In the good books
SCENTRE GROUP (SCG) was upgraded to Neutral from Sell by UBS
The risk to the downside is reducing and as a result UBS upgrades to Neutral from Sell. This takes into account the recent underperformance of the stock and improved valuation support along with better operating metrics. The ongoing re-setting of rents is now reflected in the price of the stock, the broker adds. Recent analysis also highlights a manageable vacancy profile. UBS expects 2021 growth in earnings per share of 32%, helped by reduction in coronavirus-related abatements. Target is steady at $2.65.
In the not-so-good books
CENTURIA INDUSTRIAL REIT (CIP) was downgraded to Neutral from Buy by UBS
Centuria Industrial has revalued its entire portfolio of 61 assets to a 4.53% cap rate, reflecting current market strength UBS asserts. The broker now believes the risk/reward is relatively balanced and downgrades to Neutral from Buy on valuation grounds. The broker’s preference is for Goodman Group (GMG) as current conditions are favouring developers and valuations for that stock now more conservative. Target is raised to $3.72 from $3.54.
DEXUS (DXS) was downgraded to Neutral from Outperform by Macquarie
After reviewing the earnings drivers for Dexus, Macquarie downgrades to Neutral from Outperform as balance sheet flexibility is more limited and headwinds from work-from-home persist. It’s expected DPS will fall -7% in FY22. The broker highlights key headwinds including over -$2bn of divestments, a reduction in occupancy driven by the expiry of Rio Tinto (RIO) contract at 123 Albert St and elevated tenant incentives. The deployment of around -$1.1bn of capital is not enough to offset the above headwinds, notes the analyst. The target price increases to $10.85 from $10.81.
INTEGRAL DIAGNOSTICS (IDX) was downgraded to Accumulate from Buy by Ord Minnett
Ord Minnett reviews the investment thesis for Integral Diagnostics. It’s believed the company is positioned for above-industry growth, driven by a portfolio inclusive of circa 36% comprehensive sites and a skew towards high end modalities. Additionally, there are tailwinds from recent acquisitions (including Ascot Radiology) and favourable demographics in key catchments. On a transfer of coverage to a new analyst, an Accumulate rating is set, with the price target lowered to $5.09 from $5.16. The trajectory of the recovery remains strong in the key states for the company, as indicated by April statistics, explains the analyst. Still, the fresh Accumulate rating compares with Buy from the previous analyst. Hence, while not necessarily communicated as such by the broker, today’s fresh update represents a mild downgrade from Buy.
NEWS CORPORATION (NWS) was downgraded to Neutral from Buy by UBS
UBS downgrades to Neutral from Buy on the back of recent strength in the share price. The broker assesses additional transparency surrounding Dow Jones, asset sales along with strength in digital real estate have contributed to the re-rating. The broker envisages continued headwinds at Foxtel while book publishing earnings should normalise in FY22. Target is raised to $35.00 from $33.20.
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.
