Analysts have been quiet this week. In the downgrade list are South32 and Pendal.
In the good books
No upgrades.
In the not-so-good books
ALS Limited (ALQ) was downgraded to Neutral from Outperform by Credit Suisse
ALS has laid out a pathway to its five-year aspirations of 50% revenue growth to $3.3bn and 55% earnings growth to $600m by FY27. Credit Suisse notes the company intends to deliver margins above 19% and cash conversion above 90%.
The broker noted the company highlighted its major divisions remain favourably exposed to operating trends. Credit Suisse is cautious about potential moderating activity from junior miners in the near term, but on a five-year view sees a strong investment opportunity in ALS.
The rating is downgraded to Neutral from Outperform and the target price of $12.60 is retained.
Pendal Group Limited (PDL) was downgraded to Accumulate from Buy by Ord Minnett
Ord Minnett reviews Pendal Group’s valuation following the Perpetual (PPT) takeover offer.
The broker says the offer implies proceeds of $5.44, although that is something of a moot point for many shareholders given there is no shareholder vote.
Rating downgrade to Accumulate from Buy on valuation. Target price rises to $5.35 from $4.20 to reflect the likely completion offer – about 5.2% below the Perpetual offer.
South32 Limited (S32) was downgraded to Neutral from Buy by Citi
Following an about 10% outperformance versus the ASX300 Mining Index in the last month (despite lower copper and aluminium prices), Citi downgrades its rating for South32 to Neutral from Buy.
While robust valuation support exists, there’s thought to be a significant downside risk to near-term earnings, based upon spot commodity prices compared to the broker’s base case.
The target price falls to $4.50 from $4.65 after downward revisions to the analyst’s FY23 and FY24 earnings forecasts.
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.
