Australian Broker Call

Macquarie rates AHY as Resume Coverage with Neutral (3) -

The company has completed the sale of its Australian consumer tissue business. Macquarie estimates transaction costs, environmental indemnity and working capital variation of $30-40m.

Asaleo retains the Australasian personal care and B2B operations as well as the consumer tissue business in New Zealand and the Pacific Islands. Macquarie resumes coverage with a Neutral rating and $0.84 target.

Target price is $0.84 Current Price is $0.91 Difference: minus $0.07 (current price is over target).
If AHY meets the Macquarie target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $1.05, suggesting upside of 15.0% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.7

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

Ord Minnett rates ALQ as Accumulate (2) -

Ord Minnett believes the life sciences margin growth and sample volume growth in geochemistry in the second half will be key to the investment case when the company reports its FY19 result on May 21. Ord Minnett forecasts a -1% decline in net profit.

The broker envisages an attractive risk/reward ratio heading into the result, maintaining an Accumulate rating and raising the target to $8.45 from $8.29. The life sciences division faces an easy comparable period and management was confident of achieving 50-100 basis points of margin expansion.

Target price is $8.45 Current Price is $7.97 Difference: $0.48
If ALQ meets the Ord Minnett target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $8.21, suggesting upside of 3.0% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.2

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

Citi rates ASB as Buy (1) -

Confidence has increased following a visit to Austal's shipyard in Vietnam. Among the items pointed out by Citi analysts, is that employee costs in Vietnam are no more than 10% of comparable costs in Australia.

Add a strategically location and it's pretty straightforward as to why Citi believes this shipyard increases Austal's ability to win work. With the share price trading at a -14% discount to peers, Citi maintains now is an excellent time to start buying Austal shares. Buy. Target price $2.76 (unchanged).

Target price is $2.76 Current Price is $2.34 Difference: $0.42
If ASB meets the Citi target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $2.60, suggesting upside of 11.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.8

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

Macquarie rates BEN as Underperform (5) -

Macquarie considers regional banks are expensive on a PE and yield basis. The broker reiterates an Underperform rating and $9.50 target. The broker estimates the bank is trading at a relative valuation premium of 26%.

Macquarie acknowledges its analysis does not capture potential future increases in interest rates or cost savings in the outer years, which would provide some offset to higher impairments and mortgage front book normalisation.

Target price is $9.50 Current Price is $9.51 Difference: minus $0.01 (current price is over target).
If BEN meets the Macquarie target it will return approximately minus 0% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $9.53, suggesting upside of 0.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: -1.0

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

Macquarie rates BHP as Outperform (1) -

Macquarie has upgraded its 2019 oil price forecast by 9% for Brent and 10% for West Texas Intermediate. The company's petroleum division accounts for 18% of group operating earnings (EBITDA) in FY19.

Buoyant iron ore prices remain the key to earnings upside and Macquarie reiterates an Outperform rating. Target is $41.

Target price is $41.00 Current Price is $39.66 Difference: $1.34
If BHP meets the Macquarie target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $37.29, suggesting downside of -6.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

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

Ord Minnett rates BLD as Accumulate (2) -

Ord Minnett believes the valuation discount remains too large for Boral and maintains an Accumulate rating and $6 target. The broker has reviewed conditions in the March quarter in Australia and the US.

Australian conditions appear to have been favourable up until the heavy rain in March in parts of NSW and south-east Queensland. In North America the March quarter was very wet in the west.

Boral, along with its construction materials peers, has signalled that unfavourable weather conditions affected operations in the first half of FY19.

Target price is $6.00 Current Price is $4.72 Difference: $1.28
If BLD meets the Ord Minnett target it will return approximately 27% (excluding dividends, fees and charges).

Current consensus price target is $5.90, suggesting upside of 25.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.6

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

Citi rates BOQ as Neutral (3) -

On Citi's initial assessment, today's interim report slightly missed expectations, by some -1%, effectively proving that keeping a stringent tab on operational costs is not enough to compensate for top line pressure.

Capital declines have prompted a cut in the dividend with the analysts pointing out the pay out ratio remains a high 82%. Citi analysts believe management's subdued guidance is a source of concern. They anticipate consensus forecasts will have to reset lower post today's release.

Target price is $9.90 Current Price is $8.96 Difference: $0.94
If BOQ meets the Citi target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $9.19, suggesting upside of 2.6% (ex-dividends)

The company's fiscal year ends in August.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: -0.4

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

Macquarie rates BOQ as Underperform (5) -

Macquarie considers regional banks are expensive on a PE and yield basis. The broker reiterates an Underperform rating and $9.00 target. The broker estimates the bank is trading at a relative valuation premium of 12%.

Macquarie acknowledges its analysis does not capture potential future increases in interest rates or cost savings in the outer years, which would provide some offset to higher impairments and mortgage front book normalisation.

Target price is $9.00 Current Price is $8.96 Difference: $0.04
If BOQ meets the Macquarie target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $9.19, suggesting upside of 2.6% (ex-dividends)

The company's fiscal year ends in August.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: -0.4

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

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

Credit Suisse models no near-term earnings impact from lower LNG spot prices but increases the target to $2.02 from $1.91 after upgrading its 2019 oil price forecasts and assigning some value for production upside.

Rating is downgraded to Neutral from Outperform as the broker considers the run-up in the share price now more fully reflects the value. The broker likes the company's exposure to the east coast gas market and the growth potential.

Target price is $2.02 Current Price is $2.14 Difference: minus $0.12 (current price is over target).
If BPT meets the Credit Suisse target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.04, suggesting downside of -4.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.4

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

Deutsche Bank rates CWN as Hold (3) -

No sooner had preliminary discussions been confirmed by Wynn Resorts than the offer was pulled. Deutsche Bank does not believe that Wynn Resorts will walk away from its Crown Resorts bid indefinitely.

The broker remains of the view that Crown is in play with its major shareholder willing to divest at an appropriate price. The broker still considers the offer from Wynn Resorts was opportunistic. Hold rating and $14.75 target maintained.

Target price is $14.75 Current Price is $13.01 Difference: $1.74
If CWN meets the Deutsche Bank target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $13.33, suggesting upside of 2.4% (ex-dividends)

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 CWN as Neutral (3) -

Macquarie notes the recent takeover proposal from Wynn Resorts (subsequently pulled by Wynn Resorts). The broker had expected the takeover would be well received by shareholders given the valuation premium of around 26% to the prior close.

Macquarie maintains a Neutral rating and raises the target to $14.75 from $12.20.

Target price is $14.75 Current Price is $13.01 Difference: $1.74
If CWN meets the Macquarie target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $13.33, suggesting upside of 2.4% (ex-dividends)

The company's fiscal year ends in June.

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

Deutsche Bank rates DMP as Sell (5) -

Domino's Pizza Enterprises has acquired some Danish territory which Deutsche Bank believes could be a good opportunity. Denmark has been a difficult geography for the previous Domino's Pizza operator as well as Pizza Hut.

The broker notes the company has a good track record of developing markets and executing better than its predecessors and competitors, and The Netherlands could be a template for success in this market.

However, with a population of less than 6m the opportunity is small and the 150 store target appears optimistic to the broker. Sell rating and $35 target maintained.

Target price is $35.00 Current Price is $43.02 Difference: minus $8.02 (current price is over target).
If DMP meets the Deutsche Bank target it will return approximately minus 19% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $44.40, suggesting upside of 3.2% (ex-dividends)

Forecast for FY19:

Forecast for FY20:

Market Sentiment: -0.1

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

Ord Minnett rates DMP as Lighten (4) -

The company has acquired the Domino's Pizza assets in Denmark for EUR2.5m. Ord Minnett believes this is an opportunistic acquisition, as the company is entering a market with the potential for 150 stores at a low cost. The previous operator has entered administration and ceased trading.

However, the amount of incremental capital and reinvestment in the brand that is required is unknown. Ord Minnett maintains a Lighten rating and $42 target.

Target price is $42.00 Current Price is $43.02 Difference: minus $1.02 (current price is over target).
If DMP meets the Ord Minnett target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $44.40, suggesting upside of 3.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: -0.1

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

Deutsche Bank rates FNP as Buy (1) -

Deutsche Bank was impressed with its visit to the Shepparton facility in Victoria. Management is focused on optimising returns, with the bulk of capital investment on track for completion in FY19.

Management has reaffirmed a strong outlook for UHT milk both domestic and offshore. The company has built an industry-leading nutritional capacity, the broker observes, and it is now up to management to extract value. Buy rating is reiterated. Target is $6.

Target price is $6.00 Current Price is $5.13 Difference: $0.87
If FNP meets the Deutsche Bank target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $6.01, suggesting upside of 17.2% (ex-dividends)

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.8

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

Ord Minnett rates IFN as Buy (1) -

Infigen Energy has de-rated materially over the past two years, Ord Minnett observes. This has been driven mainly by lower green certificate prices.

The broker estimates that, if an infrastructure company acquired Infigen at a 30% premium to the current stock price, then signed a $55/megawatt-hour offtake for all uncontracted generation to the next 15 years, it would result in an unleveraged internal rate of return of 7%.

There is also substantially less risk versus building new plants, given the debt would be paid off within 7-8 years compare with 15 in the case of building a new plant. The broker maintains a Buy rating and $0.80 target.

Target price is $0.80 Current Price is $0.47 Difference: $0.33
If IFN meets the Ord Minnett target it will return approximately 70% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 1.0

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

Morgan Stanley rates JIN as Overweight (1) -

Morgan Stanley emphasises that its bull case scenario for Jumbo Interactive (target price under bull case scenario is $35) relies on the successful software sales in the US. The US Department of Justice in January ruled that the Wire Act applies to all forms of gambling, including lotteries, implying that online lottery purchases would be illegal.

However, this has now been clarified, with the government stating the interpretation did not address whether the act applies to state lotteries and vendors. The issue is being reviewed. Morgan Stanley believes regulatory certainty is a prerequisite for adoption.

Morgan Stanley reiterates an Overweight rating and $20 target. Industry view is In-Line.

Target price is $20.00 Current Price is $17.00 Difference: $3
If JIN meets the Morgan Stanley target it will return approximately 18% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 1.0

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

Morgans rates LVH as Add (1) -

Morgans observes the company's global growth plans are now fully funded following the recent capital raising. LiveHire has raised $15m to roll out its services to the first major US client, Workforce Logic, and a number of potential distribution partners.

While the higher investment will result in higher short-term costs, at least in FY20 and FY21, Morgans suggests the investment will allow faster revenue growth and higher profit margins in the long run. The broker raises the target to $0.90 from $0.85 and maintains an Add rating.

Target price is $0.90 Current Price is $0.55 Difference: $0.35
If LVH meets the Morgans target it will return approximately 64% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 1.0

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

Citi rates MFG as Downgrade to Neutral from Buy (3) -

Citi has downgraded Magellan Financial to Neutral from Buy following a strong share price performance, fueling the view it's time for a breather and the risk-reward proposition has become "less compelling".

Marking to market and accounting for stronger fund inflows has further pushed up earnings estimates. Target price lifts to $39.80 from $35.30.

Citi suggests Magellan Financial needs to add additional growth for further outperformance, but current optionalities require more time.

Target price is $39.80 Current Price is $39.04 Difference: $0.76
If MFG meets the Citi target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $34.73, suggesting downside of -11.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.1

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

Credit Suisse rates MHJ as Outperform (1) -

Michael Hill International has delivered a weaker trading update versus Credit Suisse expectations. Australia, among the company's key markets, was the only one to report a sequential improvement in same-store sales trends for the nine months to March.

The broker points out first half trading is critical as it typically generates 70-80% of the full year earnings (EBIT). Reflecting changes to forecasts, the broker reduces the target to NZ$0.90 from NZ$0.97. Outperform maintained (purely on cheap valuation).

Current Price is $0.60. Target price not assessed.

Current consensus price target is $0.76, suggesting upside of 26.1% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.8

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

Morgan Stanley rates MQG as Overweight (1) -

Macquarie Group is buying around $17.5bn of traditional assets under management from Foresters, a US mutual life insurer. The assets are mostly US retail mutual funds with a 50:50 split of equities versus fixed income.

Morgan Stanley considers this a sensible deal, consistent with the strategy of deploying excess capital into bolt-on acquisitions and building out the global operating platform. Overweight rating, $140 target and In-Line industry view maintained.

Target price is $140.00 Current Price is $130.54 Difference: $9.46
If MQG meets the Morgan Stanley target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $129.31, suggesting downside of -0.9% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.5

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

Credit Suisse rates OSH as Neutral (3) -

Credit Suisse increases the target to $7.60 from $7.50 after upgrading 2019 oil price forecasts, partly offset by lower LNG spot prices. The company's confirmation of its final interest in the Papua LNG of 17.7% is slightly lower than the broker previously assumed.

The broker envisages a further downside risk to 2019 earnings of -1.6% if LNG prices were to average US$5/MMBtu instead of US$6/MMBtu. Neutral rating maintained.

Target price is $7.60 Current Price is $8.00 Difference: minus $0.4 (current price is over target).
If OSH meets the Credit Suisse target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $8.61, suggesting upside of 7.7% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY19:

Forecast for FY20:

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 RIO as Equal-weight (3) -

The company has experienced another fire at an iron ore screen house at the Dampier port terminal. It remains unclear if loading has resumed, but Morgan Stanley suggests the fact there is no immediate change in production means the impact is unlikely to be material.

Based on initial reports there is no damage to the actual ship loading equipment or quay. Still, the broker believes the incident poses some questions around the sustainability of the level of expenditure on the assets.

Moreover, an elevated iron ore price for an extended period would be unhelpful, as it may trigger a return of mothballed projects that could structurally change the long-term supply and demand balance.

Morgan Stanley maintains an Equal-weight rating. Target is GBP44. Industry view: Attractive.

Current Price is $100.55. Target price not assessed.

Current consensus price target is $94.67, suggesting downside of -5.9% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY19:

Forecast for FY20:

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

Credit Suisse rates STO as Downgrade to Underperform from Neutral (5) -

Credit Suisse upgrades 2019 oil price forecasts, partly offset by lower LNG spot prices, and increases the target to $6.40 from $6.28.

The broker downgrades to Underperform from Neutral because of the difficulty getting the valuation to match the current share price under global oil price assumptions.

Credit Suisse has not changed its view on the fundamentals of the company's business and the scope for growth.

Target price is $6.40 Current Price is $7.02 Difference: minus $0.62 (current price is over target).
If STO meets the Credit Suisse target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $6.95, suggesting downside of -1.0% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY19:

Forecast for FY20:

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

Credit Suisse rates WPL as Outperform (1) -

Credit Suisse upgrades 2019 oil price forecasts, offset by lower LNG spot prices. The broker envisages further downside risk to 2019 earnings of around -1.7% if LNG prices were to average US$5/MMBtu, instead of US$6/MMBtu.

The broker maintains a positive view on the priority Scarborough project. Outperform rating maintained. Target is reduced to $37.60 from $37.64.

Target price is $37.60 Current Price is $35.41 Difference: $2.19
If WPL meets the Credit Suisse target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $35.61, suggesting upside of 0.6% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY19:

Forecast for FY20:

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