Friday’s analyst upgrades and downgrades

Inside the Market’s roundup of some of today’s key analyst actions

RBC Capital Markets analyst Steve Arthur downgraded BRP Inc. (DOO-T) to “sector perform” from “outperform,” in the wake of the recreational vehicle company’s latest earnings. But he also raised his 12-month price target to C$52 from $46.

“BRP delivered solid FQ1 results, with encouraging commentary on recent US retail trends,” analyst Steve Arthur said in a note. “BRP is executing well, in our view, and should emerge post-COVID in an even stronger market position.”

However, he added that BRP shares have rebounded sharply off its lows - by more than 140 per cent - and “we now see balanced risk/reward.”

“We continue to see several drivers of longer-term earnings growth and share price appreciation for BRP. Led by innovative products and a strong dealer network, we expect further market share gains, margin improvement and double-digit earnings CAGR (compound annual growth rate) over a 5-year horizon.”

In the longer term, he thinks the share price can trade in the $65 range.

Elsewhere, Canaccord Genuity raised its price target to $60 from $31 and reiterated a “buy” rating, citing a better-than-expected outlook despite a “mixed” quarter. Desjardins Securities raised its target to C$57 (from $48).

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BMO analyst Jackie Przybylowski upgraded Hudbay Minerals Inc. (HBM-T) to “outperform” from “market perform” and raised her price target to C$5 from $4. She cited changes made to her target multiples and revisions to assumptions for gold and silver commodity prices.

Elsewhere in her coverage universe, Ms. Przybylowski downgraded Osisko Gold Royalties Ltd. (OR-T) to “market perform” from “outperform” but raised her target to C$16.75/share from $15.00/share, also as the result of changes to her target multiples and BMO’s gold and silver commodity price assumptions.

BMO analyst Brian Quast upgraded Kirkland Lake Gold Ltd. (KL-T) to “outperform” and raised his price target on the stock to C$71 from $65, also citing changes to BMO’s assumptions for commodity prices. He added: “Kirkland Lake has continued to demonstrate strong execution at the Fosterville gold mine. This has allowed the the company to maintain the majority of its near-term free cash flow generation as two of its mines are in the process of ramping up following temporary reductions to operations.”

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Canaccord Genuity analyst Scott Chan raised his price target on Canadian Imperial Bank of Commerce (CM-T) to C$95 from $84 and maintained a “hold” rating.

CIBC Thursday reported lower-than-expected adjusted earnings per share, impacted by a jump in credit reserves. Mr. Chan reduced his fiscal 2021 EPS forecast by 2 per cent after reviewing the results. “We are encouraged by the firm’s stronger relative capital position, but core Cdn. Personal & Business Banking continues to track weaker than peers,” he said in a note.

Doug Young of Desjardins Securities also nudged up his price target on CIBC, to $94 from $92, but also reiterated a “hold” rating. He termed the overall impact of the quarterly results as "slightly positive. “We saw essentially what we wanted to see in terms of the build in performing loan PCLs, CET1 ratio and better-than-anticipated pre-tax, pre-provision (PTPP) earnings,” he commented.

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RBC analyst Scot Ciccarelli raised his price target on Costco Wholesale Corp. (COST-Q) to US$348 from $332, citing “solid” sales versus a year ago. Sales at the retailer rose 7 per cent to US$36.45 billion in its fiscal third quarter.

While results were pressured by restrictions placed on the retailer by U.S. states, “Costco is already reopening its ancillary businesses and sales should improve as states ease social distancing guidelines/reopen economies,” he said. “We remain buyers of COST shares, as we believe the company continues to be one of the best positioned retailers to weather the Covid-19 storm.”

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In other analyst actions:

Lululemon Athletica (LULU-Q): Raymond James raised its price target to a Street high US$335.

Hardwoods Distribution (HDI-T): National Bank of Canada raises target price to C$21 from C$18.50

Vermilion Energy Inc (VET-T): CIBC raises target price to C$8 from C$7

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