Australian Broker Call

Credit Suisse rates AMC as Neutral (3) -

Credit Suisse believes a straight acquisition of Bemis by Amcor cannot meet Amcor's hurdle rate of 20% return in three years. Amcor would need to nearly triple the Bemis operating earnings to achieve the targeted return.

There is a possibility asset sales or joint ventures may arise out of discussions between the two companies, the broker acknowledges.

Neutral and $15.70 target price retained.

Target price is $15.70 Current Price is $15.77 Difference: minus $0.07 (current price is over target).
If AMC meets the Credit Suisse target it will return approximately minus 0% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $16.29, suggesting upside of 3.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

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

Market Sentiment: 0.4

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

Deutsche Bank rates BLD as Buy (1) -

Deutsche Bank downgrades FY18 US operating earnings by -US$7.5m because of the recent impact of the hurricanes.

The hurricanes may dampen the US recovery in the short term, but the broker continues to believe that long-term growth is achievable and forecasts total housing starts to grow at around 9% per annum in FY19-21.

The broker continues to rate the stock a Buy, given its exposure to the growing US economy, upside from Headwaters synergies and a 20% exposure to the growing Australian infrastructure segment. Target is raised to $7.75 from $7.67.

Target price is $7.75 Current Price is $6.72 Difference: $1.03
If BLD meets the Deutsche Bank target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $6.92, suggesting upside of 4.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.4

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

Ord Minnett rates BLD as Hold (3) -

The company has consistently indicated it prefers to focus on lighter and stronger products. An example of recent innovation is the development of Backerboard.

Ord Minnett considers this a sensible strategy that should ensure sustainability of the light building product portfolio but suspects it may be challenging to effectively manage an ever-growing range of products.

The broker retains a Hold rating and $6.60 target.

This stock is not covered in-house by Ord Minnett. Instead, the broker whitelabels research by JP Morgan.

Target price is $6.60 Current Price is $6.72 Difference: minus $0.12 (current price is over target).
If BLD meets the Ord Minnett target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $6.92, suggesting upside of 4.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.4

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

Credit Suisse rates BSL as Outperform (1) -

New anti-dumping legislation has been introduced by the Australian government to remove loopholes that have allowed foreign steelmakers to dump surplus steel in Australia at prices below those in their home markets.

BlueScope attributes a -$60m hit to the December half earnings estimates from the impact of having to match price to maintain market share.

Credit Suisse suggests, as the legislation takes effect, if current spreads are sustained and theoretical import parity prices restored, second half earnings should be above first half guidance.

The broker retains an Outperform rating and $12.75 target.

Target price is $12.75 Current Price is $11.73 Difference: $1.02
If BSL meets the Credit Suisse target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $13.12, suggesting upside of 13.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.8

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

Credit Suisse rates COH as Neutral (3) -

Credit Suisse updates its global cochlear implant market share model. Analysis suggests Cochlear's market share at the end of FY17 was 54.1%, up from 51.3% in FY16.

Based on current sales growth forecasts, and assuming global industry growth of 7%, the broker's implied market share estimates reach 61% by FY25.

Rating is Neutral. Target is $142.50.

Target price is $142.50 Current Price is $158.50 Difference: minus $16 (current price is over target).
If COH meets the Credit Suisse target it will return approximately minus 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $142.97, suggesting downside of -9.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.3

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

Deutsche Bank rates DOW as Upgrade to Buy from Hold (1) -

The company's FY17 result demonstrated the core business is performing well with a robust outlook.

While Deutsche Bank believes the company faces integration issues with the Spotless ((SPO)) acquisition and a potential downgrade to Spotless' FY18 guidance, this is considered well-known and reflected in the share price.

The broker upgrades to Buy from Hold and raises the target to $7.45 from $6.62.

Target price is $7.45 Current Price is $6.77 Difference: $0.68
If DOW meets the Deutsche Bank target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $6.71, suggesting upside of 0.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.0

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

Deutsche Bank rates GNC as Buy (1) -

Crop estimates have been lowered by ABARES. While the FY18 east coast crop is now expected to be down around -33%, Deutsche Bank believes this has been excessively discounted in the current share price.

The broker's Buy rating is supported by a return to more normal east coast cropping conditions and expansion of the less cyclical malt & oils business. Target is $10.

Target price is $10.00 Current Price is $8.11 Difference: $1.89
If GNC meets the Deutsche Bank target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $9.63, suggesting upside of 18.2% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.4

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

Credit Suisse rates MPL as Underperform (5) -

Credit Suisse continues to envisage near-term risks as skewed to the downside. The broker needs to witness a re-basing of earnings, or a lower share price, as a pre-condition for a more positive view.

The broker appreciates on a two-three-year view, without regulation change, the upside opportunity could be significant. Nevertheless, with industry penetration getting worse and affordability becoming the terms of reference for every review across the industry, the broker is concerned about holding the stock in an industry at a potential tipping point.

Underperform maintained. Target is $2.80.

Target price is $2.80 Current Price is $2.98 Difference: minus $0.18 (current price is over target).
If MPL meets the Credit Suisse target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.85, suggesting downside of -3.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.1

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

Credit Suisse rates MQA as Neutral (3) -

The company is acquiring an additional 4.86% stake in APRR for EUR440m. This raises the indirect stake to 25% and 50.01% of the holding vehicle.

Credit Suisse notes traffic at Dulles Greenway is weak, down -3.4% for the quarter to date. The broker retains a Neutral rating and lowers the target to $5.25 from $5.90.

Target price is $5.25 Current Price is $5.53 Difference: minus $0.28 (current price is over target).
If MQA meets the Credit Suisse target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.66, suggesting upside of 5.2% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.2

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

Morgan Stanley rates MQA as Equal-weight (3) -

The company will issue $450m in new equity to increase its stake in the APRR toll road network. Morgan Stanley calculates the transaction, as proposed, appears to be around 4% accretive.

The negative aspects the broker assesses for Macquarie Atlas Roads are incremental structural complexity and poor traffic on the Dulles Greenway.

Equal-weight retained. Target is $5.74. Industry view: Cautious.

Target price is $5.74 Current Price is $5.53 Difference: $0.21
If MQA meets the Morgan Stanley target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $5.66, suggesting upside of 5.2% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.2

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

UBS rates MQA as Neutral (3) -

Macquarie Atlas has purchased a further 4.9% stake in APRR, taking its stake to 25%. UBS preliminary estimates suggest around 10% accretion to 2018 cash flow per security.

The value accretive economics make the transaction logical, in the broker's opinion, and the decision by the company's co-investors to take up pre-empty of rights has resulted in a lower-than-expected transaction size.

UBS retains a Neutral rating and $5.80 target.

Target price is $5.80 Current Price is $5.53 Difference: $0.27
If MQA meets the UBS target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $5.66, suggesting upside of 5.2% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.2

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

Citi rates MYR as Buy (1) -

Myer's FY17 financials revealed better-than-feared like-for-like sales growth in the final quarter, report Citi analysts. Underlying gross margin was steady. The analysts point towards cost-outs as the ongoing key factor.

Citi remains of the view that management's strategic targets are "optimistic". The analysts call for the reset of three out of the four New Myer targets. Two years into the five year turnaround program, market expectations sit well below management's optimism, the analysts note.

What this business needs is good old fashioned like-for-like sales growth, suggest the analysts, adding they think this remains unlikely in the near term. $0.95 target and Buy/High Risk rating retained, with changes made to estimates, including reduced DPS forecasts.

Target price is $0.95 Current Price is $0.73 Difference: $0.22
If MYR meets the Citi target it will return approximately 30% (excluding dividends, fees and charges).

Current consensus price target is $0.83, suggesting upside of 16.7% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.3

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

Credit Suisse rates MYR as Downgrade to Underperform from Neutral (5) -

Credit Suisse observes the results displayed declining sales and non-repeatable benefits from cost reductions at head office. FY18 forecasts are boosted by lower depreciation as a result of advancing store closure assumptions.

As there is a lack of evidence showing there is a core of stores for which sales revenue is growing, the outlook hinges mainly on accelerating cost reductions, in the broker's view.

Rating is downgraded to Underperform from Neutral. Target is reduced to $0.67 from $0.72.

Target price is $0.67 Current Price is $0.73 Difference: minus $0.06 (current price is over target).
If MYR meets the Credit Suisse target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $0.83, suggesting upside of 16.7% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.3

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

Deutsche Bank rates MYR as Hold (3) -

Deutsche Bank continues to believe the business cannot grow the top line while maintaining gross margins. FY17 net profit was 1% ahead of the broker's forecast while operating earnings declined by -6% and were in line.

The broker downgrades FY18 net profit estimates by -2.6%. Hold rating retained. Target is lowered to $0.75 from $0.80.

Target price is $0.75 Current Price is $0.73 Difference: $0.02
If MYR meets the Deutsche Bank target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $0.83, suggesting upside of 16.7% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.3

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

Morgan Stanley rates MYR as Equal-weight (3) -

The sales performance in FY17 was disappointing, Morgan Stanley observes, with a decline of -1.4% and driven in part by the closure of three stores. An additional three stores will now be closed.

The broker has little optimism regarding future sales growth and, while recognising the productivity benefits that should come with closures, is not confident in the transfer of sales to other stores.

This is particularly the case in regard to the arrival of Amazon, more international competition and a weaker consumer cycle. FY18 trading has already begun below management expectations.

Equal-weight rating retained. Target is $0.70.  Industry view is Cautious.

Target price is $0.70 Current Price is $0.73 Difference: minus $0.03 (current price is over target).
If MYR meets the Morgan Stanley target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $0.83, suggesting upside of 16.7% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.3

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

UBS rates MYR as Sell (5) -

FY17 results were in line with UBS estimates and the broker considers the lack of top-line growth is the key issue.

The broker finds little evidence the trends will turn around in the short to medium term, given year-to-date FY18 trading continues to be weak and below expectations.

Sell rating and $0.65 target retained.

Target price is $0.65 Current Price is $0.73 Difference: minus $0.08 (current price is over target).
If MYR meets the UBS target it will return approximately minus 11% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $0.83, suggesting upside of 16.7% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.3

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

Morgans rates RCG as Hold (3) -

Morgans conducts a further analysis of the future rolling out of stores and makes additional downgrades to FY18 estimates. The rolling out of stores will be weighted towards the Skechers format versus Hype previously. It will also be more weighted towards regional centres than Metro.

The broker notes from FY18 the company becomes heavily reliant on like-for-like sales growth, and any resulting operating leverage after making a number of acquisitions over the last few years.

With the impending threat of increased competition,, the broker finds it difficult to forecast with any conviction. Hold rating retained. Target is reduced to $0.81 from $0.89.

Target price is $0.81 Current Price is $0.75 Difference: $0.06
If RCG meets the Morgans target it will return approximately 8% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.0

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

UBS rates WFD as Buy (1) -

UBS calculates that the stock has underperformed the A-REITs sector by -17% and the market by -26% over the past 12 months.

The broker reviews earnings in detail post the results and now expects 7-8% growth in 2018 and 2019. Buy retained. Target is reduced to $9.00 from $9.20.

Target price is $9.00 Current Price is $7.76 Difference: $1.24
If WFD meets the UBS target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $9.07, suggesting upside of 16.1% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY17:

Forecast for FY18:

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

Market Sentiment: 0.4

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

UBS rates WOW as Buy (1) -

UBS still likes Woolworths as there is scope for upside surprise and considers the market is too negative on Big W.

The upcoming catalysts will be the first quarter sales on October 31. The broker expects the company to report a 5.5% like-for-like increase in food and -3% decrease in Big W.

Buy retained. Target is $28.90.

Target price is $28.90 Current Price is $25.39 Difference: $3.51
If WOW meets the UBS target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $26.30, suggesting upside of 3.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.2

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