There have been 3 upgrades and 1 downgrade from the 7 stockbrokers monitored by FNArena so far this week.
In the good books
Bendigo & Adelaide Bank Limited (BEN) was upgraded to Hold from Lighten by Ord Minnett
Bendigo & Adelaide Bank has underperformed the majors by -20 percentage points since the day prior to the release of its full-year result, and while it remains one of Ord Minnett’s least preferred banks the broker has lifted its rating given the recent share price decline.
The bank’s guidance for the coming year disappointed the market, implying less leverage to rising rates than had been expected. Ord Minnett expects Bendigo & Adelaide Bank should be relatively defensive in an economic downturn.
The rating is upgraded to Hold from Lighten and the target price of $8.70 is retained.
Universal Store Holdings Limited (UNI) was upgraded to Neutral from Underperform by Macquarie
After conducting a youth consumer survey, Macquarie finds Universal Store is the most preferred youth retailer, ahead of other incumbents such as General Pants and Glue Store.
These findings raise the broker’s conviction in the worth of Universal Store’s recent investment in digital initiatives and the rating rises to Neutral from Underperform. Improved in-store and online sales are assumed and the valuation multiple is increased.
The target jumps to $4.90 from $3.90.
Worley Limited (WOR) was upgraded to Hold from Lighten by Ord Minnett
The recent market downturn has seen Worley’s share price decline, and with the stock now trading below Ord Minnett’s target price the broker has lifted its rating.
Ord Minnett continues to view Worley as a high-beta stock with better leverage to the market than most companies in its coverage.
The broker likes that capital expenditure forecasts imply mid-single digit revenue growth for each of the next two years. Ord Minnett forecasts earnings growth of 30% in FY23 and 16% in FY24.
The rating is upgraded to Hold from Lighten and the target price of $12.80 is retained.
In the not-so-good books
Sigma Healthcare Limited (SIG) was downgraded to Underperform from Neutral by Credit Suisse
Credit Suisse lowers its rating for Sigma Healthcare to Underperform from Neutral on valuation concerns, given no sharp turnaround for earnings in the next 12-18 months is expected.
This follows 1H profits that were in line with the broker’s forecast though a miss versus the consensus expectation. Apart from an improved cash performance, the overall results disappointed the analyst.
Credit Suisse raises its target price to $0.58 from $0.51 on an improved working capital position and lower net debt.
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.