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Monday’s analyst upgrades and downgrades

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

Gildan Activewear Inc. is expected to see continued growth, despite missing third-quarter estimates, says Citi Research analyst Kate McShane.

Ms. McShane explains that while Gildan's adjusted third-quarter earnings per share of $0.95 came in slightly below her estimate of $0.96, the company continued to post solid top-line growth.

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"Encouragingly, GIL intends to drive further top-line growth via: 1) the introduction of new, higher priced products (particularly in Printwear); 2) new branded programs to increase shelf space and drive better product placement at retail; and 3) the introduction of national programs for licensed brands," she says.

Ms. McShane is raising her target price to $66 (Canadian) from $63 and maintains her "neutral" rating.  The analyst consensus price target is $64.81, according to Thomson Reuters.

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Aimia Inc. appears to be successfully managing a tricky transition, but real risks surrounding some of its fees remain, says CIBC World Markets analyst Perry Caicco.

The loyalty management company reported strong second-quarter results, close to Mr. Caicco's adjusted EBITDA forecast. It also raised free-cash-flow guidance for the year.

"The transition in partners has gone well, and the card uptake at TD and the new programs at Amex are driving accumulation and billing," says Mr. Caicco. "We have increased our 2014 FCF and adjusted EBITDA estimates and have left our 2015 FCF forecast largely unchanged. Operationally, the company appears to be successfully engineering a difficult transition, and there is optimism around the possibilities for 2015 and 2016.

"However, the government has returned its attention to interchange fees and these fees help pay for the loyalty programs AIM provides its financial partners. The range of outcomes may be "manageable," and the partner contracts contain clauses, but the risk is no less real."

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Mr. Caicco is cutting his target price to $20 (Canadian) from $21 and maintains his "sector performer" rating. The analyst consensus price target is $19.50, according to Thomson Reuters.

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Algonquin Power and Utilities Corp. is in good shape to secure new wind power contracts, RBC Dominion Securities analyst Nelson Ng said.

On Thursday, the company reported second quarter earnings generally in line with analysts' expectations. Also as expected, Algonquin hiked its dividend by 12 per cent. Adjusted EBITDA came in higher than Mr. Ng's estimate, with the variance largely attributable to an increased contribution from the renewable energy division.

"The company has a strong development pipeline in the renewable and thermal energy sectors and has built up a regulated utility business that can grow organically or through acquisitions," Mr. Ng. said.

He raised his target price on Algonquin to $9.50 (Canadian) from $8.50 and maintained an "outperform" rating on the stock. The analyst consensus price target is $8.72, according to Thomson Reuters.

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As Descartes Systems Group Inc. builds on its track record for growth, its stock should narrow the valuation discount against its peers, Barclays Capital analyst Phillip Huang said.

"We see attractive opportunities for both organic growth in expanding markets as well as accretive acquisitions over the next several years," Mr. Huang said. "We believe management is relatively conservative and disciplined, and has a strong track record of sourcing and executing deals."

Barclays initiated coverage of the Waterloo, Ont.-based logistics technology company with an "overweight" rating and a $18 (Canadian) price target. The analyst consensus price target is $16.86, according to Thomson Reuters.

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CIBC World Markets has increased confidence in Boardwalk REIT's growth outlook, particularly in its Alberta markets.

The multi-family property REIT reported its second-quarter results on Thursday, coming in slightly higher than CIBC's estimates, largely as a result of net operating income growth in Alberta, analyst Alex Avery said.

"Boardwalk's robust capital structure, low payout ratio and strong property fundamentals in its core Alberta markets make the REIT an attractive and defensive investment with highly sustainable and growing distributions, and a REIT we consider a core holding," Mr. Avery said.

He raised his price target on the stock to $74 (Canadian) from $68 while maintaining a "sector performer" rating. The analyst consensus price target is $71.50, according to Thomson Reuters.

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In other analyst actions:

CIBC World Markets has raised its price target for Cardinal Energy to $22.50 (Canadian) from $19, maintains "sector outperformer" rating.

CIBC World Markets has raised its price target for Boardwalk REIT to $74 (Canadian) from $68, maintains sector performer rating.

Firstenergy Capital cuts its price target for Advantage Oil and Gas Ltd. to $10.50 (Canadian), maintains "top pick" rating.

Canaccord Genuity raises its price target for Amaya Inc. to $35 (Canadian) from $34, maintains "buy" rating.

Paradigm cuts its price target for Bri-Chem to $2.75 (Canadian) from $3, maintains "buy" rating.

CIBC World Markets raises its price target for Callidus Capital to $25 (Canadian) from $23.50, maintains "sector outperformer" rating.

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About the Author
Investing reporter

Tim Shufelt joined the Globe and Mail in August, 2013, primarily to cover investments for Report on Business. Prior to the Globe, he worked as a staff writer at Canadian Business magazine, a business reporter at the Financial Post, and covered city news and courts for the Ottawa Citizen. More

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