Weekly Recommendation, Target Price, Earnings Forecast Changes

Array
(
    [0] => Array
        (
            [0] => ((ACR))
            [1] => ((AQG))
            [2] => ((AMC))
            [3] => ((API))
            [4] => ((BTT))
            [5] => ((CBA))
            [6] => ((BEN))
            [7] => ((HVN))
            [8] => ((NWS))
            [9] => ((REA))
            [10] => ((FXJ))
            [11] => ((PNA))
            [12] => ((RMD))
            [13] => ((TAP))
            [14] => ((ANZ))
            [15] => ((AZJ))
            [16] => ((AUT))
            [17] => ((BPT))
            [18] => ((IGO))
            [19] => ((LLC))
            [20] => ((NAB))
            [21] => ((CBA))
            [22] => ((BEN))
            [23] => ((PAN))
            [24] => ((WSA))
            [25] => ((IGO))
            [26] => ((PRU))
            [27] => ((WBC))
            [28] => ((CBA))
            [29] => ((WSA))
            [30] => ((WDC))
            [31] => ((WRT))
            [32] => ((WOW))
        )

    [1] => Array
        (
            [0] => ACR
            [1] => AQG
            [2] => AMC
            [3] => API
            [4] => BTT
            [5] => CBA
            [6] => BEN
            [7] => HVN
            [8] => NWS
            [9] => REA
            [10] => FXJ
            [11] => PNA
            [12] => RMD
            [13] => TAP
            [14] => ANZ
            [15] => AZJ
            [16] => AUT
            [17] => BPT
            [18] => IGO
            [19] => LLC
            [20] => NAB
            [21] => CBA
            [22] => BEN
            [23] => PAN
            [24] => WSA
            [25] => IGO
            [26] => PRU
            [27] => WBC
            [28] => CBA
            [29] => WSA
            [30] => WDC
            [31] => WRT
            [32] => WOW
        )

)

This story features ACRUX LIMITED, and other companies.
For more info SHARE ANALYSIS: ACR

By Rudi Filapek-Vandyck, Editor FNArena

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.

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

Summary

Period: Monday April 28 to Friday May 2, 2014
Total Upgrades: 13
Total Downgrades: 15
Net Ratings Breakdown: Buy 40.13%; Hold 43.26%; Sell 16.61%

Probably the best way to view last week's changes in broker ratings for individual stocks in Australia is a big swing towards Neutral, with Hold/Neutral ratings the destination for half of all downgrades as well as for half of all upgrades during the week. Banks and energy stocks featured prominently and that can hardly be a surprise as the first are in the midst of interim reporting season and the latter are busy releasing production reports, updates on LNG projects and… at the forefront of a general pick up in M&A deals.

FNArena registered 13 upgrades for the week ending Friday, 2nd May, slightly outnumbered by 15 downgrades.

Changes in ratings for individual stocks tell only half of the share market's story, at best. The underlying theme for price targets and earnings estimates continues to hold a positive skew and this hasn't changed during the week past. Combined both observations are telling investors there's increased room for further optimism, but valuations can become a small problem, especially in the short term. It's not that we couldn't draw the same conclusion from simply watching the daily low volume price action on the ASX.

Upgrades

Acrux ((ACR)) upgraded to Neutral from Underperform by Macquarie. B/H/S: 0/1/0

Partner Eli Lilly reported Axiron sales of $39.5m, down 11% on the broker's forecasts. The broker thinks Acrux could find some support at current levels given it has potential projects with large addressable markets and this could attract investors, raising hopes that Axiron royalties will soon be augmented. The rating is upgraded to Neutral from Underperform, with the broker considering the company's multiple is now at a more reasonable level amid some potential upside from trials that have recently started. The price target is reduced to $1.07 from $1.62.

Alacer Gold ((AQG)) upgraded to Hold from Sell by Deutsche Bank and to Buy from Neutral by UBS. B/H/S: 3/3/0

Alacer had a good start to the year, in Deutsche Bank's view, and the near-term focus is on the sulphide definitive feasibility study, due by the end of the June quarter. The Copler oxide operation has started to trend towards lower gold output but continues to benefit from the higher grades stockpiled in the previous three to six months. The broker is upgrading to Hold from Sell on valuation, as the sulphide ore continues to show strongly positive grade reconciliation. Alacer's March-quarter production fell shy of UBS forecasts but costs were steady and Alacer maintained a reputation as one of the lowest-cost gold producers, generating free cash flow of $24.4 million in the quarter. The miner has guided to higher depreciation past 2014 and clarified tax issues. UBS upgrades to a Buy from Neutral to account for the recent retreat in the share price.

Amcor ((AMC)) upgraded to Buy from Neutral by Citi. B/H/S: 3/4/1

Citi analysts remain attracted to the company's robust and reliable growth outlook, complemented by avenues to keep growth alive through consolidation in developed economies and additional penetration into developing economies. An analyst tour in mid May is likely to put the shares back in focus, speculates Citi. In addition, the analysts seem to suggest that bottom line growth is going to override any market concerns relating to tepid top line growth. Coverage of Amcor has transferred to a new analyst and the first decision is to raise the rating to Buy from Neutral. Target $11.43 (was $10.50).

Australian Pharmaceutical ((API)) upgraded to Buy from Hold by Deutsche Bank. B/H/S: 3/1/0

The broker welcomed the first half result, encouraged by a 5.3% lift in Priceline's same store sales. Revenue was ahead of Deutsche Bank's forecasts and the broker thinks sales success should attract more pharmacists, supporting the wholesaling operations. Following the fixing of the balance sheet, Deutsche Bank thinks the risks are more than reflected in the relatively cheap share price. The rating is upgraded to Buy from Hold and the target lifted to 70c from 62c.

BT Investment Management ((BTT)) upgraded to Neutral from Underperform by Credit Suisse. B/H/S: 0/3/0

The first half results were ahead of Credit Suisse's forecasts, driven by strong performance fees in the JO Hambro business and fee margin expansion. The broker has upgraded cash earnings forecasts for FY14 and FY15 by 17% and 10% respectively. The rating is upgraded to Neutral from Underperform as the broker sees the positive trends factored into the current share price. The target is raised to $7.80 from $6.80.

Commonwealth Bank ((CBA)) upgraded to Neutral from Underperform by BA-Merrill Lynch. B/H/S: 2/3/3

BA-ML is joining the experts in the local share market that have started to re-assess Australian banks following yet another period of market outperformance. Today's upgrade sees CBA turning into BA-ML's most preferred major bank on the back of an improved outlook for capital and returns. They also point out there are no Buy ratings for the major banks in the BA-ML universe and the preference for CBA is a relative sector call. The analysts see better value in Bendigo and Adelaide Bank ((BEN)). Price target has jumped to $77.60.

Harvey Norman ((HVN)) upgraded to Neutral from Underperform by BA-Merrill Lynch. B/H/S: 3/4/1

Strong like-for-like sales continue in the March quarter with Australia up 3.6%. Most overseas markets also experienced constant currency growth. Merrills has upgraded to Neutral from Underperform, based on a preference for household goods over other discretionary retail items such as department stores and apparel. The price target is raised to $3.30 from $2.50.

News Corp ((NWS)) upgraded to Outperform from Neutral by Credit Suisse. B/H/S: 3/2/1

News Corp has missed the re-rating of many of its media peers and Credit Suisse thinks there's scope to catch up. The increase in the REA Group ((REA)) share price has supported the stock but, excluding REA, News has materially underperformed both the US media index and peers such as Fairfax Media ((FXJ)). Credit Suisse believes any sign of quarterly improvements in operating performance could be a catalyst and upgrades the stock to Outperform from Neutral. The price target is raised to $20.70 from $20.25.

PanAust ((PNA)) upgraded to Neutral from Sell by Citi. B/H/S: 6/1/0

Citi has made slight reductions to 2014 production forecasts, after an uneventful March quarter, driven by adjustments to commodity and FX forecasts. The broker is upgrading the rating to Neutral from Sell and raising the target to $1.67 from $1.55.

ResMed ((RMD)) upgraded to Add from Hold by CIMB Securities and to Buy from Hold by Deutsche Bank. B/H/S: 5/3/0

Third quarter results were in line with CIMB's expectations. Price adjustments supported volumes but CIMB notes this was at the expense of margins. The broker thinks the stabilisation of US market dynamics and the fact the bulk of price concessions appear to be behind the company means the earnings profile has improved. This reduced risk is considered to be inadequately reflected in trading levels. Hence CIMB has upgraded the rating to Add from Hold. Deutsche Bank believes a return to more normal pricing and demand conditions is likely after US competitive bidding mark 2, and sales growth in FY15 should also be boosted by the new product range. The key risk remains the potential for further funding reforms but Deutsche Bank believes, in the interim, the market should continue to grow. The rating is upgraded to Buy from Hold.

Tap Oil ((TAP)) upgraded to Buy from Neutral by UBS. B/H/S: 2/0/0

Tap Oil has established a $90 million debt facility to replace its existing Manora and Commonwealth Bank facilities, without incurring penalties. UBS says the deal relieves the threat of an equity raising and upgrades the stock to Buy from Neutral. The target price rises to 55c from 50c. The broker says the first oil from Manora is due within six months and expects Tap to draw down $70 million to $80 million of the facility leading into this, meaning its cash flow should be sufficient to repay the loan within three years. Risks remain, but UBS believe these are factored in to the share price.

Downgrades

ANZ Bank ((ANZ)) downgraded to Underperform from Neutral by Macquarie. B/H/S: 4/1/3

ANZ's result and dividend were a slight beat on consensus but the broker remains concerned over what is a low growth, high volatility environment. ANZ's earnings include trading profits, which can just as easily reverse, and a substantial shortening of trade finance asset duration. Asset quality is also an issue given the bank's exposure to mining services and Asia. For the first time, the broker suggests, we may see an Oz bank having to hold more capital than peers due to its offshore strategy. The margin outlook remains challenging. The broker has slightly increased forecast earnings and raised its target to $34.70 from $34.46 but on the balance of all above, the broker has moved to Underperform.

Aurizon ((AZJ)) downgraded to Neutral from Overweight by JP Morgan. B/H/S: 2/5/0

Aurizon's coal haulage numbers were in line with expectation. The broker notes the next catalyst for the stock will be the announcement of regulatory price increases to which the broker's valuation is very sensitive. Given the share price has risen to its target, the broker has downgraded to Neutral, warning of the risk of a price hike below AZJ's submission of 8.18%. Target unchanged at $5.16.

Aurora Oil & Gas ((AUT)) downgraded to Neutral from Overweight by JP Morgan. B/H/S: 0/3/1

March quarter production was up 14% and beat the broker's forecasts. JP Morgan believes there is nothing in the report that would make either Aurora or Baytex walk away from the friendly takeover bid. The broker has a Neutral rating as the stock trades close to takeover terms and there's little chance of another bid emerging at this stage. The target is $4.10.

Beach Energy ((BPT)) downgraded to Sell from Neutral by UBS. B/H/S: 1/2/3

Beach Energy's March quarter production took a knock, thanks largely to lacklustre output from Cooper Basin gas/liquids. Sales and revenue slumped 15% and 19% respectively. Given Beach is approaching the upper end of its production guidance and production from the Western Flank oil assets is tipped to fall 17% in FY15, the broker downgrades its rating to Sell from Neutral. UBS' target price is based on a discounted-cash-flow valuation of Beach's producing assets plus upside risk to Cooper Basin, so remains unchanged at $1.55.

Independence Group ((IGO)) downgraded to Hold from Buy by Deutsche Bank. B/H/S: 1/5/0

The company's key asset, Tropicana, is now running consistently at nameplate capacity and cash costs impressed Deutsche Bank in the March quarter. That said, the broker is downgrading to a Hold rating from Buy as the stock is considered fairly priced. The target is reset to $4.25 from $4.20, as the valuation is adjusted in line with the broker's commodity price and Australian dollar expectations.

Lend Lease ((LLC)) downgraded to Neutral from Outperform by Credit Suisse. B/H/S: 5/3/0

Credit Suisse notes PricewaterhouseCoopers has committed to take space in the Barangaroo Tower 1 and Lend Lease will initially fund 100% of the project, commencing development in FY15. Recent leasing deals are positive but the broker observes Sydney A-grade and premium vacancy rates sit above historical averages. As the share price has rallied 24% in the past three months the broker is downgrading the rating to Neutral from Outperform. The target is raised to $13.56 from $12.73.

National Australia Bank ((NAB)) downgraded to Sell from Neutral by Citi and to Neutral from Buy by BA-Merrill Lynch. B/H/S: 2/5/1

Citi is downgrading the rating to Sell from Neutral. The target is steady at $34.00. The banks have outperformed the market over the last three months as a sector but NAB has performed more in line. The rating is reduced because the broker expects poor first half revenue and underlying profit growth amidst lacklustre demand for business lending. BA-ML believes selling the UK assets is not going to happen this year and thus investors' focus will shift to the operational side of NAB and it's not particularly pretty. They have thus decided to downgrade to Neutral. The change in focus also reduces the price target, to $34.40 from $39.80. The broad re-assessment of the sector leaves BA-ML with no Buy ratings for any of the major banks in Australia, but with a relative preference for CommBank ((CBA)) among the majors and for Bendigo and Adelaide Bank ((BEN)) for the sector.

Panoramic Resources ((PAN)) downgraded to Underperform from Outperform by Credit Suisse. B/H/S: 2/0/1

Panoramic reported strong production, in line with guidance. The stock has sold off, which the broker suggests is probably due to over-inflated expectations ahead of the Savannah North drill test results. Target rises to 60c from 50c but despite the weakness the broker still sees Panoramic as overvalued on the nickel price rally, and prefers Western Areas ((WSA)) and Independence Group ((IGO)) in the space. Hence a downgrade to Underperform from Outperform.

Perseus Mining ((PRU)) downgraded to Neutral from Outperform by Macquarie. B/H/S: 3/2/0

Gold production at Edikan was below expectations on lower grades and throughput. Perseus continues to weigh up ways to optimise the Edikan plant but while there are potentially successful options, none have proven winners to date, the broker notes. A balance of low grades and high costs leaves Perseus highly leveraged to the gold price and facing a challenging year, the broker suggests. Target falls from 50c to 60c. Downgrade to Neutral.

Westpac Banking ((WBC)) downgraded to Neutral from Buy by Citi and to Underperform from Neutral by BA-Merrill Lynch. B/H/S: 2/4/2

Citi is downgrading the rating to Neutral from Buy. The sector has outperformed the broader market over the last three months and Westpac was the stand-out performer. The broker considers Westpac is the best positioned of the major banks for revised target ranges but special dividends are unlikely for now. The $35.75 target is maintained. BA-ML is joining the experts in the local share market who've started to re-assess Australian banks following yet another period of market outperformance. Westpac has simply become over-priced, otherwise known as too expensive, argue the analysts. They have thus decided to downgrade to Underperform. The analysts have lifted estimates on the back of recent housing strength and lower bad debts, but it's insufficient to justify the present share price. Plus they see looming regulatory risks from the federal budget, D-SIB and the Financial Services Inquiry. CommBank ((CBA)) is now the preferred major bank in Australia. Price target has remained unchanged at $32.60.

Western Areas ((WSA)) downgraded to Sell from Hold by Deutsche Bank. B/H/S: 4/2/1

Operations were consistent in the March quarter and Deutsche Bank thinks the stock is a clean way to play the nickel market. Nevertheless, Western Areas is now pricing in $11.10/lb when the spot price is $8.95/lb. Hence, as there is no production growth at this stage without a mill expansion, the broker thinks the recent rally is overdone. The rating is downgraded to Sell from Hold and the target raised to $3.15 from $3.05.

Westfield ((WDC)) downgraded to Neutral from Outperform by Macquarie. B/H/S: 2/2/0

Of the various alternatives the Scentre proposal offers up, the broker believes the most likely is a new Westfield-listed entity one way or the other. WDC will demerge its Aust/NZ and US operations, even if the former does not then merge with Westfield Retail Trust ((WRT)), the broker predicts. This would not be as valuable for WDC shareholders as would the Scentre demerger/merger proposal. The broker thus downgrades to Neutral following a 10% increase in total shareholder value, given the risk Scentre does not proceed. Target unchanged at $11.05.

Woolworths ((WOW)) downgraded to Hold from Buy by Deutsche Bank. B/H/S: 3/2/3

The March quarter sales were slightly below the broker's forecasts although Australian food and liquor was robust. Deutsche Bank expects momentum to persist and margins to expand, even if sentiment gets damaged by the upcoming federal budget. The broker is reducing the rating to Hold from Buy, envisaging limited upside from the current share price. The target is steady at $38.00.

Total Recommendations	Recommendation Changes
Broker Recommendation Breakup

Click to view our Glossary of Financial Terms