Buy, Sell, Hold – what the brokers say

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Analysts had a quiet short week, with only a few actions, including an upgrade for the ASX on the back of improved activity.

In the good books

Credit Suisse upgraded ASX (ASX) to Neutral from Underperform. Buy/Hold/Sell 0/5/3 March quarter stats show a strong result for ASX trading, with equities and derivative activity solid and rate cut expectations driving volumes, the broker notes. March is usually a quiet quarter for raisings but activity was solid in that space as well. Strong cyclical activity is providing a tailwind for ASX volumes at present and given dividend and valuation support, the broker has upgraded its rating to Neutral. But the broker continues to believe ASX faces structural headwinds over the next 2-3 years.

Citi upgraded Oil Search to Neutral from Sell. Buy/Hold/Sell 6/2/0 The recent underperformance in the share price means the stock is now trading below the broker’s target and, as such, the rating is upgraded to Neutral from Sell.

Credit Suisse upgraded Resmed (RMD) to Outperform from Neutral. Buy/Hold/Sell 6/2/0 Credit Suisse has reviewed margins for the past three years and estimates the constant currency margin reported in the second quarter of FY15 was the highest in three years. With stronger volume growth forecast on the back of successful product launches the broker expects ongoing improvement in this margin.

In the not-so-good books

Macquarie downgraded Aristocrat Leisure (ALL) to Underperform from Neutral. Buy/Hold/Sell 5/0/2 The broker likes Aristocrat’s market leading products, recurring revenue and favourable A$ exposure, but the stock has run up too far. The broker sees headwinds in the form of a tepid US market, a greater than anticipated capex requirement and a fight-back from the competition.

UBS downgrade BT Investment Management (BTT) to Sell from Neutral. Buy/Hold/ Sell 1/2/2 While the March quarter flows and upcoming first half results should prove to be strong, UBS now believes earnings forecasts need to be re-based to realistic levels. Equity markets, currency and flows have driven the share price 47% higher in the year to date, outperforming Australian and UK peers by more than 20%.

The above was compiled from reports on FNArena, which tabulates the views of eight major Australian and international stock brokers: BA-Merrill Lynch, CIMB, Citi, Credit Suisse, Deutsche Bank, JP Morgan, Macquarie 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 regards to your circumstances.

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