Top Ten Weekly Recommendation, Target Price, Earnings Forecast Changes

This story features AMCOR PLC, and other companies. For more info SHARE ANALYSIS: AMC

By Chris Shaw

Over the last week ratings downgrades by brokers in the FNArena database have again dominated upgrades to the tune of 11 to six, leaving total Buy ratings at 50.38%.

Among the upgrades was Amcor ((AMC)), where Citi moved to Buy from Hold to account for the expectation of increased M&A activity from the company going forward. Changes to its model to reflect this also saw Citi lift its price target for the stock.

Austar ((AUN)) was also upgraded to Neutral from Underweight by JP Morgan to reflect the ACCC has approved the proposed merger with Foxtel. The lift in rating reflects the removal of previous concerns with respect to the deal being allowed to proceed. At the same time UBS downgraded its rating on Austar to Hold from Buy, this on valuation grounds as the ACCC approval drove the share price to the broker's target price.

While David Jones ((DJS)) was hit with a couple of downgrades post its interim result last month, BA Merrill Lynch now sees enough value to upgrade to a Neutral rating from Sell. The call is strictly a value play, the broker noting the David Jones share price has underperformed the market by almost 40% over the past year.

Another valuation based upgrade has seen UBS lift its rating on Fleetwood ((FWD)) to Buy from Hold, this given a weak share price since the group's interim result earlier this year. A shortage of resource sector accommodation should keep the company in focus in UBS's view, while the attractive dividend is also expected to support the share price.

Strong leverage to iron ore prices and the fact the Karara project is on track to meet expectations has seen JP Morgan move to an Overweight rating on Gindalbie ((GBG)) from Neutral previously, the upgrade supported by the current 20% discount to net present value.

Another upgrade in the mining sector involved PanAust ((PNA)), where Credit Suisse has moved to Outperform from Neutral post a solid quarterly report. Both the Phu Kham expansion and the development of Ban Houayxai project are on track, while higher grades meant lower costs in the March quarter. Valuation has also improved given recent share price weakness.

ASX ((ASX)) was among the downgrades this week as Credit Suisse moved to an Underperform rating from Neutral previously. The downgrade reflects current weak trading conditions, a trend the broker suggests has little chance of any significant turnaround shorter-term.

Credit Suisse also downgraded Coca-Cola Amatil ((CCL)) to Underperform from Neutral, this a simple valuation call given recent solid share price performance. The broker has made no changes to earnings forecasts or price target.

RBS Australia has moved to a Sell rating on Echo Entertainment ((EGP)) from Hold previously, this given the potential for some negative consequences from the Star redevelopment to emerge in coming years. The broker is also uncertain as to the benefit of Crown's ((CWN)) interest in the company.

A review of its model has prompted Macquarie to downgrade Gloucester Coal ((GCL)) to Sell from Neutral previously, while Deutsche Bank has downgraded Investa Office ((IOF)) to Hold from Buy as FY13 earnings are now considered priced in.

BA-ML has downgraded Lend Lease ((LLC)) to Sell from Hold, the broker arguing the market has become too carried away with the stock of late to the extent of overlooking a poor acquisition track record and little news on potential buyers of the Barangaroo project. Cuts to forecasts leave the broker well below consensus with its estimates.

PMI Gold ((PVM)) was downgraded by JP Morgan to Neutral from Outperform. While resource estimates have been increased, grades have been lowered. This is seen as having a potential ongoing impact on production levels. 

JP Morgan also lowered its rating on Seven Group Holdings ((SVW)) on valuation grounds, as while the Bucyrus deal is expected to be earnings accretive, the stock appears fully priced at current levels. Others in the market have adjusted earnings forecasts and price targets to account for the acquisition.

Sandfire Resources ((SFR)) delivered a solid quarterly report but given subdued expectations for copper prices UBS has downgraded to a Hold rating, while Citi downgraded Super Retail ((SUL)) to Hold from Buy following share price gains of around 40% so far this year.

 

Total Recommendations	Recommendation Changes
Broker Recommendation Breakup

 

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