In the good books
Brambles (BXB) was upgraded to Outperform from Neutral by Credit Suisse. B/H/S – 3/4/0. The company has offered a detailed plan for turning around the performance of the US business, improving cash conversion and offsetting cost inflation. Credit Suisse is now more confident significant improvement can be delivered over the next 2-3 years and expects the technology investment will strengthen the network advantage. Target is raised to $10.40 from $9.40.
In the not-so-good books
Nine Entertainment (NEC) was downgraded to Neutral from Outperform by Credit Suisse. B/H/S – 2/3/0. Credit Suisse increases FY18 earnings estimates by 2.9% to reflect a strong start to the 2018 ratings year. The broker forecasts a 39.0% market share in FY18. FY19 earnings estimates are raised by 8.1%. A high level of sustainable market share is now factored into the price, as well as reasonable valuations for the digital assets. Target rises to $2.35 from $2.10.
Premier Investments (PMV) was downgrade to Neutral from Buy by Citi. B/H/S – 3/3/0. Citi notes a large acceleration in online business during the first half. Bricks and mortar sales declined by 0.8% while online grew 72%. Citi forecasts a decline in second half gross margins of 43 basis points, softer than the first half decline of 87 basis points. Meanwhile, inventory is expected to be in a good position and year-on-year discounting should not increase as much. Rating is downgraded to Neutral from Buy, given the increase in the share price over the past four months. Target is raised to $16.40 from $15.30.
Seek (SEK) was downgraded to Reduce from Hold by Morgans. B/H/S – 1/2/4. The launch of Google For Jobs is expected in Australia shortly. Morgans believes that ultimately Seek has the power to see off the threat from Google, but initially there may be a drag on short-term earnings. There will likely also be a dip in market sentiment towards Seek, given the potential impact of a new player. Morgans still likes Seek long term but short-term downside risk is elevated. Target falls to $19.07 from $21.07.
The above was compiled from reports on FN Arena. 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.
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