Australian Broker Call

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

In light of quarterly results posted by US competitors IGT and SGMS and the optimistic outlooks cited by both, the broker suggests the pace of Aristocrat's market share gains could slow. The broker sees a high-quality, but cyclical business.

With FY18 upside largely factored in and growth more difficult to come by from FY19 onwards, the brokers sees little reason for the company's PE to re-rate further. Equal-weight and $26 target retained. Industry view: Cautious.

Target price is $26.00 Current Price is $24.98 Difference: $1.02
If ALL meets the Morgan Stanley target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $27.86, suggesting upside of 11.5% (ex-dividends)

The company's fiscal year ends in September.

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

Macquarie rates ALQ as Outperform (1) -

Macquarie finds the outlook for minerals favourable, while improvement in life sciences is expected in the second half and FY19.

While the stock is not cheap in absolute terms, the broker notes it is currently trading at a -20% PE discount to global diversified peers, which is below its five-year average.

Outperform maintained. Target is $8.25.

Target price is $8.25 Current Price is $7.45 Difference: $0.8
If ALQ meets the Macquarie target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $7.86, suggesting upside of 5.5% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.2

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

Macquarie rates AWE as Neutral (3) -

Mineral Resources ((MIN)) has withdrawn from the bidding for AWE and Macquarie re-sets the target at $0.95 based on the cash offer from Mitsui.

The board has unanimously recommended shareholders accept Mitsui's offer, which is at a 13% premium to the Mineral Resources offer and a 30% premium to the CERCG offer, both of which have been withdrawn.

Macquarie believes Mitsui's offer implies full de-risking of Waitsia, made possible by low-cost debt. Neutral rating.

Target price is $0.95 Current Price is $0.95 Difference: $0
If AWE meets the Macquarie target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $0.95, suggesting upside of 0.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.2

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

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

Credit Suisse upgrades FY18 estimates for earnings by 3% because of cost reductions in the network. The broker suspects the network is likely to surprise to the upside in 2018.

Given recent weakness, the rating is upgraded to Outperform from Neutral. Target is raised to $4.85 from $4.75.

Target price is $4.85 Current Price is $4.39 Difference: $0.46
If AZJ meets the Credit Suisse target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $4.69, suggesting upside of 6.8% (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

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

The ACCC's decision on Aurizon's sale and closure of its intermodal business is due on March 15. Aurizon's share price has already been under pressure from uncertainty around the draft UT5 decision.

If the sale is allowed to proceed, that would be positive, the broker notes. If the regulator finds issues that need to be resolved, uncertainty will continue to prevail. If the ACCC blocks the deal the broker believes the market is potentially underestimating the downside risk.

The broker's base case is sale approval. Equal-weight and $4.88 target retained. Industry view: Cautious.

Target price is $4.88 Current Price is $4.39 Difference: $0.49
If AZJ meets the Morgan Stanley target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $4.69, suggesting upside of 6.8% (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

Morgans rates BOQ as Upgrade to Add from Hold (1) -

Morgans expects the strong capital position and surplus franking credits will result in special dividends. The broker also believes the bank's interim CET1 ratio target of 9.25% will prove too conservative. This creates potential for capital management initiatives in addition to the forecast for special dividends.

Rating is upgraded to Add from Hold. The broker reduces cash earnings forecasts by -2.0% for FY18 and -4.0% for FY19. A discounted dividend reinvestment plan is now expected to operate over the forecast period. Net interest margin forecasts have also been lowered. Target is $12.00.

Target price is $12.00 Current Price is $11.94 Difference: $0.06
If BOQ meets the Morgans target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $12.11, suggesting upside of 1.4% (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

Ord Minnett rates BSL as Accumulate (2) -

Following the announcement that the US will introduce a 25% tariff on imported steel, Australia has been granted an exemption. This provides the company with a cost advantage for its US west-coast Steelscape business.

Ord Minnett notes the company's significant leverage to higher US steel prices will also support its North Star facility in Ohio. Accumulate rating and $18 target maintained.

Target price is $18.00 Current Price is $15.60 Difference: $2.4
If BSL meets the Ord Minnett target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $17.71, suggesting upside of 13.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.8

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

UBS rates ING as Downgrade to Neutral from Buy (3) -

The stock has outperformed the market by around 12% over the last month, UBS observes. While believing a long-term opportunity exists, the broker downgrades to Neutral from Buy on valuation grounds.

Recent industry feedback suggests pressure in the frozen poultry category share and a re-basing of industry volumes. Cost reductions will help offset these pressures, UBS acknowledges, but risks in the short term are on the downside. Target is $3.70.

Target price is $3.70 Current Price is $3.83 Difference: minus $0.13 (current price is over target).
If ING meets the UBS target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.88, suggesting upside of 1.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.5

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

Morgans rates JHC as Hold (3) -

The company has downgraded its FY18 guidance after a recent Federal Court ruling, which noted that billing residents for asset replacement charges is inconsistent with the legislation. Morgans reduces estimates as EBITDA guidance for FY18 has been reduced to -14-19% below FY17.

Hold rating maintained and the broker does not rule out corporate activity given the strategic holding of Moelis Australia. Target is reduced to $1.93 from $2.03. The broker believes it will be another six months before the market gains confidence in a recovery in operations.

Target price is $1.93 Current Price is $1.83 Difference: $0.1
If JHC meets the Morgans target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $1.92, suggesting upside of 4.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.0

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

Morgans rates LVH as Add (1) -

Morgans adjusts its forecasts to reflect the higher level of investment expenditure that has been foreshadowed by the company. The impact of these changes means higher operating losses in the near-term but higher free cash generation and rates of revenue growth in the long-term.

Add rating maintained. Target is raised to $1.39 from $1.38.

Target price is $1.39 Current Price is $0.87 Difference: $0.52
If LVH meets the Morgans target it will return approximately 60% (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

Deutsche Bank rates NCM as Hold (3) -

No milling for the next six months following the dam collapse at Cadia. That's the basic proposition that Deutsche Bank puts forward, and into its modeling, following the sorry update from Newcrest Mining on the currently disabled mine.

In financial terms, no milling for six months translates into a profit dive by -50%, the analysts point out. FY19 EPS forecast falls by a further -24%. Today's update also assumes $30m of additional sustaining capex for remediation work.

Hold rating retained. Target drops to $20.

Target price is $20.00 Current Price is $20.21 Difference: minus $0.21 (current price is over target).
If NCM meets the Deutsche Bank target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $20.82, suggesting upside of 3.0% (ex-dividends)

Forecast for FY18:

Forecast for FY19:

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

Market Sentiment: -0.2

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

Macquarie rates NUF as Outperform (1) -

Macquarie tapers its estimates, given the timing of the company's acquisitions, but remains positive on the growth outlook. The broker expects a heavy skew to the second half. Seeds development provides further options on growth.

FY18 estimates for earnings per share are reduced by -13% and FY19 by -4%. Outperform rating maintained. Target is reduced to $10.17 from $10.29.

Target price is $10.17 Current Price is $8.53 Difference: $1.64
If NUF meets the Macquarie target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $9.44, suggesting upside of 10.7% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.6

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

Credit Suisse rates OZL as Neutral (3) -

The company has released its power strategy, which Credit Suisse does not believe addresses the key concerns of where power will actually come from to meet the increased draw.

There is further detail on the building and funding of the new transmission line, while power supply appears dependent on a private company, SolarReserve, developing its facility north of Port Augusta.

Neutral rating and $8.25 target.

Target price is $8.25 Current Price is $9.18 Difference: minus $0.93 (current price is over target).
If OZL meets the Credit Suisse target it will return approximately minus 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $9.73, suggesting upside of 6.0% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.4

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

Deutsche Bank rates OZL as Hold (3) -

No changes to $9.10 price target, forecasts or Hold rating after OZ Minerals updated the market about its power supply strategy. The core of the new strategy consists of construction of 270km of high-voltage power lines to Prominent Hill and Carrapateena, to be operational by mid-2020.

In the short term, Deustche Bank analysts expect the company to enter into a combination of short-term and long-term agreements to satisfy power demands for operations beyond 2018.

Target price is $9.10 Current Price is $9.18 Difference: minus $0.08 (current price is over target).
If OZL meets the Deutsche Bank target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $9.73, suggesting upside of 6.0% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.4

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

UBS rates OZL as Neutral (3) -

The company has announced plans for the development of a 270km transmission line as well as an on-site solar plant at Prominent Hill. The development will also provide power for the future and remove the power bottleneck at Carrapateena.

UBS notes the market has always considered this a long-dated issue and not materially affecting the economics of Prominent Hill. The broker believes the update should be taken positively, as it relieves concerns over long-term power access, albeit not for pricing. Neutral rating and $9.80 target maintained.

Target price is $9.80 Current Price is $9.18 Difference: $0.62
If OZL meets the UBS target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $9.73, suggesting upside of 6.0% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.4

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

Morgans rates RVA as Add (1) -

The 2017 net loss was in line with expectations. Management has pointed to increased billings and re-orders throughout February.

Morgans continues to believe in the Fantom market approach, although sales were hindered by safety concerns around a competitor's withdrawn product.

The broker suspects the medical community will be cautious regarding any bioresorbable drug-eluting stent until there is enough data to prove the safety of these products. Add rating maintained. Target is reduced to $0.66 from $1.15.

Target price is $0.66 Current Price is $0.35 Difference: $0.31
If RVA meets the Morgans target it will return approximately 89% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 1.0

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

Macquarie rates SYD as Upgrade to Outperform from Neutral (1) -

Macquarie has reconsidered the outlook for Sydney Airport, expecting management will maintain growth at least until the Western Sydney Airport opens.

The broker upgrades to Outperform from Neutral and raises the target to $6.85 from $6.40. Macquarie considers the stock undervalued versus Auckland International Airport ((AIA)) despite a stronger 2018 international passenger growth outlook.

Target price is $6.85 Current Price is $6.78 Difference: $0.07
If SYD meets the Macquarie target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $7.32, suggesting upside of 8.0% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.8

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

Ord Minnett rates WES as Hold (3) -

Ord Minnett incorporates a more pessimistic view on the Bunnings UK & Ireland business and reduces earnings estimates. Bunnings is expected to perform well in Australasia. Meanwhile, Coles is enduring a more competitive supermarket industry and cost saving efforts are affecting execution, the broker observes.

Ord Minnett notes the dividend yield supports the stock but does not find the valuation compelling. Hold maintained. Target is reduced to $40 from $41.

Target price is $40.00 Current Price is $40.90 Difference: minus $0.9 (current price is over target).
If WES 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 $41.30, suggesting upside of 1.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.0

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