Thursday'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.

Canadian Pacific Railway Ltd. is no longer one of Citibank's top investing ideas among U.S.-listed stocks.

The giant U.S. bank today yanked the railway off its so-called focus list, which represents its favourite investing ideas. However, the bank is still positive on the company's shares, and sees the possibility of the railway ramping up its share buybacks in the future, which would further boost its stock price.

Citibank added CP Rail to the focus list on May 2. Since that time, shares have risen 21 per cent, so its action today partly reflects that there's less upside left to its $205 (U.S.) price target.

"We continue to remain very constructive on CP shares and believe the company is among the best positioned within our transportation coverage, but we are removing it from Citi's focus list, which is shorter-term focused," said Citibank analyst Christian Wetherbee. He maintains a "buy" rating and thinks that an investor meeting scheduled for the fourth quarter could act as a positive catalyst, as management is expected to present updated long-term financial targets at that time.

Higher free cash flows resulting from revenue and margin increases could raise the possibility of increased share buybacks, potentially up to $3-billion (Canadian) a year, Mr. Wetherbee said. If that indeed unfolds, he sees the potential for shares to climb to $260, well above his target price.

In its place, Citibank added FedEx to its focus list. Mr. Wetherbee, who also covers that stock, reiterated a $70 (U.S.) price target and "buy" rating.

"We are adding FedEx Corp. to the Citi Focus List, as we believe the competitive dynamic is the US small package market has improved in FedEx's favour and should support better yield growth opportunities, particularly around the peak season. Ultimately, the confluence of robust volume growth driven by e-commerce penetration, another shortened peak season and UPS's internal focus on service improvements, should put FedEx is a position to take market share, improve mix and potentially raise price. Coupled with its Express turnaround, which should gain steam in F15, we believe earnings power is at an inflection point," he said.

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In its second-quarter earnings report, Tim Hortons Inc. not only beat profit estimates, it increased its guidance for this year, and perhaps most importantly, surprised analysts with strong same-store sales growth, BMO Nesbitt Burns analyst Peter Sklar said.

"Same-store sales is the key fundamental success driver for a quick-service restaurant chain like Tim Hortons, and we believe the quarter's higher level of same store sales will prove to be sustainable, and will attract a higher multiple on the stock," Mr. Sklar said.

As the company reported on Wednesday, U.S. same-store sales grew by 5.9 per cent in the second quarter, boosting analyst confidence in the company's ongoing five-year strategic plan.

"We had anticipated these initiatives would require some period of time before potentially impacting the company's same-store sales and growth profile, and we were surprised by the strength of the same-store growth results in the quarter," Mr. Sklar said.

He upgraded the stock to "outperform" from "market perform" and raised his target price to $74 (Canadian) from $62. Raymond James today also raised its price target on Tim Hortons to $72 (Canadian) from $65 and maintained an "outperform" rating. Barclays, CIBC World Markets, Desjardins Securities and TD Securities also all raised their price targets.

The average price target on Tim Hortons is now $70.61, according to Bloomberg data, up nearly $5 from prior to the earnings release.

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Cineplex Inc.'s recent box office declines are the result of substandard film product rather than anything structural, Canaccord Genuity analyst Aravinda Galappatthige said.

Cineplex posted its second-quarter results on Wednesday, which were in line with expectations, but declined from a year ago on revenue and profits, after excluding the impact of acquisitions.

"There seems to be a growing consensus that 2015 and 2016 carry impressive film lineups, in fact among the best in recent years," Mr. Galappatthige said. "Thus, investors should be thinking of positioning themselves for these slates."

He upgraded the stock to a "buy" from a "hold" and raised his target price to $42 (Canadian) from $39. The analyst consensus price target for over the next year is $43.12, according to Thomson Reuters.

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Barrick Gold Corp.'s outlook is improving on both costs and production at its key gold mines, lending support to the case that the company is poised to rebound, RBC Dominion Securities analyst Stephen Walker said.

"Following two years of corporate restructuring and divestment of non-core assets, we believe Barrick is reaching a key turning point in operations and estimate a strong operational rebound in 2015," Mr. Walker said.

He raised his price target to $25 (U.S.) from $23 and maintained an "outperform" rating. The analyst consensus price target over the next year is $20.59, according to Thomson Reuters data

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At least two analysts upgraded Essential Energy Services Ltd. after the company posted impressive second-quarter results.

TD analyst Scott Treadwell commented that the stock's 20 per cent pullback since late June presents a buying opportunity.

"Essential's Q2 results were well ahead of forecasts, with nearly the entire business exceeding expectations," Mr. Treadwell said. "Well servicing activity was strong as mild weather in Q2 boosted operating hours along with increased producer urgency in the period. Tools exceeded our expectations, driven mostly by improving results from specialty rentals and conventional downhole tools. Essential's Tryton multi-stage group continued to respond to changing industry dynamics, with varying success," he said.

TD Securities upgraded Essential Energy Services to "buy" from "hold" and cut its price target to $3 (Canadian) from $3.25. Canaccord Genuity upgraded Essential Energy Services to "buy" from "hold" while keeping its $3.25 price target. And National Bank Financial raised its price target to $2.90 (Canadian) from $3.15 and maintained a "sector perform."

The average price target is $3.21, according to Bloomberg data.

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Canaccord Genuity downgraded Foraco International SA to "speculative buy" from "buy" and cut its price target to $1 (Canadian) from $1.25.

Analyst Yuri Lynk explained, "Sentiment towards Foraco shares remains extremely negative, potentially creating an entry point for deep-value investors with a multi-year investment horizon. Given the company's financial leverage, we rate the shares spec buy (buy previously) to reflect the associated risk."

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Canaccord Genuity upgraded New Flyer Industries Inc. to "buy" from "hold" and hiked its price target to $14 (Canadian) from $12. Analyst David Tyerman said that New Flyer's valuation could remain stronger than he formerly expected.

"We recommend investors buy NFI for potential upside from an improving demand and free cash outlook. We believe stronger demand plus on-going cost improvements should boost results and open up the potential for shareholder value creation through material dividend increases or other actions," he said.

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In other analyst actions:

RBC Dominin Securities downgraded Rocky Mountain Dealerships to "sector perform" from "outperform" and cut its price target to $12 (Canadian) from $13.

National Bank Financial upgraded ARC Resources "outperform" from "sector perform" with a price target of $35 (Canadian).

Cormark Securities downgraded High Liner Foods to "market perform" from "buy" with a price target of $27.50 (Canadian).

National Bank Financial upgraded Vicwest to "outperform" from "sector perform" with a price target of $13 (Canadian).

PI Financial downgraded Luna Gold to "neutral" from "buy" with a price target of $1 (Canadian).

National Bank Financial initiated coverage on Mosaic Capital with an "outperform"  rating and $15.50 (Canadian) price target.

Cantor Fitzgerald upgraded AOL to "buy" from "hold" with a price target of $50 (U.S.).

Craig-Hallum upgraded Wynn Resorts to "buy" from "hold" with a price target of $244 (U.S.).

Craig-Hallum upgraded Las Vegas Sands to "buy" from "hold" with a price target of $83 (U.S.)

With files from Bloomberg