It’s been an extremely quiet week for broker activity with actions on only three stocks from the eight major brokers that FN Arena monitors. Interestingly, all of these were upgrades and two of them were resource companies.
In the good books
CIMB Securities upgraded OceanaGold Corporation (OGC) to Add from Hold. September quarter production puts the company on track to meet or exceed guidance. CIMB expects the December quarter will also be strong and fine tunes December forecasts following the release of the detailed mine plan for Didipio.
Macquarie upgraded Recall Holdings (REC) to Neutral from Underperform. The broker believes a takeover by US rival Iron Mountain would deliver synergy benefits of some $90 million, suggesting IRM could lift its bid to $9.00 from the current $7.45 implied at the top end of the offer range. The broker also believes a REIT conversion for Recall is achievable, adding around $1.40 to valuation. IRM’s quarterly result saw prices increasing for the first time in three quarters. The broker is not factoring in either a REIT conversion or takeover into its valuation but suggests downside is now limited.
Both UBS and Deutsche Bank upgraded Regis Resources (RRL) to Buy from Neutral. September quarter production was strong and beat UBS’s expectations. Operations were mixed with Moolart Well and Rosemont ahead of forecasts but Garden Well materially below. UBS believes FY15 will be a quiet time for the company as management rebuilds confidence and delivers on guidance. Deutsche Bank notes that grade and throughput improved at Moolart Well and Rosemont in the September quarter, lifting production which, in the broker’s opinion, more than made up for the underwhelming performance at Garden Well. Deutsche Bank re-bases expectations and, on the back of improved production and use of hedging, upgrades the rating.
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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