ASX has been bobbing along a little above our trigger for a downgrade to Hold for over a month now, and our procrastination betrays a reluctance to downgrade this high-quality company just as some positive sentiment returns to its markets.
So instead we’re going to bite the bullet and raise our price guides to Buy up to $40 (from $35) and Sell above $60 (from $55). The move reflects the improved sentiment, particularly in the float market, although with few secondary capital raisings, it hasn’t made a big difference to forecasts for 2014 earnings per share, for which the consensus still sits at about $1.98. The bigger move has been to 2015 forecasts, with the consensus rising from $2.03 to $2.12 over the past three months, which is consistent with our view that earnings can grow over the long term by at least 5% per year. These numbers are dependent on what happens to markets, of course, but they have nonetheless moved in the right direction.
