In the good books

MONASH IVF GROUP LIMITED (MVF) Upgrade to Add from Hold by Morgans B/H/S: 2/0/0

Morgans observes the share price has been punished after the company downgraded first half expectations. Transition to a new CEO, the loss of a key doctor and competitive pressures are the main issues. However, underlying IVF cycle numbers are returning to long-term growth rates, and despite downgrading FY18 net profit forecasts by -7.2%, the broker is encouraged by broader market developments. Morgans upgrades to Add from Hold. Target is reduced to $1.52 from $1.58.

VIRTUS HEALTH LIMITED (VRT) Upgrade to Add from Hold by Morgans. B/H/S: 2/1/0

Morgans suspects the broader IVF market is stabilising, as recovery in NSW and Victoria offsets weakness in Queensland. The weakness in the Virtus Health share price is considered an opportunity, seemingly affected by the unexpected downgrade by Monash IVF (MVF). The broker notes that the Monash issues are independent of the broader market. Morgans upgrades to Add from Hold. Target is $5.46.

In the not-so-good books

ARISTOCRAT LEISURE LIMITED (ALL) Downgrade to Accumulate from Buy by Ord Minnett B/H/S: 5/2/0

FY17 net profit was ahead of board minutes forecasts. The company has also announced the acquisition of game developer Big Fish. Ord Minnett observes the company has significantly increased its digital exposure, with further opportunities available. The broker considers the risk/reward attractive but, as there’s been a strong run up in the share price since September, downgrades to Accumulate from Buy. Target is reduced to $24.20 from $24.60.

MCMILLAN SHAKESPEARE LIMITED (MMS) Downgrade to Neutral from Buy by Citi B/H/S: 0/4/0 and SMARTGROUP CORPORATION LTD (SIQ) Downgrade to Neutral from Buy by Citi B/H/S: 4/2/0

Citi has updated on the Australian automotive fleet industry, recommending investors switch out of Smartgroup and McMillan Shakespeare and into EclipX (preferred) and SG Fleet. The analysts anticipate ongoing consolidation of the sector with both SG Fleet and EclipX expected to lead the move. To support the shift in preference, and in reference to elevated valuations, both Smartgroup and McMillan Shakespeare have received downgrades to Neutral. McMillan’s target is $16.87. and SmartGroup’s is $10.11.

Earnings forecast

Listed below are the companies that have had their forecast current year earnings raised or lowered by the brokers last week. The qualification is that the stock must be covered by at least two brokers. The table shows the previous forecast on an earnings per share basis, the new forecast, and the percentage change.

Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances.