Australian Broker Call

Ord Minnett rates AHG as Hold (3) -

FY19 underlying net profit was down -22%. Ord Minnett does not expect the shares will trade on underlying fundamentals, given the agreed merger with AP Eagers ((APE)).

The broker maintains a Hold rating and raises the target to $3.20 from $2.20.

Target price is $3.20 Current Price is $3.70 Difference: minus $0.5 (current price is over target).
If AHG meets the Ord Minnett target it will return approximately minus 14% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.88, suggesting downside of -22.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.2

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

Credit Suisse rates ALL as Outperform (1) -

Credit Suisse now projects 15% growth in revenue in casual games in the second half. However, profitability is not updated because revenue growth is likely to come at a cost.

The scaling of Raid is so swift the broker finds it difficult to work out what the long-term trajectory of the game would be and whether capitalisation of current revenue or profits is appropriate.

The broker considers the stock has significant options to the upside if investors become more confident in the ability to gain market share in the US$32bn mobile games market.

Outperform rating maintained. Target is $30.

Target price is $30.00 Current Price is $29.16 Difference: $0.84
If ALL meets the Credit Suisse target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $33.11, suggesting upside of 13.6% (ex-dividends)

The company's fiscal year ends in September.

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

Citi rates ASB as Neutral (3) -

Earnings estimates have been raised which pushes up the share price target to $4.30 from $4.04 but the Neutral rating remains unchanged as the share price has rallied strongly while the analysts also believe there is currently a lack of catalysts on the immediate horizon.

Citi retains a supportive view longer term. The analysts see a strong order pipeline combined with prospects for margin expansion in core markets underpinning their view.

Target price is $4.30 Current Price is $4.34 Difference: minus $0.04 (current price is over target).
If ASB meets the Citi target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.38, suggesting upside of 1.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.3

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

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

Underlying net profit in FY19 was up 7.4%, largely driven by a lower implied amortisation rate. Morgans assesses, if it were not for this and applying the same amortisation rate as FY18, underlying net profit would have been down -39%.

The broker was looking for improved cash generation and this was absent in FY19. If operating performance improves there is upside in the longer term but the broker also assesses the downside risk is significant.

Rating is downgraded to Reduce from Hold and the target lowered to $1.09 from $1.42.

Target price is $1.09 Current Price is $1.16 Difference: minus $0.07 (current price is over target).
If CLH meets the Morgans target it will return approximately minus 6% (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: -1.0

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

UBS rates CSL as Neutral (3) -

UBS envisages continued strength in US immunoglobulin volumes, as reflected in monthly plasma data, is supportive of FY20 growth forecasts.

The broker expects 15% revenue growth in immunoglobulin, with more modest growth for the haemophilia portfolio and specialty revenue.

The broker maintains a Neutral rating and raises the target to $248 from $245.

Target price is $248.00 Current Price is $239.29 Difference: $8.71
If CSL meets the UBS target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $241.99, suggesting upside of 1.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

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 FDV as Add (1) -

Morgans assesses Frontier Digital is on track to be positive in terms of cash flow by FY21. The company's portfolio of 14 emerging marketplace companies continues to evolve.

The broker retains a positive view on the stock and believes the company has created significant value since investing in most of its portfolio companies. Add rating and $0.94 target maintained.

Target price is $0.94 Current Price is $0.72 Difference: $0.22
If FDV meets the Morgans target it will return approximately 31% (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

Credit Suisse rates IGO as Underperform (5) -

The confirmation that Indonesia will bring forward a nickel ore export ban to December 2019, now means the ban is two years earlier than originally stated and will take place before Indonesia's plan build-out of the nickel pig iron capacity, Credit Suisse observes.

Independence Group cannot change its mine plan or operating strategy but the broker suggests the increase in cash flow from nickel prices, which are now likely to remain materially higher over the next 18 months versus forecasts, supports a stronger dividend pay-out.

Credit Suisse has a target price and earnings estimates that reflect a nickel price deck which assumes that the export ban is operating from 2022, not December this year. Underperform rating and $4.15 target maintain.

Target price is $4.15 Current Price is $6.10 Difference: minus $1.95 (current price is over target).
If IGO meets the Credit Suisse target it will return approximately minus 32% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.33, suggesting downside of -12.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: -0.2

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

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

News reports suggest Indonesia is moving ahead with new regulations and bringing forward an export ban for nickel with grade less than 1.7%.

Morgan Stanley estimates around 218,000t of Indonesian nickel-in-ore, or 9% of global mined supply, is exposed to the ban. If this nickel ore is left stranded the market would move into substantial deficit.

Equal-weight. Industry view is: Attractive. Target is raised to $6.00 from $4.60.

Target price is $6.00 Current Price is $6.10 Difference: minus $0.1 (current price is over target).
If IGO 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 $5.33, suggesting downside of -12.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: -0.2

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

Citi rates IPL as Upgrade to Buy from Neutral (1) -

Citi analysts had already warned investors about the apparent downside risk to the company's guidance for FY19 so yesterday's profit warning from the company did not come as a surprise. What did surprise was the magnitude of the downgrade.

Citi analysts now note management has announced a strategic review of the fertiliser business. Citi analysts think finding a buyer for the whole operation might prove a challenge, but the distribution business with circa 50% market share in Australia's East will definitely attract interest, in their view.

Market forecasts are poised to reset lower, but Citi also finds that, with the share price at a three year low, the risk reward proposition for owning this stock has turned favourably again, hence the upgrade to Buy from Neutral. Target price remains unchanged at $3.45.

Target price is $3.45 Current Price is $3.04 Difference: $0.41
If IPL meets the Citi target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $3.41, suggesting upside of 12.1% (ex-dividends)

The company's fiscal year ends in September.

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

Credit Suisse rates IPL as Outperform (1) -

The company has downgraded guidance again for FY19 and pulled forward a strategic review of the fertiliser business. Credit Suisse was not surprised by the drought-driven downgrade but further plant downtime at the Louisiana plant is of concern.

While a repeat of the disruptions in the first half may be unlikely, the broker errs on the side of caution and expects the dividend may be cut and discretionary capital expenditure reduced.

The broker suggests the strategic review of fertiliser will probably mean its valuation of this business is not realised. Credit Suisse finds the explosive business much more attractive. Outperform rating maintained. Target is reduced to $3.73 from $3.78.

Target price is $3.73 Current Price is $3.04 Difference: $0.69
If IPL meets the Credit Suisse target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $3.41, suggesting upside of 12.1% (ex-dividends)

The company's fiscal year ends in September.

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 IPL as Outperform (1) -

Incitec Pivot has lowered its FY19 earnings guidance range to $285-295m due to the drought and lower fertiliser prices. The broker had previously forecast $360m, below the prior guidance range.

The company will conduct a strategic review of its Asia-Pacific fertiliser business to decide whether to sell it, demerge it or keep it. This may prove a positive amid guidance disappointment. Incitec Pivot hosts an investor day tomorrow.

The broker has cut its target to $3.45 from $3.65, retaining Outperform.

Target price is $3.45 Current Price is $3.04 Difference: $0.41
If IPL meets the Macquarie target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $3.41, suggesting upside of 12.1% (ex-dividends)

The company's fiscal year ends in September.

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

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

The company has provided revised guidance, expecting earnings (EBIT) of $285-295m, which represents a -25% downgrade to consensus expectations and Morgan Stanley reduces forecasts accordingly.

The main drivers of the additional downgrade are production outages at the Louisiana ammonia plant, further impact from drought in eastern Australia and higher gas costs at Gibson Island in Queensland.

Morgan Stanley considers the issues largely one-off but adjusts fertiliser price assumptions. Downward revisions are made across FY20 and FY21.

Equal-weight rating, Cautious industry view. Target is reduced to $3.10 from $3.50.

Target price is $3.10 Current Price is $3.04 Difference: $0.06
If IPL meets the Morgan Stanley target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $3.41, suggesting upside of 12.1% (ex-dividends)

The company's fiscal year ends in September.

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

Morgans rates IPL as Hold (3) -

The company has downgraded FY19 earnings guidance and announced a strategic review of fertilisers. While the downgrade was not unexpected, given weak fertiliser prices and continuing drought, the quantum was materially worse than Morgans expected.

The broker reduces FY19 earnings (EBIT) forecasts by -25.6%. FY20 and FY21 net profit forecasts are also reduced by -13.7% and -12.3%, respectively, because of conservative fertiliser price assumptions. Hold rating maintained. Target is reduced to $3.36 from $3.46.

Target price is $3.36 Current Price is $3.04 Difference: $0.32
If IPL meets the Morgans target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $3.41, suggesting upside of 12.1% (ex-dividends)

The company's fiscal year ends in September.

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 IPL as Buy (1) -

The company has downgraded guidance for FY19 earnings (EBIT) by -25%. Ord Minnett suggests this was somewhat already priced in.

The company has also announced a strategic review of the fertilisers business, which the broker believes has attractive distribution assets but low book value ascribed to the plants at Gibson Island and Phosphate Hill.

The broker was surprised by the lower-than-forecast ammonia production at Waggaman although expects near-nameplate should resume in FY20. Ord Minnett considers the stock inexpensive and retains a Buy rating. Target is reduced to $3.45 from $3.75.

Target price is $3.45 Current Price is $3.04 Difference: $0.41
If IPL meets the Ord Minnett target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $3.41, suggesting upside of 12.1% (ex-dividends)

The company's fiscal year ends in September.

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 IPL as Neutral (3) -

The company now expects to deliver FY19 earnings (EBIT) of $285-295m. UBS assesses the downgrade partially relates to lower than expected diammonium phosphate/ammonia prices which are partly offset by favourable FX and US gas prices.

The remainder of the downgrade has been driven by the impact of the drought, gas costs and the operating issues that have reduced production at the Louisiana ammonia plant.

UBS reduces estimates by -27%. The company will also commence a strategic review of the fertilisers business, which will consider all options. Neutral maintained. Target is reduced to $3.32 from $3.50.

Target price is $3.32 Current Price is $3.04 Difference: $0.28
If IPL meets the UBS target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $3.41, suggesting upside of 12.1% (ex-dividends)

The company's fiscal year ends in September.

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

Morgans rates ORE as Add (1) -

The agreement between Orocobre and Toyota Tsusho for Olaroz has been re-negotiated. Orocobre is consolidating Olaroz in its accounts from January 1 2019 and receiving a 1.5% management fee.

Morgans notes Olaroz sales volumes were up 2% in FY19, with revenue down -16% and largely a function of the weaker lithium carbonate price.

Guidance for FY20 production is for a 5% increase and a review at the AGM. Morgans models a 10% increase to 14,000t and a minor fall in unit costs. Add rating maintained. Target is reduced to $4.97 from $5.05.

Target price is $4.97 Current Price is $2.46 Difference: $2.51
If ORE meets the Morgans target it will return approximately 102% (excluding dividends, fees and charges).

Current consensus price target is $3.82, suggesting upside of 55.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.6

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

Citi rates OSH as Neutral (3) -

No changes to $6.97 price target or Neutral rating as Citi analysts amend their modeling, which results in reduced forecasts as well as a lower dividend forecast of 15c for the current financial year.

Target price is $6.97 Current Price is $6.68 Difference: $0.29
If OSH meets the Citi target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $7.51, suggesting upside of 12.4% (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 PAC as Buy (1) -

FY19 pre-tax profit was in line with Ord Minnett estimates. This is a solid outcome, in the broker's view, despite the timing issues impacting the recent investment in Victory Park.

Most of the issues are expected to reverse in FY20 although the broker prefers not to assume a complete reversal. The annualisation of the Carlisle investment underpins the bulk of the broker's expected 30% uplift to net profit in FY20.

Buy rating maintained. Target rises to $8.34 from $8.24.

Target price is $8.34 Current Price is $6.08 Difference: $2.26
If PAC meets the Ord Minnett target it will return approximately 37% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 1.0

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

Macquarie rates PAN as Outperform (1) -

Panoramic Resources' underlying earnings were in line with expectation. No guidance was provided and the broker has made no changes to forecasts.

The broker does otherwise acknowledge that the nickel price has now jumped above US$8/lb on expectations Indonesia will bring forward its anticipated nickel ore export ban.

Were the broker to use spot prices in its forecasts, earnings would rise by 357% in FY20 and valuation would rise 39%. Outperform and 46c target retained.

Target price is $0.46 Current Price is $0.34 Difference: $0.12
If PAN meets the Macquarie target it will return approximately 35% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 1.0

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

Ord Minnett rates PPH as Upgrade to Hold from Lighten (3) -

Ord Minnett observes the stock price has retraced -25% since the FY19 result. The broker believes expectations now reflect a more realistic view of the company's addressable market and earnings potential.

While the fundamental view is of an increasingly competitive market, the broker acknowledges a Lighten rating is no longer valid and upgrades to Hold. Target is raised to $3.08 from $2.92.

Target price is $3.08 Current Price is $2.91 Difference: $0.17
If PPH meets the Ord Minnett target it will return approximately 6% (excluding dividends, fees and charges).

The company's fiscal year ends in March.

Forecast for FY20:

Forecast for FY21:

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

Morgans rates RNO as Add (1) -

FY19 results were largely in line with guidance. Morgans observes investors are awaiting the initial evidence of sales traction for the new Pronto device and further details of the Columbia Care deal.

Cash reserves point to a need for additional capital within the next 12 months, the broker adds. Morgans expects FY20 will be a pivotal year for the company amid the roll-out of the new Pronto range and its partnership with Columbia Care.

The broker maintains a positive rating but moves to Speculative Buy from Add. Target is reduced to $0.38 from $0.51 as the model is rolled forward.

Target price is $0.38 Current Price is $0.25 Difference: $0.13
If RNO meets the Morgans target it will return approximately 52% (excluding dividends, fees and charges).

Market Sentiment: 1.0

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

Macquarie rates S32 as Resume coverage with Neutral (3) -

The broker has returned from restriction to apply a $2.60 target and Neutral rating for South32. The broker consensus earnings forecasts have dropped some -30% due to commodity price weakness and the stock has underperformed the market to the point, the broker suggests, at which weakness is priced in.

With nickel surging above US$8/lb the broker notes momentum has now swung back the other way. At spot nickel, FY21 earnings forecasts would rise by 60%.

Target price is $2.60 Current Price is $2.70 Difference: minus $0.1 (current price is over target).
If S32 meets the Macquarie target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.23, suggesting upside of 19.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

This company reports in USD. 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 SDF as Resume coverage with Outperform (1) -

The broker has returned from restriction following Steadfast's capital raising and announced earnings result that was slightly below expectation.

The broker has increased confidence the company will deliver growth in line with guidance, with potential upside from acquisitions, and sees opportunities to continue to add value over the medium term.

Lowering the risk free rate in the broker's model leads to a target increase to $4.10 from $3.90. Outperform.

Target price is $4.10 Current Price is $3.82 Difference: $0.28
If SDF meets the Macquarie target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $3.95, suggesting upside of 3.4% (ex-dividends)

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

Credit Suisse rates TLS as Neutral (3) -

Telstra has updated guidance following NBN figures that forecast 1.5m activations in FY20. This is a reduction of -500,000 activations from the previous plan.

Telstra is now guiding to total income of $25.3-27.3bn, a decrease of -$400m, and anticipates FY21 will be the year of peak NBN headwinds.

Credit Suisse lowers FY20 estimates as NBN activations are pushed out to subsequent years. Neutral rating and $3.70 target maintained.

Target price is $3.70 Current Price is $3.62 Difference: $0.08
If TLS meets the Credit Suisse target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $3.73, suggesting upside of 3.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: -0.1

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

Macquarie rates TLS as Neutral (3) -

An update from NBN Co revealed that while the profile of premises deemed Ready for Service was moderately lower, the ramp-up of connected services has been slowed by some -400,000 in FY20.

Telstra's underlying earnings will benefit from slower migration to the NBN, the broker points out, but the timing of migration payments received pushes out.

The net result on valuation is not material. Neutral and $3.80 target retained.

Target price is $3.80 Current Price is $3.62 Difference: $0.18
If TLS meets the Macquarie target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $3.73, suggesting upside of 3.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: -0.1

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

Morgans rates TLS as Add (1) -

The NBN corporate plan now forecasts around -500,000 fewer households being forcibly disconnected from Telstra and placed on the NBN in FY20.

This has led Telstra to downgrade FY20 operating earnings (EBITDA) estimates by -2.5% and Morgans, in turn, reduces its forecasts. In addition, Morgans makes further cuts to FY21 to reflect this being the peak year for NBN headwinds for Telstra.

While the price to access the NBN continues to increase, the broker assesses telcos are starting to charge consumers more for access to the NBN/fixed line as well as mobile services, which indicates a return to more rational economics.

Add rating maintained. Target is reduced to $4.46 from $4.49.

Target price is $4.46 Current Price is $3.62 Difference: $0.84
If TLS meets the Morgans target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $3.73, suggesting upside of 3.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: -0.1

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

Ord Minnett rates TLS as Accumulate (2) -

Ord Minnett updates its model to incorporate the guidance following the release of the NBN FY20 corporate plan.

As a result of the reduction in the total number of premises to be connected, now at 1.5m, Telstra has lowered revenue guidance by -$400m and one-off NBN payments by -$300m.

Ord Minnett increases FY20 recurring core operating earnings (EBITDA) estimates to $7.7bn and also lifts FY21 estimates, as the NBN now forecasts $1.3bn in subscriber payments, up from $1.1bn previously.

Accumulate rating and $4.25 target maintained.

Target price is $4.25 Current Price is $3.62 Difference: $0.63
If TLS meets the Ord Minnett target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $3.73, suggesting upside of 3.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: -0.1

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

UBS rates TLS as Neutral (3) -

FY20 guidance has been updated to incorporate the new NBN corporate plan. There is a reduction in NBN premises connected during FY20 to 1.5m and more NBN disconnections are now delayed into FY21-23.

This reduces short-term disconnection payments to Telstra but UBS assesses the enduring valuation impact is minimal. Estimates for earnings per share are cut by -5% for FY20 but raised by 5% for FY21. The broker maintains a Neutral rating and $4 target.

Target price is $4.00 Current Price is $3.62 Difference: $0.38
If TLS meets the UBS target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $3.73, suggesting upside of 3.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: -0.1

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

Credit Suisse rates WBC as Upgrade to Outperform from Neutral (1) -

Credit Suisse upgrades to Outperform from Neutral as the stock is trading at a 10-year low in terms of sector-relative valuation. The broker expects two of the three items weighing on the stock should be resolved in the coming quarter i.e. capital and dividend sustainability.

The broker believes this could be dealt with at the upcoming result with a capital raising in the order of $1.5-2bn and a -10-15c per security reduction in the semi-annual dividend.

While asset sales are possible, Credit Suisse believes the timing of completion means more urgent action on capital is required.

The broker does not suggest Westpac will completely abandon the multi-brand strategy but a consolidation of some of the brands would provide a cost opportunity. Target is raised to $30.55 from $28.60.

Target price is $30.55 Current Price is $28.34 Difference: $2.21
If WBC meets the Credit Suisse target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $28.78, suggesting upside of 1.5% (ex-dividends)

The company's fiscal year ends in September.

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

Credit Suisse rates WSA as Neutral (3) -

The confirmation that Indonesia will bring forward a nickel ore export ban to December 2019, now means the ban is two years earlier than originally stated and will take place before Indonesia's plan build-out of the nickel pig iron capacity, Credit Suisse observes.

The broker notes Western Areas is pursuing a number of lower grade operating strategies to extend the life of Flying Fox. These strategies are more compelling when assessed relative to nickel prices that are likely to prevail over the next 18 months.

Credit Suisse has a target price and earnings estimates that reflect a nickel price deck which assumes that the export ban is operating from 2022, not December this year.

Credit Suisse maintains a Neutral rating and $2.50 target.

Target price is $2.50 Current Price is $3.02 Difference: minus $0.52 (current price is over target).
If WSA meets the Credit Suisse target it will return approximately minus 17% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.73, suggesting downside of -9.5% (ex-dividends)

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

Morgan Stanley rates WSA as Upgrade to Overweight from Equal-weight (1) -

News reports suggest Indonesia is moving ahead with new regulations and bringing forward an export ban for nickel with grade less than 1.7%.

Morgan Stanley estimates around 218,000t of Indonesian nickel-in-ore, or 9% of global mined supply, is exposed to the ban. If this nickel ore is left stranded the market would move into substantial deficit.

The broker envisages high upside risk for nickel versus forecasts and Western Areas becomes the preferred nickel exposure.

Rating is upgraded to Overweight from Equal-weight. Industry view is Attractive. Target is raised to $3.30 from $2.25.

Target price is $3.30 Current Price is $3.02 Difference: $0.28
If WSA meets the Morgan Stanley target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $2.73, suggesting downside of -9.5% (ex-dividends)

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