Australian Broker Call

Credit Suisse rates ASX as Underperform (5) -

First half activity trends are tracking broadly in line with Credit Suisse expectations. The trends in the first four months of the first half demonstrate the diversity of the business, suggest the analysts.

While this diversity presents significant upside, or downside, to earnings it also has the benefit of stability, the broker asserts.

Despite this, Credit Suisse only expects 2-3% growth in earnings in FY18-20, similar to the growth in FY17. As a result an Underperform rating is retained. Target is raised to $51 from $50.

Target price is $51.00 Current Price is $54.44 Difference: minus $3.44 (current price is over target).
If ASX 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 $51.44, suggesting downside of -5.5% (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

Ord Minnett rates BXB as Buy (1) -

Ord Minnett suggests market pessimists have recently won the battle for control of the share price but this could change as evidence emerges that concerns about the performance of CHEP in the US have been overplayed.

Ord Minnett believes investors would be better off taking a longer-term view on the stock and considering the remaining US$1-2bn of addressable whitewood conversion opportunities.

Buy rating and $12.65 target.

Target price is $12.65 Current Price is $9.50 Difference: $3.15
If BXB meets the Ord Minnett target it will return approximately 33% (excluding dividends, fees and charges).

Current consensus price target is $10.39, suggesting upside of 9.4% (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

UBS rates CAB as Neutral (3) -

UBS observes the company's new driver terminal appears to be working its way into taxi expenditure data, with Cabcharge gaining a 5.2% share in the September quarter.

This is a major positive and supports the broker's view that the company has a place in the Australian market. Cabharge appears to be winning share, despite Uber's momentum, at the expense of traditional competitors.

Nevertheless, news reports of a new ride-on-demand competitor entering the Australian market creates a new set of potential risks and UBS prefers to await developments.

Neutral rating retained and target falls to $1.75 from $2.05.

Target price is $1.75 Current Price is $1.73 Difference: $0.02
If CAB meets the UBS target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $1.88, suggesting upside of 8.4% (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 CGC as Upgrade to Outperform from Neutral (1) -

The company will lift its shareholding of African Blue to 90% from 49%. A payment of $68m for the initial 37% share increase will be paid and the remaining 4% is dependent on actual earnings achieved.

Macquarie expects this Moroccan transaction to heighten the chance of an upgrade at the AGM. Costa has previously guided for 10% growth in underlying net profit in FY18.

Macquarie upgrades to Outperform from Neutral. Target is raised to $7.00 from $6.14.

Target price is $7.00 Current Price is $6.61 Difference: $0.39
If CGC meets the Macquarie target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $5.90, suggesting downside of -10.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.7

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

Credit Suisse rates CPU as Outperform (1) -

Credit Suisse assesses the rate rises in the UK provide a tailwind for the company. The Bank of England has raised rates by 25 basis points to 50 basis points.

The immediate benefit in FY18 will be an increase of 0.8% to net profit, with larger benefits in the outer years.

Outperform retained. Target is $15.00.

Target price is $15.00 Current Price is $15.48 Difference: minus $0.48 (current price is over target).
If CPU 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 $13.89, suggesting downside of -10.3% (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: -0.1

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

Deutsche Bank rates DMP as Sell (5) -

Yum Brands' Sep Q result released in the US showed Aust Pizza Hut sales growing 35% in the quarter and 25% calendar year. There's a bit of noise around the data, the broker notes, given a switch to a calendar year end for Yum reporting.

However it's enough to assume the period of Domino's stealing market share from Pizza Hut is now over, the broker suggests, and possibly swung back the other way as Pizza Hut is now on aggregator platforms. Sell and $36 target retained.

Target price is $36.00 Current Price is $48.06 Difference: minus $12.06 (current price is over target).
If DMP meets the Deutsche Bank target it will return approximately minus 25% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $47.18, suggesting downside of -1.8% (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

Macquarie rates GMA as Outperform (1) -

The company has upgraded the FY17 claim ratio guidance. The expected FY17 full-year claim ratio has been lowered to 35-40% from 40-50%. Macquarie notes capital requirements also continue to fall. 

The broker believes yield and excess capital should drive outperformance in the stock.

Outperform rating retained. Target is $3.66.

Target price is $3.66 Current Price is $2.85 Difference: $0.81
If GMA meets the Macquarie target it will return approximately 28% (excluding dividends, fees and charges).

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

UBS rates GMA as Sell (5) -

UBS observes the sequential improvement in delinquencies mirrors a trend observed through bank reporting season so far. Hence, a better September quarter for the company was not altogether surprising.

Still, UBS believes the 12-24 months investment case has not changed materially and loss ratios will deteriorate into 2018 and 2019, supporting a Sell call. $2.60 target maintained.

Target price is $2.60 Current Price is $2.85 Difference: minus $0.25 (current price is over target).
If GMA meets the UBS target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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

Morgan Stanley rates IAG as Overweight (1) -

Morgan Stanley believes investors remain cautious about the company's margin upside, being concerned that savings will be reinvested in growth.

Yet the broker suspects the more upbeat cycle now prevailing provides a unique position for the business to capture targeted savings and pricing tailwinds.

Overweight rating retained. Industry view In-Line. Price target $6.80.

Target price is $6.80 Current Price is $6.78 Difference: $0.02
If IAG meets the Morgan Stanley target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $6.32, suggesting downside of -6.7% (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

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

The company indicated at its AGM that trade in September and October moderated, affected by the timing of product launches.

The iPhone X has now been launched and Morgan Stanley observed very strong demand at JB Hi-Fi stores. This leads the broker to suspect that there could be a material uplift to sales, not to mention the associated lift in store traffic.

Equal-weight rating, Cautious industry view and $25 target retained.

Target price is $25.00 Current Price is $22.42 Difference: $2.58
If JBH meets the Morgan Stanley target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $24.52, suggesting upside of 9.4% (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 NAB as Buy (1) -

NAB posted a sound result, the broker suggests, featuring net interest margin increases in both housing and business lending. The bank will now embark on an ambitious spending program which will elevate cost growth.

While this will crimp earnings growth in FY18, beyond that the broker sees NAB's solid positioning in the SME segment as being reinforced by such investment. Buy retained, target rises to $33.50 from $32.50.

Target price is $33.50 Current Price is $31.63 Difference: $1.87
If NAB meets the Deutsche Bank target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $31.99, suggesting upside of 1.2% (ex-dividends)

The company's fiscal year ends in September.

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 PRU as Buy (1) -

The Yaoure definitive feasibility study has increased confidence in the project but at a reduced valuation, Citi observes.

Production rates and gold resources are reduced versus the pre-feasibility. The broker suggests the project may be delayed to build internal cash flow but would still give the company an attractive multi-year growth profile.

Buy/High Risk. Target is reduced to $0.52 from $0.53.

Target price is $0.52 Current Price is $0.32 Difference: $0.2
If PRU meets the Citi target it will return approximately 63% (excluding dividends, fees and charges).

Current consensus price target is $0.48, suggesting upside of 51.3% (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) -

The Yaoure gold project feasibility study has confirmed an additional 8.5 year mine life to produce around 215,000 ounces per year.

Credit Suisse suspects the development will be deferred until it is fundable from cash flow and debt as a clear preference to new equity issuance.

In this way, Edikan and Sissingue will affect the share price and in turn the funding capacity and development timing of Yaoure.

Outperform rating retained. Target is reduced to $0.69 from $0.78.

Target price is $0.69 Current Price is $0.32 Difference: $0.37
If PRU meets the Credit Suisse target it will return approximately 116% (excluding dividends, fees and charges).

Current consensus price target is $0.48, suggesting upside of 51.3% (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

Morgan Stanley rates SPK as Overweight (1) -

The company held its AGM, maintaining FY18 guidance. Morgan Stanley observes the focus remains on cost control to combat high-margin legacy businesses in decline, elevated competition and digital disruption.

The broker found nothing in the AGM to alter existing investment expectations and the stock remains a preferred telco yield play.

The broker retains an Overweight rating. Industry view is In-Line. Price target is NZ$4.05.

Current Price is $3.28. Target price not assessed.

The company's fiscal year ends in June.

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: 1.0

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

Credit Suisse rates TAH as Outperform (1) -

The company has recently released its Multiplier product. Tabcorp is now in the market with a product that competes with corporate bookmakers but Credit Suisse suspects that one major innovation per year may not be enough to protect market share.

Paddy Power has reported a 30% increase in revenue in its Australian digital wagering business versus Tabcorp's report of 17% growth, the broker points out.

Outperform retained. Target is $4.80.

Target price is $4.80 Current Price is $4.45 Difference: $0.35
If TAH meets the Credit Suisse target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $4.51, suggesting upside of 1.4% (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