Australian Broker Call
September 25, 2017
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COMPANIES DISCUSSED IN THIS ISSUE
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Last Updated: 11:44 AM
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
| IGO - | INDEPENDENCE GROUP | Downgrade to Neutral from Buy | Citi |
| PRU - | PERSEUS MINING | Upgrade to Buy from Neutral | Citi |
| RRL - | REGIS RESOURCES | Downgrade to Sell from Neutral | Citi |
Ord Minnett rates BHP as Hold (3) -
Ord Minnett is encouraged by the prospect of a cultural and financial turnaround at BHP.
Nevertheless, a new medium-term strategy is yet to be defined and the broker considers there are execution risks around disposals and capital management decisions.
Hold rating. Target raised to $29 from $27.
This stock is not covered in-house by Ord Minnett. Instead, the broker whitelabels research by JP Morgan.
Target price is $29.00 Current Price is $25.95 Difference: $3.05
If BHP meets the Ord Minnett target it will return approximately 12% (excluding dividends, fees and charges).
Current consensus price target is $28.61, suggesting upside of 9.8% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Ord Minnett forecasts a full year FY18 dividend of 139.22 cents and EPS of 198.32 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 161.4, implying annual growth of N/A. Current consensus DPS estimate is 99.3, implying a prospective dividend yield of 3.8%. Current consensus EPS estimate suggests the PER is 16.1. |
Forecast for FY19:
Ord Minnett forecasts a full year FY19 dividend of 124.77 cents and EPS of 173.37 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 146.5, implying annual growth of -9.2%. Current consensus DPS estimate is 92.6, implying a prospective dividend yield of 3.6%. Current consensus EPS estimate suggests the PER is 17.8. |
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
Citi rates BKW as Neutral (3) -
Citi believes the confidence exhibited by management regarding the next 3-6 months in the order book does not mitigate the upcoming reduction in new residential activity.
Despite new residential completions forecast to be up 9% in FY17, volumes appear to have fallen by -4.4% year-on-year.
With energy costs likely to rise, the recently announced price increases will need to stick in a market that is starting to slow, and this does not bode well, in the broker's opinion, for the medium to longer term.
Neutral rating retained. Target is raised $14.53 from $14.45.
Target price is $14.53 Current Price is $13.87 Difference: $0.66
If BKW meets the Citi target it will return approximately 5% (excluding dividends, fees and charges).
Current consensus price target is $14.55, suggesting upside of 5.8% (ex-dividends)
The company's fiscal year ends in July.
Forecast for FY18:
Citi forecasts a full year FY18 dividend of 54.00 cents and EPS of 106.80 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 107.3, implying annual growth of -14.1%. Current consensus DPS estimate is 55.3, implying a prospective dividend yield of 4.0%. Current consensus EPS estimate suggests the PER is 12.8. |
Forecast for FY19:
Citi forecasts a full year FY19 dividend of 58.90 cents and EPS of 106.10 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 102.0, implying annual growth of -4.9%. Current consensus DPS estimate is 55.7, implying a prospective dividend yield of 4.0%. Current consensus EPS estimate suggests the PER is 13.5. |
Market Sentiment: 0.3
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Deutsche Bank rates CBA as Hold (3) -
Deutsche Bank considers the sale of the life insurance business a good outcome. This facilitates the exit from capital-intensive business which has a reputation risk and is increasingly regarded as non-core.
The strategic review of the asset management business further confirms an ongoing move away from non-core, in the broker's opinion.
Hold retained. Target reduced to $80.00 from $84.30.
Target price is $80.00 Current Price is $76.62 Difference: $3.38
If CBA meets the Deutsche Bank target it will return approximately 4% (excluding dividends, fees and charges).
Current consensus price target is $77.63, suggesting upside of 1.1% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Deutsche Bank forecasts a full year FY18 dividend of 442.00 cents and EPS of 592.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 575.0, implying annual growth of -0.5%. Current consensus DPS estimate is 437.1, implying a prospective dividend yield of 5.7%. Current consensus EPS estimate suggests the PER is 13.3. |
Forecast for FY19:
Deutsche Bank forecasts a full year FY19 dividend of 449.00 cents and EPS of 583.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 576.6, implying annual growth of 0.3%. Current consensus DPS estimate is 444.2, implying a prospective dividend yield of 5.8%. Current consensus EPS estimate suggests the PER is 13.3. |
Market Sentiment: -0.1
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Morgan Stanley rates CBA as Underweight (5) -
Morgan Stanley observes for the first time in many years the bank's strategy is changing. CBA has concluded it no longer needs to manufacture life insurance, a view the broker shares. The bank is also undertaking a strategic review of global asset management.
While the price/earnings premium to peers has contracted to its lowest level since 2010, the broker believes the premium was inflated previously because of retail banking outperformance and company-specific problems at ANZ ((ANZ)) and National Australia Bank ((NAB)).
Morgan Stanley considers the stock overvalued. Underweight. Target is $72. Industry view is In-Line.
Target price is $72.00 Current Price is $76.62 Difference: minus $4.62 (current price is over target).
If CBA meets the Morgan Stanley target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $77.63, suggesting upside of 1.1% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Morgan Stanley forecasts a full year FY18 dividend of 432.00 cents and EPS of 566.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 575.0, implying annual growth of -0.5%. Current consensus DPS estimate is 437.1, implying a prospective dividend yield of 5.7%. Current consensus EPS estimate suggests the PER is 13.3. |
Forecast for FY19:
Morgan Stanley forecasts a full year FY19 dividend of 432.00 cents and EPS of 560.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 576.6, implying annual growth of 0.3%. Current consensus DPS estimate is 444.2, implying a prospective dividend yield of 5.8%. Current consensus EPS estimate suggests the PER is 13.3. |
Market Sentiment: -0.1
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
UBS rates DXS as Sell (5) -
UBS has reviewed office rent forecasts and the company's valuation. Valuation is lowered by -8%, reflecting a view that office asset growth has peaked and the market could start to focus more on distribution growth and real cash flow.
While the outlook for the Sydney office market appears healthy, UBS believes this is already priced in. Sell retained. Target reduced to $8.85 from $9.57.
Target price is $8.85 Current Price is $9.50 Difference: minus $0.65 (current price is over target).
If DXS meets the UBS target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $9.45, suggesting downside of -0.4% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
UBS forecasts a full year FY18 dividend of 46.30 cents and EPS of 63.90 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 58.2, implying annual growth of -55.4%. Current consensus DPS estimate is 47.3, implying a prospective dividend yield of 5.0%. Current consensus EPS estimate suggests the PER is 16.3. |
Forecast for FY19:
UBS forecasts a full year FY19 dividend of 48.10 cents and EPS of 65.10 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 58.3, implying annual growth of 0.2%. Current consensus DPS estimate is 48.2, implying a prospective dividend yield of 5.1%. Current consensus EPS estimate suggests the PER is 16.3. |
Market Sentiment: 0.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Citi rates EVN as Buy (1) -
Higher expected US dollar gold prices in the December half are more than offset by a higher AUD/USD in FY18-20, in Citi's calculation, which reduces earnings.
Evolution Mining is valued at a premium to its closest ASX peer, Northern Star ((NST)), because of larger-scale production and lower costs via copper leverage. The broker retains a preference for the stock in the gold sector.
Buy rating retained. Target is reduced to $2.60 from $2.65.
Target price is $2.60 Current Price is $2.23 Difference: $0.37
If EVN meets the Citi target it will return approximately 17% (excluding dividends, fees and charges).
Current consensus price target is $2.51, suggesting upside of 12.7% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Citi forecasts a full year FY18 dividend of 7.00 cents and EPS of 13.20 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 17.3, implying annual growth of 30.3%. Current consensus DPS estimate is 7.1, implying a prospective dividend yield of 3.2%. Current consensus EPS estimate suggests the PER is 12.9. |
Forecast for FY19:
Citi forecasts a full year FY19 dividend of 9.00 cents and EPS of 13.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 20.5, implying annual growth of 18.5%. Current consensus DPS estimate is 9.7, implying a prospective dividend yield of 4.3%. Current consensus EPS estimate suggests the PER is 10.9. |
Market Sentiment: 0.6
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Citi rates IGO as Downgrade to Neutral from Buy (3) -
Commodity analysts at Citi have updated their price deck, which has resulted, mainly, in higher price forecasts for Q4 and calendar 2018, albeit in many cases prices remain below present spot prices.
For Australian based operations the exercise has a flipside in that a stronger-for-longer Aussie dollar is, despite the above, triggering downgrades to forecasts. This is partially offset by higher valuation multiples for the sector overall.
Citi is now projecting AUD/USD to remain above 80c for the next three years. On the back of all of this, Independence Group's rating has been downgraded to Neutral from Buy. Price target falls to $3.67 from $3.82.
Target price is $3.67 Current Price is $3.39 Difference: $0.28
If IGO meets the Citi target it will return approximately 8% (excluding dividends, fees and charges).
Current consensus price target is $3.48, suggesting upside of 3.4% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Citi forecasts a full year FY18 EPS of 28.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 25.8, implying annual growth of 780.5%. Current consensus DPS estimate is 7.8, implying a prospective dividend yield of 2.3%. Current consensus EPS estimate suggests the PER is 13.0. |
Forecast for FY19:
Citi forecasts a full year FY19 EPS of 28.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 33.6, implying annual growth of 30.2%. Current consensus DPS estimate is 11.7, implying a prospective dividend yield of 3.5%. Current consensus EPS estimate suggests the PER is 10.0. |
Market Sentiment: 0.2
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Morgan Stanley rates MTS as Overweight (1) -
Morgan Stanley believes the honeymoon is over for supermarkets, as comparables get tougher, food inflation builds and Aldi and Amazon provide competition.
While valuations for both Woolworths ((WOW)) and Wesfarmers ((WES)) appear stretched, cost reductions should mean Metcash can hold up. Morgan Stanley also believes the hardware business and capital management/acquisition opportunity in the stock offsets the pressure on the food business.
Overweight rating maintained. Cautious sector view. Target is raised to $3.00 from $2.80.
Target price is $3.00 Current Price is $2.75 Difference: $0.25
If MTS meets the Morgan Stanley target it will return approximately 9% (excluding dividends, fees and charges).
Current consensus price target is $2.41, suggesting downside of -10.6% (ex-dividends)
The company's fiscal year ends in April.
Forecast for FY18:
Morgan Stanley forecasts a full year FY18 dividend of 13.20 cents and EPS of 22.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 20.8, implying annual growth of 16.2%. Current consensus DPS estimate is 12.1, implying a prospective dividend yield of 4.5%. Current consensus EPS estimate suggests the PER is 13.0. |
Forecast for FY19:
Morgan Stanley forecasts a full year FY19 dividend of 14.00 cents and EPS of 23.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 22.3, implying annual growth of 7.2%. Current consensus DPS estimate is 14.2, implying a prospective dividend yield of 5.3%. Current consensus EPS estimate suggests the PER is 12.1. |
Market Sentiment: 0.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Morgans rates OSH as Add (1) -
Stockbroker Morgans notes the PNG government has sold its entire 10% stake in Oil Search to help fund its share of future LNG growth in PNG. Apparently, the shares have been sold off gradually over the past few years.
The analysts suggest maybe now the road is open for the share price to close the gap with their price target? Add rating retained, as well as the $10.31 price target.
Target price is $10.31 Current Price is $6.84 Difference: $3.47
If OSH meets the Morgans target it will return approximately 51% (excluding dividends, fees and charges).
Current consensus price target is $7.53, suggesting upside of 8.8% (ex-dividends)
The company's fiscal year ends in December.
Forecast for FY17:
Morgans forecasts a full year FY17 dividend of 10.51 cents and EPS of 23.64 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 36.1, implying annual growth of N/A. Current consensus DPS estimate is 9.0, implying a prospective dividend yield of 1.3%. Current consensus EPS estimate suggests the PER is 19.2. |
Forecast for FY18:
Morgans forecasts a full year FY18 dividend of 15.76 cents and EPS of 38.09 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 23.2, implying annual growth of -35.7%. Current consensus DPS estimate is 10.3, implying a prospective dividend yield of 1.5%. Current consensus EPS estimate suggests the PER is 29.8. |
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
Citi rates OZL as Buy (1) -
Higher expected US dollar gold and base metal prices in the December half are more than offset by a higher AUD/USD in FY18-20, in Citi's calculation, which reduces earnings.
The stock remains the broker's number one pick in the base metal sector. Buy retained. Target is lowered to $9.10 from $10.10.
Target price is $9.10 Current Price is $7.42 Difference: $1.68
If OZL meets the Citi target it will return approximately 23% (excluding dividends, fees and charges).
Current consensus price target is $8.43, suggesting upside of 13.8% (ex-dividends)
The company's fiscal year ends in December.
Forecast for FY17:
Citi forecasts a full year FY17 dividend of 20.00 cents and EPS of 61.40 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 52.3, implying annual growth of 46.5%. Current consensus DPS estimate is 14.4, implying a prospective dividend yield of 1.9%. Current consensus EPS estimate suggests the PER is 14.2. |
Forecast for FY18:
Citi forecasts a full year FY18 dividend of 26.00 cents and EPS of 38.70 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 31.3, implying annual growth of -40.2%. Current consensus DPS estimate is 12.3, implying a prospective dividend yield of 1.7%. Current consensus EPS estimate suggests the PER is 23.7. |
Market Sentiment: 0.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Citi rates PRU as Upgrade to Buy from Neutral (1) -
Commodity analysts at Citi have updated their price deck, which has resulted, mainly, in higher price forecasts for Q4 and calendar 2018, albeit in many cases prices remain below present spot prices.
For Australian based operations the exercise has a flipside in that a stronger-for-longer Aussie dollar is, despite the above, triggering downgrades to forecasts. This is partially offset by higher valuation multiples for the sector overall.
Citi is now projecting AUD/USD to remain above 80c for the next three years. Perseus Mining is the sole recipient of a recommendation upgrade following all of the above; to Buy/High Risk from Neutral. Price target jumps to 53c from 36c.
Target price is $0.53 Current Price is $0.34 Difference: $0.195
If PRU meets the Citi target it will return approximately 58% (excluding dividends, fees and charges).
Current consensus price target is $0.48, suggesting upside of 40.6% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Citi forecasts a full year FY18 dividend of 0.00 cents and EPS of 0.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 2.0, 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 17.0. |
Forecast for FY19:
Citi forecasts a full year FY19 dividend of 0.00 cents and EPS of 5.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 3.7, implying annual growth of 85.0%. Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A. Current consensus EPS estimate suggests the PER is 9.2. |
Market Sentiment: 0.8
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Citi rates RIO as Buy (1) -
The company will distribute proceeds from the sale of the Coal & Allied assets through a US$2.5bn additional buy-back.
Full completion of the buy-backs would drive 3.6% accretion to 2019 estimates of earnings per share, in Citi's calculation. Buy rating and $66 price target retained.
Target price is $66.00 Current Price is $65.97 Difference: $0.03
If RIO meets the Citi target it will return approximately 0% (excluding dividends, fees and charges).
Current consensus price target is $72.75, suggesting upside of 8.9% (ex-dividends)
The company's fiscal year ends in December.
Forecast for FY17:
Citi forecasts a full year FY17 dividend of 404.52 cents and EPS of 644.08 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 561.5, implying annual growth of N/A. Current consensus DPS estimate is 333.1, implying a prospective dividend yield of 5.0%. Current consensus EPS estimate suggests the PER is 11.9. |
Forecast for FY18:
Citi forecasts a full year FY18 dividend of 254.79 cents and EPS of 428.95 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 492.6, implying annual growth of -12.3%. Current consensus DPS estimate is 285.0, implying a prospective dividend yield of 4.3%. Current consensus EPS estimate suggests the PER is 13.6. |
This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.
Market Sentiment: 0.8
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Credit Suisse rates RIO as Outperform (1) -
No changes made to either Outperform rating or $72 price target following announcement of an additional US$2.5bn buyback. The analysts explain Rio Tinto has effectively decided to return the Coal & Allied sale proceeds to shareholders.
Credit Suisse further assumes an incremental return for shareholders of US$4bn next year and US$2bn in 2019. Short term, the analysts see pressure from a declining iron ore price.
Target price is $72.00 Current Price is $65.97 Difference: $6.03
If RIO meets the Credit Suisse target it will return approximately 9% (excluding dividends, fees and charges).
Current consensus price target is $72.75, suggesting upside of 8.9% (ex-dividends)
The company's fiscal year ends in December.
Forecast for FY17:
Credit Suisse forecasts a full year FY17 dividend of 370.37 cents and EPS of 638.30 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 561.5, implying annual growth of N/A. Current consensus DPS estimate is 333.1, implying a prospective dividend yield of 5.0%. Current consensus EPS estimate suggests the PER is 11.9. |
Forecast for FY18:
Credit Suisse forecasts a full year FY18 dividend of 330.97 cents and EPS of 566.06 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 492.6, implying annual growth of -12.3%. Current consensus DPS estimate is 285.0, implying a prospective dividend yield of 4.3%. Current consensus EPS estimate suggests the PER is 13.6. |
This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.
Market Sentiment: 0.8
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Macquarie rates RIO as Outperform (1) -
The company has announced it will return the proceeds from the sale of the Coal & Allied assets early, through a US$2.5bn boost to the buy-back. The announcement increases the total buy-backs announced in 2017 to US$4.0bn.
This is a positive surprise to Macquarie and, should the company be successful in selling its remaining Queensland coal assets and/or Pacific Aluminium, further buy-backs are considered likely in 2018.
Outperform retained. Target is raised to $83 from $82.
Target price is $83.00 Current Price is $65.97 Difference: $17.03
If RIO meets the Macquarie target it will return approximately 26% (excluding dividends, fees and charges).
Current consensus price target is $72.75, suggesting upside of 8.9% (ex-dividends)
The company's fiscal year ends in December.
Forecast for FY17:
Macquarie forecasts a full year FY17 dividend of 409.77 cents and EPS of 671.66 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 561.5, implying annual growth of N/A. Current consensus DPS estimate is 333.1, implying a prospective dividend yield of 5.0%. Current consensus EPS estimate suggests the PER is 11.9. |
Forecast for FY18:
Macquarie forecasts a full year FY18 dividend of 286.32 cents and EPS of 482.40 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 492.6, implying annual growth of -12.3%. Current consensus DPS estimate is 285.0, implying a prospective dividend yield of 4.3%. Current consensus EPS estimate suggests the PER is 13.6. |
This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.
Market Sentiment: 0.8
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
UBS rates RIO as Buy (1) -
The company will return a further US$2.5bn to shareholders following the sale of Coal & Allied. The return of the proceeds, while expected, has come earlier than factored in and UBS commends the company for not sitting on the cash.
Buy rating retained. Target is $78.
Target price is $78.00 Current Price is $65.97 Difference: $12.03
If RIO meets the UBS target it will return approximately 18% (excluding dividends, fees and charges).
Current consensus price target is $72.75, suggesting upside of 8.9% (ex-dividends)
The company's fiscal year ends in December.
Forecast for FY17:
UBS forecasts a full year FY17 dividend of 365.12 cents and EPS of 629.10 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 561.5, implying annual growth of N/A. Current consensus DPS estimate is 333.1, implying a prospective dividend yield of 5.0%. Current consensus EPS estimate suggests the PER is 11.9. |
Forecast for FY18:
UBS forecasts a full year FY18 dividend of 334.91 cents and EPS of 558.18 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 492.6, implying annual growth of -12.3%. Current consensus DPS estimate is 285.0, implying a prospective dividend yield of 4.3%. Current consensus EPS estimate suggests the PER is 13.6. |
This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.
Market Sentiment: 0.8
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Citi rates RRL as Downgrade to Sell from Neutral (5) -
Commodity analysts at Citi have updated their price deck, which has resulted, mainly, in higher price forecasts for Q4 and calendar 2018, albeit in many cases prices remain below present spot prices.
For Australian based operations the exercise has a flipside in that a stronger-for-longer Aussie dollar is, despite the above, triggering downgrades to forecasts. This is partially offset by higher valuation multiples for the sector overall.
Citi is now projecting AUD/USD to remain above 80c for the next three years. On the back of all of this, Regis Resources' rating has been downgraded to Sell from Neutral. Price target falls to $3.60 from $4.
Target price is $3.60 Current Price is $3.77 Difference: minus $0.17 (current price is over target).
If RRL meets the Citi target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $3.57, suggesting downside of -4.0% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Citi forecasts a full year FY18 EPS of 31.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 31.4, implying annual growth of 13.8%. Current consensus DPS estimate is 17.5, implying a prospective dividend yield of 4.7%. Current consensus EPS estimate suggests the PER is 11.8. |
Forecast for FY19:
Citi forecasts a full year FY19 EPS of 30.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 35.8, implying annual growth of 14.0%. Current consensus DPS estimate is 21.1, implying a prospective dividend yield of 5.7%. Current consensus EPS estimate suggests the PER is 10.4. |
Market Sentiment: -0.8
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Citi rates SFR as Neutral (3) -
Higher expected US dollar gold and base metal pricess prices in the December half are more than offset by a higher AUD/USD in FY18-20, in Citi's calculation, which reduces earnings.
Neutral/High Risk rating retained. Target is reduced to $6.20 from $6.90. The broker values the stock at a discount to its ASX peer OZ Minerals ((OZL)) because of small-scale production and shorter mine life.
Target price is $6.20 Current Price is $5.57 Difference: $0.63
If SFR meets the Citi target it will return approximately 11% (excluding dividends, fees and charges).
Current consensus price target is $6.30, suggesting upside of 14.5% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Citi forecasts a full year FY18 dividend of 17.00 cents and EPS of 44.20 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 54.1, implying annual growth of 10.0%. Current consensus DPS estimate is 17.6, implying a prospective dividend yield of 3.2%. Current consensus EPS estimate suggests the PER is 10.2. |
Forecast for FY19:
Citi forecasts a full year FY19 dividend of 30.00 cents and EPS of 67.70 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 66.2, implying annual growth of 22.4%. Current consensus DPS estimate is 22.3, implying a prospective dividend yield of 4.1%. Current consensus EPS estimate suggests the PER is 8.3. |
Market Sentiment: -0.1
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Morgans - Cessation of coverage
Forecast for FY17:
Morgans forecasts a full year FY17 dividend of 0.00 cents and EPS of 4.00 cents. |
Forecast for FY18:
Morgans forecasts a full year FY18 dividend of 2.50 cents and EPS of 7.00 cents. |
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Deutsche Bank rates WOR as Buy (1) -
Deutsche Bank assesses the potential should a takeover proposal return to the forefront of considerations. The broker's analysis suggests there would be reasonable level of cost synergies and likely additional revenue synergies.
DAR Group made a bid for the company in November last year and, having been rejected, amassed a 19.99% stake in WorleyParsons.
While a 14-17% internal rate of return is low for a private equity fund, the broker suggests DAR Group could be attracted to the business for other reasons,, such as diversification and improving operations through collaboration.
Buy rating and $16.47 target retained.
Target price is $16.47 Current Price is $13.53 Difference: $2.94
If WOR meets the Deutsche Bank target it will return approximately 22% (excluding dividends, fees and charges).
Current consensus price target is $13.45, suggesting upside of 0.7% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Deutsche Bank forecasts a full year FY18 dividend of 43.00 cents and EPS of 66.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 67.2, implying annual growth of 397.8%. Current consensus DPS estimate is 16.4, implying a prospective dividend yield of 1.2%. Current consensus EPS estimate suggests the PER is 19.9. |
Forecast for FY19:
Deutsche Bank forecasts a full year FY19 dividend of 47.00 cents and EPS of 73.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 78.4, implying annual growth of 16.7%. Current consensus DPS estimate is 28.5, implying a prospective dividend yield of 2.1%. Current consensus EPS estimate suggests the PER is 17.0. |
Market Sentiment: 0.6
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Summaries
| BHP - | BHP BILLITON | Hold - Ord Minnett | Overnight Price $25.95 |
| BKW - | BRICKWORKS | Neutral - Citi | Overnight Price $13.87 |
| CBA - | COMMBANK | Hold - Deutsche Bank | Overnight Price $76.62 |
| Underweight - Morgan Stanley | Overnight Price $76.62 | ||
| DXS - | DEXUS PROPERTY | Sell - UBS | Overnight Price $9.50 |
| EVN - | EVOLUTION MINING | Buy - Citi | Overnight Price $2.23 |
| IGO - | INDEPENDENCE GROUP | Downgrade to Neutral from Buy - Citi | Overnight Price $3.39 |
| MTS - | METCASH | Overweight - Morgan Stanley | Overnight Price $2.75 |
| OSH - | OIL SEARCH | Add - Morgans | Overnight Price $6.84 |
| OZL - | OZ MINERALS | Buy - Citi | Overnight Price $7.42 |
| PRU - | PERSEUS MINING | Upgrade to Buy from Neutral - Citi | Overnight Price $0.34 |
| RIO - | RIO TINTO | Buy - Citi | Overnight Price $65.97 |
| Outperform - Credit Suisse | Overnight Price $65.97 | ||
| Outperform - Macquarie | Overnight Price $65.97 | ||
| Buy - UBS | Overnight Price $65.97 | ||
| RRL - | REGIS RESOURCES | Downgrade to Sell from Neutral - Citi | Overnight Price $3.77 |
| SFR - | SANDFIRE | Neutral - Citi | Overnight Price $5.57 |
| SIO - | SIMONDS GROUP | Cessation of coverage - Morgans | Overnight Price $0.34 |
| WOR - | WORLEYPARSONS | Buy - Deutsche Bank | Overnight Price $13.53 |
RATING SUMMARY
| Rating | No. Of Recommendations |
| 1. Buy | 10 |
| 3. Hold | 5 |
| 5. Sell | 3 |
Monday 25 September 2017
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