Tag Archives: Health Care and Biotech

article 3 months old

Good Times Soon Over For Ramsay Health Care?

 - Ramsay Health Care shares now fully valued in view of Morgan Stanley
 - Means testing of private health insurance rebate offers downside risk to earnings
 - This is not priced in, broker downgrades to Underweight

By Chris Shaw

A combination of secure growth and defensive status courtesy of exposure to the healthcare sector has helped Ramsay Health Care ((RHU)) outperform the ASX200 index by 23% since March. 

But in the view of Morgan Stanley this outperformance may be set to end, as the growth profile for Ramsay is now at risk. This suggests the shares are expensive at current levels and sees Morgan Stanley downgrade to an Underweight rating within a cautious Industry view.

The issue for Morgan Stanley is the current Ramsay share price ignores the negative impact from means testing of the private health insurance rebate that starts from July 1. Means testing should save the government close to $750 million in FY13, with the earnings impact for Ramsay likely to become evident from FY14.

Morgan Stanley expects FY13 earnings guidance will be strong given bank bill swap rates are down by around one percentage point relative to average rates through FY12. This should boost earnings for FY13 to the extent Morgan Stanley sees scope for double digit earnings per share (EPS) growth. This appears priced in given Ramsay is trading on 16.1 times Morgan Stanley's FY13 earnings forecasts.

These forecasts in EPS terms stand at 116c this year and 135c in FY13, the latter up from 133c previously. By way of comparison, consensus EPS forecasts according to the FNArena database stand at 116.6c for FY12 and 129.9c for FY13.

Given Morgan Stanley expects the means testing earnings impact will become apparent from FY14, the broker has cut its numbers for that year. The expectation now is for earnings growth of around 7%, while under a bear case scenario EPS could actually decline by a little more than 2%.

The changes to its numbers leave Morgan Stanley 7% below consensus with respect to EBIT (earnings before interest and tax) in FY14 and 5% below on an EPS basis. As noted by Morgan Stanley, the impact of means testing will be felt over a number of years, which adds to downward pressure on earnings growth for the medium-term.

Based on its new earnings estimates, Morgan Stanley has a price target for Ramsay of $18.27. This compares to a consensus price target for the stock according to the FNArena database of $20.35. Targets in the database range from Citi at $17.50 to Macquarie at $24.00.

Given the range of price targets for Ramsay it is no surprise there is a spread in broker ratings, the database showing two Buy recommendations, four Hold ratings and two Sell ratings. Citi and UBS agree with Morgan Stanley's view Ramsay is a Sell, this given a significant valuation premium relative to peers in the sector.

Macquarie argues the Buy case in taking the view Ramsay is likely to achieve ongoing revenue growth and margin expansion, which would more than justify the current valuation on the stock. JP Morgan is similarly positive.

Those with Hold ratings include Deutsche Bank, who suggests while private hospital operators are set to win more public sector work, which is a positive for Ramsay, the stock appears fully valued around current levels given the share price is above Deutsche's target.

Shares in Ramsay today are weaker in a down market and as at 11.35am the stock was 50c lower at $21.60. This compares to a range over the past 12 months of $16.00 to $22.75 and implies downside of around 6% relative to the consensus price target in the FNArena database.


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article 3 months old

Rudi’s Response: Qantas Is Not Investment Grade

By Rudi Filapek-Vandyck, Editor FNArena

I received and responded to the question below and thought it apt to share this with other subscribers and readers at FNArena.

Question from Philip P, Victoria:

"Hi Rudi, I would like your opinion on the following stocks. Qantas and Billabong which i unfortunately own. Do they have a future or are they just speculative bets from this point? Some brokers seem to think Qantas has a lot of value there . It just seems too hard to me and BBG appears as if it may just crash and burn. Although they will have a much smaller debt load. It beggars belief that they got into so much debt in this environment.

"On a more optimistic note i listened to BRR yesterday and they spoke about 2 stocks that caught my attention -TTS and NHF. They appear to fit your "all weather performer" category [you have mentioned TTS before] and consistent dividend payers at a reasonable price. Your opinion please.

"In the last 2 years i have bought NAB, ANZ, WBC, WOW in which I timed reasonably well . I also recently bought some more AGK in their capital raising. I also have some Senex energy which have done very well and will take up my entitlement in the upcoming capital raising.

"Those Europeans are sure keeping us entertained as well as of course our prime minister in Mexico.

"I hope to attend one of your gatherings in Melbourne sometime. Regards. Philip"

RESPONSE:

Hi Philip,

To understand the brokers' views on individual stocks, one has to understand they do not care much about durability, sustainability or quality for the long run.

Their main focus is on "cheap/expensive" over a potential 12 months horizon.

It really challenges my intellect to know there are actually funds managers in this country that hold very large equity stakes in a company such as Qantas ((QAN)) and have held such exposure for many years.

One can only hope they are the receiver of someone else's superannuation money.

I am a firm believer that airlines are by definition not investment grade. You fly them, but never buy them is one of my favourite idioms about the industry.

Another one I like to use is: date them, but never get married. That's just another way of saying: trade them as much as you like, but never ever think of including them in your investment portfolio - no matter how low the entry price.

The same principle applies, in my view, to traditional media companies and bricks and mortar retailers. The risk-reward balance on a longer term horizon is so much skewed towards extreme levels of high risk that I wouldn't go near with a barge pole.

To put it very bluntly: yes, Billabong ((BBG)) shares can experience a short squeeze at any point in time but the company is highly unlikely to exist in its current form in five years' time. In fact, its corporate existence may not make it that far at all (regardless of the balance sheet repairing that is going on).

Regarding your questions about Tatt's ((TTS)) and NIB ((NHF)); they are both obvious dividend propositions. But whereas the second one (NIB) is likely to prove a reasonable performer in the years ahead, I'd like you to research TTS in Stock Analysis.

What do you see when you look two years ahead? Today's very attractive looking high dividend yield is expected to drop significantly in FY14. What makes you think this won't have an impact on the share price too?

Again, I know a lot of stockbrokers like to put their clients into gaming stocks for their supposed defensive characteristics and yield, but I don't like the industry dynamics plus most of these dividends are to fall significantly in years ahead.

I hereby accuse many stockbrokers and advisors for having a too narrow and short-timed view when they promote these stocks. Note also these gaming stocks all have a very mixed legacy in terms of investment returns in the long run for loyal shareholders.

I note that AGL Energy ((AGK)) is on many a strategist's list of favourites and as such I can only assume that owning these shares will bring you joy and benefits in the years ahead.

I know many experts also like Senex. As long as you are comfortable with the higher risk profile that comes with a micro-energy play, I see no problem.

In general, I think you did reasonably well with that portfolio of yours. At least you're not down 30-40% or something along these lines. Do bear in mind that you are currently very much concentrated in the financial corner of the market and that is a risk in itself.

I also think I still need to write more clarifications about what exactly defines an "All-Weather Performer" as only Woolworths ((WOW)) and AGL Energy ((AGK)) could possibly deserve that label.

All other stocks you mention are dividend plays. There's a difference between the two, even though I personally like to combine All-Weather Performers with solid dividends.

I hope this helps.

Cheers

Rudi Filapek-Vandyck Your Editor

P.S. Subscriber Philip clarified in response that the stocks mentioned do not represent his complete portfolio, but only part of it.

Readers should note that my personal views are just that. None of the above is investment advice. Investors should always consult with a licenced financial advisor before making any investment decisions.

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article 3 months old

The Short Report

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By Chris Shaw

Changes in short positions for the week from June 5 showed a clear division, as while no stock saw increases of more than one percentage point there were a number of companies for which total shorts declined by more than two percentage points.

The largest decline was in Nexus ((NXS)), where shorts fell to 0.15% from 9.59% previously. The fall in positions came following news commercial arrangements for the Crux Field have been expanded to include some earlier development concepts.

The next largest decline in shorts was in Tishman Speyer ((TSO)), where positions declined to 0.01% from 5.92% previously. This reflects the upcoming de-listing of the group following the distribution of US asset sale proceeds to shareholders and a winding up of the company.

Shorts in Sundance Resources ((SDL)) fell to 0.6% from 2.6% the week prior as the company completed a placement of $40 million in new shares to further develop the Mbalam project, while shorts in Elders ((ELD)) fell to 3.31% from 5.45% following news Ruralco Holdings ((RHL)) acquired a 10.1% strategic stake in the company. Ruralco has indicated it has no current intention to make a takeover offer for Elders.

With no major increases in short positions the largest short interests among ASX-listed stocks continue to be dominated by companies with exposure to the consumer discretionary sector. This includes the likes of JB Hi-Fi ((JBH)) Billabong ((BBG)), Myer ((MYR)), David Jones ((DJS)) and Harvey Norman ((HVN)).

Others in the top 20 include Lynas Corporation ((LYC)), Iluka ((ILU)) and Paladin ((PDN)) among the resource sector and industrials such as gaming group Echo Entertainment ((EGP)), building materials play CSR ((CSR)) and biotech Mesoblast ((MSB)).

With respect to monthly changes in positions for the period from May 11, the largest increases were in Linc Energy ((LNC)) and Myer ((MYR)) at just over two percentage points each. Linc has seen little in the way of news since replying to an ASX price query that targets for FY12 were expected to be met, while a recent investor day from Myer left brokers with the view sales growth remains an issue for the company.

Among the largest falls in short positions for the month were Spark Infrastructure ((SKI)), where AGM commentary included news of some management changes and some strategic changes designed to simplify the group's structure.

Bradken ((BKN)) enjoyed a fall in shorts to 1.73% from 4.94% as the market completed the adjustment to earlier news of some issues in the group's rail division, while shorts in Echo fell to 6.36% from 8.93% as the market adjusted expectations to reflect a trading update in the period.

Shorts in Mirabela Nickel ((MBN)) fell for the month to 3.11% from 5.13%, this as the market factored in a $120 million capital raising that should help put to rest investor fears with respect to the state of the group's balance sheet.

As noted by RBS Australia, shorts in Coca-Cola Amatil ((CCL)) have risen over the past month by more than 0.5 percentage points to more than 1.6%. In the broker's view this reflects the fact the stock is fully valued at current levels, even allowing for what is regarded as a strong medium-term growth profile.

 

Top 20 Largest Short Positions

Rank Symbol Short Position Total Product %Short
1 JBH 23973358 98850643 24.26
2 MYR 72378948 583384551 12.39
3 CRZ 28135705 233689223 12.03
4 FLT 11716554 100039833 11.71
5 COH 6508795 56929432 11.40
6 FXJ 257845008 2351955725 10.97
7 DJS 57428510 528655600 10.83
8 LYC 182432879 1714846913 10.61
9 HVN 102459626 1062316784 9.62
10 BBG 24772467 257888239 9.60
11 ILU 38033593 418700517 9.07
12 PDN 75531506 835645290 9.03
13 GNS 74495950 848401559 8.77
14 CSR 38615647 506000315 7.63
15 WTF 15548636 211736244 7.34
16 ISO 413769 5703165 7.26
17 LNC 35079085 504487631 6.94
18 EGP 43684076 688019737 6.36
19 MSB 17992548 284478361 6.32
20 TRS 1570006 26071170 6.01

To see the full Short Report, please go to this link

IMPORTANT INFORMATION ABOUT THIS REPORT

The above information is sourced from daily reports published by the Australian Investment & Securities Commission (ASIC) and is provided by FNArena unqualified as a service to subscribers. FNArena would like to make it very clear that immediate assumptions cannot be drawn from the numbers alone.

It is wrong to assume that short percentages published by ASIC simply imply negative market positions held by fund managers or others looking to profit from a fall in respective share prices. While all or part of certain short percentages may indeed imply such, there are also a myriad of other reasons why a short position might be held which does not render that position “naked” given offsetting positions held elsewhere. Whatever balance of percentages truly is a “short” position would suggest there are negative views on a stock held by some in the market and also would suggest that were the news flow on that stock to turn suddenly positive, “short covering” may spark a short, sharp rally in that share price. However short positions held as an offset against another position may prove merely benign.

Often large short positions can be attributable to a listed hybrid security on the same stock where traders look to “strip out” the option value of the hybrid with offsetting listed option and stock positions. Short positions may form part of a short stock portfolio offsetting a long share price index (SPI) futures portfolio – a popular trade which seeks to exploit windows of opportunity when the SPI price trades at an overextended discount to fair value. Short positions may be held as a hedge by a broking house providing dividend reinvestment plan (DRP) underwriting services or other similar services. Short positions will occasionally need to be adopted by market makers in listed equity exchange traded fund products (EFT). All of the above are just some of the reasons why a short position may be held in a stock but can be considered benign in share price direction terms due to offsets.

Market makers in stock and stock index options will also hedge their portfolios using short positions where necessary. These delta hedges often form the other side of a client's long stock-long put option protection trade, or perhaps long stock-short call option (“buy-write”) position. In a clear example of how published short percentages can be misleading, an options market maker may hold a short position below the implied delta hedge level and that actually implies a “long” position in that stock.

Another popular trading strategy is that of “pairs trading” in which one stock is held short against a long position in another stock. Such positions look to exploit perceived imbalances in the valuations of two stocks and imply a “net neutral” market position.

Aside from all the above reasons as to why it would be a potential misconception to draw simply conclusions on short percentages, there are even wider issues to consider. ASIC itself will admit that short position data is not an exact science given the onus on market participants to declare to their broker when positions truly are “short”. Without any suggestion of deceit, there are always participants who are ignorant of the regulations. Discrepancies can also arise when short positions are held by a large investment banking operation offering multiple stock market services as well as proprietary trading activities. Such activity can introduce the possibility of either non-counting or double-counting when custodians are involved and beneficial ownership issues become unclear.

Finally, a simple fact is that the Australian Securities Exchange also keeps its own register of short positions. The figures provided by ASIC and by the ASX at any point do not necessarily correlate.

FNArena has offered this qualified explanation of the vagaries of short stock positions as a warning to subscribers not to jump to any conclusions or to make investment decisions based solely on these unqualified numbers. FNArena strongly suggests investors seek advice from their stock broker or financial adviser before acting upon any of the information provided herein.

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article 3 months old

Top Ten Weekly Recommendation, Target Price, Earnings Forecast Changes

By Chris Shaw

In a quiet week for changes to stock ratings the eight brokers in the FNArena database upgraded just three recommendations while downgrading five. Total Buy ratings now stand at 49.31%.

Credit Suisse was responsible for two of the upgrades, lifting its ratings on both OrotonGroup ((ORL)) and QBE Insurance to Buy from Neutral. For Oroton the upgrade is a valuation call and comes on the back of recent weakness in the company's share price. This weakness is giving investors the change to acquire a quality retailer at a more attractive price in the broker's view.

For QBE Insurance the value on offer is also improving, this as premium rate rises are starting to flow through and balance sheet pressures for the group are easing. Benign weather is also helping the investment case for QBE at present according to Credit Suisse.

Seven West Media ((SWM)) was the other upgrade for the week, with Citi moving to a Buy rating from Hold previously. A tough operating environment means things could get worse before they get better and sees Citi adjust earnings estimates and its price target.

While there is scope in Citi's view for Seven West to make a rights issue to address balance sheet concerns, the broker argues the share price is already factoring this in and value is thus seen as attractive at current levels.

On the downgrades side Macquarie has cut its rating on Cabcharge Australia ((CAB)) to Sell from Neutral, reflecting the potential for earnings to be impacted if credit card surcharge levels are capped, as might be the intention from authorities in Australia. Price target has been cut to reflect the potential earnings impact, while the uncertainty leads Macquarie to suggest the shares are more likely to underperform.

Deutsche Bank has downgraded Cochlear ((COH)) to Sell from Hold on market share concerns stemming from the N5 recall and the impact this has had on the company's reputation in the market. Earnings will slip in FY13 in Deutsche's view and the stockbroker has cut its forecasts and price target to reflect this expectation.

While the announcement of a capital raising by Echo Entertainment ((EGP)) has caused Credit Suisse to adjust earnings forecasts and price target, it is recent share price appreciation that sees the broker downgrade to a Sell rating from Neutral. The gains of late make the stock too expensive in the broker's view (even though the cause is take-over speculation).

Credit Suisse has also downgraded Specialty Fashion ((SFH)) to Sell from Neutral given the expectation that ongoing retail headwinds will impact on earnings for some time. Price target has been reduced to reflect lower earnings estimates.

Fletcher Building ((FBU)) has some franchise strength in New Zealand that probably deserves a premium multiple in the view of UBS, but a review of the broker's model sees earnings forecasts cut through FY13.

The changes mean a reduction in price target and given few signs yet of any cyclical upturn, UBS has downgraded to a Neutral rating from Buy previously.

Elsewhere, adjustments to broker models meant relatively modest changes in price targets across stocks under coverage, with no price targets increasing or decreasing by as much as 5.0% during the week. The largest increase was 3.7% for SP Ausnet ((SPN)), while the biggest cut in target was 4.1% for Cabcharge.

Changes to earnings estimates were also relatively modest, ranging from an increase of just over 1.0% for Caltex ((CTX)) to a cut of nearly 9% for Sydney Airport ((SYD)).

Total Recommendations
 Recommendation Changes

 

Broker Recommendation Breakup

 

Broker Rating

Order Company Old Rating New Rating Broker
Upgrade
1 OROTONGROUP LIMITED Neutral Buy Credit Suisse
2 QBE INSURANCE GROUP LIMITED Neutral Buy Credit Suisse
3 SEVEN WEST MEDIA LIMITED Neutral Buy Citi
Downgrade
4 CABCHARGE AUSTRALIA LIMITED Neutral Sell Macquarie
5 COCHLEAR LIMITED Neutral Sell Deutsche Bank
6 ECHO ENTERTAINMENT GROUP LIMITED Neutral Sell Credit Suisse
7 FLETCHER BUILDING LIMITED Buy Neutral UBS
8 SPECIALTY FASHION GROUP LIMITED Neutral Sell Credit Suisse
 

Recommendation

Positive Change Covered by > 2 Brokers

Order Symbol Previous Rating New Rating Change Recs
1 ORL 20.0% 40.0% 20.0% 5
2 SWM 50.0% 63.0% 13.0% 8
3 QBE 50.0% 63.0% 13.0% 8
4 CWN 75.0% 86.0% 11.0% 7
5 PRU 50.0% 60.0% 10.0% 5

Negative Change Covered by > 2 Brokers

Order Symbol Previous Rating New Rating Change Recs
1 CAB 40.0% 20.0% - 20.0% 5
2 GWA 33.0% 17.0% - 16.0% 6
3 SPN - 25.0% - 40.0% - 15.0% 5
4 FBU 63.0% 50.0% - 13.0% 8
5 AWC 38.0% 25.0% - 13.0% 8
6 COH - 25.0% - 38.0% - 13.0% 8
7 TEL - 13.0% - 25.0% - 12.0% 8
8 BXB 75.0% 71.0% - 4.0% 7
9 VBA 86.0% 83.0% - 3.0% 6
10 AIO 88.0% 86.0% - 2.0% 7
 

Target Price

Positive Change Covered by > 2 Brokers

Order Symbol Previous Target New Target Change Recs
1 SPN 1.030 1.068 3.69% 5
2 PRU 3.238 3.280 1.30% 5

Negative Change Covered by > 2 Brokers

Order Symbol Previous Target New Target Change Recs
1 CAB 6.532 6.264 - 4.10% 5
2 SWM 3.578 3.434 - 4.02% 8
3 GWA 2.188 2.187 - 0.05% 6
 

Earning Forecast

Positive Change Covered by > 2 Brokers

Order Symbol Previous EF New EF Change Recs
1 CTX 114.400 115.917 1.33% 6
2 QBE 135.884 137.129 0.92% 8
3 TEL 13.730 13.792 0.45% 8
4 CPA 7.571 7.586 0.20% 7
5 BHP 326.730 327.236 0.15% 8
6 NWS 133.729 133.936 0.15% 7
7 RIO 700.487 701.571 0.15% 8
8 FMG 46.907 46.979 0.15% 8
9 RMD 16.490 16.515 0.15% 8
10 OSH 13.930 13.949 0.14% 8

Negative Change Covered by > 2 Brokers

Order Symbol Previous EF New EF Change Recs
1 SYD 5.700 5.200 - 8.77% 6
2 VAH 2.743 2.600 - 5.21% 7
3 OST 12.586 12.157 - 3.41% 7
4 FXJ 8.613 8.400 - 2.47% 8
5 QUB 7.550 7.425 - 1.66% 4
6 NHF 13.133 12.950 - 1.39% 4
7 CPU 47.257 46.689 - 1.20% 8
8 COH 284.575 281.950 - 0.92% 8
9 BLD 17.725 17.600 - 0.71% 8
10 OZL 71.888 71.388 - 0.70% 8
 

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article 3 months old

NIB Holdings: (Special) Dividends With Upside

 - Macquarie has initiated coverage with Outperform on NIB Holdings
 - Broker attracted to defensive earnings and focus on capital management
 - All brokers covering NIB Holdings rate the stock a Buy 

By Chris Shaw

NIB Holdings ((NHF)) is Australia's fifth largest provider of Private Health Insurance (PHI), operating in a heavily regulated and politically sensitive sector of the economy that provides a defensive revenue stream with underlying industry growth of 6-8%. 

Macquarie last week initiated coverage on NIB Holdings with an Outperform rating, attracted to earnings growth underpinned by unique industry dynamics and management discipline with respect to capital management.

Market growth driven by population increases and rising health care costs has helped NIB Holdings grow earnings. Government policy, such as the introduction of the Medicare Levy Surcharge, has also driven growth in private insurance in general as participation in the private health sector is being encouraged to lower the burden on the public system.

Management at NIB Holdings has a focus on the youth segment and in recent years has been successful in growing overall market share. At the same time operating efficiencies continue to be targeted and achieved, helping support margins and deliver earnings growth.

As Macquarie notes, net margins for NIB Holdings have increased from 3.6% in 2007 to 6.1% now as policy holder market share has risen from 6.6% to 7.6% over the same time. Since 2007 NIB Holdings has also returned around $185 million of excess capital through special dividends, a buyback and a capital return. Return on equity has been above 15% since 2010.

Key issues for the private health insurance sector in Macquarie's view are the introduction of income testing for PHI tax rebates and the Private Health Insurance Administration Council (PHIAC) position on pricing and current margin levels.

With respect to the former, a survey by Macquarie suggests private health insurance coverage could reduce by 1.0-1.5% given means testing for the tax rebate. At the same time, comments from the PHIAC suggest price competition in the private health insurance sector is not as sharp as it could be given current capital positions and margin outcomes for the industry.

Macquarie has factored a decline in margins into its model for NIB Holdings, its model suggesting from 6.1% in FY11 net underwriting margin is likely to come in at around 5.9% in FY12. Earnings growth for NIB Holdings should still be achieved even given lower margins.

Earnings per share (EPS) forecasts for Macquarie stand at 12.4c in FY12 and 13c in FY13, which compares to consensus EPS estimates according to the FNArena database of 13c and 14.3c respectively.

Macquarie's earnings estimates translate to a price target for NIB Holdings of $1.70, which is in line with the consensus price target in the FNArena database. Targets range from Citi at $1.60 to BA Merrill Lynch at $1.75. The database shows all four brokers covering the stock rate NIB Holdings as a Buy.

At current levels NIB Holdings is trading at a discount to what Macquarie regards as a fair earnings multiple, which implies upside potential. Earnings rather than any multiple expansion have been the major driver of share price performance for NIB Holdings, as Macquarie notes the stock has traded at an average 11% discount to the small industrials index over the past 18 months.

BA Merrill Lynch agrees there is value in NIB Holdings, pointing out while organic growth is becoming tougher to achieve, the stock offers a 12-month potential total return of around 18%. This is despite solid share price performance in recent years.

Part of this return comes from attractive dividends, as Macquarie's numbers imply a fully franked yield of 8.9% in FY12 and more than 6% in FY13. Special dividends such as the 5c per share paid out in the second half of 2011 are likely to continue in Macquarie's view.

Shares in NIB Holdings have traded in a range over the past year of $1.11 to $1.705, the current share price implying upside of around 10% relative to the consensus price target in the FNArena database.


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article 3 months old

Primary Health A Conviction Buy

 - Goldman Sachs adds Primary Health to Conviction List
 - Broker sees value at current levels
 - Positives should support share price upside

By Chris Shaw

The Goldman Sachs Australia and New Zealand Conviction List represents what the broker sees as its best possibilities for generating return alpha. This is a risk adjusted measure of active investment returns, reflecting a stock's return which is stock-specific beyond that of the index return (the latter being called "beta").

Following a review of the healthcare sector, Goldman Sachs has added Primary Health Care ((PRY)) to its conviction list, seeing attractive value at current levels following recent share price underperformance.

Positives with respect to Primary Health in the view of Goldman Sachs include recent stabilisation of the group's debt levels post successful refinancing, as well as a solid outlook for pathology volumes and the industry structure in general as consolidation continues.

Goldman Sachs also sees doctor churn in Primary's medical centres as manageable in the near-term as many of Primary's doctors are locked up to contracts. The broker does acknowledge on a 2-3 year view there continue to be questions as to whether growth in cash flows for Primary will be limited by ongoing doctor churn, nevertheless.

Looking out to FY13, Goldman Sachs believes there is value in Primary Health at current levels. The broker's earnings per share forecasts suggest outcomes of 24.8c this year and 28.8c in FY13. The latter suggests a price to free cash flow multiple next year of 11.7 times, which is a discount to both the ASX200 ex-Financials and Sonic Health Care ((SHL)), which is Primary's closest peer.

Consensus earnings estimates for Primary Health Care according to the FNArena database stand at 23.2c in FY12 and 27c in FY13.

On a straight earnings multiple basis Primary also looks attractive, as Goldman Sachs's forecasts suggest a P/E for FY13 of 9.8 times. Add in a fully franked yield of close to 4.0% in FY13 and the expectation is a 12-month total return of 20% based on a price target of $3.25.

Goldman's target is in-line with the consensus price target according to the FNArena database of $3.26. Targets range from Macquarie at $2.60 to UBS at $3.65. Ratings range from Five Buy recommendations to two Hold ratings and one Sell.

Macquarie has the Sell rating on Primary, which reflects concerns with respect to ongoing churn in the group's medical centres division. In Macquarie's view this is enough of an issue to limit share price performance.

The Neutral calls of both Credit Suisse and JP Morgan are largely valuation based, while Buy ratings from the likes of Citi reflect an expectation of good earnings growth in FY13 and upside potential relative to price targets.

Shares in Primary Health Care today are unchanged in a weaker overall market, the stock trading at $2.82 as at 10.50am. Over the past year the shares have ranged between $2.56 and $3.57, the current share price implying upside relative to the consensus price target in the FNArena database of around 16%.

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article 3 months old

The Short Report

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By Chris Shaw

Weekly changes in short positions for the week from May 28 were dominated by increases, with seven stocks seeing positions rise by more than one percentage point against just two declines of a similar magnitude.

The largest change in positions was in Mesoblast ((MSB)), where shorts jumped to 6.17% from 2.86% in the week prior to the company updating on its corporate strategy with respect to product development. Work continues on developing Mesenchymal Precursor Cells (MPCs) for treating diseases such as Parkinson's and Huntington's disease, but competition in the stem cell sector appears to be increasing.

Shorts in Paladin ((PDN)) rose to 9.03% from 7.43% for the week as the company updated on production and costs for the March quarter. Brokers expect cash flows will be the main point of focus for the market in coming months given upcoming refinancing commitments.

SingTel ((SGT)) experienced an increase in shorts to 4.28% from 2.71% as the market continues to see little in the way of positive drivers for earnings in coming months, especially given the operating environment for telcos in India continues to deteriorate.

For Myer ((MYR)) shorts jumped to 12.62% from 11.24% post an investor day update from the company that left brokers with the view driving sales growth would remain the retailer's biggest challenge in the shorter-term.

The increase has reinforced Myer's place among the top 20 short positions on the Australian market, a list which continues to be dominated by consumer discretionary stocks such as JB Hi-Fi ((JBH)), David Jones ((DLS)), Harvey Norman ((HVN)), Billabong ((BBG)) and Wotif.com ((WTF)). Paladin also makes the list along with Lynas ((LYC)) and Iluka ((ILU)) among resource plays and industrials such as CSR ((CSR)) and Echo Entertainment ((EGP)).

Despite indicating to the market targets for production and cash management for 2012 were still in line to be met, shorts in Linc Energy ((LNC)) increased for the week from May 28 to 6.73% from 5.41%. Shorts in Centro Retail ((CRF)) also increased to 2.28% from 1.15% the week before, this despite brokers turning more positive given some good news such as asset sale results and the settlement of a class action.

A recent trading update from Ten Network ((TEN)) indicated media market conditions remain difficult and this saw some minor cuts to earnings estimates for Seven West ((SWM)) as well. The market responded by lifting short positions in the stock to 3.3% from 2.26% previously.

Total shorts in Mirabela ((MBN)) declined for the week from May 28 to 3.1% from 4.46% as the market continues to adjust to the recent announcement of a capital raising. The raising should help reduce what had been some liquidity concerns surrounding the company.

The net largest decline in shorts was in Alesco ((ALS)), where positions fell to 2.11% from 3.16% previously. The change came prior to the pre-release of full year earnings, which the market generally viewed as solid given what remain difficult operating conditions, and a public offer by DuluxGroup ((DLX)). Alesco's board has rejected the offer.

Outside of those stocks in the top 20, increases in shorts for the month from May 4 were largest for Dart Energy ((DTE)) and Centro Retail, where in both cases shorts rose by just under 2.0 percentage points to 4.31% and 2.28% respectively. For Dart the changes came prior to the stock being removed from the S&P/ASX200 index.

Monthly falls in shorts were largest for Whitehaven Coal ((WHC)) and Spark Infrastructure ((SKI)), the former falling to 1.03% from 4.72% and the latter to 2.66% from 6.31%. The changes for Whitehaven came prior to news the longwall at the Narrabri underground mine has been installed, while for Spark the market continues to adjust views in relation to the proposed acquisition of the Sydney de-sal plant.

The other fall in shorts of more than 2.0 percentage points for the month was in Henderson Group ((HGG)), where positions declined to 0.75% from 2.8% previously. The major news for the company in the period was IOOF Holdings ((IFL)) lifting its stake in the company.

 

Top 20 Largest Short Positions

Rank Symbol Short Position Total Product %Short
1 JBH 23734597 98850643 24.01
2 MYR 73693279 583384551 12.62
3 CRZ 28322705 233689223 12.15
4 FLT 11833312 100039833 11.82
5 FXJ 273740259 2351955725 11.64
6 DJS 58662263 528655600 11.06
7 COH 6180079 56929432 10.83
8 LYC 176783079 1714846913 10.31
9 ISO 566387 5703165 9.93
10 ILU 41017629 418700517 9.79
11 BBG 24170908 257888239 9.38
12 HVN 99837835 1062316784 9.38
13 PDN 75419878 835645290 9.03
14 GNS 75429556 848401559 8.88
15 CSR 41480002 506000315 8.21
16 WTF 16287604 211736244 7.69
17 EGP 49018195 688019737 7.14
18 LNC 34079022 504487631 6.73
19 TEN 64630518 1045236720 6.19
20 MSB 17572480 284478361 6.17

To see the full Short Report, please go to this link

IMPORTANT INFORMATION ABOUT THIS REPORT

The above information is sourced from daily reports published by the Australian Investment & Securities Commission (ASIC) and is provided by FNArena unqualified as a service to subscribers. FNArena would like to make it very clear that immediate assumptions cannot be drawn from the numbers alone.

It is wrong to assume that short percentages published by ASIC simply imply negative market positions held by fund managers or others looking to profit from a fall in respective share prices. While all or part of certain short percentages may indeed imply such, there are also a myriad of other reasons why a short position might be held which does not render that position “naked” given offsetting positions held elsewhere. Whatever balance of percentages truly is a “short” position would suggest there are negative views on a stock held by some in the market and also would suggest that were the news flow on that stock to turn suddenly positive, “short covering” may spark a short, sharp rally in that share price. However short positions held as an offset against another position may prove merely benign.

Often large short positions can be attributable to a listed hybrid security on the same stock where traders look to “strip out” the option value of the hybrid with offsetting listed option and stock positions. Short positions may form part of a short stock portfolio offsetting a long share price index (SPI) futures portfolio – a popular trade which seeks to exploit windows of opportunity when the SPI price trades at an overextended discount to fair value. Short positions may be held as a hedge by a broking house providing dividend reinvestment plan (DRP) underwriting services or other similar services. Short positions will occasionally need to be adopted by market makers in listed equity exchange traded fund products (EFT). All of the above are just some of the reasons why a short position may be held in a stock but can be considered benign in share price direction terms due to offsets.

Market makers in stock and stock index options will also hedge their portfolios using short positions where necessary. These delta hedges often form the other side of a client's long stock-long put option protection trade, or perhaps long stock-short call option (“buy-write”) position. In a clear example of how published short percentages can be misleading, an options market maker may hold a short position below the implied delta hedge level and that actually implies a “long” position in that stock.

Another popular trading strategy is that of “pairs trading” in which one stock is held short against a long position in another stock. Such positions look to exploit perceived imbalances in the valuations of two stocks and imply a “net neutral” market position.

Aside from all the above reasons as to why it would be a potential misconception to draw simply conclusions on short percentages, there are even wider issues to consider. ASIC itself will admit that short position data is not an exact science given the onus on market participants to declare to their broker when positions truly are “short”. Without any suggestion of deceit, there are always participants who are ignorant of the regulations. Discrepancies can also arise when short positions are held by a large investment banking operation offering multiple stock market services as well as proprietary trading activities. Such activity can introduce the possibility of either non-counting or double-counting when custodians are involved and beneficial ownership issues become unclear.

Finally, a simple fact is that the Australian Securities Exchange also keeps its own register of short positions. The figures provided by ASIC and by the ASX at any point do not necessarily correlate.

FNArena has offered this qualified explanation of the vagaries of short stock positions as a warning to subscribers not to jump to any conclusions or to make investment decisions based solely on these unqualified numbers. FNArena strongly suggests investors seek advice from their stock broker or financial adviser before acting upon any of the information provided herein.

Technical limitations

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article 3 months old

Yet Another Downgrade For Cochlear

 - Data suggest Cochlear losing market share
 - Deutsche Bank trims forecasts and price target as a result
 - Broker downgrades to a Sell rating 
 - Share price outperformance unlikely given market share concerns

By Chris Shaw

For the past several months Cochlear ((COH)) has appeared to handle the recall of its N5 implant well, though there has been some related loss of market share as the company's aura of superior safety and reliability has been tarnished.

In the view of Deutsche Bank, this loss of market share is likely to continue, as while Cochlear will focus on re-launching the N5 device, competitors will continue moving closer to bringing new devices to the market.

Recent market data support this view, Deutsche noting a survey of 90 respondents from implant centres in the US and Europe shows Cochlear is losing some market share. Western world unit sales grow is around 10%, but Deutsche's survey suggests Cochlear's market share in the Western world has fallen to 61% this year from 68% in 2010. Advanced Bionics is believed to have picked up most of the share lost by Cochlear.

Respondents to the survey expect Cochlear's market share will decline to around 54% over the next three years. To account for this, Deutsche has lowered earnings per share (EPS) forecasts for Cochlear by around 7% in each year through FY14.

The changes leave Deutsche forecasting EPS for Cochlear of 269c this year and 267c in FY13 (implying no growth). This compares to consensus EPS forecasts according to the FNArena database of 282c and 298.2c respectively.

The changes to Deutsche's estimates see the broker cut its price target to $56.00 from $59.00. In line with its below consensus forecasts, Deutsche's revised target is below the consensus target in the database of $60.77. Targets range from Citi at $50.86 to Macquarie at $68.50.

Given its market share concerns, Deutsche has downgraded Cochlear to a Sell rating from Hold previously. This reflects the view share price outperformance is unlikely given Cochlear's potential market share issues.

The FNArena database now shows only Macquarie still rates Cochlear as a Buy, against three Hold and four Sell recommendations. For Macquarie the expectation is market share losses for Cochlear will be well below what the market expects, which implies continued share price upside from current levels.

The Hold argument is largely a valuation call, as the three brokers with this rating – RBS Australia, Credit Suisse and JP Morgan – have price targets broadly in line with the current share price of Cochlear.

Those with a Sell recommendation include UBS, which sides with Deutsche's view there remains downside risk to underlying unit sales growth data. For UBS, this risk is not supportive of the current Cochlear share price. Citi agrees, also noting Cochlear has been losing market share to competitors in recent months. 

Shares in Cochlear closed yesterday at $64.64, which compares to a range over the past year of $45.11 to $77.50. Yesterday's closing share price implies downside of around 6% relative to the consensus price target in the FNArena database.

Technical limitations

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Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)" - Warning this story contains unashamedly positive feedback on the service provided.

article 3 months old

The Short Report

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By Chris Shaw

For the week from May 22 the largest short position increase on the ASX was in Sundance Resources ((SDL)), where positions rose from just 0.27% to 2.24%. This occurred just prior to the company presenting at a mining forum in Cameroon and agreeing some key terms for its Mbalam iron ore project.

The next largest increase was in Iluka ((ILU)), where shorts increased to 8.93% from 7.08% after the company updated both zircon sales guidance and the outlook for the zircon market in general. Lower sales volumes and a slow recovery in the market are priced into the stock at current levels in the view of Macquarie.

A jump in shorts to 8.89% from 7.46% previously for Gunns ((GNS)) comes on the back of an update from management that included news of the sale of the Heyfield timber business. Further asset sales are expected as is a significant capital raising, so changes in shorts likely reflect positioning for such an event.

Among those to enjoy significant falls in short positions for the week from May 22 were retail plays David Jones ((DJS)) and Myer ((MYR)), the former seeing a decline in shorts to 8.81% from 10.51% and the latter to 9.72% from 11.21%.

The change for David Jones came ahead of what was viewed by most as a disappointing 3Q sales result, though the result did at least give some indication sales were stabilising. The change for Myer follows a trading update that included a cut in earnings guidance, which led brokers to comment upcoming sales periods for both companies will be important for full year earnings.

Despite the falls in respective short positions both David Jones and Myer remain among the top 20 short positions on the Australian market, along with other consumer discretionary plays such as JB Hi-Fi ((JBH)), Billabong ((BBG)), Harvey Norman ((HVN)), Flight Centre ((FLT)) and Carsales.com ((CRZ)).

Also among the top 20 are Iluka, Paladin ((PDN)) and Lynas ((LYC)) among resource plays, Echo Entertainment ((EGP)) in the gaming sector, building materials play CSR ((CSR)), rural group Elders ((ELD)) and biotech play Mesoblast ((MSB)). Shorts in both Echo Entertainment and Paladin fell by around 1.0 percentage point in the week from May 22.

Shorts in Western Areas ((WSA)) declined to 4.66% from 6.07% the week prior after the market updated expectations to reflect higher production and sales guidance from the company, while shorts in Whitehaven Coal ((WHC)) also declined to 0.74% from 1.94% as the company supplied an initial resource for the Ferndale project.

From the perspective of monthly changes in shorts for the period from April 26, Iluka experienced the largest increase with a move to 8.93% from 6.48% the month prior. Sparsely covered Linc Energy ((LNC)) also saw a jump in shorts to 5.58% from 3.34%, this despite management responding to an ASX query by confirming previous guidance for oil production and cash management for the full year.

A number of the top 20 short position stocks saw total positions increase by around 1.0% or more in the month from April 26, these including Billabong, Gunns, Harvey Norman, Flight Centre, Western Areas, CSR and Elders.

On the side of falling short positions, Whitehaven saw the greatest decline for the month, while utilities Spark Infrastructure ((SKI)) and Australian Pipeline Trust ((APA)) also enjoyed solid falls in total positions. For the former shorts fell to 2.29% from 5.46% and for the latter to 1.02% from 3.23% as the market continues to digest potential acquisitions in both cases.

Shorts in SingTel ((SGT)) declined to 3.6% from 5.93% the month before as the market viewed full year earnings as broadly in line with expectations, while a solid update indicating fund performance has been good and there is potential for an increase in fund inflows in coming months may have helped shorts in Henderson Group ((HGG)) fall to 0.69% from 2.26% previously.

Elsewhere in the market, RBS Australia notes Metcash ((MTS)) short positions have increased by more than 50 basis points over the past three weeks and now stand at 5.5%. In RBS's view such an increase is justified by weak trading conditions, which are expected to pressure independent supermarkets more than those of Coles and Woolworths ((WOW)). Such a trend would make it more difficult for Metash to sell many of its Franklins stores.

Investors should note past research conducted by RBS has shown that increasing/decreasing short positions for an individual stock can function as an early indication for the share price underperforming/outperforming respectively in the weeks/months ahead.
 

Top 20 Largest Short Positions

Rank Symbol Short Position Total Product %Short
1 JBH 23026494 98850643 23.29
2 FLT 11708664 100031742 11.70
3 CRZ 27135451 233689223 11.60
4 FXJ 269444917 2351955725 11.48
5 COH 6460589 56929432 11.32
6 LYC 175865064 1714846913 10.26
7 ISO 564043 5703165 9.89
8 MYR 56759223 583384551 9.72
9 BBG 24988441 257888239 9.69
10 ILU 37466989 418700517 8.93
11 GNS 75481203 848401559 8.89
12 HVN 94109184 1062316784 8.83
13 DJS 46649603 528655600 8.81
14 EGP 52714970 688019737 7.66
15 WTF 15883143 211736244 7.49
16 CSR 36894219 506000315 7.29
17 PDN 60483039 835645290 7.22
18 MSB 16644576 284478361 5.85
19 GWA 17206537 302005514 5.71
20 ELD 25258709 448598480 5.63

To see the full Short Report, please go to this link

IMPORTANT INFORMATION ABOUT THIS REPORT

The above information is sourced from daily reports published by the Australian Investment & Securities Commission (ASIC) and is provided by FNArena unqualified as a service to subscribers. FNArena would like to make it very clear that immediate assumptions cannot be drawn from the numbers alone.

It is wrong to assume that short percentages published by ASIC simply imply negative market positions held by fund managers or others looking to profit from a fall in respective share prices. While all or part of certain short percentages may indeed imply such, there are also a myriad of other reasons why a short position might be held which does not render that position “naked” given offsetting positions held elsewhere. Whatever balance of percentages truly is a “short” position would suggest there are negative views on a stock held by some in the market and also would suggest that were the news flow on that stock to turn suddenly positive, “short covering” may spark a short, sharp rally in that share price. However short positions held as an offset against another position may prove merely benign.

Often large short positions can be attributable to a listed hybrid security on the same stock where traders look to “strip out” the option value of the hybrid with offsetting listed option and stock positions. Short positions may form part of a short stock portfolio offsetting a long share price index (SPI) futures portfolio – a popular trade which seeks to exploit windows of opportunity when the SPI price trades at an overextended discount to fair value. Short positions may be held as a hedge by a broking house providing dividend reinvestment plan (DRP) underwriting services or other similar services. Short positions will occasionally need to be adopted by market makers in listed equity exchange traded fund products (EFT). All of the above are just some of the reasons why a short position may be held in a stock but can be considered benign in share price direction terms due to offsets.

Market makers in stock and stock index options will also hedge their portfolios using short positions where necessary. These delta hedges often form the other side of a client's long stock-long put option protection trade, or perhaps long stock-short call option (“buy-write”) position. In a clear example of how published short percentages can be misleading, an options market maker may hold a short position below the implied delta hedge level and that actually implies a “long” position in that stock.

Another popular trading strategy is that of “pairs trading” in which one stock is held short against a long position in another stock. Such positions look to exploit perceived imbalances in the valuations of two stocks and imply a “net neutral” market position.

Aside from all the above reasons as to why it would be a potential misconception to draw simply conclusions on short percentages, there are even wider issues to consider. ASIC itself will admit that short position data is not an exact science given the onus on market participants to declare to their broker when positions truly are “short”. Without any suggestion of deceit, there are always participants who are ignorant of the regulations. Discrepancies can also arise when short positions are held by a large investment banking operation offering multiple stock market services as well as proprietary trading activities. Such activity can introduce the possibility of either non-counting or double-counting when custodians are involved and beneficial ownership issues become unclear.

Finally, a simple fact is that the Australian Securities Exchange also keeps its own register of short positions. The figures provided by ASIC and by the ASX at any point do not necessarily correlate.

FNArena has offered this qualified explanation of the vagaries of short stock positions as a warning to subscribers not to jump to any conclusions or to make investment decisions based solely on these unqualified numbers. FNArena strongly suggests investors seek advice from their stock broker or financial adviser before acting upon any of the information provided herein.

Technical limitations

If you are reading this story through a third party distribution channel and you cannot see charts included, we apologise, but technical limitations are to blame.

Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)" - Warning this story contains unashamedly positive feedback on the service provided.

article 3 months old

Top Ten Weekly Recommendation, Target Price, Earnings Forecast Changes

By Chris Shaw

In a reversal of the dominant trend of recent weeks, upgrades to broker ratings outweighed downgrades by a total of nine to six over the past week. Total Buy ratings according to the eight brokers in the FNArena database now stand at 49.28%.

Among the upgrades was AGL Energy ((AGK)), where Citi moved to a Buy rating from Neutral as part of a resumption of coverage following the Loy Yang A acquisition. The deal is earnings accretive, adds more energy to AGL's portfolio and reduces supply risk, all of which are positives in the broker's view.

Citi also upgraded Centro Retail ((CRF)) to Buy from Neutral, reflecting not only recent relative underperformance but some company specific positives. These include the settlement of class action litigation and solid asset sale results and imply the stock now offers better value and a less risky proposition.

A solid full year earnings result from Programmed Maintenance Services ((PRG)) was enough for Citi to upgrade to a Buy recommendation from Neutral, they key to the more positive view being greater stability in earnings following restructuring efforts over the past few years. There is also value on offer according to Citi given an attractive earnings multiple and dividend yield.

Improved valuation was behind Citi's decision to upgrade Sigma Pharmaceutical ((SIP)) to Buy from Hold. Over the past month Sigma shares are down around 12%, enough in Citi's view to make the stock look relatively attractive again. 

For similar reasons JP Morgan has upgraded Ausenco ((AAX)) to Overweight from Neutral, the broker noting the stock has lost around 20% over the past month to the point where the shares now offer "compelling value".

JP Morgan also upgraded ANZ Banking Group ((ANZ)) to Neutral from Underweight, this to reflect recent relative price moves among the major banks. While the sector is likely to struggle from a lack of credit growth in the medium-term, the broker has lifted its ANZ rating while downgrading National Australia Bank ((NAB)) to Underweight from Neutral on respective share price changes.

JP Morgan's earnings estimates and price targets have been adjusted across the banking sector, while Macquarie has upgraded Suncorp Group ((SUN)) to Neutral from Sell. This reflects improved valuation from recent share price weakness, while the broker also sees potential longer-term benefits from further cost efficiencies.

On news of the sale of its Technology Solutions business CSG ((CSV)) has been upgraded to Hold from Sell by RBS Australia. The sale is viewed positively as it allows for better focus on the remainder of CSG's operations, while also opens up the potential for a special dividend to shareholders. Price target was also lifted on the news.

The attraction of Monadelphous ((MND)) for Deutsche Bank is the group's level of contract sales and exposure to projects unlikely to be deferred, which in the broker's view means the stock is being undervalue at current levels. Given a solid earnings growth outlook, Deutsche moves to a Buy from Hold previously, this despite a trimming in price target.

Turning to the downgrades and RBS Australia has cut its rating on Acrux ((ACR)) to Hold from Buy on valuation grounds as the stock has gained 25% since the broker's last report. Echo Entertainment ((EGP)) was also downgraded to Neutral from Overweight by JP Morgan, this given a trading update implied a tougher outlook for some of the group's casino operations. While forecasts and price targets have been lowered, JP Morgan continues to see some downside risk to earnings.

Transurban ((TCL)) has been downgraded to Hold from Buy by BA Merrill Lynch, this given the valuation impact of the pushing back of the M2 completion date, a toll freeze on the same road and softer than expected traffic numbers. Supporting the downgrade in BA-ML's view is the stock is very yield sensitive, the changes to its model generating a slight cut in dividend expectations.

The only stock to be downgraded by two brokers this week was Sims Group ((SGM)), both Macquarie and BA-ML moving to Sell ratings from Buy previously. The changes come after a trading update included weak earnings guidance, both brokers suggesting in the currently difficult trading environment share price outperformance for Sims is unlikely.

The trading update saw Sims top the list in terms of the largest cuts to broker price targets, while Programmed Maintenance enjoyed the largest increase in price targets following what was a well received profit result.

The database shows some solid positive revisions to earnings estimates for Alesco ((ALS)), while Sims, Echo Entertainment and Lynas Corporation ((LYC)) saw the largest cuts to forecasts. The changes for Lynas reflect uncertainty with respect to the granting of a temporary operating licence for its LAMP plus falling rare earth prices. 

Total Recommendations
 Recommendation Changes

 

Broker Recommendation Breakup

 

Broker Rating

Order Company Old Rating New Rating Broker
Upgrade
1 AGL ENERGY LTD Neutral Buy Citi
2 AUSENCO LTD Neutral Buy JP Morgan
3 AUSTRALIA & NEW ZEALAND BANKING GROUP Sell Neutral JP Morgan
4 CENTRO RETAIL AUSTRALIA Neutral Buy Citi
5 CSG LIMITED Sell Neutral RBS Australia
6 MONADELPHOUS GROUP LIMITED Neutral Buy Deutsche Bank
7 PROGRAMMED MAINTENANCE SERVICES LIMITED Neutral Buy Citi
8 Sigma Pharmaceuticals Ltd Sell Neutral Citi
9 SUNCORP GROUP LIMITED Sell Neutral Macquarie
Downgrade
10 ACRUX LIMITED Buy Neutral RBS Australia
11 ECHO ENTERTAINMENT GROUP LIMITED Buy Neutral JP Morgan
12 NATIONAL AUSTRALIA BANK LIMITED Neutral Sell JP Morgan
13 SIMS METAL MANAGEMENT LIMITED Buy Sell Macquarie
14 SIMS METAL MANAGEMENT LIMITED Buy Sell BA-Merrill Lynch
15 TRANSURBAN GROUP Buy Neutral BA-Merrill Lynch
 

Recommendation

Positive Change Covered by > 2 Brokers

Order Symbol Previous Rating New Rating Change Recs
1 AAX 80.0% 100.0% 20.0% 5
2 PRT 50.0% 67.0% 17.0% 6
3 MND 33.0% 50.0% 17.0% 6
4 CRF 50.0% 67.0% 17.0% 6
5 SIP - 29.0% - 14.0% 15.0% 7
6 PRG 86.0% 100.0% 14.0% 7
7 BSL 43.0% 57.0% 14.0% 7
8 SUN 75.0% 88.0% 13.0% 8
9 AGK 63.0% 75.0% 12.0% 8
10 ANZ 13.0% 25.0% 12.0% 8

Negative Change Covered by > 2 Brokers

Order Symbol Previous Rating New Rating Change Recs
1 SGM 100.0% 43.0% - 57.0% 7
2 TGA 67.0% 33.0% - 34.0% 3
3 SLM 40.0% 20.0% - 20.0% 5
4 TCL 71.0% 57.0% - 14.0% 7
5 EGP 38.0% 25.0% - 13.0% 8
 

Target Price

Positive Change Covered by > 2 Brokers

Order Symbol Previous Target New Target Change Recs
1 PRG 2.584 2.747 6.31% 7
2 CRF 2.005 2.060 2.74% 6
3 API 0.378 0.388 2.65% 4
4 AGK 16.264 16.391 0.78% 8
5 PRT 0.807 0.813 0.74% 6
6 TCL 6.067 6.103 0.59% 7
7 SUN 9.258 9.278 0.22% 8
8 SIP 0.629 0.630 0.16% 7

Negative Change Covered by > 2 Brokers

Order Symbol Previous Target New Target Change Recs
1 SGM 17.673 15.146 - 14.30% 7
2 SLM 2.922 2.562 - 12.32% 5
3 TGA 1.770 1.687 - 4.69% 3
4 EGP 4.620 4.554 - 1.43% 8
5 ANZ 24.491 24.256 - 0.96% 8
6 PRU 3.264 3.238 - 0.80% 4
7 MND 23.288 23.110 - 0.76% 6
8 BSL 0.603 0.599 - 0.66% 7
 

Earning Forecast

Positive Change Covered by > 2 Brokers

Order Symbol Previous EF New EF Change Recs
1 ALS 16.800 23.757 41.41% 6
2 AIZ 3.015 3.211 6.50% 4
3 SGP 30.029 31.357 4.42% 7
4 TGA 20.267 20.500 1.15% 3
5 SUN 63.975 64.435 0.72% 8
6 CRF 10.367 10.400 0.32% 6
7 IIN 24.917 24.983 0.26% 6
8 DJS 20.263 20.313 0.25% 8
9 GNC 102.733 102.983 0.24% 6
10 ORG 79.725 79.913 0.24% 8

Negative Change Covered by > 2 Brokers

Order Symbol Previous EF New EF Change Recs
1 LYC 0.317 - 1.750 - 652.05% 5
2 SGM 24.543 13.729 - 44.06% 7
3 EGP 20.438 18.550 - 9.24% 8
4 PRY 24.125 23.050 - 4.46% 8
5 WHC 6.957 6.657 - 4.31% 7
6 PRG 30.514 29.214 - 4.26% 7
7 SLM 26.567 25.617 - 3.58% 5
8 QAN 9.663 9.488 - 1.81% 8
9 TEN 3.575 3.525 - 1.40% 8
10 ORL 64.200 63.600 - 0.93% 5
 

Technical limitations

If you are reading this story through a third party distribution channel and you cannot see charts included, we apologise, but technical limitations are to blame.

Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)" - Warning this story contains unashamedly positive feedback on the service provided.