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LIFEHEALTHCARE GROUP LIMITED (LHC) Downgrade to Neutral from Buy by UBS B/H/S: 0/1/0
UBS downgrades the stock to Neutral from Buy ahead of an expected announcement of -10-15% reductions to the prosthesis list prices.
The company’s exposure to prosthesis is around 35% of revenue. At this stage the broker does not adjust the earnings outlook as it lacks clarity on the magnitude and timing of the cuts. Target is reduced to $2.30 from $2.75.
SOUTH32 LIMITED (S32) Downgrade to Neutral from Buy by UBS B/H/S: 3/5/0
UBS believes the stock has run too hard for now and aluminium/alumina, metallurgical coal and manganese remain vulnerable to the correction seen in copper and iron ore.
The broker downgrades to Neutral from Buy. Target is raised to $3.25 from $3.00.
The stock is appreciated for its cash balance sheet and 20% free cash flow yield at spot prices but UBS would have liked to see more cash returns to shareholders, and remains concerns about operations at Illawarra and Cannington.
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