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FN Arena Broker Call Headlines - 27 Feb 2013

Reported by FN Arena
Wednesday, February 27, 2013
Companies forced to change their nameConflict in Iraq and Syria is causing serious headaches for companies who happen to share the ISIS moniker

- WESTPAC BANKING CORPORATION

Citi rates as Buy (1) - Target $33.30 (was $28.50). The latest regulatory risk and capital disclosure from the bank shows a couple things. First, Citi notes Westpac is delivering better than peer capital generation and second, there's probably been a bit of extra cash set aside to cover Basel III.

The first thing Citi thinks about is capital management possibilities, like a dividend increases or an on-market share buy back. EPS estimates are lifted by 4%-5% to reflect better net income margins and a good credit quality performance, with the Buy call also maintained.

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- TRANSFIELD SERVICES LIMITED

JP Morgan rates as Neutral (3) - Interim results and guidance disappointed the broker. Subdued demand and strong competition are providing headwinds. Transfield will need to prove its new strategy over some time before investors will be sure this is permanent, in JP Morgan's view.

The Neutral rating is retained. The price target is $1.88 from $1.70.

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- REGIS RESOURCES LIMITED

UBS rates as Neutral (3) - Interim results were in line with UBS estimates. Management are still targeting a dividend around 20c for the June half. FY13 earnings estimates are reduced by 18% because of lowered production expectations. A Neutral recommendation is maintained although UBS admits, after a recent sell-off, the stock is trading on undemanding forward multiples.

The price target is $5 from $5.40.

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- SOUTHERN CROSS ELECTRICAL ENGINEERING LTD

CIMB Securities rates as Outperform (1) - Southern Cross Electrical's result was weak as expected given higher overheads and high taxes. But it is also about contract timing, and 's earnings are weighted to the 2H. The broker is thus not concerned, noting is leveraged to the back-end of resource sector capex given electrics come in at the end. Throw in the JV with Kentech and as a specialist the company should be in good stead to pick up work at the big end of LNG town.

Target falls to $1.40 from $1.54 but Outperform retained.

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- RAMSAY HEALTH CARE LIMITED

JP Morgan rates as Neutral (3) - The first half result was 2% ahead of JP Morgan's estimates. The stock is delivering top line growth and margin improvement but the broker finds it difficult to recommend on the existing earnings profile. Hence a Neutral rating is maintained. A large acquisition in the UK with strong synergies or access to future public-private partnerships would be a cause to revisit the rating.

The price target is $28.20 from $27.05.

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- VIRGIN AUSTRALIA HOLDINGS LIMITED

UBS rates as Neutral (3) - First half showed a worse-than-expected result in domestic, but UBS believes the airline's transformation to a high yielding full service brand is continuing. The broker has reduced forecasts by 15-20% for a slower recovery in domestic yields.

The price target is 45c from 50c and the rating stays at Neutral.

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- BEACH ENERGY LIMITED

JP Morgan rates as Underweight (5) - There were no surprises for JP Morgan in the interim results. The focus was on the recently announced Chevron farm-in. The broker noted management gave no insight into Chevron's reasons for entering the east coast market but hinted at a commercialisation strategy of exporting gas.

The Underweight rating is maintained and the price target is $1.53 from $1.52.

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- WDS LIMITED

JP Morgan rates as Neutral (3) - The first half disappointed the broker as margins contracted more than expected. JP Morgan is cautious, given the execution risks associated with large CSG contracts in the energy division and fragile demand for coal work. The broker has reduced earnings estimates materially. The Neutral rating is retained. The price target is 55c from 61c.

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27/11/2014 07:08Sydney, Australia. 27 November,2014
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