Daily FNArena News - Australia

Citigroup’s downgrade on Telstra yesterday has been followed today by JP Morgan, who also argues the stock is expensive and it is too early to price in success in the transformation process.

Telstra has received a number of upgrades to earnings and price targets in recent days, but Citigroup counters too much is being priced in and the stock is overvalued.

Both Deutsche and Citigroup have initiated coverage on Babcock & Brown Power with Buy ratings, reflecting the combination of solid growth and an attractive yield.

A CPI outcome at the lower end of expectations has brokers tipping New Zealand interest rates are on hold, while ongoing inflationary pressures in Australia suggest possible further hikes.

If India’s Ranbaxy can increase its presence through the sale of Merck’s operations in Australia the news may not be so positive for Sigma and Genepharm Australasia, ABN Amro Morgans believes.

BIS Shrapnel has completed its annual study of road construction and maintenance activity, concluding the sector has peaked and a decline is likely in coming years.

ABN Amro continues to target $6.00 for MFS, suggesting any weakness is a buying opportunity given the company’s strong growth profile and attractive yield.

Commonwealth Bank suggests favourable demographics should continue to support the housing market in Australia, while fears of increased household debt levels have been overblown.

With brokers starting to look forward into the February results season, questions are being asked who is likely to surprise but also who will be re-rated?

The Wheat Export Authority has released its annual grower’s report that suggests the AWB is doing a reasonable job in many areas. Despite this, the market remains unconvinced of the stock’s outlook.