In the good books
Superloop (SLC) was upgraded to Overweight from Equal-weight by Morgan Stanley
Superloop is a telco challenger competing for share from incumbents based on speed, price, flexibility and service. Morgan Stanley thinks the company’s medium-term targets of doubling revenue share to 4-5% from 2% today is highly achievable.
Superloop’s is a turnaround story, the broker believes, following leadership renewal, divestment of non-core assets, balance sheet repair and the Exetel acquisition. The broker sees upside from leveraging the company’s fibre network either organically or inorganically.
Upgrade to Overweight from Equal-weight. Target rises to $1.45 from $1.05. Industry view: In-Line.
Trajan Group (TRJ) was upgraded to Accumulate from Hold by Ord Minnett
Ord Minnett sees any share price weakness for Trajan Group as an opportunity for investors to accumulate, which tallies with its rating increase to Accumulate from Hold. The target price rises to $2.70 from $2.60.
While the analyst factors-in to forecasts the recently acquired Axel Semrau GmbH, a further acquisition of similar size would likely prompt a target price of $2.95. This is on the proviso the transaction occurs in the 2H of 2022 or 1H of 2023.
In the not-so-good books
Fortescue Metals (FMG) was downgraded to Neutral from Buy by Citi
Fortescue Metals Group has outperformed iron ore peers as the company’s share price rose 21% in the last month while competitors largely remained flat or down, but Citi now sees better value elsewhere finding Fortescue Metals Group has reached a fair value.
The company has managed to outperform benchmark iron ore pricing since early July, and has additionally benefited from falling shipping rates.
Rating is downgraded to Neutral from Buy and $18 target price is retained.
Pact Group Holdings (PGH) was downgraded to Neutral from Outperform by Macquarie
Macquarie lowers its rating for Pact Group Holdings to Neutral from Outperform based on global peer valuations. This comes as 1H earnings (EBIT) were guided to be $80m versus the $95m expected by Macquarie. The target price falls to $2.85 from $4.20.
The guided breakeven earnings for the Contract Manufacturing segment was largely responsible, versus the $13m for the previous corresponding period, explains the analyst.
Management expects positive underlying demand to continue in the 2H while market and supply chain disruption will persist in the near term. However, Macquarie feels this is being managed well.
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.