Australian Broker Call

Morgan Stanley rates ALL as Overweight (1) -

Morgan Stanley believes the digital business is key to valuing the stock. Downloads in Big Fish continue to be weak and the launch of Toy Story Drop appears to provide little benefit, on the basis of monthly Sensor Tower data.

Meanwhile, Plarium continued to enjoy the benefit of RAID and Product Madness revenue continues to improve sequentially.

Overall, the data shows revenue for all games is tracking growth of 8% year-on-year versus Morgan Stanley's estimates of 3% for FY19. Overweight. Target is $35. Industry view: Cautious.

Target price is $35.00 Current Price is $29.52 Difference: $5.48
If ALL meets the Morgan Stanley target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $33.11, suggesting upside of 12.2% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 1.0

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

Macquarie rates BKW as Neutral (3) -

The company has acquired US brick manufacturer Sioux City for US$32m. The company has also updated on trading for FY19 and expects net profit to be broadly in line with the previous year.

A contraction in construction activity, lower sales volumes and higher energy costs have squeezed margins in Australia where earnings are expected to decline. A higher contribution from the property division could offset this, Macquarie suggests.

The broker maintains a Neutral rating. Target is reduced to $16.10 from $18.00.

Target price is $16.10 Current Price is $16.51 Difference: minus $0.41 (current price is over target).
If BKW meets the Macquarie target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $16.94, suggesting upside of 2.6% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.0

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

Macquarie rates FCL as Initiation of coverage with Outperform (1) -

FINEOS Corp is a global vendor of insurance system software across the life, accident & health insurance industry. The business operates across eight countries and has a workforce of 660 supporting more than 50 clients.

Macquarie observes the company has invested EUR90m in R&D since FY15 to build capability in its suite of products and transition to the cloud.

The broker notes the company delivered results ahead of prospectus in FY19. Subscription revenue was up 30%. Macquarie initiates coverage with an Outperform rating and $3.75 target.

Target price is $3.75 Current Price is $0.43 Difference: $3.325
If FCL meets the Macquarie target it will return approximately 782% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 1.0

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

Credit Suisse rates IGO as Underperform (5) -

Credit Suisse upgrades FY20 and FY21 estimates for earnings per share by 20% and 10%, respectively, on the implementation of higher nickel pricing.

Despite Indonesia's export ban, the broker expects no major shortage of nickel in 2020. The nickel supply loss is expected to be covered by a drawdown of -40,000t of nickel ore stocks that are believed to be held by nickel pig iron plants.

Without Indonesian ore in the future, Credit Suisse expects China will need to reduce its nickel pig iron production, and supply of nickel is likely to be replaced with nickel pig iron from Indonesia where output is growing swiftly. Underperform rating and $4.15 target maintained.

Target price is $4.15 Current Price is $6.46 Difference: minus $2.31 (current price is over target).
If IGO meets the Credit Suisse target it will return approximately minus 36% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.63, suggesting downside of -12.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: -0.2

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

Citi rates MYX as Neutral/High Risk (3) -

Citi analysts have used a general sector update to reduce their valuation for Mayne Pharma to 50c to bring it in line with peers post a general de-rating for this particular segment of the healthcare industry. Neutral/High Risk rating retained.

The analysts believe the August reporting season was overall positive for the sector, but elevated valuations for many of the star performers remain a problem. Prior target for Mayne Pharma was 60c.

Target price is $0.50 Current Price is $0.48 Difference: $0.02
If MYX meets the Citi target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $0.54, suggesting upside of 13.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: -0.3

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

Morgan Stanley rates PTM as Underweight (5) -

The company reported -$407m in net outflows in August compared with -$108m in July and -$228m in June. The stock has de-rated to around 15x FY20 PE estimates but remains too expensive in Morgan Stanley's view, given the level and direction of outflows.

The broker suspects the market is underestimating the risk of outflows, lack of growth options and the need to invest in the brand. Underweight rating maintained. In-Line industry view. Target is $3.35.

Target price is $3.35 Current Price is $3.91 Difference: minus $0.56 (current price is over target).
If PTM meets the Morgan Stanley target it will return approximately minus 14% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.86, suggesting downside of -1.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: -0.6

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

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

Citi analysts, who've kept a positive long term view on Ramsay Health Care throughout the challenging few years past, have used a general sector update to lift their recommendation to Buy from Neutral.

The analysts believe the August reporting season was overall positive for the sector, but elevated valuations for many of the star performers remain a problem.

While headwinds remain in the Australian hospital environment, Citi expects Ramsay Healthy Care to increase its market share. In addition, momentum should build in the recently acquired Capio business. Target price unchanged at $74.

Target price is $74.00 Current Price is $63.90 Difference: $10.1
If RHC meets the Citi target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $68.30, suggesting upside of 6.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.0

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

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

Now the integration of John Guest is largely complete, Morgan Stanley believes the company's focus will shift to the cross-selling opportunities.

Management expects significant upside as the expanded UK/European footprint will allow the SharkBite product to penetrate previously inaccessible markets.

SpeedFit product is also expected to gain traction in the US. The company will hold its John Guest investor briefing and tour on September 11 and tour on September 18 in the US.

Morgan Stanley maintains an Equal-weight rating. Target is $4. Industry view is Cautious.

Target price is $4.00 Current Price is $3.99 Difference: $0.01
If RWC meets the Morgan Stanley target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $4.11, suggesting upside of 2.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.4

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

Morgans rates SM1 as Hold (3) -

Morgans expects FY19 net profit of NZ$87.6m when the company reports on September 12. Volume guidance for FY20 in finished infant formula will be critical to the outlook.

The broker still envisages recent investment in new capacity will drive strong, volume-led earnings growth out to FY21. With the appreciation of the AUD/NZD and a slight reduction in multiples, the broker reduces the target to $9.60 from $10.10.

Morgans remains attracted to the company's position as a leading manufacturer of value-added dairy products. Hold rating maintained. The broker continues to await a resolution of the legal proceedings and the commissioning of the Pokeno facility before becoming more positive.

Target price is $9.60 Current Price is $8.89 Difference: $0.71
If SM1 meets the Morgans target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $9.60, suggesting upside of 8.0% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY19:

Forecast for FY20:

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

Market Sentiment: -0.5

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

Macquarie rates VCX as Downgrade to Underperform from Neutral (5) -

Vicinity Centres has pointed out capital expenditure levels continue to increase, with an -$80-90m incentive expenditure for tenants in FY20. Macquarie notes, at the upper end of the range, this is an 8% increase on FY19 and 18% increase on FY18.

The extra expenditure comes despite the business divesting -5% of assets. Considering the asset sale program, Macquarie believes the extension of the buyback is a strange undertaking.

The broker remains cautious about the returns on capital expenditure, noting capital intensity in malls generally continues to rise and remains a drag on free cash flow. Rating is downgraded to Underperform from Neutral. Target is $2.34.

Target price is $2.34 Current Price is $2.56 Difference: minus $0.22 (current price is over target).
If VCX meets the Macquarie target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.57, suggesting upside of 0.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: -0.1

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

UBS rates WHC as Buy (1) -

By FY27 Whitehaven Coal expects to be producing more than 35mtpa of saleable coal through the Vickery and Winchester South projects. Currently production is 20-21mt.

UBS believes unit costs, guided to $70/t in FY20, could be down around -10% on initiatives such as autonomous trucks and in-pit dumping at Maules Creek and Narrabri South along with the Tarrawonga integration into Vickery.

The company will host its inaugural investor briefing on September 12. UBS maintains a Buy rating and reduces the target to $4.00 from $4.30.

Target price is $4.00 Current Price is $3.36 Difference: $0.64
If WHC meets the UBS target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $4.12, suggesting upside of 22.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.7

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

Credit Suisse rates WSA as Neutral (3) -

Credit Suisse upgrades FY20 and FY21 estimates for earnings per share by 27% and 20%, respectively, on the implementation of higher nickel pricing.

Despite Indonesia's export ban the broker expects no major shortage of nickel in 2020. The nickel supply loss is expected to be covered by a drawdown of -40,000t of nickel ore stocks that are believed to be held by nickel pig iron plants.

Without Indonesian ore in the future, Credit Suisse expects China will need to reduce its nickel pig iron production, and supply of nickel is likely to be replaced with nickel pig iron from Indonesia where output is growing swiftly.

Credit Suisse maintains a Neutral rating and $2.50 target.

Target price is $2.50 Current Price is $3.26 Difference: minus $0.76 (current price is over target).
If WSA meets the Credit Suisse target it will return approximately minus 23% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.04, suggesting downside of -6.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.5

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