Top Ten Weekly Recommendation, Target Price, Earnings Forecast Changes

This story features PEET LIMITED, and other companies. For more info SHARE ANALYSIS: PPC

By Chris Shaw

In a big week for ratings upgrades the FNArena database has recorded a total of 24 ratings increases in the week ending on Friday 25th July, against just 11 downgrades. This brings the total proportion of Buy ratings on stocks covered by the eight brokers in the database to 53.9%, up from 53.2% last week.

One stock enjoying upgrades to ratings during the week was Coal and Allied ((CNA)), a largely in-line quarterly production report being boosted by changes to coal price assumptions and recent share price weakness to generate two broker upgrades.

Super Retail ((SUL)) was also upgraded on relative valuation grounds following ongoing reviews of the retail sector, while recent share price weakness improving the value on offer was behind upgrades for Independence Group ((IGO)) and Flight Centre ((FLT)).

Gindalbie ((GBG)) has addressed some of its equity requirements by announcing a raising and this was enough to prompt one upgrade in rating, others enjoying upgrades over the past week include Peet ((PPC)), Macquarie Group ((MQG)) and REA Group ((REA)).

Retail stocks dominated the downgrades side of the ledger as brokers adjusted models following last week's downgrade to earnings guidance from David Jones ((DJS)). Aside from DJS, Premier Investments ((PMV)) and Myer ((MYR)) experienced downgrades, while more difficult operating conditions similarly saw ratings for GWA Group  ((GWA)) and Paladin ((PDN)) lowered.

In terms of changes to price targets during the week, increases were all relatively small in magnitude and reflect modest changes to earnings forecasts. Those with targets increasing included Super Retail, Gindalbie and Iluka ((ILU)).

It was a different story for decreases to consensus price targets, with revised estimates across the retail sector seeing targets cut by 7-23% for the likes of David Jones, Myer, Premier Investments and Harvey Norman ((HVN)). In keeping with its downgrade in rating Paladin also experienced a near 20% cut in consensus price target, this reflecting ongoing production issues.

In contrast to Paladin, Energy Resources of Australia ((ERA)) enjoyed some increases to earnings forecasts to reflect management lifting annual production guidance following the re-starting of operations.

Eastern Star Gas's earnings forecasts also rose during the week, while Iluka also enjoyed a modest overall increase in earnings forecasts. Those companies experiencing cuts to earnings estimates included Coal and Allied given changes to underlying assumptions, while Rio Tinto ((RIO)) and Santos ((STO)) also faced cuts following what in both cases were mixed June quarter production reports.

 

Total Recommendations	Recommendation Changes
Broker Recommendation Breakup

 

Click to view our Glossary of Financial Terms