Tuesday'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.

Canaccord Genuity analyst Juan Plessis upgraded Pembina Pipeline Corp. to "buy" from "hold" after the company announced it has secured sufficient commercial commitments to proceed with a $460-million propane-plus fractionator at its Redwater facility in Alberta.

It would be the third fractionator at the Redwater complex and the company also announced plans for an associated pipeline.

"We understand that the project will generate returns similar to other recent projects, implying a 12-15 per cent pre-tax return on invested capital and an annual EBITDA of about $75-million once completed," commented Mr. Plessis.

The new facility is scheduled to be in service in the third quarter of 2017. While long-term contracts have been signed with producers, some uncontracted capacity remains, which should provide additional upside potential for Pembina's future cash flow, he added.

He raised his price target to $48 (Canadian) from $44. The analyst consensus price target over the next year is $45.36, according to Thomson Reuters data.

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Raymond James analyst Ken Avalos downgraded Canadian Apartment Properties REIT to "market perform" from "outperform," concerned that the Street has not yet fully factored in the negative impact from this winter's brutal weather.

While the miserable cold affected almost all real estate investment trusts during the first quarter, apartment REITs were particularly impacted. Ontario, where the REIT has a high percentage of its operations, saw an especially harsh winter, which drove natural gas prices up and cooled renters' interest to move into new rental units.

"While the Street (us included) adjusted estimates with the mid-February 4Q release, we do not think these estimates factor in the full 45 days of additional extreme weather and believe consensus is still high," Mr. Avalos said in a research note.

The REIT faces another potential challenge: a U.S. economy that may start to show more robust signs of recovery in the back half of this year. "In this environment, the sector will likely once again endure more volatility as investors try to figure out the potential impact of changing debt and equity costs, coupled with some capital outflows into growthier assets," he said.

Mr. Avalos previously had a $23.50 (Canadian) price target on CAP REIT. That target is now withdrawn as Raymond James does not give a target for securities rated market perform, the equivalent of a hold.

He suggested the REIT is set for a period of treading water.

"Given current valuation (14.3 times estimated 2015 adjusted funds from operations; 10 per cent discount to net asset value), we admit that there seems to be limited downside in the name, barring a systemic shock to the REIT universe. However, in our opinion, there is no catalyst to the upside either," he said.

The consensus target is $23.89.

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Alliance Grain Traders Inc. overcame a tough winter for rail transportation to post a decent earnings beat in its first quarter, Steve Hansen, an analyst at Raymond James, said in a note.

The Regina-based pulse crop producer beat estimates on both revenue and earnings when it posted its results on Monday. The quarter was "underpinned by a healthy lift in volumes despite notable headwinds relating to Canada's winter congested rail network," Mr. Hansen said, upgrading the company's stock to "outperform" from "market perform" and raising his price target to $23 (Canadian) from $21.

Alliance, one of the world's largest processors of lentils and other pulses, was hit hard by the sovereign debt crisis in Europe, which squeezed the company's export volumes.

The company has since undertaken to improve its profit margins, efforts that "continue to bear significant fruit," Mr. Hansen said.

CIBC World Markets analyst Jacob Bout was less impressed with Alliance's incremental gains in productivity, noting that margins in the pulses and grain processing segment basically stayed flat quarter over quarter, while the company's net debt continues to increase.

Mr. Bout lowered his price target to $19.50 from $20 while maintaining a "sector performer" rating.

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Beneath the surface of a first-quarter earnings disappointment are encouraging signs of a turnaround for Bird Construction Inc., Michael Tupholme, an analyst at TD Securities, said in a note.

"We believe that [the first quarter] will prove to represent an inflection point in terms of Bird's financial results," Mr. Tupholme said. "After a challenging 2013 and a weaker-than-forecast start to 2014, we expect Bird to deliver meaningfully improved results as the year progresses."

After market close on Friday, the general contractor reporter first-quarter earnings well below analysts' estimates, the shortfall being driven by disappointing margins and revenues.

But the company's backlog of work also increased by 11.3 per cent from the previous quarter to a record $1.4-billion. Plus, the backlog has shifted in recent quarters toward more profitable industrial work, "driven in large part by increased contract awards in the oil sands," said Mr. Tupholme, who upgraded the company's stock to "buy" from "hold," and raised his target price to $15.50 (Canadian) from $14.50.

The consensus target is $15.46.

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First-quarter results that exceeded expectations have earned Total Energy Services Inc. a ratings upgrade and target price hike from TD Securities Inc. analyst Scott Treadwell.

The better-than-expected results were helped by the sale of rental compression equipment during the quarter, while Total Energy also increased its capital budget by $14-million to purchase assets for its rental group and to further broaden its compression group, says Mr. Treadwell.

"Total's business mix delivered a quarter in line with our expectations, with the incremental asset sale delivering the beat," he says. "The increase in capital spending likely targets high-demand areas that should deliver strong returns."

"In our view, Total remains one of the best allocators of capital in our universe, and Q1 results gave us no cause to change this thesis. Continued good results across the board were aided by the one-time sale of rental assets. However, the increase in capital spending improves our outlook for 2015."

Mr. Treadwell upgraded Total Energy to "buy" from "hold" and raised his target price by $1 to $26 (Canadian). The analyst consensus price target over the next year is $24.15.

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In other analyst actions:

Canaccord Genuity downgraded Inter Pipeline to "hold" from "buy" and kept a $31 (Canadian) price target.

Canaccord Genuity upgraded Entrec to "buy" from "hold" and maintained a $1.60 (Canadian) price target.

BMO Nesbitt Burns raised its price target on Shawcor to $65 (Canadian) from $54 and maintained an "outperform" rating.

Bernstein upgraded Time Warner to "outperform" from "market perform" and raised its price target to $84 (U.S.) from $73.

Bernstein downgraded Nabors to "market perform" from "outperform" but raised its price target to $25 (U.S.) from $24.

BMO Nesbitt Burns downgraded Pinnacle Foods to "market perform" from "outperform" and raised its price target to $36 (U.S.) from $31.

Wunderlich Securities downgraded Concho Resources to "hold" from "buy" and cut its price target to $137 (U.S.) from $147.

Bernstein downgraded Baker Hughes to "market perform" from "outperform" with a price target of $77 (U.S.).