Australian Broker Call

Macquarie rates AMP as Outperform (1) -

Macquarie revises system growth, market share and fee expectations. The broker continues to expect managed funds will grow as the legislated superannuation guarantee increases post 2020, which will offset the impact of an ageing population.

The broker suggests the sustained positive net flows will continue to be offset by fee pressure as MySuper balances increase and asset allocation shifts towards lower returning, lower fee asset classes.

Outperform rating and $5.65 target maintained.

Target price is $5.65 Current Price is $5.22 Difference: $0.43
If AMP meets the Macquarie target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $5.62, suggesting upside of 7.6% (ex-dividends)

The company's fiscal year ends in December.

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 ANZ as Equal-weight (3) -

Morgan Stanley notes the bank is considering an IPO of its New Zealand asset finance business, UDC. Last year, a planned sale of UDC to HNA Group did not proceed.

Rating is Equal-weight. Target is $29.30. Sector view is In-Line.

Target price is $29.30 Current Price is $28.02 Difference: $1.28
If ANZ meets the Morgan Stanley target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $30.13, suggesting upside of 7.5% (ex-dividends)

The company's fiscal year ends in September.

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

Credit Suisse rates CSL as Outperform (1) -

The US FDA has approved Hizentra to be the first subcutaneous immunoglobulin product available as a treatment option for CIDP, a neurological disease. It has also been designated an orphan drug, allowing for seven years of marketing exclusivity.

The European Commission has also granted authorisation for use in CIDP. Credit Suisse estimates earnings accretion of around 3% by FY24, assuming a 20% market share shift to Hizentra. Outperform rating maintained. Target rises to $173 from $170.

Target price is $173.00 Current Price is $163.75 Difference: $9.25
If CSL meets the Credit Suisse target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $163.29, suggesting downside of -0.3% (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: 0.5

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

Ord Minnett rates EVT as Buy (1) -

Ord Minnett reviews its investment thesis, noting the hotel/resorts division is significantly outperforming peers. This trend is expected to continue and should be the key driver of earnings in coming years.

The broker also considers the property development assets a positive. Buy rating and $16.01 target reiterated.

Target price is $16.01 Current Price is $13.50 Difference: $2.51
If EVT meets the Ord Minnett target it will return approximately 19% (excluding dividends, fees and charges).

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

Macquarie rates GNC as Neutral (3) -

Macquarie considers the FY18 earnings outlook remains bleak, although the room for downside to the stock is limited as investors shift their focus to FY19.

The Bureau of Meteorology notes a slightly increased chance that April will be wetter than average for the east coast and this provides a marginal positive for the FY19 outlook as this is the start of winter crop planting.

Neutral retained. Target rises to $8.29 from $7.62.

Target price is $8.29 Current Price is $8.15 Difference: $0.14
If GNC meets the Macquarie target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $8.75, suggesting upside of 7.4% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.6

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

Macquarie rates GTY as Outperform (1) -

The company will acquire two communities in South Australia for $45m. Macquarie notes the company's focus on improving the quality of the annuity style rental stream and acquiring either mature sites or development sites, as opposed to conversion sites.

The broker anticipates further non-core asset sales which will limit the accretion of the newly-acquired South Australian assets. Rating is Outperform. Target is $2.14.

Target price is $2.14 Current Price is $1.99 Difference: $0.15
If GTY meets the Macquarie target it will return approximately 8% (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

UBS rates GTY as Buy (1) -

The company has acquired two residential land lease communities in South Australia for $45m. UBS expects further asset recycling to pay down debt that may offset the earnings benefit.

The acquisition is expected to improve the overall asset quality, which the broker believes will support a lower trading cap rate for the manufactured home estate assets.

Buy rating and $2.30 target maintained.

Target price is $2.30 Current Price is $1.99 Difference: $0.31
If GTY meets the UBS target it will return approximately 16% (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

Macquarie rates IFL as Outperform (1) -

Macquarie revises system growth, market share and fee expectations. The broker continues to expect managed funds will grow as the legislated superannuation guarantee increases post 2020, which will offset the impact of an ageing population.

The broker suggests the sustained positive net flows will continue to be offset by fee pressure as MySuper balances increase and asset allocation shifts towards lower returning, lower fee asset classes.

Outperform rating maintained. Target rises to $12.20 from $12.10.

Target price is $12.20 Current Price is $10.55 Difference: $1.65
If IFL meets the Macquarie target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $12.01, suggesting upside of 13.8% (ex-dividends)

The company's fiscal year ends in June.

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

Credit Suisse rates NCM as Underperform (5) -

The definitive feasibility study for Golpu has projected a more financially robust project. Credit Suisse notes the project remains long dated and requires further capital expenditure before first positive net cash flow is realised seven years from commitment.

Underperform and $18.50 target maintained.

Target price is $18.50 Current Price is $19.47 Difference: minus $0.97 (current price is over target).
If NCM 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 $20.41, suggesting upside of 4.8% (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: -0.2

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

Macquarie rates NCM as Underperform (5) -

The updated feasibility study for Wafi-Golpu has returned better economics, Macquarie observes. The updated plan incorporates a larger-scale development than previously assumed.

Securing all the development approvals remains the key risk, as does the structure of the funding package under the joint venture with Harmony Gold.

Underperform rating and $19 target maintained.

Target price is $19.00 Current Price is $19.47 Difference: minus $0.47 (current price is over target).
If NCM meets the Macquarie target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $20.41, suggesting upside of 4.8% (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: -0.2

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

Ord Minnett rates NCM as Accumulate (2) -

The company has released an updated feasibility study for its 50%-owned Wafi-Golpu project in PNG. Ord Minnett notes the capital hurdle makes this an asset only a major mining company could develop, although with its in-house caving expertise Newcrest is arguably in the best position to deliver.

Ord Minnett believes, given the recent issues with Cadia, the company is taking a prudent and value-accretive approach in diversifying its portfolio. Accumulate rating and $24 target maintained.

Target price is $24.00 Current Price is $19.47 Difference: $4.53
If NCM meets the Ord Minnett target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $20.41, suggesting upside of 4.8% (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: -0.2

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

UBS rates NCM as Sell (5) -

UBS analysis suggests Golpu could reduce the company's costs by around -US$400/oz by 2028. The copper mine is also expected to lower the company's long-term gold revenue exposure by -15% to around 60%.

The ratio of long-term gold to copper revenue will depend on several factors but the broker believes acquiring more of Golpu, above Newcrest's current 50% stake, risks having too much copper in the portfolio and affecting the stock's gold premium.

Sell rating maintained. Target is raised to $14.70 from $13.90.

Target price is $14.70 Current Price is $19.47 Difference: minus $4.77 (current price is over target).
If NCM meets the UBS target it will return approximately minus 24% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $20.41, suggesting upside of 4.8% (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: -0.2

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

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

Credit Suisse increases FY18 earnings estimates by 2.9% to reflect a strong start to the 2018 ratings year. The broker forecasts a 39.0% market share in FY18. FY19 earnings estimates are raised by 8.1%.

A high level of sustainable market share is now factored into the price as well as reasonable valuations for the digital assets, in the broker's opinion. Rating is downgraded to Neutral from Outperform. Target rises to $2.35 from $2.10.

Target price is $2.35 Current Price is $2.32 Difference: $0.03
If NEC meets the Credit Suisse target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $1.81, suggesting downside of -22.1% (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 NUF as Overweight (1) -

Morgan Stanley continues to envisage compelling valuation support after incorporating recent acquisitions. The broker considers the company is substantially transformed and the earnings outlook is robust.

The broker argues a premium relative to history is justified and a discount unwarranted. Moreover, the potential upside with the Omega-3 program is not factored into the stock.

Overweight rating and Cautious industry view. Target is $11.20.

Target price is $11.20 Current Price is $8.30 Difference: $2.9
If NUF meets the Morgan Stanley target it will return approximately 35% (excluding dividends, fees and charges).

Current consensus price target is $9.44, suggesting upside of 13.7% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.6

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

Macquarie rates PMV as Outperform (1) -

First half results were strong despite a competitive domestic environment and Macquarie retains the stock as a key sector pick, underpinned by the potential for a global rolling out of Smiggle.

Macquarie finds the valuation undemanding in the context of global opportunities, with limited value being ascribed to the legacy portfolio. Outperform rating maintained. Target rises to $16.90 from $15.95.

Target price is $16.90 Current Price is $15.63 Difference: $1.27
If PMV meets the Macquarie target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $15.96, suggesting upside of 2.1% (ex-dividends)

The company's fiscal year ends in July.

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

UBS rates PMV as Buy (1) -

First half results were firm, UBS observes, supported by like-for-like sales growth, online expansion and cost reductions.

The broker observes the roll out of Smiggle is on track and the first Netherlands store will open in the second quarter of FY19.

The broker maintains a Buy rating and raises the target to $17.30 from $16.65.

Target price is $17.30 Current Price is $15.63 Difference: $1.67
If PMV meets the UBS target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $15.96, suggesting upside of 2.1% (ex-dividends)

The company's fiscal year ends in July.

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

Macquarie rates PNL as Outperform (1) -

First half loss was greater than Macquarie expected, primarily because of costs associated with the US listing. Flooding has delayed construction in the Ohio River Valley by around one month. First production from Poplar Grove is still expected in the second half of 2018.

Macquarie believes the company could stand to benefit should upcoming changes to US steel and aluminium tariffs result in increased energy demand. Outperform rating and $0.70 target maintained.

Target price is $0.70 Current Price is $0.37 Difference: $0.33
If PNL meets the Macquarie target it will return approximately 89% (excluding dividends, fees and charges).

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: 1.0

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

UBS rates QBE as Buy (1) -

Lenders mortgage insurance generated around 15% of QBE insurance profit in FY17, down from 18% in FY16. UBS expects a modest drag on margins at the group level over FY18 and FY19.

Excluding LMI, the broker observes underlying loss ratios improved and now expects this recovery will support a widening of group margins over the next couple of years. This remains a significant component of the brokers Buy thesis. Target is $11.70.

Target price is $11.70 Current Price is $9.79 Difference: $1.91
If QBE meets the UBS target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $10.91, suggesting upside of 11.5% (ex-dividends)

The company's fiscal year ends in December.

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: 0.3

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

Morgans rates SEK as Downgrade to Reduce from Hold (5) -

The launch of Google For Jobs is expected in Australia shortly. Morgans believes that ultimately Seek has the power to see off the threat from Google, but initially there may be a drag on short term earnings.

There will likely also be a dip in market sentiment towards Seek given the potential impact of a new player, that being Google no less. Morgans still likes Seek long term but short term downside risk is elevated. Downgrade to Reduce. Target falls to $19.07 from $21.07.

Target price is $19.07 Current Price is $20.02 Difference: minus $0.95 (current price is over target).
If SEK meets the Morgans target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $18.70, suggesting downside of -6.6% (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

Credit Suisse rates SM1 as Underperform (5) -

Credit Suisse expects a strong first half result on March 21 and incorporates the liquid processing plant commitment into forecasts. The impact on valuation is minor as the broker takes a conservative approach to the company's branded dairy opportunity.

Target is raised to NZ$6.36 from NZ$5.98. Underperform maintained.

Current Price is $7.63. Target price not assessed.

Current consensus price target is N/A

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

Citi rates WES as Neutral (3) -

Probably the most interesting factoid in Citi's update on the proposed Coles demerger is that, on Citi's projections, Wesfarmers' organic growth rate remains poised to dip well below that of Coles in the years ahead.

A capital intensive margin recovery is expected to push organic EBIT CAGR to 7.7% per annum for Coles, whereas the similar pace for Wesfarmers ex-Coles is anticipated to slow to 2.4% per annum.

No double guessing as to why the conglomerate intends to reinvent itself through reinvesting the proceeds from the Coles demerger into higher growth assets elsewhere. Citi also thinks an independent Coles will be focused on earnings stability, plus it doesn't have the same balance sheet power. Neutral rating retained.

Target price is $41.00 Current Price is $43.28 Difference: minus $2.28 (current price is over target).
If WES meets the Citi target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $43.06, suggesting downside of -0.5% (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

UBS rates WES as Neutral (3) -

Wesfarmers will de-merge Coles in FY19, retaining up to 20% of the listed entity. UBS believes the de-merger is a positive for the grocery industry and Wesfarmers should become a higher-returning, higher-growth business.

Neutral rating and $41.30 target maintained.

Target price is $41.30 Current Price is $43.28 Difference: minus $1.98 (current price is over target).
If WES meets the UBS target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $43.06, suggesting downside of -0.5% (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