Australian Broker Call

Ord Minnett rates AAD as Upgrade to Hold from Lighten (3) -

While Ardent Leisure still carries risk with respect to the execution of the Main Event roll out, Ord Minnett believes the company has appointed solid management and the shares are returning to enterprise value/operating earnings multiples of 10.8x in FY19 and 8.9x in FY20.

Ord Minnett reduces net profit forecasts by -21% for FY19 and by -29% for FY20, leading to a lower target, reduced to $1.07 from $1.35. The broker now considers the risk/reward ratio is more balanced and upgrades to Hold from Lighten.

Target price is $1.07 Current Price is $1.49 Difference: minus $0.42 (current price is over target).
If AAD meets the Ord Minnett target it will return approximately minus 28% (excluding dividends, fees and charges - negative figures indicate an expected loss).

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.0

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Credit Suisse rates ASX as Underperform (5) -

Credit Suisse upgrades forecasts by 1-2% for FY19-21 to reflect the better activity trends in the March quarter. Upgrades are driven by stronger than expected derivatives activity. Meanwhile, corporate actions were down -40% with only $7bn in equity being raised.

Credit Suisse suggests narrowing BBSW spreads and cash rate reductions could create some headwinds going forward.

The -25 basis points drop in the BBSW spread to the cash rate over the past month could negatively affect earnings by -3% from FY20. A -50 basis points reduction in the cash rate would impact earnings by -1%.

Underperform rating and $60 target maintained.

Target price is $60.00 Current Price is $71.24 Difference: minus $11.24 (current price is over target).
If ASX meets the Credit Suisse target it will return approximately minus 16% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $60.10, suggesting downside of -15.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: -0.8

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Deutsche Bank rates ASX as Sell (5) -

The company posted a record month for derivatives in March, with volumes for both futures and options up by 21%. Cash market trades picked up as well. The average daily value traded on market of $5bn was up 14%.

On the other hand, Deutsche Bank observes capital raisings were much slower during the month as the impact of an election and volatile markets meant conditions worsened. Sell rating and $59.70 target maintained.

Target price is $59.70 Current Price is $71.24 Difference: minus $11.54 (current price is over target).
If ASX meets the Deutsche Bank target it will return approximately minus 16% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $60.10, suggesting downside of -15.6% (ex-dividends)

Forecast for FY19:

Forecast for FY20:

Market Sentiment: -0.8

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Citi rates BKL as Sell (5) -

Citi incorporates a negative catalyst watch on Blackmores ahead of the third quarter results on April 16. Sales are expected to be negatively affected by fewer orders. This stems from the overhang of excess inventory in Chinese channels and a shift away from daigou towards Australian retailers.

Chinese consumer sentiment is also softer. Nevertheless, the broker considers the company's brand is strong and it is well-placed to benefit from increased health consciousness and a growing Asian middle class.

Citi maintains a Sell rating until there are improvements in execution in China and new product development, which is necessary to grow market share. Target is $89.50.

Target price is $89.50 Current Price is $93.95 Difference: minus $4.45 (current price is over target).
If BKL meets the Citi target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $90.92, suggesting downside of -3.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: -0.3

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

UBS rates CL1 as Buy (1) -

The company reported a "reasonable" March quarter, UBS suggests, with 2,000 net Class Super accounts added. The rate of net additions was above the December quarter but well below prior periods. The company continues to highlight regulatory and political uncertainty.

Andrew Russell, the new CEO, will commence the job on May 14. UBS maintains a Buy rating and continues to believe there is structural growth and valuation support. Target is $2.15.

Target price is $2.15 Current Price is $1.70 Difference: $0.45
If CL1 meets the UBS target it will return approximately 26% (excluding dividends, fees and charges).

Current consensus price target is $1.59, suggesting downside of -6.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.0

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Deutsche Bank rates FNP as Initiation of coverage with Buy (1) -

Deutsche Bank initiates coverage of Freedom Foods with a Buy rating and $6.00 target. The broker's call is predicated on robust earnings growth, leveraged to domestic and offshore dairy demand.

The broker considers the stock is also a high-quality exposure to non-dairy and health food. Despite the high spot multiple, the broker lauds the stock, given the strong medium-term earnings.

Target price is $6.00 Current Price is $5.25 Difference: $0.75
If FNP meets the Deutsche Bank target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $6.01, suggesting upside of 14.5% (ex-dividends)

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.8

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Morgans - Cessation of coverage

Forecast for FY18:

Forecast for FY19:

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Macquarie rates IAG as Underperform (5) -

The stock multiple signals the market is expecting positive earnings revisions with limited downside risk, in Macquarie's view. The broker incorporates a peril allowance increase of 5.0% from FY20 and assesses there is a risk the company may breach its FY19 peril allowance.

While the company has fewer issues compared with its peers, the broker envisages downside risk to earnings multiples in the near term. Macquarie maintains an Underperform rating and raises the target to $6.90 from $6.85.

Target price is $6.90 Current Price is $7.60 Difference: minus $0.7 (current price is over target).
If IAG meets the Macquarie target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $7.72, suggesting upside of 1.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.2

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Macquarie rates KLL as Outperform (1) -

Kalium Lakes has secured $20.8m in an equity placement at $0.44 a share. The placement provides private equity fund Greenstone Resources with a 19.99% stake in the company and a seat on the board.

The placement will narrow the funding gap for Beyondie to around $64m, Macquarie assesses. The broker maintains an Outperform rating and $0.80 target.

Target price is $0.80 Current Price is $0.50 Difference: $0.3
If KLL meets the Macquarie target it will return approximately 60% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 1.0

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Morgans rates SEA as Add (1) -

Morgans reviews forecasts for Sundance Energy and continues to envisage an attractive value proposition, with the current market implying a 2020 FCF yield of 16% and leaving the stock trading on a sizeable discount.

The previous infrastructure bottleneck in Area 31 is expected to be removed in Apri 2019, which was a significant hurdle to resuming growth.

The broker maintains an Add rating and raises the target to $1.69 from $1.61.

Target price is $1.69 Current Price is $0.41 Difference: $1.28
If SEA meets the Morgans target it will return approximately 312% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

Forecast for FY19:

Forecast for FY20:

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: 1.0

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Ord Minnett rates VVR as Downgrade to Hold from Accumulate (3) -

Ord Minnett considers the more-aligned partnership between Viva Energy ((VEA)) and Coles ((COL)) is a positive for Viva Energy REIT, as the new agreement provides certainty of retail operator until 2029, and lower bond yields should also be supportive in the near term.

Viva Energy REIT has a secure income stream from long-leased assets and the broker believes it is well-positioned to grow the portfolio through further acquisitions. Ord Minnett expects growth in earnings per share of 3.5% in 2019 and 3.1% in 2020.

The broker downgrades to Hold from Accumulate and maintains a $2.40 target.

Target price is $2.40 Current Price is $2.48 Difference: minus $0.08 (current price is over target).
If VVR meets the Ord Minnett target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.52, suggesting upside of 1.6% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.7

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Deutsche Bank rates WHC as Buy (1) -

Deutsche Bank highlights the value in Whitehaven Coal. Now that coal and gas prices have re-set the broker believes contrarian, yield-seeking investors should be buying.

The broker reiterates the 30% upside envisaged in the stock, with the strong dividend & FCF yields and funded growth options that are not yet factored into the share price. Buy rating and $5.20 target maintained.

Target price is $5.20 Current Price is $3.96 Difference: $1.24
If WHC meets the Deutsche Bank target it will return approximately 31% (excluding dividends, fees and charges).

Current consensus price target is $5.18, suggesting upside of 30.8% (ex-dividends)

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.8

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources