Australian Broker Call

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

A general update on the mining sector, including re-adjusting forecasts for metals and minerals, has led to a downgrade for Alumina ltd to Sell from Neutral. UBS is anticipating a subdued environment leading into 2020 with gold the sole exception.

UBS analysts are not expecting any recovery in prices in the absence of better demand an/or producers curtailing output. Target price remains unchanged at $2.10.

Target price is $2.10 Current Price is $2.38 Difference: minus $0.28 (current price is over target).
If AWC meets the UBS target it will return approximately minus 12% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.30, suggesting downside of -3.4% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY19:

Forecast for FY20:

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

Market Sentiment: 0.0

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

Morgans rates CRN as Add (1) -

Morgans is not surprised at the downgrades to the earnings outlook given the deterioration in the metallurgical coal market. The broker downgrades 2020-21 estimates for earnings per share by -8-22%.

While the stock is considered cheap, the broker suspects the short-term coal market risk will continue to deter marginal momentum investors. The valuation remains very sensitive to ongoing volatility in physical markets.

However, the broker is positive about the stock over the longer term and maintains an Add rating. Target is reduced to $3.50 from $3.94.

Target price is $3.50 Current Price is $2.30 Difference: $1.2
If CRN meets the Morgans target it will return approximately 52% (excluding dividends, fees and charges).

Current consensus price target is $3.50, suggesting upside of 52.2% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY19:

Forecast for FY20:

This company reports in USD. 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

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

A general update on the mining sector, including re-adjusting forecasts for metals and minerals, has led to a downgrade for Fortescue Metals to Sell from Neutral. UBS is anticipating a subdued environment leading into 2020 with gold the sole exception.

UBS analysts are not expecting any recovery in prices in the absence of better demand an/or producers curtailing output. Price target for Fortescue has improved to $7.50 from $6.40.

Target price is $7.50 Current Price is $8.82 Difference: minus $1.32 (current price is over target).
If FMG meets the UBS target it will return approximately minus 15% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $8.18, suggesting downside of -7.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

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

UBS rates FSF as Neutral (3) -

UBS seems to think it's not illogical to assume there should be better times ahead on a five-year horizon, but the analysts also warn against too rosy expectations, instead arguing growth will most likely disappoint vis a vis market expectations.

There simply is too much happening right now with the company battling margin pressure from higher milk prices, as well as downsizing the organisation while at the same time coping with environmental initiatives.

The underlying suggestion made is that larger investments might need to be made. UBS, having reduced forecasts recently, has further lowered expectations. Valuation remains unchanged at NZ$3.50. Neutral.

Current Price is $3.10. Target price not assessed.

Current consensus price target is N/A

The company's fiscal year ends in July.

Forecast for FY20:

Forecast for FY21:

This company reports in NZD. 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

Morgan Stanley rates OSH as Overweight (1) -

Morgan Stanley suggests the size, quality and proximity of the Alaskan asset base to a mature energy region cannot be underestimated. Alaska dwarfs other oil opportunities in the Australasian region, with around 20bn barrels of oil discovered to date.

Oil Search assesses there is potential for a further 10bn barrels to be discovered across Alaska. Having visited the asset, Morgan Stanley remains confident in the size of the company's opportunity and retains an Overweight rating, In-Line industry view and $8 target.

Target price is $8.00 Current Price is $7.32 Difference: $0.68
If OSH meets the Morgan Stanley target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $7.65, suggesting upside of 4.5% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY19:

Forecast for FY20:

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

Macquarie rates S32 as Underperform (5) -

Manganese prices are now below Macquarie's FY20 forecasts as supply from South Africa has increased. Manganese prices have fallen -40% from the peak in the year to date.

 Moreover, lower alumina and coal prices signal further earnings momentum to the downside. Macquarie maintains an Underperform rating and reduces the target to $2.50 from $2.60.

Target price is $2.50 Current Price is $2.64 Difference: minus $0.14 (current price is over target).
If S32 meets the Macquarie target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.12, suggesting upside of 18.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

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

Market Sentiment: 0.4

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

UBS rates S32 as Downgrade to Neutral from Buy (3) -

A general update on the mining sector, including re-adjusting forecasts for metals and minerals, has led to a downgrade for South32 to Neutral from Buy. UBS is anticipating a subdued environment leading into 2020 with gold the sole exception.

UBS analysts are not expecting any recovery in prices in the absence of better demand an/or producers curtailing output. Price target drops to $2.80 from $3.30.

Target price is $2.80 Current Price is $2.64 Difference: $0.16
If S32 meets the UBS target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $3.12, suggesting upside of 18.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

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

Market Sentiment: 0.4

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

Credit Suisse rates WEB as Downgrade to Neutral from Outperform (3) -

Credit Suisse is concerned about the worrying trend of earnings downgrades. The Thomas Cook receivables exposure is two thirds of B2B FY19 earnings and a reminder of the credit risk in B2B.

The broker reduces underlying earnings estimates by -10% and -11% for FY20 and FY21 respectively, because of the removal of Thomas Cook earnings and an increasingly conservative view across B2B forecasts.

Rating is downgraded to Neutral from Outperform. The broker will await indications that earnings are stabilising before becoming more positive. Target is reduced to $11 from $14.

Target price is $11.00 Current Price is $10.98 Difference: $0.02
If WEB meets the Credit Suisse target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $14.48, suggesting upside of 31.9% (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

Credit Suisse rates WPL as Outperform (1) -

Credit Suisse notes Woodside Petroleum has underperformed, given high LNG exposure amid weaker LNG contract/spot pricing and a disappointing first half result. There is also increasing scepticism regarding the viability of Scarborough.

The retracement in the stock provides the opportunity to accumulate, in the broker's view, as there is around $5-10/share upside if growth plans come to fruition and market conditions improve in the long-term. On the other hand, the downside is limited if this does not eventuate.

Outperform maintained. Target is reduced to $36.20 from $37.33.

Target price is $36.20 Current Price is $32.43 Difference: $3.77
If WPL meets the Credit Suisse target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $32.96, suggesting upside of 1.6% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY19:

Forecast for FY20:

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

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

Having conducted a general sector update, UBS has downgraded Western Areas to Sell from Neutral. While forecasts for the price of nickel have been adjusted upwards, the analysts suggest this has already been priced into the share price.

In addition, while working on the Odysseus project, UBS makes it clear this company carries execution and capex risk. Target price has risen to $2.90 from $2.50. Estimates have been increased.

Target price is $2.90 Current Price is $3.10 Difference: minus $0.2 (current price is over target).
If WSA 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 $3.13, suggesting upside of 1.1% (ex-dividends)

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