Monday'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.

Merrill Lynch has downgraded both Telus Corp. and Rogers Communications Inc. to "neutral" from "buy" after the Canadian government today announced it will auction certain chunks of prime AWS-3 spectrum to smaller players in order to spur more wireless competition in the country.

The action will increase competitive pressure on the wireless incumbents, and should act as a catalyst for the sale of Wind Canada to either Quebecor or a foreign operator, Merrill Lynch analysts said.

Its price target on Telus was cut to $36 (U.S.) from $38 and Rogers' target was cut to $38.75 (U.S.) from $40.50. Merrill Lynch maintained a "neutral" rating on BCE shares.

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Raymond James has bolstered its price outlook for West Texas Intermediate crude oil, sending its price targets higher on many of the Canadian energy companies it covers.

Analysts at Raymond James now assume WTI crude will average $102.29 (U.S.) this year, up from their previous forecast of $99.30. Their long-term price assumption was also raised, to $100 a barrel from $90.

They also increased their forecasts on the pricing for Canadian oil, now expecting Edmonton Par crude to average $104.95 (Canadian) this year. That was up only slightly from its last forecast, but it bolstered its 2015 forecast more significantly, to $102 from $97.45.

Its outlook for natural gas prices moved in the other direction, with lower prices forecast for this year and for 2015 - although adjustments to those forecasts were relatively minor.

Given the sizeable increase in Raymond James' long-term crude price assumptions, oil-weighted stocks saw the largest increases in target prices and earnings estimates. The most notable one-year target price changes were Canadian Oil Sands, with a 22 per cent boost; followed by Canadian Natural Resources, up 15 per cent; and Imperial Oil, also up 15 per cent.

Key highlights of price target changes were as follows: Suncor Energy (to $55 Canadian from $51, rated "outperform"); Baytex Energy (to $58 Canadian from $51, rated "outperform"); Canadian Natural Resources (to $54 Canadian from $47, rated "market perform"); Canadian Oil Sands (to $25 Canadian from $20.50, rated "market perform"); Cenovus Energy (to $42 Canadian from $40, rated "outperform"); Imperial Oil (to $61 Canadian from $53, rated "market perform"); MEG Energy (to $49 Canadian from $46, rated "outperform"); and Pengrowth Energy (to $8.50 Canadian from 48, rated "outperform").

Also of note for the energy sector today, BMO Nesbitt Burns analysts upgraded the oil and gas explorers and producers sector to an "outperform" rating from "market perform." BMO now expects Brent crude to average $108 (U.S.) per barrel this year and $105 next year, which is modestly higher than its earlier forecasts. It's particularly bullish on Western Canadian heavy oil prices over the next 12 months because of greatly enhanced market access and growing demand.

"The sector has performed well and we believe that there is further upside given the group is only discounting a crude oil price of roughly $95/bbl and natural gas price of $4.25/Mcf," said BMO analysts in a research note. "Our top recommendations are Africa Oil, Canadian Natural, Cimarex, Crew, Genel, MEG, Newfield, Raging River, Royal Dutch Shell, Suncor, Total S.A., Tullow Oil, Whitecap, Whiting and Vermilion."

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Strong passenger demand and rising fares have increased the earnings outlook for WestJet Airlines Ltd., said Fadi Chamoun, an analyst at BMO Nesbitt Burns.

The analyst upgraded WestJet stock to "outperform" from "market perform," and raised his price target to $31 (Canadian) from $28.

While the airline's earnings outlook has been consistently strong, its stock had limited appeal due to high supply growth, high earnings expectations and risks surrounding the launch of Encore, WestJet's regional service.

But in addition to improved revenues and lower costs at WestJet, the launch of Encore has gone smoothly, and, "following a successful first year where the company focused on launching new services in Western Canada, the company is now set to expand east," Mr. Chamoun said.

"We felt that valuation was not compensating investors adequately for the given risk profile. With valuation remaining inexpensive, consensus expectations are now at a level that we think the company can meet or even exceed going forward."

The analyst consensus price target over the next year is $30.48, according to Thomson Reuters data.

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Canaccord Genuity has concerns about Cogeco Cable Inc.'s enterprise division, although the stock remains cheap enough to warrant a "buy" recommendation, analyst Dvai Ghose said.

The company's enterprise services division is facing potential pricing pressure from its competitors, high capital expenditure requirements, and limited free cash flow.

But Cogeco's stock is trading at a meaningful discount to its peers, Mr. Ghose said. "While we have some concerns including subscriber pressure in the Canadian cable division and lack of enterprise free cash flow generation to date, overall we like Cogeco Cable's free cash flow growth profile and valuation."

The analyst reiterated his recommendation and $69 (Canadian) price target.  The analyst consensus price target over the next year is $66.15, according to Thomson Reuters.

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RBC Dominion Securities is forecasting higher-than-consensus earnings for Yum! Brands Inc., as same-store sales growth increases at the company's restaurant chains in China.

Analyst David Palmer estimates that the company can generate 15 per cent annualized earnings growth over the long term.

"Despite reaching new highs, we continue to believe Yum stock has the most upside in our coverage universe," Mr. Palmer said.

He raised his target price on the stock to $94 (U.S.) from $87, while reiterating a "top pick" rating. The analyst consensus price target over the next year is $85.13, according to Thomson Reuters.

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GT Advanced Technologies Inc. is poised to benefit from product evolution in the handset market, but much of the optimism for the company is already priced into the stock, Canaccord Genuity analyst Jonathan Dorsheimer said.

GT makes equipment for the solar, LED lighting and electronics industries, including sapphire cover glass for handsets, which is stronger, thinner and more resistant to scratching.

The company's stock has risen on rumours of Apple switching to sapphire cover glass for its iPhone 6, which is expected to be released some time this fall.

"With shares just off a historical high water mark and heading into a blind somewhat binary event, we are taking this opportunity to downgrade the shares," Mr. Dorsheimer said.

He lowered his rating on the stock to a "hold" from a "buy" and maintained a $20 (U.S.) price target.

UBS also today downgraded its rating on the stock to "neutral" from "buy" while reiterating a $22 price target.

The analyst consensus price target is $20 (U.S.).

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In other analyst actions:

TD Securities raised its price target on First Quantum Minerals to $30 (Canadian) from $27 and reiterated a "buy" rating.

Dundee Securities cut its price target on Domtar to $60 (U.S.) from $66 and maintained a "buy" rating.

Deutsche Bank downgraded Coeur Mining to "hold" from "buy" and lowered its price target to $11 (U.S.) from $13.

Deutsche Bank downgraded Peabody Energy to "hold" from "buy" and cut its price target to $19 (U.S.) from $23.

Goldman Sachs upgraded Century Aluminum to "neutral" from "sell" and raised its price target to $15.50 (U.S.) from $8.

Merrill Lynch upgraded Williams-Sonoma to "buy" from "neutral" and raised its price target to $82 (U.S.) from $70.

FBR Capital upgraded Canadian Solar to "outperform" from "market perform" with a price target of $40 (U.S.).

BMO Nesbitt Burns upgraded Southern Copper to "outperform" from "market perform" with a price target of $40 (U.S.), up from $30.