Australian Broker Call

Morgans rates APE as Add (1) -

Morgans includes Automotive Holdings ((AHG)) in forecasts for the first time now AP Eagers has reached over 90% relevant interest and acquisition is compulsory.

Synergies of $30m have been guided within the first 12 months of ownership and the broker factors in total synergies of $90m. The combined group is expected to be under-geared by the end of 2020 and further consolidation and/or capital management appears likely.

Add rating maintained. Target is raised to $15.55 from $12.56.

Target price is $15.55 Current Price is $13.55 Difference: $2
If APE meets the Morgans target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $13.46, suggesting downside of -0.6% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.9

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

Citi rates APT as Initiation of coverage with Neutral (3) -

Citi has initiated coverage of Afterpay Touch with a Neutral rating and $33.70 price target. The analysts hold the view the market might be underestimating the growth levers embedded inside this business model.

Despite the above, the analysts retain a more cautious view as regulatory risks remain. Equally important, near term the company cannot escape further cost investment required to support growth plus competition is increasing.

Target price is $33.70 Current Price is $32.26 Difference: $1.44
If APT meets the Citi target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $33.52, suggesting upside of 3.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.7

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

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

US investor briefings have provided more comfort for Morgan Stanley regarding the fly ash story but there is little else to convince the broker that the overall business will deliver attractive returns through the cycle.

While issues that plagued the roofing and stone businesses are now rectified, and the performance has improved, Morgan Stanley notes earnings declined -5% ex synergies in FY19.

The company has indicated that a further US$45m in synergies and a return to housing starts totalling 1.5m would be required just to generate a cost of capital return.

Morgan Stanley maintains an Equal-weight rating and $4.50 target. Industry view is Cautious.

Target price is $4.50 Current Price is $4.92 Difference: minus $0.42 (current price is over target).
If BLD meets the Morgan Stanley target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.76, suggesting downside of -3.3% (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

Ord Minnett rates BLD as Accumulate (2) -

Boral has reiterated its target to increase the available supply of fly ash by 2.0mt to 8.5-9.0mt by 2021. The company expects prices to be strong and margins to hold up.

At this stage, Ord Minnett envisages a risk of further sources of supply drying up while other drivers of volumes, such as imports, have been significantly lower in terms of margins.

The broker is also encouraged by the news that volumes in the windows and trim businesses continue to grow strongly. Accumulate rating maintained. Target is $5.00.

Target price is $5.00 Current Price is $4.92 Difference: $0.08
If BLD meets the Ord Minnett target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $4.76, suggesting downside of -3.3% (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

Ord Minnett rates FCL as Initiation of coverage with Buy (1) -

The company provides software to the global life, accident and health insurance industries. In addition, considerable investment has been made in a new cloud-based platform that is just starting to generate revenue.

Ord Minnett notes early customer demand has been encouraging and the win rate on new deals is likely to continue improving. The broker initiates coverage with a Buy rating and $3.60 target.

There is good visibility on medium-term revenue growth and Ord Minnett expects break-even by the end of FY22.

Target price is $3.60 Current Price is $3.10 Difference: $0.5
If FCL meets the Ord Minnett target it will return approximately 16% (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

Citi rates FMG as Neutral (3) -

Citi analysts are explaining that investors have to be bullish iron ore prices to continue holding Fortescue Metals shares, and if correct they stand to receive a big dividend payout in FY20.

However, if the price of iron ore trends back towards US$60/tonne the present share price might be closer to fair value.

Citi analysts' own view is that the risk is now building towards the downside, based upon ongoing trade tensions and slowing China and global economies. They hold a Neutral rating, believing caution is warranted. Target remains unchanged at $8.

Target price is $8.00 Current Price is $8.98 Difference: minus $0.98 (current price is over target).
If FMG meets the Citi target it will return approximately minus 11% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $8.06, suggesting downside of -10.2% (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: 0.1

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

Macquarie rates IFL as Upgrade to Outperform from Neutral (1) -

Following the Federal Court decision that IOOF directors and executives did not contravene the Act, Macquarie upgrades to Outperform from Neutral.

Risks around completing the OnePath deal remain, although a material impediment has been removed.

While there is still work to be done, Macquarie believes the steps taken by IOOF to regain the confidence of the market are encouraging. Target is raised to $7.00 from $5.80.

Target price is $7.00 Current Price is $6.71 Difference: $0.29
If IFL meets the Macquarie target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $5.25, suggesting downside of -21.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.0

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

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

Morgan Stanley notes, on October 17, both IOOF and ANZ Bank ((ANZ)) have the right to walk away from the sale of ANZ's wealth P&I business if conditions precedent are not met.

Given the uncertainty surrounding the transaction, if the pair walk away from a deal it will likely mean downgrades to earnings estimates for IOOF. The broker assumes the original deal is not completed and includes a $450m buyback in base case estimates.

Equal-weight rating maintained. Target is $4.95. Industry view: In Line.

Target price is $4.95 Current Price is $6.71 Difference: minus $1.76 (current price is over target).
If IFL meets the Morgan Stanley target it will return approximately minus 26% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.25, suggesting downside of -21.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.0

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

Citi rates PMV as Downgrade to Sell from Neutral (5) -

Citi analysts have downgraded Premier Investments to Sell from Neutral with a slightly higher price target of $16.80 (was $16.40). The analysts don't see further re-rating happening because they don't believe earnings upgrades will happen.

With wholesale channels now the key earnings driver for Smiggle, and core retail sales slowing, Citi believes past the next six months, momentum is unlikely to stay strong.

On Citi's assessment, reported FY19 proved slightly ahead of market consensus. They also believe the share price is now trading at a premium to other discretionary retailers.

Target price is $16.80 Current Price is $19.12 Difference: minus $2.32 (current price is over target).
If PMV meets the Citi target it will return approximately minus 12% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $19.23, suggesting upside of 0.6% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.4

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

Credit Suisse rates PMV as Outperform (1) -

Profit improved in FY19 on minimal incremental investment, Credit Suisse observes. Invested capital was flat and earnings (EBIT) increased 11%.

The broker believes debates on the company's UK exposure are becoming peripheral to the overall investment case. The business appears to have been able to mitigate market weakness through rental reductions.

Domestically, apparel brands improved their market positions. Outperform rating maintained. Target is raised to $20.56 from $19.58.

Target price is $20.56 Current Price is $19.12 Difference: $1.44
If PMV meets the Credit Suisse target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $19.23, suggesting upside of 0.6% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.4

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

Macquarie rates PMV as Upgrade to Outperform from Neutral (1) -

Macquarie found the FY19 results strong in the context of a challenging market. The company's multi-channel strategy exceeded the broker's expectations and earnings visibility has improved.

Further clarity on the wholesale channel trajectory is likely to be a positive catalyst and wholesale remains the source of upside risk, in Macquarie's view.

Rating is upgraded to Outperform from Neutral and the target raised to $20.00 from $17.20.

Target price is $20.00 Current Price is $19.12 Difference: $0.88
If PMV meets the Macquarie target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $19.23, suggesting upside of 0.6% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.4

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

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

FY19 results were ahead of Morgan Stanley's estimates. Online sales rose 31.7% and now account for 13.4% of the total.

The broker notes aggressive global wholesale expansion continues and, while no specific outlook commentary was provided, like-for-like sales for Smiggle in the first six weeks of FY20, are up 5.2%.

Equal-weight rating, In-Line industry view. Target is $19.00.

Target price is $19.00 Current Price is $19.12 Difference: minus $0.12 (current price is over target).
If PMV meets the Morgan Stanley target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $19.23, suggesting upside of 0.6% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.4

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

Ord Minnett rates SYD as Hold (3) -

Total passenger numbers continued to decline in August amid negative domestic trends, Ord Minnett observes. The rate of decline did slow as the international passenger numbers bounced back.

Total passenger traffic was down -0.1% in August with domestic declining -1.3%. International passenger traffic through Sydney Airport grew 2.0% in August. Hold maintained with a $7.80 target.

Target price is $7.80 Current Price is $8.06 Difference: minus $0.26 (current price is over target).
If SYD meets the Ord Minnett target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $8.18, suggesting upside of 1.5% (ex-dividends)

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.2

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

UBS rates TWE as Buy (1) -

US Nielsen data signals, by brand, that Treasury Wines' top five continue to outperform, with 19Crimes up 9% and Matua up 24% in the September quarter to date.

Nielsen data does not cover all of the company's US business, but UBS assesses the trends are still positive, and there is no evidence of material disruption from the change in distribution.

Buy rating and $20.50 target maintained. The broker notes the next catalyst is the investor tour on the 24th and 25th of September.

Target price is $20.50 Current Price is $19.16 Difference: $1.34
If TWE meets the UBS target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $18.66, suggesting downside of -2.6% (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