Weekly Recommendation, Target Price, Earnings Forecast Changes

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            [1] => ((ANZ))
            [2] => ((BOQ))
            [3] => ((BEN))
            [4] => ((CFX))
            [5] => ((DXS))
            [6] => ((GBG))
            [7] => ((GPT))
            [8] => ((MGR))
            [9] => ((NUF))
            [10] => ((SUN))
            [11] => ((IAG))
            [12] => ((TOL))
            [13] => ((BLD))
            [14] => ((COH))
            [15] => ((GEM))
            [16] => ((LEI))
            [17] => ((LYC))
            [18] => ((NCM))
            [19] => ((NWH))
            [20] => ((SKE))
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            [2] => BOQ
            [3] => BEN
            [4] => CFX
            [5] => DXS
            [6] => GBG
            [7] => GPT
            [8] => MGR
            [9] => NUF
            [10] => SUN
            [11] => IAG
            [12] => TOL
            [13] => BLD
            [14] => COH
            [15] => GEM
            [16] => LEI
            [17] => LYC
            [18] => NCM
            [19] => NWH
            [20] => SKE
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This story features ANZ GROUP HOLDINGS LIMITED, and other companies.
For more info SHARE ANALYSIS: ANZ
The company is included in ASX20, ASX50, ASX100, ASX200, ASX300 and ALL-ORDS

Guide:

The FNArena database tabulates the views of eight major Australian and international stock brokers: BA-Merrill Lynch, CIMB, Citi, Credit Suisse, Deutsche Bank, JP Morgan, Macquarie and UBS.

For the purpose of broker rating correlation, Outperform and Overweight ratings are grouped as Buy, Neutral is grouped with Hold and Underperform and Underweight are grouped as Sell to provide a Buy/Hold/Sell (B/H/S) ratio.

Ratings, consensus target price and forecast earnings tables are published at the bottom of this report.

Summary

Period: Monday June 10 to Friday June 14

Total Upgrades: 13
Total Downgrades: 8

Net Ratings Breakdown: Buy 40.66%; Hold 42.85%; Sell 16.49%

Changes to broker recommendations continued to flow at a steady rate last week and once again, upgrades have managed to out run downgrades. This makes for two straight weeks of amendments to the upside after a six-week run of downgrades winning out. Financials and property stocks enjoyed the majority of the upgrades pushed through by brokers. The downgrade side of the ledger featured a majority of materials and resources stocks.

Last week was one of significant volatility in currency markets, the yen running up to 99.30 then crashing to 93.79. This saw the Nikkei fall more than 6% and pushed the EUR/USD and GBP/USD to their highest level for four months. In the meantime, the AUD softened a little further over the week, sitting at 0.9575 on Friday in the US.

Upgrades

AGL Energy ((AGK)) upgraded to Buy from Neutral by UBS. B/H/S: 4/2/0

The company has admitted FY profits will come in at the lower end of the guidance range, while the company also devalued some upstream assets and cautioned about its gas contract book, which is shrinking at the same time prices are rising. The broker shrugged this all off, saying it is already in the price and then some. Otherwise, CSM extraction rule changes in NSW look like they will be favourable, while some cheap NSW generation assets are up for sale and UBS thought they would be a good fit. With EPS growth still looking like it will come in better than 10% over FY14-15 and with the valuation picture starting to look attractive, the recommendation was upgraded.

ANZ Banking Group ((ANZ)) upgraded to Buy from Neutral by UBS. B/H/S: 6/2/0

While the price target stayed put at $28.50 and forecasts were barely changed, the recommendation was upgraded after the run of share price declines booked over the past month and a half. Shares are down 17% since mid-April, making for an FY14 PER of 11.2x on a yield of 6.3%. The broker said the only real problem it ever had with ANZ was valuation and this is no longer a problem at current levels. Otherwise, operations continue to perform well, the Asian strategy still looks attractive and the falling AUD provides a good opportunity for the bank's global markets businesses. Bad debts are always a risk, but UBS said it was comfortable with the outlook for impairments, at least near-term.

Bank of Queensland ((BOQ)) upgraded to Buy from Neutral by UBS. B/H/S: 1/6/1

The price target stayed put at $9.70 and there were only miniscule changes to forecasts, but the recommendation was upgraded now that the share price has come off some 20% since the end of April. The broker said it liked the management reshuffle and subsequent turnaround that has happened over the past couple of years and with capital and provisioning levels looking much better, UBS said the impaired asset book is not so much a problem anymore. On the other hand, the exposure to mining and mining sectors are troubling and could prove a problem if the bottom really falls out of the sector.

Bendigo and Adelaide Bank ((BEN)) upgraded to Buy from Neutral by UBS. B/H/S: 1/5/2

The price target remained at $10.00 and there were only minor changes to forecasts, but the recommendation was upgraded after the share price came off 15% over the past six weeks. The broker continues to like the potential upside from the Community Bank network and sees BEN as being well placed for a turning of the cycle given its mix of products. Provisioning remains a concern, while most debt is secured mortgages, rural and margin loans, thus a fall in asset prices could lead to a material hit to earnings.

CFS Retail Property ((CFX)) upgraded to Buy from Neutral by BA-Merrill Lynch. B/H/S: 2/3/2

The broker has upgraded the stock given the share price has fallen 10% over the last month. The $2.20 price target was unchanged. While BA-Merrill Lynch was still concerned over the mid-term growth outlook, given 25% of the company's malls are B-grade, the current pricing more than reflects this. The stronger malls, such as Chadstone, are considered significant and valuable, with cap rates likely firming up.

Dexus Property ((DXS)) upgraded to Buy from Neutral by BA-Merrill Lynch. B/H/S: 3/2/2

The broker was positive on the direction of Dexus. The rating was upgraded and the price target was steady at $1.18. Further upside is seen coming from additional acquisitions as Dexus lifts gearing to 35% and recycles capital from non-core office buildings. From a risk perspective, BA-Merrill Lynch also noted there is minimal near-term Sydney lease expiry facing the company.

Gindalbie Metals ((GBG)) upgraded to Neutral from Underweight by JP Morgan. B/H/S: 0/4/1

JP Morgan noted Gindalbie will not exercise the option to repay the Ansteel loan and this relieves immediate cash flow issues, given Karara is expected to be cash flow positive in the September quarter. The transaction has resulted in Ansteel gaining control of Karara. The risk now becomes potential funding for a Stage 2 expansion as Gindalbie's ownership falls below 50%. Although not stated by Ansteel, the broker said were the company is prepared to value Karara at $1.3 billion, so logically it could buy up to 48% at a lower price by acquiring Gindalbie.

GPT ((GPT)) upgraded to Neutral from Sell by UBS. B/H/S: 2/3/2

The $3.95 price target and forecasts were maintained, but the recommendation was upgraded, the broker citing the reinstated buyback, upside guidance risk from cost reductions and recent weakness in the share price. It's not all clear sailing, with UBS still seeing potential downside in the form of regional retail income growth over the next twelve months and some significant office expirations coming in 2014. Acquisitions are thus a must if the company is going to address what is a weakening growth profile when compared to the past three years. The broker also took heart from the fact the company has upgraded earnings guidance by 3%-6% every one of the past three August reporting seasons.

Mirvac ((MGR)) upgraded to Buy from Neutral by BA-Merrill Lynch. B/H/S: 3/4/0

Following the recent pull back in the share price the broker now finds the stock attractive, with a 5.5% dividend yield and 4% discount to net tangible assets. BA-Merrill Lynch said it likes the strong near-term earnings growth profile, noting over 60% of the profit from the development business is already locked in.

Nufarm ((NUF)) upgraded to Outperform from Neutral by Macquarie. B/H/S: 4/2/2

Macquarie refreshed its viewpoint on Nufarm and as a result has raised the rating to Outperform. Seasonal conditions are heading in the right direction and provide greater confidence in the company's ability to get to the mid-point of its guidance range. A more normal season in Australia in the next year should produce growth in earnings, in Macquarie's view.

Suncorp Group ((SUN)) upgraded to Neutral from Underperform by Macquarie and upgraded to Neutral from Underperform by Credit Suisse. B/H/S: 5/3/0

Macquarie noted Suncorp has sold the non-core bank portfolio to Goldman Sachs. Suncorp expects to incur a net loss around $480m in the second half. Macquarie said payment of a special dividend will now be at the mercy of rating agency and regulator considerations. For the broker, the distinction between Suncorp and Insurance Australia ((IAG)) is reduced. IAG remains the preferred domestic P&C insurer because of underwriting performance and the reinsurance program. Suncorp may increase reinsurance coverage at the July 1 renewal, further reducing the distinction between the two.

Credit Suisse also noted Suncorp has resolved the non-core bank portfolio and expects a loss of around $480m in the second half. The broker lowered FY13 earnings forecasts by 41%, but made no changes to the dividend forecast or the $12.20 target price. The share price has dropped around 10% since May and hence the recommendation was upgraded. Credit Suisse's valuation implies 11.5 times FY14 cash price/earnings, a discount of 12% to IAG and a 10% premium to the regional banks. This is justified in the broker's view, given Suncorp's business mix.

Toll Holdings ((TOL)) upgraded to Outperform from Neutral by CIMB. B/H/S: 1/4/2

CIMB has changed its view on Toll. A recent de-rating of the share price has provided an opportunity in the stock. While the broker does not expect trading conditions to improve much over the next 3-6 months, valuations are more attractive. Toll is trading at a 14% discount to its long-term average price/earnings multiple and a 23% discount to the S&P/ASX 200. The current share price is providing an attractive entry point to gain exposure to a domestic economic recovery, said the broker.

Downgrades

Boral ((BLD)) downgraded to Underperform from Neutral by BA-Merrill Lynch. B/H/S: 3/3/2

Bearish assumptions have been factored into forecasts for the building materials sector, developers and contractors. The reasons for a more cautious view include the peaking of the mining investment cycle, fiscal stringency affecting infrastructure spending and weak business conditions and confidence. This caused the downgrade.

Cochlear ((COH)) downgraded to Underperform from Neutral by Credit Suisse. B/H/S: 0/3/5

C1500 failures may be low, but they're lingering. The US FDA has updated its MAUDE database for May, including failures to May 21. There are 26 events so far, suggesting that the full month will be higher than March or April. Credit Suisse said it was uncertain as to whether this problem will abate, noting malfunctions continue to occur 20 months after the recall.

G8 Education ((GEM)) downgraded to Neutral from Buy by Citi. B/H/S: 0/1/0

The broker noted the company has bought seven more child care centres in NSW, Queensland and Victoria for $24m at good prices. That means 1082 more places and increased geographic diversification into the bigger markets of Sydney and Melbourne. This news, plus a few more deals concluded earlier, saw 2013 operating earnings bumped up by 3% and 2014 lifted by 14%. The dividend was also lifted. The price target was pushed higher on the better earnings, but not far enough. Recent share price strength has taken its toll on the broker's recommendation, which was downgraded to Neutral.

Leighton Holdings ((LEI)) downgraded to Underweight from Neutral by BA-Merrill Lynch. B/H/S: 0/4/4

BA-Merrill Lynch has downgraded the rating and reduced the price target to $15.00 from $21.20.Reasons for the bearishness include a peaking of mining sector investment, a tightening up of government infrastructure spending as well as expectations of softer economic growth in 2013 and 2014. Analysis of current and committed major projects suggests that roads and highway sectors are most at risk.

Lynas Corporations ((LYC)) downgraded to Neutral from Outperform by Macquarie. B/H/S: 0/4/0

As the rare earth market is subdued Lynas is optimising production at the phase 1 capacity level until higher prices are reached. This sounds good, but Macquarie said time will tell whether it is successful. The lack of visibility on when prices may improve has resulted in the broker downgrading the recommendation, with maiden profit expectations also pushed out until FY15.

Newcrest ((NCM)) downgraded to Neutral from Buy by BA-Merrill Lynch. B/H/S: 3/2/3

The broker has downgraded to Neutral and reduced its price target to $13.50 from $20.00. The company's planned operational changes have been viewed positively, as the aim is to maximise cash flow and reduce high cost assets. BA-Merrill Lynch saw little room for error on the balance sheet and suspects it may need repair via some kind of capital raising. On the broker's analysis, if gold prices were to fall to around US$1200/oz then an equity raising of $2 billion would be required to bring gearing back to the company's stated target. Investors are cautioned to be patient until there is a clearer picture. The risk is a rally in the gold price. That would alleviate the balance sheet pressure.

NRW Holdings ((NWH)) downgraded to Neutral from Outperform by Macquarie. B/H/S: 3/3/1

The broker noted the company has cut its FY guidance. Macquarie felt that given the size of the downgrade, word could have gotten out sooner. In the meantime, work in hand looked okay and the balance sheet was in decent condition. The recommendation was lowered given the big cut to earnings, but with the stock trading below its asset value, the broker is anxious to hear a little more about FY14 earnings. The cut to the price target was a big one, the broker pointing out much is due to a change in valuation methodology, Macquarie is now valuing the company at just 1x net tangible assets. It used to be 1.2x.

Skilled Group ((SKE)) downgraded to Neutral from Outperform by Credit Suisse. B/H/S: 3/1/0

The broker has buckled, dropping its call to Neutral and slashing its price target despite really liking the company. FY14 is now just looking too dark, the broker citing an increasingly difficult employment outlook, especially in mining and that's where the recent upside has been coming from. The broker said it now expects a flat FY14 result at best. FY13-14 EPS forecasts were trimmed by 2% and 8%, with the balance of risk now having shifted to the downside.

Significant consensus target price and earnings forecast changes tabled below.

Total Recommendations	Recommendation Changes
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