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 Alacer Gold Corp with 81.31% and OceanaGold Corporation with 37.26%.
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In the good books
NORTHERN STAR RESOURCES LTD (NST) Upgrade to Outperform from Neutral by Macquarie B/H/S: 1/3/2
Northern Star has delivered substantial upgrades to the Jundee and Kalgoorlie operations. Macquarie observes this is a significant upgrade to the long-term outlook, and the company now has a reserve and resource base capable of supporting a 600,000 ounces per annum run rate over 10 years.
Incorporating near-term guidance means a modest reduction to the broker’s earnings forecasts for the next three years. FY18, FY19 and FY20 forecasts are lowered -8%, -13% and -7% respectively. Target is raised to $5.40 from $4.00. Rating is upgraded to Outperform from Neutral.
WEBJET LIMITED (WEB) Upgrade to Add from Hold by Morgans B/H/S: 3/2/0
The company will acquire UK-based JacTravel for $330m. Morgans observes the size and nature of the transaction means the acquisition is not without risk but the strategic importance of the deal is irrefutable, as it transforms Webjet into the number two player in business-to-business travel globally.
The transaction will be funded via a combination of an entitlement offer, cash and debt. Morgans continues to view diversification into this higher quality and higher margin market positively.
With a materially stronger growth profile, the broker believes the valuation is compelling and upgrades to Add from Hold. Target is raised to $13.50 from $12.80.
In the not-so-good books
FORTESCUE METALS GROUP LTD (FMG) Downgrade to Hold from Add by Morgans B/H/S: 3/4/1
Morgans believes the stock is trading close to fair value, and with benchmark iron ore prices back above US$70/t the broker downgrades to Hold from Add.
The broker suspects the stock could rally from this point if the large discounts on its lower-grade iron ore starts to normalise towards the long-term range. To get there though, China needs to absorb a large stockpile that has been building at port. Target is $5.95.
MANTRA GROUP LIMITED (MTR) Downgrade to Neutral from Buy by Citi and Downgrade to Equal-weight from Overweight by Morgan Stanley B/H/S: 3/5/0
Citi downgrades to Neutral from Buy on the belief that consensus market forecasts are too optimistic, albeit not dramatically so. One factor mentioned is the anticipated Commonwealth Games uplift, which Citi suggests is likely to be more moderate than the market expects.
A strong Aussie dollar represents yet another downside risk, the analysts point out. Estimates have been cut. Price target drops to $3.15 from $3.27 in response.
Morgan Stanley observes strength in Australian outbound growth and moderation in inbound growth as a higher Australian dollar makes the country more expensive for foreigners and translation of offshore assets.
The broker finds it hard to draw many positives for the company from the current conditions and downgrades to Equal-weight from Overweight. Target is reduced to $3.20 from $4.20. Industry view is In-Line.
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