Weekly Recommendation, Target Price, Earnings Forecast Changes

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This story features AIR NEW ZEALAND LIMITED, and other companies.
For more info SHARE ANALYSIS: AIZ
The company is included in ALL-ORDS

By Rudi Filapek-Vandyck, Editor FNArena

Guide:

The FNArena database tabulates the views of eight major Australian and international stock brokers: Citi, Credit Suisse, Deutsche Bank, Macquarie, Morgan Stanley, Morgans, Ord Minnett 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 February 22 to Friday February 26, 2016
Total Upgrades: 29
Total Downgrades: 37
Net Ratings Breakdown: Buy 43.75%; Hold 44.01%; Sell 12.24%

The final full week of the February reporting season brought about a deluge in stockbroker ratings changes. For the eight stockbrokers FNArena monitors daily, we recorded no less than 29 upgrades and 37 downgrades in the five trading days ending on Friday, 26th February 2016. Changes were based upon all imaginable reasons and causations, but better/worse than expected financial performances feature high up on the ladder.

Companies receiving multiple upgrades were Ramsay Health Care, Silver Chef and Spark Infrastructure. Companies receiving multiple downgrades were BlueScope Steel, DUET Group, Flight Centre, Iluka Resources, OceanaGold and Sandfire Resources. Here the motivations were broader as share prices being perceived as having rallied too high continue to impact on sentiment for local gold miners and on BlueScope and on DUET as well.

Also note that resources stocks continue to feature heavily on the negative side.

The week's table for positive changes to price targets sees resources stocks feature on top (Alumina Ltd & OceanaGold), but industrials Cleanaway, Sydney Airport and Breville Group are not that far behind. As is usually the case, negative revisions are larger in adjustments with Village Roadshow (-13.6%) taking prominence following a disappointing results release, followed by Peet & Co, Sims Metal Group, Estia Health, RCR Tomlinson and Cardno. All ten stocks featured issued disappointing financial reports during the week.

Changes to consensus estimates sees three heavy hitters on top of the table for positive adjustments -Senex Energy, NextDC and Santos- but otherwise shows a mix of resources stocks and companies that reported better than what analysts had penciled in. The negative side is completely dominated by resources stocks, including BHP Billiton.

Upgrade

ACONEX LIMITED ((ACX)) Upgrade to Outperform from Neutral by Macquarie .B/H/S: 4/1/0

Aconex' result easily beat Macquarie and the prospectus. A&NZ was the key performer but strength in global infrastructure and favourable currency movements contributed.

The global construction industry is increasingly recognising the benefits of collaboration solutions, the broker notes, and with technology trends driving increasing penetration, the shift away from internal systems is accelerating. Aconex boasts a substantial market penetration opportunity and offers one of the strongest growth profiles among Macquarie's emerging leader coverage universe. 

Upgrade to Outperform. Target rises to $5.30 from $5.00.

AIR NEW ZEALAND LIMITED ((AIZ)) Upgrade to Neutral from Underperform by Credit Suisse .B/H/S: 2/2/0

First half results were strongly higher underpinned by a decline in fuel costs and healthy tourist activity. Credit Suisse notes the competitive environment is about to change as other carriers have recently announced new capacity to compete with Air NZ.

 The broker believes the company will need to reduce yields if it plans to hold load factors at current levels. Following share price weakness the rating is upgraded to Neutral from Underperform. Target is unchanged at NZ$2.85.

See also AIZ downgrade.

AMP LIMITED ((AMP)) Upgrade to Buy from Neutral by Citi .B/H/S: 7/1/0

AMP's H2 result triggered more cautious forecasts at Citi with EPS estimates being pared back some 3%. However, the stock offers an attractive yield and is leveraged to improving financial markets, offer the analysts.

On the expectation that equity markets are poised for improvement, Citi suggests AMP shares should be one of the logical beneficiaries. Upgrade to Buy from Neutral. Target lifts to $6.20 from $5.60.

ALUMINA LIMITED ((AWC)) Upgrade to Neutral from Underperform by Credit Suisse .B/H/S: 4/2/1

2015 results were in line with Credit Suisse estimates. The company envisages that, with recent alumina curtailment in China, a tighter market is likely. Project delays have also occurred in Indonesia, given low prices.

Credit Suisse upgrades to Neutral from Underperform and reduces the target to $1.15 from $1.30.

AMAYSIM AUSTRALIA LIMITED ((AYS)) Upgrade to Outperform from Neutral by Macquarie .B/H/S: 1/0/0

Below expectation subscriber growth led to amaysim's result falling short of Macquarie. FY subs growth guidance has been revised down.

This disappointment highlights the challenge of a crowded market, but Macquarie suggests subs growth was actually not too bad in such an environment and margins held up, which is a positive. The broker believes management is being somewhat conservative in its guidance and notes that the business would be attractive to the likes of an Optus, thus helping to underpin value.

Target drops to $2.00 from $2.80. Given the trashing the stock received following the result, Macquarie upgrades to Outperform.

BREVILLE GROUP LIMITED ((BRG)) Upgrade to Outperform from Neutral by Credit Suisse .B/H/S: 3/1/0

The first half result in Australasia was predictably weak, Credit Suisse maintains, but better than feared. The market appeared braced for a downgrade to earnings that did not materialise.

Credit Suisse is increasingly confident in the underlying trends in key businesses, particularly the US. The broker upgrades to Outperform from Neutral. Target is raised to $7.70 from $6.55.

BRAMBLES LIMITED ((BXB)) Upgrade to Buy from Neutral by Citi .B/H/S: 3/4/1

Citi hadn't updated since mid-October but today's response, post a (slightly) stronger-than-expected interim report release, sees the rating upgraded to Buy from Neutral. Price target jumps to $13.53 from $10.57.

Changes made to estimates are minimal. The improved sentiment seems to be more related to a noticeable lift in confidence among Citi analysts, supported by Brambles lifting its guidance.

CARDNO LIMITED ((CDD)) Upgrade to Hold from Sell by Deutsche Bank .B/H/S: 1/3/2

First half earnings fell sharply and were below Deutsche Bank's estimates. The broker is particularly concerned about the Americas, which reflects the deep downturn in oil & gas markets.

The balance sheet has improved and the company is exposed to parts of the Australian and US economies which stand to perform as the outlook improves, in Deutsche Bank's view.

As the stock is trading close to the target the broker upgrades to Hold from Sell. Target is reduced to $1.08 from $1.15.

CROMWELL PROPERTY GROUP ((CMW)) Upgrade to Neutral from Underperform by Credit Suisse .B/H/S: 0/2/3

Cromwell Property Group's first half results were ahead of the broker's forecast. FY16 guidance for a 9c distribution implies second half earnings will be lower, although the broker thinks this looks conservative.

Credit Suisse has upgraded the stock to Neutral from Underperform and retains the $1.00 target.

CALTEX AUSTRALIA LIMITED ((CTX)) Upgrade to Buy from Neutral by Citi .B/H/S: 3/4/0

Target rises to $39.40 from $39.06 and the rating has been upgraded to Buy from Neutral following an in-line H2 report. Owning Caltex shares is from here onwards all about capital management, suggest Citi analysts.

Citi had forecast $1.95/share of special dividends over 3 years starting in 2H15, and now forecasts an additional $1/share of returns at the end of CY16. In addition, the analysts see scope to redistribute a further $500m on the condition that credit metrics are reassessed favourably, a process believed to take 12-24 months.

ERM POWER LIMITED ((EPW)) Upgrade to Buy from Neutral by UBS .B/H/S: 1/2/0

First half results were below UBS forecasts because of a soft US outcome. Management has reiterated guidance for Oakey and forecast a $2-3m full year loss in the US. This implies a break-even in the June half in the US, the broker notes.

UBS downgrades FY16 forecasts by 7.0% and upgrades FY17 by 3.0%. The broker upgrades to Buy from Neutral but emphasises there is higher-than-average risk in the stock.Target is reduced to $1.94 from $2.00.

FORTESCUE METALS GROUP LTD ((FMG)) Upgrade to Buy from Hold by Deutsche Bank .B/H/S: 4/3/1

First half profit was below Deutsche Bank estimates. The focus is on a further decrease in strip ratios at Chichester and Solomon.

The broker believes C1 costs can fall to US$12/wmt in FY17 and the company should be able to comfortable de-gear, even below US$40/dmt.

Deutsche Bank upgrades to Buy from Hold on valuation and suspects a re-rating is likely.Target is raised to $2.80 from $2.40.

HOTEL PROPERTY INVESTMENTS ((HPI)) Upgrade to Accumulate from Hold by Ord Minnett .B/H/S: 1/0/0

H1 slightly beat Ord Minnett's expectations while upgraded guidance implies no changes have to be made to forecasts (e.i. Ord Minnett anticipated it well). The analysts believe the shares are undervalued vis–vis peers and have thus decided to upgrade to Accumulate from Hold. Price target gained 3c to $2.59.

HEALTHSCOPE LIMITED ((HSO)) Upgrade to Neutral from Underperform by Credit Suisse .B/H/S: 3/5/0

First half results were ahead of Credit Suisse forecasts. With the company targeting an ongoing shift upwards in its case mix this is expected to help offset any continuation of the lower volume growth environment.

Credit Suisse upgrades to Neutral from Underperform based on the recent relative share price underperformance.Target is raised to $2.60 from $2.55.

NUFARM LIMITED ((NUF)) Upgrade to Buy from Neutral by UBS .B/H/S: 3/3/1

UBS has upgraded the stock to Buy from Neutral and reduced the price target to $8.50 from $9.00.

Nufarm now expects first half earnings to be between 8% and 13% above the previous corresponding period. However, UBS has reduced FY16 forecast by 8% to reflect higher financing costs and write-downs.

RAMSAY HEALTH CARE LIMITED ((RHC)) Upgrade to Neutral from Sell by Citi and Upgrade to Outperform from Neutral by Credit Suisse .B/H/S: 4/2/2

Citi has upgraded to Neutral from Sell while the broker's price target makes a jump to $62.41 from $53.84. Earnings estimates have increased following an interim report that surprised to the upside.

Not everything was honky dory with margins in France disappointing but Citi expects to see improvement in H2. The forecast is for core EPS growth of 13%-17% over FY16-FY18 and on this basis the present valuation is seen as fair.

First half results were ahead of Credit Suisse forecasts. The broker believes the company is supported for medium term volume growth, despite the recent contraction in private health insurance participation.

Earnings estimates are raised by 3.0%. Rating is upgraded to Outperform from Neutral. Target price rises to $72.00 from $70.15.

SOUTH32 LIMITED ((S32)) Upgrade to Buy from Neutral by Citi .B/H/S: 3/3/1

Citi upgrades to Buy from Neutral alongside an increase to the price target of 30c to $1.50. Earnings estimates have received an upward boost following a better-than-expected financial result.

Given challenging conditions, management's focus remains on cost reductions and here the analysts continue to be surprised by management's achievements. Citi thinks management will do a lot better than its own guidance.

SEEK LIMITED ((SEK)) Upgrade to Neutral from Underperform by Credit Suisse .B/H/S: 3/5/0

First half earnings were ahead of Credit Suisse. Guidance for FY16 was largely unchanged. The broker notes domestic growth is strong while international business is ahead of expectations.

Credit Suisse upgrades to Neutral from Underperform as its target price is now close to the current share price. Price target rises to $14.35 from $13.50.

SILVER CHEF LIMITED ((SIV)) Upgrade to Add from Hold by Morgans and Upgrade to Outperform from Neutral by Macquarie .B/H/S: 2/0/0

First half results featured very strong volumes. Morgans believes managing the credit and residual asset risk will be the key for delivery on forecasts.

The broker believes the company has potential to carve out another financing niche with the GoGetta offering. Rating is upgraded to Add from Hold on the solid growth trajectory. Target is raised to $10.80 from $9.20.

Silver Chef 's result beat Macquarie, although the dividend fell short. The mature hospitality business maintained its growth rate but improvement for GoGetta was a key factor in the beat.

Continuing strength in GoGetta asset acquisition rates, which sets the company up for solid growth over the next 12 months, is sufficient for Macquarie to upgrade to Outperform, while noting the key risk is a rising cost of funds for Silver Chef after locking in customer pricing. Target rises to $10.11 from $8.27.

SPARK INFRASTRUCTURE GROUP ((SKI)) Upgrade to Neutral from Sell by Citi and Upgrade to Neutral from Underperform by Macquarie .B/H/S: 3/3/1

H2 operational performance disappointed, but Citi analysts see opportunity to start paying out higher dividends and on this basis the rating is being upgraded to Neutral from Sell.

Price target lifts to $1.99 (up 4%).For this year (2016) the analysts are anticipating a dividend 1c above company guidance.

Spark's earnings came in ahead of Macquarie. FY16-18 dividend guidance of 0.5cpa has been reiterated but management has highlighted limited scope for upside. This is the critical issue for the broker.

Macquarie believes management's desire to divest of the Duet ((DUE)) stake is a positive as it would materially reduce risk. Even without Duet's contribution the broker believes the dividend can still be pushed above guidance. It is this that will drive the share price in the near term, the broker suggests.

Upgrade to Neutral. Target falls to $2.02 from $2.05.

SEALINK TRAVEL GROUP LIMITED ((SLK)) Upgrade to Accumulate from Hold by Ord Minnett .B/H/S: 1/0/0

The company has acquired Captain Cook WA for $12m. This business has seven vessels servicing that market and two operated on behalf of the WA government.

Ord Minnett estimates the acquisition will be 5.0% accretive in FY17. The broker upgrades FY16 and FY17 forecasts by 1.0% and 5.0% respectively.

With valuation support now on offer and a 3.1% dividend yield the broker upgrades to Accumulate from Hold. Target is raised to $4.18 from $3.27.

SEVEN GROUP HOLDINGS LIMITED ((SVW)) Upgrade to Neutral from Underperform by Macquarie .B/H/S: 0/3/0

Seven Group's result solidly beat Macquarie, thanks to better than expected earnings from media investments and flat result from WesTrac, which also exceeded expectations. FY guidance is unchanged but the broker notes the company is ahead on the first half run-rate.

Macquarie believes the share price will be supported by the attractive dividend yield and share buyback but notes were earnings to decline from FY16 levels, cash flow would not be sufficient to cover both. That said, the broker upgrades to Neutral. Target rises to $5.32 from $4.46.

SOUTHERN CROSS MEDIA GROUP ((SXL)) Upgrade to Hold from Lighten by Ord Minnett .B/H/S: 0/6/1

First half results were in line with Ord Minnett forecasts. Revenue growth in regional radio and market share gains in metro radio and regional TV were the highlights for the broker.

The recent Australian Traffic Network deal will impact metro radio forecasts due to the upfront payment of $100m, and the broker cuts FY16 and FY17 earnings estimates by 4.7% and 1.8% respectively.

Ord Minnett upgrades the stock to Hold from Lighten and raised the target price to $1.28 from 97c.

See also SXL downgrade.

UGL LIMITED ((UGL)) Upgrade to Outperform from Underperform by Macquarie .B/H/S: 1/4/1

UGL's first half result represented more than half of Macquarie's FY profit forecast. FY margin and revenue guidance has been reiterated. The broker suggests the CEO has been effective in righting the ship since his arrival 14 months ago.

UGL remains confident on its position with regard the dispute over the Ichthys contract and Macquarie notes the company is one of few in the engineering & contracting space with a positive earnings outlook. The broker has opted to upgrade to Outperform, while warning UGL is "not for the faint-hearted". Target rises to $3.20 from $2.23.

VILLAGE ROADSHOW LIMITED ((VRL)) Upgrade to Buy from Accumulate by Ord Minnett .B/H/S: 3/1/0

Ord Minnett found the interim report was a mixed bag and the ultimate profit achieved was well below expectations. Given the sell-off that has ensued, a decision has nevertheless been made to upgrade the rating to Buy from Accumulate. Price target is $6.72 (was $7.26).

The analysts discovered Cinemas is performing well, but both Theme Parks and Distribution delivered double-digit misses.  Earnings estimates have been reduced, significantly so for FY16.

See also VRL downgrade.

WORLEYPARSONS LIMITED ((WOR)) Upgrade to Outperform from Neutral by Credit Suisse .B/H/S: 2/2/2

Underlying first half profit was below Credit Suisse estimates. The broker acknowledges it has made the wrong call on the stock and upgrades to Outperform from Neutral.

That said, Credit Suisse emphasises the upgrade is not on the back of the results, nor based on a view that earnings will recover in the near term, but rather because the stock has just become too cheap. Target is reduced to $4.80 from $8.00.

Downgrade

AIR NEW ZEALAND LIMITED ((AIZ)) Downgrade to Hold from Buy by Deutsche Bank .B/H/S: 2/2/0

First half results were better than the broker's forecasts. Lower fuel costs and additional capacity were the main driver.

Management guidance for FY16 is only to exceed $800m, which in the broker's view is conservative.

Deutsche Bank has downgraded the stock to Hold from Buy, and cut the price target to NZ$2.89 from NZ$3.40.

See also AIZ upgrade.

ASIA PACIFIC DATA CENTRE GROUP ((AJD)) Downgrade to Hold from Add by Morgans .B/H/S: 0/1/0

First half earnings were in line with guidance. Guidance for distributions for the remainder of FY16 has been reconfirmed at 2.4c for the March and June quarters.

Morgans believes the company offers investors first mover advantage in data centre assets and its distribution yield remains attractive. Rating is downgraded to Hold from Add following the share price appreciation. Target is unchanged at $1.34.

APA GROUP ((APA)) Downgrade to Neutral from Buy by UBS .B/H/S: 5/3/0

APA Group's first half was disappointing for the broker, but improvement is expected in the second half. UBS has lifted FY16 forecast by 1% but cut FY17 and FY18 by 1%.

UBS sees few long term catalysts for the company in the gas transport business, but renewable energy could be a potential alternative, as APA already owns one wind farm.

UBS has downgraded the stock to Neutral from Buy and cut the price target to $9.23 from $9.25.

AUSTBROKERS HOLDINGS LIMITED ((AUB)) Downgrade to Underperform from Neutral by Credit Suisse .B/H/S: 2/0/1

First half results were below Credit Suisse forecasts. The broker notes the core business remains in decline as commercial lines pricing remains challenging. The broker lowers FY16 forecasts by 3.1%.

The share price continues to outperform the market but with minimal or no earnings growth Credit Suisse considers this no longer justified. Rating is downgraded to Underperform from Neutral. Target is reduced to $8.90 from $9.20.

BHP BILLITON LIMITED ((BHP)) Downgrade to Neutral from Buy by Citi .B/H/S: 4/3/1

Citi has downgraded to Neutral from Buy while adding $1.00 to its price target, now at $18.00. Earnings estimates look a lot less dismal, in particular FY16, after the analysts raised them post the Big Australian's interim report.

The stockbroker argues we've now had the "self-help" effect kicking in, the future is now about the macro picture and here Citi's forecasts are for ongoing low commodity prices. The analysts do acknowledge BHP can probably still look forward to generating some US$4bn in free cash flows, offering options.

BLUE SKY ALTERNATIVE INVESTMENTS LIMITED ((BLA)) Downgrade to Hold from Add by Morgans .B/H/S: 1/1/0

First half results were in line with Morgans estimates, and up 69%. The result was driven by a 17% increase in management fees and 338% increase in performance fees.

FY16 guidance for profit of $14-16m has been issued. The company now expects assets under management of $2bn by June, six months earlier than prior guidance.

Target price is raised to $6.85 from $5.65. Rating is downgraded to Hold from Add on valuation with the stock trading within range of the target. Longer term the broker believes the company has the platform to develop a materially larger business.

BLUESCOPE STEEL LIMITED ((BSL)) Downgrade to Neutral from Outperform by Credit Suisse and Downgrade to Hold from Buy by Deutsche Bank .B/H/S: 5/2/0

BlueScope Steel's results were in line with the brokers estimates. Credit Suisse was pleased to see management's strategy was paying off.

Second half guidance was in line with Credit Suisse assumptions, although weaker steel pricing lagging from 2015 could be a risk. The loss making NZ iron sands business is up for sale. 

The broker has downgraded the stock to Neutral from Outperform and raised the price target to $5.80 from $5.30.

The first half results were in line with guidance. Deutsche Bank considers a large part of the robust result was the cost reductions and increased Australia sales.

Deutsche Bank factors in the 60% earnings growth the management expects to achieve in the second half. Accordingly, the rating is downgraded to Hold from Buy. Target is raised to $5.66 from $5.57.

CROWN RESORTS LIMITED ((CWN)) Downgrade to Neutral from Buy by UBS .B/H/S: 2/5/0

First half earnings were weaker than UBS expected, driven by lower results from Aspinalls and wagering as well as a one-off increase in corporate costs associated with recent investments.

Crown has also announced it will pay a 15c special dividend. The broker downgrades forecasts by 11% and 3.0% for FY16 and FY17 respectively.

Rating is downgraded to Neutral from Buy. Target is reduced to $13.00 from $15.35.

DECMIL GROUP LIMITED ((DCG)) Downgrade to Lighten from Hold by Ord Minnett .B/H/S: 0/0/1

Not only did the reported interim performance miss expectations, Ord Minnett analysts point out guidance provided essentially amount to another profit warning. They have responded by pulling back their rating to Lighten from Hold, while cutting the price target to 68c from $1.10.

The underlying result was supported by a lower tax rate and still proved well off the mark, comment the analysts. They believe H2 will thus be worse than H1. Estimates have received the chainsaw treatment.

DUET GROUP ((DUE)) Downgrade to Neutral from Outperform by Macquarie and Downgrade to Underperform from Neutral by Credit Suisse .B/H/S: 1/5/2

Duet's result fell short of Macquarie. One-offs dragged down cash flow but the dividend was still covered and FY dividend guidance maintained.

Of Duet's divisions, the primary growth driver remains the acquired Energy Developments business, the broker notes. Investors may be attracted to a strong yield but ED programs are lumpy and the timing is hard to predict.

Macquarie does not believe the market will pay up until such programs have been committed to. The broker thus pulls back to Neutral. Target falls to $2.31 from $2.50.

First half earnings suggest to Credit Suisse that re-pricing pressure has manifested and eclipses the cost savings at Energy Developments.

Furthermore, DUET does not provide compelling relative value to compensate for the pressures and the broker downgrades to Underperform from Neutral. Target is reduced to $2.15 from $2.30.

FLIGHT CENTRE LIMITED ((FLT)) Downgrade to Hold from Add by Morgans and Downgrade to Hold from Buy by Ord Minnett .B/H/S: 2/4/1

First half results were weaker than expected. Morgans is impressed by the increase in revenue margins but investment in the business was higher than expected.

The broker believes increased investment will produce modest profit growth in the short term but the company should be well placed in the longer term as it transforms into a world travel retailer.

Rating is downgraded to Hold from Add as the share price is now within 10% of the target which is raised to $43.00 from $41.50.

First half results were as expected by the broker. FY16 guidance was reiterated, but the broker believes it will be hard to achieve and favours the lower end.

Ord Minnett downgrades the stock to Hold from Buy and raised the price target to $40.98 from $40.14.

ILUKA RESOURCES LIMITED ((ILU)) Downgrade to Underperform from Neutral by Macquarie and Downgrade to Underperform from Neutral by Credit Suisse and Downgrade to Hold from Buy by Deutsche Bank .B/H/S: 1/3/3

Iluka's result was largely in line but the interim dividend was much bigger than expected, representing a substantial 68% of free cash flow, Macquarie notes. Production guidance has been lowered as operations are idled, reflecting distressed selling from competitors in a weak price environment.

Short term capex has been lowered but commentary suggests to Macquarie Iluka is preparing to launch an opportunistic, counter-cyclical investment attack. Such a realignment of the production base, and short term weakness in demand, leads the broker to downgrade to Underperform. Target rises to $5.80 from $5.45.

2015 earnings were slightly lower than Credit Suisse expected. The broker notes the subdued Chinese demand for zircon but improvement in demand in Europe.

After adjusting for suspension of Jacinth-Ambrosia and other minor adjustments, the broker's 2016 and 2017 forecasts are reduced by 19% and 21% respectively.

Rating is downgraded to Underperform from Neutral following the share price appreciation and uncertainty regarding earnings and dividends beyond 2016. Target price is raised to $6.00 from $5.50.

2015 earnings were below Deutsche Bank's forecasts, because of higher non-cash costs and tax. Guidance for 2016 is slightly softer than expected because of higher costs and an increase in lower grade zircon sales.

Still, Deutsche Bank forecasts over $200m in free cash generation and this is positive for dividends and the balance sheet ahead of the next investment phase.

After the recent strong price performance the broker downgrades to Hold from Buy. Target is lowered to $6.60 from $6.80.

JAMES HARDIE INDUSTRIES N.V. ((JHX)) Downgrade to Neutral from Buy by Citi .B/H/S: 3/4/0

Rating downgraded to Neutral from Buy alongside a drop in price target by 20c to $18.50 after the company posted a strong Q2 performance. However, Citi analysts see headwinds building in the short term and in this context the share price valuation is seen as fairly valued.

Hence the downgrade to Neutral. The analysts continue to view James Hardie as a quality stock with a sound long term outlook.

MMA OFFSHORE LIMITED ((MRM)) Downgrade to Equal-weight from Overweight by Morgan Stanley .B/H/S: 1/4/1

First half results were stronger than Morgan Stanley expected. The broker is surprised at the maintenance of FY16 guidance but accepts the company is controlling what it can. Yet continued volatility in the oil price lowers the broker's conviction in the earnings profile.

While the broker continues to envisage substantial medium-term valuation upside from the assets the rating is downgraded to Equal-weight from Overweight on a risk/reward basis. Industry-view In-Line. Target is reduced to 32c from 41c.

NORTHERN STAR RESOURCES LTD ((NST)) Downgrade to Sell from Neutral by Citi .B/H/S: 0/1/2

Northern Star was downgraded to Sell from Neutral with increased price target ($3.40 versus $3.10) despite a strong operational performance in H1. It's the share price that bothers Citi, as well as the fact gold already is priced above the analysts' projections.

Expectations remain for robust growth numbers. For the first time the analysts apply a Net Present Valuation (NPV) to Groudrush and this explains the rise in target.

OCEANAGOLD CORPORATION ((OGC)) Downgrade to Sell from Neutral by Citi and Downgrade to Sell from Buy by Deutsche Bank .B/H/S: 1/1/3

Citi analysts saw a strong operational H2 performance from OceanaGold, but they also believe the share price rally is already accounting for it, plus some. Hence the downgrade to Sell from Neutral.

Price target moves to $3.36 from $2.81 as Citi analysts incorporate higher multiples due to a visible re-rating for gold stocks.

2015 results were mixed. At the earnings line results slightly beat Deutsche Bank's forecasts. The final dividend of 4c is considered a large step up on the 2014 maiden dividend, given the share count has doubled.

This suggests to the broker than the company remains comfortable with its operational and financial outlook, even though 2016 promises to be a capital-intensive year.

Deutsche Bank downgrades to Sell from Buy, given the 42% run up in the stock over three weeks. Target is steady at $3.10.

OIL SEARCH LIMITED ((OSH)) Downgrade to Neutral from Buy by Citi .B/H/S: 4/4/0

Oil Search's H2 report missed expectations due to higher costs and Citi analysts note management will need to keep a close eye on costs and expenses given ongoing low priced energy markets.

The company's well-documented growth path is probably due some delays, suggest the analysts. This is likely to support the share price in their view, while noting low energy prices are impacting on Oil Search's pile of cash.

The analysts are of the view funding of LNG expansion and M&A looks challenging in absence of higher oil prices or equity. Downgrade to Neutral from Buy. Target falls 2% to $6.98.

PACT GROUP HOLDINGS LTD ((PGH)) Downgrade to Sell from Neutral by UBS .B/H/S: 2/2/1

First half results were in line with the broker's estimates. UBS remains concerned over Pact's underlying growth outlook, but keeps FY16 to FY18 forecasts largely unchanged.

UBS sees better value elsewhere in the sector and downgrades to stock to Sell from Neutral. Price target rises to $4.30 from $4.20.

PEET & COMPANY LIMITED ((PPC)) Downgrade to Hold from Buy by Deutsche Bank .B/H/S: 3/1/0

First half results were below the broker's expectations. No quantative guidance was forthcoming, but management expects conditions across NSW, Vic, ACT and SA to remain supportive, WA and NT will remain subdued.

Deutsche Bank remains concerned over the WA housing market, but 65% of new projects are on the east coast with the largest of these being Flagstone City in QLD and Whole Green in Vic.

The broker has downgraded the stock to Hold from Buy and reduced the target price to $1.09 from $1.30.

RETAIL FOOD GROUP LIMITED ((RFG)) Downgrade to Hold from Add by Morgans .B/H/S: 1/2/0

First half results were in line with the broker's estimates. FY16 guidance for 20% growth was reaffirmed.

While the company has multiple medium term growth opportunities, Morgans is looking for more evidence that the growth profile can continue beyond the full integration of recent acquisitions.

The broker downgrades the stock to Hold from Add and reduces the target price to $5.00 from $5.45.

STEADFAST GROUP LIMITED ((SDF)) Downgrade to Neutral from Outperform by Credit Suisse .B/H/S: 2/1/0

First half results were a little below Credit Suisse forecasts. Acquisitions in the past 12 months are distorting historical comparisons, the broker observes.

While insurers and brokers are motivated to talk up the premium rate environment Credit Suisse is less optimistic and takes this opportunity to pull back to a less positive view. Rating is downgraded to Neutral from Outperform. The $1.70 target is maintained.

SANDFIRE RESOURCES NL ((SFR)) Downgrade to Neutral from Outperform by Macquarie and Downgrade to Underperform from Neutral by Credit Suisse and Downgrade to Neutral from Buy by UBS .B/H/S: 1/5/2

Sandfire's result was weaker than Macquarie expected due to negative provisional pricing adjustments and higher exploration expense. But all that really matters is the upcoming maiden resource release for Monty late next month.

Macquarie is already pricing in value for both Monty and a maiden resource at Conductor 5, but a 25% jump in the past month has taken the share price to in line with that valuation, so the broker pulls back to Neutral. Target unchanged at $5.90.

First half profit was marginally above Credit Suisse estimates. The broker downgrades to Underperform from Neutral to reflect the strong share price gains.

Upcoming catalysts include the revised life-of-mine plan for DeGrussa. Target of $5.20 retained.

First half results were weaker than UBS expected, affected by increased spending on exploration. The dividend disappointed but the broker notes the company typically weights the dividend to the second half.

UBS downgrades to Neutral from Buy following strong share price appreciation. Target is raised to $6.10 from $5.70.

SIMS METAL MANAGEMENT LIMITED ((SGM)) Downgrade to Neutral from Outperform by Macquarie .B/H/S: 3/4/0

Sims' result fell short of Macquarie. A 10c dividend was declared when the broker expected no dividend. The US posted a weak half and margins declined, although they appear to have now bounced, the broker notes.

Guidance of a similar run rate in FY16 to FY15 has been maintained but this relies on cost-outs plans being met and volumes being maintained. Macquarie believes that while volumes might be maintained there is downside risk to scrap prices. A bottom for earnings may be near but may linger longer. On a full price the broker downgrades to Neutral. Target falls to $7.20 from $8.15.

SMARTGROUP CORPORATION LTD ((SIQ)) Downgrade to Accumulate from Buy by Ord Minnett .B/H/S: 4/0/0

Smartgroup's H2 performance beat the company's own guidance but Ord Minnett analysts observe the market was ostensibly expecting an even better result. Key to the outlook is much higher margin and the analysts think this ensures strong growth in the six months ahead.

The analysts explain the main risk to their forecasts is whether the company can continue to grow the number of salary packages and novated leases at above GDP growth rates. The stockbroker believes Smartgroup has a superior business model and the company is expected to continue outperforming its peers.

SOUTHERN CROSS MEDIA GROUP ((SXL)) Downgrade to Neutral from Buy by UBS .B/H/S: 0/6/1

First half results were in line with UBS estimates. The broker observes both regional and metro radio markets are showing solid growth, with regional radio revenues up 5.0% and metro up 6.9%.

Regional TV markets remain challenging, UBS maintains, and the renegotiation of the Ten Network ((TEN)) affiliate deal is underway.

UBS downgrades to Neutral from Buy as the stock appears fairly valued. The $1.10 target is maintained.

See also SXL upgrade.

TELSTRA CORPORATION LIMITED ((TLS)) Downgrade to Underweight from Equal-weight by Morgan Stanley .B/H/S: 1/5/2

The broker considers Telstra's de-rating on capital allocation concerns will be permanent, with the downside in focus if risky investments increase with the acceleration of the Asian expansion strategy.

The broker believes if Telstra were to return to its previous strategy of small bolt-on acquisitions and returning capital to shareholders it would re-rate. Expanding offshore when competition is increasing does not seem appropriate, in Morgan Stanley's view.

The broker downgrades to Underweight from Equal-weight. In-Line sector view retained. Target drops to $5.00 from $5.75.

VILLAGE ROADSHOW LIMITED ((VRL)) Downgrade to Neutral from Outperform by Macquarie .B/H/S: 3/1/0

Village Roadshow's result fell well short of Macquarie, although the dividend came in better than expected. While Cinema Exhibition & Corporate posted an in line result, Theme Parks disappointed with a weak result and Film Distribution also materially missed.

The broker expected more from the Gold Coast parks given tourism tailwinds, while film distribution is an opaque business and hard to forecast. Theme parks in Asia provide for material longer term upside but Macquarie can't see the stock's premium to the market as justifiable until Village can consistently deliver results. Downgrade to Neutral. Target falls to $5.85 from $7.97.

See also VRL upgrade.

WESFARMERS LIMITED ((WES)) Downgrade to Lighten from Hold by Ord Minnett .B/H/S: 1/5/2

Wesfarmers' first half results were below the broker's expectations, with Bunnings' strong earnings offsetting losses in the resources sector.

FY16, FY17 and FY18 earnings forecasts reduced by 2.5%, 1.2% and 5.2% respectively, due to continuing weakness in resources and a slow down in both Kmart and Target's turnaround.

Ord Minnett downgrades the stock to Lighten from Hold and reduces the price target to $37.00 from $38.00.

WESTERN AREAS NL ((WSA)) Downgrade to Neutral from Buy by UBS .B/H/S: 3/3/1

First half results were weaker than expected, with a net loss of $20m versus UBS forecasts for $4m. Higher costs drove the losses.

Nickel prices continue to languish and the broker downgrades to Neutral from Buy. Target is lowered to $2.15 from $2.60.

The company believes it can hold a low level of capex for 1-2 years and is break even at spot prices but UBS notes it has $13m due to Glencore over the next 15 months plus payables that may need to be funded.

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