In the good books
MEDIBANK PRIVATE LIMITED (MPL) Upgrade to Neutral from Underperform by Credit Suisse B/H/S: 2/5/1
The share price has fallen 25% from its peak less than six months ago. Credit Suisse now considers the stock fair value and upgrades to Neutral from Underperform. Target is $2.50.
The broker continues to expect earnings will be volatile with potential for large moves in profitability in both directions. Moreover, investors are cautioned to be mindful of the regulatory risk. The broker is in no doubt the industry is over earning and that the magnitude of the 2016 premium rate increases should have been lower.
REA GROUP LIMITED (REA) Upgrade to Outperform from Neutral by Credit Suisse B/H/S: 3/2/2
Following the recent back tracking of the shares Credit Suisse upgrades to Outperform from Neutral. The share price weakness has been driven by lower property listing volumes but the broker believes this is only a temporary issue.
Hence, there is a buying opportunity and Credit Suisse expects the share price to re-rate as listings recover. Target is unchanged at $61.00.
TRANSURBAN GROUP (TCL) Upgrade to Buy from Neutral by Citi B/H/S: 5/2/0
Citi analysts seem okay with the traffic numbers released yesterday. More importantly, they believe recent share price weakness on adjustments in global bond yields has gone too far.
Citi analysts see the stock as well supported by growth opportunities plus earnings upside risk in the medium term from higher bond yields. On top of this they also consider potential future blue sky opportunities from road pricing reform, and -further out- the benefits from autonomous vehicles.
Upgrade to Buy from Neutral. Target price remains $11.75.
In the not-so-good books
OIL SEARCH LIMITED (OSH) Downgrade to Underperform from Neutral by Credit Suisse B/H/S: 4/2/2
Credit Suisse has lowered its forecast pricing for oil, most notably dropping its long term Brent price to US$65/bbl from US$70/bbl. On the broker’s valuation, Oil Search’s current trading price implies US$70 oil at a US$75c Aussie.
Hence valuation was already stretched, and now the broker has dropped its target to $5.80 from $6.30. This has prompted a downgrade to Underperform.
SANTOS LIMITED (STO) Downgrade to Underperform from Neutral by Credit Suisse B/H/S: 5/1/1
Credit Suisse has lowered its forecast pricing for oil, most notably dropping its long term Brent price to US$65/bbl from US$70/bbl. On the broker’s valuation, Santos’ current trading price implies US$62 oil at a US$75c Aussie.
Target falls to $3.50 from $3.90, prompting a downgrade to Underperform.
Earning Forecast
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