Stocks to watch: Contact outlook, Wrightson forecast

Thursday 25th June 2009

The following stocks may be active on the New Zealand exchange after developments since the close of trading yesterday.

Themes of the day: The Federal Reserve kept monetary policy in the U.S. unchanged after its two-day meeting, saying interest rates will remain unusually low for an extended period and inflation will remain subdued. In New Zealand, current account figures today may show a shrinking deficit in the first quarter.

Air New Zealand (AIR): The airline should consider an alliance with Virgin Blue to cut costs and strengthen its hand against Qantas Airways, according to analysts at Macquarie Equities. A tie-up between the two airlines would bolster profitability on routes where they both fly and save on engineering and maintenance costs, the firm said, according to the Sydney Morning Herald. The shares were unchanged at 91 cents yesterday and have declined 5% this year.

Contact Energy (CEN): First NZ Capital analyst Jason Lindsay lowered his forecast for 2009 operating earnings by $26 million to $455 million, according to the ShareChat website. Lindsay said a third of the downgrade was attributable to lower wholesale electricity prices. The reduction also reflects fewer gas and electricity customers and higher operating costs. He rates the stock “outperform.” Contact shares rose 0.4% to $5.78 yesterday.

PGG Wrightson (PGW): The shares fell 6.7% to $1.12 yesterday, the biggest decline on the NZX 50, after New Zealand’s biggest rural services company cut its full-year profit forecast for a second time, reflecting a downturn in dairy activity and a reluctance of sheep and beef farmers to spend more as trading improves. Net operating earnings may be $30 million to $32 million in the year ending June 30, down from last year’s $39.2 million, it said.

New Zealand Oil & Gas (NZO): Crude oil for August delivery fell 0.8% to US$68.67 a barrel on the New York Mercantile Exchange, extending its retreat from a seven month high of US$73.23 on June 11. The shares rose 4 cents to $1.57 yesterday.

New Zealand Wool Services International (WSI): The wool scour company said it will break even in the year ending June 30, reflecting unrealised foreign exchange losses, difficult trading conditions and a slow moving wool commodity market. Profit last year was about $1 million. The shares last traded on the NZAX market on June 4 at 35 cents.

Businesswire.co.nz

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