Ryan Remiorz/The Canadian Press
Inside the Market's roundup of some of today's key analyst actions. This file will be updated often during the trading day so check back for new details.
Valeant Pharmaceuticals International Inc.'s strong fourth-quarter results and agreement to buy Salix Pharmaceuticals Ltd. show the company is "kicking butt," according to Canaccord Genuity.
"We have long been fans of the Salix assets as the previous management team has done an outstanding job building the company," said analyst Neil Marouka. "Longer term, we see earnings per share growth in double digits as very sustainable – even with no more acquisitions."
The analyst nearly doubled his estimate for adjusted net income in 2016 to $5.23-billion (U.S.) from $2.69-billion.
He cautioned that some of the risks facing the company include the inability to obtain approval for Xifaxan (which Valeant is set to acquire from Salix), rising interest rates, and political unrest abroad.
Mr. Marouka maintained a "buy" rating on the stock and boosted his price target to $230 (U.S.) from $183.
The average analyst price target is $202.94.
======
UBS analyst Marc Goodman is downgrading Salix Pharmaceuticals Ltd. in light of its impending acquisition by Valeant Pharmaceuticals International.
Mr. Goodman says the deal is a good one for Salix, and he expects its shares will trade in step with Valeant's. He also assumes that the deal will go through, and no other bidders will emerge.
Along with the downgrade to "neutral" from "buy," Mr. Goodman is increasing his target price to $158 (U.S.) from $144. The analyst consensus price target is $143.93.
======
Despite a strong reserves report, Enerplus Corp. is the subject of a target price cut.
AltaCorp. Capital Research analyst Patrick O'Rourke notes that the company's proved developed producing (PDP) reserves for 2014 were 210.5 million barrels of oil equivalent, up 9 per cent from 192.7 million barrels in 2013.
"In our view, management's commitment to prudent management of the balance sheet and inventory should be applauded by investors, however, the reduction of the pace of PDP [Net Present Value] capture sees our target slightly reduced at this time," he says.
Mr. O'Rourke is maintaining his "sector perform" rating and cutting his target price by a dollar to $15 (Canadian). The analyst consensus price is $15.50.
======
PrairieSky Royalty Ltd.'s dividend is safe, says BMO Nesbitt Burns analyst Gordon Tait.
Mr. Tait says the company's fourth-quarter results reaffirm his positive view on the company, as it benefited from a low decline rate and higher drilling activity in the fourth quarter.
"In this commodity price environment, we believe PrairieSky has the ability to maintain its payout to shareholders given it has no capex requirements, no opex obligations, and no abandonment liabilities," he says. "We believe PrairieSky is a good choice for investors with a long-term investment horizon looking for an income stream derived from oil and gas properties."
Mr. Tait maintains his "outperform" rating and $27 target price. The analyst consensus price target is $33.04.
======
CIBC World Markets analyst Alex Avery is boosting Canadian Apartment Properties REIT's target price in the wake of strong quarterly results.
CAP REIT reported fourth-quarter normalized funds from operations of $0.416/unit, up from $0.334/unit last year and sharply above Mr. Avery's $0.37/unit estimate. This was driven by "remarkably strong" 16.4 per cent same-property net operating income growth, partly offset by increased unit-based compensation, he explains.
Mr. Avery maintains his "sector outperformer" rating is boosting his target price to $30 (Canadian) from $26. The analyst consensus price target is $29.72.
======
In other analyst actions
ACADIA Pharmaceuticals Inc. was rated new "buy" at HC Wainwright by equity analyst Andrew Fein. The 12-month target price is $50.00 (U.S.) per share.
American Eagle Outfitters Inc. was rated new "buy" at BB&T Capital by equity analyst Paul Alexander. The 12-month target price is $18.00 (U.S.) per share.
AMC Networks Inc. was downgraded to "neutral" from "outperform" at Macquarie by equity analyst Amy Yong. The 12-month target price is $72.00 (U.S.) per share.
Yamana Gold Inc. was raised to "outperform" from "market perform" at BMO Capital Markets by equity analyst David Haughton. The 12-month target price is $6.00 (U.S.) per share.
Armstrong World Industries Inc. was downgraded to "Hold" from "buy" at KeyBanc by equity analyst Kenneth Zener.
Basic Energy Services Inc. was downgraded to "outperform" from "strong buy" at Raymond James by equity analyst Marshall J Adkins. The 12-month target price is $9.00 (U.S.) per share.
Coach Inc. was raised to "outperform" from "market perform" at Oppenheimer by equity analyst Anna Andreeva. The 12-month target price is $50.00 (U.S.) per share.
Discovery Communications Inc. was raised to "outperform" from "neutral" at Macquarie by equity analyst Amy Yong. The 12-month target price is $38.00 (U.S.) per share.
Fifth Street Asset Management Inc. was downgraded to "neutral" from "outperform" at Credit Suisse by equity analyst Craig Siegenthaler. The target price is $13.00 (U.S.) per share.
InfraREIT Inc. was rated new "outperform" at Wells Fargo by equity analyst Neil Kalton.
Huntington Ingalls Industries Inc. was downgraded to "underperform" from "neutral" at Credit Suisse by equity analyst Robert Spingarn. The target price is $127.00 (U.S.) per share.
Kayne Anderson Energy Development Co. was downgraded to "hold" from "buy" at Stifel by equity analyst Selman Akyol.
Newtek Business Services Corp. was rated new "market perform" at JMP Securities by equity analyst Christopher York.