In the good books
AVENTUS RETAIL PROPERTY FUND (AVN) Upgrade to Add from Hold by Morgans B/H/S: 2/1/0
Aventus’ result was in line with expectation and FY18 guidance has been reiterated. Attention now turns to bedding down recent acquisitions, lease expiries and the roll-out of the company’s development pipeline, Morgans suggests.
Aventus offers exposure to large format retail and the broker believes the fund is well placed to weather the challenge from online through organic growth and further opportunities to consolidate a fragmented market. A total shareholder return forecast of 15% leads Morgans to upgrade to Add.
Target rises to $2.46 from $2.45.
INCITEC PIVOT LIMITED (IPL) Upgrade to Neutral from Underperform by Credit Suisse B/H/S: 4/3/1
Credit Suisse believes seasonal challenges and choppy fertiliser markets will persist in the near term. The company, with the announcement of Jeanne Johns as the new CEO, appears to the broker to have confirmed a focus on extracting the most from the existing asset base.
Given the share price drop, and on the basis of no significant deterioration in fertiliser markets and currency, Credit Suisse upgrades to Neutral from Underperform. Target is reduced to $3.29 to $3.37.
MAGELLAN FINANCIAL GROUP LIMITED (MFG) Upgrade to Buy from Hold by Ord Minnett B/H/S: 1/5/0
Ord Minnett observes the business is stepping up its retail game and marketing expenditure is set to soar. It is also sponsoring the Australian test cricket series.
The company is launching what will likely be the largest closed-end investment vehicle ever raised in Australia. The broker observes the efforts are aimed at the under penetrated self-advised market.
The company is increasing its public profile in an effort to educate retail investors about the need to allocate toward global equities and that Magellan should be the go-to choice in this area.
Ord Minnett upgrades to Buy from Hold, as the market appears to be treating increased expenditure on marketing as a negative rather that it as an investment to strengthen the retail business. Target is raised to $29.18 from $28.13.
In the not-so-good books
TRADE ME GROUP LIMITED (TME) Downgrade to Sell from Hold by Deutsche Bank B/H/S: 1/1/3
Deutsche Bank observes the competitive environment for the company’s marketplace business has deteriorated significantly and the entry of Amazon into Australia, likely to be followed by New Zealand, will increase pressure.
The broker argues that the best option for the company, to ensure it remains relevant, is to launch an all-you-can-eat shipping service, even though this will depress earnings growth.
The shares are trading 21% above the broker’s revised target price and the rating is downgraded to Sell from Hold.
Target is reduced to NZ$4.30 from NZ$5.41.
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