Opportunity To Be Had In Downer? FN Arena News - August 10 2006
Downer EDI's (DOW) shares took a savaging yesterday, dropping by around 30% on news of its $248m Iluka contract provision, now a couple of brokers, namely Credit Suisse and JP Morgan have upgraded their recommendations to Outperform/Overweight.
While JP Morgan feels the company's management deserved to be "sin binned," and has reduced its target on the stock by 95c to $6.00, the broker is of the view that the punishment was "overdone," as although the market is currently very much focused on construction contract exposure, the sizeable provision is seen as rendering this risk as "moot."
Yesterday Credit Suisse downgraded its recommendation, target and earnings forecasts, but following the market's reaction the analysts have used their discretion to raise their recommendation back up to Outperform, with a target of $6.90.
According to the FN Arena database, the average target price on the stock is now $6.40, with the stock having three Buy recommendations, one Hold and two Sells. It closed yesterday at $5.15.
By Terry Hughes
DOW Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
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