In the good books
Costa Group Holdings (CGC) was upgraded to Buy from Neutral by UBS. B/H/S – 1/3/0. UBS upgrades following share price underperformance. Supporting the upgrade is the stronger wholesale produce pricing and the growth projects. Upside is expected to FY19 guidance for low double-digit net profit growth, albeit limited, and the broker suggests there is a risk of a large skew to the second half. Target is steady at $8.20.
Fonterra Shareholders’ Fund (FSF) was upgraded to Neutral from Underperform by Credit Suisse. B/H/S – 0/2/1. The disappointing FY18 results were well flagged, with two downgrades in the second half. The FY19 guidance of 25-35c per share is disappointing but Credit Suisse views management's more conservative intentions as a positive. The broker believes the company's ability to forecast earnings is challenged by the complexity of the business and limited control over input costs. Credit Suisse upgrades to Neutral from Underperform and lowers the target price to NZ$5.09 from NZ$5.12.