Buy, Hold, Sell – what the brokers say

Editorial director of Switzer
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In the good books

Caltex (CTX) has been upgraded to Buy from Neutral by Citi. B/H/S - 3/3/1. The stock has underperformed since its results and Citi suggests, while the earnings outlook is a little uncertain, the disciplined strategy and prudent capital allocation has consistently delivered top quartile returns, historically. The broker suspects the market is underestimating the medium-term outlook for earnings growth and upgrades to Buy from Neutral. Target is steady at $39.71.

IOOF Holdings (IFL) was upgraded to Outperform from Neutral by Macquarie. B/H/S - 4/1/0. Since the acquisition of the OnePath business in October, the stock has underperformed the S&P/ ASX 200 by -14%, Macquarie notes. The broker suspects this has been driven by concerns around growth/margins as well as execution risks associated with an acquisition of this scale. The broker considers the company's track record should outweigh these concerns and suggests investors are being appropriately rewarded on a risk-adjusted basis. Target is raised to $12.10 from $11.50.

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