The outside of a TD Bank branch is seen in New York in this file photo.SHANNON STAPLETON/Reuters
Inside the Market's roundup of some of today's key analyst actions. This file will be updated during the trading day.
Toronto-Dominion Bank has been downgraded by Desjardins Securities analyst Doug Young after a disappointing quarter.
TD Bank reported fourth-quarter 2014 earnings per share of 98 cents, missing Mr. Young's estimate and consensus of $1.05. The miss was primarily driven by higher expenses, a headwind he believes will persist over the near term.
"To be clear, we believe TD has one of the best Canadian P&C (Personal & Commercial) banking franchises, a strong wealth management platform and stands to benefit as U.S. economic conditions improve via its U.S. retail banking/wealth management businesses," he says. "We also believe the bank can raise dividends at a faster pace than peers over the next year. However, the bank has failed to hit core expense growth targets over the past few years, and we believe the expense headwinds will continue through fiscal tear 2015, a period in which we believe business growth could temper."
Mr. Young downgraded TD to "hold" from "buy" and cut his target price to $60 from $65 (Canadian).
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Potash Corp. of Saskatchewan Inc. is poised to benefit from an improving supply/demand balance in the market, according to JPMorgan analyst Jeffrey J. Zekauskas.
Mr. Zekauskas writes that falling potash inventories in the United States and 2.6 million tonnes of production that has been delayed or closed by competitors provide opportunities for the company to increase shipments and may also boost its pricing power.
A major Uralkali potash mine that accounts for 3 per cent of global supply flooded in November, prompting a shutdown of operations.
"Potash may be the larger beneficiary of industry demand," said the analyst. "It is also the case that in the event of prolonged issues at the Uralkali mines, Potash Corp may have enhanced earnings leverage."
Mr. Zekauskas upgraded the stock to "overweight" from "neutral" and hiked his price target to $40 from $34 (Canadian).
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The falling price of oil has dimmed Canadian Western Bank's prospects, according to a number of analysts.
Citing the "challenging environment" in the region and the company's guidance for mid-to-high single-digit earnings per share growth in 2015, Canaccord Genuity analyst Scott Chan believes Canadian Western no longer deserves a higher price-to-earnings multiple than the Big Six banks.
"We believe positive operating results could prove difficult next year and is reflected in CWB's higher target efficiency ratio guidance of less than 47 percent," he said.
Mr. Chan downgraded the stock to "hold" from "buy" and lowered his price target to $36 (Canadian) from $42.
Highlighting similar dynamics, BMO Nesbitt Burns reduced its price target on Canadian Western Bank to $37 from $41 and cut its rating to "market perform" from "outperform."
On Tuesday, Credit Suisse analyst Kevin Choquette also cut his price target on the stock to $37 from $47 on expectations of a significant decline in loan growth as much lower oil prices take their toll on Western Canadian businesses.
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A new pricing strategy from Gildan Activewear Inc. has resulted in a ratings upgrade from Raymond James analyst Kenric Tyghe.
Gildan's plan to "significantly lower base prices" removes a key risk, says Mr. Tyghe.
"Gildan's pricing actions in the Printwear segment are in our opinion the exclamation (not question) mark on its competitive and cost advantages," he says. "We believe that the de-risking and improved earnings visibility with the everyday low prices (and $45.0-million inventory devaluation) more than offset the costs."
Mr. Tyghe upgraded Gildan to "strong buy" from "outperform" but lowered his target price to $62 (U.S.) from $70. Several other analysts also cut price targets on the stock as a result of the company's disappointing 2015 guidance, include Desjardins Securities reducing its target to $69 (Canadian) from $77 and Canaccord Genuity cutting its target to $61 (U.S.) from $68.
But Canaccord also reiterated a "buy" rating on the stock and added it to its "Focus List" - its favourite investing ideas. "We believe Gildan's medium-term outlook remains bright. Moreover, we expect shares to rebound strongly, in line with share price action witnessed post previous announcements of lower-than-expected near-term guidance," commented Canaccord analyst Derek Dley.
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In other analyst actions:
TD Securities upgraded Freehold Royalties to "buy" from "hold" and hiked its price target to $25 (Canadian) from $23.
BMO Nesbitt Burns downgraded Oryx Petroleum to "market perform" from "outperform" and cut its price target to $8.50 (Canadian) from $18.
Credit Suisse cut its price target on Canadian Oil Sands to $13 (Canadian) from $20 and maintained a "neutral" rating.
Sanford Bernstein downgraded Lockheed Martin to "market perform" from "outperform" with a price target of $208 (U.S.).
Sanford Bernstein upgraded Northrop Grumman to "outperform" from "market perform" with a price target of $174 (U.S.).
Merrill Lynch upgraded Yahoo to "buy" from "neutral" and raised its price target to $62 (U.S.) from $55.
Merrill Lynch downgraded Google to "neutral" from "buy" and cut its price target to $580 (U.S.) from $600.