In the good books
AUTOMOTIVE HOLDINGS GROUP LIMITED (AHG) Upgrade to Buy from Neutral by UBS B/H/S: 5/2/0
Low interest rates, leading to higher disposable incomes and lower financing costs, suggest to UBS 2016 is likely to be a record year for sales of new and used cars. This means strong organic growth for Auto Holdings, augmented by assumed acquisitions.
It is enough to offset expected further weakness in the Refrigerated Logistics business, hence UBS upgrades to Buy. Target rises to $4.63 from $4.32.
[1]DOWNER EDI LIMITED (DOW) Upgrade to Buy from Lighten by Ord Minnett B/H/S: 4/2/0
FY16 results were stronger than expected and backed up by strong second half cash flow, which suggests to Ord Minnett the quality of the result was high.
Near term catalysts are in the three large rail contracts likely to be awarded in the first half. The broker believes the company is the front runner. Ord Minnett upgrades to Buy from Lighten on the better-than-expected outlook. The broker raises the target to $5.12 from $3.25.
In the not-so-good books
FAIRFAX MEDIA LIMITED (FXJ) Downgrade to Hold from Buy by Deutsche Bank B/H/S: 4/2/0
Deutsche Bank downgrades to Hold from Buy given share price strength and on the back of a recently decline in property listing volumes in the capital cities.
The broker attributes this decline in some extent to the federal election, exacerbated by tough comparables.
Target is raised to $1.05 from $1.00.
[2]HOTEL PROPERTY INVESTMENTS (HPI) Downgrade to Hold from Accumulate by Ord Minnett B/H/S: 0/1/0
As part of its review of the real estate investment trust sector Ord Minnett lifts price targets on average by 6%.
The broker reduces its rating to Hold from Accumulate for Hotel Property as the stock has recently outperformed. The broker raises the target to $2.85 from $2.59.
MACQUARIE ATLAS ROADS GROUP (MQA) Downgrade to Hold from Add by Morgans B/H/S: 4/2/0
The share price has surged through the target price and Morgans downgrades to Hold from Add. The broker expects no material negative surprises in the FY16 result, given solid growth in first half toll revenue has been reported.
The broker continues to be attracted to the growth in the distribution and M&A potential. Target rises to $5.64 from $5.61.
NAVITAS LIMITED (NVT) Downgrade to Underperform from Neutral by Credit Suisse B/H/S: 0/3/2
FY16 earnings were broadly in line with guidance, Credit Suisse observes. FY17 earnings are expected to be flat.
The broker notes the strong run up in the share price this year and believes the premium is difficult to justify, given the guidance for flat earnings and the execution risk in the move away from traditional royalty models towards joint ventures.
Credit Suisse downgrades to Underperform from Neutral. Target is raised to $5.20 from $5.00.
REA GROUP LIMITED (REA) Downgrade to Sell from Hold by Deutsche Bank B/H/S: 3/3/1
Deutsche Bank downgrades to Sell from Hold, given share price strength and on the back of a recently decline in property listing volumes in the capital cities.
The broker attributes this decline in some extent to the federal election, exacerbated by tough comparables.
Target is raised to $57.00 from $52.75.
SUNCORP GROUP LIMITED (SUN) Downgrade to Accumulate from Buy by Ord Minnett B/H/S: 4/3/1
FY16 results missed Ord Minnett’s forecasts. The broker expects rates and expense trends will boost margins gradually back towards the 12% target in two years.
Margins in general insurance are expected to improve and the broker believes the bank and life divisions hold some prospects for growth. Ord Minnett does not believe there is scope for capital management near term.
The broker reduces its rating to Accumulate from Buy given the recent share price performance. Target is trimmed to $13.80 from $13.90.
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