UBS Sees FY06 16% EPS Growth In Australia, 18.2% in FY07

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By Terry Hughes

While everybody waits with baited breath for the upcoming results season, with some market watchers growing increasingly nervous about the possibility of consensus estimates that are simply too high, see Rinker (RIN), Ansell (ANN) and Excel Coal (EXL), the analysts at UBS are predicting the overall market should register EPS growth of over 16% for FY06.

Those that have need cautioning against too positive a slant on earnings will find no comfort in UBS pointing out that over the past three months overall earnings estimates have risen by 3.4% in FY06 and by 8.1% for FY07.

While this growth has been championed by the resources sector, with FY07 forecasts up by 32.7%, the analysts say that industrials are the weak area, particularly Telstra (TLS) and those companies with high input costs and those that have exposure to economic soft spots like media and retail.

Looking into next year, the analysts state that the consensus view is for earnings growth of 12.2%, but UBS is significantly more positive, with an expectation of 18.2%, led by a stronger than expected resources sector.

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