In the good books
AGL Energy (AGL) was upgraded to Neutral from Sell by Citi. B/H/S – 4/3/0. Citi has analysed the data available on the entry of Alinta to the east coast and the price response observed in incumbent tariffs. While the broker still believes consensus earnings estimates signal complacency, relative to the risk posed by retail competition, the share prices imply compensation is already adequate in terms of retail margin compression. Hence, the broker upgrades to Neutral from Sell. Target is raised to $21.28 from $20.54.
Amcor (AMC) was upgraded to Equal-weight from Underweight by Morgan Stanley. B/H/S – 3/4/0. The company has faced a number of cyclical pressures in the past 12-18 months but Morgan Stanley believes there are early signs this is easing. The broker believes the company is now better equipped to deal with cost inflation. Despite a growth profile that is consistent with the industrials ex-financials, the stock is trading at an 18% discount. Target is raised to $14.80 from $14.40.
Genworth Mortgage Insurance Australia (GMA) was upgrade to Neutral from Sell by UBS. B/H/S – 1/1/0. UBS remains cautious about a gradual housing market correction but believes operating challenges that were posed by the decline in net earned premium have now played out and are widely appreciated. The broker now regards a Sell thesis as less compelling and upgrades to Neutral. UBS acknowledges that sentiment could push the stock’s value well below fundamentals if key housing data deteriorates. The surplus capital remains a positive and the broker renews expectations of capital returns. Target is reduced to $2.30 from $2.50.
Origin Energy (ORG) was upgraded to Buy from Neutral by Citi. B/H/S – 5/3/0. Citi has analysed the data available on the entry of Alinta to the east coast and the price response observed in incumbent tariffs. While the broker still believes consensus earnings estimates signal complacency, relative to the risk posed by retail competition, the share price implies compensation is already adequate in terms of retail margin compression. Target is raised to $10.06 from $9.61.
WiseTech Global (WTC) was upgraded to Neutral from Sell by Citi. B/H/S – 1/2/1. Citi had earlier downgraded to Sell as the share price had rallied well ahead of intrinsic valuation. Now that the share price has fallen back to earth, the analysts have upgraded to Neutral. Target price $9.51 (up from $9.02). The analysts remain of the view the company’s medium term outlook remains positive due to robust industry as well as company specific drivers. Equally interesting, WiseTech will organise its first ever Investor Day on 4th May.
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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