In the good books
Macquarie upgraded Premier Investments (PMV) to Outperform from Neutral. Buy/Hold/Sell 2/4/0. Macquarie has re-reviewed the outlook for the company’s overseas expansion, while transferring coverage to a new analyst and upgrading the recommendation. Macquarie is now forecasting 3-year EPS compound annual growth rate of 12%, on conservative estimates primarily driven by overseas expansion. Smiggle is the star performer in the group, key risks are with the older, established brands.
UBS has upgraded OceanaGold (OGC) to Neutral from Sell. Buy/Hold/Sell 3/2/0. UBS maintains its 2016 and 2017 gold price forecast at US$1,250/oz. Any downside from here is expected to be ultimately contained. A lower assumption for the Australian dollar helps lift valuation, but 2015 earnings have been reduced by 11%, and 2016 by 9.0%, following a cut to copper price forecasts.
Macquarie has upgraded Suncorp (SUN) to Outperform from Neutral. Buy/Hold/Sell 1/6/1. Macquarie has undertaken detailed reserving analysis for Suncorp and introduced a comparative absolute valuation for the stock as the broker does for QBE Insurance. An upgrade to FY16 forecast reserve releases leads to an upgrade in earnings forecasts.
In the not-so-good books
Macquarie has downgraded CSR to Underperform from Outperform. Buy/Hold/Sell 4/2/1. Macquarie is forecasting a big drop in housing commencements in 2016 as the pace of population growth slows, while housing supply continues to grow well above trend. While Australian listed building stocks are in more robust shape now following restructures, and balance sheets are in good shape, the broker has nevertheless downgraded expectations. While CSR has been sold off to historically low valuation, a housing rollover and weak aluminium prices will dampen any rebound possibility.
The above was compiled from reports on FNArena, which 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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