Icarus Signal New Entries For Today

This story features IRESS LIMITED, and other companies. For more info SHARE ANALYSIS: IRE

Daily update on share prices and consensus price targets.

By Rudi Filapek-Vandyck

"Decimated" is without any doubt a well-chosen term today. The list of stocks trading close to, but still below consensus target has been decimated in past trading sessions. Today sees another day of losses in the Australian share market, but persistent weakness earlier in the week already reduced the number of stocks on the list to seven only (7), including newcomer Growthpoint Properties ((GOZ)), a small cap stock that has been very volatile of late. Growthpoint enters the list on the basis of share price weakness, having traded above target earlier.

Now that we're mentioning the stocks above target; 25 still remain, despite the loss of Growthpoint, but also thanks to the new inclusion of Monadelphous ((MND)). Observation number one: everybody loves Monadelphous. Observation number two: the only blemish on the stock's armour is that the Price-Earnings multiple for the year just closed is pretty high (17.8x) and we yet have to find out whether projected growth for FY12 (circa 11%) will prove an understatement, or not. Observation number three: even on these elevated multiples the implied dividend yield remains above 5% for FY12. Observation number four: earlier this year the PE multiple surged above 20, which explains the fall in share price since. Observation number five: the pros and contras of the four previous observations is obviously putting pressure on the share price, while at the same time providing support whenever Monadelphous receives rejection above target, again.

Observation number six: investors' affection for Monadelphous is much stronger than for Iress ((IRE)), though that might reverse in a nanosecond from the moment equity markets display something that at least has the appearance of a sustainable rally. Right now, Iress is back out of Icarus lists, trading more than 4.5% below target (and weakening today).

A special In Memoriam for Cochlear. It was not that long ago that I quarelled with an ever-so-bullish stockbroker in a live broadcast about whether investors were getting a bit too euphoric about Cochlear shares. We're talking PE multiples of 26 and a share price above $84. Fast forward to this week and Cochlear shares sit uncomfortably at $70 – that's a loss of close to 17%. I predicted at the time, the PE ratio was likely going to dip below 20, depending on exactly what was going to be Cochlear's growth pace beyond the current year.

Currently the PE sits above 21 and market consensus believes EPS growth next year will be no more than 6%. Too low for a multiple above 20, I think. Prospective dividend yields don't reach further than 3.2-3.5%, because of the still elevated multiple. I'll leave further conclusions for others to make. I do note healthcare analysts at Morgan Stanley updated their thoughts ahead of the August reporting season with the view that risks remain to the downside for most stocks in the sector. Morgan Stanley speculates that the lowest risk sits with Sigma Pharmaceuticals ((SIP)), Ramsay Health Care ((RHC)) and CSL ((CSL)). Cochlear is positioned in the middle, still "safer" than Ansell ((ANN)), Sonic Healthcare ((SHL)) and Primary Healthare ((PRY)).

We apologise for yesterday's absence of the daily Icarus Signal update, but technical problems were to blame.

Investors should consider the information and data are provided for research purposes only.

Stocks <3% Below Consensus

Order Symbol Current Price($) Consensus Price($) Difference(%) 1 GOZ $ 1.90 $ 1.93 1.58%

Stocks Above Consensus

Order Symbol Current Price($) Consensus Price($) Difference(%) 1 MND $ 18.86 $ 18.81 – 0.27%

Top 50 Stocks Furthest from Consensus

Order Symbol Current Price($) Consensus Price($) Difference(%) 1 PPX $ 0.15 $ 0.44 191.33% 2 TXN $ 0.61 $ 1.64 168.85% 3 SLX $ 3.08 $ 8.01 160.06% 4 PGA $ 0.04 $ 0.10 156.41% 5 OTH $ 0.65 $ 1.63 150.77% 6 CVN $ 0.21 $ 0.50 138.10% 7 KGL $ 0.09 $ 0.22 134.04% 8 GNM $ 0.35 $ 0.81 130.00% 9 NCR $ 0.35 $ 0.78 122.86% 10 WEC $ 1.89 $ 4.10 116.93% 11 AVG $ 0.27 $ 0.55 103.70% 12 BTA $ 0.98 $ 1.99 103.06% 13 SMR $ 1.01 $ 2.03 100.99% 14 HSK $ 0.13 $ 0.26 100.00% 15 DTE $ 0.61 $ 1.20 96.72% 16 PBD $ 0.06 $ 0.12 93.55% 17 GRR $ 0.51 $ 0.96 88.82% 18 RUL $ 0.34 $ 0.64 88.24% 19 IVA $ 2.36 $ 4.40 86.44% 20 GNS $ 0.27 $ 0.49 83.02% 21 RFX $ 1.28 $ 2.32 81.25% 22 HTA $ 0.07 $ 0.13 80.56% 23 PLA $ 0.36 $ 0.62 74.65% 24 IGR $ 0.49 $ 0.83 71.13% 25 PMP $ 0.57 $ 0.97 70.70% 26 TIS $ 0.57 $ 0.95 68.14% 27 TSM $ 0.70 $ 1.17 66.43% 28 KGD $ 1.55 $ 2.55 64.52% 29 MPO $ 0.76 $ 1.25 64.47% 30 COK $ 0.41 $ 0.66 62.96% 31 ACL $ 0.80 $ 1.30 62.50% 32 IAU $ 1.67 $ 2.70 61.68% 33 BSL $ 1.28 $ 2.07 61.41% 34 NXS $ 0.32 $ 0.51 61.27% 35 PDN $ 2.53 $ 4.02 59.01% 36 HST $ 0.15 $ 0.24 58.67% 37 PAN $ 1.74 $ 2.71 55.57% 38 NFE $ 1.84 $ 2.85 55.31% 39 MAD $ 0.24 $ 0.36 53.19% 40 HZN $ 0.33 $ 0.49 51.69% 41 ROC $ 0.31 $ 0.49 59.03% 42 PEM $ 0.64 $ 1.10 73.23% 43 BOL $ 0.30 $ 0.53 76.67% 44 IFN $ 0.37 $ 0.66 78.38% 45 BVA $ 0.14 $ 0.25 78.57% 46 KAR $ 5.42 $ 9.68 78.63% 47 IPD $ 0.64 $ 1.14 79.53% 48 RES $ 0.76 $ 1.40 85.43% 49 CIF $ 0.99 $ 1.48 49.80% 50 AJA $ 2.74 $ 4.12 50.18%

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