In the good books
Citi upgraded Leighton Holdings to Neutral from Sell after the company announced it would sell the John Holland business for $1.15 billion. Citi finds there is little to inspire in terms of new work being won but major loss-making projects are no longer bleeding cash and costs being taken out mean future margins can rise on the lowered revenue.
JP Morgan upgraded Treasury Wine Estates (TWE) to Neutral from Underweight. While JP Morgan believes the wine industry remains a tough industry to be in, the weaker Aussie dollar is going to make Treasury’s challenges a little easier to deal with. In addition, the stockbroker believes execution risk for the new managing director’s strategy has reduced.
Credit Suisse upgraded Wesfarmers (WES) to Neutral from Underperform. The broker has lowered its coal price forecasts and thus its earnings forecasts for Wesfarmers’ coal division and the group. Recent share price weakness is enough for the broker to upgrade to Neutral from Underperform, but given WES still trades at a 20% premium to the index, above its long-term average, the broker does not consider the stock a compelling proposition.
Deutsche Bank has updated its commodity price forecasts with upgrades for:
Evolution Mining (EVN) – Upgrade to Buy from Hold
Newcrest Mining (NCM) – Upgrade to Hold from Sell
OZ Minerals (OZL) – Upgrade to Buy from Hold
Morgan Stanley has also re-based its commodity price deck with upgrades for:
Perseus Mining (PRU) – Upgrade to Equal-weight from Underweight
Whitehaven Coal (WHC) – Upgrade to Overweight from Underweight
Western Areas (WSA) – Upgrade to Overweight from Equal-weight
In the not-so-good books
Credit Suisse downgraded Crown resorts to Underperform from Neutral. Credit Suisse is toying with the idea of a prolonged slow down for VIP gambling, pointing out this segment of high rollers is very important to Crown, in and outside Australia. The analysts are anxiously watching developments in Vegas and Macau for further insights into how deep and how long the current slow down for VIP revenues might turn out to be.
Deutsche Bank has updated its commodity price forecasts with downgrades for:
Alacer Gold (AQG) – Downgrade to Hold from Buy
Mount Gibson Iron (MGX) – Downgrade to Hold from Buy
Morgan Stanley has re-based its commodity price deck with downgrades for:
BC Iron (BCI) – Downgrade to Equal-weight from Overweight
Fortescue (FMG) – Downgrade to Equal-weight from Overweight
Medusa Mining (MML) – Downgrade to Underweight from Equal-weight
Regis Resources (RRL) – Downgrade to Underweight from Equal-weight
Resolute Mining (RSG) – Downgrade to Underweight from Equal-weight
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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