A Canadian Western Bank branch in Calgary.TODD KOROL
Inside the Market's roundup of some of today's key analyst actions
Three of Canada's smaller banks are expected to raise their dividend payouts in the fourth quarter after standing pat in the previous period, CIBC analyst Robert Sedran said in a report released on Monday. "Each of the larger banks moved in the third quarter, and so they should hold off this time around...
"Beyond this quarter, we expect dividend growth to track with earnings growth for all banks except Toronto Dominion [where the decision to increase its target payout ratio range should provide better growth]. The dividend story remains a very compelling one for the sector, especially in the ongoing low-yield environment."
The analyst predicts that National Bank of Canada will raise its quarterly dividend to 82 cents a share from 79 cents. "We anticipate another potential increase in a couple of quarters given the bank's relatively low payout ratio [40 per cent for the fourth quarter]," he said.
Mr. Sedran, who has a "sector underperformer" rating on the bank, forecasts it will report a fourth-quarter profit of $1.94 a share versus consensus expectations of $1.91 a share. His one-year target is $81 a share.
Laurentian Bank appears ready to raise its quarterly dividend to 50 cents a share from 47 cents, he added. Because the bank's payout ratio remains low relative to its larger peers (35 per cent for the fourth quarter), he anticipates another increase to be announced as early as the second quarter of fiscal 2013.
Mr. Sedran, who maintains a "sector performer" rating on the bank, expects it will report a fourth-quarter profit of $1.36 per share, up from consensus estimates of $1.33. " His one-year target is $53 a share.
For Canadian Western Bank, the analyst expects a modest quarterly dividend hike to 17 cents a share from 16 cents. He estimates the bank will report a fourth-quarter profit of 60 cents per shares versus consensus estimates of 58 cents. He maintains a "sector performer" rating with a one-year target of $32 a share.
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Dundee Securities analyst Joseph Gallucci downgraded his rating for junior miner Augusta Resource Corp. because of the latest permitting delay for its Rosemont copper project in Arizona. Despite a lack of short-term catalysts for the stock, he expects Augusta be a likely merger and acquisition candidate once it gets its required permits.
Downside: He cuts his rating to "sell" from "neutral," but maintains a one-year target of $2.50 a share.
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Given the pullback in shares of Enerplus Corp. "the stock has become oversold in our eyes," said RBC Dominion Securities analyst Greg Pardy. His dividend outlook is unchanged at $1.08 a share in 2013 and 2014 despite the company reporting a third-quarter loss and lowering production guidance.
Upside: The analyst upgraded his rating to "outperform," but maintains his one-year target of $18 a share.
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CIBC World Markets analyst Mark Kennedy boosted his target price on lumber producer West Fraser Timber Co. Ltd. after it significantly beat his third-quarter estimates. "We expect West Fraser will advance with the momentum in the U.S. housing sector," he said.
Upside: The analyst, who maintains a "sector outperformer" rating, raised his one-year target to $80 a share from $65.
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Cyberonics Inc., maker of of medical devices to treat epilepsy, posted another strong quarter with profit topping consensus estimates. Cyberonics continues to execute with record revenue and earnings per share driven by a growth in international markets, said Canaccord Genuity analyst William Plovanic.
Upside: He maintains his "buy" rating, but raised his one-year target by $1 (U.S.) a share to $57.