Australian Broker Call

Macquarie rates BIN as Neutral (3) -

Bingo's skip price increase in the wake of the Queensland levy has not proven a great move. The company has cut prices for a second time, to -21-33% below the July peak price and almost down to pre-levy rates. The extent of the cuts suggests to the broker prices were too uncompetitive and would have led to reduced volumes.

Volatility in collections market pricing is indicative of the various supply/demand factors at play in the broader market at present, which for the broker heightens the degree of uncertainty. Neutral and $2.35 target retained.

Target price is $2.35 Current Price is $2.26 Difference: $0.09
If BIN meets the Macquarie target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $2.47, suggesting upside of 9.1% (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

Macquarie rates CLQ as No Rating (-1) -

Macquarie has upgraded its FY20 and FY21 nickel price forecasts by 34% and 9% to incorporate the early reinstatement of the nickel ore ban. Earnings forecasts for CleanTeq rise as a result but the broker is currently restricted from making a recommendation.

Current Price is $0.33. Target price not assessed.

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

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

Macquarie rates CYB as Outperform (1) -

The broker has been caught by surprise by the extent of CYBG's announced increase in payment protection insurance remediation provisions. GBP300-450m compares to Royal Bank of Scotland's GBP600-900m, and RBS is nine times larger. The bank's capital position has now weakened by -130-190 basis points, which is ill-timed given ongoing Brexit uncertainty.

The broker admits even the most patient of investors would by now be frustrated, but still, yesterday's share price response was excessive. Trading at 0.5x net tangible asset value the bank appears oversold, albeit a capital raising, if required, would be highly dilutive.

Target falls to $3.00 from $4.10. Outperform retained.

Target price is $3.00 Current Price is $1.99 Difference: $1.01
If CYB meets the Macquarie target it will return approximately 51% (excluding dividends, fees and charges).

Current consensus price target is $2.56, suggesting upside of 28.4% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY19:

Forecast for FY20:

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

Market Sentiment: 0.7

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

Morgans rates CYB as Hold (3) -

The bank expects to increase its provisions for legacy PPI costs by between -GBP300-450m. Morgans calculates that the top end of this range equates to a hit of -30p per share on an after-tax basis.

A more accurate estimate of the costs is expected at the FY19 result on November 28. Morgans is no longer forecasting any dividends over FY19 and FY20. The broker reduces the target to $2.11 from $3.16 and maintains a Hold rating.

Target price is $2.11 Current Price is $1.99 Difference: $0.12
If CYB meets the Morgans target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $2.56, suggesting upside of 28.4% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY19:

Forecast for FY20:

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

Market Sentiment: 0.7

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

Macquarie rates IGO as Outperform (1) -

Macquarie has upgraded its FY20 and FY21 nickel price forecasts by 34% and 9% respectively to incorporate the early reinstatement of the nickel ore ban. This leads to an 80% increase in forecast FY20 earnings for Independence Group, tempered by gold exposure.

Target rises to $6.80 from $5.90, Outperform retained.

Target price is $6.80 Current Price is $6.11 Difference: $0.69
If IGO meets the Macquarie target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $5.63, suggesting downside of -7.9% (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

Citi rates IPL as Buy (1) -

Given the bullish outlook for demand for ammonium nitrate, the company is committed to a further 15% expansion of the Moranbah output by FY22.

Citi has visited the plant and the BMA coal mine nearby and assesses, along with the new technology alliance with BHP Group ((BHP)), Moranbah appears poised for a strong earnings recovery in the next 3-5 years.

While sensing some concerns regarding the company's ability to realise significant value for the fertiliser segment, Citi does not rule out a strategic buyer. Buy rating maintained. Target is raised to $3.55 from $3.45.

Target price is $3.55 Current Price is $3.28 Difference: $0.27
If IPL meets the Citi target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $3.42, suggesting upside of 4.4% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.6

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

Citi rates MYR as Sell (5) -

Myer delivered the first year of net profit growth since FY10. This was despite a -2.9% contraction in like-for-like sales. Citi notes significant cost reductions were required.

The sales outlook remains challenging, amid store closures, the exit of some brands and declining bricks-and-mortar sales. Online continues to grow strongly but the broker points out this is dilutive to margins.

Citi increases FY20 and FY21 estimates by 19% and 31% respectively. While consumer outlook is improving, the broker does not expect Myer to participate in the recovery in sales growth to the same extent as other retailers.

Sell rating maintained. Target is raised to $0.57 from $0.49.

Target price is $0.57 Current Price is $0.62 Difference: minus $0.05 (current price is over target).
If MYR meets the Citi target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $0.66, suggesting upside of 6.1% (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

Credit Suisse rates MYR as Neutral (3) -

FY19 underlying earnings (EBIT) of $58m was ahead of forecasts. Despite declining sales, gross margins improved and there was a reduction in costs, which Credit Suisse believes has provided greater confidence in management's long-term strategy.

The company's online store is now its largest, representing 9.8% of total sales. Over 100 new brands have been added to the online store and Myer is aiming to match its in-store and online ranges by the end of 2019.

Myer will close its Hornsby store and remaining clearance stores by January 2020 and exit level four of its Emporium in Melbourne from May 2020. Credit Suisse maintains a Neutral rating and raises the target to $0.61 from $0.55.

Target price is $0.61 Current Price is $0.62 Difference: minus $0.01 (current price is over target).
If MYR meets the Credit Suisse target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $0.66, suggesting upside of 6.1% (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 MYR as Neutral (3) -

Myer's profit came in ahead of expectations thanks to an improved gross profit margin on an ongoing cost reduction effort. Yet sales fell -2.9%. The broker expects further downside risk to sales as stores are closed, key brands exit and the company spends less on promotion.

Store rationalisation, lower costs and a refocus on the range and mix of offerings should continue to support margin expansion in the near term, the broker suggests, but revenue growth remains challenged and the consumer is expected to remain subdued in FY20.

Neutral retained, target rises to 65c from 49c.

Target price is $0.65 Current Price is $0.62 Difference: $0.03
If MYR meets the Macquarie target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $0.66, suggesting upside of 6.1% (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

Ord Minnett rates MYR as Accumulate (2) -

FY19 net profit was below forecasts while operating earnings (EBITDA) were above. The shift in sales to Myer exclusive brands and other new ranges should boost gross margins and, Ord Minnett points out, operating earnings growth will be driven by gross margin expansion.

The store network continues to be optimised. Ord Minnett maintains an Accumulate rating and raises the target to $0.75 from $0.70.

Target price is $0.75 Current Price is $0.62 Difference: $0.13
If MYR meets the Ord Minnett target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $0.66, suggesting upside of 6.1% (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

UBS rates MYR as Buy (1) -

FY19 earnings (EBIT) were ahead of UBS estimates. The broker notes cash flow was strong and cost reductions accelerated in the second half. The company has provided a cautious FY20 outlook, contrary to peers, UBS assesses.

While not without risks, UBS believes management's focus on profit through handing back space, cost reductions and refurbishment should drive earnings going forward. Buy rating maintained. Target rises to $0.71 from $0.64.

Target price is $0.71 Current Price is $0.62 Difference: $0.09
If MYR meets the UBS target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $0.66, suggesting upside of 6.1% (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 PAN as Outperform (1) -

Macquarie has upgraded its FY20 and FY21 nickel price forecasts by 34% and 9% respectively to incorporate the early reinstatement of the nickel ore ban. This leads the broker forecast for Panoramic Resources to swing to profit from loss.

Target falls to 45c from 46c on updated Savannah guidance and anticipation of a rights issue, Outperform retained.

Target price is $0.45 Current Price is $0.31 Difference: $0.14
If PAN meets the Macquarie target it will return approximately 45% (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

Macquarie rates S32 as Neutral (3) -

Macquarie has upgraded its FY20 and FY21 nickel price forecasts by 34% and 9% respectively to incorporate the early reinstatement of the nickel ore ban. This leads to 9-5% increase in forecast FY20-21 earnings for South32.

Target rises to $2.70 from $2.60, Neutral retained.

Target price is $2.70 Current Price is $2.79 Difference: minus $0.09 (current price is over target).
If S32 meets the Macquarie target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.24, suggesting upside of 16.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

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

Market Sentiment: 0.7

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

Morgans rates SDG as Hold (3) -

FY19 results revealed lower sales volumes while Morgans notes margins remain sound. The broker updates assumptions around the timing of projects. Contracted pre-sales for released projects stands at $192.4m.

The FY20 result will include a $6.4m profit contribution from the Lakeview Retail Centre, which was recently sold for $20m.

 The company does not expect market conditions to strengthen in the short term. Despite the challenges, Morgans remains comfortable with the quality of the portfolio and track record. Hold rating maintained. Target is raised to $1.62 from $1.48.

Target price is $1.62 Current Price is $1.60 Difference: $0.02
If SDG meets the Morgans target it will return approximately 1% (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

Citi rates SIG as Neutral (3) -

Citi always expected the first half results to be messy, given the transition of the Chemist Warehouse contract. So, while the first half net profit was -16% below forecasts, the broker is more interested in the full-year outlook and FY21.

At current multiples the stock appears fairly valued and, as there is some risk in the execution of Project Pivot, Citi maintains a Neutral High Risk rating. Target is $0.52.

The company is forecasting FY20 operating earnings (EBITDA) to be at the lower end of prior guidance of $55-60m, with at least 10% growth for the next three years.

Target price is $0.52 Current Price is $0.59 Difference: minus $0.07 (current price is over target).
If SIG 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 $0.50, suggesting downside of -15.3% (ex-dividends)

The company's fiscal year ends in January.

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

Credit Suisse rates SIG as Underperform (5) -

First half earnings were in line with Credit Suisse estimates. The company achieved $33m in annualised savings in the first half, because of a reduction in labour, although some benefits have been delayed because of a slower transition of Chemist Warehouse.

The company continues to invest in its new distribution centres. While the level of automation has increased, the broker estimates there could be around 50% excess capacity post the exit of Chemist Warehouse, which in turn may limit the amount of operating efficiencies available.

Credit Suisse retains an Underperform rating and $0.50 target.

Target price is $0.50 Current Price is $0.59 Difference: minus $0.09 (current price is over target).
If SIG meets the Credit Suisse target it will return approximately minus 15% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $0.50, suggesting downside of -15.3% (ex-dividends)

The company's fiscal year ends in January.

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

Morgan Stanley rates SIG as Underweight (5) -

Morgan Stanley finds industry conditions remain challenging and the impact of the lost Chemist Warehouse contract is still to be felt. The broker awaits the execution on the company's transformation strategy to obtain more confidence in the long-term growth targets.

Underlying net profit fell -44% in the first half, weaker than Morgan Stanley expected. The company now expects FY20 operating earnings (EBITDA) to be at the bottom end of the $55-60m range.

The company has realised $33m in annualised efficiencies and still plans to annualise a further $60m by the end of FY20, and another $40m by the end of FY21.

The bulk of the savings relate to the transition of the Chemist Warehouse contract. The broker maintains an Underweight rating, In-Line industry view and raises the target to $0.49 from $0.46.

Target price is $0.49 Current Price is $0.59 Difference: minus $0.1 (current price is over target).
If SIG meets the Morgan Stanley target it will return approximately minus 17% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $0.50, suggesting downside of -15.3% (ex-dividends)

The company's fiscal year ends in January.

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

UBS rates SIG as Sell (5) -

First half sales were ahead of UBS estimates while underlying operating earnings (EBITDA) were in line. Earnings quality was affected by the one-off restructuring costs associated with Project Pivot.

The company has reiterated long-term targets but the implied growth appears optimistic to the broker. UBS downgrades estimates for earnings per share by -23% and -19% across FY20 and FY21.

Sell rating maintained. Target rises to $0.49 from $0.45.

Target price is $0.49 Current Price is $0.59 Difference: minus $0.1 (current price is over target).
If SIG meets the UBS target it will return approximately minus 17% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $0.50, suggesting downside of -15.3% (ex-dividends)

The company's fiscal year ends in January.

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

Credit Suisse rates TPM as Underperform (5) -

FY19 results were slightly ahead of guidance. FY20 is expected to reveal a significant decline in operating earnings (EBITDA), driven by the combined impact of NBN migration and lower margins for existing NBN customers.

Credit Suisse recognises the proposed merger with Vodafone Australia is a key driver of the stock. Federal Court hearings will finish by the beginning of October but a judgement is not expected before Christmas.

The broker maintains an Underperform rating and reduces the target to $5.50 from $5.60.

Target price is $5.50 Current Price is $6.42 Difference: minus $0.92 (current price is over target).
If TPM meets the Credit Suisse target it will return approximately minus 14% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $6.33, suggesting downside of -1.4% (ex-dividends)

The company's fiscal year ends in July.

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

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

At first glance FY19 operating earnings (EBITDA) beat estimates with more cost reductions and better income in the enterprise division. First time FY20 operating earnings guidance is $735-750m, also ahead of Morgan Stanley's forecasts.

The broker considers the shares are detached from the fundamentals and heavily influenced by the Federal Court decision on the merger with Vodafone Australia.

The broker's bull case, should the merger proceed, is $8.70 a share while, conversely, should it not proceed the valuation is $5 a share.

Rating is Equal-weight. Target is $6.85. Industry view is In-Line.

Target price is $6.85 Current Price is $6.42 Difference: $0.43
If TPM meets the Morgan Stanley target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $6.33, suggesting downside of -1.4% (ex-dividends)

The company's fiscal year ends in July.

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

Morgans rates TPM as Hold (3) -

Underlying operating earnings (EBITDA) were ahead of guidance while FY20 guidance is broadly in line with expectations. Management continues to aggressively fight NBN margin erosion with cost reductions and has impressed Morgans on this front.

The direction of earnings and the share price are heavily dependent on the merger success with Vodafone Australia. Morgans maintains a Hold rating and raises the target to $5.89 from $5.50.

Target price is $5.89 Current Price is $6.42 Difference: minus $0.53 (current price is over target).
If TPM meets the Morgans target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $6.33, suggesting downside of -1.4% (ex-dividends)

The company's fiscal year ends in July.

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

Ord Minnett rates TPM as Accumulate (2) -

FY19 revenue was ahead of Ord Minnett's forecasts while underlying profit was weaker than expected. FY20 operating earnings (EBITDA) guidance of 735-750m is in line with estimates.

The broker observes the company is performing well across its consumer business, despite the pressure from the NBN. Valuation remains largely dependent on the outcome of the court decision on the proposed merger with Vodafone Australia.

Ord Minnett continues to assume an 80% likelihood the merger will be approved. Accumulate rating maintained. Target rises to $7.25 from $6.90.

Target price is $7.25 Current Price is $6.42 Difference: $0.83
If TPM meets the Ord Minnett target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $6.33, suggesting downside of -1.4% (ex-dividends)

The company's fiscal year ends in July.

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 WPL as Neutral (3) -

As the Treasury's gas transfer pricing review continues, headwinds from PRRT changes continue for Woodside. Lower PRRT (petroleum resource rent tax) shields and thus higher and sooner PRRT payments have reduced the economics of Browse and Scarborough, the broker notes. 

Weaker energy prices have also increased downside risk to forecasts, and transfer price changes could also reduce the value of Wheatstone and Pluto. The broker retains Neutral, target falls to $32.50 from $33.30.

Target price is $32.50 Current Price is $31.85 Difference: $0.65
If WPL meets the Macquarie target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $33.17, suggesting upside of 4.1% (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: 0.1

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

Macquarie rates WSA as Outperform (1) -

Macquarie has upgraded its FY20 and FY21 nickel price forecasts by 34% and 9% respectively to incorporate the early reinstatement of the nickel ore ban. This leads to a 266% increase in forecast FY20 earnings for Western Areas.

Target rises to $3.60 from $2.70, Outperform retained.

Target price is $3.60 Current Price is $3.08 Difference: $0.52
If WSA meets the Macquarie target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $3.04, suggesting downside of -1.2% (ex-dividends)

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 XRO as Lighten (4) -

The company has announced a number of functionality initiatives at its conference. Ord Minnett notes changes are incremental and fall into two broad categories.

There include initiatives to assist with small-medium enterprise cash flow management as well as reducing process friction.

On the latter subject, improvements in machine learning algorithms have meant the business is now extracting 70% of financial documents in Hubdoc as opposed to 20% of the time of acquisition. Documents are now processed in seconds rather than hours.

Ord Minnett maintains a Lighten rating and $53 target, believing the stock multiples are high relative to global peers.

Target price is $53.00 Current Price is $66.50 Difference: minus $13.5 (current price is over target).
If XRO meets the Ord Minnett target it will return approximately minus 20% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $58.25, suggesting downside of -12.4% (ex-dividends)

The company's fiscal year ends in March.

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: -0.2

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