In the good books
ILUKA RESOURCES LIMITED (ILU) Upgrade to Accumulate from Lighten by Ord Minnett B/H/S: 3/3/1
March quarter sales and revenue beat Ord Minnett forecasts by around 60%. Zircon sales were much better than expected, despite what is usually a seasonally weak quarter.
The broker updates price forecasts on the back of an improved outlook for demand. This leads to a hike in the recommendation to Accumulate from Lighten. Target rises to $8.80 from $6.40.
See also ILU downgrade.

NATIONAL AUSTRALIA BANK LIMITED (NAB) Upgrade to Add from Hold by Morgans B/H/S: 4/3/1
Morgans believes the outlook for the major banks is improving and remains cautiously optimistic about the share prices, because of a low cost of equity being factored into current prices.
The broker upgrades National Australia Bank to Add from Hold. Target is raised to $35.00 from $29.50.
RIO TINTO LIMITED (RIO) Upgrade to Buy from Neutral by Citi B/H/S: 8/0/0
Despite a weak March quarter, Citi upgrades to Buy from Neutral, because of the share price correction on the back of recent iron ore weakness.
Incorporating the broker’s latest commodity price changes drives upgrades to earnings in FY17 and FY18 estimates of 2% and 12% respectively.
The broker envisages further upside for capital management after strong cash flow. Target is $70.
In the not-so-good books
ILUKA RESOURCES LIMITED (ILU) Downgrade to Neutral from Buy by Citi B/H/S: 3/3/1
Sales volumes were much stronger in the March quarter and Citi increases forecasts, which drive earnings upgrades and raise the target to $8.50 from $8.10.
The broker believes the major challenge that remains is the integration of Sierra Rutile after further unplanned outages in the quarter, although a raft of issues have largely been addressed.
The broker downgrades to Neutral from Buy because of the share price appreciation.
See also ILU upgrade.

RESMED INC (RMD) Downgrade to Hold from Accumulate by Ord Minnett B/H/S: 5/2/0
Ord Minnett expects mask sales growth to be subdued in the March quarter, despite the release of the new AirFit range, as manufacturing challenges have caused supply to lag demand.
The broker reduces revenue forecasts to reflect this issue. Rating is downgraded to Hold from Accumulate. Target is reduced to $9.45 from $9.50. New masks are still expected to boost FY18 earnings growth.
SYDNEY AIRPORT HOLDINGS LIMITED (SYD) Downgrade to Hold from Add by Morgans B/H/S: 3/3/1
On the surface, the growth rate in March for international passengers of 2.3% appears below trend but Morgan notes the busy Easter period fell in April this year compared with March last year, meaning the company was cycling a stronger comparables.
Year-to-date trends are expected to be clearer once the April data is published and captures the Easter impact. Given the share price has passed the broker’s target, the rating is reduced to Hold from Add. Target is $6.77.
Earnings forecast

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