Commodity price updates drove ratings actions this week as Arrium received a half-hearted upgrade and a downgrade. Santos also got an upgrade to Buy from UBS.
In the good books
Citi upgraded Arrium (ARI) to Neutral from Sell. Citi analysts have updated their modeling for the latest changes in commodity prices and foreign exchange forecasts, as well as the company's announced restructuring of its iron ore operations. Citi observes its non-consensus forecasts of the Aussie dollar for US 72 cents and iron at US$58/tonne keep the pressure high for Arrium, with the latter more than outweighing the tailwind benefits from the weaker currency. (See downgrade).
UBS upgraded Myer Holdings (MYR) to Neutral from Sell following a share price decline of around 30% since September. The broker is increasingly confident in management's ability to meet or exceed forecasts for the first half. UBS considers the valuation attractive and outlook is improving despite the long-term structural risks, which remain.