Sandor Fizli
Inside the Market's roundup of some of today's key analyst actions. This file will be updated during the trading day. For breaking analyst actions prior to market open every day, read our Before the Bell morning report.
A price war over cable and wireless services in New Brunswick has prompted Desjardins Securities to downgrade Bell Aliant Inc.
The Halifax-based telcommunications company has cut prices to win customers and compete with Rogers Communications Inc., but risks reducing annual profit by 2.5 per cent if the battle widens to the rest of Atlantic Canada, analyst Maher Yaghi said in a research note.
"Bell Aliant remains attractive for income-seeking investors given its important and dependable dividend," Mr. Yaghi wrote. "However, we do not see catalysts for material capital appreciation until the competitive pricing situation improves in the company's Atlantic markets."
Target: Mr. Yahgi downgraded Bell Aliant to "hold" from "buy" and maintained a share price target of $27.50. The Bloomberg share price average is $26.95.
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CIBC World Markets analyst Dean Wilkinson initiated coverage on four Canadian real estate investment trusts, and is feeling particularly upbeat about two of them.
He gave Dundee Industrial REIT a "sector outperformer" rating, with a price target of $10.25. Dundee is a pure-play industrial REIT, with 206 properties comprising 15.7 million square feet. Its properties are geographically diverse and represent a broad mix of warehouse, distribution, and light manufacturing properties.
The trust trades at 9.4 times his 2014 estimate funds from operations, which is a 12 per cent discount to his net asset value of $10.25.
He is also recommending WPT Industrial REIT, giving it a "sector outperformer" rating and $10 (U.S.) price target. WPT is a U.S.-based REIT that owns 38 properties, mainly warehouse and distribution centres, that provides investors an opportunity to gain direct exposure to a recover U.S. economy.
"The REIT is externally managed by Welsh LLC, a private real estate investment firm with a 35-year track record in industrial real estate in the U.S. Welsh also retains an interest of approximately 53 per cent in the REIT," he noted.
The two other REITs were given "sector performer" ratings: Agellan Commercial REIT (with a $10 price target) and Melcor REIT (price target $11).
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After initially falling in the post market Monday upon the release of the company's earnings, Apple Inc. shares are nearly unchanged in regular trading today, as investors find encouragement from a raft of price target hikes by analysts.
There's been one upgrade: Robert W. Baird lifted its rating on Apple to "outperform" from "neutral" as it raised its price target to $620 (U.S.) from $525.
Apple is already rated as a buy at most brokers, so the majority of the analyst actions today have featured price target hikes.
In its most recent quarter ended Sept. 28, Apple posted revenue of $37.5-billion, up from $36-billion a year earlier, and net profit of $8.26 per diluted share, down from $8.67 a share a year earlier.
Those results beat expectations but for the upcoming quarter, which will include sales of the company's recently unveiled tablets and smartphones, Apple predicted margins in the range of 36.5 per cent and 37.5 per cent, a little below the Street consensus.
For the most part, analysts don't appear too concerned about the guidance on margins.
"Fundamentally, we believe APPL is executing impressively and we see more catalysts," summed up RBC Dominion Securities analyst Amit Daryanani as he raised his price target to $590 (U.S.) from $550. Those catalysts include potential increases in capital allocation, the launch of new iPads, and the telecom deal in China.
"In the current environment with $147-billion in cash ($161/sh), we believe the stock is currently undervalued at these levels," Mr. Daryanani added. "Notably, from a product perspective we believe the company can continue to gain share in both the tablet and smartphone space. In our view, the smartphone space is currently a two-horse race where Apple will be one of the winners in continuing to gain market share."
In his upgrade, Robert W. Baird analyst Will Power cited some of the some catalysts as RBC for his optimism. "We had been concerned with the current product cycle, but with better-than-expected results now behind us, we expect the focus to turn to 2014, which we believe holds more promise," he said in a research note.
In other Apple analyst moves, Goldman Sachs raised its price target to $620 from $560 and reiterated a "buy" rating while BMO Nesbitt Burns raised its target to $600 from $508 and maintained a "buy" rating. Lazard Capital raised its price target to $610 from $570 and maintained a "buy" rating.
The average analyst price target is now $573.34, according to Bloomberg data. There are 48 buys on the stock, 13 holds and 4 sells, according to Bloomberg.
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Canada's largest publicly traded car dealership, AutoCanada Inc., is expected to post higher profits and raise its dividend amid strong vehicle sales.
Canaccord Genuity analyst Derek Dley has raised the share price target for the Edmonton-based company, which operates about 30 dealership franchises in six provinces whose brands include Chrysler, GM, Kia, Volkswagen and Audi.
"New car sales in Canada increased six per cent during the [third] quarter, and we expect AutoCanada's exposure to the robust western Canadian economies of Alberta and British Columbia will again lead to above-industry-average new-car sales growth" Mr. Dley said in a research note.
AutoCanada reports third-quarter earnings on Nov. 6. Mr. Dley expects per-share profit of 53 cents and that the dividend will be raised by one cent, for the 11 consecutive payout increase. AutoCanada's shares have risen by 153 per cent this year.
Mr. Dley said AutoCanada deserves a premium valuation of 18 times 2014 EPS due to its healthy balance sheet that lets it dealerships in prosperous western markets such as Calgary and Winnipeg.
Target: Mr Dley raised his share price target to $42 from $36 and maintained a "buy" rating. The average price of analysts surveyed by Bloomberg is $42.60.
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CIBC World Markets reduced its share price target on TMX Group Ltd. as lower trading volumes and tougher competition erode the profit outlook for the owner of the Toronto Stock Exchange.
Equity financings on Canada's main stock market were down by 35 per cent year-over-year in the third quarter and TMX's market share in cash trades slipped by three percentage points to 77 per cent, CIBC analyst Paul Holden said in a research note. Energy trading was a bright spot, up by seven per cent, said Mr. Holden, who notes TMX is facing tougher rivals in alternative exchange Chi-X and Aequitas, which is owned by a group led by Royal Bank of Canada and is expected to be launched next year.
TMX also owns the TSX Venture exchange, Montreal Exchange and Boston Options Exchange.
Target: Mr. Holden reduced his share price target to $46 (Canadian) from $50 and maintained a rating of "sector performer." The Bloomberg price target average among analysts is $46.44.
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Raymond James analyst Ben Cherniavsky likes WestJet Airlines Ltd.'s plans to launch a regional carrier but is cautious on the Calgary-based company's outlook for reasons that include doubts over strength in consumer spending.
In a research note today titled "Soaring into uncharted territory," Mr. Cherniavsky said optimism about the company's plans to grow through new planes, more fees and the Encore regional service is tempered by headwinds that include: increased competition, high consumer debt levels, a rising price-to-earnings multiple and the complexity of WestJet's plans.
WestJet shares have already risen by 36 per cent this year on the Toronto Stock Exchange.
Target: Mr. Cherniavsky maintained a share price target of $25.75 and a rating of "market perform."
Also today, Cormark Securities analyst David Newman downgraded WestJet to "market perform" from "buy" but raised its price target to $30 from $27.
The average price target of analysts surveyed by Bloomberg is $28.83.
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In other analyst actions today:
RBC raised its price target on Stantec to $63 (U.S.) from $57 and reiterated an "outperform" rating.
CIBC World Markets raised its price target on B2Gold to $3.50 from $3 and maintained a "sector outperformer" rating.
Clarus Securities cut its price target on Perseus Mining to 60 cents per share from 90 cents and maintained a "hold" rating.
Wells Fargo downgraded Michael Kors to "market perform" from "outperform" and kept its price target at a range of $75-79.
Sanford Bernstein upgraded Yahoo to "outperform" from "market perform" with a price target of $40 (U.S.).
Credit Suisse raised its price target on Colgate-Palmolive to $72 (U.S.) from $63 and maintained an "outperform" rating.
FBR Capital initiated coverage on Moody's with an "outperform" rating and $85 (U.S.) price target.
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For more analyst actions, breaking investing news and analysis, follow Darcy Keith on Twitter at @eyeonequities
Darcy Keith
Eric Atkins