On the Radar: Which stocks are analysts eyeballing – and rating?
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Several stocks have received significant attention from analysts in recent days.
And the last time Stockhead recapped analyst reports, it was very popular among our readers. So we decided to recap them again.
This time we set the bar higher, looking for stocks with five reports or more this year and we found 13.
Of course just because a stock is rated, it doesn’t mean it is a buy. It could be a hold or a sell. Yet some stocks are (mostly) tipped to rise in coming months.
The most eyeballed stock, nickel miner Western Areas (ASX:WSA), was the most recommended with seven buys.
One of the first to tip them was Hartleys, which liked the company’s forecast production figures of 21,600t per annum. Hartleys also liked that Western Areas was debt free and paid a dividend last year.
The stockbroker tipped the company to rise to $2.66 per share. Western Areas’ share price is sitting just below $2 at the moment.
Since Hartleys rated the miner, analyst activity had stagnated, until the past week with no less than five other firms rating Western Areas.
These were Credit Suisse, RBC, Morgan Stanley, Canaccord and Argonaut.
Canaccord tipped them to rise above $3, as did JP Morgan back in late April, following a successful quarter, when Western Areas produced 5,400t.
Although Cannacord admitted low nickel prices were a risk, it anticipated offtake discussions would lead to the company generating a premium for its product.
Western Areas currently sells to BHP (ASX:BHP) and Tsingshan, and JP Morgan estimated the payability of the company’s concentrate as 72 per cent — a figure the investment bank argued was too low.
Another heavily analysed stock was FAR (ASX:FAR), which Stockhead reported on Tuesday was heavily shorted.
Of six analysts that have covered the stock in the last two months, all of them rated them as a buy. But only Bell Potter tipped them to rise substantially – to 23c per share. The main reason being that production isn’t expected until 2022. Right now FAR is trading at 8c.
Furniture retailer Adairs (ASX:ADH) had several admirers, one of which was Goldman Sachs.
Investors sent the stock down 31 per cent back on June 21 after a profit downgrade. Goldman Sachs analysts Aaron Yeoh and Grace Fulton tipped Adairs to rise again – to $1.79. Adairs currently trades at around $1.51.
“In the context of a broader retail environment, we remain positive on the long-term sustainability and prospects of the ADH business model with its vertical integrated model, strong online sales platform and focus on in-house designed fashionable product,” Yeoh and Fulton said.
One eyeballed stock was lithium miner Galaxy Resources (ASX:GXY), which was tipped as a buy by Hartleys, Canaccord, Baillieu, Credit Suisse and Bell Potter. Baillieu’s report was the most interesting titled “starting to wonder if it is more spin than substance”.
Baillieu still tipped Galaxy as a buy at $3.52, but said it was “now sceptical about the basis of our assumptions on the economics of the Sal de Vida and the possible start date”.
Right now, Galaxy’s share price is $1.34.
Myer (ASX:MYR) has been heavily shorted recently. The big institutions, Macquarie, JP Morgan and Credit Suisse, all think it will keep falling despite the company’s turnaround plan.
Dacian Gold (ASX:DCN) is one that divided analysts, especially since its production downgrade. However, the downgrade did not stop director Barry Patterson buying nearly $1m in shares only one day afterwards.
Ainsworth Game Technologies (ASX:AGI) was tipped to fall by Wilsons, Canaccord and Macquarie. Even Baillieu, which rated it a hold, admitted its most recent half yearly report was poor. While it admitted product approvals and competitive pressures were an issue, they were not an issue for competitors.
Many other small caps have at least one analyst covering them. One analyst report that caught the eye recently was a State One Stockbroking report tipping that FBR (ASX:FBR) will eventually generate $60 billion in revenue each year.
Yes you read correct, $60 billion. That is, if FBR had 15,000 machines making $4m each. But of course that is a while away. Even by FY22 the company will only have 10 machines operating.
But State One conceded that “hitting the target will require as much a manufacturing and financing strategy as a sales and marketing strategy”. And the stockbroker only tipped a share price of 17c.