Weekly Reports | Jan 14 2019
By Rudi Filapek-Vandyck, Editor FNArena
The FNArena database tabulates the views of eight major Australian and international stock brokers: Citi, Credit Suisse, Deutsche Bank, Macquarie, Morgan Stanley, Morgans, Ord Minnett and UBS.
For the purpose of broker rating correlation, Outperform and Overweight ratings are grouped as Buy, Neutral is grouped with Hold and Underperform and Underweight are grouped as Sell to provide a Buy/Hold/Sell (B/H/S) ratio.
Ratings, consensus target price and forecast earnings tables are published at the bottom of this report.
Period: Monday January 7 to Friday January 11, 2019
Total Upgrades: 9
Total Downgrades: 8
Net Ratings Breakdown: Buy 46.41%; Hold 40.64%; Sell 12.95%
Welcome to 2019! Stockbrokers have been rather busy while you and I and most of our peers were enjoying too many lazy meals, drinks and extra-burning sunshine.
Let's first focus on last week, ending Friday January 11th.
For the week, FNArena registered nine upgrades and eight downgrades for individual ASX-listed stocks, with Woodside Petroleum (2x upgrades) and Class ltd (2x downgrades), respectively, stealing the show on both sides of the ledger. If there are any themes to pay attention to, they are that companies operating in the fringes of the automobile sector seem to have been cast aside too easily, according to analysts, while energy and miners divide, and bricks & mortar retailers simply cannot find any new friends.
Apparently, Christmas sales have been awful, and reasonable at best for the better performers in the sector. Gold miners are losing favour now that equities in general are trying to build a base.
In terms of target prices, everything was relatively quiet during the week. Vocus Group is the only one worth mentioning on the positive side. On the negative side we find heavy reductions taking place for the likes of Class and Kathmandu (analysts have not been quick in responding to Costa Group's profit warning).
As far as earnings estimates are concerned, the balance is decidedly in favour of falling forecasts, which are needed for the current healing process to run its course. QBE Insurance, Santos and Woodside Petroleum have been enjoying positive adjustments, while notable reductions have arrived for companies including Sydney Airport, Syrah Resources, Challenger, Japara Healthcare, Suncorp and Costa Group.
For the period stretching back to Monday December 17, 2018 (last time FNArena updated for the calendar year gone), FNArena registered six upgrades for ASX-listed individual stocks against four downgrades. Unfortunately technical limitations have prevented us from including tables and overviews for the full period.
Have been upgraded since December 17: Atlas Arteria, Bega Cheese, GWA Group, nib Holdings, Paradigm Biopharmaceutical and Sigma Healthcare. Have received downgrades since: APA Group, Inghams Group, Panoramic Resources and Villa World.
In terms of positive amendments to valuations and price targets, Sigma Healthcare enjoyed a nice boost, whereas adjustments for GWA Group, APA Group and Origin Energy were negative.
Ironically, GWA Group stands out as one major beneficiary in terms of positive momentum for earnings estimates (thanks to an acquisition across the Tasman), while consensus forecasts for Western Areas, Independence Group, Mineral Resources, Sonic Healthcare, Senex Energy, Fortescue Metals, Perseus Mining and Pinnacle Investment Management are all notably turning lower.
The year is young, but already companies such as Costa Group and Kathmandu had to warn investors about disappointing operational dynamics. On the other hand, Treasury Wine came out strongly and decisively, issuing positive guidance for the present year, despite some of its peers suffering, as did Noni B.
The gap between these two groups will be one of the defining characteristics of the February reporting season. To be continued.