Weekly Ratings, Targets, Forecast Changes – 06-03-20

This story features ARISTOCRAT LEISURE LIMITED, and other companies. For more info SHARE ANALYSIS: ALL

By Rudi Filapek-Vandyck, Editor FNArena

Guide:

The FNArena database tabulates the views of seven major Australian and international stock brokers: Citi, Credit Suisse, 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 March 2 to Friday March 6, 2020
Total Upgrades: 36
Total Downgrades: 12
Net Ratings Breakdown: Buy 41.10%; Hold 44.39%; Sell 14.51%

Against a background of escalating concerns about the potential economic fall-out from the spreading covid-19 virus, FNArena's daily monitored seven stockbrokers issued no less than 36 recommendation upgrades for individual listed ASX entities, against twelve downgrades.

The instantaneous result of the large gap between both is that total Buy recommendations for the seven brokers made a giant leap forward, narrowing the gap with Neutral/Hold rating, while total Sell ratings have declined noticeably.

As percentages stand on Friday, 6th March 2020, circa 41% of all ratings now comprises of a Buy, with Neutral/Holds on 44.39% and Sell ratings taking up the remaining 14.5%.

Equally remarkable, only one of the seven stockbrokers (Morgans) is presently carrying more Buy ratings than Neutral/Holds, by a thin margin only.

Eight of the 36 recommendation upgrades stopped at Neutral/Hold. BHP Group received two fresh Buy ratings throughout the week, but Coles attracted three fresh upgrades to Buy. Bank of Queensland also received two upgrades, but both went up to Neutral.

Downgrades were limited to twelve in total and three of those shifted to Sell. Ansell, Flight Centre and National Australia Bank were the unlucky receivers.

Changes in price targets remained benign, with only Integral Diagnostics sticking above the cornfield, in a positive manner. There is a lot more happening in the week's overview for negative changes with Myer the week's biggest loser, followed by AP Eagers, Zip Co, WiseTech Global, and Flight Centre. All saw target price reductions in double digit percentages.

The week's tables for amendments to earnings forecasts equally shows a strong bias for negative updates. Those enjoying positive revisions were led by Costa Group, Senex Energy, and Webjet but most positive changes pale when compared to the sizable reductions that are dominating the local share market post February.

Humongous cuts befell Zip Co and Afterpay, followed by large reductions in earnings estimates for the likes of Myer, Unibail-Rodamco-Westfield, OceanaGold, Japara Healthcare, and many others.

With uncertainty about covid-19 and its economic impact continuing to grip global equities, it seems investors will have to look elsewhere than broker updates for encouragement. Though the large number of recommendation upgrades suggest there will be buying opportunities when the selling stops.

Upgrade

ARISTOCRAT LEISURE LIMITED ((ALL)) Upgrade to Outperform from Neutral by Credit Suisse .B/H/S: 7/0/0

Credit Suisse upgrades to Outperform from Neutral amid continued momentum in the digital business. The broker also notes Cashman game upgrades have lifted revenue well above the trough.

A pandemic may have some impact on the land-based revenue, if people avoid casinos in North America and to a lesser extent Europe and Latin America.

However, in Macau, the broker estimates that the company has virtually no revenue share exposure, as casinos there prefer outright purchases. Target is steady at $35.

ALTIUM LIMITED ((ALU)) Upgrade to Buy from Lighten by Ord Minnett .B/H/S: 1/2/0

Ord Minnett notes the share price has fallen -23% over February. While FY20 guidance was lowered to the lower end of the prior range, amid uncertainty surrounding coronavirus, the broker still notes the stock has materially de-rated compared with software stocks globally.

While there is a risk guidance may still prove optimistic, looking ahead to FY21, the broker is comfortable with forecasts which imply revenue growth of 20%.

The stock now represents value to Ord Minnett and the rating is upgraded to Buy from Lighten. Target is reduced to $33.40 from $37.76.

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

Credit Suisse upgrades to Outperform from Neutral because of the recent fall in the share price. Value has emerged, in the broker's opinion, and Amcor did not fully participate in the recent market rally.

The broker suspects revenue is less likely to be affected by an economic slowdown associated with the possible coronavirus pandemic.

This stems from the fact Amcor manufactures packaging for defensive industries and its exposure to China is about 4% of revenue. Target is steady at $16.25.

ASX LIMITED ((ASX)) Upgrade to Neutral from Underperform by Credit Suisse .B/H/S: 0/3/4

Credit Suisse upgrades to Neutral from Underperform following the fall in the share price in recent weeks. Target is $70.

The broker considers ASX the most defensive stock in the sector, with earnings somewhat insulated during risk-off events through increased velocity in equity markets, increased futures trading as interest rates are cut and the ability to re-price.

ALUMINA LIMITED ((AWC)) Upgrade to Buy from Neutral by Citi .B/H/S: 2/2/2

Alumina Ltd has been upgraded to Buy from Neutral as part of a sector stress-test undertaken by commodity analysts at Citi. Taking guidance from global interest rates, Citi's view is that 2020 will be a disappointing year for the sector overall.

Citi considers Alumina Ltd a sector stand-out given the company's ability to pay what is described as a "reasonable dividend", even in an environment of depressed alumina prices.

BHP GROUP ((BHP)) Upgrade to Add from Hold by Morgans and Upgrade to Accumulate from Hold by Ord Minnett .B/H/S: 3/4/0

While acknowledging there is difficulty in predicting the end of the equity market volatility or the immediate outlook for commodities, Morgans considers the current sell-off has pushed the big miners into value territory.

The broker upgrades to Add from Hold. Target is $36.46. The preference shifts to Rio Tinto ((RIO)).

Uncertain conditions in China are likely to be met with heavy stimulus while BHP Group's energy exposure could become a source of a new discount if oil prices continue to weaken, in the broker's view.

The company's share price is down -17% since the peak on January 20, amid significant uncertainty about how coronavirus will spread and the duration of the impact.

Ord Minnett takes the view that, by mid-year, the market will look through the economic impact and this should drive a re-rating for some of the miners.

Following the correction, BHP Group's valuation metrics appear compelling and the broker upgrades to Accumulate from Hold. Target is $42.

BANK OF QUEENSLAND LIMITED ((BOQ)) Upgrade to Hold from Reduce by Morgans and Upgrade to Equal-weight from Underweight by Morgan Stanley .B/H/S: 0/7/0

Bank of Queensland has unveiled its 5-year strategy and is now guiding to FY20 cash earnings being -4-5% lower than FY19.

Morgans increases cash earnings-per-share estimates, largely on expectations of higher home loan growth and lower operating expenses.

Rating is upgraded to Hold from Reduce and the target is raised to $7.60 from $7.20.

Morgan Stanley believes the bank's revised strategy provides potential to stabilise returns and deal with several years of underperformance. The broker lifts forecasts by 4% for FY20 and FY21.

However, cash profit forecasts remain below the lower end of guidance. While expecting ongoing revenue challenges, Morgan Stanley upgrades to Equal-weight from Underweight, given a clear strategy and a better cost outlook.

Target is raised to $7.60 from $7.50. Industry view is In-Line.

BREVILLE GROUP LIMITED ((BRG)) Upgrade to Buy from Neutral by UBS .B/H/S: 1/2/0

UBS upgrades to Buy from Neutral, given strong top-line growth. The broker believes a premium multiple is justified because of the growth profile and business quality.

Direct entry to a new region could add up to $5 per share to the valuation, the broker calculates. The main risk is potential supply chain disruption from coronavirus although the company has not been materially affected to date.

Europe is now the second largest market for Breville and the broker forecasts more than $300m in sales by FY23. Target is raised to $22.70 from $17.85.

COMMONWEALTH BANK OF AUSTRALIA ((CBA)) Upgrade to Neutral from Underperform by Credit Suisse .B/H/S: 0/1/5

Credit Suisse downgrades earnings estimates on the back of the reduction in official cash rates but also taking note of an increase in bad debt provisions derived from economic stress.

Bad debt provision estimates are increased for FY20 and FY21 because of the economic impact likely from coronavirus, with regard to small businesses linked to the supply chain in the tourism and education sectors.

Rating is upgraded to Neutral from Underperform, given the bank's capital strength. Target is reduced to $77.00 from $77.60.

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

First half earnings were well ahead of expectations. This was driven by development and performance fees. Despite the beat on expectations being driven by non-recurring items, Macquarie suspects there is upside risk to FY20 guidance.

There is also a path for the funds management platform to generate stable earnings in the medium term. The broker upgrades to Neutral from Underperform. Target is reduced to $1.20 from $1.22.

COLES GROUP LIMITED ((COL)) Upgrade to Outperform from Neutral by Macquarie and Upgrade to Accumulate from Lighten by Ord Minnett and Upgrade to Outperform from Neutral by Credit Suisse .B/H/S: 3/1/3

Macquarie believes the market correction has provided an opportunity to buy a high-quality asset, and current supermarket trading is favouring Coles over Woolworths ((WOW)).

The first seven weeks of 2020 have shown Coles is gaining share. The broker considers the valuation attractive at current levels and upgrades to Outperform from Neutral. Target is $17.20.

Ord Minnett has become more confident in the supermarket industry as food inflation is now likely to persist. Moreover, the broker likes the Coles strategy based on cost savings and tailoring of range and formats.

Value now exists and the gap to Woolworths ((WOW)) is expected to continue narrowing. Rating is upgraded to Accumulate from Lighten and the target lifted to $16.75 from $15.00.

After FY20, Credit Suisse believes mid to high single-digit earnings growth will be largely driven by a targeted renewal program and the development of the supermarket range.

While liquor is not central to the investment case, earnings should lift in FY21 with a clean inventory position.

Fuel convenience remains the option, with earnings largely dependent on investment from Viva Energy ((VEA)) to drive fuel volumes.

However there is little downside envisaged for Coles in fuel convenience. Rating is upgraded to Outperform from Neutral. Target is raised to $17.80 from $17.72.

CROWN RESORTS LIMITED ((CWN)) Upgrade to Outperform from Neutral by Macquarie .B/H/S: 1/5/0

Since January 17, Macquarie notes the market has wiped around -21% of the company's market capitalisation. This is based on a mix of coronavirus-related concerns and the public hearing.

The broker continues to believe that, while impacts on VIP visitors will be material in the near term, coronavirus is temporary and the domestic business should be more resilient.

There is also material room for capital management following the opening of Crown Sydney in early 2021. Hence, Macquarie upgrades to Outperform from Neutral. Target is $11.95.

DOMINO'S PIZZA ENTERPRISES LIMITED ((DMP)) Upgrade to Add from Reduce by Morgans .B/H/S: 2/3/2

Morgans believes Domino's Pizza is well-placed, with limited exposure to coronavirus and a reasonably solid growth profile.

The broker points out there are few large cap stocks with double-digit growth profiles and defensive attributes.

Moreover, the company has noted its Japanese operations experienced a trading benefit during the SARS outbreak.

Rating is lifted to Add from Reduce and the target raised to $60.30 from $57.61.

FRONTIER DIGITAL VENTURES LIMITED ((FDV)) Upgrade to Add from Hold by Morgans .B/H/S: 1/0/0

2019 results were strong and above expectations. Commission-style transaction fees from real estate portals continue to be the main engine of growth.

Morgans observes the business has created significant value since investing in its portfolio companies and is expected to continue doing so.

As the stock is now well below valuation the rating is upgraded to Add from Hold. Target is $1.09.

FORTESCUE METALS GROUP LTD ((FMG)) Upgrade to Buy from Sell by UBS .B/H/S: 2/3/2

UBS suspects, given commodity volatility stemming from the coronavirus outbreak, China is likely to introduce commodity-intensive stimulus to soften any economic downturn.

The broker upgrades 2020 and 2021 iron ore prices by 9% and 7% respectively. With West Pilbara fines becoming a larger proportion of the product mix in late 2020, the broker lifts price realisation to 90%.

Rating is upgraded to Buy from Sell and the target is lifted to $10.20 from $9.30.

FREEDOM FOODS GROUP LIMITED ((FNP)) Upgrade to Add from Hold by Morgans .B/H/S: 3/0/0

First half operating earnings (EBITDA) beat Morgans' forecasts. The broker expects strong earnings growth because of strong demand for the company's products across Australia and Asia.

Following material share price weakness, the stock is now trading at an attractive forward multiple and the broker upgrades to Add from Hold. Target is steady at $5.16.

HARVEY NORMAN HOLDINGS LIMITED ((HVN)) Upgrade to Hold from Lighten by Ord Minnett .B/H/S: 1/5/0

First half results were slightly ahead of Ord Minnett's forecasts. International and property were better than expected, while the core franchising operations disappointed.

However, the broker assesses the recent decline in the share price makes the valuation more attractive and the rating is upgraded to Hold from Lighten. Target is lowered to $3.75 from $4.00.

ILUKA RESOURCES LIMITED ((ILU)) Upgrade to Buy from Neutral by Citi .B/H/S: 1/4/0

Iluka Resources has been upgraded to Buy from Neutral as part of a sector stress-test undertaken by commodity analysts at Citi. Taking guidance from global interest rates, Citi's view is that 2020 will be a disappointing year for the sector overall.

Price target has shifted to $9.80 from $9.70 on slightly higher forecasts for 2021.

IRESS LIMITED ((IRE)) Upgrade to Buy from Hold by Ord Minnett .B/H/S: 2/1/1

FY20 guidance was slightly below Ord Minnett's forecasts and the second half skew provides a slightly higher risk profile. However, the share price has fallen -15% throughout February and this is a noteworthy de-rating versus software stocks globally.

Ord Minnett is comfortable with forecasts and assesses, while market volatility could persist for a few weeks yet, the stock now represents value. Target is raised to $12.90 from $12.85 and the rating upgraded to Buy from Hold.

JB HI-FI LIMITED ((JBH)) Upgrade to Add from Hold by Morgans .B/H/S: 2/3/2

Morgans assesses investors will be best placed sticking with large, more defensive names such as JB Hi-Fi in the current environment. The company revealed resilient like-for-like sales growth in the recent results.

Moreover, online expansion was still doing the heavy lifting and the business reported one of the highest rates of growth in this segment. The broker upgrades to Add from Hold. Target is $40.66.

NEWCREST MINING LIMITED ((NCM)) Upgrade to Hold from Lighten by Ord Minnett .B/H/S: 0/4/3

Having reviewed the gold sector after the recent results, Ord Minnett notes guidance ranges were retained and balance sheets are not unduly stretched. The main headwind for production and costs are declining grades.

Newcrest Mining has pulled back recently so the broker upgrades to Hold from Lighten. Target is $26.

OIL SEARCH LIMITED ((OSH)) Upgrade to Outperform from Neutral by Macquarie .B/H/S: 4/3/0

Macquarie upgrades to Outperform from Neutral, given the recent fall in the share price. Despite the impasse on P'nyang, the broker highlights the stability of the current PNG LNG operations and the growth prospects in Alaska.

Target is reduced -3% to $6.20. Earnings estimates are also decreased amid a lower near-term Brent forecast.

REECE LIMITED ((REH)) Upgrade to Add from Hold by Morgans .B/H/S: 1/0/1

First half results were ahead of expectations. US sales revenue grew 19%. Morgans envisages a lot of potential in the US once the company deploys its accelerated bolt-on strategy and rolls out stores.

Margins are expected to continue improving. The main risk centres on the slowing downstream construction activity. The broker upgrades to Add from Hold and raises the target to $12.84 from $12.45.

RIO TINTO LIMITED ((RIO)) Upgrade to Add from Hold by Morgans .B/H/S: 3/3/1

While acknowledging there is difficulty in predicting the end of the equity market volatility or the immediate outlook for commodities, Morgans considers the current sell-off has pushed the big miners into value territory.

The broker upgrades to Add from Hold, shifting its preference to Rio Tinto among the large caps. Target is $97.25.

Uncertain conditions in China are likely to be met with heavy stimulus while BHP Group's ((BHP)) energy exposure could become a source of a new discount if oil prices continue to weaken, in the broker's view.

RHINOMED LIMITED ((RNO)) Upgrade to Add from Hold by Morgans .B/H/S: 1/0/0

First half net losses were extended and weaker than Morgans expected. Higher costs occurred across most expense lines. Revenue increased 24% from sales of the traditional Turbine and Mute devices.

Morgans revises forecasts lower in line with the higher operating cost base and lower sales traction but remains cautiously optimistic about new products. Target is reduced to $0.22 from $0.28.

Rating is upgraded to Speculative Buy from Hold because of recent share price weakness.

REGIS RESOURCES LIMITED ((RRL)) Upgrade to Hold from Lighten by Ord Minnett .B/H/S: 2/3/1

Having reviewed the gold sector after the recent results, Ord Minnett notes guidance ranges were retained and balance sheets are not unduly stretched. The main headwind for production and costs are declining grades.

Regis Resources has pulled back recently so Ord Minnett upgrades to Hold from Lighten. Target is $3.90.

SONIC HEALTHCARE LIMITED ((SHL)) Upgrade to Buy from Neutral by Citi .B/H/S: 5/1/1

Citi healthcare sector analysts have used a general re-assessment post the February reporting season to upgrade Sonic Healthcare to Buy from Neutral. There is always potential for upside through acquisitions, though Citi isn't forecasting any for the time being.

Outside further acquisitions, the analysts view Sonic Healthcare as a stable and well managed business. They remind investors organic revenue growth normally ranges from 3-6%, depending on the geography. In addition, it is rare for regulatory changes in multiple geographies in any given year.

Price target lifts to $33.75 from $33.50.

SUPER RETAIL GROUP LIMITED ((SUL)) Upgrade to Outperform from Neutral by Credit Suisse .B/H/S: 7/0/0

Overall, Credit Suisse observes Super Retail has achieved solid revenue growth and built one of the better digital capabilities in the retail sector.

While BCF has underperformed, its influence on the investment case is minor.

The broker upgrades to Outperform from Neutral, believing the business is well-positioned for medium-term growth. Target is steady at $9.94.

TRANSURBAN GROUP ((TCL)) Upgrade to Accumulate from Hold by Ord Minnett .B/H/S: 1/4/2

Ord Minnett increases earnings estimates and lifts free cash flow forecasts materially. This is based on tax stabilising at half previously assumed levels and lower capitalised interest for select developments.

Improved returns from WestConnex are also expected. Rating is upgraded to Accumulate from Hold and the target raised to $17.00 from $15.65.

WOODSIDE PETROLEUM LIMITED ((WPL)) Upgrade to Outperform from Neutral by Macquarie .B/H/S: 4/3/0

Scarborough is progressing and set for a final investment decision in 2020. A tolling fee has been agreed and interest in the fields are now aligned for both Woodside Petroleum and BHP Group ((BHP)).

Gas will be processed through the Pluto train 1 and the train 2 expansion.

Woodside's ability to manage capital investment over returns to shareholders will be a key driver of the share price in the medium term, Macquarie suggests.

The broker upgrades to Outperform from Neutral, noting the payment of the dividend is now critical to a positive view. A 73% pay-out ratio is assumed for 2020. Target is reduced to $33 from $35.

WISETECH GLOBAL LIMITED ((WTC)) Upgrade to Buy from Lighten by Ord Minnett .B/H/S: 2/1/0

The share price has fallen -40% over February. Ord Minnett now assesses the stock is trading on a forward enterprise value/revenue multiple of 9.6x, around -40% below its two-year average.

While there is a risk FY20 guidance may still prove too optimistic, Ord Minnett believes the stock represents value at current levels and upgrades to Buy from Lighten. Target is reduced to $19.00 from $19.34.

ZIP CO LIMITED ((Z1P)) Upgrade to Add from Hold by Morgans .B/H/S: 3/0/0

First half net loss was greater than Morgans expected. The broker downgrades FY20 and FY21 forecast by more than -50%, given lower cash earnings margin assumptions.

While the Zip Co share price has retraced significantly, the broker envisages long-term value is re-emerging and therefore upgrades to Add from Hold. Target is reduced to $3.23 from $3.92.

Downgrade

AIR NEW ZEALAND LIMITED ((AIZ)) Downgrade to Neutral from Buy by UBS .B/H/S: 0/2/1

Air New Zealand's outlook is now binary, UBS notes. If the virus is contained and international travel normalises by mid-year then significant upside awaits. Under a global pandemic scenario, material downside awaits.

To reflect the heightened uncertainty, the broker has adjusted its valuation model, which leads to a target price drop to NZ$2.00 from NZ$2.85. Rating is pulled back to Neutral on the same basis.

ANSELL LIMITED ((ANN)) Downgrade to Underperform from Neutral by Macquarie .B/H/S: 1/4/1

Macquarie considers the downside risks to organic revenue growth have increased and outweigh support from various business initiatives.

This is particularly the case if confirmed cases of coronavirus continue to expand outside mainland China.

Rating is downgraded to Underperform from Neutral and the target lowered to $27.50 from $30.00.

ACCENT GROUP LIMITED ((AX1)) Downgrade to Hold from Add by Morgans .B/H/S: 1/2/0

Morgans continues to like the business and the growth potential. Surprises on earnings are being driven by the store roll-out profile, which may continue should some of the new concepts gain traction.

Yet, Morgans downgrades to Hold from Add, preferring other retail stocks at similar valuations in the current environment. Target is reduced to $1.92 from $2.15.

CHARTER HALL GROUP ((CHC)) Downgrade to Hold from Accumulate by Ord Minnett .B/H/S: 2/3/0

First half operating earnings were ahead of forecasts. Ord Minnett observes Charter Hall is a strongly performing business but commercial property transaction volumes in Australia are likely to slow in response to travel restrictions and uncertainty over asset values.

At least until the impact of coronavirus is better understood. The broker's main concern is that, if vendors are not willing to take assets to the market, then the company's growth in assets under management is likely to moderate.

Rating is downgraded to Hold from Accumulate and the target lowered to $12.50 from $14.20.

COMPUTERSHARE LIMITED ((CPU)) Downgrade to Neutral from Outperform by Credit Suisse .B/H/S: 0/4/2

Credit Suisse downgrades to Neutral from Outperform, reversing its call from some weeks ago when it did not assume such a rapid and large decline in global cash rates. Target is reduced to $15.25 from $19.40.

In addition, equity market volatility and weaker activity levels could reduce employee share plan trading revenue, corporate actions and loan volumes in the mortgage servicing business.

CORPORATE TRAVEL MANAGEMENT LIMITED ((CTD)) Downgrade to Accumulate from Buy by Ord Minnett .B/H/S: 4/2/0

Ord Minnett suggests the current concerns regarding the impact of coronavirus are well-founded given its ability to spread quickly and the high mortality rate. This presents a toxic combination for travel agencies.

A number have suggested the virus could materially affect earnings for the remainder of 2020.

While analysis suggests the stock offers value at current levels, Ord Minnett downgrades Corporate Travel to Accumulate from Buy and reduces the target to $13.55 from $20.42.

FLIGHT CENTRE LIMITED ((FLT)) Downgrade to Lighten from Hold by Ord Minnett .B/H/S: 3/3/0

Ord Minnett suggests the current concerns regarding the impact of coronavirus are well-founded given its ability to spread quickly and the high mortality rate. This presents a toxic combination for travel agencies.

A number have suggested the virus could materially affect earnings for the remainder of 2020.

Ord Minnett assesses Flight Centre has potential for further downside and downgrades to Lighten from Hold. Target is reduced to $25.49 from $35.52. 

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

Asia represents 33% of Goodman Group's assets under management earnings, 23% of capital invested and 43% of development work in progress, UBS notes. Projects underway in Hong Kong are fully committed but in Japan it's 65% and China 25%. None of the projects are scheduled for completion in FY20 hence no risk to FY20 guidance.

Development sites in China are not yet operating but are anticipated to be operational in coming weeks. In FY20 to date, major tenants continue to implement long term supply chain initiatives. Virus-related risk is therefore a story for FY21-22, and on that risk UBS pulls back to Neutral. Target rises to $16.00 from $15.60 after updating for forex and net tangible asset valuation.

IDP EDUCATION LIMITED ((IEL)) Downgrade to Hold from Add by Morgans .B/H/S: 3/1/1

Given further deterioration in macro economic conditions on the back of the coronavirus contagion, Morgans has become more cautious. Rating is downgraded to Hold from Add.

The short-term nature of any impact makes the broker reluctant to change its long-term view but, at current multiples, the stock is more vulnerable to any impact from coronavirus. Target is $24.49.

NATIONAL AUSTRALIA BANK LIMITED ((NAB)) Downgrade to Underperform from Neutral by Credit Suisse .B/H/S: 2/3/2

Credit Suisse downgrades earnings estimates on the back of the reduction in official cash rates but also taking note of an increase in bad debt provisions derived from economic stress.

Bad debt provision estimates are increased for FY20 and FY21 because of the economic impact likely from coronavirus, with regard to small businesses linked to the supply chain in the tourism and education sectors.

Rating is downgraded to Underperform from Neutral and the target lowered to $22.90 from $27.90, because of the bank's large exposure to the small-medium enterprise segment and lower relative capital position.

TPG TELECOM LIMITED ((TPM)) Downgrade to Hold from Accumulate by Ord Minnett .B/H/S: 0/5/0

First half net profit was below Ord Minnett's forecasts. The consumer business was better than expected because of recent NBN wholesale pricing changes.

TPG Telecom shares have also received a boost as the ACCC announced it would not appeal the court decision allowing the merger with Vodafone Australia. The broker updates its modelling to reflect the merger.

The stock is assessed as trading at fair value and the rating is downgraded to Hold from Accumulate. Target is raised to $8.25 from $7.25.

XREF LIMITED ((XF1)) Downgrade to Hold from Buy by Ord Minnett .B/H/S: 0/1/0

Or Minnett notes a slowing growth profile in sales has meant management has turned attention to self-activation via Xref Light and Template builder.

There are no material signs yet the strategy is taking hold and the broker will need to witness a marked improvement in sales and a rationalisation of costs in the second half to become more confident.

In the interim, the rating is downgraded to Hold from Speculative Buy and the target lowered to $0.25 from $0.60.

Total Recommendations	Recommendation Changes
Broker Recommendation Breakup

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