Australian Broker Call

September 27, 2016

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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: 01:05 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
FMG - FORTESCUE Downgrade to Underweight from Equal-weight Morgan Stanley
BHP  BHP BILLITON LIMITED

Materials

Overnight Price: $21.55

Morgan Stanley rates BHP as Overweight (1) -

Morgan Stanley's quarterly update on commodity prices brings better bulks into the base case. BHP Billiton remains the preferred mining exposure.

The most notable forecast changes are hard coking coal, up 18% for 2016 and 29% for 2017 followed by iron ore up 11% in 2016 and 27% in 2017 then thermal coal, up 13% in both years.

The broker retains an Overweight rating and Attractive industry view. Target moves up to $27.50 from $27.00.

Target price is $27.50 Current Price is $21.55 Difference: $5.95
If BHP meets the Morgan Stanley target it will return approximately 28% (excluding dividends, fees and charges).

Current consensus price target is $23.10, suggesting upside of 8.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Morgan Stanley forecasts a full year FY17 dividend of 70.66 cents and EPS of 100.56 cents.
At the last closing share price the estimated dividend yield is 3.28%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 21.43.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 84.1, implying annual growth of N/A.

Current consensus DPS estimate is 55.0, implying a prospective dividend yield of 2.6%.

Current consensus EPS estimate suggests the PER is 25.3.

Forecast for FY18:

Morgan Stanley forecasts a full year FY18 dividend of 58.43 cents and EPS of 96.48 cents.
At the last closing share price the estimated dividend yield is 2.71%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 22.34.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 96.6, implying annual growth of 14.9%.

Current consensus DPS estimate is 62.4, implying a prospective dividend yield of 2.9%.

Current consensus EPS estimate suggests the PER is 22.0.

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

EHE  ESTIA HEALTH LIMITED

Health Care Equipment & Services

Overnight Price: $3.47

UBS rates EHE as Buy (1) -

UBS channel checks suggest the aged care sector is capable of mitigating at least 50% of the cuts to the aged care funding instrument via higher occupancy, reclassification and revenue for additional services.

The broker's Estia Health forecasts apply no improvement in performance of the Kennedy business beyond the current $20m EBITDA run rate.

UBS makes reductions of around 8% to EBITDA for FY19. Target drops to $4.10 from $6.95. Buy rating retained.

Target price is $4.10 Current Price is $3.47 Difference: $0.63
If EHE meets the UBS target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $3.87, suggesting upside of 11.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

UBS forecasts a full year FY17 dividend of 25.00 cents and EPS of 30.00 cents.
At the last closing share price the estimated dividend yield is 7.20%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 11.57.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 30.3, implying annual growth of 100.7%.

Current consensus DPS estimate is 29.5, implying a prospective dividend yield of 8.5%.

Current consensus EPS estimate suggests the PER is 11.5.

Forecast for FY18:

UBS forecasts a full year FY18 dividend of 27.00 cents and EPS of 32.00 cents.
At the last closing share price the estimated dividend yield is 7.78%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 10.84.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 29.5, implying annual growth of -2.6%.

Current consensus DPS estimate is 27.4, implying a prospective dividend yield of 7.9%.

Current consensus EPS estimate suggests the PER is 11.8.

Market Sentiment: 0.3

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

FMG  FORTESCUE METALS GROUP LTD

Materials

Overnight Price: $4.95

Morgan Stanley rates FMG as Downgrade to Underweight from Equal-weight (5) -

Morgan Stanley's quarterly update on commodity prices brings better bulks into the base case.

The most notable forecast changes are hard coking coal, up 18% for 2016 and 29% for 2017 followed by iron ore up 11% in 2016 and 27% in 2017 then thermal coal, up 13% in both years.

Morgan Stanley tosses up between the robust free cash flow with ongoing debt reduction and the potential for iron ore to drag the equity lower in the near term, and opts for the latter.

Rating is downgraded to Underweight from Equal-weight, with the broker looking to take the opportunity to turn positive again. Attractive industry view retained. Target is raised to $4.50 from $4.05.

Target price is $4.50 Current Price is $4.95 Difference: minus $0.45 (current price is over target).
If FMG meets the Morgan Stanley target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.74, suggesting downside of -3.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Morgan Stanley forecasts a full year FY17 dividend of 10.87 cents and EPS of 51.64 cents.
At the last closing share price the estimated dividend yield is 2.20%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 9.59.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 45.8, implying annual growth of N/A.

Current consensus DPS estimate is 17.7, implying a prospective dividend yield of 3.6%.

Current consensus EPS estimate suggests the PER is 10.7.

Forecast for FY18:

Morgan Stanley forecasts a full year FY18 dividend of 9.51 cents and EPS of 39.41 cents.
At the last closing share price the estimated dividend yield is 1.92%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.56.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 26.1, implying annual growth of -43.0%.

Current consensus DPS estimate is 10.9, implying a prospective dividend yield of 2.2%.

Current consensus EPS estimate suggests the PER is 18.7.

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

Market Sentiment: -0.1

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

IRE  IRESS MARKET TECHNOLOGY LIMITED

Software & Services

Overnight Price: $11.88

ADDED

Deutsche Bank rates IRE as Buy (1) -

Deutsche Bank considers the acquisition of Financial Synergy, a fund administration software provider, as a positive, given the attractive returns profile and cost synergy potential.

Iress will undertake an $85m placement and share purchase plan up to $20m to fund the $90m price tag.

Deutsche Bank raises the target to $12.80 from $12.50. Buy rating retained.

Target price is $12.80 Current Price is $11.88 Difference: $0.92
If IRE meets the Deutsche Bank target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $11.92, suggesting upside of 2.4% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY16:

Deutsche Bank forecasts a full year FY16 dividend of 45.00 cents and EPS of 44.00 cents.
At the last closing share price the estimated dividend yield is 3.79%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 27.00.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 44.5, implying annual growth of 26.4%.

Current consensus DPS estimate is 45.4, implying a prospective dividend yield of 3.9%.

Current consensus EPS estimate suggests the PER is 26.2.

Forecast for FY17:

Deutsche Bank forecasts a full year FY17 dividend of 53.00 cents and EPS of 53.00 cents.
At the last closing share price the estimated dividend yield is 4.46%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 22.42.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 51.6, implying annual growth of 16.0%.

Current consensus DPS estimate is 50.8, implying a prospective dividend yield of 4.4%.

Current consensus EPS estimate suggests the PER is 22.6.

Market Sentiment: 0.5

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


Macquarie rates IRE as Neutral (3) -

The company has acquired Financial Synergy for $90m, to be funded by a placement and share purchase plan. Macquarie observes this is the first foray by Iress into fund administration software but there are client synergies.

The broker estimates the transaction to be marginally accretive. The company's successful penetration into the UK wealth management market will provide the key upside/downside risk for Iress, Macquarie believes.

Neutral rating and $11.19 target retained.

Target price is $11.19 Current Price is $11.88 Difference: minus $0.69 (current price is over target).
If IRE meets the Macquarie target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $11.92, suggesting upside of 2.4% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY16:

Macquarie forecasts a full year FY16 dividend of 46.00 cents and EPS of 47.10 cents.
At the last closing share price the estimated dividend yield is 3.87%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 25.22.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 44.5, implying annual growth of 26.4%.

Current consensus DPS estimate is 45.4, implying a prospective dividend yield of 3.9%.

Current consensus EPS estimate suggests the PER is 26.2.

Forecast for FY17:

Macquarie forecasts a full year FY17 dividend of 52.00 cents and EPS of 53.70 cents.
At the last closing share price the estimated dividend yield is 4.38%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 22.12.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 51.6, implying annual growth of 16.0%.

Current consensus DPS estimate is 50.8, implying a prospective dividend yield of 4.4%.

Current consensus EPS estimate suggests the PER is 22.6.

Market Sentiment: 0.5

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

JHC  JAPARA HEALTHCARE LIMITED

Health Care Equipment & Services

Overnight Price: $2.12

UBS rates JHC as Buy (1) -

UBS channel checks suggest the aged care sector is capable of mitigating at least 50% of the cuts to the aged care funding instrument via higher occupancy, reclassification and revenue for additional services.

UBS makes reductions of around 8% to EBITDA for FY19.  Buy retained. Target falls to $2.65 from $3.05.

Target price is $2.65 Current Price is $2.12 Difference: $0.53
If JHC meets the UBS target it will return approximately 25% (excluding dividends, fees and charges).

Current consensus price target is $2.32, suggesting upside of 14.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

UBS forecasts a full year FY17 dividend of 13.00 cents and EPS of 13.10 cents.
At the last closing share price the estimated dividend yield is 6.13%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 16.18.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 12.8, implying annual growth of 10.9%.

Current consensus DPS estimate is 12.7, implying a prospective dividend yield of 6.3%.

Current consensus EPS estimate suggests the PER is 15.8.

Forecast for FY18:

UBS forecasts a full year FY18 dividend of 14.00 cents and EPS of 13.80 cents.
At the last closing share price the estimated dividend yield is 6.60%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 15.36.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 12.9, implying annual growth of 0.8%.

Current consensus DPS estimate is 13.1, implying a prospective dividend yield of 6.5%.

Current consensus EPS estimate suggests the PER is 15.7.

Market Sentiment: 0.3

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

OZL  OZ MINERALS LIMITED

Materials

Overnight Price: $6.28

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

Morgan Stanley updates its price deck, with near-term headwinds seen in copper and the currency. Copper price forecasts are revised down 0.4% and 2.2% for FY17 and FY18 respectively.

The revisions put negative pressure on earnings for domestic copper producers. With the equity trading close to the base case valuation the broker's Equal-weight rating is retained. Target is lowered to $5.80 from $6.20. Industry view: Attractive.

Target price is $5.80 Current Price is $6.28 Difference: minus $0.48 (current price is over target).
If OZL meets the Morgan Stanley target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.93, suggesting downside of -2.9% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY16:

Morgan Stanley forecasts a full year FY16 dividend of 5.00 cents and EPS of 33.00 cents.
At the last closing share price the estimated dividend yield is 0.80%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 19.03.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 33.9, implying annual growth of -21.0%.

Current consensus DPS estimate is 11.1, implying a prospective dividend yield of 1.8%.

Current consensus EPS estimate suggests the PER is 18.0.

Forecast for FY17:

Morgan Stanley forecasts a full year FY17 dividend of 16.00 cents and EPS of 35.00 cents.
At the last closing share price the estimated dividend yield is 2.55%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 17.94.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 32.0, implying annual growth of -5.6%.

Current consensus DPS estimate is 13.0, implying a prospective dividend yield of 2.1%.

Current consensus EPS estimate suggests the PER is 19.1.

Market Sentiment: -0.3

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

REG  REGIS HEALTHCARE LIMITED

Health Care Equipment & Services

Overnight Price: $4.50

UBS rates REG as Buy (1) -

UBS channel checks suggest the aged care sector is capable of mitigating at least 50% of the cuts to the aged care funding instrument via higher occupancy, reclassification and revenue for additional services.

UBS makes reductions of around 8% to EBITDA for FY19. Buy retained. Target is lowered to $4.80 from $5.45.

Target price is $4.80 Current Price is $4.50 Difference: $0.3
If REG meets the UBS target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $5.05, suggesting upside of 13.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

UBS forecasts a full year FY17 dividend of 21.00 cents and EPS of 20.40 cents.
At the last closing share price the estimated dividend yield is 4.67%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 22.06.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 20.6, implying annual growth of 34.3%.

Current consensus DPS estimate is 20.2, implying a prospective dividend yield of 4.6%.

Current consensus EPS estimate suggests the PER is 21.5.

Forecast for FY18:

UBS forecasts a full year FY18 dividend of 22.00 cents and EPS of 21.30 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 21.13.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 22.0, implying annual growth of 6.8%.

Current consensus DPS estimate is 22.2, implying a prospective dividend yield of 5.0%.

Current consensus EPS estimate suggests the PER is 20.1.

Market Sentiment: 0.8

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

RIO  RIO TINTO LIMITED

Materials

Overnight Price: $50.38

Morgan Stanley rates RIO as Overweight (1) -

Morgan Stanley's quarterly update on commodity prices brings better bulks into the base case. 

The most notable forecast changes are hard coking coal, up 18% for 2016 and 29% for 2017 followed by iron ore up 11% in 2016 and 27% in 2017 then thermal coal, up 13% in both years.

Overweight rating, In-Line sector view retained. Target rises to $59.50 from $55.50.

Target price is $59.50 Current Price is $50.38 Difference: $9.12
If RIO meets the Morgan Stanley target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $55.10, suggesting upside of 10.7% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY16:

Morgan Stanley forecasts a full year FY16 dividend of 163.07 cents and EPS of 275.85 cents.
At the last closing share price the estimated dividend yield is 3.24%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 18.26.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 264.0, implying annual growth of N/A.

Current consensus DPS estimate is 146.5, implying a prospective dividend yield of 2.9%.

Current consensus EPS estimate suggests the PER is 18.9.

Forecast for FY17:

Morgan Stanley forecasts a full year FY17 dividend of 163.07 cents and EPS of 341.08 cents.
At the last closing share price the estimated dividend yield is 3.24%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.77.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 277.2, implying annual growth of 5.0%.

Current consensus DPS estimate is 154.1, implying a prospective dividend yield of 3.1%.

Current consensus EPS estimate suggests the PER is 18.0.

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

SAI  SAI GLOBAL LIMITED

Commercial Services & Supplies

Overnight Price: $4.62

ADDED

Deutsche Bank rates SAI as Hold (3) -

The company has entered into a scheme implementation deed with Baring Asia, which will acquire the shares not already owned at $4.75 cash per share. The scheme is unanimously recommended by the board.

The offer is a 25% premium to Deutsche Bank's valuation. Target rises to $4.75 from $3.80 in line with the offer price.

Target price is $4.75 Current Price is $4.62 Difference: $0.13
If SAI meets the Deutsche Bank target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $4.06, suggesting downside of -12.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Deutsche Bank forecasts a full year FY17 dividend of 18.00 cents and EPS of 30.00 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 15.40.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 29.5, implying annual growth of 18.5%.

Current consensus DPS estimate is 17.7, implying a prospective dividend yield of 3.8%.

Current consensus EPS estimate suggests the PER is 15.7.

Forecast for FY18:

Deutsche Bank forecasts a full year FY18 dividend of 20.00 cents and EPS of 33.00 cents.
At the last closing share price the estimated dividend yield is 4.33%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.00.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 31.8, implying annual growth of 7.8%.

Current consensus DPS estimate is 19.5, implying a prospective dividend yield of 4.2%.

Current consensus EPS estimate suggests the PER is 14.6.

Market Sentiment: 0.0

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


UPDATED

Macquarie rates SAI as Neutral (3) -

SAI Global has an implementation agreement for Baring Asia to acquire the remaining shares it does not own at $4.75 a share.

Macquarie believes the offer is reasonable given a view that there are long-term headwinds facing standards and property services and in light of the value of the assurance business.

Neutral retained with the target raised to $4.75 from $3.65 to incorporate the takeover premium.

Target price is $4.75 Current Price is $4.62 Difference: $0.13
If SAI meets the Macquarie target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $4.06, suggesting downside of -12.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Macquarie forecasts a full year FY17 dividend of 16.80 cents and EPS of 30.60 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 15.10.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 29.5, implying annual growth of 18.5%.

Current consensus DPS estimate is 17.7, implying a prospective dividend yield of 3.8%.

Current consensus EPS estimate suggests the PER is 15.7.

Forecast for FY18:

Macquarie forecasts a full year FY18 dividend of 17.70 cents and EPS of 32.20 cents.
At the last closing share price the estimated dividend yield is 3.83%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.35.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 31.8, implying annual growth of 7.8%.

Current consensus DPS estimate is 19.5, implying a prospective dividend yield of 4.2%.

Current consensus EPS estimate suggests the PER is 14.6.

Market Sentiment: 0.0

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


UPDATED

UBS rates SAI as Neutral (3) -

The company has a binding implementation agreement with Baring Asia to acquire the shares it does not own in SAI for $4.75 a share. Directors have unanimously recommended shareholders vote in favour of the scheme.

UBS calculates the offer price implies a price/earnings ratio in FY17 of 15.5x which increases to 20.2x if adjusted for the Standards Australia business.

Neutral rating and $3.65 target retained.

Target price is $3.65 Current Price is $4.62 Difference: minus $0.97 (current price is over target).
If SAI meets the UBS target it will return approximately minus 21% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.06, suggesting downside of -12.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

UBS forecasts a full year FY17 dividend of 18.00 cents and EPS of 31.00 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 14.90.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 29.5, implying annual growth of 18.5%.

Current consensus DPS estimate is 17.7, implying a prospective dividend yield of 3.8%.

Current consensus EPS estimate suggests the PER is 15.7.

Forecast for FY18:

UBS forecasts a full year FY18 dividend of 19.00 cents and EPS of 32.00 cents.
At the last closing share price the estimated dividend yield is 4.11%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.44.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 31.8, implying annual growth of 7.8%.

Current consensus DPS estimate is 19.5, implying a prospective dividend yield of 4.2%.

Current consensus EPS estimate suggests the PER is 14.6.

Market Sentiment: 0.0

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

SFR  SANDFIRE RESOURCES NL

Materials

Overnight Price: $5.37

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

Morgan Stanley updates its price deck, with near-term headwinds seen in copper and the currency. Copper price forecasts are revised down 0.4% and 2.2% for FY17 and FY18 respectively.

The revisions put negative pressure on earnings for domestic copper producers.

The broker retains an Equal-weight rating on Sandfire. Target is reduced to $5.10 from $5.90. Industry view is Attractive.

Target price is $5.10 Current Price is $5.37 Difference: minus $0.27 (current price is over target).
If SFR meets the Morgan Stanley target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.61, suggesting upside of 8.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Morgan Stanley forecasts a full year FY17 dividend of 6.00 cents and EPS of 39.00 cents.
At the last closing share price the estimated dividend yield is 1.12%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 13.77.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 31.8, implying annual growth of 4.1%.

Current consensus DPS estimate is 9.3, implying a prospective dividend yield of 1.8%.

Current consensus EPS estimate suggests the PER is 16.3.

Forecast for FY18:

Morgan Stanley forecasts a full year FY18 dividend of 13.00 cents and EPS of 63.00 cents.
At the last closing share price the estimated dividend yield is 2.42%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 8.52.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 52.2, implying annual growth of 64.2%.

Current consensus DPS estimate is 16.5, implying a prospective dividend yield of 3.2%.

Current consensus EPS estimate suggests the PER is 9.9.

Market Sentiment: 0.1

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

WES  WESFARMERS LIMITED

Food & Staples Retailing

Overnight Price: $43.73

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

Morgan Stanley's quarterly update on commodity prices brings better bulks into the base case.

The most notable forecast changes are hard coking coal, up 18% for 2016 and 29% for 2017 followed by iron ore up 11% in 2016 and 27% in 2017 then thermal coal, up 13% in both years.

Morgan Stanley lifts earnings per share forecasts for Wesfarmers by 5-6%. Equal-weight rating and In-Line sector view retained. Target is raised to $43 from $42.

Target price is $43.00 Current Price is $43.73 Difference: minus $0.73 (current price is over target).
If WES meets the Morgan Stanley target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $42.06, suggesting downside of -4.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Morgan Stanley forecasts a full year FY17 dividend of 209.00 cents and EPS of 257.00 cents.
At the last closing share price the estimated dividend yield is 4.78%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 17.02.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 238.7, implying annual growth of 559.4%.

Current consensus DPS estimate is 200.9, implying a prospective dividend yield of 4.5%.

Current consensus EPS estimate suggests the PER is 18.5.

Forecast for FY18:

Morgan Stanley forecasts a full year FY18 dividend of 221.00 cents and EPS of 272.00 cents.
At the last closing share price the estimated dividend yield is 5.05%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 16.08.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 259.2, implying annual growth of 8.6%.

Current consensus DPS estimate is 215.1, implying a prospective dividend yield of 4.9%.

Current consensus EPS estimate suggests the PER is 17.1.

Market Sentiment: 0.0

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

WHC  WHITEHAVEN COAL LIMITED

Energy

Overnight Price: $2.58

Morgan Stanley rates WHC as Overweight (1) -

Morgan Stanley's quarterly update on commodity prices brings better bulks into the base case. Whitehaven Coal has volume growth, product mix and price realisation to bolster earnings.

The most notable forecast changes are hard coking coal, up 18% for 2016 and 29% for 2017 followed by iron ore up 11% in 2016 and 27% in 2017 then thermal coal, up 13% in both years.

Target is raised to $3.10 from $2.25. Overweight rating and Attractive industry view retained.

Target price is $3.10 Current Price is $2.58 Difference: $0.52
If WHC meets the Morgan Stanley target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $2.15, suggesting downside of -13.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Morgan Stanley forecasts a full year FY17 dividend of 0.00 cents and EPS of 30.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 8.60.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 14.4, implying annual growth of 585.7%.

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

Current consensus EPS estimate suggests the PER is 17.3.

Forecast for FY18:

Morgan Stanley forecasts a full year FY18 dividend of 0.00 cents and EPS of 37.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 6.97.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 13.6, implying annual growth of -5.6%.

Current consensus DPS estimate is 0.6, implying a prospective dividend yield of 0.2%.

Current consensus EPS estimate suggests the PER is 18.3.

Market Sentiment: -0.1

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

Summaries
BHP - BHP BILLITON Overweight - Morgan Stanley Overnight Price $21.55
EHE - ESTIA HEALTH Buy - UBS Overnight Price $3.47
FMG - FORTESCUE Downgrade to Underweight from Equal-weight - Morgan Stanley Overnight Price $4.95
IRE - IRESS MARKET TECHN Buy - Deutsche Bank Overnight Price $11.88
Neutral - Macquarie Overnight Price $11.88
JHC - JAPARA HEALTHCARE Buy - UBS Overnight Price $2.12
OZL - OZ MINERALS Equal-weight - Morgan Stanley Overnight Price $6.28
REG - REGIS HEALTHCARE Buy - UBS Overnight Price $4.50
RIO - RIO TINTO Overweight - Morgan Stanley Overnight Price $50.38
SAI - SAI GLOBAL Hold - Deutsche Bank Overnight Price $4.62
Neutral - Macquarie Overnight Price $4.62
Neutral - UBS Overnight Price $4.62
SFR - SANDFIRE Equal-weight - Morgan Stanley Overnight Price $5.37
WES - WESFARMERS Equal-weight - Morgan Stanley Overnight Price $43.73
WHC - WHITEHAVEN COAL Overweight - Morgan Stanley Overnight Price $2.58
RATING SUMMARY
Rating No. Of Recommendations
1. Buy

7

3. Hold

7

5. Sell

1

Tuesday 27 September 2016

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Disclaimer:
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.