Australian Broker Call

Morgans rates ACF as Add (1) -

Morgans increases estimates for operating earnings by 1% after factoring in the cost synergies from the integration of the Natform acquisition. No benefit from revenue synergies are assumed, so this could provide potential upside to the broker's numbers.

Morgans is increasingly confident in the quality of the business and the outlook for the company in general, maintaining an Add rating. Target is raised to $0.61 from $0.52.

Target price is $0.61 Current Price is $0.54 Difference: $0.07
If ACF meets the Morgans target it will return approximately 13% (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

Ord Minnett rates ANN as Hold (3) -

Ord Minnett points out there is no guarantee medical gloves will remain exempt from US import tariffs. Given the company is buying back its own shares more aggressively, estimates have been slightly raised.

Target price rises to $25.20 from $24.70. Hold rating retained.

Target price is $25.20 Current Price is $25.51 Difference: minus $0.31 (current price is over target).
If ANN meets the Ord Minnett target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $26.42, suggesting upside of 3.6% (ex-dividends)

The company's fiscal year ends in June.

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: 0.1

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

Ord Minnett rates BOQ as Lighten (4) -

The bank is scheduled to report its FY18 financial results on October 4. Ord Minnett analysts are forecasting cash earnings of $363m, down -4% year-on-year with lower non-interest income and higher costs to blame.

The analysts' focus will on management's outlook commentary, particularly regarding margins and capital management. The broker thinks the shares are too dear and thus maintains the Lighten rating with a target price of $10.30.

Target price is $10.30 Current Price is $10.92 Difference: minus $0.62 (current price is over target).
If BOQ meets the Ord Minnett target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $10.65, suggesting downside of -2.5% (ex-dividends)

The company's fiscal year ends in August.

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

Citi rates BPT as Sell (5) -

Post the 2018 Strategy Day Citi analysts stick with their Sell rating, while slicing a little off their price target; to $1.59 from $1.61 (modeling US$55/bbl oil long term average).

Citi analysts do believe the portfolio will deliver growth and acknowledge a higher oil price can translate into upside surprise.

Target price is $1.59 Current Price is $2.19 Difference: minus $0.6 (current price is over target).
If BPT meets the Citi target it will return approximately minus 27% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $1.74, suggesting downside of -20.6% (ex-dividends)

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

Morgan Stanley rates BPT as Overweight (1) -

Beach Energy held an investor briefing. Morgan Stanley is increasingly convinced the company can build into a more sustainable and larger business over time.

A medium-term production target of 34-40mmboe is been outlined and Beach Energy is targeting 100% reserve placement. The company expects to generate $2.3bn in free cash over the next five years.

Overweight and $2.00 target retained. Industry view: Attractive.

Target price is $2.00 Current Price is $2.19 Difference: minus $0.19 (current price is over target).
If BPT 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 $1.74, suggesting downside of -20.6% (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

Ord Minnett rates BPT as Hold (3) -

Beach Energy's investor day contained very ambitious growth plans, with the company intending to spend more than $3bn over five years. Ord Minnett analysts note management has a good track record of achieving its targets.

Price target lifts to $2.10 from $1.80. Hold rating retained.

Target price is $2.10 Current Price is $2.19 Difference: minus $0.09 (current price is over target).
If BPT meets the Ord Minnett target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $1.74, suggesting downside of -20.6% (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

Morgan Stanley rates LNK as Overweight (1) -

Morgan Stanley suggests investors have a 'free option' on the possibility the proposed super reforms are delayed or watered down.

Proposed budget reforms were a key catalyst for the stock's de-rating earlier in the year and, therefore, any reversal is likely to drive an upgrade to consensus expectations and an unwinding of the current price/earnings discount versus the historical average.

The broker believes the base case for a full implementation of the reforms is fully priced into the stock. Overweight rating and $9.00 target. Industry view is In-Line.

Target price is $9.00 Current Price is $7.79 Difference: $1.21
If LNK meets the Morgan Stanley target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $8.43, suggesting upside of 8.2% (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 NUF as Buy (1) -

Given the general context of this country's worst drought in a century, Citi analysts believe Nufarm's FY18 performance has been "commendable". Plus the 16% of new capital restores the balance sheet and removes a persistent overhang, argue the analysts.

Citi analysts remain of the view Nufarm shares are "substantially" undervalued. Forecasts have been reduced to incorporate capital dilution. Price target $8.

Target price is $8.00 Current Price is $6.70 Difference: $1.3
If NUF meets the Citi target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $7.69, suggesting upside of 14.7% (ex-dividends)

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

Morgans rates NUF as Downgrade to Hold from Add (3) -

Morgans observes, while Nufarm usually benefits from strength in geographic diversity, in FY18 everything that could have gone wrong did go wrong. Consequently earnings were downgraded and the balance sheet stretched.

The broker suggests, given the amount of new capital raised, negative publicity and litigation, any re-rating is likely to take time. The broker downgrades to Hold from Add and reduces the target to $6.85 from $9.00. Morgans recommends shareholders take up the entitlement offer, given the 17% upside.

Target price is $6.85 Current Price is $6.70 Difference: $0.15
If NUF meets the Morgans target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $7.69, suggesting upside of 14.7% (ex-dividends)

The company's fiscal year ends in July.

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

Morgan Stanley rates NXT as Overweight (1) -

Morgan Stanley envisages scope for a major cloud deal to lift sales and earnings beyond FY19. The broker also re-bases S2 assumptions to reflect the growth profile on top of the 5.4MW that has already been sold. This results in higher billings in FY20.

The broker believes the business is scalable, with strong earnings visibility and a growing track record. Overweight rating reiterated. In-Line industry view. Target is $9.20.

Target price is $9.20 Current Price is $6.58 Difference: $2.62
If NXT meets the Morgan Stanley target it will return approximately 40% (excluding dividends, fees and charges).

Current consensus price target is $7.92, suggesting upside of 20.4% (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

Ord Minnett rates QUB as Buy (1) -

Ord Minnett reminds its clientele it suggested in May the outlook for the Patrick stevedoring division of Qube Holdings was improving. The analysts see vindication of this view in the fact that rival operator DP World Australia has now substantially increased its charges. Buy rating retained, as well as the $3.10 price target.

Target price is $3.10 Current Price is $2.75 Difference: $0.35
If QUB meets the Ord Minnett target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $2.74, suggesting downside of -0.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.0

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

Credit Suisse rates SYR as Outperform (1) -

The company has confirmed a mining agreement has been finalised by the Mozambique court. The agreement confirms defined and established fiscal terms for the operation of Balama through to 2038.

Credit Suisse observes this puts to bed any lingering concerns regarding a potential change in operating and fiscal terms. Outperform rating and $5.50 target maintained.

Target price is $5.50 Current Price is $2.33 Difference: $3.17
If SYR meets the Credit Suisse target it will return approximately 136% (excluding dividends, fees and charges).

Current consensus price target is $3.63, suggesting upside of 55.8% (ex-dividends)

The company's fiscal year ends in December.

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 TCL as Outperform (1) -

Transurban has announced the acquisition of a 25.5% interest in WestConnex for $4.1bn. Macquarie suggests the initial impact of the dilution from the rights issue outweighs incremental value that has been added from WestConnex and is now factored into the share price.

Upside, in the broker's opinion, should emerge with confidence in traffic, additions to the concession and use of the latent truck pricing to facilitate development. Outperform rating. Target is reduced to $11.87 from $12.28.

Target price is $11.87 Current Price is $11.22 Difference: $0.65
If TCL meets the Macquarie target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $12.30, suggesting upside of 9.6% (ex-dividends)

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

Deutsche Bank rates VEA as Buy (1) -

Deutsche Bank found the August refinery performance much better than feared, given the unplanned outage. Throughput was strong and the margin was high. The broker still incorporates downside risk to second half prospectus earnings at the refinery because of the outage and weak margins in Singapore in July.

Buy rating and $2.65 price target.

Target price is $2.65 Current Price is $2.28 Difference: $0.37
If VEA meets the Deutsche Bank target it will return approximately 16% (excluding dividends, fees and charges).

Market Sentiment: 1.0

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

Deutsche Bank rates WBC as Buy (1) -

Westpac expects a reduction of -$285m to its FY18 result because of refunds and provisions for recent litigation. Deutsche Bank had expected remediation costs related to the financial advice business and suggests this is likely a harbinger of further legal and remediation costs for the banks.

The broker reduces FY18 net profit estimates by -2.7% as a result. Buy rating and $31 target maintained.

Target price is $31.00 Current Price is $27.39 Difference: $3.61
If WBC meets the Deutsche Bank target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $30.60, suggesting upside of 11.7% (ex-dividends)

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

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

Morgan Stanley observes conduct-related provisions are weighing on the earnings outlook and reinforcing the view that a reduction in profitability may be required in the next few years to win back support from major stakeholders.

The bank has announced it will include a further $235m in provisions in the second half result. Morgan Stanley believes there is growing evidence that scrutiny of banking conduct is generating civil proceedings, more customer remediation and fines. The broker trims FY18 estimates for earnings per share by -1.5%.

Equal-weight. Target is $27.50. Industry view: In Line.

Target price is $27.50 Current Price is $27.39 Difference: $0.11
If WBC meets the Morgan Stanley target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $30.60, suggesting upside of 11.7% (ex-dividends)

The company's fiscal year ends in September.

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

Morgans rates WBC as Add (1) -

Morgans considers the magnitude of the provisions related to customer remediation relatively low versus the extent of negativity in the share price. The broker believes the main area outstanding in terms of customer issues now relates to aligned financial planners.

Westpac expects around two thirds of the cash earnings impact to be recorded as negative revenue and the remainder as costs. Morgans reiterates a view that, while there is a risk of additional provisions stemming from the Hayne Royal Commission, this is not expected to hamper the major banks achieving the unquestionably strong CET1 benchmark by January 2020.

The broker reduces FY18 cash estimates for earnings per share by -2.3%. Add rating and $34.50 target maintained.

Target price is $34.50 Current Price is $27.39 Difference: $7.11
If WBC meets the Morgans target it will return approximately 26% (excluding dividends, fees and charges).

Current consensus price target is $30.60, suggesting upside of 11.7% (ex-dividends)

The company's fiscal year ends in September.

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

Ord Minnett rates WBC as Accumulate (2) -

FY18 cash earnings will be reduced by an estimated -$235m post tax for provisions taken to address customer issues and recent litigation. Given earlier provisions already, the analysts respond with disappointment.

Accumulate retained. Target price $31.30 (unchanged). Earnings estimates have been lowered.

Target price is $31.30 Current Price is $27.39 Difference: $3.91
If WBC meets the Ord Minnett target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $30.60, suggesting upside of 11.7% (ex-dividends)

The company's fiscal year ends in September.

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

Ord Minnett rates XRO as Downgrade to Lighten from Hold (4) -

Ord Minnett doesn't like the combination of a more risky profile (as management is on the lookout for acquisitions) with lofty expectations and a full valuation. The analysts point out the company's track record is unproven when it comes to acquisitions.

Recommendation is thus downgraded to Lighten from Hold, with an unchanged price target of $42.

Target price is $42.00 Current Price is $49.29 Difference: minus $7.29 (current price is over target).
If XRO meets the Ord Minnett target it will return approximately minus 15% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $41.09, suggesting downside of -16.6% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY19:

Forecast for FY20:

This company reports in NZD. 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