Resources companies featured on the plus side of the ledger this week for a change but that was mainly due to a run of actions from Credit Suisse, as it reviewed its forecasts for a range of commodities.
In the good books
Credit Suisse upgraded Fortescue Metals (FMG) to Outperform from Neutral. The shares have now priced in a very bearish iron ore outlook and Credit Suisse now assumes Fortescue will not pay a dividend in FY15. The bad news is now priced in and the stock is trading on a FY16 cash/earnings ratio of 4.6 times.
Credit Suisse upgraded Nufarm to Outperform from Neutral, Deutsche Bank to Buy from Hold and UBS to Buy from Neutral. Credit Suisse upgraded after Nufarm met its cash goals in FY14. Credit Suisse believes the company could generate enough free cash by FY16 to lift its dividend to a yield of 6%. The result fell short of the Deutsche’s expectations but cash flow well exceeded on better than expected reductions in working capital and debt. The turnaround in cash flow stood out for UBS. Nufarm's FY14 earnings were above the broker's forecasts, driven by better outcome in European crop protection and the global seeds segment.