Weekly Recommendation, Target Price, Earnings Forecast Changes

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            [5] => ((S32))
            [6] => ((WHC))
            [7] => ((AGI))
            [8] => ((AWC))
            [9] => ((ILU))
            [10] => ((PTM))
            [11] => ((WSA))
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This story features ARISTOCRAT LEISURE LIMITED, and other companies.
For more info SHARE ANALYSIS: ALL
The company is included in ASX20, ASX50, ASX100, ASX200, ASX300 and 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 April 11 to Friday April 15, 2016
Total Upgrades: 6
Total Downgrades: 5
Net Ratings Breakdown: Buy 43.75%; Hold 43.49%; Sell 12.75%

Commodity stocks continue to dominate changes and amendments by stockbroking analysts in Australia. For the week ending Friday, April 15, 2016, FNArena registered six upgrades in ratings for individual stocks versus five downgrades. The majority of changes involves steel manufacturers, miners and energy companies.

Breaking the mould are Aristicrat Leisure and BT Investment on the positive side and Ainsworth Gaming and Platinum Asset Management on the negative side; slot machines and wealth managers.

The same companies dominate the tables for revisions to targets and valuations, with South32 leading the pack after enjoying a 7.8% boost to its target (narrowly beating Whtiehaven Coal) and with jewellery retailer Lovisa at the week's pinnacle for negative revisions (-11%), followed by Nine Entertainment (-7.9%) and Iluka Resources (-4.9%).

The Top Ten for positive revisions to earnings estimates is a 100% resources affair, led by a 89% jump for gold producer Perseus Mining. Remarkable is the continued presence of BHP Billiton in that table too, as is Fortescue Mining plus a handful of gold producers.

The negative Top Ten contains several resources stocks too, but is more diversified with meat and grain producer Wellard suffering a 74% cut to estimates, beating Whitehaven Coal and Incitec Pivot by a wide margin. Further down the list we also find BT Investment, Bank of Queensland, APN News & Media and Tassal Group. All with relatively benign cuts.

Upgrade

ARISTOCRAT LEISURE LIMITED ((ALL)) Upgrade to Outperform from Underperform by Macquarie .B/H/S: 4/2/0

Australian slot machine ship-share data for March indicate Aristocrat Leisure is continuing to take market share from Ainsworth Gaming Technology and the trend is set to continue, the broker suggests. Aristocrat's share rose to 60% in the quarter, up from 45% a year ago, while AGI's fell to 14% from 19%.

Both companies are set to benefit from consolidation in the international market, the broker notes, but patent applications and R&D spend suggest Aristocrat's dominance is set to continue. The broker has upgraded Aristocrat to Outperform from Underperform and downgraded AGI to Underperform from Outperform, now abandoning an expectation of market share mean reversion.

Aristocrat's target rises to $11 from $8.

BLUESCOPE STEEL LIMITED ((BSL)) Upgrade to Outperform from Neutral by Credit Suisse .B/H/S: 6/1/0

Spot steel spreads have risen materially and Credit Suisse notes this has grossly exceeded the soft increase in the iron ore price.

Yet the broker is cautious as a Chinese export/production response to higher spreads is a key risk that could dent an emerging structural improvement or a short lived seasonal upswing.

Credit Suisse increases assumptions modestly. BlueScope is priced on undemanding multiples and the broker upgrades to Outperform from Neutral. Target is raised $6.85 from $5.80.

BT INVESTMENT MANAGEMENT LIMITED ((BTT)) Upgrade to Add from Hold by Morgans .B/H/S: 3/2/1

March quarter funds under management were down 3.1%, largely because of the drag from the British currency, Morgans observes. JO Hambro reported net inflows of $1.1bn.

The broker considers the structural growth drivers are intact and the company is executing well. Rating is upgraded to Add from Hold. Target falls to $10.95 from $11.10.

On a longer-term view, the broker expects certainty around Britain's exit, or otherwise, from the European Union should alleviate currency concerns and the stock can re-rate towards the target.

ORIGIN ENERGY LIMITED ((ORG)) Upgrade to Outperform from Neutral by Credit Suisse .B/H/S: 4/2/1

Origin has underperformed relative to the rest of the leveraged sector in Credit Suisse's opinion, lagging Santos ((STO)) by 15% since the start of March.

The broker upgrades to Outperform from Neutral on the expectation that this situation is normalised. Moreover, the broker has increased confidence in the value of a de-merged entity with a premium for an energy markets stand alone justified by the level of conglomerate discount that exists.

Obscuring the conglomerate discount is the potential dilution from a re-capitalisation which the broker believes is required. Target is raised to $5.50 from $4.50.

SOUTH32 LIMITED ((S32)) Upgrade to Add from Hold by Morgans .B/H/S: 4/3/1

Morgans has gained conviction the downturn in the resources sector has matured and the worst is now behind. A bump up in market sentiment has been significant enough to deliver more stable commodity prices.

Morgans considers South32 has a strong balance sheet, without the high gearing that burdens others. There is also ample scope for a relief rally that may increase cash flow gains from the company's cost cutting drive.

The broker upgrades to Add from Hold, with improved confidence in the short term fundamentals. Target is raised to $1.95 from $1.20.

WHITEHAVEN COAL LIMITED ((WHC)) Upgrade to Add from Hold by Morgans .B/H/S: 5/2/1

In the wake of another solid production quarter Morgans upgrades to Add from Hold. The broker believes key market indicators have started to improve, most notably in metallurgical coals.

The broker remains optimistic that 2016 will be the trough in earnings and the stock now offers a compelling risk/reward proposition. Target is raised to 90c from 70c.

Downgrade

AINSWORTH GAME TECHNOLOGY LIMITED ((AGI)) Downgrade to Underperform from Outperform by Macquarie .B/H/S: 1/0/1

Australian slot machine ship-share data for March indicate Aristocrat Leisure is continuing to take market share from Ainsworth Gaming Technology and the trend is set to continue, the broker suggests. Aristocrat's share rose to 60% in the quarter, up from 45% a year ago, while AGI's fell to 14% from 19%.

Both companies are set to benefit from consolidation in the international market, the broker notes, but patent applications and R&D spend suggest Aristocrat's dominance is set to continue. The broker has upgraded Aristocrat to Outperform from Underperform and downgraded AGI to Underperform from Outperform, now abandoning an expectation of market share mean reversion.

Ainsworth's target falls to $2.10 from $2.86.

ALUMINA LIMITED ((AWC)) Downgrade to Neutral from Buy by UBS .B/H/S: 4/2/1

The share price is up 13% in the year to date, supported by a 25% rebound in the spot alumina price, UBS observes. Still despite the price improvement in the March quarter the broker believes 40-50% of the alumina refining industry remains loss making.

UBS downgrades to Neutral from Buy, with Alumina Ltd pricing in a US$85/t long-term earnings margin at the current price, versus US$60/t historically. Target is lowered to $1.30 from $1.50.

ILUKA RESOURCES LIMITED ((ILU)) Downgrade to Sell from Neutral by UBS .B/H/S: 1/1/5

Year to date the share price has been volatile, UBS observes. The broker considers the outlook is subdued, although potential upside could come from tightening of global supply, particularly rutile, or if demand recovers.

UBS downgrades earnings forecasts for 2016 and 2017 and drops the rating to Sell from Neutral, given concerns that the stable pricing regime of the last three years is coming to an end. Target price is lowered to $6.00 from $7.20.

PLATINUM ASSET MANAGEMENT LIMITED ((PTM)) Downgrade to Underperform from Neutral by Credit Suisse .B/H/S: 0/3/1

March quarter funds under management were down 8.0%, affected by outflows and weak market movements. Credit Suisse downgrades earnings estimates for FY16 and FY17 by 3.0% and 4.0% respectively

Rating is downgraded to Underperform from Neutral, as retail outflows appear to be accelerating. Credit Suisse observes, historically, outflows can extend many months and remains cautious. Target is reduced to $6.00 from $6.50.

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

Nickel is a commodity where much of the industry is loss making, UBS observes. The broker believes shut downs are the most obvious catalyst but another 100-150,000 tonnes per annum is needed to generate supply pressure.

UBS forecasts a loss of $52m in FY16 for Western Areas. This extends to smaller losses in FY17 and FY18, while depreciation and amortisation masks underlying profitability in those years.

The broker's valuation has been hit by lower Australian dollar nickel prices and the incorporation of the recent placement. Rating is downgraded to Sell from Neutral. Target is reduced to $1.88 from $2.15.

Total Recommendations	Recommendation Changes
Broker Recommendation Breakup

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