Weekly Recommendation, Target Price, Earnings Forecast Changes

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            [3] => ((SAR))
            [4] => ((PPC))
            [5] => ((TAP))
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This story features SANDFIRE RESOURCES LIMITED, and other companies.
For more info SHARE ANALYSIS: SFR
The company is included in ASX100, ASX200, ASX300 and ALL-ORDS

By Andrew Nelson

Now that the February reporting season is history, overall activity among stockbrokerages has slowed down significantly. The previous week saw more than 60 changes in ratings for individual stocks. Last week we only recorded 17. The balance has turned back in favour of upgrades.

Aquila Resources ((AQA)) was upgraded to Hold from Sell by JP Morgan, the broker citing recent share price weakness and some corporate appeal given good cash backing, a nice basket of mining tenements and infrastructure in the Pilbara for its decision. The change has shifted the stock to a neutral sentiment in the FNArena Database.

Aurizon Holding ((AZJ)) was lifted to Buy from Hold by Deutsche Bank on news the company had secured all of the BHP Billiton ((BHP)) alliance volume shipments from 2015/16 under a new 12-year contract for coal haulage in Queensland. The broker noted this is the largest contract in the market and ensures the use of Aurizon's assets. CIMB was of a different view, downgrading its recommendation to Hold from Buy. The broker had been anticipating the news and sees limited upside going forward and thus prefers Asciano ((AIO)) in the space.

Nufarm ((NUF)) received two upgrades, from Sell to Buy from Credit Suisse and from Sell to Hold from Macquarie. The company was informed by Monsanto that it would no longer hold the manufacturing and distribution rights for weed exterminator RoundUp. While shares tanked on the news, both brokers thought the estimated impact on earnings would be nowhere near as bad as many had initially assumed and thus the share price fall was overdone. Despite the upgrades, shares have maintained their negative sentiment footing.

There were five upgrades pushed through for Sandfire Resources ((SFR)), with JP Morgan and Credit Suisse lifting from Sell to Hold and Citi, UBS and Deutsche Bank upgrading to Hold from Buy. The 1H report was anywhere from in-line to a slight beat and provided little impact in and of itself, although forecasts were trimmed for the most part. What brokers did respond to was the recent weakness in the share price, lower costs and rapidly improving recoveries at DeGrussa. In the case of JP Morgan, a favorable copper outlook contributed too. Sentiment is positive post the upgrades.

UGL ((UGL)) was upgraded to Buy from Hold by Deutsche Bank, who pointed out exposure to a growing global property services market, ongoing cost out work, a share price that doesn't factor in growth opportunities in traditional markets and thus upside risk to consensus estimates. The broker also liked the 10% per year EPS growth out to FY16 on an 11.2x PER, 24% upside to the price target and a dividend yield of 7%. Sentiment has shifted to positive on the upgrade.

Webjet ((WEB)) was lifted to Buy from Hold by UBS, the broker noting the stock is trading in-line with the ASX Industrials (ex finance), but should be trading at a 10%-15% premium given higher growth potential plus the upside from Zuji. The broker acknowledges the stock is also trading in-line with online peers, but thinks it should also be at a premium here given better EPS growth prospects. Sentiment has shifted to positive on the upgrade.

Westfield Retail Trust ((WRT)) was bumped up to Buy from Hold on share price weakness post news founders the Lowy family had sold their final 7.1% stake. Credit Suisse did not think this weakness accurately reflected the state of the trust and thus saw the price weakness as helping to bring about more meaningful buyback activity. Sentiment remains positive post the upgrade.

Macquarie upgraded Westpac ((WBC)) to Hold from Sell on the belief the positive sector trends being reported by peers is likely providing benefit to Westpac as well. When 1H numbers are released, Macquarie expects to see improved margins and given a benign outlook for impairments and strong capital ratios, the broker is also starting to see some chances of a capital return. Sentiment has shifted to neutral on the upgrade.

The last upgrade to report was Credit Suisse moving to Buy from Sell on Yancoal Australia ((YAL)). The broker expects the 2013 focus will be on cost reductions and efficiencies, although it did say it was upgrading because of the 21% potential upside to the price target from current levels. Sentiment has improved to neutral on the upgrade.

Evolution Mining ((EVN)) was downgraded to Hold from Buy, BA-Merrill Lynch making the move on lower forecasts for the gold price. The broker is still positive on gold, but doesn't believe the price will reach its US$2,000/oz target until 2014. Sentiment on the stock remains positive.

BA-Merrill Lynch also downgraded Saracen Mineral Holding ((SAR)), moving from Hold to Sell for the same exact reason it downgraded Evolution Mining; lower forecast gold prices and the belief that leveraged names are not the best way to gain exposure to gold in a less favourable gold price environment. Sentiment has shifted to neutral on the downgrade.

There were a few significant changes to consensus price target last week, the biggest increase being a near 18% rise in Harvey Norman’s ((HVN)) target and a near 12.5% lift in Peet & Co’s ((PPC)). Gindalbie Metals’ ((GBG)) consensus target came off 10.3% and Nufarm’s target sunk nearly 7.3%.

Average earnings forecasts in the FN Arena Database also showed some significant revision, with forecasts for Harvey Norman up 7% and Independence Group’s ((IGO)) up nearly 5.8%. Forecasts for Gindalbie Metals were down more than 45%, Tap Oil ((TAP)) was down almost 38%, Discovery Metals ((DML)) down nearly 29%, Iluka ((ILU)) 12.6% lower and Peet & Co down 11.8%.

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, CIMB (formerly RBS) and UBS.

Total Recommendations	Recommendation Changes
Broker Recommendation Breakup Securities,Citi,Credit<*br*>Suisse,Deutsche<*br*>Bank,JP<*br*>Morgan,Macquarie,UBS&b0=99,146,85,81,89,69,112,97&h0=80,153,118,104,138,106,123,137&s0=63,23,36,47,15,51,38,27″ style=”border:1px solid #000000;” />

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