Top Ten Weekly Recommendation, Target Price, Earnings Forecast Changes

This story features WOOLWORTHS GROUP LIMITED. For more info SHARE ANALYSIS: WOW

By Chris Shaw

In the past week the FNArena database has seen 18 upgrades and 18 downgrades to recommendations by the eight brokers covered in the database, the result being the total proportion of Buy recommendations ended the week relatively flat at 53.7%. (There are other factors impacting on these numbers such as brokers temporarily going "no rating" in case of a take-over and initiations of coverage on new stocks).

On the buy side, upgrades to ratings were enjoyed by Woolworths ((WOW)), Independence Group ((IGO)), Australand ((ALZ)), Premier Investments ((PMV)) and Gindalbie ((GBG)), with improved valuation the primary factor underpinning the changes. For Premier there was also an overall favourable response to news of a strategic review designed to generate improved earnings performance.

Downgrades were experienced by ConnectEast ((CEU)), Aston Resources ((AZT)) and PanAust ((PNA)) on valuation grounds. Alesco ((ALS)) also saw a rating downgrade post its full year earnings result, this on evidence of better value elsewhere among stocks exposed to the property and building sector. 

With respect to consensus price targets, ConnectEast saw an increase as brokers adjusted targets in line with a bid for the company, while the likes of Regis Resources ((RRL)), Campbell Brothers ((CPB)) and Mount Gibson also saw targets raised. The Campbell Brothers increase followed an increase in interim earnings guidance from management, which also saw earnings estimates revised higher.

On the other side of the ledger, targets for Paladin ((PDN)) were cut following a poor June quarter production result, while the strategic review announcement from Premier also saw some brokers adjust earnings estimates and price targets lower.

Targets for Austar ((AUN)) were lowered when the proposed takeover by Foxtel was brought into question by the ACCC announcing it had some issues with the proposal, while retail stocks such as Harvey Norman ((HVN)) and Myer ((MYR)) continue to see brokers fine tune their expectations given ongoing tough retail trading conditions.

Gindalbie ((GBG)) was a beneficiary of increased iron ore price estimates that have seen earnings forecasts for the company increase, as was Aquila Resources ((AQA)), but to a lesser extent. Forecasts for Virgin Blue ((VBA)) and TPG Telecom ((TPM)) were also increased as brokers adjusted models for a trading update from the former and an acquisition by the latter. 

With production expectations for Paladin being revised lower so too have been earnings forecasts, while higher cash costs have seen a trimming of estimates for PanAust. Alesco's earnings forecasts have been adjusted to reflect full year results and the still tough market for the company, while earnings for Australian Worldwide Exploration ((AWE)) were lowered after the company revised down reserves at the Tui oil field.  

Total Recommendations	Recommendation Changes
Broker Recommendation Breakup

 

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