Top Ten Weekly Recommendation, Target Price, Earnings Forecast Changes

This story features SANDFIRE RESOURCES LIMITED, and other companies. For more info SHARE ANALYSIS: SFR

By Chris Shaw

The past week has yet again seen broker upgrades outnumber downgrades, with 13 increases in rating compared to just seven downgrades. The eight brokers in the FNArena database now have a total proportion of Buy ratings of 59%, up from 58.7% last week.

Resources stocks dominated the rating upgrades this week, with Medusa Mining ((MML)) enjoying an upgrade to Buy from Deutsche Bank on revised commodity price forecasts along with an initiation at the same rating from RBS Australia. RBS is attracted to Medusa's pure gold exposure, solid cash flows and growth potential from both new projects and exploration.

Similarly, Oz Minerals ((OZL)) enjoyed upgrades to Buy ratings from Deutsche Bank and Citi, the former following a review of commodity price assumptions and the latter post a review of the Australian copper sector.

Deutsche Bank also upgraded the likes of Whitehaven Coal ((WHC)), Kingsgate Consolidated ((KCN)), Iluka ((ILU)) and Gryphon Resources ((GRY)) following a general update to commodity price forecasts. Deutsche also upgraded PanAust ((PNA)) to reflect a positive outlook on the Inco de Oro project in South America and the scope for group production to ramp up in the coming year.

PanAust was also upgraded by Citi following the broker's copper sector review, which also generated an initiation with a Buy rating on Sandfire Resources ((SFR)). Woodside ((WPL)) was the energy stock to enjoy an upgrade, this courtesy of Macquarie. The decision was based on valuation grounds following recent share price weakness. 

On the downgrade side, Nexus saw its rating cut to Hold from Buy by both RBS Australia and Macquarie, the change reflecting increased doubt surrounding the future of the Crux project now well respected MD Richard Cottee has left the company. 

Deutsche's commodity prices review also generated a downgrade for Extract Resources ((EXT)), while Citi's initiation on copper plays brought down the overall rating on both Discovery Metals ((DML)) and Intrepid Mines ((IAU)). A similar initiation on Jetset Travelworld ((JET)) has a similar impact on the overall rating for that stock, Deutsche cautious given only a small free float of shares available in the company.

An equity raising by Goodman Fielder ((GFF)) saw Deutsche (again) downgrade that stock to Underperform from Neutral, while a mixed full year earnings result from Nufarm ((NUF)) and some valuation issues prompted a downgrade by Deutsche to Sell from Hold previously. It was a similar story for Coca-Cola Amatil ((CCL)), Citi downgrading to Hold on valuation grounds.

The commodity price review by Deutsche Bank was the main driver of changes to share price targets, the most significant revisions coming for Medusa, Sandfire, Gryphon, Discovery Metals, Newcrest ((NCM)) and PanAust. 

On the other side of the ledger targets were cut for Nexus, Intrepid, Platinum Australia, Paladin, Oz Minerals, Fortescue, Iluka and Whitehaven among the resource plays and Jetset Travelworld and Goodman Fielder among the industrial plays.

From an earnings perspective, resources plays again dominated, with increases to forecasts for the likes of Roc Oil ((ROC)) following the acquisition of an increased stake in the Cliff Head project, Murchison Metals ((MMX)) following full year earnings and adjustments to estimates for Range Resources ((RRL)), Kingsgate and Gindalbie ((GBG)). 

Forecasts for CSL ((CSL)) were lifted on signs of a tightening in the global plasma market, while Oroton's ((ORL)) better than expected full year earnings result triggered increases to analysts' estimates. 

Lower earnings estimates have flowed through for Mincor ((MCR)), Lynas ((LYC)), Paladin, Gloucester Coal ((GCL)), Platinum Australia, PanAust, Aquarius Platinum ((AQP)), Independence Group ((IGO)) and Minara Resources ((MRE)) largely as a result of changes to commodity price assumptions, and for Goodman Fielder to reflect the equity issue announced this week. 

Total Recommendations	Recommendation Changes
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