Weekly Ratings, Targets, Forecast Changes

This story features ALTIUM, and other companies. For more info SHARE ANALYSIS: ALU

By Rudi Filapek-Vandyck, Editor FNArena

Guide:

The FNArena database tabulates the views of eight major Australian and international stock brokers: Citi, Credit Suisse, Deutsche Bank, Macquarie, Morgan Stanley, Morgans, Ord Minnett and UBS.

For the purpose of broker rating correlation, Outperform and Overweight ratings are grouped as Buy, Neutral is grouped with Hold and Underperform and Underweight are grouped as Sell to provide a Buy/Hold/Sell (B/H/S) ratio.

Ratings, consensus target price and forecast earnings tables are published at the bottom of this report.

Summary

Period: Monday August 20 to Friday August 24, 2018
Total Upgrades: 19
Total Downgrades: 39
Net Ratings Breakdown: Buy 41.91%; Hold 42.23%; Sell 15.86%

It keeps on raining downgrades in Australia. Week three of the local reporting season saw FNArena's tally run up to 39 downgrades for individual ASX-listed stocks, and that's just for the five trading sessions, against 19 upgrades. These numbers are not unprecedented, but they are high nevertheless, and they also reveal a heavy skew towards downgrades.

In most cases, valuation seems to be the culprit, but not always solely because of share price exuberance. There are numerous companies that remain simply unable to turn the ship decisevely around, and analysts, like any other human, will lose their patience at some point.

Coca-Cola Amatil received two downgrades during the week, of which one went to Sell. Idem dito for Link Administration. Primary Healthcare was twice downgraded too, but none went to Sell. Idem dito for Woolworths. Webjet received three downgrades; all ended on Neutral/Hold. Idem dito for Corporate Travel.

The stock that stands out among the downgrades is services contractor Monadelphous which was downgraded twice, and both went to Sell.

On the positive side, Altium's FY18 release attracted two upgrades, with one moving to Buy. Gold miner St Barbara went one better, with two out of the three moving to Buy.

All in all, nine out of the 19 upgrades didn't move higher than Neutral/Hold, while 13 of the 39 downgrades moved to Sell.

Amidst all the share market volatility, upward adjustments to consensus price targets are noticeably large. Seven West Media enjoyed the largest increase (+29.9%), followed by Webjet, FlexiGroup, Super Retail, and Cleanaway Waste Management.

On the flipside, negative amendments are equally large (albeit on lesser percentages in comparison), with The Reject Shop's target suffering most (-13.7%), followed by EclipX Group, Origin Energy, Western Areas, and Asaleo Care.

When it comes to EPS forecasts, positive adjustments are simply ginormous with Fletcher Building, Pilbara Minerals, Senex Energy, Western Areas, and Ardent Leisure all shooting for the moon. Negative adjustments are considerably more benign, with St Barbara the biggest loser for the week (-18.8%), beating Air New Zealand, Primary Healthcare and Fortescue Metals to the downside.

Local reporting season continues in the week ahead.

Upgrade

ARDENT LEISURE GROUP ((AAD)) Upgrade to Neutral from Sell by UBS .B/H/S: 2/3/0

Ardent's result was weak but well-flagged. Losses in theme parks were ongoing, UBS notes, and likely will be at least until the coronial inquiry wraps up in November. Impairments were taken on five Main Event sites in challenging locations and only one new site is flagged for FY19.

Restructuring is ongoing hence risks remain but UBS notes an improved outlook for Main Event margins given greater confidence in revenues. Upgrade to Neutral from Sell. Target rises to $2.00 from $1.75.

ASALEO CARE LIMITED ((AHY)) Upgrade to Neutral from Underperform by Credit Suisse .B/H/S: 0/2/1

Asaleo Care pre-released its weak result in July, cutting guidance by -35%. Yesterday's report was in line with new guidance although one-offs were higher than expected, Credit Suisse notes, and no dividend was declared.

No dividend will improve the debt balance and interest expense burden, the broker notes. Credit Suisse has a 2019 forecast well below consensus, expecting pulp prices to continue rising. However the broker believes the stock may have found a bottom, and upgrades to Neutral from Underperform. Target unchanged at 78c.

ALTIUM LIMITED ((ALU)) Upgrade to Neutral from Sell by UBS and Upgrade to Buy from Hold by Deutsche Bank .B/H/S: 1/2/1

Altium's underlying earnings result beat UBS by 3%, but drilling down finds a stronger picture than first impressions and incrementally positive outlook commentary suggest, the broker declares. FY19 margin growth is expected to be tempered by investment initiatives but current momentum is hard to ignore.

Altium is displacing its larger competitors faster than UBS expected, making the company's goal of 100,000 subs by 2025 look possible, although the broker does not forecast out that far. The broker increases earnings forecasts but notes a rising tax rate will temper profit.

Target rises to $22.00 from $18.50. Upgrade to Neutral from Sell.

Deutsche Bank notes another strong result in FY18, with operating metrics comfortably moving towards FY20 guidance. The broker believes the effort that has gone into product development should continue to yield results for years to come.

The broker forecasts a three-year EBIT growth rate of 22%. Rating is upgraded to Buy from Hold. Target is $24.90.

APN OUTDOOR GROUP LIMITED ((APO)) Upgrade to Neutral from Sell by Citi .B/H/S: 2/3/0

First half result were broadly in line with expectations and the commentary on the second half appears positive to Citi.

The broker increases the target to the JC Decaux offer price – $6.70 – and upgrades to Neutral from Sell, given the ACCC has approved the deal. The company will hold a shareholder vote in October.

AFTERPAY TOUCH GROUP LIMITED ((APT)) Upgrade to Add from Hold by Morgans .B/H/S: 2/0/0

Afterpay Touch's FY18 result met fourth-quarter guidance, buoyed by strong US expansion, triggering an upgrade to Add from Hold.

The company also announced plans to expand into the UK, a move the broker says will add to its potentially strong growth profile over several years. Morgans notes US sales nearly doubled in July, as did the number of US merchants transacting on the platform.

The broker upgrades EPS forecasts 8% and 34% for FY19 and FY20. Target price jumps to $21.65.

ALUMINA LIMITED ((AWC)) Upgrade to Neutral from Sell by UBS .B/H/S: 4/2/0

Alumina's result and dividend appear to have fallen slightly short of UBS, albeit a 77% increase in earnings reflects strong alumina prices and the best margins since before the GFC, according to the CEO. Rising caustic soda prices remain an issue but should be offset by persistently strong alumina prices.

The company's capital management policy implies double-digit dividend yields that should support the share price, UBS suggests. Upgrade to Neutral from Sell. Target rises to $2.70 from $2.45.

COCA-COLA AMATIL LIMITED ((CCL)) Upgrade to Equal-weight from Underweight by Morgan Stanley .B/H/S: 0/4/3

First half earnings for Australian beverages were better than Morgan Stanley expected. The broker believes the valuation relative to the ASX industrials remains reasonable albeit expensive on an absolute basis.

The broker believes the company's brand leadership and new products have enabled the business to navigate the container deposit scheme impact better than previously expected. The broker upgrades to Equal-weight from Underweight. Target is raised to $9.60 from $8.00. Cautious industry view.

See also CCL downgrade.

CSR LIMITED ((CSR)) Upgrade to Equal-weight from Underweight by Morgan Stanley .B/H/S: 1/5/0

The CSR share price has fallen -22% since the results in May which, in Morgan Stanley's view, has been prompted by increased costs in the aluminium business. The valuation now appears more appropriate.

CSR carries the greatest exposure to the Australian housing cycle across all major Australian building materials stocks in the broker's coverage. While the negative news around the sector will create a difficult environment, Morgan Stanley believes CSR remains a quality business at the wrong point in the cycle.

Rating is upgraded to Equal-weight from Underweight on valuation grounds. Target is $4.75. Industry view is Cautious.

ERM POWER LIMITED ((EPW)) Upgrade to Outperform from Neutral by Macquarie .B/H/S: 1/2/0

ERM's FY18 loss of -$80.3m was not as great as Macquarie had expected. The 7.5cps dividend was above minimum guidance of 7cps.

The company has recognised that its US business lacked scale and has decided to exit, and has also sold part of the Australian single-site SME operations. FY19 EBITDA guidance is $88-90m. 

As the business is simpler without the US operations the broker upgrades to Outperform from Neutral. Target rises to $1.71 from $1.44.

HELLOWORLD LIMITED ((HLO)) Upgrade to Add from Hold by Morgans .B/H/S: 2/0/0

FY18 results were slightly below Morgans' forecasts, although a large part of the miss can be explained by the inclusion of one-off acquisition-related costs. Guidance is for strong earnings growth in FY19. FY19 EBITDA guidance is $76-80m, up 16.5-22.7%. Guidance assumes international airfare prices are flat.

Morgans upgrades to Add from Hold, given the material discount to the broader travel sector. Target is raised to $5.75 from $5.00.

NINE ENTERTAINMENT CO. HOLDINGS LIMITED ((NEC)) Upgrade to Buy from Neutral by UBS .B/H/S: 3/1/1

Nine's result was in line with guidance but slightly below UBS. The broker believes management's assumptions are undemanding, with 1% metro TV market growth and -2-3% in TV cost reductions, implying 39% market share.

But before long the market's focus will switch to the merger with Fairfax. UBS has not yet factored this in but expects upside from synergies, Stan consolidation and asset sales. On the question of whether Nine is a cheap entry point to Domain ((DHG)), the broker believes the market is unfairly discounting Nine's TV business to Seven West's ((SWM)).

UBS upgrades to Buy from Neutral. Target rises to $2.60 from $2.40.

SOUTH32 LIMITED ((S32)) Upgrade to Outperform from Neutral by Credit Suisse .B/H/S: 3/4/0

FY18 numbers slightly beat Credit Suisse estimates. The broker notes multiple potential upside catalysts as well as a more favourable commodity suite versus the major miners.

The broker believes opportunities in Illawarra and South Africa and the evolution of Arizona/Eagle Downs should be more than sufficient to maintain investor interest. Rating is upgraded to Outperform from Neutral. Target is raised to $4.10 from $3.95.

ST BARBARA LIMITED ((SBM)) Upgrade to Outperform from Neutral by Macquarie and Upgrade to Hold from Sell by Deutsche Bank and Upgrade to Accumulate from Hold by Ord Minnett .B/H/S: 2/2/1

St Barbara's FY18 result broadly met Macquarie's estimates. Guidance is strengthened for Simberi sulphides. Operating cash flow was $315m which translated to free cash of $232m and cash at bank plus term deposits of $344m. The company will announce a resource and reserve update next week.

Target price steady at $5. Broker upgrades to Outperform from Neutral citing an outstanding turnaround and growth story over the past four years. It also notes the company is financially well positioned for growth.

FY18 results were in line with expectations. Deutsche Bank notes the healthy sustainable dividend which is supported by a growing cash balance.

The company has highlighted an update to be forthcoming for Gwalia on delivery of the GMX project. Exploration at Simberi continues with an aim to increase reserves. Deutsche Bank upgrades to Hold from Sell. Target is $4.20.

St Barbara's FY18 result missed both Ord Minnett's and market consensus forecasts by -10% and -4% respectively. The analysts point at both misses in revenues and on costs. Higher-than-expected depreciation and amortisation (D&A) charges led to net profit of $202m versus the broker's forecast of $252m.

The good news is, the analysts declare the miss does not have a major impact on their forecasts. They are watching the pile of cash with anticipation. Post a sharp fall in the share price, Ord Minnett raises its recommendation to Accumulate from Hold. Target price is $4.60.

SMARTGROUP CORPORATION LTD ((SIQ)) Upgrade to Outperform from Neutral by Credit Suisse .B/H/S: 5/1/0

First half results were largely in line with expectations, although Credit Suisse is increasingly convinced the IT development program will enable margin expansion from FY19 in the form of cost savings or reinvestment in sales and service.

Following a period of share price weakness the broker upgrades to Outperform from Neutral. Target is raised to $12.10 from $11.25.

TRADE ME GROUP LIMITED ((TME)) Upgrade to Neutral from Underperform by Macquarie .B/H/S: 2/3/1

Trade Me Group's FY18 full-year result beat Macquarie's estimates, with a final dividend of 10.5c per share and a special dividend of 22c per share.

Classifieds posted strong growth and costs were less than forecast. The broker raises FY19/20 forecasts 3% and increases the target price to $NZ4.91 from $NZ4.25, reflecting a shift to a price-earning ratio valuation rather than a discounted cash flow valuation.

The broker upgrades to Neutral from Underperform believing operating expenditure has caught up and given capital management options.

WESTERN AREAS NL ((WSA)) Upgrade to Buy from Hold by Ord Minnett .B/H/S: 4/2/1

Underlying, Western Areas' FY18 result fell short by some -4% on lower than expected revenues. On reported numbers, net profits came out well short; $12m versus $17m expected. FY19 guidance is a disappointment also.

Ord Minnett analysts make a trip through memory lane, surmising how management has a long track record for meeting and beating guidance, but the 20% increase in costs did come as a shock.

Can the Odysseus definitive feasibility study, to be released in September, turn things around for the share price? Ord Minnett remains hopeful, and has on this premise upgraded to Speculative Buy from Hold. Target price lost -5% to $3.60.

Downgrade

ADELAIDE BRIGHTON LIMITED ((ABC)) Downgrade to Neutral from Outperform by Macquarie .B/H/S: 0/3/2

Adelaide Brighton's first-half result fell short of the broker and guidance also disappointed. Macquarie notes the retirement of the CEO and CFO has left the company temporarily rudderless. The group declared a 4c special dividend as expected.

The broker eases FY18 and FY19 estimates -6% to reflect weaker contributions from joint ventures and property and weaker operational performance. On the upside the broker notes better price traction and an 8% jump in cement sales.

FY18/19 earnings estimates fall -6% and target price cut to $6.45 from $7. Downgrade to Neutral from Outperform reflecting the management uncertainty.

ANSELL LIMITED ((ANN)) Downgrade to Hold from Add by Morgans and Downgrade to Hold from Accumulate by Ord Minnett .B/H/S: 1/6/1

Ansell's result was broadly in line with Morgans but required lower tax and interest and a buyback to support solid organic sales growth, offset by flat margins due to raw material headwinds.

The good news, Morgans suggests, is channel partnerships continue to expand, the Transformation program is tracking ahead of schedule, emerging market growth is strong and the balance sheet has plenty of acquisition capacity. The bad news is uncertainty in raw materials inflation and US tariff impacts.

Target falls to $25.16 from $26.30. Downgrade to Hold from Add.

Ansell broadly delivered on Ord Minnett's FY18 expectations but organic growth has slowed and most of the 10% rise in H2 operating earnings was due to cost savings from restructuring.

Management has guided to a much weaker outlook in FY19 than the broker had anticipated, due mainly to rising input costs, leading Ord Minnett to cut FY19 forecasts by -10%.

Rating downgraded to Hold from Accumulate and target reduced to $24.70 from $29.75.

APA GROUP ((APA)) Downgrade to Hold from Add by Morgans .B/H/S: 3/2/1

APA Group's full-year result outpaced the broker and consensus thanks to a strong second-half performance, but guidance points to a slower FY19.

A lot depends on the success of the CK bid, which comes with a penalty if not completed by end of CY18, and the broker notes political barriers for the Chinese bid, particularly given Liberal Party leadership uncertainty.

Broker downgrades to Hold from Add. Target price falls to $9.36 from $11. The broker says based on FY19 dividend guidance, a fall in the share price to $8.27 (a possibility should the CK bid be blocked) would effect a 10% total return for purchasers at that level.

BANK OF QUEENSLAND LIMITED ((BOQ)) Downgrade to Underperform from Neutral by Macquarie .B/H/S: 3/0/3

Retail banking conditions continued to deteriorate in the second half, the broker notes, due to increased competition, higher funding costs and slowing credited growth. Mortgage repricing may offer some reprieve but could backfire if too aggressive, the broker suggests.

Westpac's ((WBC)) and Bank of Queensland's overweight positions in retail second half and FY19 results will be under pressure. BOQ downgraded to Underperform from Neutral, target falls to $10.75 from $11.00.

COCA-COLA AMATIL LIMITED ((CCL)) Downgrade to Sell from Neutral by UBS and Downgrade to Neutral from Outperform by Credit Suisse .B/H/S: 0/4/3

Corporate costs, losses for SPC and weakness in Indonesia meant Coca-Cola Amatil's result fell short of UBS. The Australian division beat the broker by 3% but was still down -9% year on year due to heightened investment, which will continue to year's end.

Investment will then moderate in 2019, but which time structural headwinds in fizzy drink popularity will accelerate, UBS believes, while Indonesia is expected to continue weighing. Given year to date outperformance of the index, the broker moves to Sell from Neutral. Target falls to $8.30 from $8.40.

First half result was soft, as expected. Credit Suisse believes the stock is now priced correctly for what is is on offer, which is low single-digit growth in earnings per share.

Rating is downgraded to Neutral from Outperform. Target is $9.80. Credit Suisse upgrades expectations for PNG and downgrades Indonesia, concerned that the company has not ignited the top-line in the latter.

See also CCL upgrade.

CARINDALE PROPERTY TRUST ((CDP)) Downgrade to Lighten from Hold by Ord Minnett .B/H/S: 0/0/0

FY18 results were slightly below Ord Minnett's forecasts. The main issue arising in the results was the David Jones tenancy, which expires in 2019, and the decision by the department store to hand back around 50% of its base. The trust has guided to FY19 earnings per security of 36.2c, down -10% on FY18.

Ord Minnett downgrades to Lighten from Hold and reduces the target to $7.80 from $8.10.

CHARTER HALL GROUP ((CHC)) Downgrade to Hold from Accumulate by Ord Minnett .B/H/S: 2/2/1

Higher corporate costs have caused Charter Hall's FY18 operating result to miss Ord Minnett's expectation by some -3%. Guidance is for 5-7% growth in FY19, but the analysts point out including the proposed acquisition of Folkestone ((FLK)) this could turn into 8-10% growth for the year.

The analysts note the shares have significantly outperformed over the year past as investors switched their preference to office and industrial assets, which represent 60% of Assets under Management at Charter Hall.

Post share price outperformance, Ord Minnett downgrades to Hold from Accumulate. Target price unchanged at $6.90.

CROMWELL PROPERTY GROUP ((CMW)) Downgrade to Lighten from Hold by Ord Minnett .B/H/S: 0/1/1

Cromwell's FY18 result slightly missed expectations at Ord Minnett, with management also guiding towards lower EPS and a lower payout ratio for FY19. The analysts believe this is a longer term positive as it puts the company on a sustainable footing.

Shorter term, however, new guidance might see some investors abandoning the ship as implied yield falls to 6.5% instead of the previously implied 7.4%, suggest the analysts. Price target loses 1c to $1.05.

With the share price still at a premium to the revised price target, Ord Minnett downgrades to Lighten from Hold.

CORPORATE TRAVEL MANAGEMENT LIMITED ((CTD)) Downgrade to Hold from Add by Morgans and Downgrade to Neutral from Buy by UBS and Downgrade to Hold from Buy by Ord Minnett .B/H/S: 1/4/0

Morgans was impressed with FY18 earnings, noting second half growth of 21% is significant for a company of this size. All regions were largely in line with forecasts. FY19 guidance is for EBITDA of $144-150m, up 15-20%.

Morgans downgrades to Hold from Add because of the strong appreciation in the share price. Catalysts include further accretive acquisitions. Target is reduced to $32.00 from $32.25.

Corporate Travel's result was hard to fault, UBS suggests, featuring impressive organic growth of 19%. The only blip was that margin growth contributed more than expected versus revenue growth.

FY19 guidance is for 15-20% growth, both organic and the Lotus acquisition. More acquisitions are expected and technology rollouts in the US and Asia and a new SME product in Australia should help maintain momentum, the broker believes.

But it's all in the price. Target rises to $32.20 from $27.50. Downgrade to Neutral from Buy.

FY18 results were broadly in line and provide further evidence for Ord Minnett of the success of the business model. The challenge the broker perceives is that the company is now of sufficient size it could be competing with large global travel management companies on a more frequent basis.

The broker believes the market will be all about scale in coming years, as the industry moves towards a new distribution system. Earnings estimates are upgraded by 5% for FY19. Rating is downgraded to Hold from Buy on valuation grounds. Target rises to $30.30 from $24.36.

CLEANAWAY WASTE MANAGEMENT LIMITED ((CWY)) Downgrade to Neutral from Buy by UBS .B/H/S: 2/4/0

Cleanaway posted an impressive result, UBS suggests, with revenue growth beating forecasts. This despite the costs involved in new contract mobilisation amid the China recycling crisis.

With all divisions back to growth and upside from the Toxfree acquisition, the broker is positive on earnings growth and envisages a sound strategy.

The stock's valuation does not look overly expensive compared to US peers and UBS expects only marginal share price upside from here and thus downgrades to Neutral from Buy. Target rises to $2.15 from $1.90.

EBOS GROUP LIMITED ((EBO)) Downgrade to Hold from Add by Morgans .B/H/S: 0/3/0

Ebos Group's FY18 result outpaced the broker, enjoying a sharp improvement in operating cash flow.

Morgans says the result was struck on a strong earnings and cost performance from all division and the outlook for FY19 looks solid. 

Morgans downgrades to Hold from Add to reflect recent share price strength. Target price rises to NZ$20.43 from NZ$20.25.

ELANOR INVESTORS GROUP ((ENN)) Downgrade to Hold from Accumulate by Ord Minnett .B/H/S: 0/1/0

FY18 earnings were helped by the sale of Ibis Eaglehawk and partial apportioning of proceeds from the Maryland sale. Removing the impact of these transactions meant FY18 earnings were ahead of Ord Minnett estimates.

The broker expects the funds management division to grow strongly but remains wary of an emerging competitive threat to Featherdale, as Sydney Zoo is slated to open in the second half of FY19 less than 10km away. Rating is downgraded to Hold from Accumulate. Target is reduced to $2.24 from $2.28.

FLEXIGROUP LIMITED ((FXL)) Downgrade to Hold from Buy by Deutsche Bank .B/H/S: 3/3/0

Deutsche Bank notes a resumption of volume growth across previously stagnant businesses but the FY18 results benefited from a high level of cost capitalisation. Australian Cards remain the key area of concern, with strong volumes associated with diminishing earnings.

The easy gains have been achieved and Deutsche Bank downgrades to Hold from Buy. Target is $2.25.

GROWTHPOINT PROPERTIES AUSTRALIA ((GOZ)) Downgrade to Lighten from Hold by Ord Minnett .B/H/S: 0/0/2

FY18 funds from operations were in line with Ord Minnett's forecasts. The broker believes Growthpoint is delivering on its strategy to provide sustainable growth and distributions.

From a valuation perspective, however, the share price has risen 10% since June and the P/E ratio is elevated versus historical levels. Ord Minnett downgrades to Lighten from Hold and raises the target to $3.45 from $3.40.

HOTEL PROPERTY INVESTMENTS ((HPI)) Downgrade to Hold from Accumulate by Ord Minnett .B/H/S: 0/2/0

FY18 distributable profit of $29m missed by -$0.5m and lower-than-forecast net property income was apparently to blame. Distribution, however, was in-line pulling the full year dividend to 19.6cps.

Post the release, Ord Minnett has reduced estimates and this has pushed back the price target by -10c to $3.20. On current expectations, FY20 should see a return to growth of 4%.

INGHAMS GROUP LIMITED ((ING)) Downgrade to Underweight from Equal-weight by Morgan Stanley .B/H/S: 0/4/2

Regardless of the softer-than-expected FY18 result, the market has focused on the capital management announcement. Morgan Stanley also considers the on-market buyback positive.

Nevertheless, the broker flags the fact that cash flow was boosted by $40m in factoring of trade payables and a $23m inventory finance benefit. Asset sales remain an ongoing feature, and while beneficial to cash in the near term, are largely in the form of a sale and lease back. The broker warns this will eventually be brought back to the balance sheet in the form of debt.

Rating is downgraded to Underweight from Equal-weight. Target is reduced to $3.40 from $3.60. Industry view: Cautious.

LINK ADMINISTRATION HOLDINGS LIMITED ((LNK)) Downgrade to Neutral from Outperform by Credit Suisse and Downgrade to Lighten from Hold by Ord Minnett .B/H/S: 4/3/0

FY18 results beat expectations. There was a maiden contribution from asset services which provided a benefit but Credit Suisse considers the trends in the broader business are soft. The broker also notes the higher levels of fee-for-service revenues may not be repeated at the same level in FY19.

Rating is downgraded to Neutral from Outperform as the growth profile is envisaged significantly lower than it once was. Target is $8.10.

Ord Minnett notes the effects of contract losses in funds administration in the FY18 results. The result, in line with expectations, was boosted by cyclical tailwinds which the broker believes mask some structural challenges in funds administration.

Corporate markets slightly beat forecasts while Link Asset Services was slightly worse than the broker assumed. Rating is downgraded to Lighten from Hold. Target is reduced to $7.00 from $8.05.

MONADELPHOUS GROUP LIMITED ((MND)) Downgrade to Lighten from Hold by Ord Minnett and Downgrade to Sell from Hold by Deutsche Bank .B/H/S: 1/2/2

FY18 net profit was below forecasts. Ord Minnett lowers net profit estimates by -13% for FY19 and -15% for FY20. The broker believes the stock is trading on a premium valuation and downgrades its rating to Lighten from Hold. Target is reduced to $13.02 from $18.82.

The broker forecasts wins in iron ore of more than $200-300m per annum but these do not take effect until FY20. Hence, FY19 will be exposed to significant headwinds that the broker believes are not captured by consensus estimates.

Deutsche Bank was disappointed with the FY18 results, noting a severe earnings hole is emerging in FY19. While the company exceeded FY18 revenue guidance, the broker believes the expectation for construction revenue to decline in FY19 implies double-digit declines in earnings.

The broker believes the stock is expensive and downgrades to Sell from Hold. Target is $11.60.

NIB HOLDINGS LIMITED ((NHF)) Downgrade to Underperform from Neutral by Credit Suisse .B/H/S: 1/5/2

FY18 results were slightly ahead of forecasts. Claims inflation is at historical lows and in line with the broker's analysis of the industry. Credit Suisse increases FY19 estimates for underlying operating profit by 8.6%.

As the share price is up around 20% since June, the broker downgrades to Underperform from Neutral. While underlying trends remain positive and are expected to continue in FY19 the broker believes the capitalising of margins cannot continue. Target is raised to $6.30 from $5.35.

NEWS CORPORATION ((NWS)) Downgrade to Underweight from Equal-weight by Morgan Stanley .B/H/S: 2/2/2

Morgan Stanley downgrades to Underweight from Equal-weight after reducing estimates and valuation for the Australian pay-TV unit, Foxtel. In the FY18 result the broker highlights the sharp decline in Foxtel earnings.

Four years ago this was the most profitable media business in Australia. Historically, Foxtel was a pay-TV monopoly with supernormal profits. However, Morgan Stanley observes this has changed. The broker reduces the target to US$12.50 from US$17.00. Industry view is Attractive.

ORIGIN ENERGY LIMITED ((ORG)) Downgrade to Neutral from Buy by Citi .B/H/S: 3/4/0

Analysts at Citi have re-adjusted their modeling for the accountancy changes that have been implemented at Origin Energy. The result is for materially weaker forecasts than were previously modeled.

Apart from electricity hedge premiums, other negative factors include weaker gas margins growth, higher capex, weaker cash conversion, and delayed cost out. Downgrade to Neutral from Buy. Target price deflates by -20% to $8.80.

PRIMARY HEALTH CARE LIMITED ((PRY)) Downgrade to Hold from Accumulate by Ord Minnett and Downgrade to Hold from Buy by Deutsche Bank .B/H/S: 0/3/5

Primary Health Care's FY18 results were in line with Ord Minnett's estimates. The 10.6c full year dividend represented a 60% payout ratio.

The company has announced a $250m capital raising to aid in the acquisition of a day surgery operator and bring forward investment in medical centres and pathology. The broker notes management failed to clearly indicate its plans for the future or provide adequate explanation of the heavily discounted $250m rights issue.

Rating is downgraded to Hold from Accumulate and target reduced to $3.25 from $4.20.

Deutsche Bank downgrades to Hold from Buy on the weak outlook, uncertain capex and low shareholder returns. The company reported a weak FY18 result with lower than expected margins and more significant items.

Guidance for FY19 was disappointing as was the higher capex forecast. The company is undertaking a large equity raising to fund growth plans bringing management's credibility into question, in the broker's view, as they had previously stating expansion could be funded from operational cash flow and existing facilities.

Target reduced to $3.22 from $3.80.

SPARK NEW ZEALAND LIMITED ((SPK)) Downgrade to Hold from Buy by Deutsche Bank .B/H/S: 1/3/1

FY18 results were in line with Deutsche Bank's expectations. The broker considers operations are now stable with customer numbers and digital interactions lifting.

This company is executing well and on track to cover its dividend by FY20 but the broker believes these features are captured in the price and downgrades to Hold from Buy. Target is raised to NZ$3.80 from NZ$3.75.

SUPER RETAIL GROUP LIMITED ((SUL)) Downgrade to Underperform from Neutral by Credit Suisse .B/H/S: 2/5/1

Super Retail's result outperformed low expectations, Credit Suisse notes, but it required outperformance from Auto and Macpac to offset ongoing weakness in BCF and Sport. Guidance to 11 new Auto stores was a surprise.

The broker is perplexed as to why inventory levels for BCF and Auto were so high at year-end. The broker is also uneasy about a management reward structure based on normalised profit, which encourages risk taking without an offset for weakness accountability.

Credit Suisse lifts its target to $8.39 from $8.36 and downgrades to Underperform from Neutral.

SEVEN WEST MEDIA LIMITED ((SWM)) Downgrade to Sell from Neutral by UBS .B/H/S: 0/3/3

FY18 results were at the top end of guidance. Relative to UBS forecasts, FY19 cost reduction guidance of $10-20m is below previous estimates. The broker remains positive about the earnings momentum and the ability to grow share into FY19.

However, with the stock re-rating above valuation the broker downgrades to Sell from Neutral. Target is $0.85.

WESTPAC BANKING CORPORATION ((WBC)) Downgrade to Neutral from Outperform by Macquarie .B/H/S: 3/4/1

Retail banking conditions continued to deteriorate in the second half, the broker notes, due to increased competition, higher funding costs and slowing credited growth. Mortgage repricing may offer some reprieve but could backfire if too aggressive, the broker suggests.

Westpac's and Bank of Queensland's ((BOQ)) overweight positions in retail second half and FY19 results will be under pressure. Westpac downgraded to Neutral from Outperform, target falls to $32 from $33.

WEBJET LIMITED ((WEB)) Downgrade to Hold from Add by Morgans and Downgrade to Hold from Buy by Ord Minnett and Downgrade to Neutral from Outperform by Credit Suisse .B/H/S: 1/4/0

Webjet's FY18 result outpaced consensus and Morgans, and was struck on strong revenue, margins and operating cash flow. Morgans says the performance makes Webjet the fastest growing B2B player in the world.

Webjet reiterates expectations for the booking targets to grow by thrice that of the underlying market in B2C and five times in B2B.

For now, Morgans upgrades forecasts across FY19 to FY21 and increases the target price to $17.15 from $13.75. Rating is downgraded to Hold from Add, after strong share price appreciation.

Target price moves up to $17.46 from $14.00, but the rating has been pulled back to Hold from Buy following a stellar rally in the share price after the release of FY18 financials. Clearly, it was a "stand-out result",  the analysts at Ord Minnett assert.

Normalised net profit was significantly above expectations. FY18 revealed higher than expected sales of ancillary products such as packages, car hire, insurance and hotels. Such products are typically higher margin, the analysts point out.

Another observation is that net operating cashflow made a big leap while B2B operations are now starting to make a real contribution. Valuation seems but the sole constraint right now.

FY18 results were ahead of expectations. A key positive was the margin improvement in the core Webjet business, Credit Suisse observes, increasing to 40.3% from 35.6%, partly because of a higher contribution from ancillary revenue.

The broker increases FY19 estimates for operating earnings by 3%. While more confident about the integration of JacTravel and the B2B direct contract strategy, Credit Suisse downgrades to Neutral from Outperform on valuation grounds. Target is raised to $16.00 from $13.65.

WORLEYPARSONS LIMITED ((WOR)) Downgrade to Equal-weight from Overweight by Morgan Stanley .B/H/S: 3/3/1

Reported FY18 financials were in line with expectations, comment the analysts. Morgan Stanley observes the stock has regained its sector premium in recent times and thinks it's now most appropriate to downgrade to Equal-weight from Overweight.

WorleyParsons is performing well, conclude the analysts, adding the cycle looks good, but it will take time for earnings to grow significantly. Price target lifts to $20.13 from $18.70.

WOOLWORTHS LIMITED ((WOW)) Downgrade to Neutral from Buy by UBS and Downgrade to Hold from Buy by Deutsche Bank .B/H/S: 0/6/2

FY18 results were strong but below UBS estimates because of softer outcomes in New Zealand, Big W and liquor. While believing there is an opportunity to drive efficiencies UBS acknowledges this is not in evidence as yet.

The broker is concerned about the extent to which shoppers left Woolworths in July and August on the back of the Coles ((WES)) Little Shop promotion. UBS reduces forecast by -5-6% and downgrades to Neutral from Buy. Target is reduced to $28.30 from $30.00.

Deutsche Bank downgrades to Hold from Buy believing Woolworths' lost sales momentum will be compounded by higher costs and weigh on first half earnings.

Despite the company continuing to please its customers it appears they are cross shopping to chase plastic bags and toys. The broker expects sales growth to improve in 2Q19 when the headwinds have passed. $30 target maintained.

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