FN Arena Broker Call Headlines - 22 Mar 2013

Reported by FN Arena
Friday, March 22, 2013

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- COMMONWEALTH BANK OF AUSTRALIA

Macquarie rates as Neutral (3) - Macquarie/East Partners have revealed the results of a survey which has found improved business borrowing intentions. On the banks' side easier credit could come in the second half, the broker believes. Macquarie forecasts 's business banking asset growth to improve to 6% in FY13. This is partly because is the business banker to more corporates than the other majors.

The broker expects 's business margin will decline 12 basis points in the second half, extending the theme of the first half. The broker also expected below system fee income growth for with a 10.2% increase in FY13.

The Neutral rating is retained and the target price is $66.07 from $64.36.

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- OROTONGROUP LIMITED

Citi rates as Sell (5) - Target $6.00 (was $5.55). 1H sales and profit were up 2%, certainly didn't demonstrate the strong sales growth investors have become used to. The broker notes competition in high end handbags is increasing, while the company's willingness to cut overheads post the Ralph Lauren exit is limited.

FY13-14 EPS forecasts are cut by  2.5% and 7.2%, while higher peer multiples account for much of the increased price target. The Sell call is maintained, with the broker of the view that the stock is pricing in a seamless replacement to the Ralph Lauren deal despite there being no signs of progress on what is a very difficult task.

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- BILLABONG INTERNATIONAL LIMITED

JP Morgan rates as Neutral (3) - The broker notes the company has entered a trading halt in order to investigate trading levels on the 21st of March. The company did confirm both takeover approaches remained ongoing, although an AFR article that sparked this whole thing off claims Altamont is struggling to finance its side of the offer it has made in conjunction with VF Corp.

The Neutral call is maintained, with due diligence risks remaining quite significant for the company.

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- PREMIER INVESTMENTS LIMITED

Macquarie rates as Neutral (3) - Premier Investment's first half result beat Macquarie's estimates, the key difference being the gain on investments. Just Group margin and cash performance were the highlights.

Trading for the first six weeks of the new half was reported to be in line with expectations. Macquarie thinks Just Group should be leveraged to an improvement in the retail environment but is cautious about brand relevance and the sales outlook for mature apparel. Hence a Neutral rating is retained. The price target is $7.70 from $6.70.

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- WHITEHAVEN COAL LIMITED

Macquarie rates as Outperform (1) - Macquarie has reviewed the investment thesis for Whitehaven. The broker believes the stock is attractive at current prices but is trading at levels which imply no value for either Maules Creek or Vickery. An Outperform rating is maintained and the price target stays at $4.

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- VIRGIN AUSTRALIA HOLDINGS LIMITED

Macquarie rates as Upgrade to Outperform from Neutral (1) - Macquarie has reviewed the investment thesis for Virgin Australia and finds capacity growth is moderating. Moreover, the broker suspects Virgin is increasingly challenging Qantas' ((QAN)) position in the business class and regional markets. The price target has been raised to 53c from 49c.

The rating has been upgraded to Outperform from Neutral.

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- BRICKWORKS LIMITED

Macquarie rates as Outperform (1) - Brickworks produced a 13% rise in profit in the first half. Macquarie found the building products segment was reasonable, given the detached housing weakness. The company's earnings in land development were mostly driven by the Oakdale sale. Investment earnings were lower, primarily from WH Soul Pattinson ((SOL)).

An Outperform rating is retained. The target price is $13.64.

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- MESOBLAST LIMITED

Credit Suisse rates as Outperform (1) - The company presented at Credit Suisse's Asian Investment Conference and there were a few key takeaways. The recently raised $170m will be put towards funding a Phase 3 trial for lumbar spine disease, additional research into systemic inflammatory conditions and to improve manufacturing processes.

The broker notes there are a number of milestones expected over the course of this year and any one of them could provide a nice share price catalyst. Outperform call maintained.

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24/04/2014 01:05Sydney, Australia. 24 April,2014
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