Brokers aren’t easing into the first month of the year by any means, as this week saw plenty of activity. Many are using the slightly slower period to review and revise overall forecasts and predictions for individual sector growth and commodity price direction.
In the good books
Macquarie upgraded education-provider Navitas (NVT) to Outperform from Underperform, following a change in the analyst for the company. The previous analyst believed the company was expensive and considered FY14-15 earnings already well priced in. The new analyst sees a company exposed to population growth in Asia and a growing demand for higher education from the likes of China and India.
CIMB Securities upgraded Suncorp (SUN) to Buy from Neutral. Suncorp is CIMB’s preferred pick following sweeping upgrades of first-half profit forecasts for the domestic general insurance sector. Suncorp has a greater than 10% upside to its target price on a total return basis, and CIMB predicts a firm first half in 2014 could deliver a $300 million special dividend in the second half.
Macquarie upgraded Challenger (CGF) to Outperform from Neutral, ahead of the 2014 interim this week. A strong operation performance in the December quarter, combined with solid September-quarter growth and a narrowing of credit spreads (reducing risks), contributed to the upgrade.
In the not-so-good books
JP Morgan downgraded Regis Resources (RRL) to Neutral from Overweight. A weaker-than-expected December quarter, accompanied with revised production estimates and guidance, triggered the move. This is the second guidance downgrade in six months.
Credit Suisse downgraded Graincorp (GNC) to Underperform from Neutral, following a weaker-than-expected receivables update from Graincorp. Hot weather across the country is impacting on summer crop potential and the broker has reduced forecast earnings by 15% and 14% in FY14-15. GNC remains a long-term value play, but short-term momentum is missing.
The above was compiled from reports on the FNArena database, 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.
Also in Switzer Super Report:
- James Dunn: Three must-haves in the consumer discretionary jungle [1]
- Fundie’s favourite: REA Group – a good little earner for your fund [2]
- Ron Bewley: Orora the one to watch in a mediocre bunch [3]
- Penny Pryor: Short ‘n’ sweet – going global [4]
- Tony Negline: What you can and can’t do with SMSF real estate assets [5]
- Question of the week: Warren Buffett, insurance and new holdings [6]