The final week of the February local reporting season continued to reveal a true frenzy among stockbroking analysts, with FNArena registering 20 upgrades and 14 downgrades for individual ASX-listed entities for the week ending Friday, 2 March 2018.

The week ahead will be considerably quieter representing the traditional lull post an eventful month.

In the good books

ARDENT LEISURE GROUP (AAD) was upgraded to Hold from Lighten by Ord Minnett. B/H/S: 2/4/1. First half results were significantly below forecasts, largely related to one-off charges in theme parks. Ord Minnett is encouraged by the trends in theme parks and Main Event, with some early signs that the turnaround effort is working.  The broker upgrades to Hold from Lighten based on valuation. Target is raised to $1.95 from $1.73.

BEADELL RESOURCES LIMITED (BDR) was upgraded to Buy from Neutral by Citi. B/H/S: 1/2/0.  2017 results were weaker than expected but the headline loss included a non-cash write-down of low-grade stockpiles. Citi upgrades to Buy/High Risk from Neutral/High Risk, as the share price has been slapped down and the Tucano upgrade is now funded, but stresses that debt and high operating expenditure makes the stock high risk. Target is reduced to 15c from 21c.

BEGA CHEESE LIMITED (BGA) was upgraded to Buy from Neutral by UBS. B/H/S: 1/1/0. First half results were ahead of estimates. UBS found the market’s reaction to the strong result was tempered by lower-than-expected guidance for FY18 earnings and commentary regarding margin pressure. The broker believes this provides an attractive entry point and upgrades to Buy from Neutral. Target is reduced to $7.90 from $8.30.

COSTA GROUP HOLDINGS LIMITED (CGC) was upgraded to Buy from Neutral by UBS and Upgrade to Accumulate from Hold by Ord Minnett. B/H/S: 3/0/0. First half results were ahead of estimates. The produce result was the highlight for UBS, beating forecasts by around 31% and driven by citrus and tomatoes. Berry revenue was flat, reflecting heavy deflation over the half. UBS upgrades estimates for earnings per share by 3-5% across FY18-20. The broker believes the company is well placed to outperform and the valuation is attractive. Rating is upgraded to Buy from Neutral. Target is raised to $7.50 from $6.80. Ord Minnett increases earnings forecasts by 16% for FY19, noting management is building its growth options, driven by berries, avocados, mushrooms and expansion overseas. Rating is upgraded to Accumulate from Hold. Target is raised to $7.52 from $6.03.

MACQUARIE ATLAS ROADS GROUP (MQA) was upgraded to Overweight from Equal-weight by Morgan Stanley. B/H/S: 6/0/0. 2017 results were a little better than expected. Morgan Stanley suggests the year ahead will be complex but ultimately worthwhile for investors. Should the board negotiate internalisation the broker expects this to be a positive, via reduced corporate costs. Rating is upgraded to Overweight from Equal-weight. Target is raised to $6.26 from $5.86. Industry view: Cautious.

MYOB LIMITED (MYO) was upgraded to Outperform from Neutral by Credit Suisse. B/H/S: 4/2/0. Full year results were in line with Credit Suisse but at the low end of the company’s guidance range. 2018 guidance was largely as expected. The broker makes minor changes to revenue forecasts following guidance for “8-10% organic growth”. The broker also adjusts numbers for the Reckon deal, lowering 2018 EPS forecast by 3% on higher costs. Target price rises to $3.75 from $3.60.

OCEANAGOLD CORPORATION (OGC) was upgraded to Buy from Neutral by UBS. B/H/S: 6/0/0. In the wake of the recent production downgrade, and increased capex forecast, UBS believes the worst is now behind Oceana. The broker’s key concern has been the Didipio ramp-up but revised guidance, that sees the project reaching nameplate production by end-2019, increases confidence. Target rises to $4.00 from $3.40.

QUBE HOLDINGS LIMITED (QUB) was upgraded to Neutral from Underperform by Credit Suisse. B/H/S: 2/5/0. First half results were ahead of estimates. Credit Suisse raises FY18 estimates for earnings per share by 11% and FY19 by 17% because of a stronger performance in ports and bulk. Logistics remains challenged but the broker expects management to deliver improvements. Target is raised to $2.35 from $2.30.

WOODSIDE PETROLEUM LIMITED (WPL) was upgraded to Hold from Lighten by Ord Minnett. B/H/S: 2/3/3.  Ord Minnett believes the biggest downside risk for the company is cash flow but the stock is looking more attractive on a valuation basis. The broker suggests the stock price is not factoring in much growth and approximately 10% of estimated value comes from growth projects that are valued on a risk-weighted basis. Ord Minnett raises the target to $29.70 from $29.00.

In the not-so-good books

ADELAIDE BRIGHTON LIMITED (ABC) was downgraded to Underweight from Equal-weight by Morgan Stanley. B/H/S: 1/3/2.  It was a result that came out in-line, comment the analysts, including the 4c in special dividend, but given the share price had rallied pre-results release, it simply wasn’t good enough. Morgan Stanley continues to have a problem with the valuation, and thus downgrades to Underweight from Equal-weight rating. Target remains unchanged at $6.00. Industry view: Cautious.

AUTOMOTIVE HOLDINGS GROUP LIMITED (AHG) was downgraded to Neutral from Outperform by Credit Suisse. B/H/S: 3/3/0. First half results suggest to Credit Suisse that, while the trajectory of the business has improved, much is dependent on the success of the sale of refrigerated logistics to HNA. The risk that the deal falls over is higher than would typically be the case, as HNA is currently undertaking asset sales to reduce debt. If the deal does not go ahead the company will be stuck with a capital-hungry refrigerated logistics business, the broker observes. Pending confirmation of the deal the rating is downgraded to Neutral from Outperform. Target is raised to $3.85 from $3.60.

GALAXY RESOURCES LIMITED (GXY) was downgraded to Equal-weight from Overweight by Morgan Stanley. B/H/S: 2/2/1. A revised lithium price forecast has reduced the stock’s valuation and Morgan Stanley also moves to a balanced bull versus bear case weighting. The latest price deck refreshes the broker’s base case view and now incorporates the risks of increased supply from Chile. Target is reduced to $3.05 from $3.50. Industry View: Attractive.

MONASH IVF GROUP LIMITED (MVF) was downgraded to Hold from Add by Morgans. B/H/S: 1/1/0. The broker was surprised by FY18 guidance, which has called for a net profit to be 25% lower than FY17. The broker adjusts forecasts accordingly and as a result, valuation falls significantly. Rating is downgraded to Hold from Add as the broker believes competitive pressures will continue to suppress earnings over the next few years. Target is reduced to $1.25 from $1.52.

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.

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