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Box office not as busy as hoped for Cineplex: RBC

Dustin Patterson, Cineplex Entertainment projection manager at Scotiabank Theatre, shows off one of the digital projectors used to show Ice Age 3D in Toronto.

Kevin Van Paassen/Kevin Van Paassen/THE GLOBE AND MAIL

Despite hits such as The Hangover Part II and Kung Fu Panda 2, second-quarter industry box office sales fell short of high expectations, notes RBC Dominion Securities Inc. analyst Drew McReynolds.

As a result, Mr. McReynolds is scaling back his financial forecasts for Cineplex Inc. , the largest motion picture exhibitor in Canada, for when it reports results for the three-month period on Aug. 11.

Second-quarter year-over-year Canadian box office receipts were still up 1.7 per cent, but appear tepid in comparison to Mr. McReynolds' earlier forecasts for Cineplex to post a gain in box-office revenue of 2.1 per cent on a "same-store" basis.

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He lowered his 2011 adjusted earnings before interest, taxes, depreciation and amortization estimate to $193-million from $203-million, as well as cutting 2012 projections.

While contending that Cineplex should remain a core media holding for investors, he suggested that other media companies - such as Corus and Torstar - might serve up better bang for investors' buck.

Downside: Mr. McReynolds is maintaining a price target of $26 and rates Cineplex as a "sector perform."

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Northland Power Inc. has a number of projects under development that should grow its earnings before interest, taxes, depreciation and amortization to $400-million by 2014, RBC Dominion Securities Inc. analyst Nelson Ng said after recent meetings with management. While its payout ratio will exceed 100 per cent until the second half of 2013, he believes the dividend is sustainable because of access to cash reserves and a credit facility.

Upside: Mr. Ng raised his price target by $1 to $16 and rates the stock as a "sector perform - average risk."

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While copper production at Capstone Mining Corp. was slighter lower in the second quarter than CIBC World Markets Inc. analyst Ian Parkinson was expecting, he believes the long-term growth profile for the base and precious metals miner is robust. "With high-grade zones at Cozamin, underground development at Minto and now the longer-term Santo Domingo project, we believe the stock offers great value at current levels," he said.

Upside: Mr. Parkinson rates the stock as a "sector outperformer" with a price target of $6.70.

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Canaccord Genuity analyst Scott Burk has trimmed his 2011 earnings estimates for Noble Corp. after the contract driller disclosed more downtime at several rigs in the second quarter than earlier forecast. He also noted that Noble is facing a delay in receiving revenues from a contract in Mexico.

Downside: Mr. Burk cut his target price by $1 to $55 and continues to rate the stock as a "hold."

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First Quantum Minerals Ltd. reported lower-than-expected copper and gold production for the second quarter, due mostly to maintenance shutdowns and lower grades at one of its mines. Desjardins Securities Inc. analyst John Hughes believes the company, when it releases full financial results on Aug. 8 for the quarter, will trim its copper production guidance for the year by 10,000 to 20,000 tonnes.

Upside: Mr. Hughes is still maintaining a "buy" rating with a price target of $163.25

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About the Author
Investment Editor

Darcy Keith is The Globe and Mail's Investment Editor. He has been a business journalist since 1992 and joined the Report on Business in 2010 from Yahoo! Canada, where he was the senior editor of finance. More

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