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Monday’s analyst upgrades and downgrades

Pedestrians walk by a Telus store in Toronto, Aug. 15, 2013.

Galit Rodan/The Canadian Press

Inside the Market's roundup of some of today's key analyst actions. This file will be updated during the trading day.

Telus Corp. is the best-positioned contender in the telecoms sector for 2014, said Canaccord Genuity analyst Dvai Ghose, citing low wireless churn rates, strong potential for wireline cash flow and the possibility of both a share buyback and dividend hike.

He expects 6 per cent growth in consolidated earnings before interest, taxes, depreciation and amortization in 2014, along with 17 per cent growth in free cash flow and a year-on-year increase of 13 per cent in adjusted earnings per share.

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Mr. Ghose raised his price target to $44 from $41 and rates the stock "buy." The analyst consensus price target over the next year is $39.30, according to Thomson Reuters.

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Dorel Industries Inc. is facing weakness in both its mass-market and dealer channels and has disclosed its earnings will be "substantially below" last year's levels, said CIBC World Markets analyst Mark Petrie.

"A cold spring 2013 triggered a weak selling season and left dealers with excess inventory. This inventory was still being cleared out over Christmas," he wrote in a research note.

"We do not believe that Dorel's bike business is fundamentally damaged, and we applaud the company's marketing campaign and strategic acquisitions. Still, it has become clear that results will be strained through our forecast period. Though 2015 should be improved, visibility is limited at this point."

Mr. Petrie cut his target price to $39 from $41 and rates the stock "sector performer." The analyst consensus price target over the next year is $38.14.

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Domtar Inc. earnings beat consensus estimates, thanks to "lower planned maintenance, higher paper and pulp prices, favourable FX moves, and higher pulp shipments," said Raymond James analyst Daryl Swetlishoff.

"Our constructive stance on Domtar is based on rising uncoated free sheet prices, strong current pulp segment profitability, and the company's ongoing diversification into personal care, away from structurally declining white paper," he wrote in a research note.

"We expect uncoated free sheet pricing will trend steadily higher through the first half of 2014 which, in addition to strong current pulp pricing equates to significant earnings momentum for Domtar. In addition, we continue to expect multiple expansion as the company continues to diversify away from the structurally declining white paper and into the growing personal care market," he said.

Mr. Swetlishoff raised his target price from $112.00 to $125.00 and rates the stock "outperform." The analyst consensus price target over the next year is $98.33, according to Thomson Reuters.

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A year of strong returns have bolstered Gluskin Sheff + Associates Inc.'s net flows, resulting in a big price target increase from  CIBC World Markets analyst Paul Holden.

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Higher compensation resulted in a lower than expected base earnings before interest, taxes, depreciation and amortization, says Mr. Holden, but the company announced a special dividend of $1.42, in line with his expectations.

Net asset flows improved to $100-million, better than his $50-million assumption. He has revised his assumption for fiscal 2015 from $200-million to $300-million. He also notes that Gluskin Sheff is introducing a normal course issuer bid to provide the flexibility to buy back stock opportunistically.

"Gluskin Sheff has produced very strong investment performance last year and net flows are improving as a result," says Mr. Holden. "While business fundamentals are positive, current valuations are more than adequate."

He is maintaining his "sector performer" rating and increasing his target price to $31.50, from $24. The analyst consensus price target is $29.20, according to Thomson Reuters.

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RBC Dominion Securities analyst Nelson Ng is hiking his target price for Brookfield Renewable Energy on expectations that the company will outperform its peer group.

Mr. Ng cites a higher-than-expected distribution increase, acquisition announcements and attractive organic growth opportunities as catalysts.

He is maintaining his "outperform" rating and raising Brookfield's price target to $32, from $30. The analyst consensus price target is $31.25, according to Thomson Reuters.

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About the Authors
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

Streetwise editor

Jody White is the web editor for Streetwise. He previously worked as a senior editor at Canadian Business Online and has written for MoneySense Magazine, Maclean's, the National Post and other national publications. More

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