In the good books
Alumina Limited (AWC) was Upgraded to Outperform from Neutral by Macquarie
Alcoa will deploy technology improvements to reduce its capital expenditure and carbon intensity. Macquarie suggests the long-term earnings outlook has improved after incorporating updated AWAC production guidance.
The broker upgrades to Outperform from Neutral because of an improved earnings outlook and the potential for cash returns in the short term. Target is raised to $2.00 from $1.90.
CSL Limited (CSL) was Upgraded to Outperform from Neutral by Macquarie
Having reviewed the opportunities and risks for CSL’s immunoglobulin, and notwithstanding elevated multiples, Macquarie envisages a favourable growth profile and says the balance sheet remains attractive.
Over the medium to longer term, immunoglobulin growth should be supported by increased diagnosis of conditions in which the product is used. The new plasma collection platform could also improve efficiency.
The broker upgrades to Outperform from Neutral and raises its target to $338.00 from $302.50.
Pendal Group Limited (PDL) was Upgraded to Buy from Accumulate by Ord Minnett
FY21 net profit was broadly in line with Ord Minnett’s forecasts. Lower performance fees from JO Hambro have meant a reduction in forecasts going forward.
The broker suspects fixed cost growth will dampen near-term operating leverage while fund flows are likely to be lumpy.
Ord Minnett increases the rating to Buy from Accumulate while reducing the target to $8.50 from $8.60.
See downgrade below.
In the not-so-good books
Credit Corp Group Limited (CCP) was Downgraded to Accumulate from Buy by Ord Minnett
Credit Corp Group provided unchanged FY22 earnings guidance at its AGM, and raised the lower end of its purchased debt ledger (PDL) guidance. Despite this, Ord Minnett lowers its rating to Accumulate from Buy, due to a recently strong share price.
The target price rises to $35 from $32 as the broker sees credit starting to rebuild in the system and future PDL supply also appears to be emerging, particularly in the US.
Management highlighted its new product development pipeline, including US Consumer Lending, Auto Lending and a buy now, pay later product.
This stock is not covered in-house by Ord Minnett. Instead, the broker whitelabels research by JP Morgan.
Orica Limited (ORI) was Downgraded to Neutral from Outperform by Credit Suisse
Credit Suisse is constructive regarding Orica yet downgrades to Neutral from Outperform ahead of the FY21 result. Commodity cost pressures are likely to have increased throughout the second half and extend into the first half of FY22.
Higher import parity pricing is expected to create a more favourable environment allowing the company to increase prices, providing some offset. The broker upgrades the target to $17.23 from $16.11.
Pendal Group Limited (PDL) was Downgraded to Neutral from Outperform by Credit Suisse
While the FY21 results were ahead of Credit Suisse’s expectations and the stock is considered inexpensive, catalysts are likely to be more negative over the short term. Credit Suisse envisages downside risk should institutional outflows persist for longer.
Consequently, the rating is downgraded to Neutral from Outperform. The broker will be on the look out for signs that outflows are turning around as well as for the benefits of the multi-year global expansion. Target is reduced to $7.20 from $8.70.
See upgrade above.
REA Group Limited (REA) was Downgraded to Sell from Neutral by UBS
UBS raises its target price for REA Group to $170 from $160 after an “outstanding” first quarter result. While the broker upgrades its FY22 and FY23 EPS forecasts by 8% and 9% respectively, the rating is downgraded to Sell from Neutral on valuation.
While the group recorded 16% listing volume growth in October, the analyst feels volumes will remain volatile for the remainder of FY22. Management cautioned over second half risk from potential regulatory measures to slow house price inflation.
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.
