Australian Broker Call

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

The company reported a loss in the first half, although revenue and operating earnings (EBITDA) were ahead of Morgan Stanley's estimates.

Licence growth remains challenged across all regions, the broker notes, with revenue per unit growth offsetting some of the weakness.

There is now a bigger skew to the second half based on sales execution. However, Morgan Stanley is wary of the risks to guidance and believes the skew is limiting the scope for any surprise to the upside.

Target is $1. Equal-weight rating. Industry view is In-Line.

Target price is $1.00 Current Price is $0.82 Difference: $0.18
If 3PL meets the Morgan Stanley target it will return approximately 22% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.0

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

Morgans rates ASX as Reduce (5) -

First half underlying net profit was broadly in line with expectations. Broad-based revenue growth continued across all business streams, although tempered at the net profit line by elevated expenses.

Morgans retains a Reduce rating, believing the stock is fully priced. Target rises to $72.14 from $71.14.

Target price is $72.14 Current Price is $82.20 Difference: minus $10.06 (current price is over target).
If ASX meets the Morgans target it will return approximately minus 12% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $73.86, suggesting downside of -10.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: -0.7

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

Citi rates BBN as Buy (1) -

Net profit was broadly in line with Citi's estimates although underlying operating earnings were below.

Citi envisages growth will become more challenging going forward as the company no longer has the direct benefit to sales from competitor closures.

FY20 net profit guidance of $20-22m appears achievable, although this does not account for the disruption from coronavirus.

Nevertheless Baby Bunting is considered less exposed to this risk compared with other retailers.

Citi retains a Buy rating and raises the target to $4.05 from $3.90.

Target price is $4.05 Current Price is $3.59 Difference: $0.46
If BBN meets the Citi target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $3.92, suggesting upside of 9.2% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 1.0

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

Macquarie rates BBN as Outperform (1) -

First half net profit, while up 30.6%, was below Macquarie's estimates. This stemmed from weaker comparable sales, partially offset by expansion of gross margin.

The broker notes like-for-like trends decelerated because of cannibalisation and upgrade issues with the online store.

The company expects to recover the sales momentum and, while expecting the rate of growth in earnings per share to slow, Macquarie considers the business is a solid defensive proposition.

Outperform maintained. Target rises to $4.10 from $3.80.

Target price is $4.10 Current Price is $3.59 Difference: $0.51
If BBN meets the Macquarie target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $3.92, suggesting upside of 9.2% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 1.0

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

Morgan Stanley rates BBN as Overweight (1) -

First half results were better than Morgan Stanley expected. The company has also made a strong start to the second half.

Earnings guidance has been maintained and includes operating earnings (EBITDA) of $34-37m and net profit of $20-22m.

Overweight reiterated. Target is $3.50. Industry view is In-line.

Target price is $3.50 Current Price is $3.59 Difference: minus $0.09 (current price is over target).
If BBN meets the Morgan Stanley target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.92, suggesting upside of 9.2% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 1.0

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

Morgans rates BBN as Add (1) -

First half results were slightly weaker than Morgans expected. Website execution issues which affected like-for-like sales growth are disappointing but the broker remains positive about the long-term growth profile.

The broker considers the company has the right strategy in rolling out stores and investing in operating expenditure, despite the risk of cannibalising same-store sales growth. Add rating maintained. Target is raised to $4.03 from $3.92.

Target price is $4.03 Current Price is $3.59 Difference: $0.44
If BBN meets the Morgans target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $3.92, suggesting upside of 9.2% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 1.0

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

Citi rates BEN as Sell (5) -

On initial assessment, Citi suggests the interim performance has beaten market consensus by some 4%, led by a stronger-than-anticipated Net Interest Margin (NIM) and record low bad debts. There's also a $300m capital raising.

Citi suggests the NIM benefits will reverse in the second half. Cost growth proved above expectations. Management has flagged accelerated investment over the next three years. The interim dividend has been cut by -4c to 31c.

All in all, the analysts describe today's financial report as "messy". Poor fee and cost trends have been mitigated by a strong NIM and record low bad debts, they state, implying H2 might not look as rosy.

Target price is $9.25 Current Price is $10.57 Difference: minus $1.32 (current price is over target).
If BEN meets the Citi target it will return approximately minus 12% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $9.88, suggesting downside of -6.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: -1.0

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

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

Credit Suisse observes the market appears to be doubting or fearing the FY20 capital expenditure guidance, after the stock slumped -11% versus its peers.

The broker suspects the company was getting the negative news out of the way and is poised to deliver an upgrade to the long-term production outlook in August.

Several positive catalysts are anticipated in the next six months and Credit Suisse upgrades to Outperform from Neutral. Target is $2.49.

Target price is $2.49 Current Price is $2.14 Difference: $0.35
If BPT meets the Credit Suisse target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $2.33, suggesting upside of 8.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: -0.2

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

UBS rates BRG as Neutral (3) -

UBS transfers coverage to another analyst and places the Neutral rating and $17.85 target under review. The company delivered a strong first half result, beating estimates.

There were two areas of weakness, including an EBIT margin decline and weak operating cash flow, but these were not entirely unexpected.

UBS considers the business high-quality, underpinned by a track record of successful product innovation.

Target price is $17.85 Current Price is $23.82 Difference: minus $5.97 (current price is over target).
If BRG meets the UBS target it will return approximately minus 25% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $22.01, suggesting downside of -7.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.0

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

Credit Suisse rates CAJ as Outperform (1) -

Credit Suisse assesses remediation efforts in the existing business are starting to gain traction under new management.

The broker notes the company has sector-leading exposure to Medicare and therefore the highest leverage to indexation.

FY21-22 estimates for earnings per share are upgraded by 3-6% based on the recent M&A.

The company has purchased Fowler Simmons Radiology for $16m up front and a further $1.6m should operating earnings (EBITDA) exceed the recent $2.4m by an undisclosed hurdle.

The broker believes this is reasonably-priced entry into a new market. Outperform rating maintained. Target rises to $0.32 from $0.28.

Target price is $0.32 Current Price is $0.28 Difference: $0.04
If CAJ meets the Credit Suisse target it will return approximately 14% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.5

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

Ord Minnett rates DMP as Lighten (4) -

The company will report its first half result on February 19. Ord Minnett increases normalised estimates for earnings per share by 8% in FY20 and 10% in FY21.

This stems from changed store growth assumptions, which are lower for Australasia and higher for Japan. Target is raised to $52 from $36. Lighten maintained, given the lack of valuation support.

The broker acknowledges its Lighten recommendation has been ineffective, with a strong share price performance from the lows post the FY19 result.

Target price is $52.00 Current Price is $58.35 Difference: minus $6.35 (current price is over target).
If DMP meets the Ord Minnett target it will return approximately minus 11% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $48.43, suggesting downside of -17.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: -0.4

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

Macquarie rates KMD as Neutral (3) -

Macquarie has upgraded estimates to reflect the trading update, amid greater comfort with the synergies that will be realised over the medium term.

The business has proven to be resilient over recent months, yet retail weakness, consumer confidence and FX headwinds are considered still a risk.

Target is raised to $3.21 from $2.92. Neutral retained.

Target price is $3.21 Current Price is $3.43 Difference: minus $0.22 (current price is over target).
If KMD meets the Macquarie target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

The company's fiscal year ends in July.

Forecast for FY20:

Forecast for FY21:

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

Market Sentiment: 0.0

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

Macquarie rates MIN as Outperform (1) -

The investor briefing has reaffirmed Macquarie's belief that the company will beat guidance on mining services EBITDA.

The company reported a strong first half and the broker expects iron ore earnings should improve because of the increased contribution from Koolyanobbing.

Outperform maintained. Target is steady at $20.30.

Target price is $20.30 Current Price is $19.03 Difference: $1.27
If MIN meets the Macquarie target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $17.90, suggesting downside of -5.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.7

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

Morgans rates MX1 as Add (1) -

Micro-X has received a significant order for its nano units from the governments of two Asian countries. The order is worth $800,000.

This comes in response to growing concerns around the coronavirus with a view that the ultra-lightweight x-ray units will assist in monitoring progression of the symptoms.

Also, the company is working on getting clearance for the Rover which should result in immediate orders from the US Defence Health Agency.

Speculative Buy (Add) maintained. Target is 41c.

Target price is $0.41 Current Price is $0.20 Difference: $0.21
If MX1 meets the Morgans target it will return approximately 105% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 1.0

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

Morgan Stanley rates NSR as No Rating (-1) -

The company has confirmed the receipt of a non-binding indicative proposal from US-listed Public Storage at $2.40 a share. Public Storage has been granted due diligence.

National Storage has confirmed the proposal is superior to that offered by Gaw Capital, although discussions are ongoing.

Morgan Stanley is acting as adviser to Public Storage and cannot provide a rating or target at present. Industry view is In-Line.

Current Price is $2.40. Target price not assessed.

Current consensus price target is $1.72, suggesting downside of -28.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: -0.3

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

Citi rates NXT as Buy (1) -

While the delay to the second Sydney data centre has dented the company's track record, Citi maintains a Buy rating, expecting earnings growth in the short term will be underpinned by the contracted order book.

While increasing supply, particularly in Sydney, raises questions about medium-term pricing, the broker expects demand will be driven by more workload moving to the cloud and an ongoing increase in data. Target is raised to $9.10 from $8.45.

Target price is $9.10 Current Price is $7.94 Difference: $1.16
If NXT meets the Citi target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $7.92, suggesting downside of -0.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.8

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

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

Revenue and operating earnings (EBITDA) growth was strong in the first half, although margins were lower than Morgans anticipated.

The broker believes the company is well-positioned to capitalise on the strong industry tailwinds.

Nevertheless, the stock is trading close to the revised target, which edges down to $3.82 from $3.83, and the rating is downgraded to Hold from Add.

Target price is $3.82 Current Price is $3.70 Difference: $0.12
If PPE meets the Morgans target it will return approximately 3% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.3

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

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

First half underlying operating earnings (EBITDA) of $12.9m were in line with Ord Minnett's estimates. Recent acquisitions are performing in line with expectations.

The broker considers this another solid result in what is becoming a typical event. A lot of opportunity is envisaged. The broker downgrades to Accumulate from Buy. Target is raised to $4.05 from $3.74.

Target price is $4.05 Current Price is $3.70 Difference: $0.35
If PPE meets the Ord Minnett target it will return approximately 9% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.3

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

Ord Minnett rates QBE as Accumulate (2) -

Ord Minnett reports QBE Insurance's 2019 report, upon initial assessment, failed to meet expectations despite pre-guiding its financial metrics. The analysts note, as pre-guided, the result was largely impacted by a poor crop result which returned a combined operating ratio (COR) of 107.5% versus 90% long term.

On the other hand, premium rate increases have been labeled as "strong". The analysts note QBE's gross written premium (GWP) and net earned premium (NEP) numbers were slightly better than forecasts.

In addition, the underlying margin improved.

Target price is $14.54 Current Price is $14.75 Difference: minus $0.21 (current price is over target).
If QBE 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 $14.09, suggesting downside of -4.5% (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: 0.6

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

UBS rates TPM as Neutral (3) -

The Federal Court has ruled that the proposed merger with Vodafone Australia can go ahead. The merger is expected to be completed in mid 2020. UBS considers the development broadly neutral for the sector.

The merger removes the potential for an aggressive fourth player and, while it creates a larger third player, the merged entity has stronger incentives to act rationally.

The broker raises the target to $8.40 from $6.60 to reflect the merged valuation. Neutral maintained.

Target price is $8.40 Current Price is $8.00 Difference: $0.4
If TPM meets the UBS target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $7.02, suggesting downside of -12.3% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.1

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

Macquarie rates TWE as Neutral (3) -

Pernod Ricard has reported first half results, noting coronavirus has clearly affected its performance in China.

Home delivery (Pernod Ricard) is currently experiencing disruption, which is a concern for Macquarie, given Treasury Wine expected its e-commerce portion of sales would mitigate the on-premises risk.

The broker forecasts zero growth in earnings (EBITS) in FY20. Neutral rating and $12 target maintained.

Target price is $12.00 Current Price is $11.35 Difference: $0.65
If TWE meets the Macquarie target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $14.11, suggesting upside of 24.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.0

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