In the good books

GUD Holdings (GUD) was upgraded to Neutral from Sell by UBS. B/H/S – 2/3/0. The company recently acquired Disc Brakes Australia and is adding new lines to its automotive division. Feedback from industry appears supportive of the momentum in the automotive business. The company appears well placed to acquire high-quality aftermarket brands that are not too reliant on sales to either Bapcor (BA)) or Repco. Target is raised to $14.60 from $11.75.

Macquarie Group (MQG) was upgraded to Overweight from Equal-weight by Morgan Stanley. B/H/S – 4/3/0. Morgan Stanley believes Macquarie Group is benefiting from a favourable and diversified business mix. On a five-year outlook, the broker is increasingly confident and upgrades to Overweight from Equal-weight. Morgan Stanley observes the business is geared to the real economy, not just financial markets, and remains a leading alternative asset manager. Target is raised to $130 from $100.

In the not-so-good books 

IAG (IAG) was downgraded to Hold from Buy by Deutsche Bank. B/H/S – 1/6/1. Deutsche Bank expects the proceeds from the sale of Asian assets to be returned to shareholders and the capital return may be as large as $520 million. The broker welcomes the return to focus on the Australasian market. With the stock having re-rated from an historic discount to the broader market, to a significant premium over the past two years, the rating is now downgraded to Hold from Buy. Target is raised to $8.00 from $7.80.

Mirvac (MGR) was downgraded to Neutral from Outperform by Credit Suisse. B/H/S – 3/2/2. Whilst the company has reaffirmed FY18 guidance, a number of external factors point to a deteriorating residential market. One of these is tougher regulatory scrutiny and a focus on expenses, which is leading to tighter lending standards. The broker reduces the target to $2.38 from $2.50.

Super Retail Group (SUL) was downgrade to Neutral from Buy by UBS. B/H/S – 3/5/0. The share price has risen around 30% over the last three months, outperforming the market by a similar amount. Super Retail now trades at a -38% discount to the ASX 200 industrials ex financials. A more negative view on housing has caused UBS to downgrade to Neutral from Buy. The main driver of the Buy call was a large negative valuation implied in the share price for leisure, which is now considered more balanced. Target is $8.70.

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.

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.