Wednesday's analyst upgrades and downgrades

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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.

RBC Dominion Securities analyst Greg Pardy upgraded Husky Energy Inc. to "outperform" from "sector perform," impressed by the company's steady progress with its major growth initiatives.

Mr. Pardy raised his price target to $41 (Canadian) from $37, reflecting an increase in his cash flow per share estimates because of higher oil and natural gas prices and also the weaker Canadian dollar.

"Husky Energy's upstream growth profile is poised to accelerate this year into the 9 per cent range, fuelled by the recent startup of its Liwan gas project at the end of the first-quarter," Mr. Pardy said in a research note. "Supported by ongoing momentum in its thermal heavy oil operations, Husky's top line growth should translate into healthy cash flow per share growth of 20 per cent in 2014."

Another big attraction to the name: its 3.5 per cent dividend yield, which is supported by a strong balance sheet. Mr. Pardy estimates that the company will have an average net debt-to-trailing cash flow ratio of 0.4 times in 2014 and 2015.

"With the recent start-up of Liwan and first oil at Sunrise slated for the second-half of 2014, Husky's growth picture is the most attractive it has been in many years," he said.

Last week, Canaccord Genuity also upgraded Husky Energy, to a "buy" from a "hold," and raised its price target to $38.50 (Canadian) from $35, impressed by the company's start-up of Liwan, a $6.5-billion offshore facility in the South China Sea that is Husky's largest project to date.

The analyst consensus price target for Husky Energy over the next year is $36.79, according to Thomson Reuters.

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RBC Dominion Securities analyst Greg Pardy downgraded Canadian Oil Sands Ltd. to "underperform" from "sector perform" as he considers the stock fairly valued at current levels.

Mr. Pardy says higher sustained production rates at Syncrude – which it partially owns – have proven elusive, mainly due to unplanned maintenance. Improved operating performance at Syncrude – which he expects to gradually increase – will result in a more bullish take on Canadian Oil Sands shares.

He also notes that the completion of its major capital projects means Canadian Oil Sands' sustaining capital is expected to fall in 2015.

"With growth initiatives at Syncrude on hold for an indefinite timeframe, COS should become more of an income vehicle beyond 2014."

Mr. Pardy raised his price target to $22 (Canadian) from $20. The analyst consensus price target over the next year is $21.64, according to Thomson Reuters.

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Morgan Stanley analyst Adam Jonas downgraded General Motors Corp. to "underweight" from "equalweight" and slashed his price target to $33 (U.S.) from $49, believing that new technologies will become a major challenge for the automaker's business going forward.

He believes GM is now trading at fair value and does not offer risk-adjusted upside. Shares opened down 1.3 per cent at $34.07 on the New York Stock Exchange.

The auto industry is entering a new era of significant technology disruption, StreetInsider.com quoted Mr. Jonas as saying.

"The pressures will challenge conventional thinking on capital allocation, engineering and human resources," he said. "The biggest fundamental opportunity for the 'new GM' is to take risk on the top line (new products and technology) that its predecessor was never able to adequately withstand. GM will need to muster every bit of its financial and technological resources to make the transition to advanced powertrains, connected vehicles and, ultimately, autonomous cars."

The analyst consensus price target over the next year is $45.93.

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CIBC World Markets analyst David Noseworthy raised his price target on Newalta Corp. after the company announced it is conducting a strategic review of its industrial division, which may include a sale, initial public offering or a spin-off.

"In our view, this is the logical next step in a series of value-maximizing transactions that could ultimately result in the sale of the entire company," Mr. Noseworthy said in a research note.

He believes Newalta's various industrial segment assets -- which are focused on processing waste material in the energy sector -- could be sold for about $450-million, implying an enterprise value 6.5 times 2014 estimated earnings before interest, taxes, depreciation and amortization. "We expect reinvestment of proceeds into higher-value opportunities and multiple expansion for the remaining business could ultimately result in share price accretion of $4.00," he said.

Proceeds from asset sales would likely be used to fund high-return growth projects in the heavy oil industry, he added.

He raised his price target to $22 (Canadian) from $20 and maintained a "sector performer" rating.

"Our higher price target reflects management's progress on a value-maximizing strategy that could result in a materially higher share price if executed to its fullest. However, the sale of the industrial division could ultimately be dilutive absent reinvestment. as company management presses forward with a strategy of boosting value," he said.

Canaccord Genuity earlier this week downgraded Newalta to "hold" from "buy," citing the stock's recent strong run. It maintained a $20 (Canadian) price target.

"We continue to see the company's strategic plan as clear and appropriate, and believe it can deliver a combination of strong growth and improved returns through 2017," Canaccord analyst Sara Elford said.

The analyst consensus price target is $22.28.

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M Partners analyst Daniel Pearlstein initiated coverage on Aurinia Pharmaceuticals Inc. with a "buy" rating and $6.17 (Canadian) price target, implying a rate of return of 84 per cent over the next 12 months.

Aurinia is a clinical-stage biopharmaceutical company developing the drug voclosporin, which could become a treatment for lupus nephritis, an inflammation of the kidneys.

There is a substantial unmet medical need in treating the disorder, notes Mr. Pearlstein. Untreated, patients could end up on dialysis or in need of kidney transplants.

Aurinia management has a proven track record in this area of medicine, as several key management members were part of developing an existing treatment, known as CellCept, used for aiding patients with the disorder.

The company is beginning a new trial phase in the second quarter of this year.

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In other analyst actions:

RBC Dominion Securities downgraded Canadian Oil Sands to "underperform" from "sector perform" but raised its price target to $22 (Canadian) from $20.

Macquarie downgraded Baytex Energy to "neutral" from "outperform" but raised its price target to $48.50 (Canadian) from $47.

National Bank Financial initiated coverage on Gluskin Sheff & Associates with a "sector perform" rating with a price target of $33 (Canadian).

Several research firms raised their price targets on Whitecap Resources: RBC raised its target to $16, First Energy Capital to $16.75; CIBC to $16.25 and Dundee Securities to $15.75.

Goldman Sachs downgraded Hershey to "sell" from "neutral" with a price target of $90 (U.S.).

UBS hiked its price target on Alcoa to $12.50 (U.S.) from $10 and maintained a "neutral" rating.

Deutsche Bank downgraded Apache to "hold" from "buy" with a price target of $91 (U.S.).

Merrill Lynch upgraded E*Trade to "neutral" from "underperform" and raised its price target to $21 (U.S.) from $19.

FBR Capital upgraded AmerisourceBergen to "outperform" from "market perform" with a price target of $75 (U.S.).

Jefferies initiated coverage on Chevron with a "buy" rating and $140 (U.S.) price target, and on ExxonMobil with a "hold" rating and $96 (U.S.) price target.

UBS downgraded Walter Energy to "sell" from "neutral" and cut its price target to $5 (U.S.) from $8. It also downgraded Arch Coal to "sell" from "neutral" and Alpha Natural Resources to "sell" from "neutral" and cut its price target to $3 from $5.

Credit Suisse raised its price target on Magellan Midstream Partners to $80 (U.S.) from $74 and maintained an "outperform" rating.

For more analyst actions, breaking investing news and analysis, follow Darcy Keith on Twitter at @eyeonequities