Tag Archives: Media

article 3 months old

Treasure Chest: The Media Outlook, Old & New, In 2013

By Greg Peel

It will be next year when a significant milestone will be passed in Australia's media history. For the first time, Credit Suisse forecasts, digital media will surpass free to air television as the country's largest advertising medium.

As 2012 comes to a close, it will be remembered as a year in which local FTA TV as we know it went very close to turning up its toes. The Seven Network, now under the Seven West Media ((SWM)) banner, is still kicking along but Channel Nine was saved at the eleventh hour by the skin of its teeth and the Ten Network ((TEN)) is rapidly back-pedalling. All three networks have spent the twenty-first century attempting to use previously unquestionable muscle to maintain an aging status quo and hold off the digital pretender. All three have been shown up as being smug incompetents.

They have all been shown up by the ABC in particular, which without a commercial agenda has embraced digital media from day one. They have all scrambled to take the first step by introducing digital sub-channels, and have signed up to the Freeview collective to service digital recorders, but beyond that they have resisted the growth of cable television and internet-based television at every turn. Moreover, they have attempted to secure this resistance through leaning on (threatening?) the government.

Increasingly such efforts are to little avail.

The print media has already suffered from slow-mover syndrome, and 2012 has also been a year in which, arguably, industry icon Fairfax Media ((FXJ)) came rather a little too close to obsolescence. Fairfax, and its print media rivals, are also now scrambling to catch up but they are some way behind. 

Rest assured no one saw the tablet coming.

The print-to-digital shift is accelerating, Credit Suisse notes. For print businesses, structural changes are likely to outweigh cyclical impacts (ie the economy) over the next twelve months. Credit Suisse suggests the structural shift in television will be slower, hence cyclical fluctuations and changes in ratings and revenue share are likely to have a greater impact in 2013. The believe advertising spend will remain subdued in 2013. By contrast, digital businesses will continue to report solid growth over the next twelve months, they believe.

The media stocks Credit Suisse suggest will provide the greatest total shareholder return in 2013 are Seven West Media, STW Communications ((SGN)) and Carsales.com ((CRZ)) – the old, the transitional and the new.

Seven West is old media but will benefit from the aforementioned slower digital revolution in television and the company's own dominant momentum in TV ratings and ad market share, as well as its dominant position in WA newspapers. STW is a company well-positioned to benefit from the structural shift from print to digital, having moved ahead in digital marketing offerings while still servicing the old print and TV guard. STW is the dominant player in ANZ but boasts growth upside potential in Asia. Auto advertising is a less volatile market than employment or real estate, and Carsales is the dominant player while still offering good value in PE terms, Credit Suisse suggests.

Credit Suisse has set Outperform ratings for SWM, SGN and CRZ. For other media sector stocks under coverage, the analysts provide Neutral ratings for News Corp ((NWS)), Ten Network, Prime Media ((PRT)), Trade Me Group ((TME)) and REA Group ((REA)) and Underperform ratings for Fairfax, APN News & Media ((APN)), Southern Cross Media ((SXL)), and Seek ((SEK)).

Where the argument is not one of old versus new, extended valuation is the primary issue.
 

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article 3 months old

Weekly Broker Wrap: TV, Mining Capex And Insurance Caution

By Andrew Nelson

It’s been a tough year for Australia’s free-to-air (FTA) TV broadcasters and Citi is starting to wonder whether Australia is big enough to maintain three FTA networks. After taking a look at international TV markets the broker notes Australia is a bit of an anomaly, as the majority of the markets the broker looked at were supporting two commercial broadcasters, not three.

Citi has undertaken a detailed review of twelve TV markets in advanced economies and Australia, believe it or not, comes away a global leader among FTA markets, underpinned by some very supportive structural market dynamics. The main supportive factor is the health and breadth of Australia's ad market, which sits is the global top quartile on both spend per capita and for percentage of GDP.

Because of this, TV in general is able to remain a very high value product, with broadcasters and publishers able to charge some fairly hefty cost per minute rates and cost per capita. Although, the broker notes relative to total advertising, TV holds a 31% share of ad spend in Australia, making it mid-range in terms of the bigger picture.

While FTA broadcasters have admittedly been impacted both locally and globally, struggling with weaker revenues and cost inflation, Australian FTA networks have outperformed international peers. All three players, Seven ((SWM)), Nine and Ten ((TEN)) are still profitable, just running on much thinner margins for the time being. It isn’t time to be predicting clear weather just yet, however, with Citi expecting to see further content cost inflation in order for the FTAs to keep up with pay TV operators.

Given the near term risks from both structural and cyclical pressures are still firmly in place, the broker maintains its preference for Seven, given its demonstrated ability, even over the past few years, in turning viewership into money.

New media also came into focus last week, with Goldman Sachs hosting its 2012 Online Conference. The first cab off the rank was the rise and rise of mobile computing, from phones to tablets to what else have you. The industry sees plenty of opportunity here, especially given the potential of increasing transaction levels via the integration of increasing user-based data and the evolution of search, especially given geo-location capabilities.

There was a consensus that companies must have a good strategy before taking on social media, as a half-hearted presence can do more harm to a brand than not being there at all. It is also quite difficult to measure return on investment (ROI) in social media investment, although it is agreed it’s better to be there than not.

The panel also agreed upon the importance of accepting the fact that companies will, at various stages and at various levels, have to formalise an on-line strategy at some point and then be committed to that migration. Although, the broker points out it is important to keep in mind that online capex has a shorter life cycle and short-term ROI can be hard to measure, thus flexibility remains the key. A prime example is the high correlation between online sales and AUD/USD exchange rate, which is already driving a noticeable change in on line sales momentum. 

Citi also took a look at the mining capex picture last week and its findings were definitely worth taking note of. In short, the broker believes the peak in mining and energy investment will probably occur in FY13, one year earlier than it had previously expected.

Much of the brought-forward downside is due to the deferral or cancellation of coal projects and to a lesser extent iron ore. The good news is the outlook for LNG investment has not really changed and this support has Citi believing that Australia probably isn’t looking at a steep investment cliff, but likely a more manageable decline. Although, the broker notes overall business investment growth could be close to flat over the next 12 months.

On the positive side, this drop in investment could see the imports of capital goods drop off by around 1% of GDP, unwinding the rise in imports that reduced the economic stimulus from the capex phase of the boom in the first place, which would help to soften the blow to overall economic growth.

The coal, iron ore and LNG export share of GDP would then start to rise again in FY14, although Citi believes the bulk of this ramp-up won’t be seen until FY16. Up until FY16, however, the broker notes there will be a gap between the pick-up in exports and the drop-off in capex of around 1.5% of GDP. Something will need to fill this gap and the broker believes a combination of lower imports and higher spending in the non-mining sectors may well do the trick.

The broker is also of the opinion that filling this gap won’t take as much luck as seems to be implied, with there already being a significant amount of pent-up demand across numerous sectors that have been squeezed out by the mining boom over the past few years. These sectors could well fill the growth gap. An example would be the fact that the share of housing investment has fallen by about 2% of GDP from its peak last decade. Demand here, as we all know, would be economically beneficial.

However, timing remains the key, notes the broker. Mining capex could actually come off faster than thought, or the AUD may remain stubbornly high for an even more prolonged period. This makes the task of rebalancing the economy even more problematic. Still, there are some early rays of sunshine, with Citi pointing to the recent signs of stabilisation in China’s growth and stabilizing commodity prices, both of which are positives for the rebalancing. Further rate cuts will also likely be needed, even if recent data belie the need for near-term action.

Analysts at Macquarie agree, noting the combination of lower commodity prices and a still high AUD continues to undermine resource company cash flow, and the ability to keep on growing investments from current levels. The broker believes resources investment will still keep rising until mid 2013 and then plateau, which has Maccas asking a similar question to Citi; what will drive growth over the second half of 2013 and beyond?

As already noted, a much weaker currency would help, but isn’t all that likely in the short term.  So, cross your fingers for increasing housing construction activity, as the broker sees this as being almost the only candidate.  Interest cuts will be key, says the broker, and hopefully quickly given the lags of monetary policy.

Bank of America-Merrill Lynch notes that as always, the outlook for insurers always depends, to some extent, on the weather. Natural peril claims are an important component of an insurer’s claim costs and ultimately, profitability. The broker notes both  Insurance Australia Group ((IAG)) and Suncorp ((SUN)) currently budget about 7% against net premium revenue for natural peril costs, with QBE’s ((QBE)) similarly high.

While the provisioning seems about right, the broker is a little troubled by the belief investors are pricing the Australian general insurers for a benign period of natural peril losses over the next two years. This is especially so for IAG,  with BA-ML noting some analysts are even running with natural peril budgets for IAG that are well below even the insurer’s own budgets for such costs. And while costs may actually prove to be low, the broker notes it’s a roll of the dice, more guesswork than fundamental analysis.

A word of caution from JP Morgan, who notes that despite persisting headwinds, the US housing market has so far staged a stronger recovery than expected. This has in turn started to lift most stocks with material US housing exposure. The benefits have already stated to flow through to James Hardie ((JHX)) and Boral ((BLD)), but the broker thinks the current improvement and much more is already priced into the two companies.
 

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article 3 months old

Top Ten Weekly Recommendation, Target Price, Earnings Forecast Changes

By Chris Shaw

As more companies use annual general meetings to confess on earnings guidance for FY13, changes to broker ratings have become weighted to the downside, with the past week seeing nine stocks upgraded compared to 27 downgrades. Total Buy recommendations in the FNArena database now stand at 42.77%.

Both Dexus Property ((DXS)) and IOOF Holdings ((IFL)) received two upgrades during the week. For Dexus, news the company intends to sell its remaining US assets to reinvest in the Australian market prompted Macquarie to move to a Neutral rating from Sell and JP Morgan to go one better and lift its rating to Buy from Neutral. In both cases the asset sale is seen as a likely positive catalyst for the stock.

Both Citi and Credit Suisse upgraded IOOF to Buy from Hold following the incorporation of the recent Plan B acquisition into earnings models, which resulted in increases to earnings estimates and price target. Credit Suisse also sees value given the stock is trading below historic average multiples.

Credit Suisse has also moved to a Buy rating from Hold on Goodman Fielder ((GFF)), this on the back of increases to earnings estimates given signs of improvement in the company's bread operations. The changes to forecasts resulted in an increase in price target.

With Archer Daniels Midland confirming an indicative proposal to acquire Graincorp ((GNC)), UBS has upgraded to a Buy rating from Hold previously to reflect the fact the stock is now in play. Given a potential list of suitors for Graincorp the broker has lifted its price target above the proposed offer price.

While Ten Network ((TEN)) delivered a disappointing full year result Deutsche Bank has upgraded to a Hold rating from Sell. While the long-term value in Ten's broadcasting licences is unlikely to be realised for some time, Deutsche takes the view the sale of the Eye Corp assets means a capital raising is now unlikely to be needed.

RBS Australia has upgraded WorleyParsons ((WOR)) to Buy from Hold post an investor day, largely on valuation grounds as both sector and peer multiples have improved in recent weeks. Changes to forecasts post the investor day saw some adjustments to price targets across the market.

JP Morgan was in a minority in upgrading OZ Minerals ((OZL)) to Hold from Sell post the company's quarterly production report. The lift in rating reflects the broker's view value is now less likely to be destroyed via merger and acquisition activity, while there is also seen to be a lack of negative catalysts for the share price at present.

Others didn't agree, as Citi, BA Merrill Lynch and Deutsche Bank all downgraded OZ Minerals during the week, the former to Hold from Buy and the others to Sell from Hold. Citi's downgrade reflects a lack of upside near-term given the stock is near valuation, while BA-ML takes the view rising costs will at some point have a more significant impact on earnings. Deutsche's downgrade is largely a valuation call.

A number of other stocks also received multiple downgrades, one being Mirvac Group ((MGR)). Both JP Morgan and Credit Suisse moved to Hold ratings from Buy following the group's quarterly update, both highlighting valuation as the reason for the rating change given recent gains in the share price.

National Australia Bank ((NAB)) saw both Macquarie and BA-ML downgrade, the former to Hold from Buy and the latter to Sell from Hold. Macquarie sees scope for the bank to have to deal with additional impairment charges in coming months given ongoing soft economic conditions, while BA-ML remains cautious on the outlook for the bank's UK assets as well.

Macquarie extended the weaker outlook to Westpac ((WBC)) as well, trimming earnings estimates and downgrading its rating to Underperform from Neutral.

Lower margin and revenue assumptions have seen estimates for Programmed Maintenance Services ((PRG)) lowered by Macquarie, while Credit Suisse has also adjusted down its forecasts and price target for the stock. In both cases the brokers have downgraded ratings to Neutral from Buy given an increasing risk profile.

SMS Management and Technology ((SMX)) delivered weaker AGM commentary than the market had expected and the resulting cuts to earnings estimates were enough for both Macquarie and UBS to downgrade to Hold ratings from Buy previously. Forecasts and price targets were lowered across the market.

It was a similar story for Treasury Wine Estates ((TWE)), where lowered guidance for the full year was enough for both Deutsche and UBS to downgrade to Sell ratings from Neutral recommendations previously.

On the resource side of the market BA-ML downgraded Alacer Gold ((AQG)) to Sell from Hold to reflect risk of further production disappointments following a weaker than expected quarterly production report.

Credit Suisse also downgraded Gindalbie ((GBG)) to Neutral from Sell following the incorporation of an equity raising for the Karara project into its model for the company. In the broker's view any such raising is unlikely to be well received by the market.

Citi has cut its rating on Oil Search ((OSH)) to Neutral from Buy following the company's quarterly, largely on a valuation basis as results for the period were broadly in line with expectations. Higher than expected costs saw UBS lower earnings estimates for Panoramic Resources ((PAN)) and when the potential need for additional funding is factored in the broker has moved to a Hold rating from Buy previously.

A weak September quarter production report from St Barbara ((SBM)) has left the market wanting more in the view of Deutsche, to the extent the broker has moved to a Neutral rating from Buy previously.

Among the industrials, BA-ML downgraded Ansell ((ANN)) to Sell from Hold on valuation grounds and RBS Australia has downgraded Australian Pharmaceutical Industries ((API)) to Hold from Buy on the same basis following the group's full year profit result. The result prompted changes to earnings estimates and price targets across the market.

RBS also downgraded both Biota ((BTA)) and Bradken ((BKN)) to Hold from Buy, the former as part of ceasing coverage on the stock given its imminent de-listing in Australia and the latter to reflect a full valuation given the expectation of a further softening in the group's markets.

Fletcher Building ((FBU)) saw a rating cut to Hold from Buy by Credit Suisse following solid share price gains, the broker noting the recent run in the stock has come before evidence the cycle has actually turned for building materials companies.

Credit Suisse also downgraded Goodman Group ((GMG)) to Sell from Hold on valuation grounds following a review of the REIT sector, while Deutsche downgraded Charter Hall Retail ((CQR)) on the same basis given the view the market is looking through Poland execution risk, where assets need to be sold to fund the group's development pipeline.

Lower earnings forecasts for SAI Global ((SAI)) given ongoing macro headwinds have been factored into JP Morgan's model, the result being the broker has downgraded to Neutral from Outperform to reflect additional pressure on the company to meet full year earnings expectations.

In terms of target price changes over the week only Australian Pharmaceutical enjoyed an increase of more than 10%, while Panoramic, SMS Management, Ten Network, Senex Energy ((SXY)) and Bradken saw targets reduced by 10% or more.

The cut in target for Senex came despite earnings forecasts being increased by more than 10%, the only stock in this category for the week. Cuts to earnings forecasts were most significant for Panoramic, Ten, Atlas Iron ((AGO)), BC Iron ((BCI)), Mount Gibson ((MGX)), Yancoal ((YAL)), Western Areas ((WSA)), GWA Group ((GWA)) and SMS Management. 


 

Total Recommendations
 Recommendation Changes

 

Broker Recommendation Breakup
Suisse,Deutsche<*br*>Bank,JP<*br*>Morgan,Macquarie,RBS<*br*>Australia,UBS&b0=110,89,93,90,75,121,142,113&h0=73,117,96,132,100,108,151,126&s0=57,29,43,12,43,39,13,19" style="border-bottom: #000000 1px solid; border-left: #000000 1px solid; border-top: #000000 1px solid; border-right: #000000 1px solid" />

 

Broker Rating

Order Company Old Rating New Rating Broker
Upgrade
1 DEXUS PROPERTY GROUP Sell Sell Macquarie
2 DEXUS PROPERTY GROUP Neutral Buy JP Morgan
3 GOODMAN FIELDER LIMITED Neutral Buy Credit Suisse
4 GRAINCORP LIMITED Neutral Buy UBS
5 IOOF HOLDINGS LIMITED Neutral Buy Citi
6 IOOF HOLDINGS LIMITED Neutral Buy Credit Suisse
7 OZ MINERALS LIMITED Sell Neutral JP Morgan
8 TEN NETWORK HOLDINGS LIMITED Sell Neutral Deutsche Bank
9 WORLEYPARSONS LIMITED Neutral Buy RBS Australia
Downgrade
10 ALACER GOLD CORP Neutral Sell BA-Merrill Lynch
11 ANSELL LIMITED Neutral Sell BA-Merrill Lynch
12 AUSTRALIAN PHARMACEUTICAL INDUSTRIES Buy Neutral RBS Australia
13 BIOTA HOLDINGS LIMITED Buy Neutral RBS Australia
14 BRADKEN LIMITED Buy Neutral RBS Australia
15 CHARTER HALL RETAIL REIT Buy Neutral Deutsche Bank
16 FLETCHER BUILDING LIMITED Buy Neutral Credit Suisse
17 GINDALBIE METALS LTD Buy Neutral Credit Suisse
18 GOODMAN GROUP Neutral Sell Credit Suisse
19 MIRVAC GROUP Buy Neutral JP Morgan
20 MIRVAC GROUP Buy Neutral Credit Suisse
21 NATIONAL AUSTRALIA BANK LIMITED Buy Neutral Macquarie
22 NATIONAL AUSTRALIA BANK LIMITED Neutral Sell BA-Merrill Lynch
23 OIL SEARCH LIMITED Buy Neutral Citi
24 OZ MINERALS LIMITED Buy Neutral Citi
25 OZ MINERALS LIMITED Sell Sell BA-Merrill Lynch
26 OZ MINERALS LIMITED Neutral Sell Deutsche Bank
27 PANORAMIC RESOURCES LIMITED Buy Neutral UBS
28 PROGRAMMED MAINTENANCE SERVICES LIMITED Buy Neutral Macquarie
29 PROGRAMMED MAINTENANCE SERVICES LIMITED Buy Neutral Credit Suisse
30 SAI GLOBAL LIMITED Buy Neutral JP Morgan
31 SMS MANAGEMENT & TECHNOLOGY LIMITED Buy Neutral Macquarie
32 SMS MANAGEMENT & TECHNOLOGY LIMITED Buy Neutral UBS
33 ST BARBARA LIMITED Buy Neutral Deutsche Bank
34 TREASURY WINE ESTATES LIMITED Neutral Sell UBS
35 TREASURY WINE ESTATES LIMITED Neutral Sell Deutsche Bank
36 WESTPAC BANKING CORPORATION Neutral Sell Macquarie
 

Recommendation

Positive Change Covered by > 2 Brokers

Order Symbol Previous Rating New Rating Change Recs
1 IFL 17.0% 50.0% 33.0% 6
2 PRY 25.0% 38.0% 13.0% 8
3 GFF 13.0% 25.0% 12.0% 8
4 CBA - 25.0% - 13.0% 12.0% 8
5 TEN - 50.0% - 38.0% 12.0% 8

Negative Change Covered by > 2 Brokers

Order Symbol Previous Rating New Rating Change Recs
1 SXY 100.0% 33.0% - 67.0% 3
2 SMX 75.0% 25.0% - 50.0% 4
3 PAN 100.0% 67.0% - 33.0% 3
4 API 50.0% 20.0% - 30.0% 5
5 PRG 100.0% 71.0% - 29.0% 7
6 MGR 57.0% 29.0% - 28.0% 7
7 NAB 13.0% - 13.0% - 26.0% 8
8 TWE - 38.0% - 63.0% - 25.0% 8
9 ARP 50.0% 25.0% - 25.0% 4
10 BKN 86.0% 71.0% - 15.0% 7
 

Target Price

Positive Change Covered by > 2 Brokers

Order Symbol Previous Target New Target Change Recs
1 API 0.408 0.520 27.45% 5
2 KMD 1.467 1.575 7.36% 3
3 IFL 6.242 6.517 4.41% 6
4 PRY 3.688 3.756 1.84% 8
5 MGR 1.470 1.490 1.36% 7
6 GFF 0.593 0.600 1.18% 8
7 CBA 53.606 54.196 1.10% 8
8 ARP 9.660 9.763 1.07% 4

Negative Change Covered by > 2 Brokers

Order Symbol Previous Target New Target Change Recs
1 PAN 1.083 0.883 - 18.47% 3
2 SMX 6.405 5.458 - 14.79% 4
3 TEN 0.481 0.421 - 12.47% 8
4 SXY 0.995 0.877 - 11.86% 3
5 BKN 7.439 6.641 - 10.73% 7
6 SGM 13.314 12.600 - 5.36% 6
7 AQG 7.599 7.294 - 4.01% 8
8 BBG 0.980 0.951 - 2.96% 8
9 CGF 4.439 4.310 - 2.91% 7
10 PRG 2.656 2.594 - 2.33% 7
 

Earning Forecast

Positive Change Covered by > 2 Brokers

Order Symbol Previous EF New EF Change Recs
1 SXY 2.000 2.300 15.00% 3
2 WPL 228.066 243.421 6.73% 8
3 CLO 8.633 9.000 4.25% 3
4 API 4.660 4.840 3.86% 5
5 SUL 60.443 61.357 1.51% 7
6 IFL 44.743 45.386 1.44% 6
7 GFF 5.413 5.488 1.39% 8
8 STO 61.988 62.763 1.25% 8
9 EVN 18.100 18.317 1.20% 6
10 QBE 131.511 132.748 0.94% 8

Negative Change Covered by > 2 Brokers

Order Symbol Previous EF New EF Change Recs
1 PAN 0.125 - 2.075 - 1760.00% 3
2 TEN 1.675 0.689 - 58.87% 8
3 AGO 10.113 5.913 - 41.53% 8
4 BCI 69.967 51.267 - 26.73% 3
5 MGX 21.175 16.388 - 22.61% 8
6 YAL 66.460 53.820 - 19.02% 5
7 WSA 17.314 14.814 - 14.44% 7
8 GWA 13.983 12.267 - 12.27% 6
9 SMX 38.680 34.420 - 11.01% 4
10 SXL 14.950 13.663 - 8.61% 7
 

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.

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article 3 months old

Weekly Broker Wrap: RBA, Banks And Swan’s Surplus Challenge

By Eva Brocklehurst

As the Reserve Bank board meets on October 2 for its monthly mulling over the forces in the economy, and ponders whether to carve off some more points from its official interest rates (and a number of economists suggest they will), the markets are doing their best to muddy the picture.

The overriding emphasis has been on mining, and coal and iron ore prices. It is now a case of, well, the peak has passed, where will any gap/opportunity come in the country's continued wealth creation?

A lot has been said about other sectors and how they struggle in the midst of all this focus on mining investment. Do they stand ready to pick up any opportunity? Can they take advantage of lower interest rates? According to economists at Bank of America Merrill Lynch, it might be not be all gloomy in the commodity country for its tourist industry, fraught for several years by the high Australian dollar which has made tourist arrivals slump.

The hallmark was Cyclone Yasi's devastating impact a couple of years ago on its psyche. After all, Far North Queensland, with its large economic dependence on tourism felt the financial devastation. However, the analysts are now mentioning ...tailwinds!

Merrills says, despite soft consumer confidence and challenging market conditions, "we are seeing potential tailwinds emerging in the domestic travel market". Domestic airfare prices are expected to hit new levels of affordability and drive an increase in passenger numbers (expected to be up 6-7%). So, they suggest a pairs trade strategy - Buy on Flight Centre ((FLT)) and go Underperform on Wotif.com ((WTF)).

The airlines team is forecasting domestic yield compression of 2.5% for Qantas in FY13 as a result of capacity additions and subsequent discounting. Nevertheless, declining yields are positive for the domestic travel industry and act as a proxy for airfare prices. Merrills continues to prefer Flight Centre as FY12 trading comments were supportive for growth in FY13. FLT remains a heavily shorted stock, however days short has decreased and the broker continues to view the short as an overplayed theme. As for Wotif.com, the analysts see some lift in the domestic travel market but are cautious on WTF given the structural challenges remain heightened and this translates into a muted EBIT (earnings before interest and taxes) growth forecast of 4.6% in FY13.

Another sector that has fallen hard is media and the upcoming AGM season (Oct/Nov) will likely tell the tale of woe. JP Morgan expects consensus downgrades across traditional media names.

There are several reasons for this including a subdued advertising market start, a lack of visibility on FY13 revenue as well as structural challenges. JPM analysis has highlighted FY13 EBITDA (earnings before interest, taxes, depreciation and amortisation) downside risk for Ten Network (-21%), Fairfax (-18%), Southern Cross Media (-13%), Seek (-9%) & Seven West (-8%).

So, stresses and strains in several sectors but a bit of hope in one that has been terribly stressed? Yes, it's muddy waters.

Lastly, what about the role of the banks?

According to UBS banking analysts, one thing that all the bank boards are likely to acknowledge is, that in tight times and with higher risks of a blow-out in defaults, cutting the ordinary dividend should be avoided wherever possible. The sector holds a big key to sentiment as a huge number of the retail shareholders are reliant on dividends as a form of income. UBS asks the question as to what bad debts could each bank sustain without needing to cut payouts.

The stockbroker notes that, with a large corporate default, banks are more likely to look through the issue than if the overall debt defaulting is a result of a broader economic slowdown. It seems, given the nature of this economic downturn, that banks have less ability to look through a deterioration in asset quality than in other cycles.

Then, a hint of a wish list.

UBS says the banks are now strong generators of free cash flow and, given the franking credit regime in Australia and shareholder desire for yield investments, there is a significant incentive for the boards to return much of this to shareholders in the form of higher dividend payout ratios. However, the question must still be asked whether this is a prudent approach in the current environment? Bank earnings are very highly leveraged to changes in asset quality and, while this is relatively benign, the higher levels of non-performing loans are not dissipating quickly.

Deputy Prime Minister Wayne Swan has a big task at hand for his mid-year economic report, which is likely to be delivered in the next six weeks. According to Goldman Sachs there are big challenges for the commitment to a Commonwealth budget surplus. Indeed, the economists flagged the RBA's Financial Stability Review, recently released, which noted increased financial system vulnerability, but continued to characterise the ongoing consolidation in corporate and household balance sheets as desirable.

This means less money is coming into the government's coffers.

Goldman says the bigger issue since mid-year is the degree to which the adverse, and unusual, falling bulk commodity prices and strong Australian dollar, both have undermined the outlook. The economists have tested the sensitivity of Australian tax revenues to a terms of trade-driven negative income shock of around 2% of nominal GDP and find there is around $20bn downside risk to forecast Commonwealth tax revenues over FY13 and FY14 - mostly via a weaker company tax take.

In contrast, a commodity price shock presents a comparatively modest downside risk to state government goods and services tax receipts, with a much larger threat posed via the outlook for mining royalties. Moreover, the economists flag that absent new efforts to claw back revenue and restrain spending, fiscal projections will fall materially short of budget. However, sufficient revenue and mitigating expenditure cuts should be found to preserve existing sovereign credit ratings.. phew.

Yes, a hard task wading through muddy water.

 
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article 3 months old

Media Sector Can’t Ad

- Total ad market in Australia grew slightly in six months to June
 - August numbers were weak 
 - Online advertising market share now exceeds newspapers
 - JP Morgan cuts earnings estimates for media companies
 

By Chris Shaw

For the six months to the end of June, Commercial Economic Advisory Service of Australia (CEASA) data showed the total advertising market in Australia rose 1.7% in the June half of 2012, or by 0.6% when adjusted for online ad spend.

The CEASA data showed online's 26.9% share of the advertising market has overtaken that of newspapers at 24.1%. This switch has occurred over the past year, as Goldman Sachs notes online's share has risen by almost 5% in that time while total newspaper share has fallen by around 3%.

The largest media type for advertising spending remains TV, this sector accounting for 30.7% of the total market. Metro TV stands at 20.6%, Pay TV has 3.5% of the market and Regional TV has 6.6%, though Goldman Sachs notes TV's total share of the market declined slightly in the June half.

Also doing it tough are regional newspapers and magazines, both performing worse in the period than Goldman Sachs had expected. Regional newspapers delivered an 18.5% decline in total ad market, against the broker's forecast of a 5% decline, while regional magazines registered a decline of 26% against a forecast of a 15% fall.

In general, Goldman Sachs suggests the CEASA report included little new information, meaning no major changes to ad market forecasts. For FY13 Goldman Sachs expects ad market growth of 4.2%, rising to 4.4% in FY14. These estimates are up from previous forecasts of 4.1% and 4.3% respectively.

The recent trend of weak advertising data has extended into August. JP Morgan notes Standard Media Index (SMI) data for August showed an acceleration in the currently weak advertising market, as total bookings for the month fell 14.3%. As Credit Suisse points out, the decline in August follows revised falls of 5.0% in July and 1.9% in the previous corresponding period.

Newspapers and magazines fell the heaviest, Credit Suisse noting newspaper advertising spending fell 24% in year-on-year terms in August, slightly better than the revised 28% fall in July. Magazine advertising fell 31% in year-on-year terms, extending the print advertising decline to 18 consecutive months.

JP Morgan notes metro TV data for the month showed a decline in advertising of 13.9%. Metro radio showed a 9.7% decline, while digital advertising recorded a decline of 8%. JP Morgan suggests the Olympics may have impacted on this category in particular.

In category terms, Credit Suisse notes retail reported static numbers for August, while Auto ad spend fell 1% in year-on-year terms and sectors such as Toiletries and Cosmetics and Communications saw significant declines of more than 30% for the month on year-on-year terms.

Prior to the release of the August SMI data, JP Morgan had already lowered earnings estimates across the media sector to reflect a weak outlook for ad spending. The changes reflected market feedback indicating a short ad market and some structural trends were impacting on ad spending in general.

Changes to earnings estimates put through by JP Morgan ranged from minor in the case of both Fairfax ((FXJ)) and Prime Television ((PRT)), where earnings per share (EPS) numbers were lowered by 2.0-4.0% through FY14, to significant in the case of Ten Network ((TEN)) and Consolidated Media ((CMJ)). EPS forecasts for the latter two companies were cut by 18% to 65% in FY13 and by around 15% in FY14.

The changes to forecasts prompted cuts to price targets for most stocks under coverage by JP Morgan, with the exception of REA Group ((REA)). Forecasts for this company were increased by 4-5% through FY14, which generated in increase in price target to $15.16 from $14.35.

Despite the reductions to numbers, JP Morgan cautions risk to consensus earnings forecasts for FY13 remains to the downside for a number of companies in the sector. These include Ten, Fairfax, Seek ((SEK)), Southern Cross Media ((SXL)), Seven West Media ((SWM)) and APN News & Media ((APN)). This reflects an expectation of only a modest increase in ad spending in FY13. JP Morgan is forecasting an increase of 1.4%, down from 2.0% previously. 

This risk leaves JP Morgan conservative on the sector, as the broker rates only Prime Media and Seven West Media as Overweight. This reflects a more positive view on TV ratings and a category preference for free-to-air given sport and local drama is regarded as less of a commoditised product.

Both Seek and Southern Cross Media are rated as Underweight, the former given JP Morgan has a negative view on expected job volumes for FY13 and the latter given adverse revenue and ratings trends for the coming year.

While Fairfax and Ten Network are trading at depressed valuation levels both are rated as Neutral, JP Morgan suggesting a cautious approach on both stocks is appropriate given the potential for downside risk to consensus earnings forecasts. APN News and Media, Consolidated Media and REA Group are also rated as Neutral by JP Morgan. 

Stock ratings in the sector also reflect the current extreme polarisation in valuation evident between traditional and new media companies. As pointed out by JP Morgan, traditional media stocks are trading on earnings multiples of as low as three times at present (APN News & Media), rising to a multiple of more than 20 times for the perceived growth stock REA Group.

While a different growth profile goes some way to explaining this spread in valuations, JP Morgan notes the valuation gap between perceived higher and lower growth sectors of the media market has expanded over the past 18 months.

Sentiment Indicator readings in the FNArena database for the Australian media stocks updated by JP Morgan range between 0.9 for Seven West Media, 0.8 for Prime Media, 0.6 for Southern Cross Media, 0.3 for REA Group, 0.1 for Consolidated Media and Seek, 0.0 for APN News and Media and Fairfax to minus 0.4 for Ten Network.


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article 3 months old

Top Ten Weekly Recommendation, Target Price, Earnings Forecast Changes

By Chris Shaw

The past week has been fairly evenly balanced in terms of ratings changes by the eight brokers in the FNArena database, with seven ratings upgraded and ten downgraded during the period. Total Buy ratings now stand at 44.64%.

Among the upgrades were two resource plays, Atlas Iron ((AGO)) and Regis Resources ((RRL)). Atlas was upgraded by UBS to Neutral from Sell, as despite the weaker iron ore price the broker suggests Atlas has enough liquidity to meet its capex, dividend and tax requirements in FY13. Recent share price weakness has improved the value on offer enough for UBS to upgrade.

For Regis Resources, full year earnings showed a strengthening of the group's balance sheet, while Deutsche continues to see value as production increases from the combination of the Moolart Well and Garden Well projects and dividends from the company come closer to reality. Deutsche has lifted its rating to Buy from Hold, while also lifting its price target on the stock.

Among the industrials, UBS upgraded Breville Group ((BRG)) to Buy from Neutral given the expectation the company can continue to grow its share of the US market. Breville's profit result prompted changes to earnings forecasts and the result was an increase in UBS's price target for the stock.

While forecasting lower average income growth in the office sector in FY13, JP Morgan continues to like the quality of Dexus's ((DXS)) portfolio, while the broker also sees scope for an increase in payout ratios in coming years. This is enough for an upgrade to a Neutral rating from Underweight previously.

Sigma Pharmaceuticals ((SIP)) delivered a better interim profit result than Macquarie had forecast, the result being increases to estimates in coming years. Macquarie's price target increased as well and on valuation grounds the broker has upgraded to a Neutral rating from Sell.

Deutsche Bank upgraded both Leighton Holdings ((LEI)) and Myer ((MYR)) to Buy ratings this week, in both cases from Hold previously. For Leighton, Deutsche suggests the market is pricing in too much risk, particularly given the company is primarily exposed to low cost mines and committed LNG projects within its resource sector activities. There are also some potential balance sheet positives such as a sale of NextGen, which is enough to justify a more positive view at current share price levels.

With respect to Myer, an improvement in gross margin was the highlight of the full year profit result in Deutsche's view. Top line growth continues to look difficult to achieve but the stock offers an attractive yield and some longer-term value at current levels in the broker's view, which supports the upgrade in rating.

On the downgrade side of the ledger UBS has cut its rating on Ansell ((ANN)) to Sell from Neutral, the change something of a relative valuation call given the company is seen to have less defensive earnings than others in the sector. The downgrade in rating comes despite an increase in price target.

UBS also downgraded Brambles ((BXB)) to a Hold rating from Buy, again on valuation grounds following an 8% rally in the share price since full year earnings were announced in August. As UBS notes, the stock is now trading broadly in line with valuation.

Aquarius Platinum ((AQP)) has been downgraded by BA Merrill Lynch to Sell from Hold as part of a reinstatement of coverage. With two mines on care and maintenance the broker sees a turnaround as reliant on improving operations at Kroondal, which is currently operating at a loss. When political risk is added to the equation BA-ML sees little upside for the stock in the shorter-term.

Credit Suisse has similarly downgraded Envestra ((ENV)) to Sell from Hold, this coming after changes to estimates to account for expectations of upcoming draft regulatory decisions. The cuts to forecasts impacted on the broker's price target, while the rating downgrade is a valuation call by Credit Suisse.

The Reject Shop ((TRS)) was also downgraded to Sell from Hold by Credit Suisse, this after recent share price outperformance suggests limited further upside from current levels. While group gearing should improve with Ipswich DC flooding claims being finalised, Credit Suisse expects tough operating conditions will continue for some time.

Recent share price strength has been enough for Citi to downgrade Insurance Australia Group ((IAG)) to Hold from Buy, as even allowing for an increase in price target the broker doesn't see enough upside from current levels to justify a more positive rating. 

JP Morgan has made two downgrades over the week, lowering ratings on both Southern Cross Media ((SXL)) and Toll Holdings ((TOL)) to Sell from Hold. For Southern Cross, still tough TV conditions lead the broker to suggest further cuts to consensus earnings estimates are unlikely, something that will act to limit potential share price upside.

In Toll's case, JP Morgan suggests a focus on market share is generating some domestic margin pressure and this suggests earnings headwinds are likely to remain in place for some time. Along with the downgrade in rating, the broker has trimmed earnings forecasts and price target.

OnTheHouse Holdings ((OTH)) delivered a result better than RBS Australia had forecast for FY12, but the broker expects FY13 will see earnings pumped back into the online business an in attempt to ensure longer-term growth. This is enough to prompt a downgrade to a Hold rating from Buy.

Macquarie has similarly downgrade Woodside ((WPL)) to Hold from Buy, this as a result of taking a less bullish view on the outlook for Australian LNG plays given the expectation of increasing competition in the global market. This view prompted cuts to earnings estimates and the broker's price target for the stock.

With respect to changes to price targets, the largest increases were seen in Webjet ((WEB)) and Sigma, while the largest decrease was in NRW Holdings ((NWH)). Only the latter saw a change of more than 10%.

Changes to earnings estimates were more significant, with Aquarius seeing the largest increase in forecasts and Panoramic Resources ((PAN)), Lynas ((LYC)) and Gindalbie ((GBG) experiencing the largest cuts to earnings expectations.  

Total Recommendations
 Recommendation Changes

 

Broker Recommendation Breakup
Suisse,Deutsche<*br*>Bank,JP<*br*>Morgan,Macquarie,RBS<*br*>Australia,UBS&b0=114,91,103,91,74,130,140,116&h0=76,116,91,130,97,100,154,125&s0=50,26,38,9,45,36,10,15" style="border-bottom: #000000 1px solid; border-left: #000000 1px solid; border-top: #000000 1px solid; border-right: #000000 1px solid" />

 

Broker Rating

Order Company Old Rating New Rating Broker
Upgrade
1 ATLAS IRON LIMITED Sell Neutral UBS
2 BREVILLE GROUP LIMITED Neutral Buy UBS
3 DEXUS PROPERTY GROUP Sell Neutral JP Morgan
4 LEIGHTON HOLDINGS LIMITED Neutral Buy Deutsche Bank
5 MYER HOLDINGS LIMITED Neutral Buy Deutsche Bank
6 REGIS RESOURCES LIMITED Neutral Buy Deutsche Bank
7 Sigma Pharmaceuticals Ltd Sell Neutral Macquarie
Downgrade
8 ANSELL LIMITED Neutral Sell UBS
9 AQUARIUS PLATINUM LIMITED Neutral Sell BA-Merrill Lynch
10 BRAMBLES LIMITED Buy Neutral UBS
11 ENVESTRA LIMITED Neutral Sell Credit Suisse
12 INSURANCE AUSTRALIA GROUP LIMITED Buy Neutral Citi
13 ONTHEHOUSEHOLDINGS LIMITED Buy Neutral RBS Australia
14 SOUTHERN CROSS MEDIA GROUP Neutral Sell JP Morgan
15 THE REJECT SHOP LIMITED Neutral Sell Credit Suisse
16 TOLL HOLDINGS LIMITED Neutral Sell JP Morgan
17 WOODSIDE PETROLEUM LIMITED Buy Neutral Macquarie
 

Recommendation

Positive Change Covered by > 2 Brokers

Order Symbol Previous Rating New Rating Change Recs
1 PAN 67.0% 100.0% 33.0% 3
2 BRG 67.0% 100.0% 33.0% 3
3 SIP - 14.0% 14.0% 28.0% 7
4 DXS - 29.0% - 14.0% 15.0% 7
5 BSL 43.0% 57.0% 14.0% 7
6 RRL 57.0% 71.0% 14.0% 7
7 AGO 50.0% 63.0% 13.0% 8
8 WEB 25.0% 33.0% 8.0% 3

Negative Change Covered by > 2 Brokers

Order Symbol Previous Rating New Rating Change Recs
1 AQP 40.0% 20.0% - 20.0% 5
2 CTX - 33.0% - 50.0% - 17.0% 6
3 ARI 83.0% 67.0% - 16.0% 6
4 GPT - 14.0% - 29.0% - 15.0% 7
5 NWH 86.0% 71.0% - 15.0% 7
6 BXB 86.0% 71.0% - 15.0% 7
7 ANN 29.0% 14.0% - 15.0% 7
8 IAG 38.0% 25.0% - 13.0% 8
9 NCM 38.0% 25.0% - 13.0% 8
10 SUN 88.0% 75.0% - 13.0% 8
 

Target Price

Positive Change Covered by > 2 Brokers

Order Symbol Previous Target New Target Change Recs
1 WEB 3.580 3.917 9.41% 3
2 SIP 0.627 0.681 8.61% 7
3 BRG 5.683 6.117 7.64% 3
4 RRL 4.686 4.844 3.37% 7
5 ANN 15.060 15.226 1.10% 7
6 GPT 3.500 3.534 0.97% 7
7 IAG 4.079 4.098 0.47% 8
8 CTX 14.060 14.110 0.36% 6
9 CHC 2.656 2.663 0.26% 6

Negative Change Covered by > 2 Brokers

Order Symbol Previous Target New Target Change Recs
1 NWH 3.924 3.516 - 10.40% 7
2 PAN 1.175 1.083 - 7.83% 3
3 ARI 1.238 1.172 - 5.33% 6
4 AGO 2.299 2.236 - 2.74% 8
5 SXL 1.501 1.471 - 2.00% 8
6 WPL 40.359 40.171 - 0.47% 8
 

Earning Forecast

Positive Change Covered by > 2 Brokers

Order Symbol Previous EF New EF Change Recs
1 AQP 2.608 3.387 29.87% 5
2 COH 274.738 281.325 2.40% 8
3 SIP 4.657 4.757 2.15% 7
4 GPT 23.957 24.129 0.72% 7
5 QRN 21.075 21.200 0.59% 7
6 RMD 19.962 20.004 0.21% 8
7 WPL 223.107 223.443 0.15% 8
8 WDC 63.775 63.813 0.06% 8
9 SGP 28.914 28.929 0.05% 7
10 HZN 2.081 2.082 0.05% 4

Negative Change Covered by > 2 Brokers

Order Symbol Previous EF New EF Change Recs
1 PAN 4.400 0.125 - 97.16% 3
2 LYC 1.800 0.600 - 66.67% 5
3 GBG 4.567 3.617 - 20.80% 6
4 AGO 12.763 11.513 - 9.79% 8
5 FMG 53.948 49.840 - 7.61% 8
6 RRL 60.529 56.286 - 7.01% 7
7 GRR 6.933 6.517 - 6.00% 6
8 MGX 24.363 22.963 - 5.75% 8
9 NWH 41.086 39.543 - 3.76% 7
10 BHP 280.180 271.866 - 2.97% 8
 

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article 3 months old

The Short Report

By Andrew Nelson

For the week to 05 September 2012, significant increases in short positions far outweighed significant decreases, both in terms of the numbers and in terms of the average magnitude of the changes. Just one stock saw its short position pull back by more than one percentage point over the period, while nine stocks experienced a greater than one percentage point increase.

We’ll start our coverage on the decrease side of the ledger, as it is a fairly short list of just one. After last week sitting on the top of the increase list, Allied Gold ((ALD)) finds itself on top of the weekly short decrease leader board this week, with total shorts decreasing by 2.49 percentage points from 2.81% to 0.32%. Investors have seemingly come to grips with the St Barbara Mines ((SBM)) merger that was approved by the High Court a few weeks back.

St Barbara, who were number two on the increase list last week right behind Allied didn’t respond in the quite the same fashion. Shorts in SBM actually increased a further 0.87 percentage points from 3.60% to 4.47% over the period. The stock remains Neutrally regarded by brokers in the FNArena database, with one Buy, Hold and Sell call recorded. The company’s FY result was reviewed by all three brokers towards the end of August, with Macquarie noting some doubts about the risk/reward profile of the merger.

Number eight on this week’s Top 20 list (that being a list of the 20 most shorted stocks on the Australian market) also booked a decline in its overall short position, albeit a minor one. Shorts in the shares in Cochlear ((COH)) declined 0.42 percentage points to 9.51% from 9.53%. The stock is negatively regarded by brokers in the FNArena database, with 4 Sells and 4 Neutrals. Yesterday, the company announced new N5 failure rates from US data that most brokers saw as a sign of improvement. Of course, this news would have had no impact on short position moves up to Sept. 5.

Number 19 on this week’s Top 20 list, Carsales ((CRZ)), also featured near the top of the decliners list, with short positions coming off 0.47 percentage points to 7.59% from 8.06%. Full year earnings in mid-August were well received. Again, while having no bearing on last week’s short position moves, Macquarie noted this Monday that it seems the threat from News Ltd’s ((NWS)) Carsguide that many were expecting to take a chunk out of Carsales has pretty much proved a non event.

Switching focus to the other side of the table, we see that three of the top 4 biggest increases in short position over the week were booked by retailers. Shorts in The Reject Shop ((TRS)) advanced 2.77 percentage points from 7.87% to 10.64%, seeing it now sit at number 5 on the Top 20 list. The company’s FY efforts were fairly well received by brokers late August; with Credit Suisse even lifting its call to Neutral post release. The Reject Shop would likely be higher on the list were JB HiFi ((JBH)), Flight Centre ((FLT)), or Fairfax ((FXJ)) to relax their grip on their seemingly permanent Top 5 spots a little.

Fellow retailer Myer finds itself at number two on the increase list, helping it to easily maintain its position in the Top 20. Short positions in the company increased by 2.70 percentage points from 7.23% to 9.93% over the week. The company reports FY numbers today and just this Monday analysts at Citi voiced their concerns about falling margins. The guys across the street at David Jones also saw their short position increase significantly, rising 2.27 percentage points from 7.18% to 9.45%.

Cabcharge saw its short position grow by 2.57 percentage points from 1.61 to 4.18%. In-line FY results were fairly well recieved in the last week of August and the stock is Neutrally regarded by brokers in the FNArena database, boasting one Sell, one Buy and four Holds.

Engineering services companies also featured amongst the biggest increasers, with Downer EDI ((DOW)), UGL ((UGL)) and Monadelphous ((MND)) all seeing their short position increase by more than 1%. Shorts in both Downer and UGL lifted by 1.71 percentage points, taking Downer to 3.69% shorted and UGL to 5.84%. Monadelphous’ short position rose 1.45 percentage points to 5.88%.

While there has been little of note from Downer over the past few weeks, last week saw UGL host analysts in Shanghai to talk about the new strategy. The response was fairly positive for the most part. Both stocks are regarded positively by brokers in the FNArena database, although out the two, Downer is the more favoured. UGL had to issue a profit warning in August.

The weekly Top 20 list looks pretty much the same as last week, with a only a few minor position changes of note.

Discretionary retail plays continued to dominate the top 20 most shorted list, with investors and brokers remaining concerned about the uncertain consumer outlook. Significant short positions were maintained by JB Hi-Fi ((JBH)), Flight Centre ((FLT)), The Reject Shop, Harvey Norman ((HVN)), Myer and David Jones. All remain in the top 10.

Resources and resources services stocks also maintain their prominent positions in the top 20.  Lynas ((LYC)) and Iluka ((ILU)) remain in the Top 10, while numbers 11-20 are dominated by base materials plays of various description such as CSR ((CSR)), Alumina ((AWC)), Paladin ((PDN)) and Fortescue ((FMG)).

The picture was quite similar looking at the monthly changes to short positions, with 21 stocks booking an increase of 1 percentage point or more, while just eight stocks enjoyed a better than 1 percentage point decrease in position.

The most prominent move on the decrease side of the ledger was booked by Discovery Metals ((DML)), with its short position falling 3.02 percentage points from 5.31% to 2.29%. The latest broker commentary on the stock came from Citi at the end of August, with the broker worried that costs will come in much higher than expected. The broker has DML at Sell, versus two Buys and a Neutral that are also recorded in the FNArena database.

Carsales was number two on the decrease list, down 2.74 percentage points from 10.33% to 7.69% shorted. Next was Seven West ((SWM)), whose short position declined 1.93 percentage points from 3.77% to 1.84%.  The stock is very positively regarded in the FNArena database, with broker’s positively reviewing the company’s FY effort on the 23-24 of August.

The most significant monthly decrease was posted by Silver Lake Resources ((SLR)), with JP Morgan liking the FY result last week and seeing potential upside from the Integra Mining ((IGR)) acquisition.

APA Group ((APA)) was next on the list, with short positions pulling back 2.80 percentage points to 4.51%, while Whitehaven Coal’s ((WHC)) short position improved by 2.43 percentage points to 3.92% shorted. The latter stock enjoys across the board Buy call in the FNArena database.

Monadelphous and Mesoblast ((MSB)) round out the top 5 decliners list. Both companies enjoy marginally positive ratings in the FNArena database and neither have drawn broker commentary over the past three weeks.

Looking at the week to 10 September, analysts from RBS note short positioning across the market remains at a record high average of 2.4%. Small to mid-cap resource stocks like Iluka and Panoramic Resources ((PAN)) remain key targets. The broker also points out that shorts in both Gold and Iron Ore stocks have doubled in the past six months, while Capital Goods stocks have also seen a recent spike in short interest.

On the other hand, short covering in banks has been the recent trend, with short decreases in Westpac ((WBC)) and Commonwealth Bank ((CBA)) more than offsetting the rise in shorts booked by National Australia Bank ((NAB)), which the broker notes has gone from 0.4% to 1.0% over the past two weeks.

Top 20 Largest Short Positions

Rank Symbol Short Position Total Product %Short
1 JBH 19697908 98850643 19.93
2 FLT 12714644 100072666 12.71
3 LYC 194606019 1715029131 11.35
4 FXJ 263096984 2351955725 11.19
5 TRS 2808625 26092220 10.76
6 ILU 42481692 418700517 10.15
7 MYR 58213554 583384551 9.98
8 COH 5509152 56972605 9.67
9 DJS 50142816 528655600 9.48
10 HVN 97646834 1062316784 9.19
11 CSR 45278798 506000315 8.95
12 LNC 45070275 504487631 8.93
13 AWC 211621322 2440196187 8.67
14 PDN 65993967 835645290 7.90
15 FMG 241608127 3113798659 7.76
16 SGT 10509671 154444714 6.80
17 GNS 55105305 848401559 6.50
18 MSB 18505035 284478361 6.50
19 CRZ 14981006 233689223 6.41
20 WTF 13557185 211736244 6.40

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

The Short Report

By Andrew Nelson

Significant increases in short positions outweighed significant decreases for the week to 29 August, while the total number of short position increases also outpaced decreases. A total of 3 stocks experienced a short position increase of more than 1% over the period, while only one stock enjoyed a decrease greater than 1%.

Allied Gold ((ALD)) finds itself on top of the weekly short increase leader board this week, with total shorts increasing by 1.9 percentage points from 0.91% to 2.81% over the course of the week. Shareholders approved the merger with St Barbara Mines ((SBM)) a few weeks back and High Court approval followed on August 29th.

No prizes for guessing who’s next on the short increase list. Shorts in St Barbara increased by 1.83 percentage points from 1.77% to 3.60% over the period. The stock is Neutrally regarded by brokers in the FNArena database, with a Buy, Hold and Sell call recorded. The company’s in-line FY result was reviewed by all three brokers on the 24th, with Macquarie skeptical about the risk/reward profile of the merger.

JB Hi-Fi ((JBH)) increased its lead at the number one position on the leader board, with short positions rising 1.36 percentage points from 18.91% to 20.27% over the course of the weekly period. Broker’s reviewed the company’s broadly in-line FY report on the 14th of August, although a good number remain skeptical about the prospects for earnings improvement. The stock is negatively regarded by brokers in the FNArena database, with 2 Buys, 3 Neutrals and 3 Sell calls.

As mentioned, only one stock enjoyed a 1%+ decrease in short positions over the weekly period. Shorts in Australian Infrastructure ((AIX)) pulled back 1.26 percentage points from 3.05% to 2.17%. The FY result posted during the period was viewed positively for the most part, although news that AIX had received a $2bn offer from the Future Fund for all of the group's assets saw both JP Morgan and UBS downgrade the stock to Sell and Neutral respectively on the basis of a good offer price.

Regular Top 10 inclusion Cochlear ((COH)) booked a slightly less significant decrease in its short position over the period. Shorts in the stock pulled back by 0.68 percentage points from 10.61% to 9.93% despite no news or broker commentary over the period. The stock remains negatively reviewed by brokers in the FNArena database, with 4 Neutrals and 4 Sells.

The weekly Top 20 list was little changed, with one stock leaving the list and one stock joining. SingTel ((SGT)) came off the Top 20, giving its number 18 position to Specialty Fashion ((SFH)).

Discretionary retail plays continued to dominate the top 20 most shorted list, with investors and brokers remaining concerned about the uncertain consumer outlook. Significant short positions were maintained by JB Hi-Fi, Flight Centre ((FLT)), The Reject Shop ((TRS)), Harvey Norman ((HVN)) and Myer ((MYR)), which all remain in the top 10.

With the slowdown in China continuing to stifle commodity prices, short sellers also continue to focus on resources and resources services stocks.  Lynas ((LYC)) and Iluka ((ILU)) remain in the Top 10, while numbers 11-20 are dominated by resource plays of various description.

Looking at month on month numbers, stocks on the increase and decrease were fairly well balanced, although the magnitude of the decreases were somewhat more significant than the increases. Fifteen stocks saw short position improve by more than 1 percentage point, while sixteen increased by more than 1 percentage points.

Positively regarded Seven West Media ((SWM)) booked the biggest monthly improvement, with its overall short position dropping 3.61 percentage points from 5.34% to just 1.73%. The move is mostly likely due to a well received FY effort put out over the period.

RBS thinks the stock is cheap on a FY13 PER of 7.3x and especially given a dividend yield of 7.5%. The broker notes TV earnings remain solid and it believes the company should easily be able to maintain a 39-40% market share, with earnings upside possible if Seven can take greater advantage of Ten’s ((TEN)) fall in the ratings.

Myer also featured prominently on the monthly decliners list, with shorts positions coming off 2.75 percentage points from 9.98% shorted down to 7.23%. The stock is Neutrally regarded by brokers in the FNArena universe.

Not to be left out, fellow retailer The Reject Shop also posted a solid monthly improvement, with shorts slipping 2.33 percentage points from 10.2% to 7.87% shorted. Credit Suisse upgraded the stock to Neutral over the period post a fairly well received FY report.

The biggest monthly increase in overall short position was booked by Silver Lake Resources ((SLR)). Opinions remained mixed on the Integra ((IGR)) acquisition leading into the company’s FY result, which occurred just after the weekly period we are reviewing. JP Morgan thought said FY result was solid.

Whitehaven Coal ((WHC)) also saw a significant increase in its overall short position, which was up 2.96 percentage points from 1.2% to 4.16%. The company booked an in-line FY profit result over the period, but investors were likely troubled by news that Nathan Tinkler had withdrawn its takeover offer. The stock still rates all Buys in the FNArena database.

Looking at the week to 3 September, analysts from RBS note short positioning across the market has reached a record high average of 2.4%. Small to mid-cap resource stocks like Fortescue ((FMG)), Alumina ((AWC)) and Kingsgate Consolidated ((KCN)) led the way, with short positions sitting at 7.2%, 9% and 4.8% respectively. The broker also points out that short position in gold and iron ore stocks have doubled in the past six months.
 

Top 20 Largest Short Positions

Rank Symbol Short Position Total Product %Short
1 JBH 20579042 98850643 20.82
2 FLT 13272368 100055135 13.27
3 FXJ 264192329 2351955725 11.23
4 TRS 2906225 26092220 11.14
5 LYC 190207424 1715029131 11.09
6 MYR 59546708 583384551 10.21
7 COH 5710860 56972605 10.02
8 ILU 40451260 418700517 9.66
9 HVN 98496106 1062316784 9.27
10 DJS 48870611 528655600 9.24
11 CSR 45665370 506000315 9.02
12 LNC 44180651 504487631 8.76
13 AWC 212078319 2440196187 8.69
14 CRZ 19132975 233689223 8.19
15 WTF 17067127 211736244 8.06
16 PDN 63616539 835645290 7.61
17 FMG 226135686 3113798659 7.26
18 SFY 401384 6123605 6.55
19 MSB 18533201 284478361 6.51
20 GNS 55105305 848401559 6.50

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

Seeking Jobs Growth

- Seek surprises to the upside
- Yield growth offsets weaker volumes
- Subsidiaries bounce back
- It's nevertheless all about jobs growth forecasts


By Greg Peel

A 25% increase in underlying net profit for FY12 from online employment specialist SEEK Ltd ((SEK)) took analysts and the market by surprise. In an weak macro environment of slowing jobs growth in Australia and China Seek proved the resilience of its business model, even as the ANZ job ads series, for example, has seen an eleven month run of declines for a 6.6% drop in ads year to date, including an 8.6% drop (post Seek's reporting period) in July.

The ANZ job ads series is as good a driver of general market sentiment towards Seek – the more mature of the coterie of ASX-listed digital advertising services – which is why the result was such a surprise. Analysts note Seek is trading at a discount to peers as a result of cautious sentiment, but then not all brokers believe this is unjustified.

A big surprise in the result was an expected sudden turnaround in the earnings fortunes of Seek's diversified Learning and Think businesses. Analysts see the potential for both to continue to improve in FY13. However the more fundamental surprise was the resilience of Seek's core Australian job ads business. BA-Merrill Lynch notes that while job ad volumes increased by a mere 1%, job ad revenue increased by 11%. Management puts this impressive increase in yield down to churn and job ad repostings.

Things were not quite as resilient in China, where subsidiary Zhaopin suffered a clear revenue slowdown in the second half and is staring at an imminent refinancing resolution. However at 15% for the next three years, Zhaopin's tax rate is materially lower than analysts had assumed, which serves to offset revenue weakness. Hong Kong's JobsDB is also suffering a slowdown.

Deutsche Bank is arguably the most positive of brokers having reported on the Seek result to date, justifying its Buy rating with the belief that “while we expect earnings growth to slow in FY13 we consider the group remains very well positioned to generate superior earnings growth and deserves to trade at a premium to the market”. Were labour market conditions to improve, suggests, Deutsche, record earnings growth could be expected.

And therein lies the real issue. Will labour market conditions improve? 

Management is relatively circumspect. Seek International and Seek Education are expected to post higher earnings in FY13 but job ads earnings are expected to be flat, relying on increased yield to offset falling volumes. The Macquarie analysts note this offset in applying a Neutral rating. Goldman Sachs is also on Neutral given the labour market outlook along with Seek's valuation.

Valuation is indeed an issue. The share price leapt 7% yesterday and has outperformed the ASX 200 by 13% this month alone. It's too much for JP Morgan who has now downgraded to Underweight. JPM's ratings are sector-based and the analysts prefer Seven West Media ((SWM)) in the space.

JP Morgan also sees an 18x price/earnings estimate for FY13 as a bit rich. Yet Seek's valuation can be viewed from different angles. Both UBS (Buy) and Deutsche point out Seek is trading at a significant discount to local online peers REA Group ((REA)) in real estate and Carsales.com ((CRZ)) in auto ads, and this is unjustified. Merrills acknowledges this discount but then notes Seek is trading at a significant premium to Asian jobs boards with greater exposure to early stage structural growth.

Take your pick.

Merrills (Underperform) remains concerned that poor consumer sentiment is likely to see new job volumes deteriorate further in FY13 and sees repostings at a risk of decline as contracts roll off during the year. The analysts expect a similar 9% growth in revenue yield in FY13 but revenue will contract by 10% on Merrill's forecasts given an expected 18% drop in volumes.

JP Morgan has downgraded but is not quite as dour on the jobs growth front, expecting a 9% contraction in volumes.

In the busy result season not all FNArena database brokers have updated their views on Seek as yet, leaving fur Buy or equivalent ratings, one Hold and four Sells. Target price upgrades to date see the consensus target lift to $7.24, offering a mere 2.2% in upside on today's trading price. The consensus target nevertheless may improve on some further broker reports.

Seek has done extremely well, it seems, but like so many stocks on the ASX its all about the macro climate, and thus what the investor's view on that might be ahead. At 16% plus forecast earnings growth for FY13 on consensus, Seek cannot be sniffed at. But is there value at this level?


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article 3 months old

Top Ten Weekly Recommendation, Target Price, Earnings Forecast Changes

By Chris Shaw

Downgrades to company ratings by brokers in the FNArena database outweighed upgrades this week by a score of 12 to nine, leaving total Buy ratings at 50.03%.

Among the upgrades was Billabong ((BBG)), where UBS lifted its rating to Neutral from Sell on news of yet another approach from private equity play TPG. UBS's valuation has increased in line with the offer of $1.45 per share, though Citi went the other way and downgraded to a Neutral rating from Buy given the share price reaction to TPG's approach and the conditional nature of its proposal.

Newcrest ((NCM)) was also upgraded by UBS to Buy from Neutral after delivering a solid quarterly production report. While delivery of key projects remains a major driver for the stock, UBS sees improved value following recent share price weakness, which justifies the upgrade in rating. Brokers across the market revised earnings forecasts and price targets on the back of the production report.

The June quarter production report also saw UBS upgrade OZ Minerals ((OZL)) to Neutral from Sell, the move again based on improved valuation stemming from recent share price weakness. The quarterly report resulted in cuts to UBS's earnings estimates and price target, a move matched by others in the market as the result was factored into broker models.

A positive trading update from Nufarm included an increase in full year earnings guidance, which was enough for brokers to lift estimates and price targets. For JP Morgan it was also enough for a rating upgrade to Neutral from Underweight, which reflects both favourable conditions in Australia and positive momentum in the ongoing process of repositioning the business.

While trimming its earnings estimates and price target, Credit Suisse upgraded QR National ((QRN)) to Neutral from Underperform based on revised total expected shareholder return expectations. A softening demand profile remains the broker's main concern with respect to the stock.

Recent share price weakness has presented a buying opportunity in Seek ((SEK)) in the view of RBS Australia, as the broker notes buying the stock in periods when job ads are under pressure has typically paid off. Minor changes to forecasts see the broker trim its price target.

There is potential for Sigma Pharmaceutical ((SIP)) to start distributing excess capital to shareholders in the view of Citi, who expects any such increase in payouts will generate a share price re-rating. Recommendation has been upgraded to Buy from Neutral.

Among the downgrades, BC Iron ((BCI)) continues to deliver operationally according to UBS, but revisions to iron ore price expectations see the broker lower earnings forecasts from FY13. The changes mean a cut in price target and cause the broker to downgrade to a Neutral rating from Buy previously.

Both UBS and Citi downgraded GUD Holdings ((GUD)) to a Sell, the former from Buy and the latter from Neutral. The changes came after a full year profit result lower than had been expected and limited upside potential given what remain difficult operating conditions.

Limited total return potential is also the reason behind Credit Suisse downgrading Goodman Fielder ((GFF)) to Sell from Hold, as the broker simply sees little scope for outperformance in the current environment. Minor changes to forecasts reflect some revised timing assumptions for restructuring charges.

BA-Merrill Lynch has downgraded a couple of resource plays, moving to Sell ratings on both Grange Resources ((GRR)) and Intrepid Mines ((IAU)) from Buy in both cases. For Grange operational issues impact on production expectations and there are some management changes coming, while for Intrepid the suspension of operations at Tujuh Buki adds significantly to the investment risk associated with the company.

Higher cash costs have impacted on Macquarie's earnings forecasts for Kingsgate ((KCN)) but the bigger issue is the potential for higher external funding requirements for the Nueva Esperanza project. This has been enough for Macquarie to downgrade to a Neutral rating from Buy.

Expectations for a continuation of the trend of declining traffic for Macquarie Atlas's core APRR asset has seen JP Morgan revise its model for the company. Along with a cut in price target the broker has downgraded to a Sell rating from Neutral. 

Recent share price outperformance and some minor changes to forecasts and price target have been enough for Credit Suisse to downgrade Stockland ((SGP)) to a Neutral rating from Buy previously, while UBS has similarly downgraded Westfield Retail Trust ((WRT)) on valuation grounds. 

Outside of those stocks where ratings were changed, the major price target adjustment during the week was for Hutchison Telecommunications ((HTA)), where targets were reduced following what was regarded as a poor interim earnings result.

There were no major increases in earnings estimates during the week, while cuts to forecasts were largest for Aquarius Platinum ((AQP)), Western Areas ((WSA)), BC Iron, OZ Minerals, Ten Network ((TEN)) and Newcrest. 


 

Total Recommendations
 Recommendation Changes

 

Broker Recommendation Breakup
Suisse,Deutsche<*br*>Bank,JP<*br*>Morgan,Macquarie,RBS<*br*>Australia,UBS&b0=119,105,121,101,81,141,149,132&h0=78,104,81,123,92,88,143,108&s0=42,22,30,4,39,35,10,15" style="border-bottom: #000000 1px solid; border-left: #000000 1px solid; border-top: #000000 1px solid; border-right: #000000 1px solid" />

 

Broker Rating

Order Company Old Rating New Rating Broker
Upgrade
1 BILLABONG INTERNATIONAL LIMITED Sell Neutral UBS
2 NAVITAS LIMITED Neutral Buy Credit Suisse
3 NEWCREST MINING LIMITED Neutral Buy UBS
4 NUFARM LIMITED Sell Neutral JP Morgan
5 OZ MINERALS LIMITED Sell Neutral UBS
6 QR NATIONAL Sell Neutral Credit Suisse
7 SEEK LIMITED Neutral Buy RBS Australia
8 Sigma Pharmaceuticals Ltd Neutral Buy Citi
Downgrade
9 BC IRON LIMITED Buy Neutral UBS
10 BILLABONG INTERNATIONAL LIMITED Sell Neutral Citi
11 G.U.D. HOLDINGS LIMITED Neutral Sell Citi
12 G.U.D. HOLDINGS LIMITED Buy Sell UBS
13 GOODMAN FIELDER LIMITED Neutral Sell Credit Suisse
14 GRANGE RESOURCES LIMITED Buy Sell BA-Merrill Lynch
15 INTREPID MINES LIMITED Buy Sell BA-Merrill Lynch
16 KINGSGATE CONSOLIDATED LIMITED Buy Neutral Macquarie
17 MACQUARIE ATLAS ROADS GROUP Neutral Sell JP Morgan
18 STOCKLAND Buy Neutral Credit Suisse
19 WESTFIELD RETAIL TRUST Buy Neutral UBS
 

Recommendation

Positive Change Covered by > 2 Brokers

Order Symbol Previous Rating New Rating Change Recs
1 BBG - 50.0% - 13.0% 37.0% 8
2 NVT 17.0% 33.0% 16.0% 6
3 QRN 14.0% 29.0% 15.0% 7
4 NUF - 29.0% - 14.0% 15.0% 7
5 NWS 29.0% 43.0% 14.0% 7
6 SEK 29.0% 43.0% 14.0% 7
7 SWM 75.0% 88.0% 13.0% 8
8 OZL 25.0% 38.0% 13.0% 8
9 NCM 88.0% 100.0% 12.0% 8
10 HTA - 33.0% - 25.0% 8.0% 4

Negative Change Covered by > 2 Brokers

Order Symbol Previous Rating New Rating Change Recs
1 GUD 17.0% - 33.0% - 50.0% 6
2 BCI 100.0% 67.0% - 33.0% 3
3 GRR 83.0% 50.0% - 33.0% 6
4 MQA 40.0% 20.0% - 20.0% 5
5 WRT 71.0% 57.0% - 14.0% 7
6 SGP 57.0% 43.0% - 14.0% 7
7 WOW 38.0% 25.0% - 13.0% 8
8 OSH 100.0% 88.0% - 12.0% 8
 

Target Price

Positive Change Covered by > 2 Brokers

Order Symbol Previous Target New Target Change Recs
1 BBG 1.159 1.277 10.18% 8
2 NVT 3.853 4.168 8.18% 6
3 NUF 4.893 5.059 3.39% 7
4 WOW 27.108 27.510 1.48% 8
5 WRT 2.900 2.911 0.38% 7

Negative Change Covered by > 2 Brokers

Order Symbol Previous Target New Target Change Recs
1 HTA 0.055 0.030 - 45.45% 4
2 MQA 1.854 1.738 - 6.26% 5
3 BCI 3.350 3.150 - 5.97% 3
4 OZL 9.956 9.439 - 5.19% 8
5 SWM 2.503 2.390 - 4.51% 8
6 GUD 8.148 7.898 - 3.07% 6
7 NCM 32.575 31.761 - 2.50% 8
8 GRR 0.728 0.712 - 2.20% 6
9 SEK 7.144 7.101 - 0.60% 7
10 QRN 3.850 3.836 - 0.36% 7
 

Earning Forecast

Positive Change Covered by > 2 Brokers

Order Symbol Previous EF New EF Change Recs
1 NAB 248.925 254.950 2.42% 8
2 ROC 4.470 4.572 2.28% 5
3 CGF 56.800 57.871 1.89% 7
4 JHX 37.502 38.017 1.37% 8
5 QBE 137.747 139.205 1.06% 8
6 ASL 42.214 42.643 1.02% 7
7 CTX 131.233 132.400 0.89% 6
8 TEL 15.131 15.217 0.57% 8
9 WOW 189.850 190.750 0.47% 8
10 ALZ 24.050 24.157 0.44% 7

Negative Change Covered by > 2 Brokers

Order Symbol Previous EF New EF Change Recs
1 AQP 7.473 4.566 - 38.90% 5
2 WSA 23.667 19.017 - 19.65% 6
3 BCI 80.800 69.233 - 14.32% 3
4 OZL 63.438 54.388 - 14.27% 8
5 TEN 1.953 1.675 - 14.23% 8
6 NCM 193.363 166.475 - 13.91% 8
7 AGO 23.550 20.938 - 11.09% 8
8 PNA 32.602 29.118 - 10.69% 8
9 STO 65.650 59.925 - 8.72% 8
10 MQG 269.143 246.529 - 8.40% 7
 

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.