Top Ten Weekly Recommendation, Target Price, Earnings Forecast Changes

This story features DOWNER EDI LIMITED, and other companies. For more info SHARE ANALYSIS: DOW

By Chris Shaw

Total Buy ratings among brokers in the FNArena database continue to increase as the market works its way through profit reporting season, the database showing 51 upgrades this week against 25 downgrades. Total Buy ratings now stand at 57.9%, up from 56.2% last week.

Among those enjoying upgrades to ratings were Charter Hall Office ((CQO)) as models were adjusted to reflect both better than expected full year earnings and the sale of the group's US portfolio. Charter Hall Retail ((CQR)) similarly enjoyed an upgrade following a solid operational result for the full year.

A similarly good result from Super Retail ((SUL)) has seen ratings upgraded for what is regarded as one of the top picks in the retail sector, while a solid profit result and good earnings momentum in coming years saw upgrades for Challenger Financial Services ((CGF)).

Whitehaven Coal ((WHC)) has been upgraded given its attractiveness among a limited number of options for Australian coal plays, while recent share price weakness has seen an upgrade in rating for Ridley Corp ((RIC)). Others to enjoy upgrades over the past week include Blackmores ((BKL)) and Virgin Blue ((VBA)). 

On the downgrade side Mortgage Choice ((MOC)) has seen ratings lowered by two brokers despite what was regarded a solid profit result, while ANZ Banking Group ((ANZ)) suffered a similar fate post a below consensus trading update.

While the outlook for Beadel Resources ((BDR)) remains positive, the stock has been downgraded following the announcement of a capital raising, while the view risk remains to the downside was enough for Ardent Leisure ((AAD)) to equally receive a downgrade in rating.

Tough macro conditions explain the downgrade for Southern Cross ((SXL)), while new guidance from management is enough to generate a downgrade for Downer EDI ((DOW)). Board infighting is enough to see Mount Gibson ((MGX)) downgraded, while others seeing drops in ratings include Telecom New Zealand ((TEL)) and Telstra ((TLS)).

In terms of price targets, Increases to forecasts for ARB Corporation ((ARP)), Challenger, Mortgage Choice and Whitehaven have driven increases to broker target prices, while changes to models have also seen targets rise for the likes of Kingsgate Consolidated ((KCN)), Perseus Mining ((PRU)) and NRW Holdings ((NWH)).

Targets have fallen for Consolidated Media Holdings ((CMJ)), Seven West Media ((SWM)) and Southern Cross as slower growth expectations are factored into the media sector, while QBE Insurance ((QBE)) also saw cuts to targets as operating conditions remain difficult for the company.

Adjustments to earnings estimates in coming years have meant cuts to targets for Ausenco ((AAX)) and Ardent Leisure, while the board issues at Mount Gibson and a lack of catalysts for Boart Longyear ((BLY)) also impact on price target assessments.

Changes to earnings forecasts are largely profit result related, with increases to forecasts for Santos ((STO)), Woodside ((WPL)), Mortgage Choice, NIB Holdings ((NHF)) and Sedgeman ((SDM)) and cuts for BlueScope Steel ((BSL)), Beadel, QBE Insurance, DUET ((DUE)), Ardent Leisure, Australian Pipeline Trust ((APA)) and Goodman Fielder ((GFF)).

Total Recommendations	Recommendation Changes
Broker Recommendation Breakup

 

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