With earnings season in full swing, there were a number of changes to broker ratings. Downgrades dominated, as many stocks are seen to be fully priced. While earnings are generally in line with expectations, there aren’t too many companies reporting well ahead.
Challenger received two upgrades and one downgrade, while Macquarie saw two downgrades.
In the good books
Amcor (AMC) was upgraded to Neutral from Underperform by Credit Suisse. First half results were slightly below the broker's expectations. Credit Suisse observes, even after executing a US$500m share buy-back, Amcor will have US$1.3bn in acquisition capacity through debt. In the absence of acquisitions, further buy-backs appear to be a likely scenario and the broker believes another US$500m could be bought back in FY17 without exceeding 2.5 times net debt to earnings. Target is raised to $14.40. Market sentiment is now neutral at +0.0.