With banner titles like Shrek Forever After and Sex and the City 2, it doesn’t take an equity analyst to know that Cineplex Galaxy (CGX.UN-TSX) failed to fill theaters in May.

“Following record grosses in March and April, industry was hugely disappointed by May results, as North American box office revenues declined by -11% year‐over‐year,” Kenric S. Tyghe, an equity analyst with Raymond James Financials, said in a note to investors.

The poor box office showing caused Raymond James to lowered its price target for Cineplex Galaxy Income Trust to $23/share, down from $24, while maintaining its outperform rating for the second quarter of 2010. Estimates for Cineplex consolidated revenues also fell to $1.059-billion from a previous valuation of $1.107-billion.

April’s box office revenues were hailed as the “highest grossing April of all time,” due to higher average ticket prices and the popularity of new 3D films like Clash of the Titans. May was a different story at the box office, with the decline “primarily due to weak attendance levels on disappointing traction of the titles released in May,the majority of which were sequels to previously released titles,” the note said.

Cineplex recently announced the acquisition of Waterloo-based digital signage firm DDC Group International for $3.5-million, in a deal expected to close today. Mr. Tyghe expects the acquisition to be “immediately accretive” to the Cineplex digital media platform.

Box office sales also saw better revenues in June thanks to the release of Toy Story 3, which generated $110.3-million on its June 18 opening weekend. Coupled with the upcoming 3D release of Despicable Me on July 9, Mr. Tyghe notes a much more optimistic outlook for the third quarter of 2010.

“The lift from 3D more than offsets what reservations we may have about the 3Q10 slate versus 3Q09,” the note said.

That is, unless Cineplex has plans to release Sex and the City 3 in August.

jberkow@nationalpost.com

Canada’s life insurers will likely post weak second-quarter results as they struggle with falling equity markets and continuing low interest rates, according to Andre Hardy, an analyst at RBC Capital Markets.
In a note to clients, Mr. Hardy predicted Manulife Financial Corp. will post a loss of 54 cents a share while Sun Life Financial Inc. will squeeze its way into the black with earnings of 21 cents a share, reflecting a return on equity of just 3.1%.
He said Manulife, North America’s largest insurer, will be most impacted by tumbling stock markets and that it will make “material reserve additions” in the three months ended June 30.
Sun Life will also boost reserves though to a lesser extent.
Both Canadian and U.S. Lifecos were hammered in the crisis because of exposure to guaranteed investment products that they sold to customers. In this country, Manulife had the most exposure and though it has made significant efforts hedge its risk in recent months, analysts remain concerned.
The sector is also being pressured by low interest rates which push down gains from fixed income investments.
“Low long-term interest rates have been a headwind to lifeco earnings in several of the past six to eight quarters and we expect another difficult quarter as interest rates trended down,” Mr Hardy said.

If you have stock investments, you’re probably always wondering just how accurate earnings previews from analysts will turn out. It’s hard not to. But what is the overall track record for analysts, and are analysts a good bet to steer your investment decisions?

Peter Buchanan of CIBC World Markets has compiled some data on analyst outlooks in comparison to how equities perform. Mr. Buchanan found that, examining forward-looking metrics, stocks currently are not overvalued — even “inexpensive” in the United States after the recent market decline.

So if that’s what analyst outlooks are hinting at right now, let’s look to see if past predictions render current outlooks as dependable.

Read More »

Anatolia Minerals cut at Haywood to sector perform  from sector outperform

CML Healthcare Income Fund resumed at Raymond James with outperform rating and $11.50 price target

Lundin Mining Corp. raised at Haywood to sector outperform from sector perform

Mirabela Nickel initiated at Raymond James with outperform rating and $3 target price

Red Back Mining Inc. raised at Haywood to sector outperform from sector perform

Terrane Metals Corp. raised at Haywood to sector outperform from sector underperform

Trican Well Service Ltd. cut at Raymond James to outperform from strong buy

Wireless Matrix Corp. raised at Versant to buy from neutral

Something as ominously named as a “death cross” must be Serious Business, right?

Well not exactly, says Pierre Lapointe, global macro strategist with Brockhouse Cooper.

“The technical analysis world is abuzz again as the S&P 500 50-day moving average is heading to fall through its 200-day moving average. Technical analysts advocate that a death cross is a bearish signal,” he said in a note Wednesday. “The truth of the matter is that death crosses have little predictive value.”

Source: Pierre Lapointe

Mr. Lapointe tracked every death cross on the S&P 500 index since 1970, and found that the average return one month later is a decline of 0.4%. However, within three months the market was up 2.5% again.

And after six months? Up 4.8% on average.

Of the 21 total death crosses documented, the market was up again more than half the time within one, three and six months.

“Some will argue that the direction of the 200-day moving average matters in this type of analysis,” he said. “But since 1970, only five of the eight death cross occurences where the 200-day  was on a downtrend resulted in negative performances.

“Bottom line: Death crosses are no better than a flip of the coin to predict future returns,” he said.

Eric Lam