In the good books
Credit Suisse upgraded Coca-Cola Amatil (CCL) to Neutral from Underperform. Buy/Hold/Sell 3/4/0 The broker’s channel checks reveal repeat purchases of Coke Life are probably short of expectations. Investors are warned to be cautious about anticipating a positive earnings surprise for either the half or full year. But Credit Suisse upgrades to Neutral from Underperform, given the fall in the share price recently.
Citi upgraded Mirvac (MGR) to Buy from Neutral. Buy/Hold/ Sell 4/2/1 Citi believes concerns surrounding macro prudential policy are important but unlikely to slow down developer sales significantly. Moves to curtail investor activity are expected to affect the established house market more than new housing.
Deutsche Bank upgraded Westpac (WBC) to Buy from Hold. Buy/Hold/Sell 3/2/3 The fall in the share price over the last six weeks is unjustified in Deutsche Bank’s view, given strong fundamentals and a first half that was only slightly weaker than expectations. Regulatory issues appear manageable and over time the broker expects asset/liability re-pricing should protect returns.
In the not-so-good books
Deutsche Bank downgraded Evolution Mining (EVN) to Hold from Buy. Buy/Hold/Sell 4/1/1 Deutsche Bank believes the Cowal acquisition improves the investment thesis because of better earnings and increased free cash flow and provides greater relevance for global investors. Further details are expected on the upside from the acquisition but, given the stock’s strong run and incorporating the equity dilution, the broker downgrades.
Citi downgraded Oroton Group to Sell from Neutral. Buy/Hold/ Sell 1/2/1 The company has revealed the second half will incorporate a loss with the unwinding of promotions combined with disappointing results at Gap and Brooks Brothers. FY15 earnings guidance is around $4.5 million. Citi forecasts a recovery in FY16 to $7.3 million, which remains a 26% downgrade to prior forecasts. The broker lowers the rating to Sell from Neutral, given the expensive valuation and lack of visibility on an earnings recovery.
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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