In the good books
Credit Suisse upgraded Beach Energy (BPT) to Neutral from Underperform and UBS to Neutral from Sell. Buy/Hold/Sell 1/4/2 FY16 production guidance is down 11% on FY15. The decline is steeper than Credit Suisse expected as capex is also significantly lower but the broker upgrades based on the decline in share price. June quarter production was boosted by better output from the Cooper Basin JV and higher Western Flank oil volumes. UBS observes the company has shown cost discipline in the face of low oil prices and should benefit from drawing on gas in storage in FY16 to meet customer nominations rather than drilling expensive development wells.
Credit Suisse upgraded Navitas (NVT) to Neutral from Underperform. Buy/Hold/Sell 1/5/1 FY15 results were solid and above Credit Suisse’s forecasts. The broker notes the improvement in university program margins, the first since FY11. Earnings are expected to be flat in FY16, reflecting a decline in university program earnings given there is growth expected in other divisions. Credit Suisse remains bullish on the long-term outlook for international student growth but expects the decline in numbers to accelerate for the next 12-18 months.
Macquarie upgraded News Corporation (NWS) to Outperform from Neutral. Buy/Hold/Sell 4/1/0 Macquarie upgrades ahead of News Corp’s June Q result, following share price weakness. The broker expects News’ earnings to rebound after cycling a number of one-off negatives and the curtailing of Education losses. FY16 guidance should be robust and capital management and M&A strategy will remain in focus.
Morgans upgraded Newcrest (NCM) to Add from Hold. Buy/Hold/Sell 2/1/5 The company’s June quarter was strong with Lihir producing 20% more than it was nine months ago. Morgans believes margins should improve further as Cadia ramps up. Rating is upgraded following recent share price weakness.
In the not-so-good books
Deutsche Bank downgraded Suncorp (SUN) to Hold from Buy. Buy/Hold/Sell 1/5/2 Deutsche Bank envisages negligible top line growth for Australian general insurers over the past year heralds the onset of a cyclical downturn, the impact of which is yet to emerge. Despite this, the broker believes Suncorp’s bank and life exposure should support slightly stronger group earnings growth compared with its peers in general insurance.
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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