Australian Broker Call

Morgan Stanley rates ANN as Overweight (1) -

Morgan Stanley expects inflation and the rubber price seen earlier this year should affect the first half. Although the company's exposure to US cyclical industrial activity should mean there is benefit organically from strong ISM data.

Hence, Morgan Stanley suspects the company could lift the lower end of guidance once again at its AGM on October 20.

Rating is Overweight. Target is $23.00. Sector view is In-Line.

Target price is $23.00 Current Price is $24.16 Difference: minus $1.16 (current price is over target).
If ANN meets the Morgan Stanley target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $22.54, suggesting downside of -6.7% (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: 0.3

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

Macquarie rates CGC as Initiation of coverage with Neutral (3) -

Macquarie initiates coverage with a Neutral rating and $6.14 target. The broker is positive about the growth prospects but considers valuation relatively full.

Macquarie notes the company has established a strong track record of delivery since its 2015 IPO and beat guidance in FY17.

However, the broker considers upside to the 10% growth forecast for FY18 is less obvious for the near term given a high bar that is set by benign seasonal conditions and the lagged benefit of growth initiatives.

Target price is $6.14 Current Price is $5.92 Difference: $0.22
If CGC meets the Macquarie target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $5.62, suggesting downside of -5.0% (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

Citi rates EVN as Buy (1) -

Citi analysts seem pleased with the quarterly production report; they in particular single out the fact that all-in costs (AISC) have now fallen to A$786/oz.

Buy rating retained, while the price target improves slightly to $2.65. Citi analysts expect the sale of high cost Edna May to keep costs low and forecast AISC of A$794/oz in FY18, beating the company's guidance.

Target price is $2.65 Current Price is $2.30 Difference: $0.35
If EVN meets the Citi target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $2.44, suggesting upside of 5.5% (ex-dividends)

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 EVN as Neutral (3) -

September quarter production was robust and Credit Suisse notes good exploration results from Cowal indicate a new discovery and longer life.

Ernest Henry generated net mine cash flow of $52.4m. Strong copper and a firm gold price suggest to the broker even stronger cash flow in the December quarter is possible if spot prices are maintained.

Neutral rating and $2.22 target maintained.

Target price is $2.22 Current Price is $2.30 Difference: minus $0.08 (current price is over target).
If EVN meets the Credit Suisse target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.44, suggesting upside of 5.5% (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

Macquarie rates EVN as Outperform (1) -

September quarter production was strong, with a record for gold output of 220,000 ounces. Macquarie expects the acceleration of the exploration program also offers the potential for upside surprises.

Outperform and $2.80 target retained.

Target price is $2.80 Current Price is $2.30 Difference: $0.5
If EVN meets the Macquarie target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $2.44, suggesting upside of 5.5% (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 EVN as Buy (1) -

September quarter production was ahead of Ord Minnett forecasts. The broker was impressed with the six core assets and expects the company to be net cash by the end of 2018.

Evolution Mining remains Ord Minnett's preferred gold exposure. Buy rating retained. Target is $2.60.

Target price is $2.60 Current Price is $2.30 Difference: $0.3
If EVN meets the Ord Minnett target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $2.44, suggesting upside of 5.5% (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

UBS rates EVN as Buy (1) -

Evolution posted a strong Sep Q, beating the broker's forecasts on both production and costs. The broker notes the company is well known for M&A success but has not had as much luck in exploration. The exploration budget is also set to fall next year.

This probably explains the stock's valuation discount to Northern Star Resources ((NST)), the broker suggests, but on the belief that gap can be narrowed, Evolution remains the broker's top pick in the space. Buy and $2.45 target retained.

Target price is $2.45 Current Price is $2.30 Difference: $0.15
If EVN meets the UBS target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $2.44, suggesting upside of 5.5% (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

Morgans rates FDV as Add (1) -

The company continues to re-shape its portfolio towards more developed emerging markets, Morgans observes. The business mix is skewed further towards Southeast Asia and businesses that have strong near-term prospects for profit.

The company has exited an early-stage business in Africa and invested in real estate transactions business in the Philippines.

Morgans retains a positive view on the stock and believes it has created significant value since investing in most of its portfolio companies. Add rating retained. Target rises to $0.79 from $0.78.

Target price is $0.79 Current Price is $0.64 Difference: $0.15
If FDV meets the Morgans target it will return approximately 23% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 1.0

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

Citi rates FPH as Downgrade to Neutral from Buy (3) -

Citi analysts remain confident the company can achieve the growth that is currently incorporated in their modeling, it's just that the share price keeps on visiting higher share price levels.

Motivated by valuation, and thus by return constraints at the current share price, the rating has been pulled back to Neutral from Buy.

Current Price is $11.77. Target price not assessed.

Current consensus price target is N/A

The company's fiscal year ends in March.

Forecast for FY18:

Forecast for FY19:

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

Market Sentiment: -0.2

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

Citi rates GUD as Upgrade to Buy from Neutral (1) -

Citi analysts observe the share price has weakened by -21% since its peak in June. As they believe this now makes the stock undervalued, they have decided to upgrade to Buy from Neutral.

Target price lifts by 8% to $12.41. Citi continues to anticipate a re-rating for the shares with GUD expected to continue to rationalise its operations via further divestments and use the proceeds to acquire more businesses in the Automotive sector.

Target price is $12.41 Current Price is $10.75 Difference: $1.66
If GUD meets the Citi target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $11.59, suggesting upside of 4.5% (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

Macquarie rates GWA as Upgrade to Neutral from Underperform (3) -

Macquarie reviews forecasts and upgrades to Neutral from Underperform. The broker envisages reduced downside risks because of the valuation, dividend yield and strong balance sheet that could support another share buyback or strategic acquisition.

A discount to the market is justified given the softening outlook for housing, but Macquarie believes the strong financial position should mean the share price is supported around current levels. Target is increased to $2.77 from $2.60.

Target price is $2.77 Current Price is $2.63 Difference: $0.14
If GWA meets the Macquarie target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $2.82, suggesting upside of 4.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.5

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

Citi rates GXY as Downgrade to Neutral from Buy (3) -

Citi downgrades to Neutral from Buy on valuation, following strong share price appreciation. Earnings estimates have been lifted, which pushes up the price target to $3.70.

Increased production, higher prices and lower costs are all responsible for the increase in forecasts. With the lithium market remaining tight, and positive catalysts still on the horizon, the analysts do acknowledge there is potential for further upside.

Target price is $3.70 Current Price is $3.54 Difference: $0.16
If GXY meets the Citi target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $3.30, suggesting downside of -8.1% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.5

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

UBS rates GXY as Neutral (3) -

Galaxy's Sep Q result beat the broker on production and cost but fell short on recoveries and realised price. The company sees ongoing positive demand trends for lithium ion batteries, aided by government support for electric vehicles and power storage.

The broker also notes an acceleration recently in M&A in the space. Neutral and $3.20 target retained.

Target price is $3.20 Current Price is $3.54 Difference: minus $0.34 (current price is over target).
If GXY meets the UBS target it will return approximately minus 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.30, suggesting downside of -8.1% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.5

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

Ord Minnett rates MOE as Initiation of coverage with Hold (3) -

Moelis Australia provides corporate advisory services and alternative asset management. Assets under management have grown to $2.6bn.

Ord Minnett observes the platform is perfectly set up to continue growing assets under management, with divisional integration ensuring consistent deal flow and the company capturing growth in funds out of Asia.

Ord Minnett initiates coverage with a Hold rating and $5.32 target.

Target price is $5.32

The company's fiscal year ends in December.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.0

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

Citi rates OZL as Buy (1) -

Costs were higher, also because of power costs, but copper production for the September quarter came out in-line with expectations, report analysts at Citi.

With the company leaving guidance unchanged, Citi analysts kept their Buy rating in place. 

Target price is $9.10 Current Price is $8.17 Difference: $0.93
If OZL meets the Citi target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $8.33, suggesting upside of 0.4% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.3

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

Credit Suisse rates OZL as Underperform (5) -

September quarter production was in line with guidance. Credit Suisse considers 2017 guidance is readily achievable.

The main near-term opportunity, in the broker's opinion, is from the re-optimisation of Prominent Hill underground to progressively include additional resources.

Underperform rating maintained and target is $7.30.

Target price is $7.30 Current Price is $8.17 Difference: minus $0.87 (current price is over target).
If OZL meets the Credit Suisse target it will return approximately minus 11% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $8.33, suggesting upside of 0.4% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.3

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

Macquarie rates OZL as Outperform (1) -

September quarter production was mixed from Prominent Hill.  Macquarie notes copper production was 6% higher than forecast but gold output was lower.

The broker makes modest changes to near-term earnings forecasts, reducing 2017 by -4% and increasing 2018 by 3%, but these remain within guidance ranges. Outperform rating and $10 target maintained.

Target price is $10.00 Current Price is $8.17 Difference: $1.83
If OZL meets the Macquarie target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $8.33, suggesting upside of 0.4% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.3

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

Morgans rates OZL as Add (1) -

September quarter production was solid and Morgans believes the stock offers excellent cash flow leverage to attractive longer-term copper market dynamics.

The broker believes the resolution of Prominent Hill's long-term power security remains some months away and this provides ongoing concerns for marginal investors.

Add rating retained. Target is raised to $8.87 from $8.80.

Target price is $8.87 Current Price is $8.17 Difference: $0.7
If OZL meets the Morgans target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $8.33, suggesting upside of 0.4% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.3

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

Ord Minnett rates OZL as Hold (3) -

September quarter production of copper was in line with Ord Minnett estimates while gold output was slightly lower. The broker continues to believe the company is performing well at the Prominent Hill operations.

However, even after including Carrapateena on an unrisked basis the stock is trading close to valuation. Ord Minnett retains a Hold rating and reduces the target to $7.70 from $7.90.

Target price is $7.70 Current Price is $8.17 Difference: minus $0.47 (current price is over target).
If OZL meets the Ord Minnett target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $8.33, suggesting upside of 0.4% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.3

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

UBS rates OZL as Buy (1) -

OZ Minerals posted an in-line Sep Q production result. The company revealed it is still trying to sort out a power deal with BHP ((BHP)) at Prominent Hill.

Power remains a risk but otherwise the broker sees OZ Minerals as the go-to copper producer, assuming no problems with the Carrapateena ramp-up. Buy retained, target rises to $9.20 from $9.10.

Target price is $9.20 Current Price is $8.17 Difference: $1.03
If OZL meets the UBS target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $8.33, suggesting upside of 0.4% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.3

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

Citi rates PRU as Buy (1) -

Citi analysts have kept their Buy/High Risk rating intact, as well as the 53c price target post what they consider was the release of a positive September quarter production report.

The analysts now believe Edikan is on track to meet 1H18 guidance. In addition, near-term catalysts should be the Yaoure DFS and progress with construction of Sissingue, they add.

Target price is $0.53 Current Price is $0.36 Difference: $0.17
If PRU meets the Citi target it will return approximately 47% (excluding dividends, fees and charges).

Current consensus price target is $0.50, suggesting upside of 44.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.6

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

Credit Suisse rates PRU as Outperform (1) -

September quarter production was in line with guidance. Sissingue's development is 77% complete and on schedule.

Despite applying discounts to valuation -15% for Edikan, -30% for Sissingue and -50% for Yaoure - Credit Suisse still generates a compelling valuation versus where the share price is trading.

Outperform rating retained. Target is $0.78.

Target price is $0.78 Current Price is $0.36 Difference: $0.42
If PRU meets the Credit Suisse target it will return approximately 117% (excluding dividends, fees and charges).

Current consensus price target is $0.50, suggesting upside of 44.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.6

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

UBS rates PRU as Neutral (3) -

Sep Q production at Edikan was weaker than expected as mining hit harder ore. Perseus nevertheless expects unplanned maintenance to reduce from here on.

The broker notes the company's balance sheet is sound, and sufficient to fund the Sissingue development. The stock has turned the corner in FY17 and started to re-rate, but the broker believes further re-rating will require a track record of meeting guidance and keeping costs down.

Neutral and 40c target retained.

Target price is $0.40 Current Price is $0.36 Difference: $0.04
If PRU meets the UBS target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $0.50, suggesting upside of 44.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.6

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

UBS rates QBE as Buy (1) -

It's been a bad year for catastrophes and the cost to QBE is yet to be quantified, but otherwise the broker sees a positive outlook for the insurer given the potential for rising rates, particularly in Australia.

Offsetting this medium term view is the near-term risk of a rebasing of FY18 earnings expectations by the incoming CEO. The broker nevertheless looks to its medium term view in maintaining a Buy rating and $12.20 target.

Target price is $12.20 Current Price is $10.39 Difference: $1.81
If QBE meets the UBS target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $11.35, suggesting upside of 8.1% (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: 0.1

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

Macquarie rates S32 as Neutral (3) -

The company has re-commenced cutting the Appin 7 longwall at Illawarra Coal. A longer outage than previously expected with a slower ramp up has resulted in Macquarie reducing FY18 production forecasts for the mine by -21%.

The broker observes the ability to operate Appin 7 and Appin 9 concurrently is critical to unlocking the long-term value of Illawarra.

If the company can do this from FY19 and beyond it presents upside risks to the broker's base case forecasts. Neutral retained. Target is $3.50.

Target price is $3.50 Current Price is $3.24 Difference: $0.26
If S32 meets the Macquarie target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $3.22, suggesting downside of -0.4% (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: 0.3

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

Morgans rates TCL as Hold (3) -

September quarter data signalled ongoing strength in the company's Australian roads while US revenue growth was weaker than Morgans expected.

The broker seeks a more attractive entry price into the stock, which may occur if government bond rates rise and/or the company undertakes a capital raising. Hold retained. Target is raised to $11.94 from $11.68.

Target price is $11.94 Current Price is $12.32 Difference: minus $0.38 (current price is over target).
If TCL meets the Morgans target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $12.75, suggesting upside of 3.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.6

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

Morgans rates TGA as Hold (3) -

The company's guidance for FY18 signals net profit will be down -27% from the FY17 result. Radio Rentals installation volumes have been affected by the implementation of the new online origination and credit assessment platform.

Morgans has suggested that there was a risk to earnings over the past 18 months and FY18 would represent a re-basing year.

The broker finds it difficult to gain confidence in the base level of earnings for Radio Rentals, given the volume decline is yet to be halted. Hold rating retained. Target is reduced to $1.00 from $1.34.

Target price is $1.00 Current Price is $0.91 Difference: $0.095
If TGA meets the Morgans target it will return approximately 10% (excluding dividends, fees and charges).

The company's fiscal year ends in March.

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 TNE as Neutral (3) -

Technology One's guidance downgrade reflects softer contract closure in Consulting and utilisation rates. Outside of Consulting, other divisions look strong, the broker notes. Consulting may have been a victim of the company's rapid growth.

The broker awaits evidence of a turnaround at the FY17 result. Meanwhile, Neutral retained. Target falls to $5.30 from $5.75.

Target price is $5.30 Current Price is $4.91 Difference: $0.39
If TNE meets the UBS target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $5.05, suggesting upside of 3.0% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.3

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