Australian Broker Call

Ord Minnett rates ASX as Hold (3) -

Fewer listings are taking place on the local stock exchange, note the analysts, but average daily trading volumes in September were up 22.8% on a year ago. The average number of trades rose by 30%.

Futures and options volumes are equally up noticeably. Ord Minnett points out market share is being won from rival Chi-X Australia.

While forecasts have been updated, no changes were made to the $79 price target or the Hold rating.

Target price is $79.00 Current Price is $81.01 Difference: minus $2.01 (current price is over target).
If ASX 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 $70.81, suggesting downside of -12.6% (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

UBS rates ECX as Buy (1) -

UBS believes the company's simplification and strategy update is well articulated, with a renewed focus on the core fleet and novated business. The cost base is expected to reduce materially by FY22.

The broker adjusts estimates to reflect an exit of Right2Drive and CarLoans in FY20. UBS envisages upside earnings risk for the medium term, from stronger net operating income growth.

Buy rating maintained. Target rises to $2.20 from $1.80.

Target price is $2.20 Current Price is $1.68 Difference: $0.52
If ECX meets the UBS target it will return approximately 31% (excluding dividends, fees and charges).

Current consensus price target is $1.81, suggesting upside of 7.9% (ex-dividends)

The company's fiscal year ends in September.

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

Morgan Stanley rates FMG as Underweight (5) -

Fortescue Metals has confirmed a bid for blocks 1 and 2 of the Simandou deposit. Morgan Stanley suggests this bid is likely to provide long-term positioning rather than a near-term development.

The broker notes no public studies are available for blocks 1 & 2, although 3 & 4, owned by Rio Tinto ((RIO)), Chinalco and the Guinea government, have reserves of around 2bnt at 65.5% iron.

Across the border, in Liberia, there are rail lines and Morgan Stanley observes the distance to a port is likely to be significantly shorter. However, this would require the Guinea government to change its requirements that ore is exported through Guinea.

Underweight. Target is $7.85. Industry view is Attractive.

Target price is $7.85 Current Price is $8.75 Difference: minus $0.9 (current price is over target).
If FMG meets the Morgan Stanley target it will return approximately minus 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $8.10, suggesting downside of -7.4% (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: -0.3

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

Ord Minnett rates FMG as Buy (1) -

The company is one of two bidding for the rights to develop blocks 1 and 2 of the Simandou iron ore deposit in Guinea. Investors might have heard about Simandou as Rio Tinto ((RIO)) is already involved nearby (blocks 3 and 4) and its website proudly states "The Simandou project provides access to one of the world’s largest untapped (over 2 billion tonnes), high grade iron ore resources in the world".

Ord Minnett sees potential for blending with Fortescue's Pilbara output, on the premise the company can apply a low capital expenditure business plan, and then still this project will be a long term proposition with investors likely hesitant to price in anything in the medium term.

Buy rating retained. Price target $9.40.

Target price is $9.40 Current Price is $8.75 Difference: $0.65
If FMG meets the Ord Minnett target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $8.10, suggesting downside of -7.4% (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: -0.3

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

Citi rates HUB as Neutral (3) -

Citi's latest analysis includes discussions with management teams in the sector, with the analysts concluding wealth platforms Netwealth, Hub24 and Panorama (BT) have all lowered interest rates on platform cash accounts by -25bp post the latest RBA rate cut.

The move is in line with expectations but Citi points out it also emphasises further downside risk to industry margins given the RBA is expected to further reduce the cash rate. Citi's forecasts already assume -15bp cash margin reduction on the forecast of one additional RBA rate cut, to be delivered in February next year.

$12.45 price target and Neutral rating maintained.

Target price is $12.45 Current Price is $11.60 Difference: $0.85
If HUB meets the Citi target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $12.44, suggesting upside of 7.2% (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

Credit Suisse rates MFG as Underperform (5) -

While flows were strong in the September quarter, Credit Suisse notes the company's performance is weakening. The broker downgrades normalised earnings estimates by -3-5% to reflect lower assumptions for funds under management amid weaker-than-anticipated market movements in September.

FY20 reported net profit is upgraded by 13% because of lower expenditure relating to the High Conviction Trust IPO. Underperform rating maintained. The stock has fallen -20% since the August result but Credit Suisse believes the premium relative to peers is still too high. Target is $49.30.

Target price is $49.30 Current Price is $49.20 Difference: $0.1
If MFG meets the Credit Suisse target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $49.40, suggesting upside of 0.4% (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

UBS rates MFG as Sell (5) -

UBS upgrades FY20 estimates for earnings per share by 3.5%. First quarter funds under management grew 6.2%, driven by strong investment markets and solid net fund flows, the broker observes.

Still, valuation metrics appear stretched and vulnerable to any slip in momentum, and a Sell rating is maintained. Target is raised to $46.60 from $45.00.

Target price is $46.60 Current Price is $49.20 Difference: minus $2.6 (current price is over target).
If MFG 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 $49.40, suggesting upside of 0.4% (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

Citi rates NWL as Neutral (3) -

Citi's latest analysis includes discussions with management teams in the sector, with the analysts concluding wealth platforms Netwealth, Hub24 and Panorama (BT) have all lowered interest rates on platform cash accounts by -25bp post the latest RBA rate cut.

The move is in line with expectations but Citi points out it also emphasises further downside risk to industry margins given the RBA is expected to further reduce the cash rate. Citi's forecasts already assume -15bp cash margin reduction on the forecast of one additional RBA rate cut, to be delivered in February next year.

$8 price target and Neutral rating maintained.

Target price is $8.00 Current Price is $8.88 Difference: minus $0.88 (current price is over target).
If NWL meets the Citi target it will return approximately minus 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $7.68, suggesting downside of -13.5% (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

Morgans rates NXT as Upgrade to Add from Hold (1) -

Morgans upgrades to Add from Hold. The broker observes strong results are underpinned by significant structural growth. The broker had been concerned that market expectations for sales were too high but now assesses expectations have eased back to more realistic levels.

The main concerns centre around the need to accelerate sales in the tier 2 facilities as well as the balance sheet.

While the debt position appears full, Morgans appreciates there are long-term contracts that mean interest coverage increases in outer years as capital deployed starts to generate a return. Target is steady at $6.68.

Target price is $6.68 Current Price is $6.32 Difference: $0.36
If NXT meets the Morgans target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $7.81, suggesting upside of 23.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.9

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

Credit Suisse rates OGC as Outperform (1) -

Exploration results at Golden Point, Macraes, underscore the opportunity that exists underground. Credit Suisse highlights Frasers is maturing and needs to be replaced and Golden Point appears a high probability, with broad widths and higher average grades.

The broker also believes the opportunity at Macraes is enhanced and arguably more important in the context of unresolved challenges at Didipio. Management is reviewing opportunities to extract additional resources from pre-mined pits. Outperform rating and $4.25 target maintained.

Target price is $4.25 Current Price is $3.97 Difference: $0.28
If OGC meets the Credit Suisse target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $4.92, suggesting upside of 23.9% (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: 0.9

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

Ord Minnett rates OML as Accumulate (2) -

Accumulate rating and $3.70 target maintained despite the Outdoor Media Association (OMA) reporting out-of-home advertising revenue in Australia for the September quarter of 2019 fell -0.9% to $218.2m, hereby ending a 26 consecutive quarterly run of positive results for the industry.

Ord Minnett is not surprised and refers to the company's trading update provided in August. Out-of-home continues to grab market share from other media channels, point out the analysts.

Target price is $3.70 Current Price is $2.88 Difference: $0.82
If OML meets the Ord Minnett target it will return approximately 28% (excluding dividends, fees and charges).

Current consensus price target is $3.92, suggesting upside of 35.9% (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 SBM as Neutral (3) -

Citi notes the September quarter grades were disappointing at Gwalia. While investors have been patient with the extension project at Gwalia, the broker believes operations will need to be free of interruptions in the December quarter to instill confidence.

Group gold production of 87,600 ounces was -20% below estimates. Moose River also missed forecasts because of the hurricane and mill maintenance contributing to lost production. Costs and FY20 guidance for Moose River will come with the full September quarter report.

Neutral rating maintained. Target is reduced to $2.90 from $3.00.

Target price is $2.90 Current Price is $2.75 Difference: $0.15
If SBM meets the Citi target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $3.17, suggesting upside of 15.1% (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 SBM as Underperform (5) -

Continuing operations at Gwalia and Simberi were weaker in the September quarter, Credit Suisse notes. However, the company's recently-acquired Atlantic Gold has performed in line with expectations and offset the weaker contribution from Gwalia and Simberi.

Target price steady at $2.76. Underperform rating retained.

Target price is $2.76 Current Price is $2.75 Difference: $0.01
If SBM meets the Credit Suisse target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $3.17, suggesting upside of 15.1% (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 SBM as Outperform (1) -

First quarter gold production was -10% below Macquarie's forecasts, driven by lower grades. The broker expects the second quarter to be broadly similar, before Gwalia production increases in the second half as the benefits from the expansion project start to flow through.

Outperform rating and $3.50 target maintained.

Target price is $3.50 Current Price is $2.75 Difference: $0.75
If SBM meets the Macquarie target it will return approximately 27% (excluding dividends, fees and charges).

Current consensus price target is $3.17, suggesting upside of 15.1% (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 SYD as Upgrade to Outperform from Neutral (1) -

Sydney Airport has started to re-negotiate access agreements. Macquarie assesses the company is facing a more challenging slot environment, as competitors, such as Western Sydney, Melbourne and Brisbane, are adding runway capacity.

Thus the emphasis needs to shift to service quality in order to differentiate the airport. Additional T4 expenditure to enhance capacity is likely to mitigate pricing pressure, the broker acknowledges.

Macquarie does not consider the multiple stretched, while the recent sale of Hobart Airport emphasises the value in Sydney Airport.

Rating is upgraded to Outperform from Neutral and the target raised to $8.77 from $8.53.

Target price is $8.77 Current Price is $8.22 Difference: $0.55
If SYD meets the Macquarie target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $8.22, suggesting upside of 0.0% (ex-dividends)

The company's fiscal year ends in December.

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