Top Ten Weekly Recommendation, Target Price, Earnings Forecast Changes

This story features COMPUTERSHARE LIMITED, and other companies. For more info SHARE ANALYSIS: CPU

By Chris Shaw

As companies have updated outlook commentary at annual general meetings over the past week, stockbrokers have reacted by making double the number of ratings downgrades to upgrades. Among the eight brokers in the FNArena database eight ratings were upgraded this week against 16 downgrades, meaning total Buy recommendations have fallen to 58.2% from 58.7% previously.

One to enjoy an upgrade in rating was Wotif.com ((WTF)), with BA Merrill Lynch lifting its rating to Neutral from Underperform. The upgrade reflects both minor changes to estimates following updated guidance from management and underperformance by the stock over the past 12 months that has improved the value on offer. The show stopper during the week was biotech Pharmaxis ((PXS)) who finally received product approval from Europe which saw investors jumping back in the shares and stockbrokers (3) lifting their ratings and price targets.

SingTel ((SGT)) was also upgraded to Overweight by JP Morgan, this to account for the expectation Singapore's NBN project will solidify the company's dominant position in that market. Regional asset earnings growth should also be solid and this sees the broker ahead of consensus with its earnings forecasts. Alacer Gold was upgraded too, by two notches to Buy by Credit Suisse.

Southern Cross Media ((SXL)) saw an initiation of coverage with an Outperform rating by Credit Suisse and this has lifted the consensus recommendation for the company. In the view of the broker, while ratings are under pressure and advertising is weaker this appears priced into the stock at current levels.

On the downgrade side Oz Minerals ((OZL)) saw RBS Australia move to a Hold from Buy previously on the back of changes to commodity price assumptions and foreign exchange forecasts. Kingsgate Consolidated ((KCN)) was similarly downgraded to a Hold rating by RBS. Earnings estimates and price targets were also adjusted, the move on OZL by RBS following similar downgrades a week earlier by UBS and Credit Suisse.

Brokers have continued to react to Super Retail's ((SUL)) move to acquire Rebel Sport with Citi the latest to downgrade to Neutral from Buy previously, with associated changes to earnings estimates and price target.

ResMed ((RMD)) was similarly downgraded by Credit Suisse following a Q1 result that showed the group's markets were relatively challenging at present. Earnings estimates and price targets for ResMed across the market have also been revised on the back of the result.

Following an investor day JP Morgan suggests the market may have gotten a little ahead of itself with respect to the outlook for WorleyParsons ((WOR)), so the broker downgraded to Underweight from Neutral. The change in rating has been accompanied by adjustments to earnings estimates and price target.

Caltex ((CTX)) has also received a few changes to ratings in recent sessions, both BA Merrill Lynch and Citi downgrading to a Neutral rating on valuation grounds while Credit Suisse has upgraded to a Neutral rating on the back of an increase in price target on news of a rationalisation of operations at the Kurnell refinery.

Valuation has come into play for Computershare ((CPU)) as adjustments to RBS Australia's model and target have been enough to prompt a downgrade to a Hold rating, while Credit Suisse has done the same with Wesfarmers ((WES)). Relative pricing grounds have seen UBS cut its rating on Charter Hall Retail ((CQR)) to Hold.

Some minor changes to its model have caused RBS to lift earnings and price target for Adelaide Brighton ((ABC)), while BA-ML has gone the other way in cutting forecasts and target for Insurance Australia Group ((IAG)) given a tough market for insurance margins and some capital issues. 

Leading into next week's result Macquarie has cut its target for CSR ((CSR)) on the back of some adjustments to estimates, which follows a similar move by UBS earlier this month.

Earnings forecasts have been lifted for Regis Resources ((RRL)) following a solid quarter of production, while estimates for Santos ((STO)) and Woodside ((WPL)) have similarly increased post respective production reports.

Still strong exploration activity levels have prompted RBS to lift forecasts for Imdex ((IMD)), which has also generated an increase in price target. The changes follow similar adjustments made by BA-ML and Deutsche Bank. 

Further progress at Maules Creek has seen RBS lift earnings estimates for Aston ((AZT)), while a solid quarterly report from Webjet ((WEB)) has been enough for BA-ML and UBS to lift earnings estimates and price targets.

Changes to earnings estimates for Panoramic ((PAN)) are more a reflection of changes to expectations for commodity prices and foreign exchange rates than operational issues, but weaker production and sales have been behind cuts to expectations for Gloucester Coal ((GCL)).

Forecasts for Macquarie Atlas ((MQA)) have come down post a slightly weaker Q3 traffic result, while weaker nickel prices are impacting on earnings estimates for Western Areas ((WSA)). On the back of a reasonable quarterly production report there have been modest changes to estimates for Atlas Iron ((AGO)), while the announcement of a capital raising has resulted in adjustments to estimates for Transpacific Industries ((TPI)). 

Tough operating conditions have seen forecasts lowered for GWA International ((GWA)), while changed commodity price and forex assumptions have prompted a lowering of earnings estimates for BHP Billiton ((BHP)).

Total Recommendations	Recommendation Changes
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