In the good books
UBS upgraded Bendigo Bank (BEN) to Neutral from Sell. Buy/Hold/Sell 1/5/2 The share price has pulled back since the result in February. UBS maintains its concerns over the impact of mortgage competition on margins and the reliance on the Homesafe house price gains to support the dividend. Still, potential sector net interest margin re-pricing after the bank capital raisings should support the regional banks.
Citi upgraded Oil Search (OSH) to Neutral from Sell. Buy/Hold/Sell 7/1/0 Citi has upgraded oil and foreign exchange forecasts. The broker expects the low point in oil will come in the second half of 2015, with supply and demand responses improving thereafter. The sector remains attractive for the broker although the near-term oil price is a risk. Oil Search is now closer to the broker’s target as a result of the recent weakness and is upgraded to Neutral from Sell.
Citi upgraded Seek (SEK) to Neutral from Sell. Buy/Hold/Sell 3/3/2 Citi reviews the stock in the light of the recent pull back in the share price. Earnings forecasts are lowered by 4.0% for FY15. While near-term momentum is mixed, the medium-term growth story regarding domestic placements and international is intact. The broker still envisages downside risk to earnings but the shares are trading broadly in line with valuation so the rating is upgraded.
UBS upgraded Westpac (WBC) to Buy from Neutral. Buy/Hold/Sell 2/3/3 The recent result was softer than expected but the broker observes a significant pull back in the shares, with the stock underperforming peers by 5.0% and the market by 10.0%. The franchise is considered strong, with leading asset quality and strong capital generation.
In the not-so-good books
UBS downgraded NAB (NAB) to Neutral from Buy. Buy/Hold/Sell 2/3/1 The decision to spin off the UK business and strengthen the balance sheet was difficult, UBS maintains. The market may have rewarded the bank by enabling it to be the best performing major in the year-to-date but to UBS, the stock is no longer cheap. While there is medium term upside potential in business banking, the broker considers it involves significant risk.
JP Morgan downgraded Newcrest Mining (NCM) to Underweight from Neutral. Buy/Hold/Sell 0/3/5 JP Morgan observes the Australian gold sector has put in a positive performance for the year-to-date but with valuations now full and expectations of a lower gold price for the remainder of the year, the decision has been made to downgrade Newcrest.
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.
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 regards to your circumstances.
