commensurate expansion of the firm's underlying trading multiple, have together reduced the risk-reward proposition available to investors," he wrote in a research note.
"We have elected to move to the sidelines until further macro visibility improves and/or a more attractive entry point emerges." The stock has gained 13 per cent so far this year.
Mr. Hansen cut his rating to "market perform" from "outperform" and has a $38.50 (U.S.) target price on the stock. The analyst consensus price target over the next year is $34.45, according to Thomson Reuters data.
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Brookfield Asset Management Inc. stock could double over the next four or five years, said Desjardins Securities analyst Michael Goldberg.
"BAM's latest quarterly results outline the strength each of its business segments has exhibited over the past several years. What was initially not so apparent, but is becoming more so, is how BAM is working to drive increased revenue from businesses complementary to its core franchises," he wrote in a research note.
"One of those businesses is renewable energy marketing. With natural gas prices showing sustained strength, the patience previously shown by management in not locking in power prices highlights the potential gains that BAM and its shareholders stand to achieve from locking in prices for long-term contracts on uncontracted power generation."
Mr. Goldberg rates the stock "top pick" and raised his target price to $50 from $46.50. The analyst consensus price target over the next year is $43.98.
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Strongco Corp. stock is inexpensive compared to its peers, and investors will benefit from the company's decision to reap a real estate windfall, said Canaccord Genuity analyst Yuri Lynk.
The company's decision to raise money by selling and leasing back real estate will result in an overall pre-tax profit of about $9-million (Canadian), Mr. Lynk wrote in a research note.
"This is a significant potential transaction for a company with a market cap of $51-million," he said. "We note current solid upside potential return to our target, a depressed valuation multiple, and an improved balance sheet."
Mr. Lynk rates the stock "buy" and raised his target price to $6 from $5.50. The analyst consensus price target over the next year is $5.31.
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CIBC World Markets analyst Stephanie Price is initiating coverage of Valeant Pharmaceuticals International with a bullish take on the company's shares based on a successful acquisition of Allergan.
"Valeant has a strong track record of creating value by acquiring firms with solid product portfolios and investing only in late-stage/low-risk R&D," says Ms. Price, in a research note.
She believes the successful completion of the Allergan acquisition will drive further growth given complementary product offerings, significant operating synergies and upside from tax optimization.
"We expect a revised bid for Allergan (possibly up to $56-billion) and see +20% upside from our current price target if the bid is successful," she says. Even if the transaction fails, she sees numerous other targets and expects growth at Valeant to continue.
Ms. Price has given Valeant a "sector outperformer" rating and a price target of $160 (U.S.). The analyst consensus price target over the next year is $168.56.
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Mosaic Capital Corp. announced its largest oil sands deal to date on Tuesday, fueling the company's growth expectations, said Raymond James analyst Theoni Pilarinos, who raised her target price on Mosaic's shares to $13.75 from $12.50, while maintaining an "outperform" rating.
Mosaic said it had entered into an agreement to acquire a 70-per-cent interest in an Alberta-based provider of maintenance services and construction in the energy sector for about $18.9-million. Mosaic did not disclose the name of the company pending an internal announcement.
"We believe the company will participate in the growth in construction and maintenance spending in the oil sands, where large projects, including Fort Hills and the Alberta Transportation road building project, are stimulating demand," Ms. Pilarinos said.
The acquisition comes sooner than expected, and leaves room for Mosaic to complete an additional $10-million transaction this year, she added.
The analyst consensus price target over the next year is $13.69 (Canadian).