Skip to main content

The Globe and Mail

Friday’s analyst upgrades and downgrades

Magna International Inc. appears to be fully valued at the moment, though investors can expect "moderate share price appreciation for the next couple of years," said Canaccord Genuity analyst David Tyerman.

The parts maker surprised analysts by forecasting its emerging markets margin would reach about 75 per cent of North American levels, or about 7.0-7.5 per cent, in two to three years, Mr. Tyerman said. "This is quicker than we expected, and we adjusted our forecast accordingly."

"North American sales are likely to grow slowly and margins should remain near current high levels. European sales growth is expected to be limited in the next couple of years, but margins should roughly double as the business is improved," he wrote in a research note. As a result, earnings per share should grow at 13.4 per cent annually from 2013 to 2015, he said.

Story continues below advertisement

He rates the stock "hold" and raised his price target to $91 (U.S.) from $89. "MGA's valuation remains on the high side, but we think it can remain there, given positive industry and company dynamics."

=====

Open Text Corp.'s Red Oxygen information-management system shows how the company can balance innovation and acquisitions, said RBC Capital Management analyst Paul Treiber.

"We see the stock well-positioned into 2014, with valuation remaining compelling and several catalysts pending," he wrote in a research note. "Red Oxygen may help re-accelerate organic growth, while street expectations appear conservative."

Mr. Treiber rates the stock "outperform" and raised his price target to $90 (U.S.) from $85. "Our target multiple reflects a re-valuation to the high-end of Open Text's historical range and towards peers on higher visibility to organic growth."

=====

Gildan Activewear's outlook for fiscal 2014 is "particularly conservative," after the company reported stronger-than-expected revenue growth in its branded goods' segment and a 20 per cent increase in its quarterly dividend, said Raymond James analyst Kenric Tyghe.

Story continues below advertisement

Because of accelerating gains in the retail market and growing demand in the printwear segment, "we believe revenue guidance is too conservative (which assumes elevated promotional activity with no improvement in either the macro backdrop or retail conditions)," he wrote in a research note.

Cotton costs are likely to be "a modest headwind" in the first half of 2014, but efficiency gains will support "a very modest gross margin expansion," rather than a compression, he said.

Mr. Tyghe maintained his "outperform" rating and $55 (U.S.) price target on the stock.

=====

Kirkland Lake Gold Inc. has raised "more questions than answers," after taking analysts on a tour of its Macassa site, said Desjardins Securities, Adam Melnyk.

"Based on our site tour, we continue to recommend KGI for investors with a longer term horizon and a higher near- to medium- term risk tolerance," he said.

Story continues below advertisement

"In particular, in the near term, we see significant uncertainty regarding the mine plan at Macassa, which we expect may change with the appointment of KGI's new CEO. We are also concerned that, based on our forecasts, KGI will not achieve its stated production guidance for fiscal 2014, which could create negative market sentiment."

Mr. Melnyk maintained his "buy" rating and cut his price target to $6 (Canadian) from $9.

=====

Premier Gold Mines released a disappointing mineral resource estimate for Cove Gold project, said CIBC World Markets analyst Jeff Killeen.

Grades at its Helen zone fell by about 50 per cent -- a decrease that was more rapid than anticipated, Mr. Killeen wrote in a research note. Drilling in the zone has been halted since May, which also muted growth, he said.

"While Cove does show further exploration upside, delivery of resource growth on paper is likely to take longer than we had initially anticipated," he said.

Mr. Killeen cut his price target to $4 from $4.25 and rates the stock "sector outperform."

=====

Darcy Keith is away and will return on Monday

Report an error Licensing Options
About the Author
Deputy head of Audience

Sonali Verma is deputy head of audience at the Globe and Mail. She is a business journalist with more than 20 years of experience, mainly in digital media.She was previously the Globe and Mail’s senior editor in charge of audience engagement, overseeing its homepages as well as social media operations. More

Comments

The Globe invites you to share your views. Please stay on topic and be respectful to everyone. For more information on our commenting policies and how our community-based moderation works, please read our Community Guidelines and our Terms and Conditions.

We’ve made some technical updates to our commenting software. If you are experiencing any issues posting comments, simply log out and log back in.

Discussion loading… ✨