Bill Downe, CEO of BMO Financial Group, speaks at the company's annual meeting in Toronto on April 1, 2014. Canadian banks are taking a hard look at their energy and consumer loans as they brace for the possibility of a prolonged period of depressed oil prices. THE CANADIAN PRESS/Michelle SiuThe 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.
There was good news and bad news in Bank of Montreal's latest earnings report, says CIBC World Markets analyst Robert Sedran.
The bank's first-quarter 2015 adjusted earnings of $1.53 per share came in below Mr. Sedran's estimate of $1.62 and consensus of $1.63. Canadian Property & Casualty banking growth slowed, consolidated fixed expenses were higher and the insurance business continues to be negatively affected by low interest rates.
"On the positive side, loan losses were stable, capital markets revenues held in well (even with more CVA/FVA charges), the U.S. business actually showed some growth despite significant margin pressure and currency translation was neutral overall, which means that benefit has yet to be realized as hedges and accounting worked their magic in the quarter to dull the impact," he says.
Also, Mr. Sedran says BMO's conference call had a "decidedly positive tone despite the oil-related uncertainty," and that the bank is expecting results to improve in the second half of the year.
He maintains his "sector performer" rating and is cutting his price target by a dollar to $83 (Canadian). The analyst consensus price target is $83.18.
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Low oil prices and share buybacks will see Agrium Inc. through 2015, says Credit Suisse analyst Christopher Parkinson.
Mr. Parkinson is raising his 2015 earnings per share estimate to $7.85 from $7.48 on the net effect of higher interest, cheaper gas and share buybacks, while implementing a 2016 estimate of $8.80.
Mr. Parkinson maintains his "outperform" rating and is raising his target price to $131 from $110 (U.S.). The analyst consensus price target is $110.23.
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Catamaran Corp. is a good candidate for further upside based on rising forecasted earnings, said Stephanie Price, an analyst at CIBC World Markets.
The company is due to report its fourth-quarter earnings on Thursday, and analysts are expecting sales of $5.56-billion (U.S.) and earnings of $0.613 per share, which would represent 13-per-cent profit growth.
Analysts will be looking for 2015 earnings guidance from the company, Ms. Price said. Previous company estimates imply 2015 EBITDA of between $895-million and $926-million, while the consensus forecast falls in the upper end of that range.
"We will also be looking for early commentary on the 2016 selling season, with management previously noting a $10-billion pipeline, including a number of sizable health plans," Ms. Price said. "We expect upside from the Affordable Care Act, with the U.S. government announcing that 11.4 million people signed up for health insurance or renewed their plans during the 2015 enrollment period."
She rolled over her valuation year to 2016 forecasted earnings, resulting in a target price increase to $77.50 (Canadian) from $62 at an unchanged rating of "sector outperformer." The average analyst price target for Catamaran over the next year is $55.15.
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Parkland Fuel Corp. has bounced back since losing a contract with Suncor Energy Inc., and is well positioned to overcome new concerns about its business, said Kevin Chiang, an analyst at CIBC World Markets.
A fuel supply agreement with Suncor expired at the end of 2013, but Parkland managed to replace that lost business with new contracts to meet the company's earnings targets, Mr. Chiang said. "We would argue that Parkland Fuel has successfully addressed these concerns and shown that its growth opportunities remain robust."
New questions have emerged, however, about Parkland's exposure to declining energy prices, the number of potential acquisitions available to the company, and its valuation multiple.
But the company's margins have shown little correlation with commodity prices, Mr. Chiang said. Additionally, the acquisition pipeline has an abundance of potential deals from both "mom and pops" as well as "integrated energy companies divesting of downstream assets," he said.
Finally, the company is arguably trading at a discount, Mr. Chiang said. He raised his price target to $25.50 (Canadian) from $22.50 while maintaining a "sector performer" rating. The average analyst price target for Parkland's stock over the next year is $23.94.
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Dundee Capital Markets has initiated coverage of CGI Group Inc. with a "buy" rating.
"CGI provides investors with exposure to a leading IT services company with valuation supported by strong fundamentals and a management team that continues to execute on its business model and on its 'build and buy' strategy," analyst Eyal Ofir said.
With the company having now integrated its Logica acquisition of 2012, "we believe that a further catalyst for the stock could be another large acquisition," the analyst said.
Dundee's target price is $60 (Canadian) per share. The consensus is $52.55, according to Thomson Reuters.
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In other analyst actions:
BHP Billiton Ltd. was downgraded to "neutral" from "buy" at Citigroup, but raised to "outperform" from "neutral" by Macquarie.
First Solar Inc. was upgraded to "neutral" from "underperform" at Merrill Lynch. The company was also raised to "market perform" from "underperform" at Northland Securities. The 12- month target price is $51 (U.S.) per share.
Iamgold Corp. was upgraded to "overweight" from "underweight" at HSBC.
American Railcar Industries Inc. was raised to "outperform" from "market perform" at Kansas City Capital.
Black Diamond Group Ltd. was downgraded to "hold" from "accumulate" at Clarus Securities. The target price is $15 (Canadian) per share.
Canyon Services Group Inc. was downgraded to "hold" from "buy" at Clarus Securities. The target price is $7 (Canadian) per share.
Artek Exploration Ltd. was downgraded to "market perform" from "buy" at Cormark Securities. The 12-month target price is $2.70 (Canadian) per share.
Western Energy Services Corp. was downgraded to "hold" from "buy" at Clarus Securities. The target price is $7 (Canadian) per share.
Cott Corp. was raised to "buy" from "hold" at Stifel. The 12-month target price is $11 (U.S.) per share.
Great Lakes Dredge & Dock Corp. was downgraded to "neutral" from "buy" at DA Davidson. The 18-month target price is $7.50 (U.S.) per share.
Orvana Minerals Corp. was rated new "buy" at PI Financial. The 12-month target price is 75 cents (Canadian) per share.
Rosetta Resources Inc. was downgraded to "hold" from "buy" at Wunderlich with a 12-month target price of $22 (U.S.) per share. KLR Group also downgraded the stock to "hold" from "buy" with a target of $17 (U.S.) a share.
With files from Bloomberg News