Australian Broker Call

Credit Suisse rates ASX as Underperform (5) -

ASX has entered into a JV with InfoTrack to provide an electronic property settlement offering. At $30m its a small, low risk investment into an adjacent market providing a new revenue opportunity, the broker notes, but unlikely to move the dial much on earnings.

The broker supports the move but retains Underperform and a $55 target, suggesting the stock is overpriced.

Target price is $55.00 Current Price is $60.32 Difference: minus $5.32 (current price is over target).
If ASX meets the Credit Suisse target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $55.54, suggesting downside of -7.9% (ex-dividends)

The company's fiscal year ends in June.

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

Deutsche Bank rates ASX as Sell (5) -

Deutsche Bank considers the valuation stretched but remains encouraged by a more growth-oriented outlook from the company. The announcement regarding a new business opportunity, Sympli, signals a shift in strategy.

Moreover, new DLT technology should allow ASX to participate in some post-trade services, the broker suggests, currently run by third parties, such as Link Administration ((LNK)) or Computershare ((CPU)). Sell rating and $55.90 target maintained.

Target price is $55.90 Current Price is $60.32 Difference: minus $4.42 (current price is over target).
If ASX meets the Deutsche Bank target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $55.54, suggesting downside of -7.9% (ex-dividends)

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

UBS rates BSL as Buy (1) -

UBS analysts have taken another look into their forecasts for Australian volumes for BlueScope Steel, and the net result is for minor changes to estimates, while the Buy rating has been retained, as well as the $20.50 price target.

The analysts note the Colorbond brand is now over 50 years old and it still dominates the painted & coated market in Australia. UBS estimates a market share of around 80%.

UBS analysts retain the view the stock is likely due for another re-rating, and with the company progressing towards a net cash position, and with greater earnings diversification, that conviction remains as strong as before.

Target price is $20.50 Current Price is $17.68 Difference: $2.82
If BSL meets the UBS target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $18.51, suggesting upside of 4.7% (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

Morgan Stanley rates CBA as Underweight (5) -

Growth in mortgages continues to slow and Morgan Stanley envisages downside risk to the major banks' growth forecasts, currently at around 4%. The broker highlights a new competitive disadvantage for the major banks.

Since the introduction of tighter lending standards in mid 2017, the major banks now have to compete more aggressively in low-risk segments to accelerate loan growth. This will, in turn, lead to margin pressure and erosion of returns on mortgages.

Underweight. Price target $70. Industry view: In-Line.

Target price is $70.00 Current Price is $68.74 Difference: $1.26
If CBA meets the Morgan Stanley target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $75.38, suggesting upside of 9.7% (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

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

Macquarie estimates the downside risk to Australasian franchising and FY18 guidance is less than previously thought. Meanwhile, the upside for Europe appears greater and there is potential now to drive scale benefits.

While FY18 net profit guidance for growth of 20% requires 35% growth in the second half, a challenge the broker acknowledges after a soft first half, headwinds are reduced and the upcoming World Cup should support business.

Macquarie upgrades to Outperform from Neutral. Target is raised to $55 from $45. The broker believes the stock has valuation support for a business that is expected to grow in excess of double digits per annum.

Target price is $55.00 Current Price is $50.89 Difference: $4.11
If DMP meets the Macquarie target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $48.64, suggesting downside of -4.4% (ex-dividends)

The company's fiscal year ends in June.

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

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

Macquarie now forecasts a -16% decline in the company's FY19 construction revenue, given the low level of wins this year and the time lag for new work flowing through to revenue. The Ichthys work should largely be completed by June 30 and the focus is now on the replacement of around $300m in revenue run-off in FY19.

Macquarie downgrades to Neutral from Outperform. Target is reduced to $15.87 from $19.18. The broker estimates 28% revenue growth in construction in FY20, assuming the company wins its share of upcoming work from the major miners.

Target price is $15.87 Current Price is $14.10 Difference: $1.77
If MND meets the Macquarie target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $15.22, suggesting upside of 8.0% (ex-dividends)

The company's fiscal year ends in June.

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

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

MYOB has abandoned its planned acquisition of Reckon's ((RKN)) Accountant Group assets due to ACCC concerns, choosing to pursue organic growth instead using the money it had allocated. Credit Suisse has lowered earnings forecasts by -15% to reflect the lost opportunity.

The hit to earnings per share is less due to interest savings and an acceleration of the buyback now the acquisition is off, but the broker has cut its target to $3.00 from $3.75 and downgraded to Neutral from Outperform.

Target price is $3.00 Current Price is $2.86 Difference: $0.14
If MYO meets the Credit Suisse target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $3.71, suggesting upside of 29.6% (ex-dividends)

The company's fiscal year ends in December.

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

Deutsche Bank rates MYO as Buy (1) -

The company will not go ahead with the Reckon ((RKN)) acquisition but will pursue the elevated expenditure on R&D and sales and marketing that was flagged as part of the transaction.

The quantum of expenditure, $80m in total, has surprised Deutsche Bank. As a result, EBITDA estimates are downgraded by -2-9% for FY18-20. Buy retained. Target is $3.70.

Target price is $3.70 Current Price is $2.86 Difference: $0.84
If MYO meets the Deutsche Bank target it will return approximately 29% (excluding dividends, fees and charges).

Current consensus price target is $3.71, suggesting upside of 29.6% (ex-dividends)

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

Macquarie rates NGI as Outperform (1) -

Macquarie incorporates the acquisition of Mesirow Financial and believes this will be transformational for the company. The broker incorporates US$5.2bn in funds under management from July and assumes heightened redemption activity in the three years following the transaction.

The broker retains an Outperform rating and raises the target to $4.77 from $3.82. FY19 earnings estimates are raised by 13.5% and FY20 by 19.8%.

Target price is $4.77 Current Price is $4.58 Difference: $0.19
If NGI meets the Macquarie target it will return approximately 4% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

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: 1.0

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

Credit Suisse rates OZL as Neutral (3) -

OZ Minerals' strategy presentation was all about introducing new board members and management team and highlighting company culture, the broker notes, and little about strategy. Nothing new was learned on this front.

When growth capital needs are better understood towards the end of the year, capital management plans will be defined. Neutral and $9.05 target retained.

Target price is $9.05 Current Price is $9.73 Difference: minus $0.68 (current price is over target).
If OZL meets the Credit Suisse target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $10.03, suggesting upside of 3.1% (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

Citi rates SEH as Buy (1) -

Buy/High Risk rating retained, as well as the 27c target price post US private equity firm Lone Star having made public its offer to shareholders of $0.25 per share in cash. Citi analysts suggest the offer will probably prove "inadequate", but Sino Gas is now officially in play.

The analysts note the board has unanimously recommended the offer, after having granted Lone Star diligence two weeks ago after an initial approach.

Target price is $0.27 Current Price is $0.24 Difference: $0.03
If SEH meets the Citi target it will return approximately 13% (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

Credit Suisse rates SGR as Outperform (1) -

Following Star Group's investor day the broker has lifted its VIP earnings outlook and trimmed valuation due to increased investment required in Brisbane. A contribution from the planned Gold Coast Tower 1 is modelled from FY23, requiring little capital from Star given the Chinese partners are providing the bulk of the funding.

No change to Outperform and a $5.60 target, with the broker still seeing the stock as cheap. The Chinese partners will buy 10% of the company on-market once NSW joins Qld in providing approval.

Target price is $5.60 Current Price is $4.89 Difference: $0.71
If SGR meets the Credit Suisse target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $6.11, suggesting upside of 24.8% (ex-dividends)

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

Credit Suisse rates SYR as Outperform (1) -

The broker notes Syrah has been quick to point out that its Balama graphite operation is a fully fenced and secured site with emergency response and crisis management teams. The Islamist attack reported in Mozambique is over seven hours drive away.

The point being, no need for investors to panic. Outperform and $6.60 target retained.

Target price is $6.60 Current Price is $3.10 Difference: $3.5
If SYR meets the Credit Suisse target it will return approximately 113% (excluding dividends, fees and charges).

Current consensus price target is $4.93, suggesting upside of 59.0% (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

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

Macquarie reviews the mixed use opportunity for the business as well as the Chatswood Chase development. Near term catalysts in the business strategy suggest the valuation is attractive.

An in specie distribution of second-tier retail assets is still considered to be on the agenda and presents potential upside.

The broker upgrades to Outperform from Neutral. Target is steady at $2.92.

Target price is $2.92 Current Price is $2.68 Difference: $0.24
If VCX meets the Macquarie target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $2.83, suggesting upside of 5.4% (ex-dividends)

The company's fiscal year ends in June.

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 - Cessation of coverage

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: 0.5

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