In the good books

ALS LIMITED (ALQ) Upgrade to Outperform from Underperform by Macquarie B/H/S: 1/3/2

With the minerals exploration cycle in the throes of a typical 3-year recovery Macquarie takes a more positive view on ALS. The broker upgrades to Outperform from Underperform, despite the stock appearing expansive on near-term multiples.

Macquarie suspects the company may consider the sale or closure options for its oil and gas business, in the event of ongoing losses and ALS remains on an acquisition footing in food. Target is raised to $6.70 from $5.20.

BLUE SKY ALTERNATIVE INVESTMENTS LIMITED (BLA) Upgrade to Add from Hold by Morgans B/H/S: 1/1/0

Assets under management reached $2.4bn in the September quarter, up 14% over the quarter. The company has made a solid start to FY17, Morgans observes and upgrades estimate by 6% over the forecast period.

Fund divestments and capital recycling continue to be a catalyst. The broker considers the stock a more attractive proposition after its recent share price decline and upgrades to Add from Hold. Target rises to $8.70 from $8.50.

In the not-so-good books

ESTIA HEALTH LIMITED (EHE) Downgrade to Underweight from Equal-weight by Morgan Stanley B/H/S: 1/1/1

Estia has downgraded earnings guidance by 14-18%. Despite the contribution of acquisitions, guidance now points to an earnings decline of 3.0-7.3%, Morgan Stanley calculates.

This suggests to the broker a lower sustainable margin and less of an ability to cope with the regulatory changes announced in the Federal budget. Downgrade to Underweight.

Earning forecast

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