Buy, Hold, Sell – what the brokers say

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In the good books

The a2 Milk Company (A2M) was upgraded to Neutral from Sell by Citi.  B/H/S – 3/3/0. Citi had been expressing concerns around excess inventory in daigou channels and this underpinned its negative view. The analysts have now become more comfortable. If there is any weakness on the horizon, and that still is a chance in Citi's view, it will likely prove temporary. Earnings estimates have been lifted. Price target jumps by 8% to $10.40.

ANZ (ANZ) was upgraded to Add from Hold by Morgans. B/H/S – 4/4/0. Morgans does not expect the additional provisions stemming from the Royal Commission to hamper the ability of the major banks to achieve APRA's unquestionably strong CET1 benchmark by January 2020. From this perspective, the broker is comfortable with ANZ's announcement of $374 million in charges for customer remediation brought to the accounts in FY18. The broker reduces estimates for cash earnings per share by 7.0% as a result of the announced charges. FY19 and FY20 estimates are reduced by 0.3% and 0.8% respectively, because of share buyback estimates reducing by $800m. Morgans upgrades viewing the recent share price weakness as overdone. Target is reduced to $28.50 from $30.00.

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