Australian Broker Call

Citi rates A2M as Neutral (3) -

Following management's admission that more spending needs to be done to market the brand to Chinese customers, and elsewhere, Citi analysts have cut forecasts. We're talking -4%-6% at the EPS level for FY18-FY20.

With market multiples largely compensating for reduced earnings outlook, Citi's price target only declines by -1% to $10.90. Neutral.

Target price is $10.90 Current Price is $10.46 Difference: $0.44
If A2M meets the Citi target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $11.72, suggesting upside of 12.0% (ex-dividends)

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: 0.7

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

Credit Suisse rates ALL as Outperform (1) -

Plarium has launched a number of new games and, while it is too early to draw conclusions, Credit Suisse is modelling an acceleration of revenue growth to 19% in FY19, from 3% in the first half of FY18.

Many of these games are yet to be launched globally. By FY19, the broker anticipates Plarium will contribute 11% to revenue. Outperform rating and $35 target maintained.

Target price is $35.00 Current Price is $31.80 Difference: $3.2
If ALL meets the Credit Suisse target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $34.48, suggesting upside of 8.4% (ex-dividends)

The company's fiscal year ends in September.

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

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

Credit Suisse analysts are of the view that the way of least resistance for aluminium prices is south, but they also anticipate margins at JV AWAC are likely to hold up and the combination of these two factors leads to an upgrade in recommendation to Outperform from Neutral.

Note JV partner Alcoa is scheduled to report Q2 financial performance numbers on Wednesday this week, USA time. Target price gains 10c on increased estimates which pushes the price target to $3.10.

Add-in a net dividend yield forecast of 9% in 2018 and the implied return from here is no less than 17%. Current forecasts do imply this year will be the peak for a while to come in terms of profits and dividends.

Target price is $3.10 Current Price is $2.83 Difference: $0.27
If AWC meets the Credit Suisse target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $2.81, suggesting downside of -1.8% (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: 0.4

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

Ord Minnett rates BXB as Buy (1) -

Ord Minnett suggests the outlook for pallet industry profitability is improving. The broker believes the Brambles share price fails to capture the outlook for US industry profitability and estimates CHEP Americas represents about 35-40% of group earnings.

The stock is the broker's preference in the transport sector and a Buy rating is maintained. Target is raised to $12.50 from $12.25.

Target price is $12.50 Current Price is $9.48 Difference: $3.02
If BXB meets the Ord Minnett target it will return approximately 32% (excluding dividends, fees and charges).

Current consensus price target is $10.37, suggesting upside of 9.4% (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: 0.3

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

Morgan Stanley rates DMP as Overweight (1) -

Morgan Stanley believes the company's greatest long-term value driver is the European expansion. Results of analysis have debunked the idea that pizza consumption is low.

The broker believes Domino's has a significant competitive advantage given online and scale. Overweight rating and Cautious industry view. Target is raised to $65 from $55.

Target price is $65.00 Current Price is $49.92 Difference: $15.08
If DMP meets the Morgan Stanley target it will return approximately 30% (excluding dividends, fees and charges).

Current consensus price target is $49.38, suggesting downside of -1.1% (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

Ord Minnett rates HPI as Upgrade to Accumulate from Hold (2) -

After reviewing six long WALE real estate investment trusts Ord Minnett notes a total return of 16.3% has been delivered in FY18, outperforming the S&P/ASX 200 REIT index.

The broker upgrades Hotel Property Investments to Accumulate from Hold. The stock underperformed the other long WALE REITs in FY18 while offering a 6.6% dividend yield. Target is $3.30.

Target price is $3.30 Current Price is $3.14 Difference: $0.16
If HPI meets the Ord Minnett target it will return approximately 5% (excluding dividends, fees and charges).

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 IAG as Overweight (1) -

Morgan Stanley believes the market has been to cautious regarding the sustainability of rate increases and the risk of the company reinvesting targeted savings into growth.

The broker believes the company provides the purest exposure to the Australasian market as it enters an upgrade cycle.

Overweight rating. Industry view In-Line. Price target is raised to $9.00 from $8.00.

Target price is $9.00 Current Price is $8.11 Difference: $0.89
If IAG meets the Morgan Stanley target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $7.90, suggesting downside of -2.6% (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

Morgans rates ICQ as Add (1) -

Cash collections in the June quarter were better than Morgans expected amid strong growth in the underlying classifieds business.

The company has launched some new transaction-based services that have potential to substantially increase revenue per vehicle listed. The broker maintains an Add rating and raises the target to $0.41 from $0.29.

Target price is $0.41 Current Price is $0.24 Difference: $0.17
If ICQ meets the Morgans target it will return approximately 71% (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

Morgans rates IDR as Hold (3) -

The company has acquired two adjoining assets in Melbourne for $15.7m on an initial yield of 7.45%. The finance facility has been restructured to allow for future growth opportunities.

Morgans expects portfolio revaluations to be announced in the near term. Hold rating maintained. Target is raised to $2.67 from $2.56.

Target price is $2.67 Current Price is $2.60 Difference: $0.07
If IDR meets the Morgans target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $2.55, suggesting downside of -1.9% (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 LLC as Neutral (3) -

Lend Lease has substantially re-rated on the back of project and construction tender gains. UBS suggests the recent news flow highlights a globally diversified business with a competitive edge.

Still, the broker does not believe a market multiple is warranted and this reflects the exposure to Australian residential markets, substantial execution risks and ongoing construction earnings weakness. Neutral rating maintained. Target is raised to $19.50 from $18.20.

Target price is $19.50 Current Price is $19.94 Difference: minus $0.44 (current price is over target).
If LLC meets the UBS target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $19.01, suggesting downside of -4.7% (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 MLX as Outperform (1) -

Macquarie found the June quarter production result weak, with both Nifty and Renison reporting output that was -17% and -13% below forecasts, respectively.

However, the commissioning of the ore sorter should mean a sharp recovery in output at Renison. The broker takes a more conservative approach to ramp up at Nifty but remains confident that significantly higher production is achievable.

Outperform rating maintained. Target is reduced to $1.00 from $1.10.

Target price is $1.00 Current Price is $0.69 Difference: $0.31
If MLX meets the Macquarie target it will return approximately 45% (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

Macquarie rates NGI as Outperform (1) -

The company reported US$5.4bn in net inflows, largely as Macquarie expected. The broker makes no changes to FY18 estimates but increases FY19 by 4.25%.

Target is raised to $5.17 from $4.77. Outperform maintained.

Target price is $5.17 Current Price is $5.68 Difference: minus $0.51 (current price is over target).
If NGI meets the Macquarie target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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

Ord Minnett rates NGI as Buy (1) -

Navigator has demonstrated another strong quarter, Ord Minnett observes, with the Lighthouse assets under management growing by 7%. Mesirow provided a positive surprise as well.

The broker notes good prospects of additional funds flowing from Asia and Europe. Buy rating maintained. Target rises to $5.70 from $4.90.

Target price is $5.70 Current Price is $5.68 Difference: $0.02
If NGI meets the Ord Minnett target it will return approximately 0% (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 NWL as Neutral (3) -

Netwealth has made a small upgrade to guidance, although Credit Suisse suggests consensus expectations had already arrived at that point. FY18 pro forma net profit guidance is now 6% ahead of prospectus forecasts.

The company reported funds under administration of $18bn, up 12% in the June quarter and driven by strong inflows and positive market movements. Credit Suisse maintains a Neutral rating and $7.90 target.

Target price is $7.90 Current Price is $9.27 Difference: minus $1.37 (current price is over target).
If NWL 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 $7.10, suggesting downside of -23.4% (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 NWL as Sell (5) -

Updated FY18 profit guidance suggests pro forma expectations that are 6% above prospectus and better than forecast at the first half result.

Allowing for several factors, UBS reduces FY18 and FY19 estimates for earnings per share by -5% and retains a Sell rating. Target is $7.

Target price is $7.00 Current Price is $9.27 Difference: minus $2.27 (current price is over target).
If NWL meets the UBS target it will return approximately minus 24% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $7.10, suggesting downside of -23.4% (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

Citi rates PRU as Buy (1) -

The gold miner surprised with a strong June quarter performance, accompanied by conservative guidance below what market consensus had been expecting.

Citi analysts point out, even taking guidance at face value means there is high growth on the menu. Reducing forecasts somewhat leads to a lower price target; 65c instead of 70c. Buy/High Risk.

Target price is $0.65 Current Price is $0.44 Difference: $0.21
If PRU meets the Citi target it will return approximately 48% (excluding dividends, fees and charges).

Current consensus price target is $0.60, suggesting upside of 36.9% (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 PRU as Outperform (1) -

The company posted a strong June quarter and Credit Suisse notes a maiden commercial quarterly outcome of 26,020 ounces from Sissingue.

Resource definition drilling continues at Yaoure and the exploitation permit is now expected in the September quarter. Outperform rating and $0.69 target.

Target price is $0.69 Current Price is $0.44 Difference: $0.25
If PRU meets the Credit Suisse target it will return approximately 57% (excluding dividends, fees and charges).

Current consensus price target is $0.60, suggesting upside of 36.9% (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

Macquarie rates PRU as Outperform (1) -

The company posted a strong end into the financial year, and Sissingue performed better than Macquarie expected.

Meanwhile, Edikan consolidated recent operating improvements and the broker suggests that the prospects of securing debt funding for the Yaoure development have improved. Macquarie maintains a Outperform rating and $0.52 target.

Target price is $0.52 Current Price is $0.44 Difference: $0.08
If PRU meets the Macquarie target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $0.60, suggesting upside of 36.9% (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

Macquarie rates QBE as Outperform (1) -

Following major losses in 2017, Macquarie believes QBE needs to restructure its 2019 reinsurance program. However, the broker believes concerns about the longevity of insurance-link securities as a reinsurance capital source have been allayed.

The broker concludes this is a sustainable funding source and there could be scope for the company to increase exposure at the next reinsurance renewal. Outperform rating maintained. Target is raised $11.70 from $11.60.

Target price is $11.70 Current Price is $9.71 Difference: $1.99
If QBE meets the Macquarie target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $11.08, suggesting upside of 14.1% (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: 0.4

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

Morgan Stanley rates QBE as Overweight (1) -

Morgan Stanley believes QBE is attractively priced versus domestic and global peers and has achieved better pricing in 2018 across Europe, North America and Australia, while actively de-risking its book.

A clean result is likely in 2018 and, with second half tailwinds, the broker reiterates an Overweight rating. Target is raised to $12.00 from $11.90. Industry view is In-Line.

Target price is $12.00 Current Price is $9.71 Difference: $2.29
If QBE meets the Morgan Stanley target it will return approximately 24% (excluding dividends, fees and charges).

Current consensus price target is $11.08, suggesting upside of 14.1% (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: 0.4

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

UBS rates RFF as Buy (1) -

The company has announced a $150m entitlement offer to fund the acquisition of the feedlot and a previously announced cattle property. UBS estimates a 13% return on equity for the acquisition versus a 13% implied cost of equity at the offer price.

As such, the broker's valuation is unchanged, although there are options for further accretive acquisitions. Buy rating and $2.39 target maintained.

Target price is $2.39 Current Price is $2.08 Difference: $0.31
If RFF meets the UBS target it will return approximately 15% (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

Citi rates RHC as Buy (1) -

The company's French subsidiary has launched a bid for the Swedish-based Capio, valuing the equity at EUR661m. Ramsay intends to fund the offer through debt and equity.

Citi expects the transaction may take 6-9 months if the Capio board engages. Hence, no changes are made to earnings forecasts and more clarity is required as the bid proceeds. Buy rating and $61 target maintained.

Target price is $61.00 Current Price is $53.74 Difference: $7.26
If RHC meets the Citi target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $60.46, suggesting upside of 12.5% (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 RHC as Equal-weight (3) -

Ramsay, through its subsidiary in France, has made an unsolicited takeover offer for European healthcare company Capio. The offer will be funded via debt and equity.

Morgan Stanley is unsure if the deal will solve the company's low-growth prospects in FY19. Management of Capio has since rejected the offer, stating it believes it does not adequately reflect fundamental value.

Equal-weight retained. In-Line sector view. Price target is $57.

Target price is $57.00 Current Price is $53.74 Difference: $3.26
If RHC meets the Morgan Stanley target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $60.46, suggesting upside of 12.5% (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

Ord Minnett rates RHC as Hold (3) -

Ramsay's French joint venture has made a public offer for Swedish listed health care group Capio. If the bid is successful Ord Minnett observes it will expand the health business into four new European countries at a time when operating conditions have been difficult because of funding pressures.

Nevertheless, the synergies on offer appear substantial and should underpin accretion by FY20, even if a higher bid is required, the broker suggests. Hold rating and $60 target maintained.

Target price is $60.00 Current Price is $53.74 Difference: $6.26
If RHC meets the Ord Minnett target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $60.46, suggesting upside of 12.5% (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 RHC as Neutral (3) -

Ramsay's French subsidiary has launched an unsolicited takeover bid for Capio, a health service provider with operations in Sweden, Norway, Denmark, France and Germany. The offer price implies an equity value of EUR661m.

On first glance, UBS estimates potential earnings accretion from FY20 increasing to around 4% in FY22. While the level of accretion suggests a higher offer is possible, the broker questions the timing of a pivot to Europe while conditions in Australia remain challenging. Neutral rating and $54 target maintained.

Target price is $54.00 Current Price is $53.74 Difference: $0.26
If RHC meets the UBS target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $60.46, suggesting upside of 12.5% (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

Citi rates RIO as Buy (1) -

The company has signed an agreement regarding the potential exit from Grasberg for US$3.5bn. Citi suggests completion of the deal would be a positive step and any cash proceeds should add to the cash returns available to shareholders in 2018.

An alternative option is to use proceeds to grow the copper business.The broker maintains a Buy rating and $86 target.

Target price is $86.00 Current Price is $79.69 Difference: $6.31
If RIO meets the Citi target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $89.31, suggesting upside of 12.1% (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: 0.8

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

UBS rates RIO as Buy (1) -

Rio Tinto has signalled the sale of Grasberg for US$3.5bn to an Indonesian state-owned entity. UBS notes the company has not generated material earnings from Grasberg since 2011.

The broker envisages the company will now be lifted from the influential Norwegian government environmental exclusion list.

Media reports also signal the company could consider exiting a couple more assets in the portfolio, and UBS estimates the value of the potential non-core assets could be around $3.4-4.4bn. Buy rating maintained along with a $93 target.

Target price is $93.00 Current Price is $79.69 Difference: $13.31
If RIO meets the UBS target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $89.31, suggesting upside of 12.1% (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: 0.8

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

Macquarie rates RSG as Outperform (1) -

Macquarie believes the updated study on Bibiani presents a large improvement over the prior study in 2016, although a conservative view is maintained on the mine life and operating costs.

Timely development remains key for the company, in order to reach its production expectations for FY22. Outperform rating maintained. Target is $1.60.

Target price is $1.60 Current Price is $1.33 Difference: $0.27
If RSG meets the Macquarie target it will return approximately 20% (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 SUN as Equal-weight (3) -

Recent share price strength reflects growing expectations that Suncorp's second half momentum will underpin the $1.4bn cash profit target in FY19.

While Morgan Stanley believes the company should obtain underlying margin improvement into FY19, investors are cautioned about expecting it to replicate Insurance Australia's ((IAG)) performance.

Equal-weight. Target is raised to $14.00 from $13.00. In-Line sector view.

Target price is $14.00 Current Price is $14.85 Difference: minus $0.85 (current price is over target).
If SUN meets the Morgan Stanley target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $14.52, suggesting downside of -2.2% (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