In the good booksÂ
Mayne Pharma Group (MYX) was upgraded to Outperform from Neutral by Credit Suisse. B/H/S – 2/0/0. Credit Suisse assesses the market for two new drugs the company intends to launch in FY19 and does not believe the current share price adequately reflects the intrinsic value of these drugs. The broker considers the stock undervalued and upgrades to Outperform from Neutral. Target is increased to $1.00 from $0.74 and further weakness in the upcoming results is considered a buying opportunity.
Western Areas (WSA) was upgraded to Neutral from Sell by Citi. B/H/S – 3/3/1. Previously Citi’s house forecast was for weaker nickel prices ahead, which underpinned its Sell rating for Western Areas. As the house view has now shifted towards “a more constructive view” on nickel (their words) the rating has moved to Neutral. Target price lifts to $3.20 from $2.60
In the not-so-good books
Coca Cola Amatil (CCL) was downgraded to Underperform from Outperform by Macquarie. B/H/S – 1/4/3. Macquarie downgrades to Underperform from Outperform, following recent strength in the share price. The broker believes Australian beverages remain susceptible to a number of headwinds and more money is expected to be spent in order for volumes to remain static. Ongoing weakness in Indonesia is also likely to affect near-term earnings. Target is reduced to $8.87 from $9.26. The company will report its result on August 22.
Charter Hall Retail REIT (CQR) was downgraded to Sell from Neutral by Citi. B/H/S – 0/3/2. Citi analysts don’t think recent share price rallies for some of the retail AREITs can be justified, hence the downgrade to Sell from Neutral. The analysts remain more bullish on AREITs with office, industrial and funds management exposure. Target falls to $3.76 from $3.87.
Scentre Group (SCG) was downgraded to Sell from Neutral by Citi and to Neutral from Outperform by Macquarie. B/H/S – 3/2/2. Citi has downgraded based on its overall view of the sector. Target drops to $4.11 from $4.19. The analysts acknowledge theirs are not consensus calls and therefore likely to trigger debate among investors and among peers. Among factors noted to worry about are ongoing structural headwinds, above average multiples and the potential for falling house prices to weigh on tenant sales. Macquarie expects 2018 guidance to be reaffirmed at the first half results, factoring in organic growth, a lower cost of debt and development completions. Macquarie downgrades to Neutral from Outperform, given the recent rally. Target is $4.46.
Shopping Centres Australasia Group (SCP) was downgraded to Sell from Neutral by Citi. B/H/S – 0/3/2. Citi has reviewed the AREIT sector and downgrades for the same reasons for its movements against Scentre Group and Charter Hall Retail REIT. Target rises by 4c to $2.18.
Southern Cross Media (SXL) was downgraded to Neutral from Buy by UBS. B/H/S -2/2/2. UBS lifts FY19 operating earnings forecasts by 2% because of the lagged effect of the company’s stronger-than-expected ratings momentum from the second half. No changes are made to FY18 forecasts. The share price is up 17% since the February result and the broker downgrades to Neutral from Buy. The broker raises the target to $1.25 from $1.20.
Sydney Airport Macquarie (SYD) was downgraded to Neutral from Outperform. B/H/S – 3/4/1. Traffic growth in the first half is consistent with Macquarie’s expectations. The broker expects some interest could emerge around Sydney Airport’s masterplan but that will be offset by the Productivity Commission review and associated aeronautical negotiations. Macquarie downgrades to Neutral from Outperform, as the valuation is considered stretched based on a bond rate assumption of 4.25%. Target is raised to $7.10 from $6.85.
The above was compiled from reports on FN Arena. The FNArena database tabulates the views of eight major Australian and international stock brokers: Citi, Credit Suisse, Deutsche Bank, Macquarie, Morgan Stanley, Morgans, Ord Minnett and UBS.
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