Australian Broker Call

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January 14, 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
NWL - NETWEALTH GROUP Upgrade to Buy from Neutral Citi
ALQ  ALS LIMITED

Mining Sector Contracting

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Overnight Price: $9.35

Ord Minnett rates ALQ as Resume coverage with Hold (3) -

Ord Minnett resumes coverage of the contractor sector and notes ALS Ltd is currently trading in line with global peers. The broker assumes coverage with a Hold rating and $9 target.

This stock is not covered in-house by Ord Minnett. Instead, the broker whitelabels research by JP Morgan.

Target price is $9.00 Current Price is $9.35 Difference: minus $0.35 (current price is over target).
If ALQ meets the Ord Minnett target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $8.86, suggesting downside of -5.3% (ex-dividends)

Forecast for FY20:

Current consensus EPS estimate is 39.7, implying annual growth of 25.6%.

Current consensus DPS estimate is 23.7, implying a prospective dividend yield of 2.5%.

Current consensus EPS estimate suggests the PER is 23.6.

Forecast for FY21:

Current consensus EPS estimate is 44.5, implying annual growth of 12.1%.

Current consensus DPS estimate is 26.2, implying a prospective dividend yield of 2.8%.

Current consensus EPS estimate suggests the PER is 21.0.

Market Sentiment: 0.2

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

CGC  COSTA GROUP HOLDINGS LIMITED

Agriculture

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Overnight Price: $2.49

UBS rates CGC as Buy (1) -

UBS tracks both retail and wholesale pricing across four of the company's main domestic categories and notes trends throughout December generally improved.

The main unknown is the supply of berries, as the industry has been affected by the bushfires and reduced water supply.

Nevertheless, the broker considers 2019 guidance is realistic, for net profit of around $28m. Buy rating and $3.25 target maintained.

Target price is $3.25 Current Price is $2.49 Difference: $0.76
If CGC meets the UBS target it will return approximately 31% (excluding dividends, fees and charges).

Current consensus price target is $2.90, suggesting upside of 16.6% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY19:

UBS forecasts a full year FY19 dividend of 4.00 cents and EPS of 9.00 cents.
At the last closing share price the estimated dividend yield is 1.61%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 27.67.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 8.6, implying annual growth of -74.6%.

Current consensus DPS estimate is 4.3, implying a prospective dividend yield of 1.7%.

Current consensus EPS estimate suggests the PER is 29.0.

Forecast for FY20:

UBS forecasts a full year FY20 dividend of 10.00 cents and EPS of 15.00 cents.
At the last closing share price the estimated dividend yield is 4.02%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 16.60.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 12.6, implying annual growth of 46.5%.

Current consensus DPS estimate is 7.4, implying a prospective dividend yield of 3.0%.

Current consensus EPS estimate suggests the PER is 19.8.

Market Sentiment: 0.2

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

CIM  CIMIC GROUP LIMITED

Industrial Sector Contractors & Engineers

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Overnight Price: $32.99

Ord Minnett rates CIM as Resume coverage with Buy (1) -

Ord Minnett resumes coverage of the contractor sector and CIMIC Group is its key preference. The broker believes the company is best placed to benefit from record levels of public infrastructure investment.

The stock is trading at a discount to peers and, if assumptions are correct, the broker believes it could re-rate. Ord Minnett allocates a Buy rating and $43 target.

This stock is not covered in-house by Ord Minnett. Instead, the broker whitelabels research by JP Morgan.

Target price is $43.00 Current Price is $32.99 Difference: $10.01
If CIM meets the Ord Minnett target it will return approximately 30% (excluding dividends, fees and charges).

Current consensus price target is $37.45, suggesting upside of 13.5% (ex-dividends)

Forecast for FY19:

Current consensus EPS estimate is 245.0, implying annual growth of 1.8%.

Current consensus DPS estimate is 155.7, implying a prospective dividend yield of 4.7%.

Current consensus EPS estimate suggests the PER is 13.5.

Forecast for FY20:

Current consensus EPS estimate is 252.0, implying annual growth of 2.9%.

Current consensus DPS estimate is 158.7, implying a prospective dividend yield of 4.8%.

Current consensus EPS estimate suggests the PER is 13.1.

Market Sentiment: 0.3

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

DOW  DOWNER EDI LIMITED

Mining Sector Contracting

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Overnight Price: $8.75

Ord Minnett rates DOW as Resume coverage with Accumulate (2) -

Ord Minnett presumes coverage of the contractor sector. Downer EDI is assessed as having potential to capture upside from a shift towards greater public expenditure on infrastructure.

A potential sale of the mining division could allow for de-leveraging and simplify operations. Ord Minnett resumes coverage with an Accumulate rating and $9.50 target.

This stock is not covered in-house by Ord Minnett. Instead, the broker whitelabels research by JP Morgan.

Target price is $9.50 Current Price is $8.75 Difference: $0.75
If DOW meets the Ord Minnett target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $8.62, suggesting downside of -1.5% (ex-dividends)

Forecast for FY20:

Current consensus EPS estimate is 53.1, implying annual growth of 23.8%.

Current consensus DPS estimate is 31.4, implying a prospective dividend yield of 3.6%.

Current consensus EPS estimate suggests the PER is 16.5.

Forecast for FY21:

Current consensus EPS estimate is 56.5, implying annual growth of 6.4%.

Current consensus DPS estimate is 34.0, implying a prospective dividend yield of 3.9%.

Current consensus EPS estimate suggests the PER is 15.5.

Market Sentiment: 0.5

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

EVN  EVOLUTION MINING LIMITED

Gold & Silver

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Overnight Price: $3.63

UBS rates EVN as Neutral (3) -

Evolution Mining's share price has underperformed because of market concerns about water supply at Cowal, which forms around 30% of FY20 estimates for earnings.

The company's recent downgrade to production expectations for FY20 was centred on Mount Carlton which drives a -5% downgrade to UBS's FY20 net profit forecasts.

The broker believes value is starting to emerge in the stock but assesses there is a lack of clear catalysts for the near term. Neutral rating with a $4.25 price target, down from $4.60..

Target price is $4.25 Current Price is $3.63 Difference: $0.62
If EVN meets the UBS target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $4.15, suggesting upside of 14.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

UBS forecasts a full year FY20 dividend of 12.00 cents and EPS of 24.00 cents.
At the last closing share price the estimated dividend yield is 3.31%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 15.13.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 21.9, implying annual growth of 70.3%.

Current consensus DPS estimate is 11.1, implying a prospective dividend yield of 3.1%.

Current consensus EPS estimate suggests the PER is 16.6.

Forecast for FY21:

UBS forecasts a full year FY21 dividend of 14.00 cents and EPS of 29.00 cents.
At the last closing share price the estimated dividend yield is 3.86%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.52.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 23.7, implying annual growth of 8.2%.

Current consensus DPS estimate is 12.8, implying a prospective dividend yield of 3.5%.

Current consensus EPS estimate suggests the PER is 15.3.

Market Sentiment: 0.3

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

HUB  HUB24 LIMITED

Wealth Management & Investments

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Overnight Price: $11.81

Credit Suisse rates HUB as Neutral (3) -

Credit Suisse downgrades earnings estimates by -3-4%. The broker believes the company has one of the best products in the market and is able to gain market share through capturing an outsized share of flow.

While believing there are barriers to prevent an immediate shift in pricing, Credit Suisse expects there will be a multi-year erosion to platform revenue margins. Nevertheless, profit growth is expected to remain high. The broker maintains a Neutral rating and $13 target.

Target price is $13.00 Current Price is $11.81 Difference: $1.19
If HUB meets the Credit Suisse target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $12.81, suggesting upside of 8.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Credit Suisse forecasts a full year FY20 dividend of 10.00 cents and EPS of 24.00 cents.
At the last closing share price the estimated dividend yield is 0.85%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 49.21.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 25.0, implying annual growth of 116.6%.

Current consensus DPS estimate is 9.1, implying a prospective dividend yield of 0.8%.

Current consensus EPS estimate suggests the PER is 47.2.

Forecast for FY21:

Credit Suisse forecasts a full year FY21 dividend of 14.00 cents and EPS of 36.00 cents.
At the last closing share price the estimated dividend yield is 1.19%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 32.81.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 35.8, implying annual growth of 43.2%.

Current consensus DPS estimate is 14.4, implying a prospective dividend yield of 1.2%.

Current consensus EPS estimate suggests the PER is 33.0.

Market Sentiment: 0.0

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

MND  MONADELPHOUS GROUP LIMITED

Mining Sector Contracting

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Overnight Price: $16.99

Ord Minnett rates MND as Resume coverage with Lighten (4) -

Ord Minnett notes Monadelphous is trading above its five-year average multiple relative to the S&P/ASX 200 index. It is also trading at higher multiples vs CIMIC ((CIM)) and Downer EDI ((DOW)), despite appearing to derive just less than half of its operating earnings from construction.

The broker resumes coverage of the contractor sector and currently envisages -13% downside to the share price, assuming it reverts to the price target of $15. Lighten rating.

This stock is not covered in-house by Ord Minnett. Instead, the broker whitelabels research by JP Morgan.

Target price is $15.00 Current Price is $16.99 Difference: minus $1.99 (current price is over target).
If MND meets the Ord Minnett target it will return approximately minus 12% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $16.29, suggesting downside of -4.1% (ex-dividends)

Forecast for FY20:

Current consensus EPS estimate is 70.5, implying annual growth of 31.2%.

Current consensus DPS estimate is 56.3, implying a prospective dividend yield of 3.3%.

Current consensus EPS estimate suggests the PER is 24.1.

Forecast for FY21:

Current consensus EPS estimate is 87.4, implying annual growth of 24.0%.

Current consensus DPS estimate is 68.9, implying a prospective dividend yield of 4.1%.

Current consensus EPS estimate suggests the PER is 19.4.

Market Sentiment: 0.0

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

NWL  NETWEALTH GROUP LIMITED

Wealth Management & Investments

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Overnight Price: $8.19

Citi rates NWL as Upgrade to Buy from Neutral (1) -

Citi upgrades Netwealth Group to Buy from Neutral, envisaging upside to near-term earnings from better-than-expected flows. Target is steady at $9.60.

Findex, an advisory firm with $17bn under advice, has launched a new platform offering. Pricing is materially lower than current platform pricing but Citi does not expects this to impact the near-term earnings of its competitors, given the likely time required to gain traction among independent wealth firms.

Target price is $9.60 Current Price is $8.19 Difference: $1.41
If NWL meets the Citi target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $7.98, suggesting downside of -2.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Citi forecasts a full year FY20 dividend of 14.50 cents and EPS of 18.10 cents.
At the last closing share price the estimated dividend yield is 1.77%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 45.25.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 17.7, implying annual growth of 19.5%.

Current consensus DPS estimate is 14.0, implying a prospective dividend yield of 1.7%.

Current consensus EPS estimate suggests the PER is 46.3.

Forecast for FY21:

Citi forecasts a full year FY21 dividend of 17.50 cents and EPS of 23.00 cents.
At the last closing share price the estimated dividend yield is 2.14%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 35.61.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 21.6, implying annual growth of 22.0%.

Current consensus DPS estimate is 17.1, implying a prospective dividend yield of 2.1%.

Current consensus EPS estimate suggests the PER is 37.9.

Market Sentiment: -0.3

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


Credit Suisse rates NWL as Underperform (5) -

Credit Suisse lowers revenue margin assumptions to account for ongoing price pressure and raises expense assumptions. The operating earnings (EBITDA) margin is expected to fall by around -150 basis points in FY20.

The broker believes there is increased risk that the platform market will shift to a new lower pricing paradigm. However, Netwealth continues to win significant new business and has resisted some of the pricing pressure to date.

Underperform rating maintained. Target is reduced to $7.40 from $7.60.

Target price is $7.40 Current Price is $8.19 Difference: minus $0.79 (current price is over target).
If NWL meets the Credit Suisse target it will return approximately minus 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $7.98, suggesting downside of -2.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Credit Suisse forecasts a full year FY20 dividend of 13.00 cents and EPS of 17.00 cents.
At the last closing share price the estimated dividend yield is 1.59%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 48.18.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 17.7, implying annual growth of 19.5%.

Current consensus DPS estimate is 14.0, implying a prospective dividend yield of 1.7%.

Current consensus EPS estimate suggests the PER is 46.3.

Forecast for FY21:

Credit Suisse forecasts a full year FY21 dividend of 16.00 cents and EPS of 20.00 cents.
At the last closing share price the estimated dividend yield is 1.95%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 40.95.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 21.6, implying annual growth of 22.0%.

Current consensus DPS estimate is 17.1, implying a prospective dividend yield of 2.1%.

Current consensus EPS estimate suggests the PER is 37.9.

Market Sentiment: -0.3

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

NXT  NEXTDC LIMITED

Cloud services

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Overnight Price: $6.62

Ord Minnett rates NXT as Hold (3) -

Macquarie Group's ((MQG)) Infrastructure & Real Assets has signed a deal to take control of AirTrunk, one of NextDC's main competitors in the wholesale data centre sector.

Ord Minnett believes this investment by MIRA bodes well for the Australian data centre industry, signalling confidence in demand.

The broker acknowledges the move could also be interpreted as suggesting greater confidence in AirTrunk's lower-cost operating model relative to NextDC's premium offering.

The potential pressure posed by AirTrunk leads the broker to maintain a Hold rating and $7 target.

Target price is $7.00 Current Price is $6.62 Difference: $0.38
If NXT meets the Ord Minnett target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $7.81, suggesting upside of 18.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Ord Minnett forecasts a full year FY20 dividend of 0.00 cents and EPS of minus 1.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 662.00.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is -3.9, 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 N/A.

Forecast for FY21:

Ord Minnett forecasts a full year FY21 dividend of 0.00 cents and EPS of 3.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 220.67.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is -0.8, 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 N/A.

Market Sentiment: 0.8

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

ORA  ORORA LIMITED

Paper & Packaging

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Overnight Price: $3.22

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

Morgan Stanley suspects the recent trends in packaging will continue amid concerns over Orora's North American performance. The broker continues to favour Amcor ((AMC)) in the sector.

Orora is expected to report a first half EBIT result of $177m, up 1%. Morgan Stanley lowers estimates by -3% across the forecast period to account for the top-line pressures in North America.

Equal-weight. Price target is raised to $3.30 from $3.00. Sector view is Cautious.

Target price is $3.30 Current Price is $3.22 Difference: $0.08
If ORA meets the Morgan Stanley target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $3.24, suggesting upside of 0.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Morgan Stanley forecasts a full year FY20 dividend of 13.00 cents and EPS of 18.00 cents.
At the last closing share price the estimated dividend yield is 4.04%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 17.89.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 16.5, implying annual growth of 23.1%.

Current consensus DPS estimate is 13.0, implying a prospective dividend yield of 4.0%.

Current consensus EPS estimate suggests the PER is 19.5.

Forecast for FY21:

Morgan Stanley forecasts a full year FY21 dividend of 14.00 cents and EPS of 19.00 cents.
At the last closing share price the estimated dividend yield is 4.35%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 16.95.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 18.1, implying annual growth of 9.7%.

Current consensus DPS estimate is 13.3, implying a prospective dividend yield of 4.1%.

Current consensus EPS estimate suggests the PER is 17.8.

Market Sentiment: 0.3

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

SGM  SIMS METAL MANAGEMENT LIMITED

Steel & Scrap

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Overnight Price: $11.54

UBS rates SGM as Sell (5) -

Twitch prices have finally started to recover, which marks the first improvement in pricing since May 2019, UBS notes. The broker considers it too early to tell if prices will rally, although suggests the downside risk is limited.

The impact of structurally lower non-ferrous scrap prices on margins remains unknown and, therefore, UBS is wary of the earnings outlook. Sell rating and $8.05 target maintained.

Target price is $8.05 Current Price is $11.54 Difference: minus $3.49 (current price is over target).
If SGM meets the UBS target it will return approximately minus 30% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $10.09, suggesting downside of -12.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

UBS forecasts a full year FY20 dividend of 6.00 cents and EPS of 2.00 cents.
At the last closing share price the estimated dividend yield is 0.52%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 577.00.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 6.9, implying annual growth of -90.8%.

Current consensus DPS estimate is 11.6, implying a prospective dividend yield of 1.0%.

Current consensus EPS estimate suggests the PER is 167.2.

Forecast for FY21:

UBS forecasts a full year FY21 dividend of 21.00 cents and EPS of 41.00 cents.
At the last closing share price the estimated dividend yield is 1.82%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 28.15.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 58.4, implying annual growth of 746.4%.

Current consensus DPS estimate is 25.2, implying a prospective dividend yield of 2.2%.

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

SVW  SEVEN GROUP HOLDINGS LIMITED

Diversified Financials

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Overnight Price: $20.71

Ord Minnett rates SVW as Resume coverage with Hold (3) -

Ord Minnett believes the WesTrac and Coates businesses should perform well given the company's exposure to both east and west coast construction.

The stock is trading above median forward EV/EBITDA and PE multiples of global peers and the broker resumes coverage with a Hold rating and $21 target.

This stock is not covered in-house by Ord Minnett. Instead, the broker whitelabels research by JP Morgan.

Target price is $21.00 Current Price is $20.71 Difference: $0.29
If SVW meets the Ord Minnett target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $21.13, suggesting upside of 2.0% (ex-dividends)

Forecast for FY20:

Current consensus EPS estimate is 145.3, implying annual growth of 123.5%.

Current consensus DPS estimate is 42.0, implying a prospective dividend yield of 2.0%.

Current consensus EPS estimate suggests the PER is 14.3.

Forecast for FY21:

Current consensus EPS estimate is 161.7, implying annual growth of 11.3%.

Current consensus DPS estimate is 42.0, implying a prospective dividend yield of 2.0%.

Current consensus EPS estimate suggests the PER is 12.8.

Market Sentiment: 0.8

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

TWE  TREASURY WINE ESTATES LIMITED

Food, Beverages & Tobacco

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Overnight Price: $17.28

UBS rates TWE as Buy (1) -

Nielsen data from the US indicates the company's December sales were weak, with volume sales down -3.5% in the month. Top brands fared better, up 0.2% year-on-year and an improvement vs November.

Overall, UBS found the data incrementally negative for the company's Americas business albeit consistent with expectations. UBS retains a Buy rating and a $20.50 target.

Target price is $20.50 Current Price is $17.28 Difference: $3.22
If TWE meets the UBS target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $19.00, suggesting upside of 9.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

UBS forecasts a full year FY20 dividend of 47.80 cents and EPS of 72.70 cents.
At the last closing share price the estimated dividend yield is 2.77%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 23.77.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 72.8, implying annual growth of 24.7%.

Current consensus DPS estimate is 46.6, implying a prospective dividend yield of 2.7%.

Current consensus EPS estimate suggests the PER is 23.7.

Forecast for FY21:

UBS forecasts a full year FY21 dividend of 59.00 cents and EPS of 89.80 cents.
At the last closing share price the estimated dividend yield is 3.41%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 19.24.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 86.7, implying annual growth of 19.1%.

Current consensus DPS estimate is 55.9, implying a prospective dividend yield of 3.2%.

Current consensus EPS estimate suggests the PER is 19.9.

Market Sentiment: 0.5

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

WES  WESFARMERS LIMITED

Apparel & Footwear

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Overnight Price: $43.37

Credit Suisse rates WES as Underperform (5) -

Credit Suisse downgrades earnings forecasts for the industrial and safety division, catching up with some commentary made by the company at the AGM. The broker calculates comparable store sales growth in the first half of 4% for Bunnings, 2% for Kmart and 1% for Target.

The broker believes the stock has a growth/valuation dilemma, finding it difficult to reconcile why the stock is more closely aligned with growth peers at a time when its earnings growth has slowed.

Credit Suisse does not dismiss the potential for Wesfarmers to use an under-geared balance sheet to acquire earnings but considers this a speculative argument rather than an investment case. The broker maintains an Underperform rating and raises the target to $32.51 from $32.16.

Target price is $32.51 Current Price is $43.37 Difference: minus $10.86 (current price is over target).
If WES meets the Credit Suisse target it will return approximately minus 25% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $35.13, suggesting downside of -19.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Credit Suisse forecasts a full year FY20 dividend of 139.00 cents and EPS of 170.00 cents.
At the last closing share price the estimated dividend yield is 3.20%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 25.51.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 165.9, implying annual growth of -3.0%.

Current consensus DPS estimate is 149.8, implying a prospective dividend yield of 3.5%.

Current consensus EPS estimate suggests the PER is 26.1.

Forecast for FY21:

Credit Suisse forecasts a full year FY21 dividend of 147.00 cents and EPS of 180.00 cents.
At the last closing share price the estimated dividend yield is 3.39%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 24.09.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 172.7, implying annual growth of 4.1%.

Current consensus DPS estimate is 154.2, implying a prospective dividend yield of 3.6%.

Current consensus EPS estimate suggests the PER is 25.1.

Market Sentiment: -0.6

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

WPL  WOODSIDE PETROLEUM LIMITED

NatGas

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Overnight Price: $35.71

Macquarie rates WPL as Neutral (3) -

The Sangomar project phase 1 has received final approval from the Senegalese government and will move to execution and development. This is a major step forward for the company's growth strategy, suggests Macquarie.

De-risking Sangomar to a 75% risk weighting has increased Macquarie's target to $36 from $35. Still, the broker continues to envisage challenges for Woodside Petroleum in the medium term because of (the potential of) further delays to North West Shelf/Pluto. Neutral maintained.

Target price is $36.00 Current Price is $35.71 Difference: $0.29
If WPL meets the Macquarie target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $36.36, suggesting upside of 1.8% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY19:

Macquarie forecasts a full year FY19 dividend of 128.11 cents and EPS of 160.07 cents.
At the last closing share price the estimated dividend yield is 3.59%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 22.31.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 174.7, implying annual growth of N/A.

Current consensus DPS estimate is 133.0, implying a prospective dividend yield of 3.7%.

Current consensus EPS estimate suggests the PER is 20.4.

Forecast for FY20:

Macquarie forecasts a full year FY20 dividend of 142.51 cents and EPS of 180.51 cents.
At the last closing share price the estimated dividend yield is 3.99%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 19.78.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 210.0, implying annual growth of 20.2%.

Current consensus DPS estimate is 161.6, implying a prospective dividend yield of 4.5%.

Current consensus EPS estimate suggests the PER is 17.0.

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

Z1P  ZIP CO LIMITED

Business & Consumer Credit

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Overnight Price: $3.63

UBS rates Z1P as Buy (1) -

The trading update for the second quarter revealed active customer numbers that were ahead of UBS estimates. Quarterly active customer growth was 336,000, split between Australia and New Zealand.

Revenue yield fell to 16.2% vs 16.8% in the first quarter, which UBS suspects was partly because of the timing of the Partpay acquisition as well as Christmas sales.

The company is targeting an exit run rate in FY20 of $2.2bn in transaction volumes and 2.25m active customers. Buy rating and $4.80 target.

Target price is $4.80 Current Price is $3.63 Difference: $1.17
If Z1P meets the UBS target it will return approximately 32% (excluding dividends, fees and charges).

Current consensus price target is $4.16, suggesting upside of 14.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

UBS forecasts a full year FY20 dividend of 0.00 cents and EPS of 0.00 cents.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is -2.2, 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 N/A.

Forecast for FY21:

UBS forecasts a full year FY21 dividend of 0.00 cents and EPS of 10.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 36.30.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 2.9, 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 125.2.

Market Sentiment: 0.5

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
ALQ ALS LIMITED $9.35 Ord Minnett 9.00 8.45 6.51%
CIM CIMIC GROUP $32.99 Ord Minnett 43.00 49.18 -12.57%
DOW DOWNER EDI $8.75 Ord Minnett 9.50 6.37 49.14%
MND MONADELPHOUS GROUP $16.99 Ord Minnett 15.00 14.95 0.33%
NWL NETWEALTH GROUP $8.19 Citi 9.60 8.00 20.00%
Credit Suisse 7.40 7.60 -2.63%
ORA ORORA $3.22 Morgan Stanley 3.30 3.00 10.00%
SVW SEVEN GROUP $20.71 Ord Minnett 21.00 23.13 -9.21%
WES WESFARMERS $43.37 Credit Suisse 32.51 32.16 1.09%
WPL WOODSIDE PETROLEUM $35.71 Macquarie 36.00 35.00 2.86%
Summaries
ALQ ALS LIMITED Resume coverage with Hold - Ord Minnett Overnight Price $9.35
CGC COSTA GROUP Buy - UBS Overnight Price $2.49
CIM CIMIC GROUP Resume coverage with Buy - Ord Minnett Overnight Price $32.99
DOW DOWNER EDI Resume coverage with Accumulate - Ord Minnett Overnight Price $8.75
EVN EVOLUTION MINING Neutral - UBS Overnight Price $3.63
HUB HUB24 Neutral - Credit Suisse Overnight Price $11.81
MND MONADELPHOUS GROUP Resume coverage with Lighten - Ord Minnett Overnight Price $16.99
NWL NETWEALTH GROUP Upgrade to Buy from Neutral - Citi Overnight Price $8.19
Underperform - Credit Suisse Overnight Price $8.19
NXT NEXTDC Hold - Ord Minnett Overnight Price $6.62
ORA ORORA Equal-weight - Morgan Stanley Overnight Price $3.22
SGM SIMS METAL MANAGEMENT Sell - UBS Overnight Price $11.54
SVW SEVEN GROUP Resume coverage with Hold - Ord Minnett Overnight Price $20.71
TWE TREASURY WINE ESTATES Buy - UBS Overnight Price $17.28
WES WESFARMERS Underperform - Credit Suisse Overnight Price $43.37
WPL WOODSIDE PETROLEUM Neutral - Macquarie Overnight Price $35.71
Z1P ZIP CO Buy - UBS Overnight Price $3.63
RATING SUMMARY
Rating No. Of Recommendations
1. Buy

5

2. Accumulate

1

3. Hold

7

4. Reduce

1

5. Sell

3

Tuesday 14 January 2020

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Disclaimer:
The content of this information does in no way reflect the opinions of FNArena, or of its journalists. In fact we don't have any opinion about the stock market, its value, future direction or individual shares. FNArena solely reports about what the main experts in the market note, believe and comment on. By doing so we believe we provide intelligent investors with a valuable tool that helps them in making up their own minds, reading market trends and getting a feel for what is happening beneath the surface. This document is provided for informational purposes only. It does not constitute an offer to sell or a solicitation to buy any security or other financial instrument. FNArena employs very experienced journalists who base their work on information believed to be reliable and accurate, though no guarantee is given that the daily report is accurate or complete. Investors should contact their personal adviser before making any investment decision.