Australian Broker Call

Citi rates AMC as Buy (1) -

Citi is initiating coverage of the company's US listing and raising the target for the Australian stock to $18.00 from $16.10 to reflect an updated valuation.

The broker notes the rationale of the Amcor Bemis tie-up is to become a leader in the industry with greater scale for resin purchasing, manufacturing and innovation capability.

The company has targeted 10-15% total shareholder value growth per annum. Citi finds the valuation attractive and maintains a Buy rating.

Target price is $18.00 Current Price is $15.51 Difference: $2.49
If AMC meets the Citi target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $16.74, suggesting upside of 7.9% (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: 0.6

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

Morgans rates AZJ as Hold (3) -

Morgans is more confident in the outlook for the regulated network after the briefing. However, concerns continue regarding competitive pressures above rail. With the revenue allowance for operating costs fixed until FY27 for the UT5 agreement, management was upbeat about the cost cutting potential.

The company currently pays all earnings out as dividends and assuming this is maintained, Morgans expects the distribution to reduce in FY19 to $0.22 per security before averaging $0.28 per security across FY20-22.

The broker maintains a Hold rating and raises the target to $4.73 from $4.59.

Target price is $4.73 Current Price is $5.39 Difference: minus $0.66 (current price is over target).
If AZJ meets the Morgans target it will return approximately minus 12% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.93, suggesting downside of -8.6% (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 CAJ as Outperform (1) -

In a consolidating market, Credit Suisse foresees material upside in both a stand-alone and merger scenario for the company. The broker expects only modest improvement in growth in the second half relative to a weak first half but believes the issues are transient, such as bottlenecks in Victoria.

The broker reviews near-term estimates and forecasts FY20 operating earnings (EBITDA) of $29.7m. Credit Suisse believes Capitol Health can still generate a very healthy earnings growth profile in the outer years despite growing below industry trends of around 6%.

Credit Suisse maintains an Outperform rating and $0.28 target.

Target price is $0.28 Current Price is $0.22 Difference: $0.06
If CAJ meets the Credit Suisse target it will return approximately 27% (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 FBU as Equal-weight (3) -

Morgan Stanley believes the upcoming investor briefing will be a key catalyst for the company. The broker envisages potential for a capital management announcement. The investor briefing will be held on June 26.

The broker expects a $250m buyback and a trading update in line with prior guidance. Equal-weight rating maintained. Target is NZ$5.00. Cautious industry view.

Current Price is $5.14. Target price not assessed.

Current consensus price target is N/A

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

This company reports in NZD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: 0.0

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

Citi rates GMG as Buy (1) -

Citi lifts earnings estimates by 2-4% across FY20/21. Changes reflect development work in progress increasing to over $5bn by the end of FY20 and associated growth in assets under management.

Revised forecasts now imply compound growth of 9.4% for FY19-22, with risks still skewed to the upside. Buy rating and $17 target maintained.

Target price is $17.00 Current Price is $15.02 Difference: $1.98
If GMG meets the Citi target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $13.78, suggesting downside of -8.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.3

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

Citi rates GPT as Sell (5) -

The company has announced the acquisition of a 25% interest in Darling Park for $531m in conjunction with the placement of $800m.

FY19 guidance for earnings per share is reduced to 2.5% from 4.0%, which Citi asserts is an unusual move - reducing earnings guidance to facilitate an acquisition.

The broker maintains a Sell rating as the stock is close to a record multiple despite having more than 40% of its weighting to retail, where headwinds are strengthening. Target is raised to $5.73 from $5.47.

Target price is $5.73 Current Price is $6.23 Difference: minus $0.5 (current price is over target).
If GPT meets the Citi target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.89, suggesting downside of -5.4% (ex-dividends)

The company's fiscal year ends in December.

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

Credit Suisse rates GPT as Neutral (3) -

The company has raised $800m via an institutional placement and will seek to raise up to $50m in a non-underwritten share purchase plan. Proceeds will be used to acquire a 25% interest in the Darling Park 1 & 2 office complex and Cockle Bay Wharf in Sydney and help fund the next stage of the development pipeline.

Credit Suisse anticipates the dilution to earnings per share to be only temporary. Pro forma gearing of 21.7%, materially below the 25-35% target, will be the supporting factor in delivering these projects and should provide the options for pursuing any future acquisitions.

Neutral rating maintained. Target is reduced to $5.88 from $5.90.

Target price is $5.88 Current Price is $6.23 Difference: minus $0.35 (current price is over target).
If GPT 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 $5.89, suggesting downside of -5.4% (ex-dividends)

The company's fiscal year ends in December.

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

Deutsche Bank rates GPT as Hold (3) -

The company has announced an $800m institutional placement and $50m security purchase plan to fund the acquisition of a 25% interest in the Darling Park 1 & 2 office complex and Cockle Bay Wharf, Sydney, for $531m.

Funds will also be used for the next stage of the future development pipeline in the office and logistics sector. Deutsche Bank estimates the raising will be -0.2% dilutive to FY20 FFO/share. Hold rating and $6.03 target.

Target price is $6.03 Current Price is $6.23 Difference: minus $0.2 (current price is over target).
If GPT meets the Deutsche Bank target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.89, suggesting downside of -5.4% (ex-dividends)

The company's fiscal year ends in December.

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

Macquarie rates GPT as No Rating (-1) -

The company has announced an $800m equity raising to fund a 25% interest in Darling Park 1 & 2. The company has revised FY19 free funds growth to 2.5% from 4.0% to reflect the excess prior to redeployment of the funds.

Around $227m has been allocated to future growth opportunities.

Macquarie is currently on research restrictions and cannot provide a rating or target at present.

Current Price is $6.23. Target price not assessed.

Current consensus price target is $5.89, suggesting downside of -5.4% (ex-dividends)

The company's fiscal year ends in December.

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

UBS rates GPT as Neutral (3) -

The company has raised $800m to acquire Darling Park 1 & 2 and de-gear the balance sheet. UBS believes the acquisition was transacted on favourable terms. In isolation, it is around -2% dilutive on a full year basis.

The broker maintains a Neutral rating and raises the target to $6.32 from $6.30.

Target price is $6.32 Current Price is $6.23 Difference: $0.09
If GPT meets the UBS target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $5.89, suggesting downside of -5.4% (ex-dividends)

The company's fiscal year ends in December.

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

Morgan Stanley rates JIN as Overweight (1) -

Morgan Stanley notes Apples updated App Store guidelines mean that gaming apps not specifically designed for iOS will be taken off the store and have until September 3 to redevelop and comply.

The broker believes this is incrementally positive for Jumbo Interactive and its US ambitions.

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

Target price is $20.00 Current Price is $19.80 Difference: $0.2
If JIN meets the Morgan Stanley target it will return approximately 1% (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

Credit Suisse rates LNK as Outperform (1) -

The company has outlined several growth opportunities across its businesses. The majority have long-term horizons and are unlikely to be material enough to detract from the earnings headwinds in FY20 and FY21, Credit Suisse asserts.

The broker found little additional insight into the earnings downgrade, while the investigation into the Woodford fund adds further uncertainty. Outperform rating and $7.60 target maintained.

Target price is $7.60 Current Price is $5.35 Difference: $2.25
If LNK meets the Credit Suisse target it will return approximately 42% (excluding dividends, fees and charges).

Current consensus price target is $7.06, suggesting upside of 31.9% (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

Ord Minnett rates LNK as Accumulate (2) -

Management has reassured investors regarding the recent earnings downgrade, yet Ord Minnett still struggles to understand the explanation. The company expects a return to revenue growth through regional expansion.

The company has stated that 60% of the recent downgrade to FY19 earnings came from Link Asset Services and most from the corporate and private clients division, which is in the process of being sold.

The broker gained comfort that, if the Woodford fund, of which Link Administration is authorised corporate director, was closed, the impact would be more than offset by other mandate wins. Accumulate rating and $7.16 target maintained.

Target price is $7.16 Current Price is $5.35 Difference: $1.81
If LNK meets the Ord Minnett target it will return approximately 34% (excluding dividends, fees and charges).

Current consensus price target is $7.06, suggesting upside of 31.9% (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

UBS rates LNK as Buy (1) -

The company's investor briefing highlighted structural growth prospects, rather than greater numerical detail around the FY19 trading update.

UBS confirms its suspicions that funds administration pressures stemming from the Protecting Your Super initiatives appear more temporary, while UK corporate markets' revenue is sustaining a recurring element linked to client losses and Brexit-related softness.

The broker continues to envisage FY20 as a transition year. Buy rating and $7.75 target maintained.

Target price is $7.75 Current Price is $5.35 Difference: $2.4
If LNK meets the UBS target it will return approximately 45% (excluding dividends, fees and charges).

Current consensus price target is $7.06, suggesting upside of 31.9% (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

Deutsche Bank rates MGR as Hold (3) -

Mirvac Group is unable to agree terms to sell the Tucker Box Hotel Trust. As a result, the asset will remain on the balance sheet. As previously guided, growth in earnings per share in FY20 increases to over 3% from over 2% post the failed negotiations.

Deutsche Bank maintains a Hold rating and $2.95 target.

Target price is $2.95 Current Price is $3.16 Difference: minus $0.21 (current price is over target).
If MGR meets the Deutsche Bank target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.78, suggesting downside of -12.0% (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

Ord Minnett rates MTS as Accumulate (2) -

The company is scheduled to report its FY19 results on June 24. Ord Minnett expects underlying net profit of $215.5m, down -0.6%. The broker notes valuation support and declining food deflation.

Hardware industry challenges remain an area of concern. Accumulate rating maintained. Target is raised to $3.30 from $3.00.

Target price is $3.30 Current Price is $3.15 Difference: $0.15
If MTS meets the Ord Minnett target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $2.89, suggesting downside of -8.4% (ex-dividends)

The company's fiscal year ends in April.

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

Morgan Stanley rates NWS as Underweight (5) -

Morgan Stanley believes a sale of the company's US coupons and inserts business, if this eventuates from the review being undertaken, makes strategic and financial sense.

A sale would simplify the investment story and any cash realised strengthen the balance sheet, in the broker's view. The business is in structural decline but could be worth more to an industry consolidator.

Underweight rating, US$11.50 target and Attractive industry view maintained.

Current Price is $19.91. Target price not assessed.

Current consensus price target is $21.24, suggesting upside of 6.7% (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: 0.4

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

UBS rates NWS as Buy (1) -

News Corp is reviewing its strategic options for News America Marketing, including a potential sale. Revenue has been under pressure in recent years, declining -6% in FY18. The business provides a range of marketing solutions to advertisers.

UBS notes similar transactions are scarce but suspects the market is undervaluing the traditional media assets in the company.

A potential sale would help simplify the structure of news and information services and could allow better visibility about the contribution from the remaining businesses in that segment. Buy rating and $21.25 target maintained.

Target price is $21.25 Current Price is $19.91 Difference: $1.34
If NWS meets the UBS target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $21.24, suggesting upside of 6.7% (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: 0.4

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

Macquarie rates ORG as Outperform (1) -

Macquarie has become more conservative over the long-term outlook for energy markets. The company is benefiting from the strong performance in APLNG and better production from Eraring and this is leading to a quick de-gearing of the balance sheet.

The broker considers this improves the likelihood of a normalisation of dividends in FY20 and possibly raises the scope for a surprise in the second half of FY19. Outperform rating and $9.12 target maintained.

Target price is $9.12 Current Price is $7.27 Difference: $1.85
If ORG meets the Macquarie target it will return approximately 25% (excluding dividends, fees and charges).

Current consensus price target is $8.09, suggesting upside of 11.2% (ex-dividends)

The company's fiscal year ends in June.

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

Ord Minnett rates PPE as Buy (1) -

The company has acquired two Queensland nursing agencies for $16.8m in cash. These serve a range of private and public hospitals across metropolitan and regional Queensland.

Ord Minnett observes the acquisition opens up a new vertical for the company. Greater scale and geographical diversification potentially provide avenues for large contracts in the aged care space.

Buy rating maintained. Target is raised to $3.50 from $3.25.

Target price is $3.50 Current Price is $3.29 Difference: $0.21
If PPE meets the Ord Minnett target it will return approximately 6% (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

Deutsche Bank rates RHP as Buy (1) -

The company has upgraded FY19 guidance and provided FY20 guidance which is in line with Deutsche Bank's estimates. The latter implies stronger-than-expected top-line growth, given the elevated investment plans.

The broker also believes there are additional catalysts available through geographical expansion. Buy rating maintained. Target is raised to $3.15 from $2.70.

Target price is $3.15 Current Price is $2.90 Difference: $0.25
If RHP meets the Deutsche Bank target it will return approximately 9% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Market Sentiment: 1.0

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) -

Rio Tinto has downgraded iron ore production guidance to 320-330mt from 333-343mt as a result of some operating challenges in the Pilbara. This culminated in a higher proportion of lower grade material being produced.

Morgan Stanley's initial assessment of the lower guidance is a reduction of -US$500m to base case earnings at the mid point. The company has not remarked on the cost or duration of the operating challenges.

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

Current Price is $101.49. Target price not assessed.

Current consensus price target is $98.21, suggesting downside of -3.2% (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

Ord Minnett rates SLK as Buy (1) -

Ord Minnett believes the company has fallen victim to a deteriorating demand environment. The broker expects a range of strategic options will be considered, including asset sales and acquisitions.

In the absence of any action, the business represents an appealing acquisition target. The broker maintains a Buy rating and reduces the target to $4.62 from $4.68.

Sealink Travel has stated it has experienced softer trading conditions in Sydney and Perth, in line with other tourism operators.

Target price is $4.62 Current Price is $3.68 Difference: $0.94
If SLK meets the Ord Minnett target it will return approximately 26% (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 SYR as Equal-weight (3) -

Syrah Resources has announced a new 108,000tpa contract with a trader to supply the Chinese market, instead of supplying directly. The company obtained better pricing through this channel.

Nevertheless, Morgan Stanley believes a move back to selling indirectly is indicative of the challenges facing the graphite market. Production guidance is unchanged at 205-250,000t in 2019.

Equal-weight rating maintained. Target is $1.25. Industry view is Attractive.

Target price is $1.25 Current Price is $0.99 Difference: $0.26
If SYR meets the Morgan Stanley target it will return approximately 26% (excluding dividends, fees and charges).

Current consensus price target is $2.17, suggesting upside of 119.2% (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: 0.6

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

Ord Minnett rates TNE as Lighten (4) -

Ord Minnett reviews key assumptions. While the company's target for annualised contract value over the next four years of $311m is significant, Ord Minnett's figures line up with this.

Given the share price is still more than 10% above the target, however, the broker concludes there is little room for error.

While TechnologyOne is a high-quality software company, Ord Minnett considers the valuation is stretched and maintains a Lighten rating. Target is raised to $6.80 from $6.70.

Target price is $6.80 Current Price is $8.29 Difference: minus $1.49 (current price is over target).
If TNE meets the Ord Minnett target it will return approximately minus 18% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $7.23, suggesting downside of -12.8% (ex-dividends)

The company's fiscal year ends in September.

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