In the good books
Beach Energy (BPT) was upgraded to Neutral from Underperform by Macquarie. B/H/S – 2/1/1. The company reported stronger production and sales in the September quarter, offset by hedging losses and weaker pricing. Production is expected to come in at the upper end of FY19 guidance. Macquarie believes the stock is fair value, despite expecting a beat on production and earnings in FY19. Target is raised to $1.65 from $1.60.
Blackmores (BKL) was upgraded to Neutral from Underperform by Credit Suisse. B/H/S – 0/2/1. Share price weakness has brought the stock closer to fair value and Credit Suisse upgrades to Neutral from Underperform. The broker reduces the target to $115 from $130, given China's consumer sector has de-rated. Critical to the broker's valuation is the assumption that direct Chinese sales growth in FY19 decelerates to 15% through to FY23, from 20%. Sales in the first quarter were ahead of expectations while operating earnings (EBITDA) growth of 11% was close to the projected growth rate.