Australian Broker Call

Macquarie rates AGL as Neutral (3) -

Changes to Vic regulations should favour the bigger energy retailers, the broker suggests, and may see consolidation among the smaller players, but the risk is the government introduces a "no frills" basic service offering.

The tailwind of rising electricity prices has now abated, the broker notes, and sustainability of pricing is uncertain as renewable generation costs fall. Lower prices will nevertheless take time to feed through into earnings, with FY20-21 most exposed.

Neutral retained for AGL, target falls to $22.92 from $23.01.

Target price is $22.92 Current Price is $21.77 Difference: $1.15
If AGL meets the Macquarie target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $24.81, suggesting upside of 14.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.4

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

Credit Suisse rates CHC as Underperform (5) -

Credit Suisse continues to believe the stock is materially overvalued, trading 19% above its revised target of $4.92, up from $4.71. Recognition of performance fees, previously slated for FY20, has been pulled forward into FY18 and this has served to boost near-term earnings.

Subsequently the broker expects a softening of valuation, for the company's long WALE fund product in particular, which will mean FY21 estimates are slightly below FY18 levels. Underperform maintained.

Target price is $4.92 Current Price is $5.89 Difference: minus $0.97 (current price is over target).
If CHC meets the Credit Suisse target it will return approximately minus 16% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $6.13, suggesting upside of 4.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.4

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

Morgan Stanley rates DMP as Overweight (1) -

Morgan Stanley has even greater conviction about the long-term growth in Europe after a visit to the company's operations. Domino's has guided to 2,500 stores in Europe by 2025 versus 891 today.

The Netherlands is the most penetrated country for online takeaway food and the broker believes the company's success in this market indicates it can survive with aggregators.

Overweight rating and Cautious industry view. Target is $55.

Target price is $55.00 Current Price is $43.91 Difference: $11.09
If DMP meets the Morgan Stanley target it will return approximately 25% (excluding dividends, fees and charges).

Current consensus price target is $47.81, suggesting upside of 8.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.0

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

Credit Suisse rates GMG as Neutral (3) -

Credit Suisse raises FY18-20 estimates by 1% on average to reflect stronger near-term performance fees offset, in part, by higher levels of fund disposal activity.

The broker now expects the company to generate three-year average growth in earnings per share of 7% from FY17-20. Neutral rating maintained. Target is raised to $8.24 from $8.01.

Target price is $8.24 Current Price is $8.44 Difference: minus $0.2 (current price is over target).
If GMG meets the Credit Suisse target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $8.58, suggesting upside of 1.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.6

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

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

Credit Suisse is more confident in the outlook after reports from the company's customers confirm that US housing and renovation activity is robust. US home builders have reported revenues that are slightly above consensus forecasts amid growing order books.

In the retail channel both Home Depot and Lowes have beat sales estimates. Credit Suisse forecasts FY18 net profit of US$280m. Rating is upgraded to Outperform from Neutral. Target is $24.75.

Target price is $24.75 Current Price is $22.81 Difference: $1.94
If JHX meets the Credit Suisse target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $24.39, suggesting upside of 6.9% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY18:

Forecast for FY19:

This company reports in USD. 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

Credit Suisse rates MFG as Outperform (1) -

Credit Suisse continues to expect a benefit from rising allocations to global equities in Australia, viewed as a structural trend.

The broker reiterates an Outperform rating for Magellan Financial as it is likely to benefit from additional retail funds from Airlie, further institutional flows and the structural shift towards global equities in the domestic retail market. Target is $29.

Target price is $29.00 Current Price is $26.10 Difference: $2.9
If MFG meets the Credit Suisse target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $28.94, suggesting upside of 10.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.7

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

Credit Suisse rates MND as Upgrade to Neutral from Underperform (3) -

Management remains cautious on the FY19 outlook although Credit Suisse expects a win of at least one of the three large iron ore contracts up for grabs in Western Australia in the first half of that year. A revenue benefit is unlikely until the second half.

Because of the weakness in the shares the broker upgrades to Neutral from Underperform. Target is steady at $15.10.

Target price is $15.10 Current Price is $15.14 Difference: minus $0.04 (current price is over target).
If MND meets the Credit Suisse target it will return approximately minus 0% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $15.13, suggesting downside of -0.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.3

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

Citi rates NCM as Buy (1) -

The company has halted operations at Cadia East following a failure in the tailings storage facility. For Citi, the incident raises questions about the operation, which can only be answered by investigations by the company and the NSW regulators.

For example, how will the incident influence the company's bid to expand processing capacity at Cadia, and are recent seismic events related to mining? Citi maintains a Buy rating and $27.10 target.

Target price is $27.10 Current Price is $20.60 Difference: $6.5
If NCM meets the Citi target it will return approximately 32% (excluding dividends, fees and charges).

Current consensus price target is $20.89, suggesting upside of 1.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

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

Market Sentiment: -0.2

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

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

The wall of the tailings dam at Cadia failed last Friday in the wake of minor earthquakes recorded in the area. Newcrest has suspended production at the mine which accounts for around 60% of group earnings. Macquarie is factoring in a six week shutdown but it could be less or more.

The failure is a major concern to Macquarie. Given the production issues arising from an earthquake in April last year, the market will likely discount valuation until some certainty in the outlook can be established. Downgrade to Underperform from Neutral.

Target falls to $19 from $23.

Target price is $19.00 Current Price is $20.60 Difference: minus $1.6 (current price is over target).
If NCM meets the Macquarie target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $20.89, suggesting upside of 1.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

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

Market Sentiment: -0.2

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

Ord Minnett rates NCM as Accumulate (2) -

Part of the tailings dam at Cadia has collapsed and the company has suspended operations. Ord Minnett's initial view is that there should be no long-term impact from this event. The break was contained within the southern tailings area.

Management has acknowledged the event could likely affect FY18 guidance, given the importance of Cadia to its performance. Ord Minnett estimates a -10% reduction in output which reduces FY18 EBITDA by -6%. Accumulate rating and $25 target maintained.

Target price is $25.00 Current Price is $20.60 Difference: $4.4
If NCM meets the Ord Minnett target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $20.89, suggesting upside of 1.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

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

Market Sentiment: -0.2

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

UBS rates NCM as Sell (5) -

The company has suspended production at Cadia pending an investigation of a breach of the tailings dam. Timing of the return to full production is unknown.

Cadia accounts for 30% of group production and around 60% of EBITDA. Hence, UBS suspects FY18 guidance is unlikely to be achieved at this stage.

Sell rating is maintained. Target is $13.90.

Target price is $13.90 Current Price is $20.60 Difference: minus $6.7 (current price is over target).
If NCM meets the UBS target it will return approximately minus 33% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $20.89, suggesting upside of 1.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

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

Market Sentiment: -0.2

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

Citi rates OZL as Buy (1) -

The company plans to commission a new high voltage line to its Prominent Hill and Carrapateena mines. This will travel parallel with the existing line owned by BHP ((BHP)) which OZ Minerals will stop using in August 2020. Citi observes the announcement goes some way to clarifying a key risk to the company's SA copper production.

Part of the new construction includes a connection to the SolarReserve Aurora thermal power array and Citi notes the company clearly expects renewables to be part of the future supply arrangement.

Citi maintains a Buy rating and $11.10 target.

Target price is $11.10 Current Price is $9.40 Difference: $1.7
If OZL meets the Citi target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $9.73, suggesting upside of 3.5% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.4

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

UBS rates RFF as Initiation of coverage with Buy (1) -

UBS initiates coverage on Rural Funds Group with a Buy rating and $2.39 target. The company is one of the few farmland real estate investment trusts globally and the only one on the ASX.

The business has strong momentum and compelling growth prospects and the broker suggests the catalyst going forward will be acquisitions, specifically cattle properties in northern Queensland, which should provide significant accretion over time.

Target price is $2.39 Current Price is $2.14 Difference: $0.25
If RFF meets the UBS target it will return approximately 12% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 1.0

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

Macquarie rates WTC as Neutral (3) -

Having reassessed its view on WiseTech post result, the broker declares the company to be a high quality growth business capable of long value creation through organic growth and acquisitions. The company's industry leading products should continue to win market share from legacy in-house systems and from competitors.

Successful penetration into other key market verticals will be an important barometer in the medium term. In the short term, the stock trades at a significant premium to global peers. Neutral retained. Target rises 61% to $11.39.

Target price is $11.39 Current Price is $10.77 Difference: $0.62
If WTC meets the Macquarie target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $10.63, suggesting downside of -1.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.3

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