Top Ten Weekly Recommendation, Target Price, Earning Forecast Changes

This story features ORICA LIMITED, and other companies. For more info SHARE ANALYSIS: ORI

 By Chris Shaw

Total Buy recommendations on Australian equities have moved even higher this week, the FNArena database now showing nearly 52.5% of all ratings by the eight stockbrokers under daily coverage are Buys. The increase comes despite little sign of any improvement in the outlook for corporate earnings or the broader economy.

During the week there were 16 upgrades compared to just seven downgrades, which is a continuation of the recent trend and suggests the valuation argument remains favourable for many companies.

Orica ((ORI)) received an upgrade to a Buy rating given an improved balance sheet has the company in good financial shape and earnings growth suggests value. Westfield Retail ((WRT)) also saw an upgrade to Overweight from Underweight, the argument being the stock offers defensive earnings and there is scope for June 2011 NTA to surprise to the upside.

Seven Group Holdings ((SVW)) was also upgraded and saw increases in price target, this being the result of changes in analysts covering the stock. Valuation arguments support the upgrades to Kathmandu ((KMD)), Paladin ((PDN)), AGL Energy ((AGK)), CSL ((CSL)) and Sonic Health ((SHL)), while an improved outlook given a competitors strong quarterly result was behind the upgrade for Sims Group ((SGM)).

Among the downgrades are Cochlear ((COH)), this given the combination of a high multiple and a slowing in earnings growth expectations. Generally weak trading conditions or valuation issues are behind the downgrades for Macquarie Airports ((MAP)), Macquarie Group ((MQG)) and ResMed ((RMD)).

While MAp saw a ratings downgrade there was also an increase in price target, this reflecting the potential for a proposed asset swap involving the company to deliver a positive valuation result for shareholders.

Positive initiations of coverage on Austbrokers ((AUB)) and Lynas ((LYC)) saw increases in consensus price targets for the two stocks in the database, while Orica and Westfield Retail also enjoyed price target increases associated with the upgrades in ratings.

The consensus target for Boart Longyear ((BLY)) fell after an initiation of coverage added a target below the previous consensus, while Ten Network ((TEN)) similarly saw a cut in target given ongoing evidence of weakness in advertising markets.

With fresh eyes looking at Seven Group the company enjoyed the largest increase in earnings estimates during the week, while the likes of CSR ((CSR)), Spark Infrastructure ((SKI)) and SP Ausnet ((SPN)) also saw changes to estimates as did Lynas, MAp and McMillan Shakespeare ((MMS)).

Resource stock Energy Resources of Australia ((ERA)) and refiner Caltex ((CTX)) were hit with the largest cuts to earnings forecasts during the week, while others to see numbers lowered by around 4.0% or more were Macquarie Group, Rio Tinto ((RIO)) and Aquila Resources ((AQA)). More modest cuts were made to estimates for Tabcorp ((TAH)), Qantas ((QAN)), BHP Billiton ((BHP)), Atlas Iron ((AGO)) and Blackmores ((BKL)).

Total Recommendations	Recommendation Changes
Broker Recommendation Breakup

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