Market analysts have been busy revising their forward earnings estimates, stock ratings, and 12-month share price targets for ASX shares following the recent earnings season.
Helpfully, Macquarie records adjustments to consensus earnings estimates over a rolling four-week period to create a dynamic list documenting the most upgraded and downgraded ASX shares.
There have been more forward earnings downgrades than upgrades for ASX shares of late.
Let's look at the most upgraded and downgraded ASX shares (courtesy Australian Financial Review (AFR).
It's important to note that Macquarie's list pertains to earnings upgrades or downgrades, not ratings changes. Brokers make changes to ratings based on a number of factors, not just earnings estimates.
Below we've listed the ASX shares with the greatest earnings upgrades and downgrades, along with a few ratings changes from a variety of brokers just to help you with your research.
Most upgraded ASX shares for earnings
Rio Tinto Ltd (ASX: RIO)
ASX 200 mining giant Rio Tinto and fellow iron ore behemoth Fortescue (discussed below) lead Macquarie's list of most upgraded ASX shares. Both companies' earnings estimates have likely been revised higher due to an unexpected rally in the iron ore price of late. The Rio Tinto share price closed yesterday up 1.06% to $115. It's down 0.5% in 2023. Goldman Sachs has a buy rating and a $125.20 price target.
Fortescue Metals Group Ltd (ASX: FMG)
The Fortescue share price closed yesterday up 0.8% to $21.33. It's up 4.5% in the year to date. Once again, the earnings upgrades from analysts are likely based on the strong iron ore price. Morgans has a reduce recommendation on Fortescue and a $16.20 share price target. UBS recently raised its rating to neutral.
Woodside Energy Group Ltd (ASX: WDS)
Another most upgraded ASX share is Woodside, which closed down 0.1% to $35.88 yesterday. It's up 1.5% in the year to date. Positive earnings revisions for both Woodside and oil and gas industry compatriot Santos (discussed below) are also likely related to strong commodity prices. RBC has upgraded the ASX 200 energy share to outperform with a price target of $34. JP Morgan has raised its rating to neutral with a $35.50 share price target.
Santos Ltd (ASX: STO)
The Santos share price closed down 1.3% at $7.63 on Thursday. It's up 8% in the year to date. Macquarie has retained its outperform rating with a trimmed price target of $9.60. JP Morgan has raised its rating to overweight with a share price target of $8.15. Citi has a buy rating and a $9 price target on Santos shares.
Pro Medicus Limited (ASX: PME)
Pro Medicus is another upgraded ASX share, this time in the medical technology space. The stock closed up 0.34% to $83.52 yesterday and is up 54% in the year to date. Pro Medicus shares hit an all-time record high of $84.55 earlier this month. Goldman Sachs thinks Pro Medicus is one of two explosive growth stocks right now. It has a buy rating and a $88 share price target.
Most downgraded ASX shares for earnings
Magellan Financial Group Ltd (ASX: MFG)
Magellan is a new entrant to Macquarie's list of most downgraded ASX shares. The Magellan share price closed yesterday up 2.77% to $7.04. It's down 19% in the year to date and recently cracked a new 52-week low of $6.62 after the company revealed $2 billion of net FUM outflows during September. Despite this, Macquarie has upgraded its rating of the ASX financial stock from underperform to neutral.
IGO Ltd (ASX: IGO)
The IGO share price closed 0.26% up at $11.55 yesterday. It's down 12% in the year to date. Downgrades to IGO's earnings are also likely due to weaker commodity prices. Lithium prices have fallen 68% and nickel prices have fallen 18% over the past 12 months. IGO shares are among 16 ASX lithium stocks with an outperform rating from Macquarie. Goldman Sachs also has a buy rating and a $14.80 price target on IGO shares. Citi has just raised its rating to buy and cut its 12-month price target by 16% to $13.
KMD Brands Ltd (ASX: KMD)
ASX retail share KMD owns popular brands like Kathmandu, Rip Curl, and Oboz. The KMD share price closed yesterday down 1.3% to 78 cents. Earnings downgrades are likely due to the continuing impact of inflation on consumer spending. The company recently reported record sales above NZ$1 billion, but the CEO highlighted "challenging consumer sentiment". KMD stock is down 18% in the year to date.
