Top Ten Weekly Recommendation, Target Price, Earnings Forecast Changes

This story features ENERGY RESOURCES OF AUSTRALIA LIMITED, and other companies. For more info SHARE ANALYSIS: ERA

By Chris Shaw

The past week has been a busy period for changes in broker ratings as the eight brokers in the FNArena database have upgraded recommendations on 12 stocks while downgrading a further 14. This means the trend of more downgrades than upgrades continues. Total Buy ratings now stand at 50.59%.

The only stock receiving multiple upgrades was Energy Resources of Australia ((ERA)), where both BA Merrill Lynch and UBS have moved to Buy ratings from Sell previously. The rating upgrades reflect a more positive view post an update by the company on the progress of operations at Ranger.

BA-ML has also upgraded Alacer Gold ((AQG)) to Buy from Sell, reflecting the broker's view the market is at present too concerned about the group's Australian assets, to the point value is emerging at current levels.

Interim earnings from Australian Pharmaceutical ((API)) were good enough for Macquarie to lift earnings estimates and its price target, the latter change enough to justify an upgrade to a Buy rating from Neutral previously. Across the market earnings estimates and price targets were adjusted post the result.

Following a strategy update by the bank UBS has upgraded Commonwealth Bank ((CBA)) to Buy from Neutral, as the broker sees strategy execution delivering relative outperformance. UBS has also lifted its price target post the update.

UBS similarly upgraded CSL ((CSL)) to Buy from Neutral on news Baxter faces delays with its HyQ product that should provide something of an earnings boost to CSL. Other brokers covering the stock have revised earnings expectations and price targets on the news.

News Fleetwood ((FWD)) will build an accommodation village in Gladstone was enough for RBS to upgrade to a Buy rating from Hold previously, as the expectation is this will deliver an earnings boost from FY14.

Credit Suisse sees value in Perseus ((PRU)) post a solid quarterly production report where output was solid and costs fell, while increases to earnings estimates for Tatt's ((TTS)) from higher win rates on fixed odd bets are enough for the broker to move to a Neutral rating from Sell previously.

While not changing its earnings forecasts Macquarie has upgraded UGL ((UGL)) to Buy from Neutral, the broker suggesting ongoing contract wins and the continued integration of DTZ will act as catalysts for the stock in coming months.

On the downgrades side, UBS has cut its rating on AMP ((AMP)) to Neutral from Buy on valuation grounds post a review of its model, while JP Morgan has similarly downgraded Aristocrat Leisure ((ALL)) on the back of recent share price strength.

For the same reason RBS has downgraded Automotive Holdings ((AHE)) to Hold from Buy, while Credit Suisse has similarly downgraded Caltex ((CTX)) to Neutral from Buy given recent share price strength.

Centro Retail ((CRF)) has been downgraded to Neutral from Overweight by JP Morgan on news the company is to sell some of its assets, as while the group's balance sheet will be strengthened overall asset quality will be reduced, in the view of JP Morgan.

BA-ML suggests it is getting tougher for Newcrest ((NCM)) to achieve production guidance this year and this implies consensus earnings estimates are too high. For the broker this is enough reason to downgrade to Neutral from Buy. Newcrest will release its March quarter production report in the week ahead.

While domestic market conditions are supportive, conditions for Nufarm ((NUF)) in other markets are more difficult and this has prompted Citi to downgrade its rating to Sell from Neutral, while Spark Infrastructure's ((SKI)) proposed expansion away from electricity via (an attempt to) taking a stake in the Sydney desalination plant is not a great move in the view of Macquarie. The broker downgrades to Neutral from Buy.

The most downgrades were applied to Westfield Group (WDC)) as UBS, Credit Suisse and Deutsche Bank have all lowered ratings to Neutral from Buy. Westfield has announced plans to sell non-core assets and this news has been well received, but valuation has been the key driver behind the cuts in ratings.

 

Total Recommendations	Recommendation Changes
Broker Recommendation Breakup

 

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