In the good books
1. MAGELLAN FINANCIAL GROUP (MFG) was upgraded to Hold from Sell by Ord Minnett.
All fund managers being reviewed by Ord Minnett generated solid absolute returns over the first half to the end of November. Flow momentum remains strong for Magellan Financial and the first half is on track to record the biggest retail inflow for a half year ever. Ord Minnett upgrades to Hold from Sell and raises the target to $50.41 from $49.60.
2. NOVONIX (NVX) was upgraded to Speculative Buy from Hold by Morgans
Morgans upgrades to Speculative Buy from Hold. Target is raised to $0.90 from $0.65. The company has announced an initial deal for 500,000t of synthetic graphite with Samsung, which will take delivery of this order from October 2020 subject to required quality assurance processes and a supplier audit. Morgans assesses cash management will be an issue, as first delivery will not take place until the first quarter of FY21 , but the deal makes it easier for the company to raise funds with debt rather than tapping the equity market.
In the not-so-good books
1. BORAL (BLD) was downgraded to Lighten from Hold by Ord Minnett
Boral has identified financial irregularities in its North American windows business. Operating earnings (EBITDA) are estimated to be overstated by US$20-30m for the 14-month period to October 2019. Management is confident this will be contained within the windows business and the period. For Credit Suisse, the unanswered question is whether there was a dramatic deterioration in FY19 and why, or was past profitability overstated. The broker retains a Neutral rating and $4.50 target.
2. SYDNEY AIRPORT HOLDINGS (SYD) was downgraded to Lighten from Hold by Ord Minnett
Ord Minnett notes Sydney Airport has been a strong performer, with a 36% total return in 2019 to date. The company has benefited from a low interest-rate environment as well as a positive report from the Productivity Commission. The broker expects slow passenger numbers in both international and domestic segments will put pressure on operating earnings and dividend growth, as the business builds up a buffer ahead of becoming a tax-paying entity in 2021. The target is raised to $8.20 from $7.80.
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.