Australian Broker Call

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

Morgan Stanley observes that pool prices have fallen and retail tariffs will follow. This drives reductions to estimates for earnings per share. Risks around policy add complexity to the outlook.

Nevertheless, the broker believes the headwinds for the energy market are adequately reflected in the share price.

Equal-weight rating. Target is reduced to $22.88 from $24.28. Industry view: Cautious.

Target price is $22.88 Current Price is $20.91 Difference: $1.97
If AGL meets the Morgan Stanley target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $23.97, suggesting upside of 14.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.4

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

Ord Minnett rates AGL as Accumulate (2) -

The company has announced changes to its residential standing electricity prices for NSW, Queensland and South Australia from July 1. AGL will lower electricity prices slightly in all three states. Unlike Origin Energy ((ORG)), AGL has increased gas prices to both residential and business customers.

Ord Minnett does not believe the market will be surprised by the announcement and expects earnings growth to come from the wholesale business rather than retail. Accumulate rating and $24.50 target maintained.

Target price is $24.50 Current Price is $20.91 Difference: $3.59
If AGL meets the Ord Minnett target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $23.97, suggesting upside of 14.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.4

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

Morgan Stanley rates AMP as Overweight (1) -

Morgan Stanley believes the company's earnings and franchise resilience will surprise. The broker couples fear with uncertainty and envisages this as an opportunity.

The market fears a once-in-a-generation adviser transition is driving leakage of funds under management, but the broker believes this overlooks the tightening regulatory focus beyond the major players and the potential capital requirements for licensees post the Royal Commission.

Overweight maintained. Target is $4.50. Industry view is In-Line.

Target price is $4.50 Current Price is $3.63 Difference: $0.87
If AMP meets the Morgan Stanley target it will return approximately 24% (excluding dividends, fees and charges).

Current consensus price target is $4.29, suggesting upside of 18.1% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.3

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

Citi rates AST as Upgrade to Neutral from Sell (3) -

Following the recent underperformance of the share price Citi upgrades to Neutral from Sell and considers the stock fairly valued. The broker also updates its model for the FY18 results, which slightly missed expectations.

The broker continues to prefer Spark Infrastructure ((SKI)) in the sector. Target is $1.54.

Target price is $1.54 Current Price is $1.53 Difference: $0.01
If AST meets the Citi target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $1.76, suggesting upside of 15.0% (ex-dividends)

The company's fiscal year ends in March.

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

Morgans rates BUB as Hold (3) -

The company has announced a number of new supply agreements with distributors in China's off-line and online sales channels. Morgans upgrades forecasts but, having previously assumed strong revenue growth, maintains a Hold rating.

Recent announcements suggest the company is making progress in building a sustainable business and continued scaling of its distribution highlights the strength of the brand, point of differentiation and value of alliances, in the broker's view. Target is raised to $0.82 from $0.75.

Target price is $0.82 Current Price is $0.90 Difference: minus $0.08 (current price is over target).
If BUB meets the Morgans 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:

Market Sentiment: 0.0

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

Morgans rates CAT as Add (1) -

Catapult has won FIFA approval for its athlete monitoring systems to be worn in-game. Morgans believes this should make it easier for Catapult to initiate sales discussions with clubs and associations.

FIFA approval does not imply endorsement but the certification should be an advantage in signing up new customers. Morgans maintains an Add rating and $1.76 target.

Target price is $1.76 Current Price is $1.24 Difference: $0.52
If CAT meets the Morgans target it will return approximately 42% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 1.0

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

Credit Suisse rates PTM as Neutral (3) -

The company reported funds under management of $27.7bn in May, down -0.9% because of negative market movements most of which can be attributed to the underperformance of the international fund. Net flows were positive.

While flows into international equities are cyclically weak at the moment Credit Suisse believes the company continues to attract modest inflows which is countering arguments that it could be negatively affected by PM changes.

While there is downside risk to FY19 forecasts if inflows persist at current levels, the broker is mindful that the company could be on the cusp of large inflows from maturing offshore UCITS products and new US distribution agreements.

Neutral rating and $5.50 target maintained.

Target price is $5.50 Current Price is $6.01 Difference: minus $0.51 (current price is over target).
If PTM meets the Credit Suisse target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $6.31, suggesting upside of 5.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.3

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

Macquarie rates RHC as Outperform (1) -

Macquarie has reviewed the investment case for Ramsay Health Care following recent weakness in the share price. The broker expects the $300m worth of brownfield developments to be opened over 2018 should support growth in FY19/20.

Procurement savings should also support margin expansions. Noting PE/growth relative to domestic healthcare peers Macquarie envisages valuation appeal at current levels and maintains an Outperform rating and $74.50 target.

Target price is $74.50 Current Price is $57.24 Difference: $17.26
If RHC meets the Macquarie target it will return approximately 30% (excluding dividends, fees and charges).

Current consensus price target is $68.24, suggesting upside of 19.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.1

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

Credit Suisse rates SFR as Underperform (5) -

The company has finally achieved in-principle agreement with Talisman ((TLM)) to acquire its 30% interest in the Monty underground copper mine and Springfield exploration JV. The price is $72m cash plus a 1% NSR royalty on future discoveries within the Springfield JV.

Credit Suisse understands the benefit of paying a full price to remove complexity and save management costs in a small deal such as this but hopes that the company does not use the same pricing approach for future transactions, unless the currency used is SFR paper. Rating is Underperform. Target is $6.70.

Target price is $6.70 Current Price is $9.98 Difference: minus $3.28 (current price is over target).
If SFR meets the Credit Suisse target it will return approximately minus 33% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $7.32, suggesting downside of -26.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.5

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

Deutsche Bank rates TAH as Buy (1) -

The strategic review of Sun Bets has concluded and Tabcorp is now in discussions with its partner, News UK, about a proposal to exit its agreement to operate the business.

Deutsche Bank considers an early exit from this agreement as an incremental positive for Tabcorp. The business is loss-making and there appears to be little prospect it will be able to generate revenue in excess of the annual minimum payment obligations.

The broker reduces earnings estimates by -2-3% to reflect the costs of early termination. Buy rating and $5.50 target retained.

Target price is $5.50 Current Price is $4.61 Difference: $0.89
If TAH meets the Deutsche Bank target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $5.21, suggesting upside of 13.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.7

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

Morgans rates WTP as Add (1) -

The Besix scheme of arrangement was not carried and its shareholding remains at 28.1%. While there is some overhang associated with the company potentially selling out, Morgans considers there is also upside risk from a full takeover proposal in time.

The broker maintains an Add rating based on the latent underlying asset value and the potential for Watpac to improve delivery. Target is raised to $0.91 from $0.88.

Target price is $0.91 Current Price is $0.76 Difference: $0.15
If WTP meets the Morgans 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