Australian Broker Call

Citi rates APX as Initiation of coverage with Buy (1) -

Appen develops high-quality data for machine-learning programs. Citi believes the company is well-positioned to facilitate global technology companies to advance voice-activated interfaces and improve internet search quality.

The broker initiates coverage on the stock with a Buy rating and $5.88 target and envisages the long-term client relationships and overall growth of artificial intelligence will support demand for the company's services. 2017 revenue is expected to grow 40% and operating earnings 50%.

Target price is $5.88 Current Price is $5.19 Difference: $0.69
If APX meets the Citi target it will return approximately 13% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 1.0

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

Morgans - Cessation of coverage

Forecast for FY18:

Forecast for FY19:

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

Deutsche Bank rates CPU as Downgrade to Sell from Hold (5) -

Deutsche Bank downgrades to Sell from Hold. The broker believes the expansion into mortgage servicing may not deliver the operating leverage the company expects.

The broker's analysis of the industry in the US suggests regulatory scrutiny that results in changes to business practice is likely to offset any operational gains.

The broker makes a small upgrade to FY18 and FY19 earnings and lowers the target to $13.00 from $13.70.

Target price is $13.00 Current Price is $14.55 Difference: minus $1.55 (current price is over target).
If CPU meets the Deutsche Bank target it will return approximately minus 11% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $13.89, suggesting downside of -2.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

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

Market Sentiment: -0.1

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

Citi rates ECX as Neutral (3) -

The company has guided to FY17 net profit growth at the top end of the 20-23% range. Citi increases estimates by 1-3% for FY17-19.

The broker acknowledges the merit in owning multiple touch points in the customer experience but remains concerned about the increased complexity stemming from diversification and the reduced visibility.

The broker retains a Neutral rating and increases the target to $4.25 from $4.01.

Target price is $4.25 Current Price is $3.98 Difference: $0.27
If ECX meets the Citi target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $4.42, suggesting upside of 10.8% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.8

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

Deutsche Bank rates ECX as Buy (1) -

Deutsche Bank observes the company is on track for a strong result, with growth in new business, cost discipline and a solid funding position.

The company has confirmed the exit from loss-making consumer categories and the completion of a substantial cost rationalisation program. Deutsche Bank envisages merit in the company's acquisition of Grays, both from a financial and strategic perspective.

Buy rating and $4.50 target retained.

Target price is $4.50 Current Price is $3.98 Difference: $0.52
If ECX meets the Deutsche Bank target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $4.42, suggesting upside of 10.8% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.8

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

Macquarie rates ECX as Outperform (1) -

The company expects 2017 net profit to be at the top end of prior guidance, which suggests to Macquarie net profit of $66.3-68m. The broker observes Grays is on track to deliver $23-25m in operating earnings in 2018.

Macquarie retains an Outperform rating. Target is $4.40.

Target price is $4.40 Current Price is $3.98 Difference: $0.42
If ECX meets the Macquarie target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $4.42, suggesting upside of 10.8% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.8

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

Morgan Stanley rates ECX as Overweight (1) -

Morgan Stanley observes the acquisition of Grays has been completed and the company has quickly removed loss-making consumer categories, consolidated the head office and outsourced the wine business logistics. The benefits of these actions will be realised over the rest of the year.

Guidance has been reiterated for FY18 operating earnings of $23-25m. The broker envisages significant opportunity to dispose of leased vehicles through the vehicle auction site and cross sell products.

The broker retains an Overweight rating and $4.90 target. Sector view is In-Line.

Target price is $4.90 Current Price is $3.98 Difference: $0.92
If ECX meets the Morgan Stanley target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $4.42, suggesting upside of 10.8% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.8

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

UBS rates ECX as Buy (1) -

The investor briefing revealed the strength of the company's Right2Drive and Grays eCommerce businesses , UBS suggests, as the company expands R2D branches and exits Grays' loss-making consumer categories.

2017 guidance has been upgraded to the top end of $66.3-68m. UBS believes the company has a solid market position and good visibility on earnings.

Buy rating retained. Target is $4.20.

Target price is $4.20 Current Price is $3.98 Difference: $0.22
If ECX meets the UBS target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $4.42, suggesting upside of 10.8% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.8

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

Macquarie rates GOR as Outperform (1) -

The latest round of drilling results support the company's ambition to find additional near-mine ounces at the Gruyere project, Macquarie suggests, as being able to feed the mill with higher grade resources is important in the early stages of the development.

The broker also incorporates FY17 financial results into estimates. A small loss is modelled for FY18. Outperform and $1.00 target retained.

Target price is $1.00 Current Price is $0.69 Difference: $0.31
If GOR meets the Macquarie target it will return approximately 45% (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

Deutsche Bank rates KMD as Buy (1) -

FY17 results - pre-released early August - show continued growth in Australian sales and ongoing recovery in the New Zealand business. Deutsche Bank highlights the very strong sales performance in an apparel market which has been challenging.

Good inventory management and a record low debt have also supported an increased pay-out ratio and further capital management initiatives are likely, in the broker's opinion.

Buy rating retained. Target is NZ$2.50.

Current Price is $2.10. Target price not assessed.

Current consensus price target is $2.52, suggesting upside of 21.2% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY18:

Forecast for FY19:

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

Market Sentiment: 0.7

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

Macquarie rates KMD as Outperform (1) -

Despite FY17 results being pre-released, Macquarie was still positively surprised by the quality, as working capital, debt and inventory metrics all showed material improvement.

The broker is now increasingly confident in the ability of management to execute and also with the operating outlook.

Macquarie maintains an Outperform rating and raises the target to $2.52 from $2.27.

Target price is $2.52 Current Price is $2.10 Difference: $0.42
If KMD meets the Macquarie target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $2.52, suggesting upside of 21.2% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY18:

Forecast for FY19:

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

Market Sentiment: 0.7

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

Ord Minnett rates MND as Hold (3) -

The company has been awarded new maintenance and construction work contracts in the mining, oil & gas sectors worth $220m. Ord Minnett values the contracts at between 7-14% of its FY18 sales forecasts.

The company is expected to experience headwinds in FY19, as its large LNG-related oil & gas contracts roll off, but should be positioned to benefit from a recovering mining industry, the broker suggests.

Hold rating maintained, largely because of the stock's relatively high valuation, and $14.30 target.

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

Target price is $14.30 Current Price is $15.38 Difference: minus $1.08 (current price is over target).
If MND meets the Ord Minnett target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $12.25, suggesting downside of -21.0% (ex-dividends)

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.8

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

Morgans rates NAM as Initiation of coverage with Add (1) -

Morgans initiates coverage on the Australian cotton processing and marketing organisation with an Add rating and $0.54 target.

The broker believes larger crops, improved earnings and corporate restructuring should go some way to narrowing the material discount at which the stock trades to its net tangible assets.

Target price is $0.54 Current Price is $0.39 Difference: $0.15
If NAM meets the Morgans target it will return approximately 38% (excluding dividends, fees and charges).

The company's fiscal year ends in February.

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

Citi rates NUF as Neutral (3) -

FY17 numbers were strong, except for Argentina, and Citi notes the company continues to benefit from improved performance measures and reduced costs. Growth in FY18 is expected as market conditions in Argentina normalise.

Citi raises FY18-19 earnings per share estimates by 6%.

With the shares fairly valued, the broker believes the stock is an event play, given potential for acquisitions arising from recent industry mergers.

Neutral rating retained. Target price is $9.31.

Target price is $9.31 Current Price is $8.76 Difference: $0.55
If NUF meets the Citi target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $9.16, suggesting upside of 6.1% (ex-dividends)

The company's fiscal year ends in July.

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 NUF as Neutral (3) -

FY17 results were in line with revised guidance, reflecting cost reductions. Credit Suisse observes the near-term outlook is similar, expecting high single-digit growth in operating earnings.

The broker believes the benefits of lower costs and market share gains are likely to be sustained. The main risks centre on seasonal conditions in Australasia, and risks appear to the downside, along with some adverse impacts for the ornamental and turf sectors in North America from recent hurricane events.

Neutral rating retained. Target is raised to $9.49 from $9.26.

Target price is $9.49 Current Price is $8.76 Difference: $0.73
If NUF meets the Credit Suisse target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $9.16, suggesting upside of 6.1% (ex-dividends)

The company's fiscal year ends in July.

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

Deutsche Bank rates NUF as Sell (5) -

Deutsche Bank found FY17 results disappointing, albeit in line with recently lowered guidance. The broker believes it will be more difficult now to undertake an acquisition of any size, although the company is assessing all opportunities that may arise from industry consolidation.

While guidance is for improved earnings in FY18, the broker believes the company has challenges in Argentina, Australia and in the seeds business. Sell rating retained. Target is reduced to $6.75 from $6.90.

Target price is $6.75 Current Price is $8.76 Difference: minus $2.01 (current price is over target).
If NUF meets the Deutsche Bank target it will return approximately minus 23% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $9.16, suggesting upside of 6.1% (ex-dividends)

The company's fiscal year ends in July.

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

Macquarie rates NUF as Outperform (1) -

FY17 results were at the upper end of prior guidance. Macquarie believes the options for acquisitions, coupled with the company's recent improvements to the business, are likely to drive solid earnings growth over the medium term.

Outperform rating retained. Target is reduced to $9.60 from $9.70.

Target price is $9.60 Current Price is $8.76 Difference: $0.84
If NUF meets the Macquarie target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $9.16, suggesting upside of 6.1% (ex-dividends)

The company's fiscal year ends in July.

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

Morgans rates NUF as Hold (3) -

FY17 results were in line with recent guidance and Morgans believes this was a credible outcome given the challenging market conditions.

The broker believes the company is doing a solid job of managing factors within its control and wins in terms of market share and the cumulative benefits of performance improvements are evidence.

The broker believes the stock is fairly valued for the short term and retains a Hold rating. Target is reduced to $9.20 from $9.40.

Target price is $9.20 Current Price is $8.76 Difference: $0.44
If NUF meets the Morgans target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $9.16, suggesting upside of 6.1% (ex-dividends)

The company's fiscal year ends in July.

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

Ord Minnett rates NUF as Hold (3) -

FY17 net profit was up 25%, driven by double-digit sales growth across all divisions except Europe as well as lower interest expense and currency losses.

In the absence of acquisitions, Ord Minnett believes challenges remain in the crop protection industry in the form of soft commodity prices, volatile seasonal conditions and pricing competition.

Hold rating retained. Target is reduced to $9.00 from $9.75.

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 $8.76 Difference: $0.24
If NUF meets the Ord Minnett target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $9.16, suggesting upside of 6.1% (ex-dividends)

The company's fiscal year ends in July.

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

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

Morgan Stanley finds the 2020 target realistic and expects a return to mid-teens growth in earnings per share from FY19.  Nevertheless, the broker considers the valuation full against elevated execution risks.

Morgan Stanley would become more positive if there was evidence of the company expanding its university partnerships beyond the pathway and doing more with existing relationships.

Equal-weight rating retained. Target is $4.50. Industry view: In-Line.

Target price is $4.50 Current Price is $4.48 Difference: $0.02
If NVT meets the Morgan Stanley target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $4.40, suggesting downside of -1.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.2

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

Morgan Stanley rates QBE as Overweight (1) -

Morgan Stanley suggests QBE is entering 2018 in better shape than its peers, with greater leverage to an improving rate outlook.

This is despite the potential for 2017 to be the worst loss year on record. The broker derives its estimates based on assumptions of September quarter loss estimates for Hurricanes Harvey, Irma and Maria and the Mexican earthquakes.

Overweight reiterated. Target is $13.00. Industry view: In-Line.

Target price is $13.00 Current Price is $10.21 Difference: $2.79
If QBE meets the Morgan Stanley target it will return approximately 27% (excluding dividends, fees and charges).

Current consensus price target is $11.59, suggesting upside of 16.5% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY17:

Forecast for FY18:

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

Market Sentiment: 0.1

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

Ord Minnett rates QBE as Lighten (4) -

After a string of catastrophes in the Americas, Ord Minnett believes there is some risk the company will breach its large loss allowance in 2017.

The broker believes investors should look through this, as there is a chance that, if the events experience is very bad, the cycle could stabilise re-insurance.

The broker notes QBE will be a net beneficiary of rising re-insurance rates in FY18, given it has already placed a large proportion of its re-insurance for FY18.

Target is $10.00. Lighten retained.

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

Target price is $10.00 Current Price is $10.21 Difference: minus $0.21 (current price is over target).
If QBE 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 $11.59, suggesting upside of 16.5% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY17:

Forecast for FY18:

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

Market Sentiment: 0.1

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