Weekly Recommendation, Target Price, Earnings Forecast Changes

Oct 10, 2016 By Rudi Filapek-Vandyck, Editor FNArena Guide: The FNArena database tabulates the views of eight major Australian and international stock brokers: Citi, Credit Suisse, Deutsche Bank, Macquarie, Morgan Stanley, Morgans, Ord Minnett and UBS. For the purpose of broker rating correlation, Outperform and Overweight ratings are grouped as Buy, Neutral is grouped with Hold and Underperform and Underweight are grouped as Sell to provide a Buy/Hold/Sell (B/H/S) ratio. Ratings, consensus target price and forecast earnings tables are published at the bottom of this report. Summary Period: Monday October 3 to Friday October 7, 2016 Total Upgrades: 4 Total Downgrades: 2 Net Ratings Breakdown: Buy 41.27%; Hold 43.52%; Sell 15.21% Four upgrades versus two downgrades. Half of all upgrades didn't go further than Neutral, while only one of the downgrades moved to Sell. Such was the full harvest in stockbroker recommendation changes for the week ending Friday, 7th October 2016.

Needless to say, it wasn't a particularly busy week. Troubled aged care provider Estia Heath was the sole recipient of a fresh Sell rating (though it's labeled "Underweight" in the Morgan Stanley universe).

Only one stock rates a mention for positive adjustments to price targets; ALS ltd, formerly known as Campbell Bros. There isn't much to talk about on the negative side either. Resources stocksFNArena continue to dominate changes in earnings estimates, and this guarantees fireworks on both sides of the ledger. Nickel miner Western Areas stands on top of the positive table, enjoying a boost of no less than +172%, followed by Whitehaven Coal on +23% and on +12%.

On the negative side, Karoon Gas is taking a blow of -146%, followed by AWE Ltd on -144% and on -105%. Never a dull day on the ASX with such movements on display. display.

The local calendar this week consists of more AGMs and quarterly production reports. Upgrade ALS LIMITED ((ALQ)) Upgrade to Outperform from Underperform by Macquarie .B/H/S: 1/3/2 With the minerals exploration cycle in the throes of a typical 3-year recovery Macquarie takes a more positive view on ALS. The broker upgrades to Outperform from Underperform despite the stock appearing expansive on near-term multiples. Macquarie suspects the company may consider the sale or closure options for its oil & gas business in the event of ongoing losses and ALS remains on an acquisition footing in food. Target is raised to $6.70 from $5.20. BLUE SKY ALTERNATIVE INVESTMENTS LIMITED ((BLA)) Upgrade to Add from Hold by Morgans .B/H/S: 1/1/0 Assets under management reached $2.4bn in the September quarter, up 14% over the quarter. The company has made a solid start to FY17, Morgans observes and upgrades estimate by 6% over the forecast period. Fund divestments and capital recycling continue to be a catalyst. The broker considers the stock a more attractive proposition after its recent share price decline and upgrades to Add from Hold. Target rises to $8.70 from $8.50. OCEANAGOLD CORPORATION ((OGC)) Upgrade to Hold from Sell by Deutsche Bank .B/H/S: 0/1/1 Deutsche Bank has upgraded commodity price forecasts by an average 3% in 2016 and 6% in 2017. Of the larger upgrades, iron ore forecasts for 2017 are upgraded 7%, coking coal 25%, Newcastle thermal coal 27%, zinc 22% and manganese 37%. The gold sector appears expensive to the broker based on a US$1,300-1,420/oz flat gold deck and weakening Australian dollar profile. Deutsche Bank upgrades OceanaGold to Hold from Sell on valuation. Target is raised to $4.30 from $3.90. LIMITED ((SGM)) Upgrade to Hold from Sell by Deutsche Bank .B/H/S: 2/4/1 Deutsche Bank increases iron ore price expectations significantly and now expects scrap prices to rise in FY17 Accordingly, the company should be able to achieve volume and price rises in FY17 and FY18, leading to margin expansion. The broker notes the company has continued to cut costs as quickly as possible in order to smooth earnings and the sale or closure of the 13 identified facilities will provide further benefitFNArena in FY17. Rating is upgraded to Hold from Sell and the target is raised to $9.33 from $8.02. Downgrade ESTIA HEALTH LIMITED ((EHE)) Downgrade to Underweight from Equal-weight by Morgan Stanley .B/H/S: 1/1/1 Estia has downgraded earnings guidance by 14-18%. Despite the contribution of acquisitions, guidance now points to an earnings decline of 3.0-7.3%, Morgan Stanley calculates. This suggests to the broker a lower sustainable margin and less of an ability to cope with the regulatory changes announced in the federal budget. Downgrade to Underweight. CO. HOLDINGS LIMITED ((NEC)) Downgrade to Neutral from Buy by UBS .B/H/S: 1/3/2 UBS strategists ponder whether the growth trade is becoming vulnerable with a backdrop of negative earnings revisions and a potential lift in bond yields. TV is qualitatively the broker's least preferred media with audience declines still outpacing revenues. UBS reduces TV forecasts because of the soft ad market outlook for FY17, cutting Nine's earnings per share estimates by 27% and by 26% for FY18. The broker downgrades to Neutral from Buy given the structural concerns. Valuation appears reasonable but UBS believes the risk to earnings is skewed to the downside. Target is lowered to 90c from $1.30.

Total Recommendations Recommendation Changes

Broker Recommendation Breakup

Broker Rating

New Old Order Company Broker Rating Rating Upgrade 1 ALS LIMITED Buy Sell Macquarie BLUE SKY ALTERNATIVE 2 Buy Neutral Morgans INVESTMENTS LIMITED Deutsche 3 OCEANAGOLD CORPORATION Neutral Sell Bank Deutsche 4 SIMS METAL MANAGEMENT LIMITED Neutral Sell Bank Downgrade Morgan 5 ESTIA HEALTH LIMITED Sell Neutral Stanley NINE ENTERTAINMENT CO. HOLDINGS 6 Neutral Buy UBS LIMITED RecommendationFNArena Positive Change Covered by > 2 Brokers

New Previous Order Symbol Company Change Recs Rating Rating 1 ALQ ALS LIMITED -17.0% -43.0% 26.0% 6 PRIVATE MEDIBANK PRIVATE 2 MPL -6.0% -19.0% 13.0% 8 LIMITED 3 SWM -33.0% -40.0% 7.0% 6 LIMITED Negative Change Covered by > 2 Brokers

Order Symbol Company New Rating Previous Rating Change Recs Target Price Positive Change Covered by > 2 Brokers

Order Symbol Company New TargetPrevious Target Change Recs 1 ALQ ALS LIMITED 4.935 4.443 11.07% 6 Negative Change Covered by > 2 Brokers

New Previous Order Symbol Company Change Recs Target Target SEVEN WEST MEDIA 1 SWM 0.808 0.820 -1.46% 6 LIMITED MEDIBANK PRIVATE 2 MPL 2.730 2.763 -1.19% 8 LIMITED Earning Forecast Positive Change Covered by > 2 Brokers

Previous Order Symbol Company New EF Change Recs EF 1 WSA WESTERN AREAS NL 0.420 -0.580 172.41% 7 WHITEHAVEN COAL 2 WHC 17.814 14.386 23.83% 8 LIMITED 3 S32 SOUTH32 LIMITED 12.476 11.137 12.02% 8 4 IGO INDEPENDENCE GROUP NL 8.275 7.558 9.49% 6 5 BHP BHP BILLITON LIMITED 94.383 87.229 8.20% 8 FORTESCUE METALS 6 FMG 47.623 44.985 5.86% 7 GROUP LTD MINERAL RESOURCES 7 MIN 53.840 52.040 3.46% 4 LIMITED 8 ALQ ALS LIMITED 16.536 16.061 2.96% 6 9 RIO LIMITED 279.975 273.886 2.22% 8 10 EVN 22.533 22.104 1.94% 7 LIMITED Negative ChangeFNArena Covered by > 2 Brokers Previous Order Symbol Company New EF Change Recs EF KAROON GAS 1 KAR -13.000 -5.280 -146.21% 4 LIMITED 2 AWE AWE LIMITED -0.068 0.152 -144.74% 7 3 ORE OROCOBRE LIMITED -0.625 11.200 -105.58% 4 3 ORE OROCOBRE LIMITED -0.625 11.200 -105.58% 4 PROGRAMMED 4 PRG MAINTENANCE SERVICES 20.742 23.975 -13.48% 4 LIMITED 5 SYR SYRAH RESOURCES LIMITED -6.523 -6.023 -8.30% 4 6 XRO LIMITED -48.057 -45.795 -4.94% 5 7 SBM LIMITED 34.497 36.163 -4.61% 3 8 STO -6.307 -6.064 -4.01% 8 9 ILU LIMITED 10.500 10.763 -2.44% 7 BANK OF 10 BOQ 92.457 94.300 -1.95% 7 LIMITED

Technical limitations If you are reading this story through a third party distribution channel and you cannot see charts included, we apologise, but technical limitations are to blame. Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)" - Warning this story contains unashamedly positive feedback on the service provided.

FNArena