As earnings season steps up a gear, brokers across Australia have been working overtime to crunch numbers and adjust recommendations on shares.
Whilst some companies which released earnings results yesterday have impressed brokers, the three below have fallen out of favour with certain brokers.
Here’s what they are saying about them today:
Bendigo and Adelaide Bank Ltd (ASX: BEN)
A research note out of UBS reveals that its analysts have retained their sell rating and $10 price target on the regional bank’s shares. Whilst the bank’s trading income was strong, UBS doesn’t appear to believe this will be repeated in the future. It also pointed to its low common equity tier one ratio as a concern. I’d agree with UBS on this one. I think Bendigo and Adelaide Bank and almost all of Australia’s leading banks are looking a touch expensive right now and might be best avoided.
JB Hi-Fi Limited (ASX: JBH)
Analysts at Credit Suisse have downgraded JB Hi-Fi from neutral to an underperform rating following the release of its half-year results yesterday. Although the results were better than the investment bank expected, the slowing growth forecast by management in the second half was a concern. As I said yesterday, I was impressed with the result but I’m just not keen on the industry at present. If Amazon enters the Australian market JB Hi-Fi is a company which I expect to be negatively impacted.
Newcrest Mining Limited (ASX: NCM)
According to a research note out of Deutsche Bank, the shares of this leading gold miner are overvalued and have been labelled as a sell. With its shares changing hands at 39x forward earnings, it’s hard to argue against this view. The only thing that would justify the premium would be if the gold price rocketed in the next few months. But with U.S. interest rates likely to rise three times this year, I feel it is more likely that the gold price will take a tumble lower. So for this reason I would agree with both Deutsche and my fellow Fool and suggest investors avoid Newcrest Mining for the time being.
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Returns as of 6th October 2020
Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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