In the good books
DOWNER EDI LIMITED (DOW) Upgrade to Buy from Hold by Deutsche Bank B/H/S: 2/2/1
The company’s FY17 result demonstrated the core business is performing well with a robust outlook.
While Deutsche Bank believes the company faces integration issues with the Spotless (SPO) acquisition and a potential downgrade to Spotless’ FY18 guidance, this is considered well-known and reflected in the share price.
The broker upgrades to Buy from Hold and raises the target to $7.45 from $6.62.
HEALTHSCOPE LIMITED (HSO) Upgrade to Buy from Hold by Ord Minnett B/H/S: 3/2/1
Ord Minnett believes Healthscope will face another challenging year as earnings are set to contract, given a number of Victorian hospitals are tracking below plan.
Value has emerged, however, as the stock is trading well below is 2014 IPO price, despite adding more than $500m in new capacity.
The broker upgrades to Buy from Hold. Target is $2.
LINK ADMINISTRATION HOLDINGS LIMITED (LNK) Upgrade to Buy from Neutral by UBS B/H/S: 5/0/1
Despite consistently delivering earnings that are ahead of expectations, the shares steadily de-rated, UBS observes, amid concerns about stagnant funds administration revenue and the recent acquisition.
Nevertheless, UBS suggests super account consolidation headwinds will ease and the company’s low fees versus the industry set it up to be the beneficiary of mergers.
UBS envisages compelling value in what it describes as a defensive and highly cash generating financial infrastructure exposure. Rating is upgraded to Buy from Neutral. Target is raised to $8.85 from $8.55.
In the not-so-good books
MYER HOLDINGS LIMITED (MYR) Downgrade to Underperform from Neutral by Credit Suisse B/H/S: 1/3/2
Credit Suisse observes the results displayed declining sales and non-repeatable benefits from cost reductions at head office. FY18 forecasts are boosted by lower depreciation as a result of advancing store closure assumptions.
As there is a lack of evidence showing there is a core of stores for which sales revenue is growing, the outlook hinges mainly on accelerating cost reductions, in the broker’s view.
Rating is downgraded to Underperform from Neutral. Target is reduced to $0.67 from $0.72.
SIRTEX MEDICAL LIMITED (SRX) Downgrade to Hold from Add by Morgans B/H/S: 2/1/0
Morgans believes intense competition, ongoing legal battles and no specifics around a viable forward strategy limits the upside for the stock.
The broker downgrades to Hold from Add. Target is steady at $16.53.
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.
