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Australian Broker Call *Extra* Edition – Jan 24, 2019

Daily Market Reports | Jan 24 2019

This story features AERIS RESOURCES LIMITED, and other companies. For more info SHARE ANALYSIS: AIS

An additional news report on the recommendation, valuation, forecast and opinion changes for ASX-listed equities.

In addition to The Australian Broker Call Report, which is published and updated daily (Mon-Fri), FNArena has now added The Australian Broker Call *Extra* Edition, featuring additional sources of research and insights on ASX-listed stocks, also enlarging the number of stocks that make up the FNArena universe.

One key difference is the *Extra* Edition will not be updated daily, but merely "regularly" depending on availability of suitable quality content. As such, the *Extra* Edition tries to build a bridge between daily updates via the Australian Broker Call Report and ad hoc news stories, that are not always timely for investors hungry for the next information update.

Investors using the *Extra* Edition as a source of input for their own share market research should thus take into account that information after publication may not be up to date, or yet awaiting another update by FNArena's team of journalists.

Similar to The Australian Broker Call Report, this *Extra* Edition includes concise but limited reviews of research recently published by Stockbrokers and other experts, which should be considered as information concerning likely market behaviour rather than advice on the securities mentioned. Do not act on the contents of this Report without first reading the important information included at the end of this Report.

The Australian Broker Call *Extra* Edition is a summary that has been prepared independently of the sources identified. Readers will check the full text of the recommendations and consult a Licenced Advisor before making any investment decision.

The copyright of this Report is owned by the publisher. Readers will not copy, forward or disseminate this Report to any other person. For more vital information about the sources included, see the bottom of this Report.

COMPANIES DISCUSSED IN THIS ISSUE

Click on a symbol for fast access.
The number next to the symbol represents the number of brokers covering it for this report -(if more than 1)

AIS   ALU   APE   APT   CGC   COE   ELX   MCP   MQG   MWY   WGN  

AIS    AERIS RESOURCES LIMITED

Copper – Overnight Price: $0.22

Bell Potter rates ((AIS)) as Downgrade to Hold from Buy (3) –

Bell Potter initiated coverage in late November last year. It considers Aeris Resources a highly leveraged play on the copper price thanks to the company's Tritton operations combined with potential for exploration success at the Torrens JV.

While the December quarterly production report is labeled "a good result", higher costs and lower forecasts for copper have triggered quite meaty reductions to forecasts. The stock's valuation has been further impacted by the weakening AUD.

All in all, the price target lost -1c to 22c. Following a rally in the share price, Bell Potter has decided to downgrade to Hold from Buy. This research update was released on January 21, 2019.

Target price is $0.22 Current Price is $0.22 Difference: $0
If AIS meets the Bell Potter target it will return approximately 0% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY19:

Bell Potter forecasts a full year FY19 dividend of 0.00 cents and EPS of 3.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 7.33.

Forecast for FY20:

Bell Potter forecasts a full year FY20 dividend of 0.00 cents and EPS of 5.10 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 4.31.

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

ALU    ALTIUM LIMITED

Hardware & Equipment – Overnight Price: $23.94

Bell Potter rates ((ALU)) as Downgrade to Hold from Buy (3) –

Bell Potter has made no changes to forecasts, still thinks this is a high quality, local tech darling able to achieve double digit percentage growth in the order of 36%, 29% and 25% respectively for FY19 and the two following years, but a rally in the share price has narrowed the gap between the revised target and the share price.

The analysts made no changes to forecasts, yet they did lift their target by 6% to $25, also rolling forward their valuation modeling ahead of the February reporting season. There is always the risk that Altium might positively surprise next month, but for now the analysts are comfortable with their already robust growth projections, and commensurate valuation.

This research update was released on January 21, 2019.

Target price is $25.00 Current Price is $23.94 Difference: $1.06
If ALU meets the Bell Potter target it will return approximately 4% (excluding dividends, fees and charges).
Current consensus price target is $21.53, suggesting downside of -10.1%(ex-dividends)
The company's fiscal year ends in June.

Forecast for FY19:

Bell Potter forecasts a full year FY19 dividend of 33.00 cents and EPS of 39.10 cents.
At the last closing share price the estimated dividend yield is 1.38%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 61.23.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 37.7, implying annual growth of 30.6%.
Current consensus DPS estimate is 33.5, implying a prospective dividend yield of 1.4%.
Current consensus EPS estimate suggests the PER is 63.5.

Forecast for FY20:

Bell Potter forecasts a full year FY20 dividend of 39.00 cents and EPS of 50.50 cents.
At the last closing share price the estimated dividend yield is 1.63%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 47.41.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 47.0, implying annual growth of 24.7%.
Current consensus DPS estimate is 39.5, implying a prospective dividend yield of 1.6%.
Current consensus EPS estimate suggests the PER is 50.9.

Market Sentiment: 0.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

APE    AP EAGERS LIMITED

Automobiles & Components – Overnight Price: $6.60

Moelis rates ((APE)) as Hold (3) –

Hold rating retained after the car dealer released what Moelis believes was a "strong" preliminary FY18 financial performance, by keeping a lid on costs plus OEM incentives. The suggested financial numbers were ahead of previously provided guidance, points out the analyst.

The face value result is propped up by property revaluation and proceeds from asset sales, leading Moelis to point out it was strong, but not to the extent as suggested by the numbers. The overall trading environment is expected to remain tough, but Moelis is prepared to back management, albeit with further downward pressure on margins assumed.

Earnings estimates have been lifted by circa 3%. Target price drops to $7.25 from $7.75. This research update was released on January 24, 2019.

Target price is $7.25 Current Price is $6.60 Difference: $0.65
If APE meets the Moelis target it will return approximately 10% (excluding dividends, fees and charges).
Current consensus price target is $7.55, suggesting upside of 14.4%(ex-dividends)
The company's fiscal year ends in December.

Forecast for FY18:

Moelis forecasts a full year FY18 dividend of 36.50 cents and EPS of 45.90 cents.
At the last closing share price the estimated dividend yield is 5.53%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.38.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 48.7, implying annual growth of -3.2%.
Current consensus DPS estimate is 34.7, implying a prospective dividend yield of 5.3%.
Current consensus EPS estimate suggests the PER is 13.6.

Forecast for FY19:

Moelis forecasts a full year FY19 dividend of 36.50 cents and EPS of 44.30 cents.
At the last closing share price the estimated dividend yield is 5.53%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.90.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 49.2, implying annual growth of 1.0%.
Current consensus DPS estimate is 35.1, implying a prospective dividend yield of 5.3%.
Current consensus EPS estimate suggests the PER is 13.4.

Market Sentiment: 0.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

APT    AFTERPAY TOUCH GROUP LIMITED

Business & Consumer Credit – Overnight Price: $15.21

Bell Potter rates ((APT)) as Buy (1) –

Bell Potter has updated for the latest market release and appearance in front of the Senate Enquiry into the Buy Now, Pay Later sector. The broker has long been a fervent supporter of the company, and that doesn't seem to be about to change.

Following multiple changes to the modeling, the price target has lifted to $25.04 from $23.63. Buy rating remains firmly in place. On current forecasts, EPS growth will jump by 269.8% and 90.9% respectively in FY20 and FY21.

Research report was released on January 23, 2019.

Target price is $25.04 Current Price is $15.21 Difference: $9.83
If APT meets the Bell Potter target it will return approximately 65% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY19:

Bell Potter forecasts a full year FY19 dividend of 0.00 cents and EPS of 3.70 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 411.08.

Forecast for FY20:

Bell Potter forecasts a full year FY20 dividend of 0.00 cents and EPS of 13.50 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 112.67.

Market Sentiment: 1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

CGC    COSTA GROUP HOLDINGS LIMITED

Agriculture – Overnight Price: $5.28

Wilsons rates ((CGC)) as Hold (3) –

The company recently issued a profit warning and Wilsons analysts state their modeling already accounts for structural price deflation. On the basis of the latest warning, the analysts now conclude the price deflation is stronger than expected, which might be due to some cyclical influences.

Forecasts have been cut by -7-12% for the years ahead. All in all, Wilsons argues the share price appears broadly fair for a business generating low double-digit earnings growth, but with elevated earnings uncertainty. Hold.

Price target $5. Research update was released on January 23, 2019.

Target price is $5.00 Current Price is $5.28 Difference: minus $0.28 (current price is over target).
If CGC meets the Wilsons target it will return approximately minus 5% (excluding dividends, fees and charges – negative figures indicate an expected loss).
Current consensus price target is $5.64, suggesting upside of 6.9%(ex-dividends)
The company's fiscal year ends in December.

Forecast for FY19:

Wilsons forecasts a full year FY19 dividend of 10.50 cents and EPS of 18.00 cents.
At the last closing share price the estimated dividend yield is 1.99%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 29.33.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 23.8, implying annual growth of -29.6%.
Current consensus DPS estimate is 12.9, implying a prospective dividend yield of 2.4%.
Current consensus EPS estimate suggests the PER is 22.2.

Forecast for FY20:

Wilsons forecasts a full year FY20 dividend of 12.50 cents and EPS of 25.10 cents.
At the last closing share price the estimated dividend yield is 2.37%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 21.04.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 27.3, implying annual growth of 14.7%.
Current consensus DPS estimate is 15.5, implying a prospective dividend yield of 2.9%.
Current consensus EPS estimate suggests the PER is 19.3.

Market Sentiment: 0.6
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

COE    COOPER ENERGY LIMITED

Crude Oil – Overnight Price: $0.45

Canaccord Genuity rates ((COE)) as Buy (1) –

Analysts at Canaccord Genuity have observed the Sole project development is de-risking quickly (now 86% complete) and while company management keeps on referring to "within budget", the analysts are of the view a more accurate designation would be "under budget".

Under different circumstances this would have translated into higher forecasts and a lift in valuation, but Canaccord Genuity has also lowered its oil price forecasts and one cancels out the other. The in-house 2H FY19 oil price forecast is now at US$65/bbl (from US$75) while the long-term forecast  moved to US$65/bbl from US$70.

FY19 forecasts have been reduced, but valuation stays untouched at $0.64. Buy rating retained. This research update was released on January 24, 2019.

Target price is $0.64 Current Price is $0.45 Difference: $0.19
If COE meets the Canaccord Genuity target it will return approximately 42% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY19:

Canaccord Genuity forecasts a full year FY19 dividend of 0.00 cents and EPS of 0.90 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 50.00.

Forecast for FY20:

Canaccord Genuity forecasts a full year FY20 dividend of 0.00 cents and EPS of 4.10 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 10.98.

Market Sentiment: 1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

ELX    ELLEX MEDICAL LASERS LIMITED

Overnight Price: $0.60

Bell Potter rates ((ELX)) as Buy (1) –

The company's trading update revealed ongoing strong growth, led by the glaucoma franchise, but analysts at Bell Potter are disappointed nevertheless; they had expected to see even better growth numbers.

This results in reduced forecasts, which pulls back the price target to $1.47 from $1.69. Bell Potter is counting on the return of strong growth in FY21, which should follow a period of negative earnings, due mainly, point out the analysts, because of increased spending to support further growth (for iTrack in particular). Buy rating retained.

This update was released on January 23, 2019.

Target price is $1.47 Current Price is $0.60 Difference: $0.87
If ELX meets the Bell Potter target it will return approximately 145% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY19:

Bell Potter forecasts a full year FY19 dividend of 0.00 cents and EPS of minus 2.90 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 20.69.

Forecast for FY20:

Bell Potter forecasts a full year FY20 dividend of 0.00 cents and EPS of minus 1.60 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 37.50.

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

MCP    MCPHERSON'S LIMITED

Overnight Price: $1.32

Moelis rates ((MCP)) as Buy (1) –

Moelis saw a (preliminary unaudited) interim result impacted by cost pressures, noting the company's guidance for FY19, underlying, represents a downgrade of some -13% from prior forecasts. Costs were definitely a disappointment and Moelis points out Multix was heavily impacted from a weaker AUD.

Given the recent drop in resin prices, the negative impact is expected to half in H2. Owned skincare brands, on the other hand, continue performing strongly, the analysts note. With the overall consumer environment not looking brighter, forecasts have been reduced by -10-13%.

Moelis maintains McPherson's is a cheap way to gain exposure to the health and beauty thematic. Target price drops to $1.65. Buy rating retained.

This research update was released on January 18, 2019.

Target price is $1.65 Current Price is $1.32 Difference: $0.33
If MCP meets the Moelis target it will return approximately 25% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY19:

Moelis forecasts a full year FY19 dividend of 8.60 cents and EPS of 12.20 cents.
At the last closing share price the estimated dividend yield is 6.52%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 10.82.

Forecast for FY20:

Moelis forecasts a full year FY20 dividend of 9.60 cents and EPS of 13.70 cents.
At the last closing share price the estimated dividend yield is 7.27%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 9.64.

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

MQG    MACQUARIE GROUP LIMITED

Wealth Management & Investments – Overnight Price: $117.06

CLSA rates ((MQG)) as Conviction Buy (1) –

Macquarie is scheduled to provide an operational update on February 12 and industry veteran analyst Brian Johnson notes this will be fresh CEO Shemara Wikramanayake’s maiden solo performance. Given Macquarie already upgraded its guidance for FY19, he's not anticipating yet another upgrade.

CLSA's current forecasts continue to project a robust pace for the years ahead, with infrastructure (MIRA) and favourable trading conditions in commodities (particularly US natural gas) and global markets underpinning this view.

Ahead of the event, Johnson reiterates the Conviction Buy call, alongside an unchanged price target of $146. This research update was released on January 24, 2019.

Target price is $146.00 Current Price is $117.06 Difference: $28.94
If MQG meets the CLSA target it will return approximately 25% (excluding dividends, fees and charges).
Current consensus price target is $128.17, suggesting upside of 9.5%(ex-dividends)

Forecast for FY19:

Current consensus EPS estimate is 858.0, implying annual growth of 13.2%.
Current consensus DPS estimate is 580.0, implying a prospective dividend yield of 5.0%.
Current consensus EPS estimate suggests the PER is 13.6.

Forecast for FY20:

Current consensus EPS estimate is 899.1, implying annual growth of 4.8%.
Current consensus DPS estimate is 604.2, implying a prospective dividend yield of 5.2%.
Current consensus EPS estimate suggests the PER is 13.0.

Market Sentiment: 0.5
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

MWY    MIDWAY LIMITED

Agriculture – Overnight Price: $3.27

Shaw and Partners rates ((MWY)) as Buy (1) –

Analysts at Shaw believe the latest market update translates to 6-8% further upside to current forecasts. Buy rating retained, while the broker's price target lifts to $3.90 from $3.50. The analysts note the share price has gained no less than 31% over the past twelve months.

It is Shaw and Partners' view that Midway remains an attractive Australian growth story. The company's addressable market remains large, while forecast EBITDA CAGR is 9%, translating into double digit EPS growth forecasts.

Equally important, the broker believes tailwinds and favourable industry dynamics should remain well into FY20, including strong prices for woodchips, strong demand from China, and constrained supply elsewhere. Update issued on January 23, 2019.

Target price is $3.90 Current Price is $3.27 Difference: $0.63
If MWY meets the Shaw and Partners target it will return approximately 19% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY19:

Shaw and Partners forecasts a full year FY19 dividend of 19.00 cents and EPS of 24.70 cents.
At the last closing share price the estimated dividend yield is 5.81%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 13.24.

Forecast for FY20:

Shaw and Partners forecasts a full year FY20 dividend of 22.00 cents and EPS of 27.80 cents.
At the last closing share price the estimated dividend yield is 6.73%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 11.76.

Market Sentiment: 1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

WGN    WAGNERS HOLDING COMPANY LIMITED

Building Products & Services – Overnight Price: $2.99

Wilsons rates ((WGN)) as Sell (5) –

Wagners has issued its second profit warning in only three months. Analysts at Wilsons are of the view that the underlying construction materials & services operations are performing ahead of expectations, but the pre-cast concrete business continues to generate disappointing news.

Wilsons cannot shake off concerns about medium-term earnings for the group as a whole, also noting there remains significant customer loss risk in FY20, while the founders' shares will come out of escrow in August this year.

The above explains why the Sell rating remains firmly in place. Target price $2.62. Forecasts have been reduced. This research update was released on January 23, 2019.

Target price is $2.62 Current Price is $2.99 Difference: minus $0.37 (current price is over target).
If WGN meets the Wilsons target it will return approximately minus 12% (excluding dividends, fees and charges – negative figures indicate an expected loss).
Current consensus price target is $3.06, suggesting upside of 2.5%(ex-dividends)
The company's fiscal year ends in June.

Forecast for FY19:

Wilsons forecasts a full year FY19 dividend of 10.50 cents and EPS of 12.80 cents.
At the last closing share price the estimated dividend yield is 3.51%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 23.36.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 12.7, implying annual growth of -25.7%.
Current consensus DPS estimate is 10.5, implying a prospective dividend yield of 3.5%.
Current consensus EPS estimate suggests the PER is 23.5.

Forecast for FY20:

Wilsons forecasts a full year FY20 dividend of 9.00 cents and EPS of 14.40 cents.
At the last closing share price the estimated dividend yield is 3.01%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 20.76.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 12.8, implying annual growth of 0.8%.
Current consensus DPS estimate is 7.8, implying a prospective dividend yield of 2.6%.
Current consensus EPS estimate suggests the PER is 23.4.

Market Sentiment: 0.3
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources


Disclaimer:
The content of this information does in no way reflect the opinions of FNArena, or of its journalists. In fact we don't have any opinion about the stock market, its value, future direction or individual shares. FNArena solely reports about what the main experts in the market note, believe and comment on. By doing so we believe we provide intelligent investors with a valuable tool that helps them in making up their own minds, reading market trends and getting a feel for what is happening beneath the surface. This document is provided for informational purposes only. It does not constitute an offer to sell or a solicitation to buy any security or other financial instrument. FNArena employs very experienced journalists who base their work on information believed to be reliable and accurate, though no guarantee is given that the daily report is accurate or complete. Investors should contact their personal adviser before making any investment decision.

As part of emerging new trends overseas, The Australian Broker Call *Extra* Edition also includes providers of sponsored research. Readers should bear in mind, sponsored research, while not necessarily of lower quality, has the embedded complication that the company that is the subject of the research has paid for this research. Providers of sponsored research that can potentially be included in this Report are Breakaway Research, Edison Investment Research, NDF Research, Pitt Street Research, and TMT Analytics.

Decisions about inclusions in this Report are made independently of the providers of stock market research and at full discretion of the team of journalists responsible for content at FNArena. Inclusion does not equal endorsement, in any way, shape or form. This Report is provided for informational purposes only.

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CHARTS

AIS ALU APE APT CGC COE MCP MQG MWY WGN

For more info SHARE ANALYSIS: AIS - AERIS RESOURCES LIMITED

For more info SHARE ANALYSIS: ALU - ALTIUM

For more info SHARE ANALYSIS: APE - EAGERS AUTOMOTIVE LIMITED

For more info SHARE ANALYSIS: APT - AFTERPAY LIMITED

For more info SHARE ANALYSIS: CGC - COSTA GROUP HOLDINGS LIMITED

For more info SHARE ANALYSIS: COE - COOPER ENERGY LIMITED

For more info SHARE ANALYSIS: MCP - MCPHERSON'S LIMITED

For more info SHARE ANALYSIS: MQG - MACQUARIE GROUP LIMITED

For more info SHARE ANALYSIS: MWY - MIDWAY LIMITED

For more info SHARE ANALYSIS: WGN - WAGNERS HOLDING CO. LIMITED