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KACPER PEMPEL/Reuters

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

Canadian banks may be due for a pause, although valuations don't look so expensive as to suggest a pullback, Canaccord Genuity analyst Gabriel Dechaine said.

This year so far has been a good one for Canadian bank stocks, which may have caught investors by surprise, Mr. Dechaine said. Many expected loan growth to slow on rising interest rates and high household debt levels.

But the banking sector has actually been outpaced by the S&P/TSX composite index and has been just the fifth best performer within the index year to date.

So relative performance alone is not sufficient to recommend reducing bank exposure, Mr. Dechaine said.

Valuation metrics, however, suggest that bank stocks have become less attractive.

The sector is currently trading at about 12 times forward earnings, which is materially above historical average, Mr. Dechaine said.

"While in our view the group doesn't look 'cheap' on an absolute basis, on a relative basis, the picture is not dramatically better."

Compared to both the broader Canadian stock market and to U.S. regional banks, Canada's bank stocks are trading above historical norms as well.

"We note, however, that banks still look attractive when comparing dividend yields to Canadian Government 5-year bond yields," Mr. Dechaine said.

Two potential catalysts could make bank valuations more of a concern for Canadian investors, he said.

The first is if Canadian life insurance stocks post strong second quarter results. Since the lifecos trade in line with bank stocks, a solid quarter would make insurance stocks more attractive by comparison.

Second, particularly for Bank of Montreal and Toronto-Dominion Bank, another tough quarter for their U.S. subsidiaries could compel Canadian investors to take some money off the table.

"These trends are particularly relevant since we believe both stocks are outperforming their peers due to their U.S. exposure and since they are no longer heavily discounted versus the U.S. regionals," Mr. Dechaine said.

Canaccord did not make any adjustments to its ratings or price targets on the Canadian banks.

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At least four brokerages raised their ratings on Twitter Inc., while at least 17 raised price targets, by as much as $18 to a high of $65, after the social media site reported quarterly results on Tuesday that blew past expectations and raised its guidance. Shares are up 20 per cent in early afternoon trading on the New York Stock Exchange.

The Street was especially impressed by Twitter's ability to grow its net new monthly active users by 16 million, the strongest in five quarters.

"We continue to believe we are in the early stages of a very long growth cycle for Twitter as it leverages cultural ubiquity, invests in product and technology, and grows the platform," Goldman Sachs analysts wrote in a note in which the bank maintained a "buy" rating and raised its price target to $63 (U.S.) from $52.

Janney Capital Markets analysts commented: "This quarter's results take away one of the major bear arguments for the stock, namely that the user base is small and maturing."

UBS was among brokers upgrading the stock, to a "neutral" rating from a "sell" as it raised its price target to $50 from $35. "Twitter clearly outperformed our more muted estimates for users and ad revenues (especially International) – our sell rating was wrong," conceded analyst Eric Sheridan. "In our view, Twitter will remain range bound from these levels despite a solid set of results due to two factors: a) industry high revs/EBITDA multiples & b) investor questions about user/revenue sustainability in coming quarters. As a result, we believe Twitter does not present anything more than a neutral risk/reward from these levels. Longer term, we would need to see continued outperformance (users, engagement, monetization) and/or more reasonable valuation multiples to become more constructive."

The average price target for Twitter is now $53.14, according to Bloomberg data.

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BMO Nesbitt Burns upgraded Genworth MI Canada Inc. to "outperform" and raised its price target to $46 (Canadian) after the private residential mortgage insurer beat earnings expectations for the second quarter.

Operating EPS was $1.04, well ahead of consensus of 94 cents, thanks to lower losses reflecting the rapidly improving quality of its insurance portfolio and continued strong housing market conditions, noted BMO analyst Tom MacKinnon.

"Our upgrade is based on a better-than-expected loss experience going forward reflecting a lower trend of loss ratios, an improving top-line as MIC continues to improve market share, the added benefit of 15 per cent rate increases that started in May 2014, and an attractive valuation, at 1.1x P/BV (price to book value) and 9.6x estimated 2015 operating EPS, with a 3.7 per cent dividend yield," Mr. MacKinnon said in a note.

The analyst consensus price target for Genworth MI Canada over the next year is $40.89, according to Thomson Reuters data.

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Several analysts raised their price targets on WestJet Airlines Ltd. in response to its latest earnings, bringing the average price target to $33.57, according to Bloomberg tabulations.

The airline's second-quarter EPS of 40 cents blew past the Street consensus of 27 cents.

BMO Nesbitt Burns analyst Fadi Chamoun, who raised his target to $33 and reiterated an "outperform" rating, commented: "WestJet results this quarter again demonstrated strategic gains in yields as a result of the deployment of Encore, Economy Plus products, and various other initiatives promoted to higher yielding passengers."

"We believe that the runway for these types of yield gains is sustainable for the foreseeable future. What's more impressive is the company's cost management, particularly in the face of a mid-single-digit decline in average length of haul," he added.

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RBC Dominion Securities analyst Sam Crittenden upgraded Romarco Minerals Inc. to "outperform" from "sector perform" and raised his price target to $1.25 (Canadian) from $1. The action followed the company this week providing more clarity on the permitting timeline for its Haile project, which RBC views as one of  the best early-stage gold projects.

"We view Romarco as a takeover candidate once permits are received based on potential for low-cost production, the scalability of the project, and regional exploration potential," Mr. Crittenden said in a note. "Using similar metrics to B2Gold's recently announced acquisition of Papillon resources would imply 20 per cent upside from the current share price (Fekola is higher grade, while Haile has better infrastructure and lower geopolitical risk, and both projects have above average grades and meaningful exploration upside."

Ramarco said earlier this week that the U.S. Army Corps expects to issue its permitting decision on the project in November of this year. That would allow for construction to start in early 2015, with potential for first gold production in late 2016. "While the permit could could be appealed we do not expect this to create a significant delay given the engagement of all relevant stakeholders and the level of detailed work completed," the RBC analyst added.

The analyst consensus price target for Romarco Minerals over the next year is $1.18, according to Thomson Reuters.

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CIBC World Markets initiated coverage on Cameco Corp. with a "sector performer" rating and $25.75 (Canadian) price target. Analyst Tom Meyer commented, "We believe the uranium supply overhang and languishing prices are reflected in the share value.... We believe a reasonable valuation, a 1.8 per cent dividend yield and flat but soon to be improving fundamentals are reasons to hold the shares now. Momentum investors may want hold off until reactor restarts and volume contracting picks up, but recent share price weakness has provided an entry point."

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Canaccord Genuity initiated coverage on Concordia Healthcare Corp. with a "hold" rating and $38 (Canadian) price target. Analyst Neil Maruoka commented, "Concordia is a U.S.-focused specialty pharmaceutical company that leverages an efficient tax structure and directed marketing strategies to optimize cash flows from acquired legacy and orphan drugs. The company has assembled a portfolio of products with good cash flow growth profiles, with longer-term upside coming from future M&A. Despite our positive view of Concordia's prospects, the run-up in the stock suggests to us that the company may be fairly valued, even in light of additional product in-licensing and the potential for a tax-driven inversion transaction."

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M Partners initiated coverage on Kirkland Lake Gold Inc. with a "buy" rating and $5.70 (Canadian) price target. It commented, "With new senior management in place, Kirkland Lake Gold has become a turnaround story, with a renewed focus on operating profitably. This has resulted in a lower throughput, higher grade approach. We believe the turnaround is under way and should grade improvements exceed guidance by only 5 per cent, our NAVPS (net asset value per share) would increase by 14 per cent providing significant upside to our estimates. Kirkland Lake currently trades at 6.2x our F2015 EBITDA estimate (current fiscal year) versus North American underground peers that trade at 9.2x for 2014."

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In other analyst actions:

Goldman Sachs downgraded Domtar to "neutral" from "buy" and cut its price target to $38 (U.S.) from $56.

Industrial Alliance downgraded Major Drilling Group to "hold" from "buy" on recent price appreciation and kept a $9 (Canadian) price target.

RBC Dominion Securities raised its price target on Enbridge Income Fund Holdings to $30 (Canadian) from $25 and maintained a "sector perform" rating.

UBS downgraded FirstEnergy to "sell" from "neutral" and cut its price target to $26 (U.S.) from $31.

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