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

Daily Market Reports | Apr 24 2019

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)

ANG   BYE   COH   CUV   DTS   FPH   HUB   LCK   MSV   NIC (2)   PNV   PPS   PSI   RVS  

ANG    AUSTIN ENGINEERING LIMITED

Mining Sector Contracting - Overnight Price: $0.18

Wilsons rates ((ANG)) as Buy (1) -

Austin Engineering downgraded guidance -17% after several contracts were moved forward by one quarter. The broker also downgrades forecasts to reflect the changes, and expects tax loss benefits to fall further into FY20 as a result.

Wilsons believe the share price sell-off to be overdone, representing a buy opportunity, and says the company is in its best position in five years.

Management recently announced the completion of Chillean assets sales and the Hunter Valley site disposal should be completed by June 30, allowing it to concentrate on the core business. The balance sheet is approaching a net cash position, and the order book for FY19 is nearly fully covered.

The broker says the mining industry's maintenance cycles have been stretched, paving the way for equipment upgrades, and commodity prices and economic data should provide a boost. The broker says based on fundamentals, the stock is cheap. The company has roughly $9m in debt, and may announce an FY19 dividend. Buy rating and 36c target price retained.

This report was published on April 18, 2019.

Target price is $0.36 Current Price is $0.18 Difference: $0.18
If ANG meets the Wilsons target it will return approximately 100% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY19:

Wilsons forecasts a full year FY19 dividend of 0.00 cents and EPS of 1.40 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.86.

Forecast for FY20:

Wilsons forecasts a full year FY20 dividend of 0.00 cents and EPS of 4.40 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 4.09.

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

BYE    BYRON ENERGY LIMITED

Crude Oil - Overnight Price: $0.31

Bell Potter rates ((BYE)) as Initiation of coverage with Buy (1) -

Bell Potter is full of superlatives for Byron Energy and initiates coverage with a Buy rating, citing its spectacular success using Reverse Time Migration and state-of-the art proprietary Vector Imaging Partition seismic inversion process to identify overlooked targets.

The main trigger for the Buy follows the company's extraction of solid oil and gas output from three wells at its 50% owned and operated SM71 platform in the Gulf of Mexico. Byron is now the dominant player in the South Marsh Island there, positioning it well for both reserves and low-cost output given the shallow water and strong pipeline infrastructure on the nearby shore.

Bell Potter also points to a rebound in the West Texas Intermediate oil price and says the South Marsh Island output is usually sold at a strong cash margin, and a premium to WTI.

Byron Energy plans to build between 10 and 17 wells over the next four years. The broker expects the stock will generate strong returns and steadily increase cash flow from its low-cost production. The 42c target price is based on the broker's net present value forecasts of prospects and assumes a modest equity raising for the drilling program.

This report was published on April 11, 2019.

Target price is $0.42 Current Price is $0.31 Difference: $0.11
If BYE meets the Bell Potter target it will return approximately 35% (excluding dividends, fees and charges).

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

COH    COCHLEAR LIMITED

Medical Equipment & Devices - Overnight Price: $181.27

Goldman Sachs rates ((COH)) as Buy (1) -

Cochlear's launch of its Nucleus Profile Plus implant has triggered an upgrade to Buy from Goldman Sachs.

The beauty of the implant lies in its rotating magnet which makes it compatible with 3T MRI platforms, eliminating the need for invasive procedures before and after imaging. Goldman Sachs believes the compatibility issue was responsible for the company's share price retreat over the past eight months and expects it will now regain those losses.

The implant has been approved for sale in Europe (expected to be rolled out before the end of FY19) and is available for sale in Germany immediately. The broker expects US approval in the first half of FY20.

Broker upgrades FY20 and FY21 earnings-per-share forecasts 4% and 5% respectively. Target price rises to $197 from $173. 

This report was published on April 16, 2019.

Target price is $197.00 Current Price is $181.27 Difference: $15.73
If COH meets the Goldman Sachs target it will return approximately 9% (excluding dividends, fees and charges).
Current consensus price target is $168.30, suggesting downside of -7.2%(ex-dividends)
The company's fiscal year ends in June.

Forecast for FY19:

Goldman Sachs forecasts a full year FY19 dividend of 180.00 cents and EPS of 467.00 cents.
At the last closing share price the estimated dividend yield is 0.99%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 38.82.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 465.2, implying annual growth of 8.9%.
Current consensus DPS estimate is 323.8, implying a prospective dividend yield of 1.8%.
Current consensus EPS estimate suggests the PER is 39.0.

Forecast for FY20:

Goldman Sachs forecasts a full year FY20 dividend of 200.00 cents and EPS of 529.00 cents.
At the last closing share price the estimated dividend yield is 1.10%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 34.27.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 513.3, implying annual growth of 10.3%.
Current consensus DPS estimate is 358.9, implying a prospective dividend yield of 2.0%.
Current consensus EPS estimate suggests the PER is 35.3.

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

CUV    CLINUVEL PHARMACEUTICALS LIMITED

Pharmaceuticals & Biotech/Lifesciences - Overnight Price: $22.30

Moelis rates ((CUV)) as Initiation of coverage with Hold (3) -

Moelis Australia has initiated coverage on Clinuvel Pharmaceuticals, which has developed a drug called SCENESSE that induces melanin production to treat patients with severe skin disorders.

The product is approved in the EU to treat ultra-orphan disease EPP and is in the final stages of gaining regulatory approval in the US (which represents 40% of the market). 

The product has 10% market penetration in several EU countries and the broker expects further EU nations to join the push for reimbursement on ultra-orphan diseases, for which market exclusivity is granted for seven to 10 years in both Europe and the US.  

After gaining US approval, Moelis expects Clinuvel to target other world markets representing revenue of A$160m. The product is also in trials for Vitilago and may have applications for other diseases.

The broker adopts a Hold rating, expecting the company to reach 35% market penetration in Europe and 20% in the US by 2025, and arrives at a $26.43 target price. It believes a swift ramp-up in the US and expansion into new countries could yield a price of $30.94.

This report was published on April 17, 2019.

Target price is $26.43 Current Price is $22.30 Difference: $4.13
If CUV meets the Moelis target it will return approximately 19% (excluding dividends, fees and charges).

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

DTS    DRAGONTAIL SYSTEMS LIMITED

Software & Services - Overnight Price: $0.21

Canaccord Genuity rates ((DTS)) as Speculative Buy (1) -

Canaccord Colts provides research coverage on a select group of early-stage ASX-listed microcap companies that the institutional research team believes have strong development trajectories. Dragon Systems specialises in Algo Dispatching Platform and QT Camera technology for tier one quick service restaurant brands.

Current customers include Pizza Hut, KFC and Domino's Pizza ((DMP)). The analysts believe the recently released 1Q19 result are best viewed as the strongest operational period since inception for Dragon Systems, noting it was driven by the significant improvement in the company's installed base and the increase in cash receipts.

Supporting the company's growth outlook is the analysts' conviction that once customers have been signed up, and QT cameras have been installed, overall churn will be low, leading to strong ARPU growth down the track.

Rating remains Speculative Buy with a 40c valuation.

This report was released on April 18, 2019.

Current Price is $0.21. Target price not assessed.
The company's fiscal year ends in June.

Forecast for FY20:

Canaccord Genuity 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 13.13.

Forecast for FY21:

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


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