Coca Cola was the centre of broker’s attentions this week after it announced a downgrade in earnings and a strategic review. It received both upgrades and downgrades, as did Bank of Queensland after it released its interim financial results.
In the good books
CIMB Securities upgraded Telstra (TLS) to Add from Hold. CIMB now thinks NBN payments may accelerate more sharply than previously estimated. The broker values the asset sales component of the NBN deal at $11.4 billion, with payments peaking in FY19 at over $2.0 billion. Separating asset sales from ongoing operating income and using a lower discount rate for related government guaranteed payments means the broker's valuation has increased.
CIMB Securities upgraded Coca Cola Amatil (CCL) to Add from Hold and Credit Suisse upgraded to Outperform from Underperform after the company downgraded first half earnings. The company has guided to a 15% reduction in first half Australian beverages earnings. The rating is upgraded to Add from Hold, as risk is now seen moving to the upside. Credit Suisse thinks the challenges in the Australian beverages business can be overcome, via reduced overheads, narrowing the business to core non-alcoholic beverages and improving the relationship with The Coca-Cola Co. See downgrades below.