Australian Shares Recommendations

The Global Equity Analysis provided by Australian market analyst UBS.

Credit Spreads in the Limelight Again

Santos (STO) rating reduced to Neutral from Buy and has a 12-month share price target of $23.62 (prior $26.59) from Australian market analyst UBS.

Santos (STO) Cooper Oil and Varanus Island Update

Event: Cooper Oil outlook and Varanus Island incident:

We have reviewed our Cooper oil forecasts and have reduced our outlook for Santos from this project. We also now assume no gas production takes place from Varanus Island until early August, after which full John Brookes (STO 45%) production is restored.

AXA Asia Pacific (AXA) has a $6.50 share price target and an unchanged neutral rating from Australian Stockmarket analyst Macquarie Research Equities.

AXA Asia Pacific (AXA) Q108 HK life stats - still underperforming

Event: Q108 HK life stats released:

Foster's Group (FGL) has a neutral rating and a share price target of $6.00 from Australian stock analyst Macquarie Research Equities.

Foster's Group (FGL) A long road to unlocking value

Event: Wine strategic review:

In an admission of poor Wine returns FGL's CEO has resigned; the company is taking a $670-770m pre-tax write down; and the Wine strategy is under review. Meanwhile trading is below expectations with FY08 constant currency EPS growth expected to be 5-7% rather than the previous guidance of +10%.

Impact: FY08 EPS -2.5%; FY09 -5.3%; FY10 -5.6%:

Foster's Group (FGL). The target has price increased from A$5.65 to A$6.10 from sharemarket analyst Macquarie Research Equities.

Foster's Group (FGL) Ltd: Change Is In The Air

Upgrade to Buy — The potential for improved operational execution and/or structural change at FGL has materially increased. The company has commenced an international search for a new CEO following the resignation of Trevor O’Hoy. It is also undertaking a review of its wine operations, which could have wider positive strategic implications.

Here is an update on the Australian market provided by Australian market analyst UBS.

Benefit From a Bounce In The Market.

foster's-group-fgl.jpg

Foster's Group (FGL) have recently recovered to the $5.60 level from low around $4.80 in March from Australian stockmarket analysts from Macquarie Research.

Foster’s Group (FGL)- Pouring down the drain?

It has been an unhappy time of late in the Foster’s Group camp and today’s downgrade to earnings guidance is unlikely to provide investors with any new confidence. Foster’s have recently recovered to the $5.60 level from low around $4.80 in March, but this could potentially be the end of the run for FGL.

Australian Resources Weekly provided by Australian market analyst UBS.

What are consensus estimates telling us?

Consensus estimates versus spot prices:

Bloomberg data suggests spot is lower than consensus estimates for lead (-25%), nickel (-23%) and zinc (-19%) and higher than consensus estimates for copper (5%) and oil (28%). The implication is that there could be downside risk to zinc, lead and nickel, if prices do not rise from current levels and hence a negative impact on the stocks exposed to these commodities.

Australian Banking Sector reporting season preview from Australian market analyst UBS.

Start scooping up banks. Mild overweight.

Recent price falls provide a buying opportunity:

The Aussie banks have seen a sharp pull back in recent weeks following their global peers. We believe that this has been driven by: (1) concerns for the health of the US investment banks into their reporting season; and (2) overhang from the current global bank rights issues. As a result the Australian banks have now underperformed the All Resources by 46% over the last year.

Commonwealth Bank (CBA) has a share price target of $50.00 from Australian stockmarket analyst Macquarie Research Equities.

Commonwealth Bank (CBA) Upgrade to Buy

Upgraded to Buy following significant underperformance YTD:

Year to date CBA has fallen 26%, underperforming the market by 15% and the banking sector by 6%. CBA is now trading at 11.2x FY09E PE, 1.3 standard deviations below its LT average of 13x. We see this as a good opportunity to begin accumulating CBA.

Risk from "bad boys" decreasing: