In the good books
1. NEXTDC (NXT) was upgraded to Add from Hold by Morgans
Morgans upgrades to Add from Hold. The broker observes strong results are underpinned by significant structural growth. The broker had been concerned that market expectations for sales were too high but now assesses expectations have eased back to more realistic levels. The main concerns centre around the need to accelerate sales in the tier 2 facilities as well as the balance sheet. While the debt position appears full, Morgans appreciates there are long-term contracts that mean interest coverage increases in outer years as capital deployed starts to generate a return. Target is steady at $6.68.
2. SYDNEY AIRPORT HOLDINGS (SYD) was upgraded to Outperform from Neutral by Macquarie
Sydney Airport has started to re-negotiate access agreements. Macquarie assesses the company is facing a more challenging slot environment, as competitors, such as Western Sydney, Melbourne and Brisbane, are adding runway capacity. Thus the emphasis needs to shift to service quality in order to differentiate the airport. Additional T4 expenditure to enhance capacity is likely to mitigate pricing pressure, the broker acknowledges. Macquarie does not consider the multiple stretched, while the recent sale of Hobart Airport emphasises the value in Sydney Airport. Rating is upgraded to Outperform from Neutral and the target raised to $8.77 from $8.53.
The above was compiled from reports on FNArena. The FNArena database tabulates the views of seven major Australian and international stock brokers: Citi, Credit Suisse, Macquarie, Morgan Stanley, Morgans, Ord Minnett and UBS. Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regard to your circumstances.