It was a pretty slow week, as brokers’ were mostly preoccupied with reporting season. Resources got some attention but many moves were mainly a result of corporate activity and movements in share prices. Treasury Wine Estates got an upgrade based on a revised offer from KKR and Crown got a downgrade following the announcement it would have another go at Las Vegas.
In the good books
JP Morgan upgraded Alacer Gold (AQG) to Overweight from Neutral because of the underperformance of the shares relative to peers, believing Alacer to be the standout in the Australian gold sector. Some risks remain around the Copler sulphide project but this is partly offset by corporate appeal and the long life of the mine. Despite June quarterly production falling 6%, management has reiterated full-year guidance.
Citi upgraded Treasury Wine Estates (TWE) to Neutral from Sell. The broker has raised its price target to $5.20 from $4.70, in line with the revised offer from KKR. The bid price is fair in Citi’s opinion. The broker believes that risks within the industry should convince shareholders to accept the KKR offer.
In the not-so-good books
Credit Suisse downgraded Crown to Underperform from Neutral. Crown has acquired a part interest in a 34.5 acre site in Las Vegas for US$280 million. The company is partnering on a resort development on the site with construction to commence next year and the casino to open in 2018. Credit Suisse calculates that Crown will accumulate around $1.9 billion in free cash flow after dividends between 2015 and 2020, excluding any impact from new projects but downgrades on the share price appreciation.
UBS downgraded Panoramic Resouces (PAN) to Neutral from Buy. Panoramic’s quarterly production was flat on the previous quarter but beat the broker’s forecast by 14%, with Lanfranchi posting a record quarter. Costs rose but remained below the broker’s forecast and net cash and cash flow are providing the funding for Savannah North exploration. The broker believes both Lanfranchi and Savannah offer exploration upside potential but a run in the share price sees the broker pull its rating back to Neutral.
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.
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.
Follow the Switzer Super Report on Twitter
Also in the Switzer Super Report:
- Charlie Aitken: All-in on Packer’s global vision for Crown
- Tony Negline: My SMSF – All about income
- Penny Pryor: Short n’ sweet – make sure the kids are all right
- Roger Montgomery: JB Hi-Fi – can growth be maintained?
- Tony Negline: Can your SMSF pay you a guaranteed pension?
- Questions of the week: Growth -v- income and the right kind of growth stock
