Australian Broker Call

Morgan Stanley rates AD8 as Initiation of coverage with Overweight (1) -

Audinate has a dominant position in the networked audio industry. The company's Dante product eco-system is the largest globally. Morgan Stanley envisages opportunity in the superior economics as there is pricing power, scale and software-like profitability.

The broker initiates coverage with an Overweight rating and $10.30 target. Industry view is In-Line.

Target price is $10.30 Current Price is $8.22 Difference: $2.08
If AD8 meets the Morgan Stanley target it will return approximately 25% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 1.0

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

Macquarie rates ASX as Underperform (5) -

ASX June quarter data showed strong trading activity, improved M&A but weak IPO action. Investment spreads continued to contract on falling rates. The defensive nature of earnings has underpinned ongoing re-rating for the stock.

But on a 34x PE and paying less than a 3% yield, the broker cannot justify valuation. Underperform retained, target rises to $65.50 from $55.50.

Target price is $65.50 Current Price is $85.83 Difference: minus $20.33 (current price is over target).
If ASX meets the Macquarie target it will return approximately minus 24% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $62.11, suggesting downside of -27.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: -0.8

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

UBS rates BAP as Buy (1) -

The company has briefed investors, providing a site tour across its trade, retail and specialist wholesale operations. There is no change to FY19 net profit guidance or observations that recent trading conditions remain tough.

UBS continues to believe the private-label target of 35% or more in trade is achievable and there are a number of categories identified for expansion. A Buy rating is reiterated along with a $6.60 target.

Target price is $6.60 Current Price is $5.98 Difference: $0.62
If BAP meets the UBS target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $6.86, suggesting upside of 14.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 1.0

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

Morgans rates BGA as Hold (3) -

As dry conditions continue and farming costs increase, Australia's milk supply is expected to decline again in FY20. Dairy Australia forecasts Australian milk supply to contract a further -3-5% in FY20 after declining by -7-9% in FY19.

Morgans reduces FY20 estimates for net profit by -15.9%. However, in FY20 and FY21 the company should benefit from improved global dairy prices as well as its growth projects. The broker maintains a Hold rating and reduces the target to $4.60 from $5.12.

Target price is $4.60 Current Price is $4.58 Difference: $0.02
If BGA meets the Morgans target it will return approximately 0% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.5

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

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

Credit Suisse now incorporates a lower net interest margin to account for the lower cash rate. The broker downgrades to Neutral from Outperform because of the recent strong performance in the bank's share price.

Earnings forecasts are reduced but lower long-term bond yields are now assumed in the three-year model for the target, and the target has increased to $79 from $76 as a result.

Target price is $79.00 Current Price is $81.57 Difference: minus $2.57 (current price is over target).
If CBA meets the Credit Suisse target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $71.25, suggesting downside of -12.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: -0.4

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

Citi rates ECX as Buy (1) -

The company will divest Grays Online and AreYouSelling, incurring a -$100m loss in the second half accounts. Citi notes, the company's lenders will not include the loss in the next covenant testing.

With more divestments expected, the broker envisages upside in EclipX as valuation starts to reflect a more stable core business. Buy/High Risk rating and $1.29 target maintained.

Target price is $1.29 Current Price is $1.48 Difference: minus $0.19 (current price is over target).
If ECX meets the Citi target it will return approximately minus 13% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $1.44, suggesting downside of -2.7% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.8

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

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

The company will sell GraysOnline and AreYouSelling for $60m. Morgan Stanley considers this a positive step towards simplifying the business.

Combined, the broker values the non-core business units at $90-130m, with GraysOnline making up the majority of the value at $40-60m.

Equal-weight rating. Industry view is In-Line. Target is $1.35.

Target price is $1.35 Current Price is $1.48 Difference: minus $0.13 (current price is over target).
If ECX 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 $1.44, suggesting downside of -2.7% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.8

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

UBS rates ECX as Buy (1) -

The company will divest GraysOnline and AreYouSelling for $60m to Quadrant Private Equity. The transaction includes a distribution agreement, allowing EclipX to continue benefiting from utilisation of Grays automotive segment as a disposal channel.

The timing of the divestments and value are ahead of UBS estimates and the sale will result in a non-cash loss of -$100m, recognised in the second half.

Further catalysts, the broker concludes, include the refinance of corporate debt, sale of commercial equipment finance and the sale of Right2Drive. UBS puts its Buy rating and $1.50 target under review.

Target price is $1.50 Current Price is $1.48 Difference: $0.02
If ECX meets the UBS target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $1.44, suggesting downside of -2.7% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.8

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

Citi rates MFG as Neutral (3) -

Citi lifts FY19 and FY20 estimates for earnings per share by 10% to reflect a positive marking to market and higher performance fees.

The broker retains a Neutral rating but increases the target to $54.00 from $39.80, now including a 20% valuation premium to reflect inflow momentum and robust investment performance.

Target price is $54.00 Current Price is $54.50 Difference: minus $0.5 (current price is over target).
If MFG meets the Citi target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $40.93, suggesting downside of -24.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: -0.3

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

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

The business continues to enjoy considerably stronger net flows relative to peers but UBS suspects this growth driver is moderating. With the shares up 135% in 2019 to date, the broker notes the FY20 dividend yield outlook is compressed to 3.5%, notwithstanding the increased pay-out policy.

Valuation metrics appear increasingly stretched and UBS downgrades to Sell from Neutral. Target rises to $42.00 from $35.50.

Target price is $42.00 Current Price is $54.50 Difference: minus $12.5 (current price is over target).
If MFG meets the UBS target it will return approximately minus 23% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $40.93, suggesting downside of -24.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: -0.3

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

Ord Minnett rates MMS as Hold (3) -

The recent update disappointed Ord Minnett, as guidance for FY19 net profit was -5.7% below its estimates. Several challenges are facing McMillan Shakespeare including weakness in the retail car market.

The UK asset management business has also had difficulties and the company has taken a -$3.7m provision for the UK business. The RFS warranty business will incur a write-off of its remaining goodwill.

The company has commenced a process to undertake an off-market share buyback but no final decision has been made. Ord Minnett maintains a Hold rating and reduces the target to $12.50 from $13.50.

Target price is $12.50 Current Price is $12.76 Difference: minus $0.26 (current price is over target).
If MMS meets the Ord Minnett target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $14.36, suggesting upside of 12.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.6

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

Macquarie rates NSR as Underperform (5) -

National Storage REIT is now guiding to FY19 earnings being flat on FY18, thus at the bottom end of the prior range. The number of acquisitions made in FY19 was greater than expected, but lower housing market turnover reduced underlying earnings, the broker notes.

The broker suggests signs of improvement in housing may provide a tailwind in FY20, but remains cautious on financial returns from acquisitions. At 5.5%, the REIT's yield is nothing special either. Target rises to $1.47 from $1.25, Underperform retained.

Target price is $1.47 Current Price is $1.76 Difference: minus $0.29 (current price is over target).
If NSR meets the Macquarie target it will return approximately minus 16% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $1.72, suggesting downside of -2.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: -0.2

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

Credit Suisse rates OGC as Neutral (3) -

The Didipio operation in the Philippines appears to be at risk of disruption as a contingent of locals are blockading access roads and prohibiting supply trucks reaching the mine. Light vehicles, personnel and food supply continue to access the site unimpeded.

The timing appears related to the recent expiration of the current agreement that provides a license and fiscal operating terms for the mine. The company has filed for an injunction against any unauthorised restraint of its operations with a hearing date set for July 10.

More broadly, Credit Suisse points out the incident highlights the challenges of operating in a tier-2 mining jurisdiction. However, the latest incident is expected to be a temporary disruption only. Neutral rating and $4.25 target maintained.

Target price is $4.25 Current Price is $3.70 Difference: $0.55
If OGC meets the Credit Suisse target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $4.76, suggesting upside of 28.6% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY19:

Forecast for FY20:

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

Market Sentiment: 0.3

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

Ord Minnett rates OML as Accumulate (2) -

Data from the Outdoor Media Association reveals revenue in Australia was up 5.2% in the June quarter. Ord Minnett finds this surprisingly positive, given the industry was cycling 14.2% growth a year ago and the period was affected by the NSW and federal elections.

The broker notes growth in expenditure in outdoor advertising has been driven by digitisation, increasing supply and changes in consumption patterns. Accumulate rating maintained. Target is $4.60.

Target price is $4.60 Current Price is $4.32 Difference: $0.28
If OML meets the Ord Minnett target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $4.69, suggesting upside of 8.5% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.9

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

UBS rates ORG as Buy (1) -

Following the reduction in free cash flow from APLNG, arising from the Queensland government's decision to increase well head royalty taxes, and the company's decision to lower retail prices following its annual tariff review, UBS reduces the target to $8.85 from $9.15.

The broker now expects FY20 energy market operating earnings (EBITDA) to be around $1.4bn. The headwinds are expected to be offset by increasing cash distributions from APLNG, as $1bn is expected in FY20. The broker maintains a Buy rating.

Target price is $8.85 Current Price is $7.60 Difference: $1.25
If ORG meets the UBS target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $8.17, suggesting upside of 7.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.6

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

Ord Minnett rates SEK as Accumulate (2) -

Ord Minnett notes a significant slowdown in job vacancies nationwide in the quarter ending May 2019. Job vacancies decreased -0.8%, the latest data from the Australian Bureau of Statistics revealed.

ABS data are now negative but still better than the data reported by Seek, in the broker's observations. Ord Minnett maintains an Accumulate rating and $22 target.

Target price is $22.00 Current Price is $21.80 Difference: $0.2
If SEK meets the Ord Minnett target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $19.76, suggesting downside of -9.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: -0.1

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

Ord Minnett rates VOL as Initiation of coverage with Buy (1) -

Victory Offices is a serviced office and co-working provider with workplace solutions across major capitals. The company has maintained high rates of occupancy since its founding in 2013, Ord Minnett observes, which has allowed for strong earnings growth.

The broker assesses a three-year compound growth rate in earnings per share of 17.4%, while an FY20 PE of 8.6x represents an attractive entry point. Coverage is initiated with a Buy rating and $2.53 target.

Target price is $2.53 Current Price is $2.20 Difference: $0.33
If VOL meets the Ord Minnett target it will return approximately 15% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 1.0

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