The View from New Zealand: First NZ Capital upgraded its advice for Fonterra Co-operative Group’s shareholders fund to ‘outperform’ from ‘neutral’, saying a short-term pullback in the price is a buying opportunity.

At the same time, the brokerage lowered its earnings forecasts for Fonterra for the coming three years and reduced its 12-month target price on the units to $8.30 from $8.50 after the dairy company last week cut its forecast for 2013 earnings because of a drought in New Zealand and intense competition in Australia. The drought-related factors that led Fonterra to pull back earnings forecasts are non-enduring events, First NZ said in a note.

Fonterra is the largest global supplier of basic dairy commodites into the global milk pool and the co-operative could double its earnings before interest and tax from $1bn to $2bn over time by significantly expanding its existing consumer and business service brands through organic and value accretive acquisition growth in the global dairy market, as well as from better cost efficiency, First NZ said.

First NZ is a leading full service, wholly locally owned, share broking and investment banking firm.

A copy of its full report recommendation is available here.