Australian Broker Call

Macquarie rates AWC as Outperform (1) -

Macquarie observes sentiment around aluminium continues to improve.

The broker continues to believe that significant upside risk exists to alumina prices over 2017-18, with proposed Chinese policy changes related to winter pollution control and capacity the main catalyst.

Outperform rating and $2.10 target retained.

Target price is $2.10 Current Price is $1.89 Difference: $0.21
If AWC meets the Macquarie target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $1.80, suggesting downside of -4.8% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY17:

Forecast for FY18:

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 CSL as Buy (1) -

Citi analysts note the SHP643 P3 headline data from most recent trials are positive, as expected, moving this product one step closer to the stockbroker's assumed October 2018 launch date.

In addition, Citi analysts continue to expect CSL's HAEGARDA to start selling in the US in 1Q FY18 upon receiving FDA approval despite the patent complaint launched by Shire. The launch is seen as a potential share price catalyst.

Regarding the latter, they add there will likely be a window of some 18 months only before Shire will launch its own superior product, but CSL has more products in the pipeline to compensate for this. Buy. Target $148.

Target price is $148.00 Current Price is $131.10 Difference: $16.9
If CSL meets the Citi target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $132.91, suggesting upside of 1.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

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

Morgan Stanley rates FXJ as Overweight (1) -

Morgan Stanley retains a positive investment thesis based on the view that the market undervalues Domain versus market leader REA ((REA)).

The broker points out that the company is not carrying too much debt and doesn't only have assets that are in structural decline.

The recent bids for the company only serve to highlight this, in the broker's opinion. Morgan Stanley believes Domain could be worth significantly more in 2-3 years time.

The broker reiterates an Overweight rating and Attractive industry view. Target is raised to $1.50 from $1.20.

Target price is $1.50 Current Price is $1.25 Difference: $0.255
If FXJ meets the Morgan Stanley target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $1.21, suggesting downside of -2.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.4

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

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

The stock has risen 14% over the last quarter and while the story is appealing, given tenant demand for developments underpinned by structural drivers, Credit Suisse downgrades to Neutral from Outperform. Target is $7.92.

Within the sector, the stock is considered the most obvious winner from the growth of online retail globally and, in particular, Amazon's flagged entry into the Australian market. Yet, the broker believes both the macro and micro appeal are now priced in.

Target price is $7.92 Current Price is $8.47 Difference: minus $0.55 (current price is over target).
If GMG meets the Credit Suisse target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $7.81, suggesting downside of -7.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.3

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

Morgan Stanley rates GOR as Overweight (1) -

Gold Fields has acquired a 10% relevant interest in Gold Road Resources at a 27% premium to the closing share price of 67.5c on May 18.

Morgan Stanley suggests this signals Gold Fields could be attributing extra value to satellite deposits or it recognises the broader potential across the joint venture tenement. The broker is now assessing whether valuation needs to be revised to address this.

Overweight rating, Attractive industry view and 70c target retained.

Target price is $0.70 Current Price is $0.72 Difference: minus $0.02 (current price is over target).
If GOR meets the Morgan Stanley target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 1.0

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

Citi rates NXT as Buy (1) -

Citi analysts have redone the numbers post recent debt raising and the key conclusion is the company has considerably improved its financial position which, the analysts suspect, can now facilitate accelerated data hall fit-out.

All this remains supported by favourable projections for the cloud data industry globally, point out the analysts.

Earnings estimates have been lowered for FY18 due to increased interest costs, but increased thereafter. Price target jumps to $5.18 (from $4.40). This stock remains a Conviction Buy at Citi.

Target price is $5.18 Current Price is $4.56 Difference: $0.62
If NXT meets the Citi target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $4.56, suggesting downside of -0.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 1.0

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

Credit Suisse rates OML as Outperform (1) -

The company has formally abandoned its merger plans with APN Outdoor ((APO)), given the concerns raised by the preliminary view from the ACCC.

Credit Suisse is not overly surprised and suggests, given the share price positioning, the market had already largely written off chances of a successful transaction.

The broker observes the latest trading update compares well against a very weak first quarter for the broader media sector. Outperform. Target is reduced to $4.95 from $5.05.

Target price is $4.95 Current Price is $4.50 Difference: $0.45
If OML meets the Credit Suisse target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $4.92, suggesting upside of 9.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.8

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

Macquarie rates OML as Re-instate coverage with Outperform (1) -

The company has abandoned its merger plans with APN Outdoor ((APO)) because of concerns raised by the ACCC. Management has flagged the risk of distraction to its business from pursuing the merger against that backdrop.

Guidance for underlying 2017 EBITDA of $88-92m is consistent with market estimate, Macquarie observes, noting the outdoor advertising market remains healthy, despite growing at a slower pace.

The broker reinstates coverage with an Outperform rating and $4.80 target.

Target price is $4.80 Current Price is $4.50 Difference: $0.3
If OML meets the Macquarie target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $4.92, suggesting upside of 9.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.8

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

Citi rates ORG as Neutral (3) -

At face value, Origin has sold the Darling Downs pipeline for $393m but behind the curtains what really did happen is the company is transforming its pipeline asset into long-term, off-balance sheet borrowings at an effective interest of 5.9%, explain the analysts.

Citi likes the ongoing balance sheet repair, including this latest move. To turn this into a really good story, Origin still needs a higher oil price, the analysts add. Neutral rating retained.

Current Price is $7.85. Target price not assessed.

Current consensus price target is $7.59, suggesting downside of -3.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.4

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

Deutsche Bank rates ORG as Hold (3) -

The company has sold its Darling Downs gas pipeline network for $392m. The company has contracted to purchase gas transportation services on the pipeline for periods ranging from 10-30 years.

The sale brings completed divestments to $1bn. Deutsche Bank believes the price is at the upper end of infrastructure assets but within expectations, given considerable appetite for infrastructure assets.

Target is $6.40. Hold retained.

Target price is $6.40 Current Price is $7.85 Difference: minus $1.45 (current price is over target).
If ORG meets the Deutsche Bank target it will return approximately minus 18% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $7.59, suggesting downside of -3.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.4

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

Morgan Stanley rates ORG as Overweight (1) -

The company has completed its asset divestment program with the sale of the Darling Downs pipeline for $392m. This provides incremental margin for comfort on corporate debt reduction,  Morgan Stanley observes.

Overweight rating. $8.63 target. Industry view: Cautious.

Target price is $8.63 Current Price is $7.85 Difference: $0.78
If ORG meets the Morgan Stanley target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $7.59, suggesting downside of -3.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.4

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

Ord Minnett rates ORG as Accumulate (2) -

The company has sold the Darling Downs pipeline for $392m and net proceeds from asset sales have now amounted to around $1bn, ahead of the $800m target.

The company has indicated the further proceeds are likely to come from the sale of Lattice Energy. Ord Minnett retains an Accumulate rating and $7.75 target.

Target price is $7.75 Current Price is $7.85 Difference: minus $0.1 (current price is over target).
If ORG 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 $7.59, suggesting downside of -3.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.4

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

UBS rates ORG as Buy (1) -

Origin has sold the Darling Downs pipeline network to Jemena Gas for $392m. UBS observes the company's asset sale program has now reached $1bn.

The main priority is debt reduction. UBS suspects, once the company has a "line of sight" on net debt/EBITDA below 3.0, it may look to reinstate the dividend. For now, the broker maintains a forecast of dividends being reinstated in the second half of FY18.

Buy rating and $8.20 target retained.

Target price is $8.20 Current Price is $7.85 Difference: $0.35
If ORG meets the UBS target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $7.59, suggesting downside of -3.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.4

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

Morgan Stanley rates RRL as Downgrade to Underweight from Equal-weight (5) -

The stock has traded in a range since the start of the year on steady operations and a stable gold price, Morgan Stanley observes. Nevertheless, it has outperformed the gold sector, rising 9% over the past 12 months.

As other stocks offer more upside relative to the broker's price targets, the rating is downgraded to Underweight from Equal-weight. Attractive industry view and $2.80 target retained.

Target price is $2.80 Current Price is $3.32 Difference: minus $0.52 (current price is over target).
If RRL meets the Morgan Stanley target it will return approximately minus 16% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.17, suggesting downside of -4.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: -0.3

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

Macquarie rates SKI as Outperform (1) -

Macquarie envisages strong positive earnings bias despite the appearance of the share price being stretched. This translates to a dividend increase, in the broker's opinion.

The broker believes the valuation is comfortably supported by recent transactions. Target is raised to $2.82 from $2.75. Outperform retained.

Target price is $2.82 Current Price is $2.69 Difference: $0.13
If SKI meets the Macquarie target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $2.51, suggesting downside of -6.6% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.3

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

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

Two recent trials have both failed to show a survival advantage in primary liver and colon cancer,  Morgans notes. The broker is not surprised, citing poor study designs and prior failed studies, although the lack of utility in liver-only colon cancer patients is disappointing and relegates the therapy to salvage.

Nevertheless, Morgans believes the core business is viable and unlikely to be detrimentally affected by these results. The broker lowers FY18-19 dose sales expectations and reduces the target to $13.63 from $15.60.

With more than 10% upside envisaged to the target, the rating is upgraded to Add from Hold.

Target price is $13.63 Current Price is $11.98 Difference: $1.65
If SRX meets the Morgans target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $22.96, suggesting upside of 91.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 1.0

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

Credit Suisse rates SXL as Neutral (3) -

The company has reduced FY17 guidance because of soft metro radio and regional TV markets. The sale of the northern NSW TV assets have been confirmed for $55.

Credit Suisse believes this was a solid price for an asset which is considered strategically unimportant to the company. After adjusting for new spectrum fees and a reduction in gambling advertising revenue, the broker estimates around $10m in repairing upside at the operating earnings line, if the reforms on licence fees are successfully passed.

This is equivalent to an 8% upgrade to earnings per share. Target is reduced to $1.30 from $1.40 because of a lower earnings base. Neutral retained.

Target price is $1.30 Current Price is $1.16 Difference: $0.14
If SXL meets the Credit Suisse target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $1.22, suggesting upside of 5.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: -0.2

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

Deutsche Bank rates SXL as Hold (3) -

Management has pointed to weaker-than-expected conditions in the second half. Metro radio markets are down -2.2% in the half to date while regional radio markets are firmer but on a lower growth path than usual.

Operating earnings guidance is lowered to just below $168m from the bottom end of the $177-183m range.Deutsche Bank observes removal of licence fees remains the potential offset. Hold retained. Target is reduced to $1.25 from $1.30.

Target price is $1.25 Current Price is $1.16 Difference: $0.09
If SXL meets the Deutsche Bank target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $1.22, suggesting upside of 5.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: -0.2

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

Macquarie rates SXL as Neutral (3) -

The company has reduced guidance for FY17 operating earnings to "slightly below" $168m from $177-183m. Guidance excludes a potential  impact of licence fee reductions and asset disposals.

Macquarie observes a large part of the downgrade was from weaker-than-expected market growth in metro radio. The broker also observes pressure continues on regional TV.

Neutral retained. Target is reduced to $1.30 from $1.40.

Target price is $1.30 Current Price is $1.16 Difference: $0.14
If SXL meets the Macquarie target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $1.22, suggesting upside of 5.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: -0.2

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

UBS rates SXL as Neutral (3) -

UBS observes the company is now guiding to FY17 operating earnings of $168m, with the majority of the downgrade appearing to be market weakness across metro radio and regional TV.

The company has confirmed its sale of the northern NSW TV assets and proceeds of $55m. UBS retains a Neutral rating and lowers the target to $1.25 from $1.40.

Target price is $1.25 Current Price is $1.16 Difference: $0.09
If SXL meets the UBS target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $1.22, suggesting upside of 5.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: -0.2

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

Macquarie rates SYD as Downgrade to Neutral from Outperform (3) -

The company has reported traffic for April, with the boost from Easter clearly evident in the numbers as international was up 12.1% and domestic up 0.7%.

The fundamentals remain robust, in Macquarie's view, as the near-term traffic growth outlook is strong. Nevertheless, the broker believes value is already captured in the current share price.

Rating is downgraded to Neutral from Outperform. Target is $7.15.

Target price is $7.15 Current Price is $7.32 Difference: minus $0.17 (current price is over target).
If SYD meets the Macquarie target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $6.77, suggesting downside of -7.5% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.0

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

Citi rates VAH as Sell (5) -

The carrier released a larger-than-expected loss for the March quarter, but management's guidance is for a much better Q4 and Citi analysts ask the question: is a turnaround arriving?

Amidst several positive signals, the analysts remark it is time this company presented investors with a more sustainable earnings improvement profile. Until that happens, Sell rating retained. Valuation drops to 14c from 18c.

Target price is $0.14 Current Price is $0.18 Difference: minus $0.035 (current price is over target).
If VAH meets the Citi target it will return approximately minus 20% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $0.18, suggesting upside of 4.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: -0.5

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