In the good books
APN Outdoor Group Limited (APO) Upgraded to Buy from Neutral by UBS B/H/S: 4/1/0
The company has lost the Yarra Trams contract. The annualised reduction to operating earnings is expected to be around -$7m.
UBS reduces 2018-19 forecasts for earnings per share by -9%. Having previously downgraded the stock to Neutral on rising margin/re-contracting headwinds and digital yield concerns, now, even factoring these in, the stock appears inexpensive.
Rating is upgraded to Buy and the target reduced to $4.75 from $5.25.
Lendlease (LLC) Upgraded to Underweight from Overweight by Morgan Stanley B/H/S: 4/2/0
Morgan Stanley increases its weighting towards capital-light developers with better growth by upgrading Lendlease to Overweight from Underweight.
The stock is the broker’s preferred development exposure with its low gearing, large pipeline and expanding funds platform.
Target is raised to $19.75 from $16.45. Industry view is Cautious.
In the not-so-good books
The A2 Milk Co (A2M) Downgraded to Hold from Buy by Deutsche Bank B/H/S: 3/2/0
Synlait Milk ((SM1)) has received CFDA registration for a2 Milk’s infant formula and a strong move in the share price of both stocks has resulted in Deutsche Bank revising estimates.
A material near-term earnings upgrade is made on the back of stronger a2 Milk volumes. Nevertheless, the broker now finds value is harder to obtain and downgrades to Hold from Buy. Target is raised to NZ$7.00 from NZ$5.80.
Current Price is $6.17. Target price not assessed.
Altura Mining (AJM) Downgraded to Underperform from Neutral by Macquarie B/H/S: 0/0/1
Macquarie updates its development scenario for the Pilgangoora project.
The company has secured sufficient debt to bring the project into production. Nevertheless, the increased level of debt increases the risk associated with ramp up in case of any delay in achieving specifications could create a funding gap.
The broker believes, while the company may need to extend current debt facilities by at least a year to cover cash shortages, the expansion potential offers upside. Rating is downgraded to Underperform from Neutral. Target rises to $0.20 from $0.16.
Australia and New Zealand Banking Group (ANZ) Downgraded to Equal-weight from Overweight by Morgan Stanley B/H/S: 3/5/0
Morgan Stanley has reduced confidence in the bank’s ability to recover revenue and considers its loan loss versus normalised loss rates greater than its peers.
While the broker believes company-specific problems have passed, the estimate of risk tendency confirms the bank still has the highest risk profile of the majors.
Rating is downgraded to Equal-weight from Overweight. Target is reduced to $29 from $30. Sector view is In-Line.
Synlait Milk (SM1) Downgraded to Sell from Hold by Deutsche Bank B/H/S: 0/1/2
Synlait has received CFDA registration for a2 Milk’s ((A2M)) infant formula and a strong move in the share price of both stocks has resulted in Deutsche Bank revising estimates.
A material near-term earnings upgrade is made for Synlait on the back of stronger a2 Milk volumes. Nevertheless, the broker now finds value is harder to obtain and downgrades to Sell from Hold. Target is raised to NZ$6.00 from NZ$5.80.
Current Price is $6.16. Target price not assessed.
 Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances.
