Australian Broker Call

UBS rates ALQ as Reinstate Coverage with Neutral (3) -

UBS believes the stock is adequately discounting both a recovery in mineral exploration activity and an improvement in profitability within the life sciences business.

While the outlook is positive the broker believes the pace of recovery will be measured. UBS reinstates coverage with a Neutral rating and $8.11 target.

Target price is $8.11 Current Price is $7.66 Difference: $0.45
If ALQ meets the UBS target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $7.57, suggesting downside of -1.1% (ex-dividends)

The company's fiscal year ends in March.

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

Macquarie rates AMC as Outperform (1) -

The company's guidance is for a modestly lower FY18 outcome versus the February update. Macquarie calculates this translates to modestly lower profit versus the prior year on a constant currency basis.

The trends are improving, Macquarie observes, but Pepsi is still losing share. The broker forecasts net profit growth of 8% in FY19. Outperform rating maintained. Target is reduced to $15.72 from $15.74.

Target price is $15.72 Current Price is $14.11 Difference: $1.61
If AMC meets the Macquarie target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $15.23, suggesting upside of 7.9% (ex-dividends)

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: 0.4

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

UBS rates AMP as Sell (5) -

UBS adds two more uncertainties to those factored into the earnings outlook. These are the removal of grandfathered commissions and federal budget changes to preserve super account balances less than $6000.

The earnings risk, combined with management and operating instability, leaves the broker reluctant to adopt a positive view on the stock. Sell rating maintained. Target is reduced to $3.30 from $3.80.

Target price is $3.30 Current Price is $3.65 Difference: minus $0.35 (current price is over target).
If AMP meets the UBS target it will return approximately minus 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.23, suggesting upside of 15.8% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.3

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

Citi rates APO as Sell (5) -

JCDecaux has submitted a non-binding, indicative offer to acquire APN Outdoor for $6.52ps or $1.1bn. Citi analysts point out, with APN Outdoor already interested in buying Adshell from HT&E ((HT1)), in competition with oOh!media ((OML)), somebody is going to lose in this game of sector consolidation.

Citi suggests the risk is now that HT&E won't have any competitive tension for its Adshell operation. This might result in no sale of that business.

Target price is $4.85 Current Price is $5.85 Difference: minus $1 (current price is over target).
If APO meets the Citi target it will return approximately minus 17% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.63, suggesting downside of -3.8% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.3

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

UBS rates ASL as Reinstate Coverage with Buy (1) -

UBS believes a favourable backdrop will support the company's contract mining services in Africa.

Ausdrill is the largest contractor in the regions in which it operates and is well positioned, in the broker's view, to convert a pipeline of projects, given its historical win rates.

UBS reinstates coverage with a Buy rating and $2.65 target.

Target price is $2.65 Current Price is $1.86 Difference: $0.79
If ASL meets the UBS target it will return approximately 42% (excluding dividends, fees and charges).

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

Morgan Stanley rates FBU as Overweight (1) -

The company's strategy briefing has confirmed the re-shaping of the portfolio with the sale of Formica and RTG. Australian business will also be combined into a single unit.

Fletcher Building is targeting a net -NZ$30m reduction in corporate costs, and impairments of at least NZ$85m in FY18 on IT.

Morgan Stanley suggests the outlook is complicated and FY19 may be a transition year with the real benefits flowing in FY20. Overweight rating, Cautious industry view and NZ$7 maintained.

Current Price is $6.20. Target price not assessed.

Current consensus price target is N/A

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

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

Market Sentiment: 0.3

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

Macquarie rates IAG as Underperform (5) -

Macquarie considers the crystallisation of the company's assets will put more focus on buybacks at the next result but suggests the bulk of capital will not be available for use until FY20.

Earnings estimates are raised by 1.8% for FY18 and by 20.5% for FY19. Underperform maintained. Target rises to $6.90 from $6.50.

Target price is $6.90 Current Price is $8.45 Difference: minus $1.55 (current price is over target).
If IAG meets the Macquarie target it will return approximately minus 18% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $7.64, suggesting downside of -9.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.0

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

UBS rates IMD as Initiation of coverage with Buy (1) -

UBS initiates coverage with a Buy rating and $1.70 target. The company is a global provider of mining equipment and technological solutions to drillers and resource companies.

Outside of the core business, the broker envisages significant upside risks to earnings if Imdex can successfully commercialise production drilling initiatives and Flexdrill.

Target price is $1.70 Current Price is $1.25 Difference: $0.45
If IMD meets the UBS target it will return approximately 36% (excluding dividends, fees and charges).

Current consensus price target is $1.70, suggesting upside of 36.0% (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

Morgans rates LAU as Add (1) -

Morgans believes the company is on track for a strong FY18 result. This is underpinned by improved capacity utilisation, market share gains and price rises in the core transport division.

The broker continues to believe the stock is a compelling way to gain exposure to the expected growth in domestic fresh produce and improving export market access. Add maintained. Target is reduced to $0.50 from $0.51.

Target price is $0.50 Current Price is $0.37 Difference: $0.13
If LAU meets the Morgans target it will return approximately 35% (excluding dividends, fees and charges).

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

UBS rates MND as Reinstate Coverage with Buy (1) -

UBS believes the stock offers significant leverage to the Western Australian iron ore expenditure cycle.

Of the total capital investment of US$19bn expected over the next 4-5 years the broker estimates a total addressable revenue pool for Monadelphous of at least $3bn.

The broker considers the current valuation attractive and reinstates coverage with a Buy rating and $15.70 target.

Target price is $15.70 Current Price is $14.42 Difference: $1.28
If MND meets the UBS target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $15.30, suggesting upside of 6.1% (ex-dividends)

The company's fiscal year ends in June.

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 MTO as Add (1) -

The company has guided to operating earnings of $19-21m for FY18, and the mid point is around -8.7% below Morgans' prior estimate. Most of the shortfall is likely relating to the base business, as opposed to Cassons, and persistent weakness in Harley-Davidson is expected to be the main culprit.

However, Morgans does not believe the drivers of the headwinds are structural and is confident in the probability of a rebound in momentum in FY19. Add maintained. Target is reduced to $4.01 from $4.49.

Target price is $4.01 Current Price is $3.43 Difference: $0.58
If MTO meets the Morgans target it will return approximately 17% (excluding dividends, fees and charges).

The company's fiscal year ends in July.

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 NCM as Neutral (3) -

Newcrest has settled its insurance claim in relation to the seismic event on April 14, 2017 at Cadia. The settlement is reported to be US$155m.

Credit Suisse calculates that US$130m of the insurance payment relates to business interruption and may be taxable at the company's 30% tax rate, while US$25m compensates the damage repair costs.

The broker adjusts estimates to capture the contribution. The surprise settlement raises the possibility of future compensation for the more recent business disruption from the tailings wall failure.

Neutral maintained. Target is raised to $20.30 from $20.10.

Target price is $20.30 Current Price is $21.19 Difference: minus $0.89 (current price is over target).
If NCM meets the Credit Suisse target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $21.11, suggesting downside of -0.4% (ex-dividends)

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: -0.1

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

Credit Suisse rates NST as Underperform (5) -

The company has signalled that the June quarter is on track to exceed 155,000 ozs, and the lower end of  FY18 guidance has already been achieved.

What is unknown, Credit Suisse points out, is whether, and by how much, the South Kalgoorlie acquisition contributes.

Underperform rating and $4.55 target maintained.

Target price is $4.55 Current Price is $6.41 Difference: minus $1.86 (current price is over target).
If NST meets the Credit Suisse target it will return approximately minus 29% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.52, suggesting downside of -14.0% (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 rates NST as Neutral (3) -

The company has reached a production run rate of 600,000 ozs per annum and believes it is on track to exceed the top of its FY18 production target of 540-560,000 ozs.

Macquarie currently models for a modest 600,000-plus ozs per annum from the June quarter, and notes the first quarter of FY19 will be the first where Northern Star will gain full control of the HBJ mill.

Neutral and $6.10 target retained.

Target price is $6.10 Current Price is $6.41 Difference: minus $0.31 (current price is over target).
If NST meets the Macquarie target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.52, suggesting downside of -14.0% (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

UBS rates NWH as Reinstate Coverage with Buy (1) -

UBS believes the company's civil construction business is well-positioned to secure it share of work from iron ore investment in Western Australia. There is also strong visibility across the mining services contracting business and an improving outlook for drill & blast.

UBS expects these drivers to underpin a 20% growth rate in earnings per share over FY18-21. The broker reinstates coverage with a Buy rating and $1.90 target.

Target price is $1.90 Current Price is $1.37 Difference: $0.53
If NWH meets the UBS target it will return approximately 39% (excluding dividends, fees and charges).

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 OGC as Outperform (1) -

The company has upgraded full-year guidance via an implied upgrade of 10-20,000 ounces for Didipio.

As Didipio continues to operate under a suspension order, an update on the review timetable, Credit Suisse suggests, would probably be more material than a production upgrade.

The broker has retained an Outperform rating and $3.80 target.

Target price is $3.80 Current Price is $3.66 Difference: $0.14
If OGC meets the Credit Suisse target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $4.60, suggesting upside of 25.7% (ex-dividends)

The company's fiscal year ends in December.

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: 0.9

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

UBS rates OGC as Buy (1) -

The company has lifted its guidance range to 500-540,000 ozs which UBS considers is another incremental positive step and a continuation of positive news over time may mean the stock re-rates closer to its peers.

The broker suggests OceanaGold is offering good value. Buy rating is maintained. Target rises to $4.20 from $4.10.

Target price is $4.20 Current Price is $3.66 Difference: $0.54
If OGC meets the UBS target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $4.60, suggesting upside of 25.7% (ex-dividends)

The company's fiscal year ends in December.

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: 0.9

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

Macquarie rates TCL as Outperform (1) -

Macquarie observes cash generation is accelerating in the absence of WestConnex. This reflects the benefit of the widening of Citylink and the secondary benefit of Gateway North and the ICB link.

Additional benefits are expected in FY20 as another toll price step change occurs at Gateway. With a strong platform for growth Macquarie maintains an Outperform rating and $12.44 target.

Target price is $12.44 Current Price is $12.17 Difference: $0.27
If TCL meets the Macquarie target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $12.82, suggesting upside of 5.3% (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

Citi rates TLS as Sell (5) -

Citi analysts have been among the loudest voices in Australia calling Telstra's dividend focus unsustainable and that view has only strengthened post yet another shock guidance provided at the telco's investor day yesterday.

To go straight to the finish: Citi is now forecasting Telstra's dividend will not be higher than 10c starting in FY21. Earnings estimates have been slashed, and that choice of language is appropriate when the chainsaw cuts -33% and -36% off previously lowered estimates.

Price target falls to $2.30 from $2.70. Sell.

Target price is $2.70 Current Price is $2.77 Difference: minus $0.07 (current price is over target).
If TLS meets the Citi target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.25, suggesting upside of 17.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.3

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

Macquarie rates TLS as Neutral (3) -

The company has lowered expectations for FY19 on the back of the tougher outlook for mobiles amid efforts to re-based pricing.

No FY19 dividend guidance was offered but Macquarie envisages dividends will be cut to $0.16 per share from FY19, to largely reflect lower earnings. Telstra has outlined plans for a stand-alone infrastructure unit with $11bn in assets.

Macquarie remains concerned about the revenue trajectory and, while the strategy should mean the company regains the initiative in the mobiles business, it is not without costs or risks. Neutral maintained. Target is reduced by -14.1% to $2.75.

Target price is $2.75 Current Price is $2.77 Difference: minus $0.02 (current price is over target).
If TLS meets the Macquarie target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.25, suggesting upside of 17.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.3

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

Morgan Stanley rates TLS as Underweight (5) -

Morgan Stanley interprets the company's commentary and the new guidance for FY19 as signalling significant structural pressures on many of the businesses.

FY19 operating earnings guidance of $8.7-9.4bn compares with consensus estimates of $10.5bn. The broker retains medium to long-term concerns regarding the fundamentals of the business, although a range of new initiatives should cushion the impact of structural pressures.

Target is $3.00. Underweight. Industry view: In-Line.

Target price is $3.00 Current Price is $2.77 Difference: $0.23
If TLS meets the Morgan Stanley target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $3.25, suggesting upside of 17.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.3

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

Morgans rates TLS as Add (1) -

Telstra has announced a significant simplification of its operations. FY19 is expected to be affected by restructuring and delays in the NBN.

Morgans understands that guidance, comprised of operating earnings of $8.7-9.4bn, assumes lower over-usage, restructuring costs and meaningful delays in the NBN.

Morgans suspects lower earnings translate to a lower dividend, regardless of timing delays, and has downgraded FY19/20 dividend estimates to $0.17 per share. The broker retains an Add rating and reduces the target to $3.42 from $3.99.

Target price is $3.42 Current Price is $2.77 Difference: $0.65
If TLS meets the Morgans target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $3.25, suggesting upside of 17.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.3

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

UBS rates TLS as Buy (1) -

UBS believes the company's announcements regarding restructuring, 5G and cost reductions should lift terminal earnings versus a "do nothing" approach and potentially even lift FY22 EBIT back above FY19.

The question for the broker is execution. A Buy rating is maintained on a risk/reward basis but the near-term catalysts are considered limited unless a trough can be demonstrated for earnings in FY19. Target is $3.00.

Target price is $3.00 Current Price is $2.77 Difference: $0.23
If TLS meets the UBS target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $3.25, suggesting upside of 17.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.3

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

UBS rates WOR as Reinstate Coverage with Neutral (3) -

UBS expects a gradual recovery in global oil & gas capital expenditure and suggests this is now adequately discounted in the WorleyParsons share price.

Oil sector fundamentals have significantly improved and support a constructive view on the medium-term growth prospects for project investment. The broker reinstates coverage with a Neutral rating and $17.50 target.

Target price is $17.50 Current Price is $16.88 Difference: $0.62
If WOR meets the UBS target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $17.13, suggesting upside of 1.5% (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