The week past, ending Friday May 30th, saw a significantly larger number of downgrades to ratings for individual stocks, but the finer detail continues to suggest investors should not fret about it as the majority for both downgrades and upgrades ends up in the Neutral/Hold basket.
In the good books
ALS Limited (ALQ) was upgraded to Neutral from Underperform by Credit Suisse and to Hold from Sell by Deutsche Bank. Credit Suisse upgraded after an extended downgrade cycle and subsequent share price underperformance. The FY14 result revealed management is now more optimistic, and the broker thinks a higher degree of earnings predictability warrants a re-rating. Deutsche Bank found a number of positive aspects to the FY14 result with conditions seeming to improve. Cash flow generation remains strong. The mining market may be challenging and there are risks to the expectations for a second half FY15 recovery in geochemistry sample flows but the broker thinks the investment risk profile is now balanced.