In the good books

BEACH ENERGY (BPT) was upgraded to Outperform from Neutral by Macquarie

With Beach Energy’s share price down -15% since May, Macquarie notes the company has underperformed the energy sector on account of its reduced five-year free cash flow guidance. The broker considers the Waitsia-North West Shelf contract win a positive surprise. Earnings forecasts for FY21-23 have been increased due to higher expected oil production and gas contract prices. Macquarie has upgraded its rating to Outperform from Neutral with a target price of $1.70.

FORTESCUE METALS GROUP (FMG) was upgraded to Buy from Hold by Ord Minnett

Ord Minnett expects 2021 iron ore price to increase to US$105/t from US$100/t due to higher China steel production estimates. This compels the broker to upgrade Fortescue Metals Group’s rating to Buy from Hold with the target price increased to $20 from $18.80. Iron ore price estimates for the group have been increased to US$51/t from US$48/t. The group offers a dividend yield of 9% over the next three years, according to the broker.

MAGELLAN FINANCIAL GROUP (MFG) was upgraded to Outperform from Neutral by Credit Suisse

Since the FY20 result Magellan Financial has dropped around -10%. Yet the infrastructure franchise has built a core offering which accounts for around half of its assets under management and Credit Suisse believes there is scope for a similar market in global equities. The broker upgrades estimates by 1-2% to account for higher net flows and believes the company’s products offer attractive characteristics that appeal to institutional investors and flows should remain robust. Rating is upgraded to Outperform from Neutral and the target raised to $65 from $60.

NUFARM (NUF) was upgraded to Add from Reduce by Morgans

Nufarm reports its FY20 result on September 23. The company has recently provided preliminary underlying earnings guidance of $290m-$300m for FY20, slightly below Morgans estimates. However, the broker expects FY20 earnings to be the low point given improved seasonal conditions in Australia. Additionally, the company said FY20 will be the trough for the European business. Given material share price weakness and a more attractive valuation, Morgans upgrades the rating to Add from Reduce and the target price is increased to $4.85 from $4.76.

In the good books (gold stocks)

Ord Minnett is positive on the outlook for gold and maintains a US$2,000/oz gold price forecast for the December half. However, a strengthening Australian dollar has been playing spoilsport, adds the broker, eroding margins and leading to near-term downgrades in earnings forecasts.

NEWCREST MINING (NCM) was upgraded to Accumulate from Hold by Ord Minnett

The broker has upgraded its rating for Newcrest Mining to Accumulate from Hold with the target price increasing to $35 from $34.

REGIS RESOURCES (RRL) was upgraded to Hold from Sell by Ord Minnett

Regis Resources’ rating has been upgraded to Hold from Sell with a target price of $4.80.

SARACEN MINERAL HOLDINGS (SAR) was upgraded to Hold from Lighten by Ord Minnett

FY21 production guidance for Saracen Mineral Holdings has been downgraded led by the Super Pit JV. Ord Minnett upgrades its rating to Hold from Lighten with a target price of $4.70.

The above was compiled from reports on FNArena. The FNArena database tabulates the views of seven major Australian and international stockbrokers: Citi, Credit Suisse, Macquarie, Morgan Stanley, Morgans, Ord Minnett and UBS.  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 regard to your circumstances.