There have been 5 upgrades and 2 downgrades from the 7 stockbrokers monitored by FNArena so far this week.
In the good books
Austal Limited (ASB) was upgraded to Outperform from Neutral by Macquarie
Austal has been awarded a contract worth up to US$3.3bn for detailed design & construction of up to 11 Offshore Patrol Cutters for the US Coast Guard and Macquarie comments this contract de-risks the company’s outlook.
There will be more tender opportunities for the company over the year ahead and Macquarie upgrades to Outperform from Buy.
Earnings estimates have received a boost, putting a rocket underneath the price target; to $2.65 from $1.91 prior.
Dacian Gold Limited (DCN) was upgraded to Neutral from Underperform by Macquarie
Macquarie upgrades its rating for Dacian Gold to Neutral from Underperform following an all-scrip takeover offer by Genesis Minerals (GMD) that values the company at $0.12.
The broker’s target price rises to $0.10 from $0.09 to reflect the takeover and a $12.6m placement to Genesis Minerals, which will
enable exploration drilling and stockpile processing to continue.
Oz Mineral Limited (OZL) was upgraded to Add from Hold by Morgans
As a direction for value investors, Morgans upgrades its rating for OZ Minerals to Add from Hold. Traders are cautioned to delay investment until there’s more clarity around the Carrapateena mine and the direction of the copper price.
This advice follows the recent 2022 management guidance downgrades, combined with weaker copper prices and higher assumed 2022-24 cost assumptions.
The broker lowers its 2022-23 earnings (EBITDA) forecasts by 8-13% and the target price falls to $23.12 from $26.65.
Platinum Asset Management Limited (PTM) was upgraded to Neutral from Underperform by Credit Suisse
Credit Suisse downgrades its EPS forecasts for asset managers by 16% on average for FY23, after allowing for market movements in the second quarter just finished.
The broker upgrades its rating for Platinum Asset Management to Neutral from Underperform on valuation and the belief that earnings will improve after a period of improved fund performance. The target falls to $1.80 from $1.90.
Woolworths Group Limited (WOW) was upgraded to Neutral from Sell by UBS
UBS is generally more positive on the grocery sector, with survey results obtained by the broker suggesting food inflation has gained momentum faster than anticipated, with the sector achieving multiple price rises in the last year.
With cost-of-living pressures expected to drive a resurgence of private-label goods, the broker expects Woolworths Group and Aldi to make market gains, while Coles Group and IGA (MTS) lose share.
Coupled with a strong trading result for Woolworths Group in April and May, the broker increases its earnings per share forecasts by 6% and 9% through to FY23.
The rating is upgraded to Neutral from Sell and the target price increases to $37.00 from $36.00.
In the not-so-good books
Newcrest Mining Limited (NCM) was downgraded to Hold from Buy by Ord Minnett
With commodity markets taking a hit in recent weeks as the market becomes increasingly focused on a potential economic recession, Ord Minnett’s average net present value has declined by 15% across its commodities coverage but does expect macroeconomic conditions to improve in the second half of the year.
The broker notes it now prefers BlueScope Steel (BSL) and South32 (S32) to Newcrest Mining.
The rating is downgraded to Hold from Buy, and the target price decreases to $23.00 from $29.00.
Star Entertainment Group Limited (SGR) was downgraded to Hold from Add by Morgans
As part of a preview of FY22 results for five gaming stocks under coverage that report in August, Morgans expects the best earnings growth from those primarily exposed to lotteries. These are represented by Jumbo Interactive and Lottery Corp.
For Star Entertainment, the broker lowers its FY22 earnings (EBITDA) forecast (to align with consensus) by 28% to $220m to take account of higher operating costs. The rating falls to Hold from Add while the findings of the Bell Review (due August 31) are awaited.
The target price falls to $3.10 from $4.00.
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 into account 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.
