In the good books
Harvey Norman (HVN) was upgraded to Neutral from Underperform by Credit Suisse B/H/S: 1/3/3. Harvey Norman's interim report was a disappointment. Credit Suisse analysts point at the Australian franchisee segment where earnings reflected increasing costs and increasing competition. But Credit Suisse has upgraded to Neutral from Underperform post sharp sell-off post results release. The target price falls to $4 from $4.03. See downgrade.
Iluka Resources (ILU) was upgraded to Neutral from Underperform by Macquarie B/H/S: 3/3/1. A solid result from Iluka beat Macquarie on both earnings and free cash flow. The dividend increase is a surprise given the step-up in capex planned for 2018. The highlight was a positive outlook for zircon and rutile prices. Macquarie has materially upgraded earnings forecasts to reflect price guidance, noting Iluka's current rutile contract price is well below spot. Target rises to $10.50 from $8.80.
Mirvac Group (MGR) was upgraded to Buy from Sell by Citi B/H/S: 4/2/1. Citi has double upgraded to Buy from Sell, while bumping up the share price target to $2.35 from $2.16. Despite softer residential conditions, the analysts believe earnings certainty is improving with 90% of major apartment projects due for completion through to FY20 having been presold. Earnings estimates have lifted by 9% and the analysts note Mirvac shares are now the cheapest among peers, despite "robust" growth prospects and with the company implementing a share buyback.