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CIMB Securities rates DOW as Add (1) -The BHP Billiton ((BHP))/Mitsubishi alliance has terminated the contract mining services for the Goonyella mine. The financial impact is minimal, with CIMB estimating a net profit reduction of 2% for Downer in FY15. The decision feeds investor concerns regarding resources exposure generally and the broker thinks the poor sentiment will have the greater impact.
While suggesting it might sound glib, CIMB believes this is a buying opportunity and the FY14 result could provide a catalyst for a re-rating. An Add rating and $5.99 target are maintained.
Target price is $5.99 Current Price is $4.70 Difference: $1.29 If DOW meets the CIMB Securities target it will return approximately 27% (excluding dividends, fees and charges).
The company's fiscal year ends in June. CIMB Securities forecasts a full year FY14 dividend of 23.00 cents and EPS of 51.00 cents. At the last closing share price the estimated dividend yield is 4.89%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 9.22.
Market Sentiment: 0.5 How do these forecasts compare to market consensus projections?Current consensus EPS estimate is 48.5, implying annual growth of 6.2%.Current consensus DPS estimate is 23.6, implying a prospective dividend yield of 5.0%.Current consensus price target is $ 5.61, suggesting upside of 19.5%(ex-dividends).Current consensus EPS estimate suggests the PER is 9.7.All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources |
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Citi rates DOW as Downgrade to Neutral from Buy (3) -Such is life for mining services as miners continue to cut costs. BHP-Mitsubishi's early termination of Downer's Goonyella coal contract not only wipes out 7% of Dow's mining work in hand and 2% of group, the broker notes, but brings into question the future of DOW's contract at the similarly sized Blackwater mine. The broker has cut forecast earnings by 6% and 9% in FY14-15.
The broker still likes DOW's prospects as it moves into net cash in FY15 but for now has pulled back to Neutral given ongoing contract risk. Target falls to $5.10 from $5.85..
Target price is $5.10 Current Price is $4.70 Difference: $0.4 If DOW meets the Citi target it will return approximately 9% (excluding dividends, fees and charges).
The company's fiscal year ends in June. Citi forecasts a full year FY14 dividend of 23.50 cents and EPS of 49.50 cents. At the last closing share price the estimated dividend yield is 5.00%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 9.49.
Market Sentiment: 0.5 How do these forecasts compare to market consensus projections?Current consensus EPS estimate is 48.5, implying annual growth of 6.2%.Current consensus DPS estimate is 23.6, implying a prospective dividend yield of 5.0%.Current consensus price target is $ 5.61, suggesting upside of 19.5%(ex-dividends).Current consensus EPS estimate suggests the PER is 9.7.All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources |
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Credit Suisse rates DOW as Downgrade to Underperform from Neutral (5) -More info to follow.
Current Price is $4.70. Target price not assessed.
The company's fiscal year ends in June. Credit Suisse forecasts a full year FY14 dividend of 25.00 cents and EPS of 49.15 cents. At the last closing share price the estimated dividend yield is 5.32%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 9.56.
Market Sentiment: 0.5 How do these forecasts compare to market consensus projections?Current consensus EPS estimate is 48.5, implying annual growth of 6.2%.Current consensus DPS estimate is 23.6, implying a prospective dividend yield of 5.0%.Current consensus price target is $ 5.61, suggesting upside of 19.5%(ex-dividends).Current consensus EPS estimate suggests the PER is 9.7.All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources |
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JP Morgan rates DOW as Overweight (1) -Downer has lost the pre-stripping contract at Goonyella Riverside in Queensland but JP Morgan believes the company's diversity and strong balance sheet will stand it in good stead.
The loss is a clear negative but the broker believes the decision reflects the continued pressure on miners in the light of weak coal prices and the whole sector is likely to come under some pressure.
JP Morgan considers the stock's current discount to valuation factors in the near-term potential risks without reflecting the company's competitive advantages. An Overweight rating is retained. The target is lowered to $6.09 from $6.33.
Target price is $6.09 Current Price is $4.70 Difference: $1.39 If DOW meets the JP Morgan target it will return approximately 30% (excluding dividends, fees and charges).
The company's fiscal year ends in June. JP Morgan forecasts a full year FY14 dividend of 25.00 cents and EPS of 48.00 cents. At the last closing share price the estimated dividend yield is 5.32%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 9.79.
Market Sentiment: 0.5 How do these forecasts compare to market consensus projections?Current consensus EPS estimate is 48.5, implying annual growth of 6.2%.Current consensus DPS estimate is 23.6, implying a prospective dividend yield of 5.0%.Current consensus price target is $ 5.61, suggesting upside of 19.5%(ex-dividends).Current consensus EPS estimate suggests the PER is 9.7.All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources |
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Macquarie rates DOW as Outperform (1) -The loss of the Goonyella contract is a disappointment but alone worth only a 4-5% drop in valuation, the broker calculates, not the 11% Downer copped on the market yesterday. This fall suggests to the broker the market is factoring in a potential repeat at Blackwater or elsewhere.
This is certainly a risk, but meanwhile DOW's efficiency drive pushes on and the company will still be net cash in FY15. Short of any more shocks, or any M&A prospects, this will probably lead to a share buyback, the broker suggests. Target falls to $5.20 from $5.50 but Outperform retained.
Target price is $5.20 Current Price is $4.70 Difference: $0.5 If DOW meets the Macquarie target it will return approximately 11% (excluding dividends, fees and charges).
The company's fiscal year ends in June. Macquarie forecasts a full year FY14 dividend of 23.30 cents and EPS of 47.30 cents. At the last closing share price the estimated dividend yield is 4.96%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 9.94.
Market Sentiment: 0.5 How do these forecasts compare to market consensus projections?Current consensus EPS estimate is 48.5, implying annual growth of 6.2%.Current consensus DPS estimate is 23.6, implying a prospective dividend yield of 5.0%.Current consensus price target is $ 5.61, suggesting upside of 19.5%(ex-dividends).Current consensus EPS estimate suggests the PER is 9.7.All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources |
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UBS rates DOW as Downgrade to Neutral from Buy (3) -Downer's contract for overburden removal at the Goonyella Riverside coal mine has been terminated, reflecting ongoing cost pressures for coal producers. UBS estimates that coal mining operations represent 20% of Downer's earnings.
While accepting that Downer has executed strongly in a difficult environment and there are opportunities inherent in a strengthening balance sheet, UBS thinks the trend of taking jobs in house and scope reductions will continue.
The broker is downgrading the rating to Neutral from Buy and lowering the target to $5.00 from $6.20.
Target price is $5.00 Current Price is $4.70 Difference: $0.3 If DOW meets the UBS target it will return approximately 6% (excluding dividends, fees and charges).
The company's fiscal year ends in June. UBS forecasts a full year FY14 dividend of 22.00 cents and EPS of 49.00 cents. At the last closing share price the estimated dividend yield is 4.68%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 9.59.
Market Sentiment: 0.5 How do these forecasts compare to market consensus projections?Current consensus EPS estimate is 48.5, implying annual growth of 6.2%.Current consensus DPS estimate is 23.6, implying a prospective dividend yield of 5.0%.Current consensus price target is $ 5.61, suggesting upside of 19.5%(ex-dividends).Current consensus EPS estimate suggests the PER is 9.7.All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources |
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