In the good books
Credit Suisse has upgraded Goodman Group (GMG) to Neutral from Underperform. Buy/Hold/Sell 3/4/0 Credit Suisse has used a sector update on A-REITs to upgrade its rating for Goodman Group. Rolling forward its valuation modelling has led to a higher price target; $6.11 versus $5.91 previously. Given the share price has tumbled some 13% in recent weeks, the stockbroker thinks it’s time for an upgrade.
Citi upgraded Premier Investment (PMV) to Neutral from Sell. Buy/Hold/Sell 1/5/0 Citi saw a “solid” result. More importantly, the rollout of success story Smiggle is to accelerate this financial year. Plus management is handling the foreign exchange headwinds well. Earnings forecasts have been pared back, but only slightly so on higher cost assumptions (from the roll-out of Smiggle).
In the not-so-good books
Credit Suisse has downgraded Evolution Mining (EVN) to Neutral from Outperform. Buy/Hold/Sell 4/2/0 The latest quarterly update on commodities prices has simply delivered yet more negative revisions, with the analysts exclaiming “There is little to like about most commodities over the medium-term, just relative degrees of unloveliness”. The subsequent update on the copper and gold sector has triggered a few changes in rating. Credit Suisse retains a relatively flat outlook for gold prices, but has now incorporated even lower prices for copper.
Macquarie downgraded The PAS Group (PGR) to Equal-Weight from Over-Weight. Buy/Hold/Sell 0/1/0 Australian Brands Investment, a US incorporated company, has made a bid for PAS Group at 63c a share. The company has begun to buy shares and will maintain the bid until the close on November 9. It owns 19.23% of the issued stock. With the potential reduction in liquidity should the acquirer fail to privatise the company and end up with a majority stake, Morgan Stanley downgrades. The broker considers the turnaround just starting in the business, leaving a longer-term opportunity. Still, there are risks from a weak consumer environment, sharp currency depreciation and underperformance in Metallicus – along with a 19.23% blocking stake.
Credit Suisse has downgraded OceanaGold (OCG) to Neutral from Outperform for the same reasons it downgraded Evolution Mining. Buy/Hold/Sell 1/3/1.
Macquarie downgraded TPG Telecom to Neutral from Outperform. Buy/Hold/Sell 2/3/1 A 33% increase in profit for TPG in FY15 came in just ahead of guidance. It was a strong second half, Macquarie notes, featuring solid cash conversion, although capex was higher than expected. The key for TPG now is the successful integration of iiNet. While Macquarie is confident in TPG’s longer-term growth prospects, valuation has become a bit rich. Hence a downgrade to Neutral.
The above was compiled from reports on FNArena tabulates the views of eight major Australian and international stock brokers: BA-Merrill Lynch, CIMB, Citi, Credit Suisse, Deutsche Bank, JP Morgan, Macquarie and UBS.
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