Calfrac Well Services says it will spend $147-million (U.S.) to buy Mission Well Services LLC, a privately held hydraulic fracturing and coiled tubing services provider focused in Texas.Jim Wilson
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.
Canaccord Genuity analyst John Bereznicki upgraded Calfrac Well Services Ltd. to "buy" from "hold" on increasing conviction that the company will benefit from positive earnings momentum in 2014.
Calfrac's fourth-quarter domestic operations met Mr. Bereznicki's expectations, while its U.S. performance beat his forecasts.
Meanwhile, management indicated in its quarterly conference call that weather, not demand, will be key to domestic drilling activity heading into the second quarter of 2014. "Put another way, Calfrac is likely to carry a backlog into the break-up, which we believe bodes well for domestic pricing in the second half of 2014," Mr. Bereznicki. The spring break-up period is when rigs cannot move to the next work site because of road bans and treacherous operating conditions.
"To reflect lingering pricing pressure, we are tempering our EPS expectations to $1.30 (from $1.80) in 2014 and to $3.20 (from $3.60) in 2015," he said. But he raised his price target to $42 (Canadian) from $36.
The average analyst price target over the next year is $39.74, according to Thomson Reuters data.
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CIBC World Markets analyst Adam Gill has lowered his expectations for Argent Energy Trust for the next two years, believing that the company will take longer than expected to improve its cost structure.
He downgraded his rating to "sector performer" from "sector outperformer" while cutting his price target to $7 (Canadian) from $9.50.
On the positive side, he thinks the trust's distribution to unitholders is safe.
"Overall, our 2014 cash flow per share estimate is reduced 28 per cent," Mr. Gill said in a research note. "This drives the total payout ratio (capex plus distributions) to 156 per cent .... Given the high DRIP participation, we do not believe the trust will need to make a cut to the distribution as the DRIP adjusted payout ratio is 86 per cent. That said, this will be a 'show-me' year for Argent and we can no longer retain the sector outperformer rating."
DRIP, or dividend reinvestment program, allows holders to reinvest their distributions automatically into the company without incurring brokerage fees.
The average analyst target is $9, according to Thomson Reuters.
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Analysts are taking a knife to their price targets on TeraGo Inc., a wireless broadband service provider to businesses that has reported a weak fourth quarter as the company lost customers.
TeraGo revealed a new business plan to become an IT services provider, but analysts warn this will take some time to play out.
"With a weaker fourth quarter, and a new strategy towards becoming an IT services company, we see plenty of execution risk ahead for TGO into 2014," said CIBC World Markets analyst Robert Bek as he downgraded his rating to "sector underperformer" from "sector performer" and cut his price target to $6.50 (Canadian) from $9. "We argue watching on the sidelines for now as shares will likely languish as the company executes along this new path."
While cutting his price target to $7 from $11, Canaccord Genuity analyst Dvai Ghose maintained a "buy" rating.
"We were disappointed with Q4/13 results, which were weak across the board. Legacy connectivity revenue is clearly in decline," Mr. Ghose commented.
"However, we view 1) the CEO and CFO replacement; and 2) the new focus on data centres as potential positive catalysts. While investors may have to be very patient while waiting for a turnaround, 1) the company is still generating positive EBITDA, adjusted earnings per share and free cash flow; 2) it had a significant $22.2-million of balance sheet liquidity at the end of 2013; and 3) the stock is only trading at an enterprise value of 5.1x annualized Q4/13 adjusted EBITDA."
The average analyst price target is $7.83, according to Bloomberg data.
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A solid quarter for Royal Bank of Canada has reinforced CIBC World Markets analyst Robert Sedran's outlook on the bank's stock.
Personal and commercial banking performance was steady in the first quarter, and while international banking saw an adjustment for a loss on disposal of Jamaican operations, his outlook for this segment remains favourable.
"Overall, it was a solid quarter with most of the positive variances to our estimates driven by revenues," said Mr. Sedran. "Although expectations are always high for this bank, we see both the quality and quantity of earnings as supportive of our investment thesis."
He maintained his "sector outperform" rating and $80 (Canadian) price target. The analyst consensus price target over the next year is $77.32, according to Thomson Reuters.
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Dundee Industrial Real Estate Investment Trust had its strongest quarter of leasing to date, notes Canaccord Genuity analyst Mark Rothschild.
Dundee's 751,000 square feet of leasing is up significantly from the third quarter of 2013 when the REIT completed 480,000 square feet of leasing. Fundamentals remain strong across all major Canadian markets, particularly in Alberta and Ontario, and he expects further improvement in occupancy in 2014.
Mr. Rothschild maintained his "buy" rating and $9.50 (Canadian) price target. The analyst consensus price target is $10.09.
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In other analyst actions:
Industrial Alliance Securities raised its price target on Major Drilling Group International to $9.50 (Canadian) from $7 and maintained a "hold" rating.
RBC Dominion Securities raised its price target on Canam Group to $18 (Canadian) from $16 and maintained an "outperform" rating.
RBC Dominion Securities cut its price target on Trican Well Service to $18 (Canadian) from $20 and maintained an "outperform" rating.
RBC Dominion Securities cut its price target on Westport Innovations to $23 (U.S.) from $27 and maintained a "sector perform" rating.
Wells Fargo upgraded J.C. Penney to "market perform" from "underperform" and raised its price target to $6-7 from $4-5.
JPMorgan added Verizon to its "focus list" - its most highly recommended stocks. It maintained an "overweight" rating with a price target of $57 (U.S.).
Wedbush raised its price target on Tesla Motors to $295 (U.S.) from $225 and maintained an "outperform" rating. Goldman Sachs raised its price target on Tesla to $170 from $118 and maintained a "neutral" rating. But Merrill Lynch reaffirmed a $65 (U.S.) price target and maintained an "underperform" rating.
UBS upgraded Weatherford International to "{buy" from "neutral" and hiked its price target to $19 (U.S.) from $15.
Piper Jaffray downgraded Cree to "neutral" from "overweight" with a price target of $67 (U.S.).
Darcy Keith