Top Ten Weekly Recommendation, Target Price, Earnings Forecast Changes

Array
(
    [0] => Array
        (
            [0] => ((TTS))
            [1] => ((NAB))
        )

    [1] => Array
        (
            [0] => TTS
            [1] => NAB
        )

)

This story features NATIONAL AUSTRALIA BANK LIMITED.
For more info SHARE ANALYSIS: NAB
The company is included in ASX20, ASX50, ASX100, ASX200, ASX300 and ALL-ORDS

By Chris Shaw

The first week of October has again brought more ratings upgrades than downgrades by the eight brokers in the FNArena database, the six upgrades double the number of downgrades in the period. Total Buy ratings now stand at 59.5%, up from 59% previously.

Citi upgraded Mirvac ((MGR)) to a Buy to reflect the view that management's moves to reposition the portfolio imply negative risks at the property developer are reducing. This is especially the case given a high level of earnings through FY14 have already been secured, adds the stockbroker.

Charter Hall Office ((CQO)) is another property play to score an upgrade, UBS lifting its recommendation to Buy given the view an offer for the company at closer to net tangible asset backing could still emerge. 

For CSL ((CSL)), changes to foreign exchange assumptions by Credit Suisse have been enough to justify an upgrade to an Outperform rating. This reflects increased upside potential relative to a price target that has also been revised higher.

Both Tabcorp ((TAH)) and Alumina ((AWC)) have enjoyed upgrades on valuation grounds, the former from Macquarie and the latter from Citi. Tatts ((TTS)) has also been upgraded to Hold by Citi, this due to higher earnings estimates and an increased price target thanks to higher ticket sales from the introduction of Saturday Lotto Six.

BHP Billiton ((BHP)) has similarly been upgraded to Outperform by Credit Suisse as recent share price weakness is pricing in overly pessimistic commodity price reductions in the broker's view. An initiation of coverage for Campbell Brothers ((CPB)) with a Buy rating by Merrill Lynch has lifted overall ratings for that company. BA-ML's initiation includes earnings estimates 8-16% above consensus through FY14.

On the downgrade side, Credit Suisse has cut its rating on Caltex ((CTX)) to Underperform from Neutral on the back of revised oil price and Australian dollar forecasts. This has the effect of impacting on expected refining margins.

For Citi a further deterioration in the global economic backdrop has driven changes to earnings estimates and price target for National Australia Bank ((NAB)). These changes are enough to see the broker downgrade to a Hold rating from Buy previously. Forecasts and price target have also been reduced.

It is a similar story for QBE Insurance ((QBE)), as UBS has downgraded to a Neutral rating given the view the market is unlikely to recognise what appears good long-term value for some time thanks to poor operating conditions and current margin volatility. The downgrade by UBS was accompanied by cuts to earnings estimates and price target.

Solid recent share price performance and tougher conditions in the US have been enough for UBS to downgrade Sonic Health ((SHL)) to Sell from Neutral, the broker arguing current earnings risks are not being fully priced in by the market. Earnings estimates and price target have also been trimmed.

The increase in offer for Charter Hall Office has caused brokers to adjust price targets higher in accordance with the change in offer, while some increases to estimates for Caltex by Citi have seen both overall earnings estimates and price target for the stock move higher. 

The upgrade in rating for CSL has been accompanied by an increase in price target and earnings estimates, while on the other side of the ledger changes to commodity price and foreign exchange assumptions have brought about cuts to price targets for BHP. JP Morgan has similarly lowered its target and forecasts for Alumina, while BA-ML's initiation on Campbell Brothers has brought down the average price target for the stock.

Factoring in full year earnings has sparked some changes to earnings estimates for Gindalbie ((GBG)) and Perseus ((PRU)), while on the back of recent commodity price movements earnings and price target for Newcrest ((NCM)) have also been adjusted. Earnings estimates for Whitehaven ((WHC)) have also risen to account for additional volume assumptions.

Forecasts for Murchison Metals ((MMX)) have been lowered to reflect increased uncertainty with respect to the Jack Hills mine and associated port and rail infrastructure projects. Changes to commodity forecasts see cuts to earnings estimates for Alumina and Paladin ((PDN)), while Paladin's earnings have also been adjusted for the recent capital raising.

Outlook commentary at Oakton's ((OKN)) annual general meeting indicated a still soft operating environment and this sees cuts to estimates across the market, which has also impacted on price targets. Thorn Group ((TGA)) has missed out on a contract re-tender and this has brought about some reductions to earnings estimates and price target, while a weaker macro environment has generated cuts to earnings forecasts for Sims Metal ((SGM)). Price targets for the shares have also come down as a result.

Note: FNArena monitors eight leading stockbrokers on a daily basis and the tables below are based on data analysis from the week past concerning these eight equity market experts. The eight experts in casu are: BA-Merrill Lynch, Citi, Credit Suisse, Deutsche Bank, JP Morgan, Macquarie, RBS and UBS.

Total Recommendations	Recommendation Changes
Broker Recommendation Breakup

Click to view our Glossary of Financial Terms