Icarus Signal New Entries For Today

This story features TELSTRA GROUP LIMITED, and other companies. For more info SHARE ANALYSIS: TLS

By Rudi Filapek-Vandyck

Heard on financial television this morning: Commonwealth Bank has downgraded Telstra ((TLS)) to Hold from Buy. I wasn't the least surprised. Icarus had already told me Telstra shares were starting to look expensive with the share price surpassing the consensus price target in yesterday's session. Stock Analysis shows UBS has a target of $4, so in theory Telstra's rally doesn't have to stop right here and now and investors clearly are eager to jump on board still now that the board has officially confirmed a renewed focus on capital management for the years ahead on top of the promised 28c annually in fully franked dividends.

Note that Telstra shares are still offering a forward looking dividend yield of around 8.4% at the current share price, plus the potential of additional payouts in the years ahead. There's simply too much uncertainty out there to dismiss such a proposal, and that's why Telstra shares are now above consensus target. Well, they were yesterday. Today is a day of weakness as CommBank analysts had to point out to everyone what Icarus already knew: it's getting toppy out there if your name is Telstra.

(It's anyone's guess how long the likes of Citi and Macquarie will wait before pulling back their ratings).

Another stock that caught my attention is Sigma Pharmaceuticals ((SIP)), high in demand last year on the back of a near-death experience that turned out less bad than feared and the share price was solidly trading above consensus target for a good four months as a result. During the break, however, the share price has come down from a lofty $0.75 to $0.55 and this means Sigma is now back below consensus target. According to market forecasts, the company should return in the black this year, but also there is at this point no growth anticipated for next financial year.

The Price-Earnings ratio at 12.8 doesn't seem too high, but then again… no growth next year.

Note that Sigma joins an equally reborn Leighton Holdings ((LEI)), and hedge fund manager HFA Holdings ((HFA)) on the list of stocks trading below but in the vicinity of the consensus target this morning, alongside Dexus Property ((DXS)), Metcash ((MTS)) and Campbell Brothers ((CPB)). The latter three are regular names on Icarus radar. Not much has changed over the annual break.

This list now contains 24 names, including the likes of Oceana Gold ((OGD)), CommBank ((CBA)) and Consolidated Media Holdings ((CMJ)), plus a whole queue of corporate targets.

As far as stocks trading above target are concerned, the above mentioned Telstra is today being joined by Tatts Group ((TTS)) -dividends anyone?- plus Invocare ((IVC)), Commonwealth Property Fund ((CPA)), Rex Minerals ((RXM)) and Ivanhoe Australia ((IVA)). There are now 35 stocks trading above target and some like Cochlear ((COH)), Envestra ((ENV)) and Melbourne IT ((MLB)) have been doing it for a long time.

Retailer Kathmandu ((KMD)) has now joined the Bottom 50, alongside PMI Gold ((PVM)) and YTC Resources ((YTC)). The three join PaperlinX (PPX)), Lynas ((LYC)), Linc Energy ((LNC)) and 44 others. The observation speaks for itself.

Daily update on share prices and consensus price targets.

Investors should consider the information and data are provided for research purposes only.

Stocks <3% Below Consensus

Stocks Above Consensus

Top 50 Stocks Furthest from Consensus

To see the full Icarus Signal, please go to this link

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