In the good books
Citi upgraded BHP (BHP) to Buy from Neutral. Buy/Hold/Sell 4/4/0 Following recent share price weakness, Citi analysts have decided it’s time to upgrade. At the same time, they highlight “significant risks” remain. Earnings estimates decline further as commodity prices forecasts have been updated.
JP Morgan double upgraded Cochlear (COH) to Overweight from Underweight. Buy/Hold/Sell 2/0/6 The second “Ear to the Ground” survey, which is based on US audiologists, suggests overall market growth for cochlear implants is about 10%. Moreover, the company appears to be regaining lost market share. The broker expects a robust FY15 result and this should underpin attractive growth over several years despite large hedge book losses. JP Morgan believes any improvement on the productivity of R&D spending has potential to create meaningful earnings leverage.
Morgan Stanley upgraded Flight Centre (FLT) to Equal-weight from Underweight. Buy/Hold/Sell 2/4/0 Shares have fallen 24% since the June 23 warning and Morgan Stanley envisages considerable longer-term pressure on the business model. Valuation, yield and excess franking credits provide support. All up, the broker argues the stock should trade at a discount to the wider market but considers the current price/earnings ratio a fair valuation.
Credit Suisse upgraded Seek (SEK) to Neutral from Underperform. Buy/Hold/Sell 4/3/1 CS has upgraded in response to recent share price weakness. The analysts have also reduced estimates in response to the company’s recent market update, which showed Seek Learning is not performing in line with expectations.
In the not-so-good books
Macquarie downgraded Resmed (RMD) to Underperform from Neutral. Buy/Hold/Sell 3/3/2 The broker has read all the literature and spoken with cardiologists in order to assess what impact SERVE-HF (a trial of a sleep apnea treatment which failed to meet its primary endpoint) will have on broader industry sales, and decided that the impact will be broader than just the SERVE-HF population and that it is difficult to be confident other patients are not at risk. Nor does the broker believe the upcoming CPAP (Continuous Positive Airway Pressure) studies will deliver the positive results the market has baked into the ResMed price.
The above was compiled from reports on FNArena, which tabulates the views of eight major Australian and international stock brokers: BA-Merrill Lynch, CIMB, Citi, Credit Suisse, Deutsche Bank, JP Morgan, Macquarie and UBS.
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