Patrons watch a 3D IMAX movie at a theater in Beijing, May 21, 2012. Imax CEO Richard Gelfond says his company has seen China expand its theatres from 2,000 to 20,000Ng Han Guan/The Associated Press
Inside the Market's roundup of some of today's key analyst actions. This file will be updated often during the trading day so check back for new details.
The strong weekend box office performance of Furious 7 is an excellent sign for IMAX Corp., according to Canaccord Genuity analyst Aravinda Galappatthige.
The blockbuster film reportedly earned $146.3-million (U.S.) domestically and $240.4-million internationally over the weekend, and, according to estimates, IMAX's take will be $22-million globally. Mr. Galappatthige thinks these results are an indicator of a strong second quarter for the company, which he felt had the risk of under-performance.
He deems Furious as an "excellent lead-in" to Avengers 2, which may be the biggest movie of 2015. He also feels the movement of Mission: Impossible Rogue Nation to this summer from December 2015 will be very helpful for IMAX, providing a strong sidekick for Terminator: Genisys.
He is upgrading the stock to "buy" from "hold," a mere two months after downgrading it. That decision is due largely to a declining risk of earnings disappointment, particularly in the first quarter, which exceeded expectations. Mr. Galappatthige also believes the stock now trades at a discount to international comparables, namely Nike and Starbucks, compared to two months ago.
"We use these comps to get a sense of what 1) high growth companies (double-digit EBITDA growth expected over the next three years), 2) that are brand driven, with 3) genuine international growth upside potential are trading at," he said. "The valuation gap versus these two names and IMAX has now opened up to 2.1-times (if we use an average)."
With an increase in net cash going forward, the analyst expects significant decisions around capital allocation in the near term. He is expecting share buybacks and possible mergers and acquisitions as well as an IPO of IMAX China.
He is raising the price target to $38 (U.S.) from $35. The analyst consensus price is $38.05, according to Thomson Reuters,
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Improved cash flow and a limited downside should compel value investors to examine Reitmans Canada Ltd., says CIBC World Markets analyst Mark Petrie.
Mr. Petrie does, however, admit he does not see evidence Reitmans is on a "sustainable recovery path."
"We view excessively stiff competition (from arguably more sophisticated global peers) and a weaker [Canadian dollar] as ongoing and material headwinds," Mr. Petrie said.
He says the company is squeezing a smaller gross profit out of its inventory. Despite concerns about cost control, particularly in selling and distribution spending, and gross margins, he is improving his 2016 fiscal year forecast slightly, raising EBITDA to $76-million from $73-million and earnings per share to 35 cents from 30 cents.
He is maintaining his "sector performer" rating and raising his price target to $8 from $7.50. The analyst consensus is $7, according to Bloomberg.
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Artis Real Estate Investment Trust's portfolio "performed well" through the last downturn in the energy cycle and TD Securities Inc. analyst Jonathan Kelcher "expects a similar scenario to play out through this cycle, especially given Atris' increased portfolio diversification in the U.S. and Ontario."
The analyst initiated coverage on the stock with a "buy" rating.
Though Mr. Kelcher said Artis's exposure to energy-related markets seems unfavourable in the weak oil price environment, he is positive on the region long-term. During the last downturn Artis's same-property net operating income growth remained positive, averaging 5 per cent growth per year.
The analyst said management's "disciplined approach" to its U.S. expansion has seen the company acquire long-term leased properties at attractive cap rates. The company's U.S. growth has outpaced its Canadian growth since it entered the market in 2010.
Mr. Kelcher set his target price at $17.50. Consensus is $16.67, according to Thomson Reuters.
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Competitive headwinds are building against Garmin Ltd.'s fitness business, and its outdoor segment could disappointed, Citigroup Global Markets Inc. analyst Jeremy David said. The analyst downgraded the stock to "sell" from "buy."
"We now believe competitive pressures are likely to start eroding Garmin's stronghold in the GPS fitness watch business which generated about 60 per cent of Garmin's Fitness sales last year," the analyst said. "Specifically, Apple, Fitbit and TomTom are likely to target runners with their own offerings, ultimately reducing Garmin's [approximately] 75 per cent share."
The analyst also said Garmin is likely to miss revenue and earnings per share in the first-quarter as it did "not ship in volume" against expectation on its new Vivoactive and Vivofit 2 products.
Mr. David cut his target price to $42 (U.S.) from $68. Consensus is $56.73, according to Thomson Reuters.
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Credit Suisse analyst Dan Galves thinks the operational excellence of Delphi Automotive PLC has enabled it to consistently meet its financial commitments, even through difficult top-line conditions.
Coupled with its consistent 100-per-cent (or more) return of free cash flow, Mr. Galves has "high confidence" in Delphi as a core long-term holding. He's maintaining his "outperform" grade on the stock.
The analyst is impressed with the company's net new business, rising cumulatively to $4.6-billion (U.S.) in 2015-2017 compared to $3.6-billion in 2014-2016.
"Fuel economy regulations, active safety, infotainment, greater software intensity, increasing need for wiring/connector content, vehicle electrification, and rapid growth for higher value content in China are all [long-term] themes contributing to Delphi's outlook of 8-per-cent organic [compound annual growth]," said Mr. Galves.
The analyst is raising his target price to $92 (U.S.) from $89.
In other analyst actions:
Qualcomm Inc. was downgraded to "market perform" from "outperform" at FBR.
Lumber Liquidators Holdings Inc. was upgraded to "outperform" from "market perform" at Raymond James.
VMWare Inc. was raised to "buy" from "neutral" at Nomura.
Enterprise Group Inc. was raised to "buy" from "hold" at Mackie Research Capital. The target price is 30 cents (Canadian) per share.
Probe Metals Inc. was rated new "outperform" at Macquarie. The 12-month target price is 75 cents per share.
Gannett Co. Inc. was downgraded to "market perform" from "outperform" at FBR Capital Markets. The 12-month target price is $38 (U.S.) per share.
Mattel Inc. was raised to "buy" from "neutral" at B. Riley. The target price is $27.25 (U.S.) per share.
Tiffany & Co. was raised to "buy" from "neutral" at Monness Crespi. The target price is $103 (U.S.) per share.
TripAdvisor Inc. was downgraded to "hold" from "buy" at Needham & Co.
Western Union Co. was downgraded to "neutral" from "positive" at Susquehanna. The 12-month target price is $22 (U.S.) per share.
With files from Bloomberg News