Australian Broker Call

UBS rates BAP as Buy (1) -

A weaker macro outlook is expected to affect the retail-exposed areas of the business but the economic cycle has not generally affected car servicing habits, UBS observes.

The broker reduces retail division sales forecasts for the second half to a contraction of -1.2% and FY18 sales growth to 2%. Margins are also trimmed. Buy rating retained. Target is reduced to $6.35 from $6.75.

Target price is $6.35 Current Price is $5.50 Difference: $0.85
If BAP meets the UBS target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $6.38, suggesting upside of 15.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.8

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

Citi rates BLX as Neutral (3) -

Citi considers the company's exclusive branded products will be a barrier to Amazon's influence. The share price has fallen -28% since April 28, which in the broker's view is factoring the risks from Amazon and slowing housing growth.

Neutral retained. Target is reduced to $1.40 from $1.75.

Target price is $1.40 Current Price is $1.26 Difference: $0.14
If BLX meets the Citi target it will return approximately 11% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

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 BTT as Downgrade to Sell from Neutral (5) -

UBS does not believe the business can achieve near-term consensus expectations regarding performance fees. Over the last five years performance fees have contributed 16% of revenue and 20% to group pre-tax profit.

The broker notes the company's success over the last five years has been driven largely by the acquisition of JO Hambro and, with net flows remaining strong, recent underperformance across a range of funds has flown under the radar.

UBS downgrades to Sell from Neutral. Target is reduced to $11.15 from $12.00.

Target price is $11.15 Current Price is $12.33 Difference: minus $1.18 (current price is over target).
If BTT 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 $11.80, suggesting downside of -4.3% (ex-dividends)

The company's fiscal year ends in September.

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 FLT as Downgrade to Neutral from Buy (3) -

The company's share price has risen 25% in the year to date and UBS observes it has outperformed the broader market. This, coupled with a more sombre outlook for the Australian discretionary retail environment, is the main driver of the broker's downgrade to Neutral from Buy.

The main issue for the company over FY17 has been airfare deflation which is offset strong volume growth and limited the business's ability to generate over-riders.

UBS believes a weaker consumer backdrop is the main risk to an earnings recovery, despite management suggesting the rate of deflation has started to ease. Target is raised to $37.60 from $36.10.

Target price is $37.60 Current Price is $39.87 Difference: minus $2.27 (current price is over target).
If FLT meets the UBS target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $30.93, suggesting downside of -22.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: -0.1

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

UBS rates GXL as Upgrade to Buy from Neutral (1) -

UBS notes feedback from the industry in pet retailing has signalled there is some trading down in food products and weaker gross margins.

The broker cuts its sales growth expectations for the Australasian retail division for the second half to 3.3% from 4.2%, and lowers divisional gross margins forecasts to a -50 basis points contraction.

Rating  is upgraded to Buy from Neutral on the back of recent share price weakness.  Target is reduced to $7.10 from $7.50.

Target price is $7.10 Current Price is $6.19 Difference: $0.91
If GXL meets the UBS target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $6.83, suggesting upside of 10.4% (ex-dividends)

The company's fiscal year ends in June.

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 MIN as Overweight (1) -

The company has made a small downgrade to forecasts, reducing EBITDA guidance by -6% to $460-480m. The main reason for the downgrade is the widening of the discount in the iron ore market for low-grade products to -35% from -18%.

The small magnitude of the downgrade signals to Morgan Stanley that the company's mining services business and lithium operations are continuing to perform strongly.

Overweight retained. Target is $13.30. Industry view is Attractive.

Target price is $13.30 Current Price is $10.00 Difference: $3.3
If MIN meets the Morgan Stanley target it will return approximately 33% (excluding dividends, fees and charges).

Current consensus price target is $13.27, suggesting upside of 32.7% (ex-dividends)

The company's fiscal year ends in June.

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

Ord Minnett rates MTS as Hold (3) -

Ord Minnett updates its model, adjusting for the company's FY17 result earlier this week. The broker continues to believe food sales are challenged because of a weak Western Australian economy and the competitive environment, and the prospect of a return to food inflation is uncertain.

Hardware remains a significant opportunity although Ord Minnett suspects the path of synergies is a little later than previously anticipated. The broker retains a Hold rating and $2.15 target.

Target price is $2.15 Current Price is $2.35 Difference: minus $0.2 (current price is over target).
If MTS meets the Ord Minnett target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.39, suggesting upside of 1.7% (ex-dividends)

The company's fiscal year ends in April.

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

UBS rates MYR as Downgrade to Sell from Neutral (5) -

Myer's share price has fallen around 40% in the year to date but UBS believes further share price underperformance is likely because of a weakening consumer backdrop.

There is also the issue of rising competition, both from international entrants and through online. The broker's medium-term forecasts fall materially, driven by mid-single digit downgrades to top-line sales.

UBS now assumes like-for-like sales growth will be flat.. Rating is downgraded to Sell from Neutral. Target is reduced to $0.75 from $1.00.

Target price is $0.75 Current Price is $0.86 Difference: minus $0.11 (current price is over target).
If MYR meets the UBS target it will return approximately minus 13% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $0.92, suggesting upside of 6.6% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: -0.1

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

UBS rates PMV as Buy (1) -

Recent weakness in retail and a softer outlook is expected to affect domestic apparel sales significantly and UBS also notes the category has suffered price deflation for nine consecutive months.

The broker reduces its forecast for earnings per share by -3% for FY17. Nevertheless, UBS estimates that the company's core brands now make up less than one-third of retail earnings (EBIT) and increased direct sourcing is providing a buffer to pressure on margins.

Buy rating retained. Target is reduced to $16.90 from $17.00.

Target price is $16.90 Current Price is $12.85 Difference: $4.05
If PMV meets the UBS target it will return approximately 32% (excluding dividends, fees and charges).

Current consensus price target is $15.50, suggesting upside of 20.6% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.8

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

Citi rates RCG as Buy (1) -

Citi believes there are a number of factors which are less appreciated that offset the risks to RCG posed by Amazon.

The broker suggests Amazon will need to source the RCG licensed brand through RCG and, therefore, should have similar pricing in Australia.

The broker acknowledges the stock is up 43% since the beginning of May and consensus expectations are required to be met to drive material gains in the share price from here.

Target is raised to 91c from 88c. Buy retained.

Target price is $0.91 Current Price is $0.88 Difference: $0.035
If RCG meets the Citi target it will return approximately 4% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

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 TPM as Downgrade to Neutral from Buy (3) -

UBS has surveyed consumers and the majority of the survey is willing to pay more than $25/month for the type of plan that the broker believes TPG may offer at a $25 price point. Whether this translates into churn for the company is unclear, as proof of the network quality is required.

Nevertheless, UBS has increased confidence that the company can capture mobile market share and increases its long-term mobile share assumptions to 9.0% from 7.5%.

Rating is downgraded to Neutral from Buy is the near-term risks are skewed to the downside, and the increase to the broker's mobile capital expenditure forecasts is not enough to offset the increase to long-term market share assumptions. Target is reduced to $6.00 from $6.70.

Target price is $6.00 Current Price is $5.79 Difference: $0.21
If TPM meets the UBS target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $7.03, suggesting upside of 21.3% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: -0.1

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

Citi rates TWE as Sell (5) -

Citi analysts have been analysing data up to the end of April. It is their assessment that when it comes to wine sales at Treasury Wine Estates, Asia could surprise on the upside, the US appears to be consistent, while Australia is sluggish and wine exports to the UK are surprisingly strong.

The analysts also observe that while export volumes to China remain incredibly strong, prices across Asia, on average, are down. The analysts believe in a rather weak Australian wine market overall, the company is grabbing market share but pricing is weak.

Looking at the lofty valuation, Citi suggests an upside surprise is required to maintain such premium. Sell rating retained. Target remains $10.50.

Target price is $10.50 Current Price is $13.17 Difference: minus $2.67 (current price is over target).
If TWE meets the Citi target it will return approximately minus 20% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $11.93, suggesting downside of -9.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: -0.1

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