The chart below shows the buy recommendations of brokers. Companies are only displayed in this table if at least 5 of the above mentioned brokers have a current position on the stock. A broker sentiment value of +1 means all brokers have a buy recommendation. The target price upside/downside is relative to the price at the time the table was updated.
The stocks with the largest target price upside this week are Alacer Gold Corp with 80% and NextDC with 65.7%.
[table “240” not found /]To see more, as well as the sell recommendations, check back here weekly.
In the good books
TOX FREE SOLUTIONS LIMITED (TOX) Upgrade to Outperform from Neutral by Macquarie B/H/S: 1/3/1
Tox Free’s AGM revealed new contract wins at Ichthys and GLNG. Add in the retention of the Fortescue and ALNG contracts and the core business is on a strong footing heading into FY18, Macquarie suggests. There was no update on the Chevron contract, but this is becoming less of an issue, the broker believes.
With the core business winning contracts, the earnings outlook is solid and valuation is inexpensive, leading Macquarie to upgrade to Outperform. Target rises to $2.79 from $2.65.
WHITEHAVEN COAL LIMITED (WHC) Upgrade to Neutral from Sell by UBS B/H/S: 2/4/2
UBS has upgraded its coking coal price forecasts by 9-27% in FY17-18 and thermal coal by 4-17% leading to earnings forecast increases for Whitehaven of 53-163%. The broker’s new prices still remain well below current spot.
While Whitehaven remains beholden to Chinese policy, the recent share price pullback sees UBS upgrade to Neutral. Target rises to $2.90 from $2.60.
In the not-so-good books
ALUMINA LIMITED (AWC) Downgrade to Sell from Buy by UBS B/H/S: 0/4/3
2016 was a big year of change for Alumina Ltd, UBS notes, given alterations to the AWAC JV with Alcoa. If the alumina price holds at its current US$320/t, the company should be able to increase returns to shareholders.
But this is not UBS’ base case. The broker has lifted its alumina forecast to US$280 from US$260, resulting in 67-75% earnings forecast increases in FY17-18. The broker nevertheless suggests alumina is overbought and will retreat once Chinese restocking ends.
This view, and a solid share price run, sees UBS downgrading to Sell. Target rises to $1.50 from $1.45.
TRANSURBAN GROUP (TCL) Downgrade to Equal-weight from Overweight by Morgan Stanley B/H/S: 4/3/0
The company’s share price is up 12% from the November low, as fundamental value has re-asserted, Morgan Stanley notes.
The broker believes the growth projects will create value over time but there is some short-term risk to valuation, in terms of bond yields, and earnings, in terms of ride sharing.
The broker considers ride-sharing applications are positive in Australia, reducing congestion, but a near-term risk for US roads where customers with three or more occupants pay no toll.
Thus, the rating is downgraded to Equal-weight from Overweight. Target is lowered to $11.22 from $11.96. Cautious sector view retained.
Earnings forecast
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