Buy, Sell, Hold – what the brokers say 30/7

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In the good books

Credit Suisse upgraded Beach Energy (BPT) to Neutral from Underperform and UBS to Neutral from Sell. Buy/Hold/Sell 1/4/2 FY16 production guidance is down 11% on FY15. The decline is steeper than Credit Suisse expected as capex is also significantly lower but the broker upgrades based on the decline in share price. June quarter production was boosted by better output from the Cooper Basin JV and higher Western Flank oil volumes. UBS observes the company has shown cost discipline in the face of low oil prices and should benefit from drawing on gas in storage in FY16 to meet customer nominations rather than drilling expensive development wells.

Credit Suisse upgraded Navitas (NVT) to Neutral from Underperform. Buy/Hold/Sell 1/5/1 FY15 results were solid and above Credit Suisse's forecasts. The broker notes the improvement in university program margins, the first since FY11. Earnings are expected to be flat in FY16, reflecting a decline in university program earnings given there is growth expected in other divisions. Credit Suisse remains bullish on the long-term outlook for international student growth but expects the decline in numbers to accelerate for the next 12-18 months.

Macquarie upgraded News Corporation (NWS) to Outperform from Neutral. Buy/Hold/Sell 4/1/0 Macquarie upgrades ahead of News Corp's June Q result, following share price weakness. The broker expects News' earnings to rebound after cycling a number of one-off negatives and the curtailing of Education losses. FY16 guidance should be robust and capital management and M&A strategy will remain in focus.

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