Australian Broker Call

Citi rates BKW as Neutral (3) -

Citi found first half results hard to fault as strong building activity continues along the east coast. The broker believes the company's diversified model, where property and investments account for two thirds of earnings, is proving its worth.

Nevertheless, the broker believes FY18 earnings will prove to be the peak and further upside is limited. Neutral retained. Target is lifted to $16.20 from $15.08.

Target price is $16.20 Current Price is $15.65 Difference: $0.55
If BKW meets the Citi target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $15.75, suggesting upside of 0.6% (ex-dividends)

The company's fiscal year ends in July.

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

Macquarie rates BKW as Neutral (3) -

First half results were ahead of expectations. Macquarie expects the residential cycle to continue supporting building products while the property business is a store of value for the group.

However, no catalyst is envisaged that will drive a meaningful re-rating at this stage.  Target is raised to $15.60 from $14.46. Neutral maintained.

Target price is $15.60 Current Price is $15.65 Difference: minus $0.05 (current price is over target).
If BKW meets the Macquarie target it will return approximately minus 0% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $15.75, suggesting upside of 0.6% (ex-dividends)

The company's fiscal year ends in July.

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

Morgans rates BKW as Hold (3) -

First half results were ahead of expectations and Morgans upgrades FY18 estimates for operating earnings by 20%.

Building products stood out, although with activity slowing and higher energy costs Morgans suggests earnings growth over the next few years will be more challenging.

This should be mitigated by the cross holding in WH Soul Pattinson ((SOL)) and increased property activity, the broker suggests. Hold rating. Target rises to $15.61 from $13.94.

Target price is $15.61 Current Price is $15.65 Difference: minus $0.04 (current price is over target).
If BKW meets the Morgans target it will return approximately minus 0% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $15.75, suggesting upside of 0.6% (ex-dividends)

The company's fiscal year ends in July.

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

Morgan Stanley rates BOQ as Underweight (5) -

Morgan Stanley expects slowing earnings growth will be revealed when the bank reports in April. Margins are peaking, although there may be some support from improved loan growth.

Morgan Stanley notes good cost controls and credit quality could surprise positively. The broker suggests investment in digital will take priority over further capital returns.

Underweight maintained. Target is reduced to $11.00 from $11.40. In-Line industry view retained.

Target price is $11.00 Current Price is $11.22 Difference: minus $0.22 (current price is over target).
If BOQ 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 $12.06, suggesting upside of 7.5% (ex-dividends)

The company's fiscal year ends in August.

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

Macquarie rates KLL as Outperform (1) -

The company has updated on evaporation pond and harvesting trials, having signed an agreement that could see additional revenue from the sale of salt from the Beyondie project.

Macquarie believes the trials significantly de-risk the development. Completion of the bankable feasibility study in the next few months should enable the company to move to full-scale development later in the year. Outperform rating and $0.60 target maintained.

Target price is $0.60 Current Price is $0.41 Difference: $0.19
If KLL meets the Macquarie target it will return approximately 46% (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

Ord Minnett rates MIN as Downgrade to Accumulate from Buy (2) -

Given recent share price strength, Ord Minnett downgrades its recommendation to Accumulate from Buy and lowers the target to $19.50 from $20.50.

The broker notes ASX lithium companies have largely recovered from recent concerns about oversupply. The broker prefers Orocobre ((ORE)), Galaxy Resources ((GXY)) and Kidman Resources ((KDR)) in the sector.

Target price is $19.50 Current Price is $17.50 Difference: $2
If MIN meets the Ord Minnett target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $20.85, suggesting upside of 19.1% (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

Citi rates SIG as Sell (5) -

Citi continues to believe the stock is overvalued relative to the ASX Industrials because of the structural challenges associated with the base business and the execution of its capital deployment plan.

FY19 guidance of around $90m in earnings (EBIT) suggests the base business is going backwards, since acquisitions should contribute over $3m.

The broker believes there is poor prospect for the PBS distribution business because of rising volumes and costs and assumes the company progressively loses Chemist Warehouse as a customer at the end of its current service contract in June 2019.

Sell rating maintained. Target is reduced to $0.70 from $0.74.

Target price is $0.70 Current Price is $0.80 Difference: minus $0.1 (current price is over target).
If SIG 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 $0.77, suggesting downside of -4.1% (ex-dividends)

The company's fiscal year ends in January.

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

Credit Suisse rates SIG as Neutral (3) -

FY18 results were in line with expectations. Credit Suisse expects PBS revenues to remain under pressure as some manufacturers are choosing to by-pass wholesale distributors and go directly to pharmacies.

Higher growth of non-PBS revenue and the potential winding back of the remaining trade discounts to pharmacy should raise gross profits through FY19.

Credit Suisse retains a Neutral rating and reduces the target to $0.82 from $0.84.

Target price is $0.82 Current Price is $0.80 Difference: $0.02
If SIG meets the Credit Suisse target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $0.77, suggesting downside of -4.1% (ex-dividends)

The company's fiscal year ends in January.

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 SIG as Underweight (5) -

FY18 results were broadly in line with lowered expectations. FY19 guidance is reiterated and no growth is expected.

Morgan Stanley observes the second half performance became more challenged as the year progressed, firstly from Chemist Warehouse disruption and subsequently from broader-based industry challenges. The broker suggests this is not the optimal time to be investing for growth.

Underweight rating. Target is raised to $0.80 from $0.79. Industry view is In-Line.

Target price is $0.80 Current Price is $0.80 Difference: $0
If SIG meets the Morgan Stanley target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $0.77, suggesting downside of -4.1% (ex-dividends)

The company's fiscal year ends in January.

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 SIG as Sell (5) -

FY18 results were broadly in line and remind UBS of the difficulties faced by pharmacy wholesalers. With operating expenditure running ahead of sales growth, the broker expects the challenging earnings environment to continue.

The company expects negotiations with Chemist Warehouse to continue over the balance of 2018. The current supply deal is set to lapse in June 2019.

UBS considers the share price reaction to the results is a reality check to investor expectations rather than a sign of anything operational. Sell rating maintained. Target is raised to $0.75 from $0.70.

Target price is $0.75 Current Price is $0.80 Difference: minus $0.05 (current price is over target).
If SIG meets the UBS target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $0.77, suggesting downside of -4.1% (ex-dividends)

The company's fiscal year ends in January.

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

Macquarie rates SM1 as Downgrade to Underperform from Neutral (5) -

First half results were ahead of Macquarie's forecasts. No quantitative guidance was provided for the second half but this is expected to be softer because of some margin benefits in the first half.

Macquarie downgrades to Underperform from Neutral on valuation. The strong result was supported by the success of key customers and earnings are expected to grow as infant formula volumes ramp up.

Price target is raised to NZ$7.00 from NZ$5.29.

Current Price is $8.30. Target price not assessed.

Current consensus price target is N/A

The company's fiscal year ends in July.

Forecast for FY18:

Forecast for FY19:

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

Market Sentiment: -1.0

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

Citi rates SXY as Downgrade to Sell from Neutral (5) -

Citi has downgraded to Sell/High Risk from Neutral/High Risk following a recent rally in the share price. Target price remains untouched at 35c.

As Citi has also increased its in-house forecasts for Brent and WTI oil prices by US$6 in 3Q18 to US$60/bbl and US$58/bbl respectively, earnings estimates have been lifted.

While pointing out there remains significant upside value potential, risks remain as well around well performance, cost control, gas contract pricing, funding and execution. As a result, investors are unlikely to pay up for the potential as yet, suggest the analysts.

Target price is $0.35 Current Price is $0.39 Difference: minus $0.04 (current price is over target).
If SXY meets the Citi target it will return approximately minus 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $0.41, suggesting upside of 5.9% (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

Deutsche Bank rates WES as Hold (3) -

A disappointing financial update by Kingfisher in the UK has once again highlighted to Deutsche Bank that the UK home improvement market is doing it tough. The analysts suggest this deterioration is compounding the errors made by BUKI (Wesfarmers).

While Wesfarmers won't be making drastic decisions based on cyclical moves, the analysts nevertheless believe the odds are shortening the board might approve an early exit. If this is the case, it will be a costly exercise, the analysts add, given the tough market.

Deutsche Bank's current valuation for Wesfarmers incorporates a costly exit to the tune of -$2bn. Hold rating retained, as well as $40 price target.

Target price is $40.00 Current Price is $41.96 Difference: minus $1.96 (current price is over target).
If WES meets the Deutsche Bank target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $43.06, suggesting upside of 2.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.1

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