Australian Broker Call

Morgan Stanley rates ANZ as Underweight (5) -

APRA will require ANZ Bank to introduce new risk weight floors for NZ mortgages and farm lending. This will reduce the group's CET1 ratio by -20 basis points and follows APRA's recent decision to lift the capital requirement for operational risk.

Morgan Stanley notes a final decision on the Reserve Bank of New Zealand's capital proposals is due in November.

Underweight. Target is $27.30. Industry view: In-Line.

Target price is $27.30 Current Price is $28.00 Difference: minus $0.7 (current price is over target).
If ANZ meets the Morgan Stanley target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $28.14, suggesting upside of 0.5% (ex-dividends)

The company's fiscal year ends in September.

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 BIN as Downgrade to Hold from Add (3) -

Morgans revises its modelling to allow for a weaker economic outlook that is implied by government bond yields. A lower cost of capital reflects a lower interest-rate environment but the implications of low bond yields will affect future earnings growth.

Morgans assumes earnings from the existing business decline in FY19 but the DADI acquisition provides growth. The company will report its results on August 22.

Rating is downgraded to Hold from Add, given recent strength in the share price has compressed the total return potential. Target is raised to $2.64 from $2.41.

Target price is $2.64 Current Price is $2.51 Difference: $0.13
If BIN meets the Morgans target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $2.56, suggesting upside of 2.1% (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

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

Morgan Stanley adjusts forecasts to remove the contribution for IFCO, which was divested in June. The broker also incorporates the associated buyback. Dilution to earnings per share fades as the buyback is executed over time, the broker observes.

The broker believes the European economic backdrop is the main downside risk for the company. Equal-weight. Target is raised to $12.50 from $10.80. Industry view is Cautious.

Target price is $12.50 Current Price is $13.11 Difference: minus $0.61 (current price is over target).
If BXB meets the Morgan Stanley target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $12.79, suggesting downside of -2.4% (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

Morgans rates CCP as Add (1) -

FY19 results were in line with expectations. Net profit guidance of $75-77m is below Morgans' original forecasts but appears conservative. The broker expects FY20 will benefit from earnings uplift in the US and an increase of 16% in the consumer lending book as well as significantly lower debt.

Increased capital deployment is the key to upside over the next year, the broker suggests. Add rating maintained. Target is raised to $27.00 from $23.70.

Target price is $27.00 Current Price is $25.82 Difference: $1.18
If CCP meets the Morgans target it will return approximately 5% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.5

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

Ord Minnett rates CCP as Hold (3) -

FY19 results were broadly in line with Ord Minnett's forecasts. The broker notes the market is disappointed by the outlook for FY20, despite the company's track record of multiple years of conservative guidance.

The business faces a number of potential tailwinds, assisted by changes in the market structure. However, given a meaningful re-rating of the share price over the past two months a Hold rating is maintained. Target is reduced to $24.50 from $25.00.

Target price is $24.50 Current Price is $25.82 Difference: minus $1.32 (current price is over target).
If CCP meets the Ord Minnett target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.5

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

Macquarie rates CIM as Upgrade to Neutral from Underperform (3) -

First half net profit was below expectations. Mining division strength stood out, delivering 26% growth in pre-tax profit. Operating cash flow was well below expectations. The company has indicated it is moving to alliance-style, rather than fixed-price, contracts which have a more even cash flow profile.

Macquarie upgrades to Neutral from Underperform, given the extent of the fall in the share price and support from the share buyback. The broker reduces the target to $40.00 from $43.80.

A return to positive construction growth is required to support a more favourable fundamental view, the broker asserts.

Target price is $40.00 Current Price is $37.60 Difference: $2.4
If CIM meets the Macquarie target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $42.55, suggesting upside of 13.2% (ex-dividends)

The company's fiscal year ends in December.

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 CTD as Overweight (1) -

Morgan Stanley observes the bears have grown more vocal, their case supported by global macro political uncertainty. However, the broker suggests the stock is likely to trade on three key metrics in August, these being cash flow conversion, the outlook and FY19 result.

The result is due in August 21. The broker expects more favourable cash flow conversion in the second half, forecasting 98% of operating earnings (EBITDA). Overweight rating. Target is $31. In-Line industry view.

Target price is $31.00 Current Price is $23.71 Difference: $7.29
If CTD meets the Morgan Stanley target it will return approximately 31% (excluding dividends, fees and charges).

Current consensus price target is $30.15, suggesting upside of 27.2% (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

Morgans rates CWY as Hold (3) -

The bond market is indicating the outlook for both inflation and economic activity is weak, and Morgans believes it appropriate to adjust assumptions for earnings growth and cost of capital.

The company has not provided guidance for its results due on August 15 but does expect positive earnings momentum. Morgans expects growth of 33% in operating earnings (EBITDA) in the second half, with the Toxfree acquisition the major contributor.

Hold rating maintained. Target is raised to $2.56 from $2.34.

Target price is $2.56 Current Price is $2.45 Difference: $0.11
If CWY meets the Morgans target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $2.38, suggesting downside of -2.8% (ex-dividends)

The company's fiscal year ends in June.

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

Morgans rates FDV as Add (1) -

The company provided strong first half results, Morgans observes. Transaction-based advertising products, where the company earns a commission on the sale of the property or merchandise being sold, are observed to be rapidly gaining in popularity with emerging market agents and dealers.

Morgans maintains an Add rating, noting the stock is High Risk and unsuited to investors with a low risk profile. Target is raised to $0.94 from $0.86.

Target price is $0.94 Current Price is $0.91 Difference: $0.03
If FDV meets the Morgans target it will return approximately 3% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

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 GWA as Hold (3) -

The company is due to report its FY19 result on August 19. Morgans expects earnings (EBIT) to be down -5%, largely because of the sale of the door and access systems.

Despite making no changes to forecasts the broker increases the target to $3.53 from $3.34, given a slightly more positive outlook on the housing market because of interest rate reductions. Hold maintained.

Target price is $3.53 Current Price is $3.72 Difference: minus $0.19 (current price is over target).
If GWA 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 $3.47, suggesting downside of -6.7% (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

Citi rates HLS as Neutral (3) -

The company has announced organisational and management changes. Details will be provided at the results on August 16. FY19 net profit is expected to be at the lower end of the $93-98m guidance range.

Citi notes pathology growth appears to have normalised in the second half, in line with the company's expectations. However, challenges continue at the medical centres, with elevated churn rates. Citi maintains a Neutral rating and $3.25 target.

Target price is $3.25 Current Price is $2.95 Difference: $0.3
If HLS meets the Citi target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $3.19, suggesting upside of 8.1% (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

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

The company will deliver net profit at the lower end of FY19 guidance of $93-98m, reporting preliminary data indicates the second half has improved in all divisions.

A management restructure has also been announced with the CFO and head of pathology to leave the business. Morgan Stanley will wait until the FY19 results for details on doctor recruitment/retention before becoming more constructive.

Equal-weight rating. Target is $3. In-Line sector view.

Target price is $3.00 Current Price is $2.95 Difference: $0.05
If HLS meets the Morgan Stanley target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $3.19, suggesting upside of 8.1% (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

UBS rates LYC as No Rating (-1) -

Production in the June quarter was weaker than UBS forecast. Management has signalled this was a discretionary decision in large part because of the weak demand in China, rather than operating issues.

UBS understands that, with Lynas Corp producing 20% of global supply, end-market demand strongly influences production decisions. Incorporating the production result drives a -4% downgrade to the broker's operating earnings (EBITDA) forecasts.

The broker is advising and is thus currently restricted from making a recommendation.

Current Price is $2.55. Target price not assessed.

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

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

Morgan Stanley rates MIN as Overweight (1) -

Mineral Resources has announced 6% spodumene concentrate prices for Mount Marion for the September quarter of US$608.95/t. Pricing achieved is largely in line with Morgan Stanley's forecasts. This results in minimal impact on earnings estimates.

Overweight rating and $19.50 target. Industry view: Attractive.

Target price is $19.50 Current Price is $16.18 Difference: $3.32
If MIN meets the Morgan Stanley target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $20.00, suggesting upside of 23.6% (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

Ord Minnett rates MPL as Downgrade to Lighten from Hold (4) -

Ord Minnett assesses growth in the health insurance sector is constrained. Downgrading of medical insurance cover continues, premium rate increases are low and there is pressure on industry margins.

The broker downgrades to Lighten from Hold, largely on valuation concerns. Target is raised to $3.33 from $3.05 as the model is rolled forward to June 2020. The company will report FY19 results on August 22.

Target price is $3.33 Current Price is $3.63 Difference: minus $0.3 (current price is over target).
If MPL meets the Ord Minnett target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.96, suggesting downside of -18.5% (ex-dividends)

The company's fiscal year ends in June.

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 NHF as Downgrade to Sell from Hold (5) -

Ord Minnett believes the company faces regulatory pressures on premium rates that will constrain growth and margins.

Hence, the broker suggests the stock should not be trading on elevated price to earnings (PE) multiples, which are currently around 23x FY20 estimates.

Rating is downgraded to Sell from Hold, although the target is raised to $6.58 from $5.71 because of changes to forecasts as the model is rolled forward to June 2020.

Target price is $6.58 Current Price is $7.99 Difference: minus $1.41 (current price is over target).
If NHF 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 $6.27, suggesting downside of -21.6% (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

Macquarie rates RIO as Outperform (1) -

Macquarie expects strong first half earnings on August 1, and suspects Rio Tinto has scope to return additional cash beyond the 50% pay-out ratio.

Buoyant iron ore prices underpin upgrade momentum, as spot prices are generating 20% and 70% upside to the the broker's 2019 and 2020 forecasts, respectively.

Macquarie maintains an Outperform rating and $117 target.

Target price is $117.00 Current Price is $99.30 Difference: $17.7
If RIO meets the Macquarie target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $103.16, suggesting upside of 3.9% (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: 0.1

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

Credit Suisse rates SDF as Neutral (3) -

The company has entered a bid implementation agreement with IBNA following the announcement in June. Also, Steadfast Group is seeking expressions of interest to acquire the total rebate from network brokerages in Australasia.

If the acquisitions are partially funded by existing cash, Credit Suisse calculates the accretion could be up to 7.5%. The broker increases the target to $3.60 from $3.00, incorporating the acquisitions into the valuation.

Neutral rating retained. Credit Suisse assesses, for a company growing by acquisition, as long as the gap between private and listed market multiples remains wide, it can continue to issue shares and make accretive acquisitions on the arbitrage alone.

Target price is $3.60 Current Price is $3.72 Difference: minus $0.12 (current price is over target).
If SDF meets the Credit Suisse target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.55, suggesting downside of -4.6% (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