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Citi 01/07/2010 1 Buy, High Risk $6.60 91.9%

The Century drilling sale offers Downer much needed funding room, Citi says.

The broker has lowered its target by 75c to $6.60 on lower peer group multiples.

While the stock is trading on a multiple of 6x FY11 earnings, the analysts see it as offering attractive value.

Target price is $6.60 Current Price is $3.60 Difference: $3
If DOW meets the Citi target it will return approximately 83% (excluding dividends, fees and charges).
UBS 01/07/2010 1 Buy $5.00 45.3%

Downer was punished following an SMH article quoting internal company emails stating issues relating to payments and collections.

UBS has lowered its FY11/12 earnings forecasts by 3-5% to allow for project delays, in line with similar cuts to other service groups.

Target falls 50c to $5.00.

Target price is $5.00 Current Price is $3.60 Difference: $1.4
If DOW meets the UBS target it will return approximately 39% (excluding dividends, fees and charges).
Credit Suisse 01/07/2010 1 Outperform $4.90 42.4%

The company has sold the balance of its stake in Century Drilling, the broker seeing this as a preferred source of capital for the company it needs to finalise its Fortescue ((FMG)) contract mining tender.

The broker continues to expect a capital raising but it sees sufficient value at current levels to retain its Outperform rating on the stock.

Target price is $4.90 Current Price is $3.60 Difference: $1.3
If DOW meets the Credit Suisse target it will return approximately 36% (excluding dividends, fees and charges).