Top Ten Weekly Recommendation, Target Price, Earnings Forecast Changes

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This story features FLETCHER BUILDING LIMITED, and other companies.
For more info SHARE ANALYSIS: FBU
The company is included in ASX200, ASX300 and ALL-ORDS

By Chris Shaw

The past week has seen downgrades by brokers in the FNArena database double the number of upgrades, 10 ratings being lowered to just five increases. Total Buy recommendations now stand at 57.1%, down from 57.4% last week.

Among the upgrades were Bathurst Resources ((BTU)), where Credit Suisse moved to an Outperform rating from Neutral given a view the smaller cap plays are now the more attractive in the Australian coal sector. Bathurst's overall rating also benefited from Citi initiating coverage with a Buy rating.

A recent profit warning saw the Fletcher Building ((FBU)) share price suffer but in JP Morgan's view the sell-off was overdone. On valuation grounds the broker upgraded to an Overweight rating from Neutral previously despite a cut in price target. Macquarie also lowered its target for the stock.

Iluka ((ILU)) has announced better than expected titanium oxide price increases, which has forced brokers across the market to lift earnings estimates and price targets. The changes suggest some upside remains for the stock, enough for RBS Australia to upgrade to a Buy rating from Hold previously.

A US asset sale by Investa Office ((IOF)) was well received by the market given a price in excess of book value. The sale saw UBS lift its price target slightly, the broker also upgrading to a Buy rating given the potential valuation upside from further asset sales.

Management at Peet ((PPC)) offered cautious commentary at the group's AGM this week and the market reacted by pushing down the stock. The falls have been overdone according to Citi, who has upgraded to a Buy rating on valuation grounds.

Among the downgrades was Adelaide Brighton ((ABC)), JP Morgan cutting its rating to Neutral from Overweight following relative outperformance. This is a valuation call as the stock is now trading close to the broker's price target.

Clough ((CLO)) has reported some cost overruns and margin pressure on two contracts, enough for RBS Australia to lower its earnings estimates and price target. The changes are enough for a downgrade to a Hold rating, again a valuation call on the part of the broker.

Valuation is also behind Credit Suisse's downgrade of Gloucester Coal ((GCL)) to a Neutral rating, this following recent share price outperformance. Minor adjustments to earnings forecasts have accompanied the downgrade.

With earnings to be impacted by some one-offs UBS has cut forecasts for HFA Holdings ((HFA)). The changes have also seen its price target cut, while a lack of positive momentum sees the broker downgrade to a Neutral rating.

A lack of positive catalysts is also behind Citi's downgrade of Hills Industries ((HIL)), as earnings are still being impacted by the strong Australian dollar and ongoing challenges in the building industry. Target has been trimmed on minor cuts to estimates.

Deutsche Bank has lowered forecasts for Newcrest ((NCM)) given changes to production expectations, the changes seeing a reduction in price target. On valuation grounds the broker has moved to a Hold rating from Buy previously, the only non-Buy recommendation on Newcrest in the FNArena database.

Demand for IT services is expected to remain subdued given weak domestic economic growth and to reflect this Macquarie sees scope for some contract cancellations. This is likely to impact on earnings for Oakton ((OKN)), so the broker has adjusted its model to the point its rating has been downgraded to Neutral.

A solid run in Programmed Maintenance ((PRG)) shares has seen Citi downgrade to a Neutral rating on valuation grounds. The downgrade comes despite a modest increase in price target. Citi has also downgraded Transurban ((TCL)) to a Neutral rating on the same basis.

United Group ((UGL)) has acquired the DTZ trading assets and this offers the company a European property footprint. Despite this RBS Australia sees a slower rate of margin improvement going forward, enough to downgrade to a Hold rating. Targets for the stock have risen overall to reflect the impact of the acquisition.

Price targets for Charter Hall Office ((CQO)) have risen slightly following news the bidding consortium has lifted its offer slightly, while targets for APN News and Media ((APN)) have fallen on the back of cuts to earnings estimates post the company's investor day.

Broker models for Australian Worldwide Exploration ((AWE)) have been adjusted on news the company has sold part of its stake in the BassGas project, the changes having minor impact on price targets across the market.

Weak global markets have Computershare's ((CPU)) earnings under pressure, enough for JP Morgan to adjust its forecasts. Models have also been adjusted to reflect the recently completed Specialised Loan Services acquisition.

New guidance from Independence Group ((IGO)) has seen brokers lower estimates and price targets, while changes to aluminium price expectations mean BA Merrill Lynch has trimmed its earnings estimates for Alumina Ltd ((AWC)). 

Total Recommendations	Recommendation Changes
Broker Recommendation Breakup Suisse,Deutsche<*br*>Bank,JP<*br*>Morgan,Macquarie,RBS<*br*>Australia,UBS&b0=123,118,128,107,94,149,189,158&h0=74,96,80,118,87,91,112,81&s0=41,18,14,6,25,20,6,13″ style=”border-bottom: #000000 1px solid; border-left: #000000 1px solid; border-top: #000000 1px solid; border-right: #000000 1px solid” />

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