Skip to main content

People play in a hall inside Alibaba's headquarters in Hangzhou, Zhejiang province, on April 23, 2014.Chance Chan/Reuters

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

Cantor Fitzgerald analyst Youssef Squali initiated coverage on Alibaba Group Holding Ltd. with a "buy" rating and $90 (U.S.) price target, believing that the Chinese company that began trading today has the potential to dominate global online commerce.

"We believe that a differentiated pricing model, strong brand, and unmatched scale give Alibaba an unfair competitive advantage relative to peers both in and outside China. While the stock's not cheap, we believe the company's outsized growth and margin profiles, if sustained, should support higher valuation over time," said Mr. Squali, via StreetInsider.com. "With $296-billion in gross merchandise volume (over the past 12 months) on its China retail marketplaces alone, Alibaba is larger than Amazon and eBay combined. And with over 80 per cent of total e-commerce volume in China, Alibaba offers investors one of the best opportunities to benefit from China's e-commerce growth."

According to the latest Bloomberg data, all five analysts who have initiated coverage on Alibaba rate it as a buy, with an average price target of $89.

Alibaba Group Holding priced its initial public offering Thursday night at $68 (U.S.) a share, the top end of the expected range, raising $21.8-billion. The stock by early afternoon today was trading near $90.

Meanwhile, Cantor Fitzgerald raised its price target on Yahoo Inc. to $43 (U.S.) today based on valuations linked to Alibaba's performance, and Jefferies raised its target to $46.50 from $45. Yahoo has a 22.6 per cent ownership stake in Alibaba, and plans to retain a 16.3 per cent interest after the IPO.

=======

Desjardins Securities analyst Michael Parkin upgraded Detour Gold Corp. to "buy" from "hold," believing the stock is well priced and offers the best leverage to the gold price among producers of the precious metal.

"We view the current share price as a good entry point, given we believe the current operating challenges are priced in and the stock is trading at a fair valuation based on spot prices," Mr. Parkin said in a statement. "We believe gold prices are due for a seasonal rally and by our estimates, Detour offers superior leverage to the gold price vs. peers. We believe a capable management team is in place and can achieve the design specifications over the near term."

However, Mr. Parkin cut his price target to $12.50 (Canadian) from $16.

=======

BMO Nesbitt Burns analyst Michael Mazar upgraded Secure Energy Services Inc. to "outperform" from "market perform" and hiked his price target to $30 (Canadian) from $26.

He cited several reasons for the upgrade, ranging from its diverse business lines and lack of exposure to the volatility of drilling rig counts, to management's excellent track record and recent acquisitions that have expanded its mid-stream business.

"One of the key reasons to own Secure, in our view, is its limited reliance on the drilling cycle and rig count, especially relative to other names in our research coverage universe," Mr. Mazar explained in a research note. "Despite fluctuations in drilling activity levels over the past decade, one trend that has been consistent is rising produced water volumes, regardless of drilling activity in a given year. While drilling activity levels from 2003 to 2013 have been volatile, produced water volumes associated with well production have continued to rise."

Water produced from oil and gas wells is a key contributor to Secure Energy Services' Processing, Recovery and Disposal division (PRD).

Shares rose nearly 5 per cent at the TSX open following the upgrade.

=======

The sharp price depreciation of Redknee Solutions Inc. shares is not the software company's fault, and makes the stock very attractive from a risk-reward perspective, says RBC Dominion Securities Inc. analyst Paul Treiber.

He believes the 45 per cent pullback in Redknee shares so far this year largely reflects the "lumpiness and communication" surrounding its late 2012 acquisition of Nokia Siemens Network's BSS business, and not "mix-execution."

"Risk-reward, in our view, is now more attractive on the shares, considering pending catalysts, Redknee's transition towards software is aligned with the market, and valuation is at trough levels," Mr. Treiber said.

Mr. Treiber upgraded Redknee to "outperform" from "sector perform" and maintains a price target of $5.50 (Canadian). The analyst consensus price target is $5.20, according to Thomson Reuters.

Redknee shares were up 9 per cent in early afternoon TSX trading.

=======

RBC Dominion Securities Inc. analyst Walter Spracklin says Air Canada shares are undervalued in light of the airline's new bag fee and cost-cutting efforts.

Air Canada announced earlier this week that it will begin charging a $25 first bag fee on certain Domestic, Caribbean and Mexico economy fares originating out of Canada.

"While expected, with AC shares trading at just 4x our 2015E EBITDAR (mainline peers at 5.4x), we do not believe these fees (and the significant cost transformation that is underway), are adequately reflected at current valuations," says Mr. Spracklin.

"Air Canada represents the most significant upside return potential in our coverage universe. We believe the cost transformation story is in its early days, and should it be fully executed, we see a step function re-rating in the shares, with substantial upside potential."

Mr. Spracklin maintains his "outperform" rating and is raising his target price to $16 (Canadian) from $15. The analyst consensus price target is $12.34, according to Thomson Reuters.

=======

In other analyst actions:

Deutsche Bank downgraded Oracle to "hold" from "buy" and cut its price target to $42 (U.S.) from $48.

Raymond James upgraded Cervus Equipment to "outperform" from "market perform" and hiked its price target to $22.50 (Canadian) from $22.

TD Securities upgraded ShawCor to "buy" from "hold" and raised its price target to $65 (Canadian) from $59.

Desjardins Securities boosted its price target on Canadian Tire to $129 (Canadian) from $118 and maintained a "buy" rating.

Desjardins Securities boosted its price target on Loblaw to $64 (Canadian) from $56 and maintained a "buy" rating.

Dundee Securities cut its price target on Barrick Gold to $22 (Canadian) from $24 and maintained a "neutral, high risk" rating.

Follow related authors and topics

Authors and topics you follow will be added to your personal news feed in Following.

Interact with The Globe