The chart below shows the buy recommendations of brokers. Companies are only displayed in this table if at least 5 of the above mentioned brokers have a current position on the stock. A broker sentiment value of +1 means all brokers have a buy recommendation. The target price upside/downside is relative to the price at the time the table was updated.
The stocks with the largest target price upside this week are Fletcher Building with 21.13% and APN News & Media with 29.62%.
[table “272” not found /]In the good books
AGL ENERGY LIMITED (AGL) Upgrade to Buy from Neutral by UBS B/H/S: 6/1/0
Low-cost thermal generators are the biggest winners in the current electricity environment, UBS believes.
The broker’s research concludes that the closure of Hazelwood will increase the National Electricity Market’s reliance on an ageing coal fleet and gas-fired generation to meet demand.
UBS believes the market is over estimating the risk of regulatory intervention and ignoring empirical evidence. The broker believes $80/MWh prices are sustainable, a 50% increase versus FY16.
Rating is upgraded to Buy from Neutral. Target is raised to $29.50 from $25.00.
ST BARBARA LIMITED (SBM) Re-initiation with Buy by Citi B/H/S: 4/0/0
It’s almost exactly three years ago since we last heard from Citi about this company. Back then, this was a different kettle of fish as witnessed by Citi’s price target at that time: 17c and a Sell rating.
Today, Citi has officially re-initiated coverage with a Buy rating and $2.93 price target. The short-term outlook is based upon compelling short-term cash flow and potential for a beat on consensus FY17 earnings, explain the analysts.
St Barbara, highlights Citi, has the luxury of being one of the gold industry’s lowest cost producers (estimated AISC at A$896/oz in FY17). Further out, the analysts expect a steady fall in Gwalia gold grades, while company management expects Simberi to close in 2-3 years.
Citi thinks it’s likely that management is looking around to purchase assets. Alternatively, St Barbara itself might become a prey too, suggest the analysts.
In the not-so-good books
SOUTH32 LIMITED (S32) Downgrade to Hold from Add by Morgans B/H/S: 5/2/0
Morgans downgrades to Hold from Add following the recent share price performance. Morgans also updates its model for revised commodity price forecasts, which means a marginal decline in valuation and target to $3.14 from $3.17.
Following the recent performance, the broker now believes the stock is trading close to fair value.
The company has downgraded its production guidance for FY17, following an underground fire at Cannington. Silver production is downgraded -13%, lead -17% and zinc -13%. The underground fire has created only minor damage and it will take up to four weeks to import some of the required parts.
Earnings Forecast
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