Top Ten Weekly Recommendation, Target Price, Earnings Forecast Changes

This story features RIO TINTO LIMITED, and other companies. For more info SHARE ANALYSIS: RIO

By Chris Shaw

The volatility in equity markets in recent sessions has had a noticeable impact on broker ratings, as the FNArena database saw 42 ratings upgrades (unusually high) compared to just six downgrades in the past week. Total Buy recommendations from the eight brokers contained in the database now stands at 54.97%, up from 53.2% last week.

Among those enjoying upgrades in ratings were Oakton ((OKN)), following a profit result that while weak offered some evidence of a turnaround in the key Victorian market. Coca-Cola Amatil ((CCL)) also enjoyed some upgrades post its interim earnings result, reflecting defensive earnings growth and an improved valuation following market weakness.

An improved valuation following recent share price weakness sparked ratings increases for Transurban ((TCL)), while a better than expected result from Domino's Pizza ((DMP)) generated upgrades as brokers factor in further strong earnings growth in coming years. Others to receive upgrades during the week include Extract Resources (EXT)) and Navitas ((NVT)). 

A potential takeover from major shareholders Rio Tinto ((RIO)) and Mitsubishi have caused brokers to downgrade ratings on Coal and Allied ((CNA)), price targets also being adjusted to reflect the implied value of the proposal. 

Refinancing concerns are behind a downgrade in rating for The Reject Shop ((TRS)), while an initiation of coverage on Sandfire Resources ((SFR)) at Underweight has brought down average ratings on the company.

In terms of price targets, increases to forecasts for Domino's Pizza translated into higher price targets, while an increase in reserves at Extract saw one broker lift its target for that stock. Greater confidence in earnings in the coming year have resulted in a price target increase for Programmed Maintenance Services ((PRG)), while Transurban saw some modest increases to targets post its profit result.

On the other side of the ledger, Harvey Norman delivered lower 4Q sales and this was met by some cuts to earnings estimates and price targets, though there were no associated changes in ratings. Myer ((MYR)) suffered by association in terms of targets and estimates being reduced.

Tough retail conditions also saw cuts to targets for The Reject Shop, while a more significant downgrade in target for Oakton ((OKN)) by one broker offset some modest target increases elsewhere. Difficult market conditions have seen targets trimmed for Stockland ((SGP)), while a somewhat lower quality result has seen cuts to both earnings estimates and targets for Bendigo and Adelaide Bank ((BEN)). 

Changes to forex assumptions translated into higher earnings estimates for Aquila Resources ((AQA)) and Paladin ((PDN)), while estimates for Mount Gibson ((MGX)) were adjusted following a solid full year earnings result.

With BlueScope ((BSL)) announcing some writedowns brokers have responded by cutting earnings estimates, while Duet Group ((DUE)) announced a capital raising during the week and this has also seen changes to earnings forecasts as models are adjusted accordingly.

A weak outlook has resulted in cuts to estimates for Computershare ((CPU)), while a disappointing price for the sale of US assets has caused brokers to adjust numbers for Charter Hall Office ((CQO)) lower. 
 

Total Recommendations	Recommendation Changes
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