The ASX stocks the big brokers loved and hated this week

Not one but two travel-related companies found themselves on the wrong side of investor sentiment regarding respective trading updates. Flight Centre Travel Group (ASX: FLT) nose-dived following a presentation by CEO and co-founder Graham Turner at an investor conference held by Morgan's on Friday.

Details of the company's performance in the September quarter were vague by most broker accounts – and that probably contributed to subsequent investor nerves. Most brokers agreed FLT had delivered a profit warning by saying that total transaction value (TTV), margin, and underlying profit were only “marginally above” the same period last year.

Ironically, only Morgans chose to downgrade FLT (HOLD from ADD – thanks for coming!), but there were several very large price target cuts applied, the greatest being -22% from Wilsons ($22.29 from $28.56, retain OVERWEIGHT).

On Tuesday, audio-visual technology solutions company Audinate Group (ASX: AD8) held its AGM and provided a trading update for the September quarter. The company warned of "several challenges" it was presently facing, including shorter order lead times, increased inventory, slower response times from its manufacturing customers, and (possibly the worst bit...) "softer than expected demand" from its customers. Oops.

Morgan Stanley called it a "large downgrade" and a "material miss" versus market expectations, noting the broker's analysts were left with several important unanswered questions after the update. Still, Morgan Stanley chose to retain its OVERWEIGHT rating on the stock and its $10.50 price target.

Jefferies wasn't so gun-shy in firing off a rating downgrade, they cut to HOLD from BUY. The broker also applied a sizeable price target cut, slicing -25% from AD8's valuation ($9 from $12), as did several other brokers.

Victims of their success...

AMP (ASX: AMP) also featured in the rating downgrades table below, but unlike FLT and WEB, it delivered a significantly better than expected trading update. Citi (NEUTRAL from BUY) and Ord Minnett (HOLD from ACCUMULATE) downgraded their respective ratings not because of disappointment over the update, but rather due to the broader market's appreciation of it via AMP's share price.

Translation: AMP's share price spiked after the news, causing each broker to see far less value in AMP's shares. You'll notice that AMP appears several times in the price target increases list below, meaning brokers generally liked what they saw.

Despite Citi and Ord's downgrades, they did have some nice things to say about AMP, for example:

"In our view, AMP’s 3Q provides more evidence that its businesses have turned a corner with significantly improved platform flows" ––Citi

"The quarterly update was positive, with the businesses stabilising" ––Ord Minnett

Evolution Mining (ASX: EVN) also copped the ire of the big brokers this week, suffering two rating downgrades. But, like AMP, it also enjoyed several large price target increases.

As far as the price target increases go, brokers responded positively to the company's very solid September quarter production and activities report – but also to EVN's massive recent share price run-up (approx. 17% since the start of this month).

Macquarie downgraded EVN to NEUTRAL from OUTPERFORM despite noting the company beat consensus estimates for production and met consensus estimates for costs. The sticking point, noted Mac, was the company's recent share price appreciation that had left EVN "fairly valued" at best.

JP Morgan downgraded EVN to UNDERWEIGHT from NEUTRAL, also acknowledging a broadly in-line update – but again cited a stretched valuation. The broker also noted there few near term catalysts to drive valuation upside.

There are plenty of other interesting broker moves for the period, and keep scrolling because we have summarised the major moves in the tables below. Remember, you can only get this level of detail on what brokers up to from us – so let’s dive in!

Broker UPGRADES since Thursday 17 Oct

Biggest broker rating upgrades since Thursday 17 Oct. Price Target Upside/Downside (“PT Upside%”) values in the last column are based on closing prices on Thursday 24 Oct.

Broker DOWNGRADES since Thursday 17 Oct

Biggest broker rating downgrades since Thursday 17 Oct. Price Target Upside/Downside (“PT Upside%”) values in the last column are based on closing prices on Thursday 24 Oct.

Biggest broker price target INCREASES since Thursday 17 Oct

Biggest broker price target increases since Thursday 17 Oct. Price Target Upside/Downside (“PT Upside%”) values in the last column are based on closing prices as on Thursday 24 Oct.

Biggest broker price target CUTS since Thursday 17 Oct

Biggest broker price target cuts since Thursday 17 Oct. Price Target Upside/Downside (“PT Upside%”) values in the last column are based on closing prices as on Thursday 24 Oct.

How to read broker recommendations 🔎

Typically, there are two major components of a broker’s view:

Rating: A call to action, usually along the lines of buy, hold, or sell, but depending on the broker’s ratings system, can be somewhere in between (e.g., accumulate or add is typically between a hold and a buy).

Price target (PT): The price at which the broker expects the stock will be trading at some point in the future, generally within the next 12 months.

This article first appeared on Market Index on Friday 25 October 2024.