CN Rail President and CEO Claude Mongeau before the company's annual general meeting in Vancouver, B.C., on Wednesday April 23, 2014.DARRYL DYCK/The Canadian Press
Inside the Market's roundup of some of today's key analyst actions. This file will be updated during the trading day.
Citing growing concerns that China's economic outlook is deteriorating and demand for base metals and coal impact will fall as a result, CIBC World Markets analyst Jacob Bout downgraded Finning International Inc. to "sector perform" from "sector outperform." Finning provides rental equipment to the global mining industry.
"Most large-cap miners have reduced capital expenditure estimates into 2015, while original equipment manufacturers have lowered their outlooks for equipment demand for the next 12 to 18 months. The outlook for Finning's South American operations and Canadian coal/base metals operations looks bearish, slightly offset by the oil sands (with a stable outlook) and the turnaround story (plan is implemented but results seem slow in coming)," Mr. Bout said in a research note.
On the positive side, he continues to expect steady improvements in margins as Finning implements its new strategic plan.
He maintained a $35 (Canadian) price target. The analyst consensus price target over the next year is $34.95, according to Thomson Reuters data.
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A prolonged harvest season due to cold weather, rain and snow in Western Canada should translate into good news for shareholders of Cervus Equipment Corp., said CIBC's Jacob Bout as he upgraded his rating on the company to "sector outperform" from "sector perform."
A prolonged and wet harvest is usually positive for ag-equipment dealerships, as farms must first swath the crop to let it dry and then combine the swathed crop, thereby using the equipment longer, noted Mr. Bout. This increases the chance of equipment breakdown and drives higher-margin parts and services revenues.
Mr. Bout also thinks Cervus' exposure to the Canadian construction market, which should get a boost from an improving Canadian economic outlook, will also benefit the company.
He raised his price target to $23 (Canadian) from $22. The analyst consensus price target over the next year is $23.26.
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Concordia Healthcare Corp. is entering the "sweet spot" in its growth trajectory as it executes a sound investment and operational strategy, RBC Dominion Securities analyst Douglas Miehm said in initiating coverage on the stock.
"We view Concordia Healthcare as an exciting new specialty pharma company that has reached a level of maturity that should allow it to accelerate its growth profile and generate outsized returns over the next several years, especially given its structural tax advantage," he said.
After several decades of double-digit growth, pharma companies are scrambling to replenish pipelines and executives have been reassessing and selling off mature assets. Concordia Healthcare's strategy is to acquire assets with durable cash flows that have additional growth capacity plus a strong safety track-record.
"We believe the strategic risk is lower than that of traditional pharma companies and its commercialization strategy requires limited capital to alter the cash flow trajectory of products," Mr. Miehm said.
"While Concordia (CXR) has been very successful in growing its business and capitalization since early 2014, we believe that it has now entered the "sweet spot" in a specialty pharma company's normal growth curve. This is a point where the cost of capital is at attractive levels and small acquisitions can still lead to outsized accretion and value creation," he added.
Mr. Miehm rates Concordia Healthcare "outperform" with a $46 (Canadian) price target. The analyst consensus price target over the next year is $44.38.
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A "truly exceptional quarter" has earned Nike Inc. an upgrade from Credit Suisse analyst Christian Buss.
The sports apparel giant posted first-quarter 2015 results that featured top-line strength, gross margin upside, and well-controlled inventory growth, resulting in a big earnings per share beat of $1.09 (U.S.) versus Mr. Buss's expectation for 86 cents, even adjusting for a 5 cents benefit from a lower-than-expected tax rate.
"Increasingly, it looks like Nike will continue to capture market share at an elevated rate globally, positioning the company for a continuation of double-digit revenue growth. When combined with benefits from margin recapture across Europe and China, the company looks to finally be able to sustain mid-teens or better earnings growth following three years of low double-digit earnings growth."
Mr. Buss upgraded Nike to "outperform" from "neutral" and raised his target price to $100 (U.S.) from $80. The analyst consensus price target is $93.26 (U.S.), according to Thomson Reuters.
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Raymond James analyst Steven Li sees near term-opportunity and long-term uncertainty for BlackBerry Ltd.
"Near-term, we expect a successful Passport launch could boost profitability, which would make it possible for BBRY to approach its cash flow break-even target next quarter (one quarter early) and potentially sets BBRY shares up for a trade," said Mr. Li. "Longer term, the ongoing Services decline (revenues from charging fees to carriers for its data service) and BBRY's ability to offset with MDM [mobile device management] revenues (non-BB devices) keeps us on the sidelines."
Mr. Li maintained his "market perform" rating and raised his target price to $10.50 (U.S.) from $10. The analyst consensus price target is $8.65, according to Thomson Reuters.
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In other analyst actions:
Desjardins Securities raised its price target on Canadian National Railway to $85 (Canadian) from $79 and reiterated a "buy" rating.
UBS raised its price target on Bank of Montreal to $90 (Canadian) from $86 and reiterated a "buy" rating.
UBS raised its price target on TD Bank to $65 (Canadian) from $63 and maintained a "buy" rating.
Raymond James upgraded Tahoe Resources to "outperform" from "market perform" and maintained a $30 (Canadian) price target.
Canaccord Genuity initiated coverage on Ceiba Energy Services with a "speculative buy" rating and $1.25 (Canadian) price target.
Susquehanna initiated coverage on Alibaba Group with a "positive" rating and $110 (U.S.) price target.
Needham & Co. upgraded Yahoo to "buy" from "hold" with a price target of $48 (U.S.).
Cowen upgraded FedEx to "outperform" from "market perform" with a price target of $210 (U.S.).
Darcy Keith