Broker Watch

ASX Upgrades and Downgrades: Rio Tinto, Whitehaven Coal and Wisetech

Tue 19 Jul 22, 12:17pm (AEST)
Coal 9 Mining
Source: iStock

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Key Points

  • Most major brokers have upgraded their Whitehaven price targets
  • Whitehaven delivered a staggering $3bn earnings in FY22

Market Index provides daily updates for the latest broker upgrades and downgrades for S&P/ASX 200 companies.

Upgrades

Rio Tinto (ASX: RIO)

  • Morgans upgraded to Add from Hold - $113 target price

    • Rating reflects recent share price weakness and expectation that Chinese demand will recover in late 2022 to early 2023

Whitehaven Coal (ASX: WHC)

  • Citi upgraded to Buy from Neutral - $7.85 target price (from $4.90)

    • Coal prices expected to stay higher for longer thanks to European countries switching back to coal power generation amid Russian gas restrictions

Downgrades

Suncorp (ASX: SUN)

  • Ord Minnett downgraded to Hold from Buy - $13.25 target price

    • ANZ's agreement to acquire Suncorp Bank lacks a compelling premium takeover offer. The takeover is still subject to regulatory approval and projected synergies might be difficult to realise

WiseTech (ASX: WTC)

  • Macquarie downgraded to Underperform from Neutral - $42.00 target price

    • WiseTech upgraded its FY22 earnings outlook thanks to higher margins but revenue guidance was unchanged. The lack of revenue growth and now lack of margin upside leaves growth and valuations at risk

Other

Several brokers have increased their target price for Whitehaven Coal after the $5.8bn market cap miner said it will deliver $3bn in earnings for FY22.

  • Credit Suisse retained Outperform rating - $7.60 target price

  • Macquarie retained Outperform rating - $6.80 target price

  • Morgan Stanley retained Overweight rating - $7.75 target price

  • Morgans retained Add rating - $6.70 target price

Whitehaven said it generated $1.4bn in cash for the June quarter, which on an annualised basis, would be worth more than its entire market cap.

Brokers expect record coal prices to generate free cash flow yields of more than 60%, which paves way for more buybacks and/or a special dividend.

Written By

Kerry Sun

Finance Writer & Social Media

Kerry holds a Bachelor of Commerce from Monash University. He is an avid swing trader, focused on technical set ups and breakouts. Outside of writing and trading, Kerry is a big UFC fan, loves poker and training Muay Thai. Connect via LinkedIn or email.

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