The August reporting season is done and dusted and overall activity among securities analysts as measured by upgrades and downgrades for individual ASX-listed entities has fallen to single digits for each for the week ending Friday 6 September 2019. No surprises here.
Fittingly, FNArena registered six upgrades and six downgrades. Five of the upgrades moved to Buy, while three of the downgrades became a fresh Sell rating. The unlucky receivers of the latter are Collection House (disappointing result), CSR (still no improvement for building materials) and Harvey Norman (disappointing result).
The real fireworks was reserved for changes to earnings forecasts which are, on both sides, considerable. On the positive side sits Myer on top, followed by Freedom Foods Group, Western Areas, Austal, and Village Roadshow.
On the negative side, where reductions on average are larger, we find NextDC, Orocobre, TPG Telecom (results release), Incitec Pivot, and Senex Energy.
Things should quieten down significantly post August and with out-of-season results releases few and far between, but this assumes the absence of further profit warnings a la CYBG on Thursday last week, which followed a profit warning from Incitec Pivot 48 hours earlier.
In the good books
(All upgrades covered in last Thursday’s Switzer Report [1])
In the not-so-good books
3P LEARNING LIMITED (3PL) was downgraded to Neutral from Outperform by Macquarie B/H/S: 0/2/0
3P Learning’s result missed Macquarie’s Forecast by -13%, with the core A&NZ business impacted by execution issues and competition. Europe et al saw earnings declines due to Brexit and contract losses, while the Americas did okay, albeit assisted by the currency. Recent licence trends have tempered FY20 growth expectations, the broker notes, with concerns raised as to whether A&NZ has “peaked”. Management is confident of improvement, but the broker expects the market will require evidence of this to provide for any re-rating. In the meantime, Macquarie downgrades to Neutral. Target falls to 90c from $1.50.
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.
The above was compiled from reports on FNArena. The FNArena database tabulates the views of seven major Australian and international stock brokers: 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.