Australian Broker Call

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June 18, 2019

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COMPANIES DISCUSSED IN THIS ISSUE

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

Last Updated: 05:00 PM

Your daily news report on the latest recommendation, valuation, forecast and opinion changes.

This report includes concise but limited reviews of research recently published by Stockbrokers, 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.

For more info about the different terms used by stockbrokers, as well as the different methodologies behind similar sounding ratings, download our guide HERE

Today's Upgrades and Downgrades
AGL - AGL ENERGY Upgrade to Neutral from Underperform Macquarie
AX1 - ACCENT GROUP Upgrade to Add from Hold Morgans
MMS - MCMILLAN SHAKESPEARE Downgrade to Neutral from Outperform Macquarie
SXY - SENEX ENERGY Upgrade to Outperform from Neutral Credit Suisse
A2M  THE A2 MILK COMPANY LIMITED

Dairy

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Overnight Price: $13.40

Macquarie rates A2M as Outperform (1) -

Macquarie takes a closer look at the US fresh milk opportunity, the largest consumer market in the world. A2 Milk is currently building its market share, experiencing a similar development profile to Australia, which the broker finds encouraging.

Macquarie assumes a2 Milk has a 10-year build up to a 2% share of value. Outperform rating maintained. Target is raised to $16.10 from $15.75.

Target price is $16.10 Current Price is $13.40 Difference: $2.7
If A2M meets the Macquarie target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $14.49, suggesting upside of 8.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Macquarie forecasts a full year FY19 dividend of 0.00 cents and EPS of 37.28 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 35.95.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 37.8, implying annual growth of N/A.

Current consensus DPS estimate is 1.6, implying a prospective dividend yield of 0.1%.

Current consensus EPS estimate suggests the PER is 35.4.

Forecast for FY20:

Macquarie forecasts a full year FY20 dividend of 25.57 cents and EPS of 48.05 cents.
At the last closing share price the estimated dividend yield is 1.91%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 27.89.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 48.4, implying annual growth of 28.0%.

Current consensus DPS estimate is 11.0, implying a prospective dividend yield of 0.8%.

Current consensus EPS estimate suggests the PER is 27.7.

This company reports in NZD. 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

AGL  AGL ENERGY LIMITED

Infrastructure & Utilities

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Overnight Price: $19.89

Macquarie rates AGL as Upgrade to Neutral from Underperform (3) -

AGL Energy has withdrawn from due diligence on Vocus Group ((VOC)). This suggests to Macquarie there are significant challenges to justify the bid price. However, AGL Energy has pointed to its commitment to diversify energy-only earnings into the emerging telco sectors.

Therefore, there is an inherent diversification risk likely to be embedded in the share price. Macquarie upgrades to Neutral from Underperform. The main positive for investors is that cash flow is strong and the balance sheet is rapidly re-gearing. Target is raised to $20.58 from $19.06.

Target price is $20.58 Current Price is $19.89 Difference: $0.69
If AGL meets the Macquarie target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $19.42, suggesting downside of -2.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Macquarie forecasts a full year FY19 dividend of 117.00 cents and EPS of 154.30 cents.
At the last closing share price the estimated dividend yield is 5.88%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.89.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 153.9, implying annual growth of -36.4%.

Current consensus DPS estimate is 114.7, implying a prospective dividend yield of 5.8%.

Current consensus EPS estimate suggests the PER is 12.9.

Forecast for FY20:

Macquarie forecasts a full year FY20 dividend of 101.00 cents and EPS of 134.60 cents.
At the last closing share price the estimated dividend yield is 5.08%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.78.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 135.1, implying annual growth of -12.2%.

Current consensus DPS estimate is 108.7, implying a prospective dividend yield of 5.5%.

Current consensus EPS estimate suggests the PER is 14.7.

Market Sentiment: -0.5

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


Ord Minnett rates AGL as Hold (3) -

AGL Energy has withdrawn its $4.85/share bid for Vocus Group ((VOC)), less than a week after commencing due diligence. Commentary appears to suggest that management deemed the offer price too high after initiating due diligence.

The withdrawal potentially means capital returns are back on the agenda, Ord Minnett assesses. Despite a high pay-out ratio, the broker envisages gearing falling to below 20% by FY22.

This implies room for additional capital returns. Hold rating and $21 target maintained.

This stock is not covered in-house by Ord Minnett. Instead, the broker whitelabels research by JP Morgan.

Target price is $21.00 Current Price is $19.89 Difference: $1.11
If AGL meets the Ord Minnett target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $19.42, suggesting downside of -2.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Ord Minnett forecasts a full year FY19 dividend of 112.00 cents and EPS of 154.00 cents.
At the last closing share price the estimated dividend yield is 5.63%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.92.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 153.9, implying annual growth of -36.4%.

Current consensus DPS estimate is 114.7, implying a prospective dividend yield of 5.8%.

Current consensus EPS estimate suggests the PER is 12.9.

Forecast for FY20:

Ord Minnett forecasts a full year FY20 dividend of 116.00 cents and EPS of 139.00 cents.
At the last closing share price the estimated dividend yield is 5.83%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.31.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 135.1, implying annual growth of -12.2%.

Current consensus DPS estimate is 108.7, implying a prospective dividend yield of 5.5%.

Current consensus EPS estimate suggests the PER is 14.7.

Market Sentiment: -0.5

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


UBS rates AGL as Sell (5) -

AGL Energy has confirmed it has withdrawn the indicative proposal to acquire Vocus Group ((VOC)), noting it was no longer confident that an acquisition would create certain value for shareholders.

UBS still expects AGL will be attracted to growth opportunities in data service provision. However, alternative options are scarce and much larger in terms of enterprise value.

UBS expects AGL will return to pursuing energy sector growth where there is greater confidence in its ability to extract synergies. UBS maintains a Sell rating and $18.35 target, expecting the stock will continue to de-rate.

Target price is $18.35 Current Price is $19.89 Difference: minus $1.54 (current price is over target).
If AGL meets the UBS target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $19.42, suggesting downside of -2.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

UBS forecasts a full year FY19 dividend of 115.00 cents and EPS of 154.00 cents.
At the last closing share price the estimated dividend yield is 5.78%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.92.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 153.9, implying annual growth of -36.4%.

Current consensus DPS estimate is 114.7, implying a prospective dividend yield of 5.8%.

Current consensus EPS estimate suggests the PER is 12.9.

Forecast for FY20:

UBS forecasts a full year FY20 dividend of 105.00 cents and EPS of 139.00 cents.
At the last closing share price the estimated dividend yield is 5.28%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.31.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 135.1, implying annual growth of -12.2%.

Current consensus DPS estimate is 108.7, implying a prospective dividend yield of 5.5%.

Current consensus EPS estimate suggests the PER is 14.7.

Market Sentiment: -0.5

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

ALQ  ALS LIMITED

Mining Sector Contracting

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Overnight Price: $7.05

Macquarie rates ALQ as Outperform (1) -

Macro concerns have reduced earnings visibility and the stock has significantly de-rated yet Macquarie envisages this as more of a pause in the cycle, with the underlying need for exploration unchanged.

The broker notes a slight pick up in Australian capital raisins in mining in recent months and metallurgy/inspection continues to show strong growth.

Outperform rating and $8.62 target.

Target price is $8.62 Current Price is $7.05 Difference: $1.57
If ALQ meets the Macquarie target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $7.91, suggesting upside of 12.3% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY20:

Macquarie forecasts a full year FY20 dividend of 24.60 cents and EPS of 40.40 cents.
At the last closing share price the estimated dividend yield is 3.49%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 17.45.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 41.7, implying annual growth of 32.0%.

Current consensus DPS estimate is 24.9, implying a prospective dividend yield of 3.5%.

Current consensus EPS estimate suggests the PER is 16.9.

Forecast for FY21:

Macquarie forecasts a full year FY21 dividend of 26.20 cents and EPS of 44.60 cents.
At the last closing share price the estimated dividend yield is 3.72%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 15.81.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 45.5, implying annual growth of 9.1%.

Current consensus DPS estimate is 26.6, implying a prospective dividend yield of 3.8%.

Current consensus EPS estimate suggests the PER is 15.5.

Market Sentiment: 0.2

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

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Overnight Price: $21.26

Morgans rates APT as Add (1) -

Afterpay Touch is required to appoint an AUSTRAC-approved external auditor to look into its compliance with the anti-money laundering regulations. The company must provide AUSTRAC with a copy of the final audit report within 120 days of the external auditor being engaged.

While the audit is a negative, Morgans finds it hard to gauge the operating or financial implications based on current disclosure. While the wording of the notice appears collaborative, the broker suggests this still needs to be viewed as an escalation of the issue.

Add rating maintained. Target is reduced to $23.43 from $25.96.

Target price is $23.43 Current Price is $21.26 Difference: $2.17
If APT meets the Morgans target it will return approximately 10% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY19:

Morgans forecasts a full year FY19 dividend of 0.00 cents and EPS of minus 2.60 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 817.69.

Forecast for FY20:

Morgans forecasts a full year FY20 dividend of 0.00 cents and EPS of 20.10 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 105.77.

Market Sentiment: 1.0

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

AQG  ALACER GOLD CORP

Gold & Silver

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Overnight Price: $4.77

Macquarie rates AQG as Outperform (1) -

Alacer Gold has declared commercial production for the Copler sulphide plant while lifting 2019 oxide guidance to 125-145,000 ounces. Macquarie lifts 2019 production expectations for both sulphide and oxide.

The broker continues to expect incremental improvement in throughput and recoveries over the second half. Macquarie maintains an Outperform rating and $4.90 target.

Target price is $4.90 Current Price is $4.77 Difference: $0.13
If AQG meets the Macquarie target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $4.76, suggesting downside of -0.2% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY19:

Macquarie forecasts a full year FY19 dividend of 11.16 cents and EPS of 41.00 cents.
At the last closing share price the estimated dividend yield is 2.34%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 11.63.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 35.9, implying annual growth of N/A.

Current consensus DPS estimate is 3.9, implying a prospective dividend yield of 0.8%.

Current consensus EPS estimate suggests the PER is 13.3.

Forecast for FY20:

Macquarie forecasts a full year FY20 dividend of 12.55 cents and EPS of 42.54 cents.
At the last closing share price the estimated dividend yield is 2.63%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 11.21.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 48.1, implying annual growth of 34.0%.

Current consensus DPS estimate is 4.4, implying a prospective dividend yield of 0.9%.

Current consensus EPS estimate suggests the PER is 9.9.

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

AX1  ACCENT GROUP LIMITED

Apparel & Footwear

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Overnight Price: $1.34

Morgans rates AX1 as Upgrade to Add from Hold (1) -

Morgans upgrades to Add from Hold following recent share price weakness. The broker is mindful of several issues such as the rise of JD Sports and a likely slowdown in the growth of the company's footprint.

Nevertheless, the opportunity in increased vertical brand/product penetration and The Athlete's Foot franchise buyback should underpin a solid growth profile, in the broker's view. Target is steady at $1.51.

Target price is $1.51 Current Price is $1.34 Difference: $0.17
If AX1 meets the Morgans target it will return approximately 13% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY19:

Morgans forecasts a full year FY19 dividend of 7.80 cents and EPS of 10.00 cents.
At the last closing share price the estimated dividend yield is 5.82%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 13.40.

Forecast for FY20:

Morgans forecasts a full year FY20 dividend of 8.50 cents and EPS of 11.00 cents.
At the last closing share price the estimated dividend yield is 6.34%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.18.

Market Sentiment: 0.5

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

AZJ  AURIZON HOLDINGS LIMITED

Transportation & Logistics

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Overnight Price: $5.32

Citi rates AZJ as Neutral (3) -

Aurizon has hosted a briefing on the outlook for the UT5 regulatory period for the below-rail business. The briefing focused on the direct deal with miners that the company announced in May, accounting for 90% of railed volumes.

The main focus for investors, Citi believes, should now shift to ratification of the deal, expected to occur by the end of 2019.

The proposed amendments to UT5 would mean Aurizon's regulated earnings period extends to 10 years from four. This should provide greater earnings visibility, in the broker's view. Neutral rating and $4.40 price target.

Target price is $4.40 Current Price is $5.32 Difference: minus $0.92 (current price is over target).
If AZJ meets the Citi target it will return approximately minus 17% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.91, suggesting downside of -7.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Citi forecasts a full year FY19 dividend of 22.20 cents and EPS of 22.30 cents.
At the last closing share price the estimated dividend yield is 4.17%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 23.86.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 22.4, implying annual growth of -16.7%.

Current consensus DPS estimate is 22.3, implying a prospective dividend yield of 4.2%.

Current consensus EPS estimate suggests the PER is 23.8.

Forecast for FY20:

Citi forecasts a full year FY20 dividend of 26.00 cents and EPS of 26.00 cents.
At the last closing share price the estimated dividend yield is 4.89%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 20.46.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 25.4, implying annual growth of 13.4%.

Current consensus DPS estimate is 25.6, implying a prospective dividend yield of 4.8%.

Current consensus EPS estimate suggests the PER is 20.9.

Market Sentiment: 0.1

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


Deutsche Bank rates AZJ as Buy (1) -

Management has updated post lodging its UT5 submission. Deutsche Bank notes there are differences in the submissions but these are mainly at the margin.

The stakeholder consultation period ends July 3 and the Queensland Competition Authority is expected to hand down its decision late in the first quarter of FY20.

Buy rating and $5.40 target maintained.

Target price is $5.40 Current Price is $5.32 Difference: $0.08
If AZJ meets the Deutsche Bank target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $4.91, suggesting downside of -7.7% (ex-dividends)

Forecast for FY19:

Current consensus EPS estimate is 22.4, implying annual growth of -16.7%.

Current consensus DPS estimate is 22.3, implying a prospective dividend yield of 4.2%.

Current consensus EPS estimate suggests the PER is 23.8.

Forecast for FY20:

Current consensus EPS estimate is 25.4, implying annual growth of 13.4%.

Current consensus DPS estimate is 25.6, implying a prospective dividend yield of 4.8%.

Current consensus EPS estimate suggests the PER is 20.9.

Market Sentiment: 0.1

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


Macquarie rates AZJ as Neutral (3) -

The company has updated the market around its customer draft amending access undertaking (DAAU). Since lodging the DAAU with the Queensland Competition Authority, Aurizon has engaged the residual 10% of clients.

Macquarie believes the upside is already reflected in the share price. There is further upside from Adani and re-contracting above rail as well as better cost savings on the network.

Neutral rating maintained. Target is raised to $5.28 from $4.81.

Target price is $5.28 Current Price is $5.32 Difference: minus $0.04 (current price is over target).
If AZJ meets the Macquarie target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.91, suggesting downside of -7.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Macquarie forecasts a full year FY19 dividend of 22.80 cents and EPS of 22.90 cents.
At the last closing share price the estimated dividend yield is 4.29%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 23.23.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 22.4, implying annual growth of -16.7%.

Current consensus DPS estimate is 22.3, implying a prospective dividend yield of 4.2%.

Current consensus EPS estimate suggests the PER is 23.8.

Forecast for FY20:

Macquarie forecasts a full year FY20 dividend of 27.10 cents and EPS of 27.10 cents.
At the last closing share price the estimated dividend yield is 5.09%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 19.63.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 25.4, implying annual growth of 13.4%.

Current consensus DPS estimate is 25.6, implying a prospective dividend yield of 4.8%.

Current consensus EPS estimate suggests the PER is 20.9.

Market Sentiment: 0.1

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


UBS rates AZJ as Neutral (3) -

The agreement between Aurizon and the miners has progressed and is now with the Queensland regulator. UBS believes an approval could be received by the end of 2019 and the full run rate of around $40m per annum in benefits occur in FY21.

UBS estimates 5-7% of underlying costs have been removed in above-rail coal haulage since the IPO. The network will not achieve the same outcome but the broker believes a -10% reduction in costs could be attainable and add 3-4% to group earnings.

Neutral rating and $5.10 target maintained.

Target price is $5.10 Current Price is $5.32 Difference: minus $0.22 (current price is over target).
If AZJ meets the UBS target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.91, suggesting downside of -7.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

UBS forecasts a full year FY19 dividend of 23.00 cents and EPS of 23.00 cents.
At the last closing share price the estimated dividend yield is 4.32%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 23.13.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 22.4, implying annual growth of -16.7%.

Current consensus DPS estimate is 22.3, implying a prospective dividend yield of 4.2%.

Current consensus EPS estimate suggests the PER is 23.8.

Forecast for FY20:

UBS forecasts a full year FY20 dividend of 27.00 cents and EPS of 27.00 cents.
At the last closing share price the estimated dividend yield is 5.08%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 19.70.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 25.4, implying annual growth of 13.4%.

Current consensus DPS estimate is 25.6, implying a prospective dividend yield of 4.8%.

Current consensus EPS estimate suggests the PER is 20.9.

Market Sentiment: 0.1

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

COH  COCHLEAR LIMITED

Medical Equipment & Devices

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Overnight Price: $203.70

Citi rates COH as Neutral (3) -

Citi assesses the new Tesla MRI compatible implant that has been launched in the US has already been factored into the share price.

The launch is in line with the broker's expectations and remains a positive for Cochlear as it increases confidence in forecasts.

Citi maintains a Neutral rating and $198 target.

Target price is $198.00 Current Price is $203.70 Difference: minus $5.7 (current price is over target).
If COH meets the Citi target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $170.11, suggesting downside of -16.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Citi forecasts a full year FY19 dividend of 335.00 cents and EPS of 481.30 cents.
At the last closing share price the estimated dividend yield is 1.64%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 42.32.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 463.7, implying annual growth of 8.5%.

Current consensus DPS estimate is 322.0, implying a prospective dividend yield of 1.6%.

Current consensus EPS estimate suggests the PER is 43.9.

Forecast for FY20:

Citi forecasts a full year FY20 dividend of 385.00 cents and EPS of 550.00 cents.
At the last closing share price the estimated dividend yield is 1.89%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 37.04.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 514.5, implying annual growth of 11.0%.

Current consensus DPS estimate is 360.4, implying a prospective dividend yield of 1.8%.

Current consensus EPS estimate suggests the PER is 39.6.

Market Sentiment: -0.6

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


Deutsche Bank rates COH as Sell (5) -

The new cochlear implant has received approval from the US FDA earlier than Deutsche Bank expected and the announcement is considered a positive boost for Cochlear.

The broker maintains a Sell rating and $154 target.

Target price is $154.00 Current Price is $203.70 Difference: minus $49.7 (current price is over target).
If COH meets the Deutsche Bank target it will return approximately minus 24% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $170.11, suggesting downside of -16.5% (ex-dividends)

Forecast for FY19:

Current consensus EPS estimate is 463.7, implying annual growth of 8.5%.

Current consensus DPS estimate is 322.0, implying a prospective dividend yield of 1.6%.

Current consensus EPS estimate suggests the PER is 43.9.

Forecast for FY20:

Current consensus EPS estimate is 514.5, implying annual growth of 11.0%.

Current consensus DPS estimate is 360.4, implying a prospective dividend yield of 1.8%.

Current consensus EPS estimate suggests the PER is 39.6.

Market Sentiment: -0.6

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

DMP  DOMINO'S PIZZA ENTERPRISES LIMITED

Food, Beverages & Tobacco

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Overnight Price: $38.71

Ord Minnett rates DMP as Lighten (4) -

Ord Minnett has recently reviewed the outlook, noting Australasian and European operations remain challenged. The Japanese market is a positive driver but remains too small to offset the headwinds.

The broker maintains a Lighten rating and reduces the target to $35 from $42. Ord Minnett suspects there is some downside risk to FY19 guidance and reduces FY20 and FY21 normalised earnings estimates by -5.8% and -8.9% respectively.

This stock is not covered in-house by Ord Minnett. Instead, the broker whitelabels research by JP Morgan.

Target price is $35.00 Current Price is $38.71 Difference: minus $3.71 (current price is over target).
If DMP meets the Ord Minnett target it will return approximately minus 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $42.40, suggesting upside of 9.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Ord Minnett forecasts a full year FY19 dividend of 123.70 cents and EPS of 171.00 cents.
At the last closing share price the estimated dividend yield is 3.20%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 22.64.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 167.8, implying annual growth of 20.4%.

Current consensus DPS estimate is 119.4, implying a prospective dividend yield of 3.1%.

Current consensus EPS estimate suggests the PER is 23.1.

Forecast for FY20:

Ord Minnett forecasts a full year FY20 dividend of 141.00 cents and EPS of 189.00 cents.
At the last closing share price the estimated dividend yield is 3.64%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 20.48.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 190.1, implying annual growth of 13.3%.

Current consensus DPS estimate is 135.1, implying a prospective dividend yield of 3.5%.

Current consensus EPS estimate suggests the PER is 20.4.

Market Sentiment: -0.3

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

DTL  DATA#3 LIMITED

IT & Support

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Overnight Price: $2.13

Morgans rates DTL as Add (1) -

Morgans expects the Australian ICT sector is likely to return to growth in 2019, after several years of anaemic expenditure which has led to a need to replace equipment.

Data#3 has a long history as a technology services company, which the broker suggests is largely due to the quality of the offering and its success in evolving within a rapidly changing landscape.

Morgans takes the opportunity to roll forward valuation and increases the target to $2.25 from $1.85. Add rating maintained.

Target price is $2.25 Current Price is $2.13 Difference: $0.12
If DTL meets the Morgans target it will return approximately 6% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY19:

Morgans forecasts a full year FY19 dividend of 9.00 cents and EPS of 11.00 cents.
At the last closing share price the estimated dividend yield is 4.23%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 19.36.

Forecast for FY20:

Morgans forecasts a full year FY20 dividend of 10.00 cents and EPS of 12.00 cents.
At the last closing share price the estimated dividend yield is 4.69%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 17.75.

Market Sentiment: 1.0

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

FSF  FONTERRA SHAREHOLDERS' FUND

Dairy

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Overnight Price: $3.70

Credit Suisse rates FSF as Resume Coverage with Neutral (3) -

Credit Suisse resumes coverage with a Neutral rating and NZ$4.39 target. The company is progressing its exit from several areas of business including Tip Top, Brazil and Beingmate.

Debt remains considerable but the broker suggests there is time for orderly exits from further businesses.

This should provide more scope for lower overheads and smaller capital expenditure requirements versus the prior strategy, which Credit Suisse believes was too broad and focused on volume.

Current Price is $3.70. Target price not assessed.

Current consensus price target is N/A

The company's fiscal year ends in July.

Forecast for FY19:

Credit Suisse forecasts a full year FY19 dividend of 0.00 cents and EPS of 15.64 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 23.66.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 15.0, implying annual growth of N/A.

Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A.

Current consensus EPS estimate suggests the PER is 24.7.

Forecast for FY20:

Credit Suisse forecasts a full year FY20 dividend of 14.05 cents and EPS of 28.66 cents.
At the last closing share price the estimated dividend yield is 3.80%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.91.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 28.1, implying annual growth of 87.3%.

Current consensus DPS estimate is 15.6, implying a prospective dividend yield of 4.2%.

Current consensus EPS estimate suggests the PER is 13.2.

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

GPT  GPT

Infra & Property Developers

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Overnight Price: $6.32

UBS rates GPT as Neutral (3) -

UBS believes the growth outlook has improved and upgrades estimates for distributions by around 2.5% for FY20-22.

The company's office portfolio will deliver the best results amid office peers in 2019, boosted by a 300 basis points pick up in actual occupancy, in the broker's view.

UBS maintains a Neutral rating and raises the target to $6.30 from $5.78.

Target price is $6.30 Current Price is $6.32 Difference: minus $0.02 (current price is over target).
If GPT meets the UBS target it will return approximately minus 0% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.81, suggesting downside of -8.1% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY19:

UBS forecasts a full year FY19 dividend of 27.00 cents and EPS of 33.00 cents.
At the last closing share price the estimated dividend yield is 4.27%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 19.15.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 32.5, implying annual growth of -58.2%.

Current consensus DPS estimate is 26.6, implying a prospective dividend yield of 4.2%.

Current consensus EPS estimate suggests the PER is 19.4.

Forecast for FY20:

UBS forecasts a full year FY20 dividend of 28.00 cents and EPS of 35.00 cents.
At the last closing share price the estimated dividend yield is 4.43%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 18.06.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 33.7, implying annual growth of 3.7%.

Current consensus DPS estimate is 27.8, implying a prospective dividend yield of 4.4%.

Current consensus EPS estimate suggests the PER is 18.8.

Market Sentiment: -0.2

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

MMS  MCMILLAN SHAKESPEARE LIMITED

Vehicle Leasing & Salary Packaging

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Overnight Price: $12.49

Citi rates MMS as Buy (1) -

The company has downgraded FY19 guidance for net profit, primarily because of softness in its group remuneration services and asset management businesses. There is also soft conditions and increased competition in the UK.

Citi believes this is evidence of the cyclical headwinds in the new car market. The broker hopes for improved conditions in the first half of FY20 from a cyclical improvement, and better consumer sentiment post the federal election.

Buy rating maintained. Target is reduced to $16.07 from $16.82.

Target price is $16.07 Current Price is $12.49 Difference: $3.58
If MMS meets the Citi target it will return approximately 29% (excluding dividends, fees and charges).

Current consensus price target is $14.65, suggesting upside of 17.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Citi forecasts a full year FY19 dividend of 73.00 cents and EPS of 106.60 cents.
At the last closing share price the estimated dividend yield is 5.84%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 11.72.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 106.9, implying annual growth of 75.5%.

Current consensus DPS estimate is 70.6, implying a prospective dividend yield of 5.7%.

Current consensus EPS estimate suggests the PER is 11.7.

Forecast for FY20:

Citi forecasts a full year FY20 dividend of 78.00 cents and EPS of 114.80 cents.
At the last closing share price the estimated dividend yield is 6.24%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 10.88.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 115.7, implying annual growth of 8.2%.

Current consensus DPS estimate is 75.8, implying a prospective dividend yield of 6.1%.

Current consensus EPS estimate suggests the PER is 10.8.

Market Sentiment: 0.6

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


Macquarie rates MMS as Downgrade to Neutral from Outperform (3) -

The FY19 trading update implies -4.3% downgrades to consensus underlying net profit estimates, Macquarie notes. Trading conditions are weaker than expected.

McMillan Shakespeare has flagged surplus capital and an excess franking credit position. While capital could be allocated to acquisitions the company has also commenced a process to undertake an off-market share buyback in the first half of FY20 of up to $100m.

Macquarie reduces its growth and margin outlook and lowers the target to $12.62 from $14.21. Rating is downgraded to Neutral from Outperform.

Target price is $12.62 Current Price is $12.49 Difference: $0.13
If MMS meets the Macquarie target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $14.65, suggesting upside of 17.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Macquarie forecasts a full year FY19 dividend of 65.30 cents and EPS of 99.70 cents.
At the last closing share price the estimated dividend yield is 5.23%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.53.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 106.9, implying annual growth of 75.5%.

Current consensus DPS estimate is 70.6, implying a prospective dividend yield of 5.7%.

Current consensus EPS estimate suggests the PER is 11.7.

Forecast for FY20:

Macquarie forecasts a full year FY20 dividend of 67.80 cents and EPS of 104.20 cents.
At the last closing share price the estimated dividend yield is 5.43%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 11.99.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 115.7, implying annual growth of 8.2%.

Current consensus DPS estimate is 75.8, implying a prospective dividend yield of 6.1%.

Current consensus EPS estimate suggests the PER is 10.8.

Market Sentiment: 0.6

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


Morgan Stanley rates MMS as Overweight (1) -

The company has announced a potential off-market share buyback of $100m and also guided to net profit in the range of $87-89m, -2-4% below Morgan Stanley's estimates.

The broker notes trading has softened into the fourth quarter. This is disappointing, but Morgan Stanley believes the market will look through the cyclical headwinds at the current valuation and find opportunity in the buyback.

Overweight rating. Target is $16.60. In-Line sector view.

Target price is $16.60 Current Price is $12.49 Difference: $4.11
If MMS meets the Morgan Stanley target it will return approximately 33% (excluding dividends, fees and charges).

Current consensus price target is $14.65, suggesting upside of 17.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Morgan Stanley forecasts a full year FY19 dividend of 68.20 cents and EPS of 105.00 cents.
At the last closing share price the estimated dividend yield is 5.46%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 11.90.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 106.9, implying annual growth of 75.5%.

Current consensus DPS estimate is 70.6, implying a prospective dividend yield of 5.7%.

Current consensus EPS estimate suggests the PER is 11.7.

Forecast for FY20:

Morgan Stanley forecasts a full year FY20 dividend of 76.00 cents and EPS of 117.00 cents.
At the last closing share price the estimated dividend yield is 6.08%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 10.68.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 115.7, implying annual growth of 8.2%.

Current consensus DPS estimate is 75.8, implying a prospective dividend yield of 6.1%.

Current consensus EPS estimate suggests the PER is 10.8.

Market Sentiment: 0.6

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

NEA  NEARMAP LTD

Software & Services

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Overnight Price: $4.04

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

Macquarie initiates coverage with an Outperform rating and $4.22 target. The broker believes Nearmap has a significant, under-penetrated market opportunity.

There are strong unit economics and a proven and highly profitable operating model. The aggregate market opportunity equates to over $3.0bn per annum in the company's existing markets.

Target price is $4.22 Current Price is $4.04 Difference: $0.18
If NEA meets the Macquarie target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $4.23, suggesting upside of 4.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Macquarie forecasts a full year FY19 dividend of 0.00 cents and EPS of minus 0.70 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 577.14.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is -1.0, implying annual growth of N/A.

Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A.

Current consensus EPS estimate suggests the PER is N/A.

Forecast for FY20:

Macquarie forecasts a full year FY20 dividend of 0.00 cents and EPS of minus 1.30 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 310.77.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is -1.1, implying annual growth of N/A.

Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A.

Current consensus EPS estimate suggests the PER is N/A.

Market Sentiment: 1.0

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

PLS  PILBARA MINERALS LIMITED

New Battery Elements

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Overnight Price: $0.59

Citi rates PLS as Buy (1) -

Pilbara Minerals expects production of 65,000t for the June quarter. Sales are expected to be in the 23-45,000t range.

The company is trying to match shipping schedules with delayed commissioning and ramp up of a customer's chemical conversion facilities in China.

The company believes spodumene offtake is slower because of a conversion capacity mismatch, rather than because customers do not want more feedstock.

Buy/High Risk rating maintained with a $0.90 target.

Target price is $0.90 Current Price is $0.59 Difference: $0.31
If PLS meets the Citi target it will return approximately 53% (excluding dividends, fees and charges).

Current consensus price target is $0.90, suggesting upside of 52.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Citi forecasts a full year FY19 dividend of 0.00 cents and EPS of 0.20 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 295.00.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is -0.9, implying annual growth of N/A.

Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A.

Current consensus EPS estimate suggests the PER is N/A.

Forecast for FY20:

Citi forecasts a full year FY20 dividend of 0.00 cents and EPS of 3.60 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 16.39.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 3.5, implying annual growth of N/A.

Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A.

Current consensus EPS estimate suggests the PER is 16.9.

Market Sentiment: 0.3

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


Credit Suisse rates PLS as Outperform (1) -

Record May production of 22,375t and guidance for June of 20-24,000t signals to Credit Suisse a sustained improvement. Upside is expected from recovery enhancements.

The main negative in the company's update was principally market-driven and September quarter production is likely to be moderated to match demand.

The company has cited delays to the ramp up of its offtake partners' downstream chemical conversion facilities as the main reason for constraining sales volumes. Outperform rating and $1.15 target maintained.

Target price is $1.15 Current Price is $0.59 Difference: $0.56
If PLS meets the Credit Suisse target it will return approximately 95% (excluding dividends, fees and charges).

Current consensus price target is $0.90, suggesting upside of 52.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Credit Suisse forecasts a full year FY19 dividend of 0.00 cents and EPS of minus 1.68 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 35.12.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is -0.9, implying annual growth of N/A.

Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A.

Current consensus EPS estimate suggests the PER is N/A.

Forecast for FY20:

Credit Suisse forecasts a full year FY20 dividend of 0.00 cents and EPS of 3.22 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 18.32.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 3.5, implying annual growth of N/A.

Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A.

Current consensus EPS estimate suggests the PER is 16.9.

Market Sentiment: 0.3

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


Macquarie rates PLS as No Rating (-1) -

A slower ramping up of key customer conversion capacity has dampened production and sales in June and July. The company recorded monthly production of 22,400t in May, achieving around 85% of stage 1 nameplate capacity.

Pilbara Minerals is exploring additional sales customers, including parties that have experienced interest in partnering at Pilgangoora.

The broker is advising hence is currently restricted from making a recommendation.

Current Price is $0.59. Target price not assessed.

Current consensus price target is $0.90, suggesting upside of 52.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Macquarie forecasts a full year FY19 dividend of 0.00 cents and EPS of minus 1.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 59.00.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is -0.9, implying annual growth of N/A.

Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A.

Current consensus EPS estimate suggests the PER is N/A.

Forecast for FY20:

Macquarie 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 14.39.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 3.5, implying annual growth of N/A.

Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A.

Current consensus EPS estimate suggests the PER is 16.9.

Market Sentiment: 0.3

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

QBE  QBE INSURANCE GROUP LIMITED

Insurance

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Overnight Price: $11.91

Deutsche Bank rates QBE as Sell (5) -

Deutsche Bank believes QBE Insurance is facing a number of headwinds. The company is exiting from underperforming lines and returning its focus to the core business. Yet this is happening at a time of macro pressures.

Local interest rates have fallen and the US dollar has strengthened. At a micro level the broker envisages a normalisation of crop and downside risks to Australian lender mortgage insurance earnings. Sell rating maintained. Target is $11.60.

Target price is $11.60 Current Price is $11.91 Difference: minus $0.31 (current price is over target).
If QBE meets the Deutsche Bank target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $13.05, suggesting upside of 9.5% (ex-dividends)

Forecast for FY19:

Current consensus EPS estimate is 91.8, implying annual growth of N/A.

Current consensus DPS estimate is 76.5, implying a prospective dividend yield of 6.4%.

Current consensus EPS estimate suggests the PER is 13.0.

Forecast for FY20:

Current consensus EPS estimate is 106.4, implying annual growth of 15.9%.

Current consensus DPS estimate is 87.2, implying a prospective dividend yield of 7.3%.

Current consensus EPS estimate suggests the PER is 11.2.

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

RIO  RIO TINTO LIMITED

Bulks

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Overnight Price: $103.62

Macquarie rates RIO as Outperform (1) -

The company has released updated information regarding its tailings facility management. Rio Tinto does not have any dams classified as extreme but has 20 considered "Very High" consequence. Half of these are located in Brazil at the operation, MRN, operated by Vale.

Macquarie suggests the increased costs of dam management are immaterial as the company is compliant with tailings dam standards set out by the ICMM in 2019.

Meanwhile, Rio Tinto is benefiting significantly from the iron ore price environment. Macquarie increases the target to $109 from $107. Outperform maintained.

Target price is $109.00 Current Price is $103.62 Difference: $5.38
If RIO meets the Macquarie target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $98.21, suggesting downside of -5.2% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY19:

Macquarie forecasts a full year FY19 dividend of 542.54 cents and EPS of 903.91 cents.
At the last closing share price the estimated dividend yield is 5.24%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 11.46.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 1048.5, implying annual growth of N/A.

Current consensus DPS estimate is 609.8, implying a prospective dividend yield of 5.9%.

Current consensus EPS estimate suggests the PER is 9.9.

Forecast for FY20:

Macquarie forecasts a full year FY20 dividend of 440.73 cents and EPS of 742.12 cents.
At the last closing share price the estimated dividend yield is 4.25%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 13.96.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 914.0, implying annual growth of -12.8%.

Current consensus DPS estimate is 552.3, implying a prospective dividend yield of 5.3%.

Current consensus EPS estimate suggests the PER is 11.3.

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

RMS  RAMELIUS RESOURCES LIMITED

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Overnight Price: $0.68

Morgans rates RMS as Add (1) -

The company has released a life-of-mine plan for five years incorporating 1m or more ounces. FY20 production guidance of 214,500 ounces has been slated at an all-in sustaining cost of $1225-1325/oz.

Morgans believes the company is still on track to generate $103m in operating earnings (EBITDA) in FY20. A healthy cash balance and no debt also provide options. Add rating maintained. Target is reduced to $0.95 from $1.02.

Target price is $0.95 Current Price is $0.68 Difference: $0.27
If RMS meets the Morgans target it will return approximately 40% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY19:

Morgans forecasts a full year FY19 EPS of 3.30 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 20.61.

Forecast for FY20:

Morgans forecasts a full year FY20 EPS of 5.60 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.14.

Market Sentiment: 1.0

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

S32  SOUTH32 LIMITED

Mining

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Overnight Price: $3.18

Credit Suisse rates S32 as Outperform (1) -

The new Illawarra metallurgical coal reserve update now incorporates a reduction of -22mt as a portion of the mining lease in the Appin area is relinquished. Reserve life is reduced to 19 years.

Over 70% of the resource for the Taylor deposit is now stated as measured or indicated, supporting a pre-feasibility study that is expected to be completed by the end of FY20.

The company has also added 10mt to the resource estimate at Hermosa, although overall grade has been reduced.

Outperform rating and $4 target maintained.

Target price is $4.00 Current Price is $3.18 Difference: $0.82
If S32 meets the Credit Suisse target it will return approximately 26% (excluding dividends, fees and charges).

Current consensus price target is $3.92, suggesting upside of 23.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Credit Suisse forecasts a full year FY19 dividend of 16.14 cents and EPS of 34.24 cents.
At the last closing share price the estimated dividend yield is 5.07%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 9.29.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 33.6, implying annual growth of N/A.

Current consensus DPS estimate is 17.3, implying a prospective dividend yield of 5.4%.

Current consensus EPS estimate suggests the PER is 9.5.

Forecast for FY20:

Credit Suisse forecasts a full year FY20 dividend of 12.40 cents and EPS of 30.96 cents.
At the last closing share price the estimated dividend yield is 3.90%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 10.27.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 33.2, implying annual growth of -1.2%.

Current consensus DPS estimate is 16.9, implying a prospective dividend yield of 5.3%.

Current consensus EPS estimate suggests the PER is 9.6.

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

Market Sentiment: 0.6

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


Morgan Stanley rates S32 as Overweight (1) -

South32 has announced a maiden reserve for Hermosa, with increased tonnage but a decline in grades, and an updated reserve for Illawarra.

Coal reserves for the Bulli seam have been reduced by -22mt to 114mt following the decision to relinquish a portion of the mining lease.

Morgan Stanley does not believe this creates mine-life headwinds for Bulli, as the reserve life remains around 20 years. Overweight rating and $4.05 target maintained. Industry view is Attractive.

Target price is $4.05 Current Price is $3.18 Difference: $0.87
If S32 meets the Morgan Stanley target it will return approximately 27% (excluding dividends, fees and charges).

Current consensus price target is $3.92, suggesting upside of 23.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Morgan Stanley forecasts a full year FY19 EPS of 32.08 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 9.91.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 33.6, implying annual growth of N/A.

Current consensus DPS estimate is 17.3, implying a prospective dividend yield of 5.4%.

Current consensus EPS estimate suggests the PER is 9.5.

Forecast for FY20:

Morgan Stanley forecasts a full year FY20 EPS of 26.50 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.00.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 33.2, implying annual growth of -1.2%.

Current consensus DPS estimate is 16.9, implying a prospective dividend yield of 5.3%.

Current consensus EPS estimate suggests the PER is 9.6.

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

Market Sentiment: 0.6

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


Ord Minnett rates S32 as Hold (3) -

Ord Minnett reviews the Illawarra Coal operations ahead of a site visit. The broker maintains a view that Appin will return to two longwall operations by the second half of FY20.

Illawarra Coal accounts for around 20% of the broker's FY19 operating earnings forecasts and 13% of net present valuation. Hold rating maintained. Target is $3.60.

This stock is not covered in-house by Ord Minnett. Instead, the broker whitelabels research by JP Morgan.

Target price is $3.60 Current Price is $3.18 Difference: $0.42
If S32 meets the Ord Minnett target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $3.92, suggesting upside of 23.2% (ex-dividends)

Forecast for FY19:

Current consensus EPS estimate is 33.6, implying annual growth of N/A.

Current consensus DPS estimate is 17.3, implying a prospective dividend yield of 5.4%.

Current consensus EPS estimate suggests the PER is 9.5.

Forecast for FY20:

Current consensus EPS estimate is 33.2, implying annual growth of -1.2%.

Current consensus DPS estimate is 16.9, implying a prospective dividend yield of 5.3%.

Current consensus EPS estimate suggests the PER is 9.6.

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

Market Sentiment: 0.6

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

SGM  SIMS METAL MANAGEMENT LIMITED

Steel & Scrap

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Overnight Price: $9.88

Credit Suisse rates SGM as Outperform (1) -

The company has guided to May quarter operating earnings (EBIT) of US$28-29m from its auto and metals recycling segment.

The sequentially stronger performance reflects the benefits from higher ferrous and non-ferrous volumes, seasonally improved supply flows and retail sales.

Credit Suisse expects the June quarter should benefit from a material improvement in export market prices relative to US domestic prices.

Outperform rating and $12.90 target maintained.

Target price is $12.90 Current Price is $9.88 Difference: $3.02
If SGM meets the Credit Suisse target it will return approximately 31% (excluding dividends, fees and charges).

Current consensus price target is $11.58, suggesting upside of 17.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Credit Suisse forecasts a full year FY19 dividend of 44.12 cents and EPS of 80.10 cents.
At the last closing share price the estimated dividend yield is 4.47%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.33.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 80.2, implying annual growth of -25.9%.

Current consensus DPS estimate is 43.0, implying a prospective dividend yield of 4.4%.

Current consensus EPS estimate suggests the PER is 12.3.

Forecast for FY20:

Credit Suisse forecasts a full year FY20 dividend of 45.48 cents and EPS of 90.99 cents.
At the last closing share price the estimated dividend yield is 4.60%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 10.86.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 90.2, implying annual growth of 12.5%.

Current consensus DPS estimate is 39.9, implying a prospective dividend yield of 4.0%.

Current consensus EPS estimate suggests the PER is 11.0.

Market Sentiment: 0.4

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

SXY  SENEX ENERGY LIMITED

Crude Oil

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Overnight Price: $0.32

Credit Suisse rates SXY as Upgrade to Outperform from Neutral (1) -

The company has announced a $50m sale and toll agreement for Roma North's gas processing facility. Credit Suisse believes the sale will strengthen the balance sheet and make the company more resilient to lower oil prices.

Credit Suisse reduces FY20 earnings estimates by -7.5% to account for the toll agreement. The broker's calculations suggest a capital raising is unlikely to be an issue.

Rating is upgraded to Outperform from Neutral on the back of the Jemena infrastructure sale, partly offset by the risk of higher royalties. Target is raised to $0.37 from $0.36.

Target price is $0.37 Current Price is $0.32 Difference: $0.05
If SXY meets the Credit Suisse target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $0.44, suggesting upside of 37.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Credit Suisse forecasts a full year FY19 dividend of 0.00 cents and EPS of 0.61 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 52.46.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 0.7, implying annual growth of N/A.

Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A.

Current consensus EPS estimate suggests the PER is 45.7.

Forecast for FY20:

Credit Suisse forecasts a full year FY20 dividend of 0.00 cents and EPS of 1.57 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 20.38.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 1.6, implying annual growth of 128.6%.

Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A.

Current consensus EPS estimate suggests the PER is 20.0.

Market Sentiment: 0.5

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


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

Senex Energy has announced the $50m sale of its Roma North processing facility to Jemena. Morgan Stanley judges this will improve the balance sheet rather than provide value accretion.

Equal-weight maintained. Target is $0.41. Industry view: In-Line.

Target price is $0.41 Current Price is $0.32 Difference: $0.09
If SXY meets the Morgan Stanley target it will return approximately 28% (excluding dividends, fees and charges).

Current consensus price target is $0.44, suggesting upside of 37.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Morgan Stanley forecasts a full year FY19 dividend of 0.00 cents and EPS of 1.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 32.00.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 0.7, implying annual growth of N/A.

Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A.

Current consensus EPS estimate suggests the PER is 45.7.

Forecast for FY20:

Morgan Stanley forecasts a full year FY20 EPS of 3.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 10.67.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 1.6, implying annual growth of 128.6%.

Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A.

Current consensus EPS estimate suggests the PER is 20.0.

Market Sentiment: 0.5

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


Morgans rates SXY as Add (1) -

The company has announced the sale of the Roma North gas plant to infrastructure operator Jemena for $50m and a long-term gas tolling agreement. Morgans believes this should remove any remaining funding concerns. The gas plant is in its final stages of construction.

Morgans believes the market is undervaluing the company's organic earnings growth profile. While not offering a step-change in earnings from new projects, production from the flagship projects is expected to steadily ramp up.

Add rating maintained. Target is raised to $0.55 from $0.53.

Target price is $0.55 Current Price is $0.32 Difference: $0.23
If SXY meets the Morgans target it will return approximately 72% (excluding dividends, fees and charges).

Current consensus price target is $0.44, suggesting upside of 37.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Morgans forecasts a full year FY19 dividend of 0.00 cents and EPS of 0.30 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 106.67.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 0.7, implying annual growth of N/A.

Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A.

Current consensus EPS estimate suggests the PER is 45.7.

Forecast for FY20:

Morgans forecasts a full year FY20 dividend of 0.00 cents and EPS of 0.70 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 45.71.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 1.6, implying annual growth of 128.6%.

Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A.

Current consensus EPS estimate suggests the PER is 20.0.

Market Sentiment: 0.5

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

VOC  VOCUS GROUP LIMITED

Telecommunication

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Overnight Price: $3.26

Macquarie rates VOC as Neutral (3) -

AGL Energy ((AGL)) has withdrawn its indicative offer for Vocus Group. Macquarie notes there was limited explanation about the withdrawal, which comes only six days after announcing a four-week exclusive due diligence process.

The numerous challenges for Vocus have been well flagged but corporate interest continues, Macquarie notes.

The broker considers it unlikely Vocus will field other approaches soon and the focus will return to the operating outlook and transformation ambitions. Neutral maintained. Target is reduced to $3.25 from $4.50.

Target price is $3.25 Current Price is $3.26 Difference: minus $0.01 (current price is over target).
If VOC meets the Macquarie target it will return approximately minus 0% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.82, suggesting upside of 17.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Macquarie forecasts a full year FY19 dividend of 0.00 cents and EPS of 17.10 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 19.06.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 15.2, implying annual growth of 54.9%.

Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A.

Current consensus EPS estimate suggests the PER is 21.4.

Forecast for FY20:

Macquarie forecasts a full year FY20 dividend of 0.00 cents and EPS of 20.70 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 15.75.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 16.8, implying annual growth of 10.5%.

Current consensus DPS estimate is 0.5, implying a prospective dividend yield of 0.2%.

Current consensus EPS estimate suggests the PER is 19.4.

Market Sentiment: 0.1

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

WHC  WHITEHAVEN COAL LIMITED

Coal

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Overnight Price: $3.65

Deutsche Bank rates WHC as Buy (1) -

As Adani's Carmichael project is now proceeding, Deutsche Bank draws attention to the pending approvals for Whitehaven Coal and the latent value.

The broker has some hope that overall imports to China will pick up as the season enters a period of higher demand. Buy rating and $4.80 target.

Target price is $4.80 Current Price is $3.65 Difference: $1.15
If WHC meets the Deutsche Bank target it will return approximately 32% (excluding dividends, fees and charges).

Current consensus price target is $5.01, suggesting upside of 37.3% (ex-dividends)

Forecast for FY19:

Current consensus EPS estimate is 58.1, implying annual growth of 9.2%.

Current consensus DPS estimate is 41.4, implying a prospective dividend yield of 11.3%.

Current consensus EPS estimate suggests the PER is 6.3.

Forecast for FY20:

Current consensus EPS estimate is 42.3, implying annual growth of -27.2%.

Current consensus DPS estimate is 27.8, implying a prospective dividend yield of 7.6%.

Current consensus EPS estimate suggests the PER is 8.6.

Market Sentiment: 0.9

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

Today's Price Target Changes
Company Broker New Target Prev Target Change
A2M A2 MILK Macquarie 16.10 15.75 2.22%
AGL AGL ENERGY Macquarie 20.58 19.06 7.97%
APT AFTERPAY TOUCH Morgans 23.43 25.96 -9.75%
AZJ AURIZON HOLDINGS Macquarie 5.28 4.81 9.77%
COH COCHLEAR Deutsche Bank 154.00 151.50 1.65%
DMP DOMINO'S PIZZA Ord Minnett 35.00 42.00 -16.67%
DTL DATA#3 Morgans 2.25 1.85 21.62%
GPT GPT UBS 6.30 5.78 9.00%
MMS MCMILLAN SHAKESPEARE Citi 16.07 16.82 -4.46%
Macquarie 12.62 14.21 -11.19%
QBE QBE INSURANCE Deutsche Bank 11.60 11.80 -1.69%
RIO RIO TINTO Macquarie 109.00 107.00 1.87%
RMS RAMELIUS RESOURCES Morgans 0.95 1.02 -6.86%
SXY SENEX ENERGY Credit Suisse 0.37 0.36 2.78%
Morgans 0.55 0.53 3.77%
VOC VOCUS GROUP Macquarie 3.25 4.10 -20.73%
WHC WHITEHAVEN COAL Deutsche Bank 4.80 5.10 -5.88%
Summaries
A2M A2 MILK Outperform - Macquarie Overnight Price $13.40
AGL AGL ENERGY Upgrade to Neutral from Underperform - Macquarie Overnight Price $19.89
Hold - Ord Minnett Overnight Price $19.89
Sell - UBS Overnight Price $19.89
ALQ ALS LIMITED Outperform - Macquarie Overnight Price $7.05
APT AFTERPAY TOUCH Add - Morgans Overnight Price $21.26
AQG ALACER GOLD Outperform - Macquarie Overnight Price $4.77
AX1 ACCENT GROUP Upgrade to Add from Hold - Morgans Overnight Price $1.34
AZJ AURIZON HOLDINGS Neutral - Citi Overnight Price $5.32
Buy - Deutsche Bank Overnight Price $5.32
Neutral - Macquarie Overnight Price $5.32
Neutral - UBS Overnight Price $5.32
COH COCHLEAR Neutral - Citi Overnight Price $203.70
Sell - Deutsche Bank Overnight Price $203.70
DMP DOMINO'S PIZZA Lighten - Ord Minnett Overnight Price $38.71
DTL DATA#3 Add - Morgans Overnight Price $2.13
FSF FONTERRA Resume Coverage with Neutral - Credit Suisse Overnight Price $3.70
GPT GPT Neutral - UBS Overnight Price $6.32
MMS MCMILLAN SHAKESPEARE Buy - Citi Overnight Price $12.49
Downgrade to Neutral from Outperform - Macquarie Overnight Price $12.49
Overweight - Morgan Stanley Overnight Price $12.49
NEA NEARMAP Initiation of coverage with Outperform - Macquarie Overnight Price $4.04
PLS PILBARA MINERALS Buy - Citi Overnight Price $0.59
Outperform - Credit Suisse Overnight Price $0.59
No Rating - Macquarie Overnight Price $0.59
QBE QBE INSURANCE Sell - Deutsche Bank Overnight Price $11.91
RIO RIO TINTO Outperform - Macquarie Overnight Price $103.62
RMS RAMELIUS RESOURCES Add - Morgans Overnight Price $0.68
S32 SOUTH32 Outperform - Credit Suisse Overnight Price $3.18
Overweight - Morgan Stanley Overnight Price $3.18
Hold - Ord Minnett Overnight Price $3.18
SGM SIMS METAL MANAGEMENT Outperform - Credit Suisse Overnight Price $9.88
SXY SENEX ENERGY Upgrade to Outperform from Neutral - Credit Suisse Overnight Price $0.32
Equal-weight - Morgan Stanley Overnight Price $0.32
Add - Morgans Overnight Price $0.32
VOC VOCUS GROUP Neutral - Macquarie Overnight Price $3.26
WHC WHITEHAVEN COAL Buy - Deutsche Bank Overnight Price $3.65
RATING SUMMARY
Rating No. Of Recommendations
1. Buy

20

3. Hold

12

4. Reduce

1

5. Sell

3

Tuesday 18 June 2019

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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.