There are few words that shareholders hate more than "downgrade". A profit downgrade or broker can have the potential to put a stop to any further share price gains, or perhaps even send the share price lower and on a downward trend. It also leaves shareholders with the difficult decision of holding on or selling up.
Commsec has recently recorded that the following companies have been downgraded to less positive outlooks according to analyst consensus. Some may still retain reasonably positive outlooks, it is just the brokers are no longer so positive. Or they may simply have been downgraded on valuation grounds.
Abacus Property Group (ASX: ABP) Concerns over a slow down in the housing market may be the cause for this real estate investment company's change of rating. Abacus has recently made a foray into the residential property development market with a $275 million joint venture with CDL.
ALS Ltd (ASX: ALQ) As the share price of the testing and analytical laboratory services company has climbed by 22% this year, it would appear that brokers now feel 19x estimated FY 2016 earnings is a little on the expensive side. A quality company nonetheless, in my opinion.
Bank of Queensland Limited (ASX: BOQ) Three of the big four banks report their interim results next week, which means it could be a rocky week for banking shares.
CSR Limited (ASX: CSR) Has an average rating probably due to the apparent slow down in the Australian housing market. It also suffered the shock exit of chief financial officer Greg Barnes to Nine Entertainment Co Holdings Ltd (ASX: NEC) recently.
Goodman Group (ASX: GMG) is another property developer that has an average rating. This downgrade may come as a surprise considering recent announcements that the industrial property giant intends on doubling its portfolio in China within the next three years. Goodman already has assets under management of $7.5 billion across 41 properties in mainland China and Hong Kong.
Whilst these shares may have fallen out of favour with brokers, there are three shares in particular that I expect brokers to be looking on very favourably right now. I believe these shares will provide strong gains for investors as well as fantastic dividends in the future.
