Buy, Sell, Hold – what the brokers say

Editorial director of Switzer
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The big financial services giant AMP (AMP) fell out of favour with brokers at the millionaires’ factory early this week, with Macquarie downgrading it from Neutral to Underperform. The broker cited the announcement by Reinsurance Group of America on expected increased costs for claims liabilities in Australia, which will have an impact on the biggest life insurer in Australia i.e. AMP. As Macquarie believes this, along with AMP’s increased claims and lapse experiences, is no longer reflected in the share price, the broker decided to downgrade.

Orica (ORI) was downgraded to Neutral from Outperform by Credit Suisse and Macquarie, and Neutral from Buy by UBS, after the company issued a revised earnings guidance late last week which flagged a 10% fall in profit compared to last year. The company cited three factors for the revised guidance, including weaker global market conditions, high optimisation costs associated with the integration of the ground support business, and issues with the Indonesian business.

Boart Longyear (BLY) was downgraded to Neutral from Outperform by Credit Suisse, after the company announced another earnings downgrade, and all that that was gold did not glitter for Kingsgate Mining (KCN) which was downgraded by Macquarie to Underperform from Neutral. After it issued a new mine plan for its South Australian Challenger mine, Macquarie now thinks that at current prices it is not cash flow positive.

The first upgrade didn’t happen till midweek when BA-Merrill Lynch upgraded everybody’s favourite telecommunications giant, Telstra (TLS), to Buy from Underperform. It appears Greg Fraser of Kimber capital (see his Monday article here) isn’t the only analyst confident about the company’s mobile and data performance forecasts, with BA-Merrill Lynch also citing ongoing earnings upgrades in mobiles that should support, or improve, current trading multiples.

JP Morgan downgraded Virgin Australia Holdings (VAH) to Neutral from Outperform on the back of the fall in the Aussie dollar, which has made fuel for the airline company more expensive.

Oil Search (OSH) issued its quarterly report to June 2013 and while six brokers maintained their current ratings – four Buys or Outperforms and two Neutrals – Credit Suisse downgraded it to Neutral from Outperform as second quarter production was slightly below its expectations.

The above was compiled from reports on the FNArena database, which tabulates the views of eight major Australian and international stock brokers: BA-Merrill Lynch, CIMB, Citi, Credit Suisse, Deutsche Bank, JP Morgan, Macquarie and UBS.

Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances.

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