Wajax says it expects demand for commodities will remain strong, boding well for the industries it supplies.Jeff McIntosh/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.
Avigilon Corp. is due for a breather after its massive rally over the past four months, says RBC Dominion Securities.
Over the past year, shares of Avigilon have been on a roller-coaster ride.
Heading into today's session, the stock was up roughly 60 per cent since the firm last reported earnings in November, far outstripping the S&P/TSX Composite index's 5 per cent advance over the same period.
Before that, shares had seen their value cut in half over the previous eight months.
The company, which designs and manufactures video surveillance software and equipment released fourth-quarter results after the close on Tuesday, with adjusted earnings per share of $0.25 coming in three cents above the consensus estimate while revenues of $79.5-million were below what analysts had anticipated.
Analyst Steve Arthur sees limited upside for the stock, which closed at $24.64 (Canadian) on Tuesday.
"On the call, management reiterated that Avigilon remains in 'growth mode' and will continue to invest heavily in the business," he said. "With that, we expect that operating expenses will outpace revenue growth in 2015E, and likely in 2016E, as they build out their sales reach and corporate infrastructure."
While Mr. Arthur believes the shares are trading near fair value, the market disagrees. Shares are tumbling, down more than 15 per cent near the end of Thursday's session.
He lowered the stock to "sector perform" from "outperform" and trimmed his price target to $26 (Canadian) from $27.
Analysts at National Bank also downgraded the company to "sector perform" from "outperform."
The average analyst price target is $28.71.
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Wajax Corp. reported fourth-quarter earnings per share of 65 cents Wednesday, well below the consensus of 78 cents. Along with the results, the industrial components company cut its dividend by 58 per cent and announced a new long-term strategy.
Despite the negative results, the changes prompted TD Securities analyst Michael Tupholme to upgrade his rating to "hold" from "reduce."
"With the negative catalyst of a cut in dividend now out of the way and with the stock's valuation looking less stretched today compared with what it was earlier this year, we are moving our rating to hold," the analyst said.
Mr. Tupholme also bumped up his price target to $25 from $24. The consensus target for Wajax is 27.42, according to Thomson Reuters.
Other brokerages also changed their ratings on Wajax. RBC raised the stock to "outperform" from "sector perform." But the stock was also lowered to "market perform" from "outperform" by BMO Nesbitt Burns. Its 12-month target price is $26 (Canadian) per share.
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Merrill Lynch analyst Timna Tanners has downgraded Alcoa Inc. to "neutral" from "buy" due to weak outlook for aluminum prices.
The analyst thinks pressure from London Metal Exchange warehouse rule changes and growing Chinese exports will hurt aluminum prices in the short term, eroding Alcoa's revenues.
"We still think aluminum can be more defensive versus other commodities," the analyst said, "yet no longer expect falling premiums can be offset by LME price strength near term."
Ms. Tanners adjusted her price target on Alcoa, dropping it to $17 (U.S.) from $20. The consensus price is $19.13, according to Thomson Reuters.
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RBC Capital Markets analyst David Palmer sees "quality" and "simplicity" returning to McDonald's Corp. The analyst has upgraded the stock to "outperform" from "sector perform" on views that same-store sales and return on invested capital will both turn positive by the end of the year.
The analyst also believes new management will force change in the fast food giant's struggling American market.
"We are confident that change is likely to occur soon with new strategic thinkers at the helm that can accelerate the pace of change," the analyst said.
Mr. Palmer raised his price target to $115 (U.S.) from $93. Analyst consensus target places McDonald's at $96.88, according to Thomson Reuters.
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Canaccord Genuity analyst David Tyerman is expecting an improved return from TransForce Inc. The analyst raised his rating on the Montreal-based transportation and logistics company to "buy" from "hold."
"We continue to believe TransForce should produce good earnings improvement in 2015 and beyond from margin expansion driven by operational improvements at existing operations and synergies from recent acquisitions," the analyst said.
Mr. Tyerman thinks strong earnings per share growth through 2017 will drive share prices up. He raised his target price for Transforce to $33 from $31. The analyst consensus is $32.17.
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The Bank of Nova Scotia's first-quarter earnings per share of $1.35 fell short of UBS Securities analyst Brennan Hawken's estimate of $1.42. The analyst is maintaining his "neutral" rating, but adjusting his expectations.
Though encouraged by expenses being in line with expectations and operating leverage improving year over year, Mr. Hawken is lowering his 2015 earnings per share estimate by 4 per cent to $5.60 from $5.84 "on the back of a lukewarm start" to 2015.
The analyst also lowered his Scotiabank price target to $68 from $71. The consensus price is $70.44.
In other analyst actions:
Blackbird Energy Inc. was raised to "buy" from "speculative buy" at Mackie Research Capital. The 12-month target price is 65 cents (Canadian) per share.
Avigilon Corp. was cut to "sector perform" from "outperform" at both RBC and National Bank. National's 12-month target price is $25 (Canadian) per share.
Crew Energy Inc. was raised to "buy" from "hold" at TD Securities.
AltaGas Ltd. was downgraded to "sector perform" from "outperform" at Alta Corp Capital. The 12-month target price is $47.50 (Canadian) per share.
Savanna Energy Services Corp. was raised to "market perform" from "underperform" at FirstEnergy. The 12-month target price is $3.25 (Canadian) per share.
Crew Energy Inc. was raised to "buy" from "hold" at TD Securities. The 12-month target price is $7 (Canadian) per share.
Martinrea International Inc. was raised to "buy" from "hold" at Canaccord Genuity. The 12-month target price is $16 (Canadian) per share.
Telesta Therapeutics Inc. was rated new "speculative buy" at Euro Pacific Canada. The 12-month target price is $1.25 (Canadian) per share.
Atlas Resource Partners was downgraded to "sector perform" from "outperform" at RBC Capital. The 12-month target price is $12 (U.S.) per share.
AutoZone Inc. was raised to "neutral" from "underperform" at Sterne Agee & Leach.
Best Buy Co. Inc. was raised to "neutral" from "underperform" at Wedbush. The 12-month target price is $37 (U.S.) per share.
Baker Hughes Inc. was downgraded to "sector outperform" from "focus list" at Scotia Howard Weil. The target price is $71 (U.S.) per share.
Bob Evans Farms Inc. was downgraded to "neutral" from "buy" at Janney Montgomery. The 12-month target price is $48 (U.S.) per share. The company was also downgraded to "hold" from "buy" at Miller Tabak + Co. The 12-month target price is $53 (U.S.) per share.
Radian Group Inc. was rated new "buy" at MKM Partners. The 12-month target price is $22 (U.S.) per share.
WhiteWave Foods Co. was rated new "outperform" at Wedbush. The 12-month target price is $48 (U.S.) per share.
F5 Networks Inc. was rated new "outperform" at Wedbush. The 12-month target price is $140 (U.S.) per share.
Halcon Resources Corp. was downgraded to "sell" from "hold" at KLR Group. The 12-month target price is $1 (U.S.) per share.
With files from Bloomberg News