Australian Broker Call
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January 09, 2020
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COMPANIES DISCUSSED IN THIS ISSUE
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The number next to the symbol represents the number of brokers covering it for this report -(if more than 1).
Last Updated: 05:00 PM
Your daily news report on the latest recommendation, valuation, forecast and opinion changes.
This report includes concise but limited reviews of research recently published by Stockbrokers, which should be considered as information concerning likely market behaviour rather than advice on the securities mentioned. Do not act on the contents of this Report without first reading the important information included at the end.
For more info about the different terms used by stockbrokers, as well as the different methodologies behind similar sounding ratings, download our guide HERE
Today's Upgrades and Downgrades
| AGL - | AGL ENERGY | Downgrade to Underperform from Neutral | Credit Suisse |
| ORG - | ORIGIN ENERGY | Downgrade to Neutral from Outperform | Credit Suisse |
AGL AGL ENERGY LIMITED
Infrastructure & Utilities
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Overnight Price: $20.32
Credit Suisse rates AGL as Downgrade to Underperform from Neutral (5) -
Credit Suisse analysts observe futures for electricity prices have nosedived since October and for whatever reason this is yet to be reflected in the share price. They have taken the view risk for underlying earnings has now turned negative.
In addition, the analysts suggest competitors in the retail space are making inroads. FY20 earnings are still expected to hit the top of management's guidance. Target price falls to $18 from $18.40.
Target price is $18.00 Current Price is $20.32 Difference: minus $2.32 (current price is over target).
If AGL meets the Credit Suisse target it will return approximately minus 11% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $19.03, suggesting downside of -6.3% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY20:
Credit Suisse forecasts a full year FY20 dividend of 119.00 cents and EPS of 134.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 130.2, implying annual growth of -5.7%. Current consensus DPS estimate is 101.9, implying a prospective dividend yield of 5.0%. Current consensus EPS estimate suggests the PER is 15.6. |
Forecast for FY21:
Credit Suisse forecasts a full year FY21 dividend of 119.00 cents and EPS of 139.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 130.5, implying annual growth of 0.2%. Current consensus DPS estimate is 101.3, implying a prospective dividend yield of 5.0%. Current consensus EPS estimate suggests the PER is 15.6. |
Market Sentiment: -0.6
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $15.18
Ord Minnett rates AMC as Accumulate (2) -
It appears indicators for volumes for some of the company's major customers in North America were on the soft side in December, though Ord Minnett also notes Gatorade, which remains a high margin business for Amcor, continues to perform solidly.
In addition, tobacco volumes in December were down -6% compared to the year prior. Accumulate rating retained, alongside $16 price target.
This stock is not covered in-house by Ord Minnett. Instead, the broker whitelabels research by JP Morgan.
Target price is $16.00 Current Price is $15.18 Difference: $0.82
If AMC meets the Ord Minnett target it will return approximately 5% (excluding dividends, fees and charges).
Current consensus price target is $16.00, suggesting upside of 5.4% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY20:
Ord Minnett forecasts a full year FY20 EPS of 88.53 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 88.6, implying annual growth of N/A. Current consensus DPS estimate is 68.0, implying a prospective dividend yield of 4.5%. Current consensus EPS estimate suggests the PER is 17.1. |
Forecast for FY21:
Ord Minnett forecasts a full year FY21 EPS of 97.84 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 101.3, implying annual growth of 14.3%. Current consensus DPS estimate is 71.8, implying a prospective dividend yield of 4.7%. Current consensus EPS estimate suggests the PER is 15.0. |
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
Overnight Price: $30.56
Citi rates APT as Buy (1) -
Citi analysts suggest, on the basis of website traffic analysis, that Afterpay likely had a strong end to calendar year 2019. This is further reinforced by analysis of app download stats.
The analysts have made some changes, which has resulted in small increases to forecasts. Buy rating retained.
Target price is $31.10 Current Price is $30.56 Difference: $0.54
If APT meets the Citi target it will return approximately 2% (excluding dividends, fees and charges).
Current consensus price target is $33.84, suggesting upside of 10.7% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY20:
Citi forecasts a full year FY20 dividend of 0.00 cents and EPS of minus 2.50 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 5.1, implying annual growth of N/A. Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A. Current consensus EPS estimate suggests the PER is 599.2. |
Forecast for FY21:
Citi forecasts a full year FY21 dividend of 0.00 cents and EPS of 8.60 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 22.1, implying annual growth of 333.3%. Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A. Current consensus EPS estimate suggests the PER is 138.3. |
Market Sentiment: 0.7
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
CSL CSL LIMITED
Pharmaceuticals & Biotech/Lifesciences
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Overnight Price: $290.58
Credit Suisse rates CSL as Outperform (1) -
On the observation that IG trends remain "robust", taking guidance from industry data, Credit Suisse retains its Outperform rating and $305 price target for CSL.
The analysts remain of the view CSL is best positioned in a tight market and the company can exceed market growth with additional upside from stronger pricing in ex-US regions.
Target price is $305.00 Current Price is $290.58 Difference: $14.42
If CSL meets the Credit Suisse target it will return approximately 5% (excluding dividends, fees and charges).
Current consensus price target is $279.70, suggesting downside of -3.7% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY20:
Credit Suisse forecasts a full year FY20 dividend of 303.60 cents and EPS of 664.75 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 677.4, implying annual growth of N/A. Current consensus DPS estimate is 303.8, implying a prospective dividend yield of 1.0%. Current consensus EPS estimate suggests the PER is 42.9. |
Forecast for FY21:
Credit Suisse forecasts a full year FY21 dividend of 372.66 cents and EPS of 808.63 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 783.5, implying annual growth of 15.7%. Current consensus DPS estimate is 349.3, implying a prospective dividend yield of 1.2%. Current consensus EPS estimate suggests the PER is 37.1. |
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
GUD G.U.D. HOLDINGS LIMITED
Household & Personal Products
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Overnight Price: $11.43
Citi rates GUD as Neutral (3) -
A lack of rainfall and short-term headwinds from a challenging consumer environment for both Automotive and the Davey operations keep Citi on the cautious side. Medium term the analysts remain confident there remain growth opportunities for the company.
The analysts also note the company's appetite for acquisitions and acknowledge there is potential for further upside from ongoing industry consolidation. Equally important, signals from both Repco and Bapcor ((BAP)) suggest the aftermarket in Australia could be stabilising (on way to recovery), comment the analysts.
Estimates have been lowered by up to -3% to account for short term headwinds. Neutral rating retained, while price target lifts by 3% to $11.30.
Target price is $11.30 Current Price is $11.43 Difference: minus $0.13 (current price is over target).
If GUD meets the Citi target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $10.72, suggesting downside of -6.2% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY20:
Citi forecasts a full year FY20 dividend of 57.00 cents and EPS of 65.90 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 67.4, implying annual growth of -2.2%. Current consensus DPS estimate is 57.4, implying a prospective dividend yield of 5.0%. Current consensus EPS estimate suggests the PER is 17.0. |
Forecast for FY21:
Citi forecasts a full year FY21 dividend of 58.00 cents and EPS of 70.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 71.9, implying annual growth of 6.7%. Current consensus DPS estimate is 60.9, implying a prospective dividend yield of 5.3%. Current consensus EPS estimate suggests the PER is 15.9. |
Market Sentiment: -0.1
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $6.77
Morgan Stanley rates IGO as Equal-weight (3) -
The analysts saw a strong December quarter performance with production for all metals exceeding forecasts. Performance is tracking above company's guidance, they point out.
Second half is expected to reveal slower growth at Tropicana. Equal-weight. Industry view is In-Line (was Attractive back in November). Target is $5.55 ($6.10 in November).
Target price is $5.55 Current Price is $6.77 Difference: minus $1.22 (current price is over target).
If IGO meets the Morgan Stanley target it will return approximately minus 18% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $5.86, suggesting downside of -13.4% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY20:
Morgan Stanley forecasts a full year FY20 dividend of 11.00 cents and EPS of 26.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 35.4, implying annual growth of 174.6%. Current consensus DPS estimate is 13.3, implying a prospective dividend yield of 2.0%. Current consensus EPS estimate suggests the PER is 19.1. |
Forecast for FY21:
Morgan Stanley forecasts a full year FY21 dividend of 14.90 cents and EPS of 22.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 34.2, implying annual growth of -3.4%. Current consensus DPS estimate is 16.6, implying a prospective dividend yield of 2.5%. Current consensus EPS estimate suggests the PER is 19.8. |
Market Sentiment: 0.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Ord Minnett rates IGO as Hold (3) -
Independence Group's December quarter performance exceeded Ord Minnett's expectations on all fronts. The analysts note management at the company does not anticipate any material impact from the bushfires.
Hold rating retained alongside an unchanged $5.70 price target.
Target price is $5.70 Current Price is $6.77 Difference: minus $1.07 (current price is over target).
If IGO meets the Ord Minnett target it will return approximately minus 16% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $5.86, suggesting downside of -13.4% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY20:
Ord Minnett forecasts a full year FY20 EPS of 44.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 35.4, implying annual growth of 174.6%. Current consensus DPS estimate is 13.3, implying a prospective dividend yield of 2.0%. Current consensus EPS estimate suggests the PER is 19.1. |
Forecast for FY21:
Ord Minnett forecasts a full year FY21 EPS of 46.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 34.2, implying annual growth of -3.4%. Current consensus DPS estimate is 16.6, implying a prospective dividend yield of 2.5%. Current consensus EPS estimate suggests the PER is 19.8. |
Market Sentiment: 0.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $8.66
Credit Suisse rates ORG as Downgrade to Neutral from Outperform (3) -
Credit Suisse analysts observe futures for electricity prices have nosedived since October and for whatever reason this is yet to be reflected in the share price.
Origin Energy remains preferred above AGL Energy, but Credit Suisse nevertheless downgrades to Neutral from Outperform. The broker argues Origin's utility business is of higher quality than AGL's, plus there should be less downside from wholesale dynamics.
APLNG might represent upside risk, while Origin's retail operations are performing better. Price target lifts to $8.90 from $8.40.
Target price is $8.90 Current Price is $8.66 Difference: $0.24
If ORG meets the Credit Suisse target it will return approximately 3% (excluding dividends, fees and charges).
Current consensus price target is $8.73, suggesting upside of 0.8% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY20:
Credit Suisse forecasts a full year FY20 dividend of 32.27 cents and EPS of 61.72 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 55.9, implying annual growth of -18.8%. Current consensus DPS estimate is 34.6, implying a prospective dividend yield of 4.0%. Current consensus EPS estimate suggests the PER is 15.5. |
Forecast for FY21:
Credit Suisse forecasts a full year FY21 dividend of 33.89 cents and EPS of 57.81 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 58.2, implying annual growth of 4.1%. Current consensus DPS estimate is 40.5, implying a prospective dividend yield of 4.7%. Current consensus EPS estimate suggests the PER is 14.9. |
Market Sentiment: 0.6
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
PTM PLATINUM ASSET MANAGEMENT LIMITED
Wealth Management & Investments
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Overnight Price: $4.64
Citi rates PTM as Sell (5) -
Citi analysts have retained their Sell rating in combination with an unchanged $3.90 price target. They do feel "encouraged" by the observation that outflows seem to be moderating, but with the added observation near-term investment performance remains "sub-optimal".
Citi cannot see meaningful inflows arriving anytime soon for the once legendary Australian asset manager. Outflows for the half were the highest in circa 2.5 years, on Citi's assessment. Earnings estimates have been further lowered.
Target price is $3.90 Current Price is $4.64 Difference: minus $0.74 (current price is over target).
If PTM meets the Citi target it will return approximately minus 16% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $3.78, suggesting downside of -18.5% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY20:
Citi forecasts a full year FY20 dividend of 26.80 cents and EPS of 27.10 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 25.9, implying annual growth of -4.2%. Current consensus DPS estimate is 25.8, implying a prospective dividend yield of 5.6%. Current consensus EPS estimate suggests the PER is 17.9. |
Forecast for FY21:
Citi forecasts a full year FY21 dividend of 27.40 cents and EPS of 27.90 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 25.1, implying annual growth of -3.1%. Current consensus DPS estimate is 24.9, implying a prospective dividend yield of 5.4%. Current consensus EPS estimate suggests the PER is 18.5. |
Market Sentiment: -0.8
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Today's Price Target Changes
| Company | Last Price | Broker | New Target | Prev Target | Change | |
| AGL | AGL ENERGY | $20.32 | Credit Suisse | 18.00 | 18.40 | -2.17% |
| GUD | G.U.D. HOLDINGS | $11.43 | Citi | 11.30 | 11.02 | 2.54% |
| ORG | ORIGIN ENERGY | $8.66 | Credit Suisse | 8.90 | 8.40 | 5.95% |
Summaries
| AGL | AGL ENERGY | Downgrade to Underperform from Neutral - Credit Suisse | Overnight Price $20.32 |
| AMC | AMCOR | Accumulate - Ord Minnett | Overnight Price $15.18 |
| APT | AFTERPAY | Buy - Citi | Overnight Price $30.56 |
| CSL | CSL | Outperform - Credit Suisse | Overnight Price $290.58 |
| GUD | G.U.D. HOLDINGS | Neutral - Citi | Overnight Price $11.43 |
| IGO | INDEPENDENCE GROUP | Equal-weight - Morgan Stanley | Overnight Price $6.77 |
| Hold - Ord Minnett | Overnight Price $6.77 | ||
| ORG | ORIGIN ENERGY | Downgrade to Neutral from Outperform - Credit Suisse | Overnight Price $8.66 |
| PTM | PLATINUM | Sell - Citi | Overnight Price $4.64 |
RATING SUMMARY
| Rating | No. Of Recommendations |
| 1. Buy | 2 |
| 2. Accumulate | 1 |
| 3. Hold | 4 |
| 5. Sell | 2 |
Thursday 09 January 2020
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