Citing "another remarkable quarter," Canaccord Genuity Inc. analyst T. Michael Walkley expects 2012 to be the year Apple Inc. declares a dividend.
"We believe Apple is likely to announce a dividend during 2012, potentially next quarter when crossing $100-billion (U.S.) in cash and cash equivalents," he says. "We view this as very bullish for investors, as we believe a new group of investors seeking dividends would invest in Apple and drive shares higher."
Not only did the tech juggernaut double its profits and sell more record numbers of iPads, iPhones and Mac computers, it far surpassed all profit expectations by reporting net income of $13.1-billion (U.S) on revenues of $46.3-billion in its first quarter ended Dec. 31.
"We believe Apple is well positioned for very strong (calendar year) 2012/13 sales and earnings growth driven by new product introductions, including the pending refresh of MacBook Air, the iPad 3 launching this spring, an LTE iPhone likely in Q3/2012 and potentially Apple TV exiting 2012," adds Mr. Walkley.
Upside: He reiterated his "buy" rating and raised his price target to $650 (U.S.), up from $560.
RBC Dominion Securities Inc. has downgraded BCE Inc. to "sector perform" from "outperform," believing that investors can find better values elsewhere in the telecommunications sector.
Analyst Drew McReynolds notes that BCE shares trade at a forward 12-month enterprise value/earnings before interest, taxes, depreciation and amortization multiple of 6.8 times. That compares with a range of 5.3 to 6.3 times for RBC's "outperform"-rated stocks that carry a similar or higher growth profile through 2013.
Mr. McReynolds made a number of minor adjustments to his financial forecasts for the company ahead of its fourth-quarter results on Feb. 9, resulting in modestly lower projects for EBITDA for 2011 through 2013. The adjustments were partly attributed to slightly lower revenue growth at Bell across wireline, wireless and media segments.
"We continue to view BCE as a core holding that should continue to benefit from investor demand for yield and capital preservation. Nevertheless, we see rising valuation risk in the name should the improvement in leading economic indicators and associated increase in risk appetite be sustained," Mr. McReynolds said in a research note.
Upside: Mr. McReynolds maintained a $43 price target.
Raymond James Ltd. analyst Daryl Swetlishoff is initiating coverage on Western Forest Products with an "outperform" rating.
Mr. Daryl Swetlishoff likes the improved cash flow from Western's restructured operations with "upside from Asian market growth, capital investment/margin improvement plans, non-core asset sales, and pending Mountain Pine Beetle and U.S. housing market impacts."
Western has long been a key player in the relatively stable Japanese lumber market, he notes, and its large timber reserves position it to capitalize on growing Chinese and Korean wood fibre demand. He also expects a U.S. housing recovery to lead to incremental benefits including reduced competition in overseas markets.
Upside: Mr. Swetlishoff set a $1.20 price target.
Sears Canada has approximately one year to "get in shape" for Target's entry into Canada, says Desjardins Securities Inc. analyst Keith Howlett.
Sears Canada's plans to lay off 400 employees, primarily in food-service jobs at in-store cafes across Canada, are likely to produce annual savings of $10-million to $15-million (Canadian) pre-tax, according to Mr. Howlett's estimates.
However, he notes that turnarounds of large-format retailers suffering from years of sales declines are rare. "Examples of successful turnarounds are J.C. Penney under Allen Questrom approximately 10 years ago, Sears Canada under Paul Walters in the mid- to late 1990s and The Bay under Bonnie Brooks since late 2008," he says. "The list of failures is lengthy."
While skeptical that an operating turnaround can be orchestrated, Mr. Howlett says the company has a solid balance sheet and valuable underlying assets.
Downside: He reiterated his "hold" recommendation and $13.50 price target.
RBC Dominion Securities Inc. analyst Stephen D. Walker has downgraded Barrick Gold Corp. to "sector perform" from "outperform," citing concerns about the potential for negative surprises at its three construction projects over the next 12 months. He also notes that the company's valuation, based on net asset cash and cash flow per share, is now in line with peers.
Nevertheless, "we continue to believe Barrick has the potential to generate strong free cash flow and grow dividends by 20–25 per cent (per annum) as its new mines come online," he said.
Upside: Mr. Walker cut his price target by $8 to $62 (U.S.)