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.
Credit Suisse analyst Nick Stogdill boosted his price targets by an average of 9 per cent on all the major Canadian banks, after a review of their latest quarterly results made him more upbeat about the outlook for stable margins and credit in Canada and their increasing capital strength.
He also increased his earnings per share estimates for the banks by 1 per cent for both 2014 and 2015 as he raised his price-to-earnings multiples for the sector over the next 12 months to 11.3 times, which is close to the historical average of 11.4 times.
Mr. Stogdill noted that Canadian banks delivered 8 per cent year-over-year earnings per share growth in the first quarter of 2014, up from 7 per cent in the fourth quarter.
"We anticipate a similar rate of growth for the remainder of 2014 driven by stable margins and credit in Canada, wealth momentum and continued focus on efficiency," he said in a research note.
The banks should continue to make progress on cutting costs throughout 2014, with non-interest expense ratios improving by 60 basis points for the sector, he projects.
Meanwhile, Mr. Stogdill expects the banks to accelerate their capital deployment, likely by increasing share buybacks, as acquisition opportunities in the wealth management business may be limited given elevated valuations. Share repurchases in the sector are also still below levels seen between 2001 and 2005. CIBC and Royal Bank of Canada, he said, are the most likely to buy back more shares.
Mr. Stogdill raised his price targets on Bank of Montreal to $79 (Canadian) from $77, on Bank of Nova Scotia to $70 from $68, and on Royal Bank of Canada to $77 from $75. All three are rated "outperform" and are his favourite Canadian banks right now.
He has "neutral" ratings on Toronto Dominion Bank (and raised its price target to $53 from $49), Canadian Imperial Bank of Commerce (new price target $97, from $89), National Bank of Canada (new price target $46, down from $47) and Canadian Western Bank (Price target $37, up from $35). He rates Laurentian Bank as "underperform" and kept its price target unchanged at $46.
TD Securities analyst Michael Tupholme upgraded Stella-Jones Inc. to "buy" from "hold," as he gained confidence about the earnings outlook for the North American producer of industrial treated wood products.
He also raised his price target to $33 (Canadian) from $29.
"On the whole, we believe that Stella-Jones has a favourable outlook" Mr. Tupholme said in a research note. "We expect the railway tie business to benefit from increasing industry demand and incremental volumes from the company's Cordele, Georgia facility (opened in Q3/13). Meanwhile, we continue to expect Stella-Jones to experience a step-up in utility pole replacement demand, driven by the aged state of North America's existing stock."
"From a margin perspective, we forecast steady improvements over the next several years as management continues to focus on optimizing the firm's continental network. Possible future acquisitions (not in our forecast) also offer growth potential," he added.
Mr. Tupholme previously expressed reservations about the level of the stock's valuation, but he's now more comfortable with it given the strength of the company's earnings outlook over the next two years, and expectations for continued strong free cash flow generation.
The analyst consensus price target for Stella-Jones over the next year is $33.29, according to Thomson Reuters.
Cowen & Co. analyst Charles Neivert upgraded three fertilizer stocks - Agrium Inc., Potash Corp. of Saskatchewan Inc. and Rentech Nitrogen Partners LP - to "market perform" from "underperform," citing expectations for a possible short-term bounce in shares this spring.
He thinks the unusually cold weather may lead to a shortened spring planting season that could give a quick boost to fertilizer prices. As well, planted acres for corn this year are likely to rise, underpinning demand for fertilizer.
But he's warning investors that long-term fundamentals continue to look challenging.
"Although we fully expect spring fertilizer application rates to be around 'normal' or even slightly better, and fertilizer prices to move up modestly on a short-term basis, the situation is likely to be transient," Mr. Neivert said in a research note.
"The coming year should not be viewed as a recovery year following 2013 challenges, but may actually represent a slightly better than normalized situation. We feel that in 2014, average prices will be below those of 2013 and will be unlikely to show significant sustainable recovery off the lows of 2013. Some products, following the spring bounce, could even revisit or break below 2013 low points. As such, we remain cautious on the industry and feel that share prices may not have a catalyst of sufficient magnitude to break them out of their current trading range for any long period of time, although short-term movement may provide positive trading opportunities.
"It is quite possible that without a shock to the system, the baseline for the next few years could resemble the 2001-2005 period for the industry, when overall ag performance was mediocre at best due to adequate grain inventory, no significant grain supply disruptions, and a well-supplied global nutrient market.
His price target on Agrium was raised to $100 (U.S.) from $77 and on Potash Corp. to $32 from $25. His target on Rentech was cut to $18 per unit from $28.
Recent share price appreciation and the threat of regulatory action against the company have resulted in a rating downgrade for medical isotope provider Nordion Inc.
CIBC World Markets analyst Stephanie Price says the 27 per cent increase in Nordion's share price over the past two months has left the stock less attractive.
Meanwhile, Nordion has spent $22-million conducting an internal investigation involving a foreign supplier over possible breaches of Canadian and U.S. foreign corruption acts. The company has since cut ties with the supplier amid allegations of bribes paid overseas.
While it remains uncertain whether any regulatory action will be taken, Ms. Price notes that the average fine for violating the U.S. Act alone was $80-million.
She downgraded Nordion to "sector underperformer" from "sector performer" and raised her target price to $11.50 (Canadian) from $10.25. The analyst consensus price target over the next year is $10.94, according to Thomson Reuters.
B2Gold Corp. is a "go to" gold-focused growth story and a preferred investment choice among gold producers, according to Raymond James analyst Chris Thompson.
The miner boasts a low cost structure - its 2014 all-in sustaining costs were approximately $1,000 an ounce - and a proven operating team, which consistently meets or exceeds expectations and guidance, says Mr. Thompson).
"We continue to recommend investors purchase shares of BTO given its robust growth profile, consistent operating performance, and quality management."
He maintained his "outperform" rating and $4.00 (Canadian) target price.
Elsewhere, Desjardins Securities downgraded B2Gold to "hold" from "buy" citing the stock's recent share price appreciation, as it hiked its price target to $3.50 (Canadian) from $3.20. CIBC World Markets raised its price target to $5 from $3.50 and maintained a "sector outperformer" rating.
The analyst consensus price target over the next year is $3.46.
In other analyst actions:
CIBC World Markets downgraded Parkland Fuel to "sector performer" from "sector outperformer" due to valuation. It maintained a $22.25 (Canadian) price target.
Raymond James cut its target on Baylin Technologies to $5 (Canadian) from $9 and maintained an "outperform" rating. M Partners cut its price target to $9 (Canadian) from $12.50 but maintained a "buy" rating.
Raymond James downgraded Tahoe Resources to "market perform" from "outperform" but hiked its target to $26 (Canadian) from $23.
Acumen Capital initiated coverage on Input Capital with a "speculative buy" recommendation and $2.70 (Canadian) price target.
CIBC hiked its price target on Stillwater Mining to $20 (U.S.) from $16.50 and reiterated a "sector outperformer" rating.
Goldman Sachs downgraded National-Oilwell Varco to "neutral" from "buy" and cut its price target to $85 (U.S.) from $90.
Goldman Sachs upgraded Patterson-UTI Energy to "conviction buy" from "buy" and raised its price target to $37 (U.S.) from $28.50.
Goldman Sachs upgraded Baker Hughes to "buy" from "neutral" and raised its price target to $72 (U.S.) from $60.
Citigroup upgraded Alon USA Partners LP to "buy" from "neutral" and raised its price target to $19 (U.S.) from $16.
Baird raised its price target on Tesla Motors to $275 (U.S.) from $245 and maintained an "outperform" rating.
Argus downgraded Facebook to "hold" from "buy" and removed its price target, which had been at $73 (U.S.). It cited the strong rise in its share price.
Canaccord Genuity upgraded STAAR Surgical to "buy" from "hold" and raised its price target to $20 (U.S.) from $14.
UBS upgraded TC Pipelines to "buy" from "neutral" and raised its price target to $51 (U.S.) from $50.
Barclays downgraded General Dynamics to "equalweight" from "overweight" and maintained a $119 (U.S.) price target.
For more analyst actions, breaking investing news and analysis, follow Darcy Keith on Twitter at @eyeonequities