There have been 2 upgrades and 5 downgrades from the 7 stockbrokers monitored by FNArena so far this week.
In the good books
Carsales.com Limited (CAR) was upgraded to Outperform from Neutral by Macquarie
Macquarie downgrades its view on the media sector to Underweight from Neutral, noting multiples are already pointing to a cyclical easing post-monetary-policy tightening and the broker cuts sector earnings assumptions.
Macquarie’s macro strategy team now forecasts a 60% probability of a mild recession and notes that media multiples tend to be the canary in the earnings coalmine, and right now they are pointing to -20% reductions in sector earnings.
The broker notes that Carsales is generally more resilient, gaining higher listings in the face of reduced demand, and is a preferred sector pick.
Rating upgraded to Outperform from Neutral. Target price falls to $20 from $23.
Plexure Group Limited (PX1) was upgraded to Buy from Hold by Ord Minnett
Plexure Group has delivered an FY result reflecting the completion of a major restructuring of the NZ business to prepare for near-term and more probable growth opportunities, Ord Minnett notes. The workforce is right-sized to facilitate global growth in key customer McDonalds and capitalise on the synergies from merging TASK with Plexure.
Combining Plexure’s loyalty and customer management technology with TASKS’s enterprise planning and management platform has yielded early cross-selling results with Pita Pit and TANK. The broker sees a much wider opportunity in FY23.
Plexure trades at a material discount to peers. The broker believes the return/risk equation has shifted positively and upgrades to Speculative Buy from Hold. Target falls to 36c from 50c.
In the not-so-good books
HT&E Limited (HT1) was downgraded to Neutral from Outperform by Macquarie
Macquarie downgrades its view on the media sector to Underweight from Neutral, noting multiples are already pointing to a cyclical easing post-monetary-policy tightening and the broker cuts sector earnings assumptions.
Macquarie’s macro strategy team now forecasts a 60% probability of a mild recession and notes that media multiples tend to be the canary in the earnings coalmine, and right now they are pointing to -20% reductions in sector earnings.
EPS forecasts for HT&E fall -4% in FY22; -31% in FY23; and -25% in FY24.
Rating downgraded to Neutral from Outperform. Target price falls to $1.70 from $2.40.
REA Group Limited (REA) was downgraded to Underperform from Neutral by Macquarie
Macquarie downgrades its view on the media sector to Underweight from Neutral (see HT1 above).
The broker says apart from monetary tightening, REA Group also faces real-estate industry-specific headwinds. EPS and dividend forecasts appear stable.
Rating downgraded to Underperform from Neutral. Target price falls to $90 from $130.
Seek Limited (SEK) was downgraded to Underperform from Neutral by Macquarie
Macquarie downgrades its view on the media sector to Underweight from Neutral (see HT1 above).
The broker says Seek is the most cyclically exposed. EPS forecasts rise 6% in FY22 and fall -3% in FY23 and -4% in FY24.
Rating downgraded to Underperform from Neutral. Target price falls to $19 from $32.
Seven West Media Limited (SWM) was downgraded to Neutral from Outperform by Macquarie
Macquarie downgrades its view on the media sector to Underweight from Neutral (see HT1 above).
EPS forecasts for Seven West Media fall -0% in FY22; -16% in FY23; and -22% in FY24.
Rating downgraded to Neutral from Outperform. Target price falls to 66c from 95c.
Southern Cross Media Group Limited (SXL) was downgraded to Neutral from Outperform by Macquarie
Macquarie downgrades its view on the media sector to Underweight from Neutral (see HT1 above).
EPS forecasts for Southern Cross Media fall -36% in FY23 and -70% in FY24.
Rating downgraded to Neutral from Outperform. Target price falls to $1.50 from $1.90
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.