In the good books
QBE INSURANCE GROUP LIMITED (QBE) Upgrade to Buy from Neutral by UBS B/H/S: 6/2/0. UBS has revisited its expectations for QBE and has become less negative on the cyclical trends in both personal and commercial lines in Australia. Although the company still faces some unique challenges the broker believes it is the most attractive exposure across the general insurers. UBS upgrades to Buy from Neutral. Target is steady at $14.50.
TELSTRA CORPORATION LIMITED (TLS) Upgrade to Neutral from Underperform by Macquarie B/H/S: 0/6/2. Telstra has copped some selling recently on concerns over competition and uncertainty over the company’s investment strategy, Macquarie notes. The broker nevertheless sees this as priced in and believes the macro backdrop remains broadly supportive for defensive stocks. The sell-off has also pushed up Telstra’s dividend yield. Ahead of the company’s investor day on Oct 29, Macquarie has upgraded to Neutral. Target unchanged at $5.85.
In the not-so-good books
GRANGE RESOURCES LIMITED (GRR) Downgrade to Underperform from Neutral by Macquarie B/H/S: 0/1/2. Grange saw better than expected prices in the September quarter and lower costs, but sales were weaker and inventory build greater than Macquarie expected, while working capital appears to have increased significantly. The result is a $10m drop in the company’s cash balance. Grange is the only iron ore producer under coverage to have seen a fall in cash balance in the quarter, Macquarie notes. Downgrade to Underperform, target falls to 9c from 11c.
PERSEUS MINING LIMITED (PRU) Downgrade to Neutral from Outperform by Macquarie B/H/S: 2/4/0. Perseus’ September quarter production was below Macquarie’s forecast on lower Edikan grades but met the lower end of the guidance range. Costs were lower than expected. Cost reductions provide a positive trade-off against what now look like lower grades ahead after a sterling FY15, the broker suggests. But the company has introduced some uncertainty in deciding to look at self-funding Sissingue rather than borrowing as originally planned. Macquarie thus downgrades to Neutral. Target falls to 40c from 48c.
Earnings Forecasts
FNArena tabulates the views of eight major Australian and international stock brokers: BA-Merrill Lynch, CIMB, Citi, Credit Suisse, Deutsche Bank, JP Morgan, Macquarie and UBS.
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