Inside the Market’s roundup of some of today’s key analyst actions
Scotiabank downgraded Yamana Gold Inc. (AUY-N;YRI-T) to “sector perform” from “sector outperform” due to its strong share price appreciation in the second quarter when compared to peers. But it raised its price target to US$5.25 from $5. The median price target among analysts is US$5.91, according to Refinitiv Eikon.
Yamana was up 99 per cent in the quarter, compared to 51 per cent for the S&P/TSX Gold Index, Scotiabank analysts led by Tanya Jakusconek noted.
Scotiabank’s top picks in the gold sector are Barrick Gold Corp, Newmont Corp., and Kinross.
The bank adjusted its 2020-2022 gold price forecast by $50/oz to reflect greater stimulus and longer real interest rate environment than previously expected. “We forecast an average gold price of ~$1,700/oz for 2020 and $1,750/oz for 2021 and 2022, up $50/ oz or 3% for 2020-2022. Our longer-term forecasts of, $1,600/oz for 2023, $1,500/oz for 2024, and $1,400/oz for 2025 and beyond are unchanged,” it said.
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Canaccord Genuity analyst John Bereznicki lowered his price target on Ensign Energy Services Inc. (ESI-T) to reflect reduced international drilling activity expectations as well as the company’s decision to acquire the remaining 40 per cent stake in a joint venture with Trinidad Drilling International.
Mr. Bereznicki maintained a “hold” recommendation as he lowered his target price to 70 cents (from $1.10). The median analyst target is 80 cents.
Ensign has consolidated its joint venture ownership position by acquiring Halliburton’s remaining 40 per cent interest via its Trinidad Drilling International segment for US$33.4 million.
“Ensign reports it will likely have to enter into discussions with its credit facility syndicate to amend its borrowing covenants ahead of a likely breach in 2H20. This is consistent with our estimates, which suggest a likely breach by the end of Q3/20,” the analyst noted. “To bolster its working capital, Ensign finalized the sale of various real estate assets for net cash proceeds of $15.4 million late in Q2/20. We expect further asset sales but believe the current macro environment could make such divestiture efforts challenging.”
Also, RBC raised its target price on Ensign Energy to C$0.80 from C$0.60.
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Credit Suisse analysts led by Stephen Ju raised their price target on Facebook Inc. (FB-Q) to US$305 - a new Street high - from $258. The median analyst target is $250.
The new target came after Credit Suisse rolled over its valuation parameters to the end of 2021. Its fiscal year 2020 adjusted EPS estimate is now $9.52 versus the prior $9.31, and its fiscal year 2021 adjusted EPS estimate is now $11.50 versus prior $11.36.
“After seeing month-on-month improvements almost across the board throughout April and May, advertiser feedback suggested moderating brand budget growth recovery in June – particularly for the US – given social unrest and the understandable desire among some marketers to delay campaigns and reexamine messaging. Updated checks for 2Q20 also suggest that vs our prior expectations, auto, pharmaceuticals, consumer electronics, financial services, and CPG fared worse while entertainment/media, dining/QSRs, and retail declined less severely than we had feared,” Credit Suisse said in a note.
“Overall, as we take stock of industry budget movements, we have left our near term estimates essentially unchanged for now. And on the move for some marketers to pull spend, we note that in the midst of its previously-announced 8mm advertiser tally, investors are unlikely to see a material impact on revenue, particularly as ad inventory is sold on an auction. We maintain our Outperform rating on the following: potential for better than-expected ad revenue growth on product innovation (Facebook Shops, Search in Marketplaces, etc.), Street models are too conservative and underestimate the long-term monetization potential of other billion-user properties like Messenger and WhatsApp, optionality for faster FCF growth on greater efficiency on content screening/security costs,” it added.
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Acumen Capital Research analyst Nick Corcoran raised his target price on Hardwoods Distribution Inc. (HDI-T) to $22 from $18, saying a strengthening U.S. home building market will boost the financial performance at the distributor of hardwood lumber and building products.
“With U.S. housing starts and other leading indicates signaling that operations are normalizing, we have revised our estimates and target price to reflect the operational and financial momentum of HDI’s business,” he wrote in a report.
Home builders have been optimistic that housing would recover as the U.S. reopens and mortgage rates are at the lowest levels in 50 years, Mr. Corcoran wrote, adding that there still is potential risk as the number of COVID-19 cases rises in parts of the US.
Still, he “revised our sales estimates up to reflect a recovery in June with momentum expected to continue through the remainder of the year, (2) adjusted our gross margin and EBITDA margin assumptions upwards, and (3) revised our calculation of net earnings.”
He maintained his “buy” rating on the stock. The median analyst target is $20.
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J.P. Morgan downgraded drugmaker Moderna Inc. (MRNA-Q) to “neutral” from “overweight,” citing valuation concerns after its 385 per cent surge this year. Analyst Cory Kasimov raised his price target to US$89 from US$60.
Moderna said earlier this month it plans to start late-stage clinical trial for its COVID-19 vaccine candidate on or around July 27. It’s now sporting a US$37-billion market cap, despite a significant number of unknowns regarding the COVID-19 pandemic and the vaccine opportunity specifically.
Mr. Kasimov, however, remains bullish on Moderna’s long-term outlook, “disruptive platform,” and chances of it being one of the first companies to bring a COVID-19 vaccine to market.
The median price target on the Street is US$94.50
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Goldman Sachs analyst Heath Terry raised his price target on Amazon Inc. (AMZN-Q) to US$3,800 from $3,000 while maintaining a “conviction buy” rating, citing continued acceleration in online sales.
According to thefly.com, Mr. Terry believes the “steepening” of Amazon’s growth curve, driven by higher levels of consumer use of e-commerce and enterprise services in cloud computing, enabled by the company’s investments in fulfillment and infrastructure, are likely to drive “significant share price outperformance well beyond the current crisis.”
The median price target among analysts is $2,950. There are 18 strong buy ratings on the stock, which includes Mr. Terry. In addition, there are 30 buys, two holds and one sell, according to Refinitive Eikon.
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In other analyst actions:
* Capstone Mining Corp CS-T: Canaccord Genuity raises target price to C$1.75 from C$0.85
* Champion Iron Ltd CIA-T: Canaccord Genuity raises target price to C$3.25 from C$2.75
* First Quantum Minerals Ltd (FM-T): Canaccord Genuity raises PT to C$17.5 from C$11
* Hudbay Minerals Inc (HBM-T: Canaccord Genuity raises target price to C$7.5 from C$6
* Ivanhoe Mines Ltd IIVN-T): Canaccord Genuity raises target price to C$5.5 from C$5
* Josemaria Resources Inc (JOSE-T): Canaccord Genuity raises PT to C$1.05 from C$0.95
* Linamar Corp (LNR-T): CIBC raises target price to C$43 from C$40
* Loblaw Companies Ltd (L-T): RBC raises target price to C$90 from C$87
* Lundin Mining Corp (LUN-T): Canaccord Genuity raises target price to C$11 from C$8.5
* Martinrea International Inc (MRE-T): CIBC raises target price to C$14.50 from C$13
* Metro Inc (MRU-T): RBC raises target price to C$63 from C$61
* Rogers Communications Inc (RCI.B-T): Canaccord Genuity cuts target to C$60 from C$62
* Teck Resources Ltd (TECK.B-T): Canaccord Genuity raises target price to C$20 from C$16
* Turquoise Hill Resources Ltd (TRQ-T): Canaccord Genuity raises PT to C$2.5 from C$2.25
* Dropbox Inc (DBX-Q): Jefferies raises to “buy” from “hold” and raises target price to US$28 from US$22
* Gilead Sciences Inc (GILD-Q): Credit Suisse raises to “neutral” from “underperform” and raises target price to US$75 from US$64
* J&J (JNJ-N): Independent Research raises to buy from hold and raises target price to US$164 from US$161.
* Phillips 66 Partners LP (PSXP-N): Jefferies raises to “buy” from “hold”; cuts target price to US$73 from US$78
* Valero Energy Corp (VLO-N): Jefferies raises to “buy” from “hold”; cuts target price to US$62 from US$65.
* Starbucks Corp (SBUX-Q): Wells Fargo initiates at “overweight” with target price US$92.
With files from Reuters
Darcy Keith
Roma Luciw