Australian Broker Call
August 04, 2017
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COMPANIES DISCUSSED IN THIS ISSUE
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Last Updated: 01:08 PM
Your daily news report on the latest recommendation, valuation, forecast and opinion changes.
This report includes concise but limited reviews of research recently published by Stockbrokers, which should be considered as information concerning likely market behaviour rather than advice on the securities mentioned. Do not act on the contents of this Report without first reading the important information included at the end.
For more info about the different terms used by stockbrokers, as well as the different methodologies behind similar sounding ratings, download our guide HERE
Today's Upgrades and Downgrades
| FMG - | FORTESCUE | Downgrade to Hold from Add | Morgans |
| NST - | NORTHERN STAR | Upgrade to Outperform from Neutral | Macquarie |
| WEB - | WEBJET | Upgrade to Add from Hold | Morgans |
Citi rates AMP as Neutral (3) -
Digging through Plan for Life data, Citi analysts believe they have discovered as to why AMP management was referring to accelerated margin squeeze at the recent investor day.
Citi analysts believe all the North net flows were into the lower-margin MyNorth products. The analysts suggest margin squeeze is likely to continue even now the MySuper transition is complete.
Because of too many uncertainties in the short term, they prefer to stick with a Neutral rating. Target $5.60. At this stage, no changes have been made to forecasts.
Target price is $5.60 Current Price is $5.41 Difference: $0.19
If AMP meets the Citi target it will return approximately 4% (excluding dividends, fees and charges).
Current consensus price target is $5.65, suggesting upside of 5.0% (ex-dividends)
The company's fiscal year ends in December.
Forecast for FY17:
Citi forecasts a full year FY17 dividend of 31.00 cents and EPS of 34.80 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 34.9, implying annual growth of N/A. Current consensus DPS estimate is 29.7, implying a prospective dividend yield of 5.5%. Current consensus EPS estimate suggests the PER is 15.4. |
Forecast for FY18:
Citi forecasts a full year FY18 dividend of 34.00 cents and EPS of 36.40 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 35.9, implying annual growth of 2.9%. Current consensus DPS estimate is 30.7, implying a prospective dividend yield of 5.7%. Current consensus EPS estimate suggests the PER is 15.0. |
Market Sentiment: 0.4
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Morgan Stanley rates API as Underweight (5) -
Morgan Stanley observes challenging conditions in Australian retail continue to detract from an otherwise reasonable performance in pharmacy.
FY17 guidance has dropped to growth of around 5% in net profit from "at least 10%". The broker reduces forecasts for earnings per share accordingly. Morgan Stanley believes the long-term strategy is intact but there are risks for the near term.
Underweight rating and In-Line industry view retained. Target drops to $1.64 from $1.86.
Target price is $1.64 Current Price is $1.53 Difference: $0.11
If API meets the Morgan Stanley target it will return approximately 7% (excluding dividends, fees and charges).
Current consensus price target is $1.70, suggesting upside of 11.0% (ex-dividends)
The company's fiscal year ends in August.
Forecast for FY17:
Morgan Stanley forecasts a full year FY17 dividend of 7.00 cents and EPS of 11.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 10.9, implying annual growth of 2.8%. Current consensus DPS estimate is 6.9, implying a prospective dividend yield of 4.5%. Current consensus EPS estimate suggests the PER is 14.0. |
Forecast for FY18:
Morgan Stanley forecasts a full year FY18 dividend of 7.00 cents and EPS of 12.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 11.6, implying annual growth of 6.4%. Current consensus DPS estimate is 7.4, implying a prospective dividend yield of 4.8%. Current consensus EPS estimate suggests the PER is 13.2. |
Market Sentiment: -1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Morgans rates CAT as Add (1) -
The company has reported fourth quarter cash flows. While growth in elite wearable revenue was strong it fell short of expectations. Morgans downgrades forecasts and valuation to reflect the strong Australian dollar and lowers the starting base for subscribers.
The broker still likes the stock and maintains an Add rating. FY18 is expected to prove more rewarding than FY17. Target is reduced to $2.79 from $2.99.
Target price is $2.79 Current Price is $2.00 Difference: $0.79
If CAT meets the Morgans target it will return approximately 40% (excluding dividends, fees and charges).
The company's fiscal year ends in June.
Forecast for FY17:
Morgans forecasts a full year FY17 dividend of 0.00 cents and EPS of minus 1.60 cents. |
Forecast for FY18:
Morgans forecasts a full year FY18 dividend of 0.00 cents and EPS of minus 0.50 cents. |
Market Sentiment: 1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Citi rates CWN as Buy (1) -
At face value, it appears Crown has managed to beat expectations with its FY17 report release, but Citi analysts point out it was a mixed quality report. Normalised profit missed Citi's expectation on higher tax plus lower than expected contributions from associates.
The company plans to buy back a further 29.3m shares, which is seen as a positive, as is the margin surprise for the Melbourne operations. Target price retained at $14.80. Buy.
Target price is $14.80 Current Price is $12.77 Difference: $2.03
If CWN meets the Citi target it will return approximately 16% (excluding dividends, fees and charges).
Current consensus price target is $13.43, suggesting upside of 7.5% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY17:
Citi forecasts a full year FY17 dividend of 143.00 cents and EPS of 52.50 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 90.3, implying annual growth of -30.7%. Current consensus DPS estimate is 143.0, implying a prospective dividend yield of 11.4%. Current consensus EPS estimate suggests the PER is 13.8. |
Forecast for FY18:
Citi forecasts a full year FY18 dividend of 60.00 cents and EPS of 57.20 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 60.5, implying annual growth of -33.0%. Current consensus DPS estimate is 71.9, implying a prospective dividend yield of 5.8%. Current consensus EPS estimate suggests the PER is 20.7. |
Market Sentiment: 0.4
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Morgans rates FMG as Downgrade to Hold from Add (3) -
Morgans believes the stock is trading close to fair value, and with benchmark iron ore prices back above US$70/t the broker downgrades to Hold from Add.
The broker suspects the stock could rally from this point if the large discounts on its lower-grade iron ore starts to normalise towards the long-term range. To get there though, China needs to absorb a large stockpile that has been building at port. Target is $5.95.
Target price is $5.95 Current Price is $5.67 Difference: $0.28
If FMG meets the Morgans target it will return approximately 5% (excluding dividends, fees and charges).
Current consensus price target is $5.73, suggesting upside of 0.5% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY17:
Morgans forecasts a full year FY17 dividend of 37.01 cents and EPS of 96.48 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 91.2, implying annual growth of N/A. Current consensus DPS estimate is 36.1, implying a prospective dividend yield of 6.3%. Current consensus EPS estimate suggests the PER is 6.3. |
Forecast for FY18:
Morgans forecasts a full year FY18 dividend of 9.30 cents and EPS of 43.85 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 49.4, implying annual growth of -45.8%. Current consensus DPS estimate is 20.2, implying a prospective dividend yield of 3.5%. Current consensus EPS estimate suggests the PER is 11.5. |
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
Citi rates GMG as Buy (1) -
Citi analysts continue their positive assessment with today predicting the future continues to look bright for Goodman Group as internal focus now shifts to management from development.
Citi's projections show 12.7% CAGR for FY17-FY20. They maintain the view Goodman shares look attractive against the ASX50. In addition, they believe the shares are on a -13% FY18 FFOx discount to global industrial peers.
The analysts note their forecasts sit slightly above market consensus. A back to normal scenario for global interest rates would be the key threat to their outlook for the shares. Buy rating retained. Target unchanged at $8.95.
Target price is $8.95 Current Price is $8.08 Difference: $0.87
If GMG meets the Citi target it will return approximately 11% (excluding dividends, fees and charges).
Current consensus price target is $8.19, suggesting upside of 1.7% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY17:
Citi forecasts a full year FY17 dividend of 25.90 cents and EPS of 43.10 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 44.6, implying annual growth of -38.1%. Current consensus DPS estimate is 25.9, implying a prospective dividend yield of 3.2%. Current consensus EPS estimate suggests the PER is 18.1. |
Forecast for FY18:
Citi forecasts a full year FY18 dividend of 27.50 cents and EPS of 46.20 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 46.1, implying annual growth of 3.4%. Current consensus DPS estimate is 27.6, implying a prospective dividend yield of 3.4%. Current consensus EPS estimate suggests the PER is 17.5. |
Market Sentiment: 0.4
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Morgans rates KGL as Add (1) -
The company has raised $2.48m through a share purchase plan. Morgans upgrades valuation, based on US5c/pound copper in the resource with an uplift in exploration value from recent drilling success.
Add rating retained. Target is raised to $0.52 from $0.51.
Target price is $0.52 Current Price is $0.30 Difference: $0.22
If KGL meets the Morgans target it will return approximately 73% (excluding dividends, fees and charges).
The company's fiscal year ends in December.
Forecast for FY17:
Morgans forecasts a full year FY17 dividend of 0.00 cents and EPS of minus 1.30 cents. |
Forecast for FY18:
Morgans forecasts a full year FY18 dividend of 0.00 cents and EPS of minus 1.30 cents. |
Market Sentiment: 1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Deutsche Bank rates KMD as Buy (1) -
Despite cycling weak comparables, Kathmandu's Australian sales growth and recovery in NZ still represents a very strong sales performance in a challenging apparel market, the broker suggests. Initiatives in marketing and product management appear to be working.
A good inventory position and record low debt also opens up the possibility of capital management, the broker notes. FY17 guidance for a 12% increase in profit keeps the broker on Buy, Target rises to NZ$2.50 from NZ$2.25.
Current Price is $2.10. Target price not assessed.
Current consensus price target is $2.27, suggesting upside of 8.9% (ex-dividends)
The company's fiscal year ends in July.
Forecast for FY17:
Deutsche Bank forecasts a full year FY17 dividend of 11.33 cents and EPS of 17.94 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 17.3, implying annual growth of N/A. Current consensus DPS estimate is 11.0, implying a prospective dividend yield of 5.3%. Current consensus EPS estimate suggests the PER is 12.1. |
Forecast for FY18:
Deutsche Bank forecasts a full year FY18 dividend of 12.08 cents and EPS of 18.59 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 18.7, implying annual growth of 8.1%. Current consensus DPS estimate is 12.0, implying a prospective dividend yield of 5.8%. Current consensus EPS estimate suggests the PER is 11.1. |
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
Macquarie rates KMD as Outperform (1) -
The company has provided a trading update and guided to profit of $37.4-38m, ahead of Macquarie's forecasts.
Following the July year-end the company has also noted that its performance has been supported by operating leverage, reduced inventory and record low debt.
Macquarie maintains an Outperform rating and raises the target to $2.27 from $2.20.
Target price is $2.27 Current Price is $2.10 Difference: $0.17
If KMD meets the Macquarie target it will return approximately 8% (excluding dividends, fees and charges).
Current consensus price target is $2.27, suggesting upside of 8.9% (ex-dividends)
The company's fiscal year ends in July.
Forecast for FY17:
Macquarie forecasts a full year FY17 dividend of 11.80 cents and EPS of 17.75 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 17.3, implying annual growth of N/A. Current consensus DPS estimate is 11.0, implying a prospective dividend yield of 5.3%. Current consensus EPS estimate suggests the PER is 12.1. |
Forecast for FY18:
Macquarie forecasts a full year FY18 dividend of 12.28 cents and EPS of 18.41 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 18.7, implying annual growth of 8.1%. Current consensus DPS estimate is 12.0, implying a prospective dividend yield of 5.8%. Current consensus EPS estimate suggests the PER is 11.1. |
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 NST as Neutral (3) -
It was the event anticipated by all and sundry, but Citi analysts comment the 2017 reserve upgrade delivered more ounces and tonnes than expected, but at lower grades than before.
Essentially, Northern Star's intention is to reach a consistent 600kozpa in FY19 and maintain it for ten years, explain the analysts. They await more news on the dividend policy at the upcoming results release. Neutral rating retained. Target price $5.10.
Target price is $5.10 Current Price is $4.67 Difference: $0.43
If NST meets the Citi target it will return approximately 9% (excluding dividends, fees and charges).
Current consensus price target is $4.76, suggesting upside of 0.8% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY17:
Citi forecasts a full year FY17 dividend of 7.00 cents and EPS of 32.60 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 33.2, implying annual growth of 31.7%. Current consensus DPS estimate is 9.3, implying a prospective dividend yield of 2.0%. Current consensus EPS estimate suggests the PER is 14.2. |
Forecast for FY18:
Citi forecasts a full year FY18 dividend of 6.00 cents and EPS of 31.50 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 43.5, implying annual growth of 31.0%. Current consensus DPS estimate is 10.3, implying a prospective dividend yield of 2.2%. Current consensus EPS estimate suggests the PER is 10.9. |
Market Sentiment: -0.2
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Credit Suisse rates NST as Neutral (3) -
The company has upgraded reserves and resources, adding 2.3m ounces to reserves and 2.7m ounces to resources net of depletion since the FY16 statement.
Credit Suisse assumes an eight-year average mine life in its valuation, taking into account fully the reserve update but not the 10 years implied by the resource.
Neutral rating retained. Target is raised to $4.30 from $4.15.
Target price is $4.30 Current Price is $4.67 Difference: minus $0.37 (current price is over target).
If NST meets the Credit Suisse target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $4.76, suggesting upside of 0.8% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY17:
Credit Suisse forecasts a full year FY17 dividend of 8.76 cents and EPS of 33.01 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 33.2, implying annual growth of 31.7%. Current consensus DPS estimate is 9.3, implying a prospective dividend yield of 2.0%. Current consensus EPS estimate suggests the PER is 14.2. |
Forecast for FY18:
Credit Suisse forecasts a full year FY18 dividend of 13.76 cents and EPS of 45.87 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 43.5, implying annual growth of 31.0%. Current consensus DPS estimate is 10.3, implying a prospective dividend yield of 2.2%. Current consensus EPS estimate suggests the PER is 10.9. |
Market Sentiment: -0.2
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Deutsche Bank rates NST as Hold (3) -
The broker considers Northern Star's doubling of its reserve base a good result given a counter-cyclical focus on resource development over the past three years. At 3.5moz, reserves exceed the broker's prior 2.5-3moz assumption.
Hold and $4.40 target retained as the broker awaits the company's upcoming strategy day.
Target price is $4.40 Current Price is $4.67 Difference: minus $0.27 (current price is over target).
If NST meets the Deutsche Bank target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $4.76, suggesting upside of 0.8% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY17:
Deutsche Bank forecasts a full year FY17 dividend of 7.00 cents and EPS of 34.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 33.2, implying annual growth of 31.7%. Current consensus DPS estimate is 9.3, implying a prospective dividend yield of 2.0%. Current consensus EPS estimate suggests the PER is 14.2. |
Forecast for FY18:
Deutsche Bank forecasts a full year FY18 dividend of 11.00 cents and EPS of 45.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 43.5, implying annual growth of 31.0%. Current consensus DPS estimate is 10.3, implying a prospective dividend yield of 2.2%. Current consensus EPS estimate suggests the PER is 10.9. |
Market Sentiment: -0.2
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Macquarie rates NST as Upgrade to Outperform from Neutral (1) -
Northern Star has delivered substantial upgrades to the Jundee and Kalgoorlie operations. Macquarie observes this is a significant upgrade to the long-term outlook, and the company now has a reserve and resource base capable of supporting a 600,000 ounces per annum run rate over 10 years.
Incorporating near-term guidance means a modest reduction to the broker's earnings forecasts for the next three years. FY18, FY19 and FY20 forecasts are lowered -8%, -13% and -7% respectively. Target is raised to $5.40 from $4.00. Rating is upgraded to Outperform from Neutral.
Target price is $5.40 Current Price is $4.67 Difference: $0.73
If NST meets the Macquarie target it will return approximately 16% (excluding dividends, fees and charges).
Current consensus price target is $4.76, suggesting upside of 0.8% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY17:
Macquarie forecasts a full year FY17 dividend of 12.00 cents and EPS of 32.80 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 33.2, implying annual growth of 31.7%. Current consensus DPS estimate is 9.3, implying a prospective dividend yield of 2.0%. Current consensus EPS estimate suggests the PER is 14.2. |
Forecast for FY18:
Macquarie forecasts a full year FY18 dividend of 9.00 cents and EPS of 38.70 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 43.5, implying annual growth of 31.0%. Current consensus DPS estimate is 10.3, implying a prospective dividend yield of 2.2%. Current consensus EPS estimate suggests the PER is 10.9. |
Market Sentiment: -0.2
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
UBS rates NST as Sell (5) -
The company has confirmed mine life of six years based on reserves and 10 years based on resources at a 600,000 ozs per annum rate.
This is ahead of UBS' expectations and removes a key concern. Yet, the broker wonders whether the market may fret about declining grades.
Sell rating retained. Target is $4.49.
Target price is $4.49 Current Price is $4.67 Difference: minus $0.18 (current price is over target).
If NST meets the UBS target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $4.76, suggesting upside of 0.8% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY17:
UBS forecasts a full year FY17 dividend of 11.00 cents and EPS of 35.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 33.2, implying annual growth of 31.7%. Current consensus DPS estimate is 9.3, implying a prospective dividend yield of 2.0%. Current consensus EPS estimate suggests the PER is 14.2. |
Forecast for FY18:
UBS forecasts a full year FY18 dividend of 12.00 cents and EPS of 47.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 43.5, implying annual growth of 31.0%. Current consensus DPS estimate is 10.3, implying a prospective dividend yield of 2.2%. Current consensus EPS estimate suggests the PER is 10.9. |
Market Sentiment: -0.2
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Citi rates SGM as Buy (1) -
Citi analysts have been taken by surprise as the company announced the sudden exit of both CEO and CFO. It all smacks of a hasty exit, suggest the analysts, adding this is likely not going to be helpful for the share price.
Guidance for FY17 Underlying EBIT of $180-185m is in line with market expectations, including Citi's. No changes made at this stage.
Target price is $14.10 Current Price is $15.32 Difference: minus $1.22 (current price is over target).
If SGM meets the Citi target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $13.39, suggesting downside of -0.6% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY17:
Citi forecasts a full year FY17 dividend of 48.00 cents and EPS of 75.80 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 70.4, implying annual growth of 31.1%. Current consensus DPS estimate is 39.7, implying a prospective dividend yield of 2.9%. Current consensus EPS estimate suggests the PER is 19.1. |
Forecast for FY18:
Citi forecasts a full year FY18 dividend of 52.00 cents and EPS of 85.90 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 83.4, implying annual growth of 18.5%. Current consensus DPS estimate is 42.0, implying a prospective dividend yield of 3.1%. Current consensus EPS estimate suggests the PER is 16.2. |
Market Sentiment: 0.4
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Citi rates SUN as Neutral (3) -
Citi analysts already commented in a first response to how weak Suncorp's FY17 financial performance turned out (see Broker Call Report yesterday). Today, they've reduced estimates by -16% for FY18 and by -6% for FY19.
Further out forecasts are somewhat supported by management's promise to retain a flat costs base in FY19/FY20. Price target falls to $14 from $14.25. Neutral rating retained.
Target price is $14.00 Current Price is $13.57 Difference: $0.43
If SUN meets the Citi target it will return approximately 3% (excluding dividends, fees and charges).
Current consensus price target is $14.17, suggesting upside of 3.4% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Citi forecasts a full year FY18 dividend of 76.00 cents and EPS of 85.10 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 88.4, implying annual growth of 5.4%. Current consensus DPS estimate is 74.7, implying a prospective dividend yield of 5.5%. Current consensus EPS estimate suggests the PER is 15.5. |
Forecast for FY19:
Citi forecasts a full year FY19 dividend of 79.00 cents and EPS of 97.60 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 96.4, implying annual growth of 9.0%. Current consensus DPS estimate is 75.3, implying a prospective dividend yield of 5.5%. Current consensus EPS estimate suggests the PER is 14.2. |
Market Sentiment: 0.1
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Credit Suisse rates SUN as Neutral (3) -
Cash earnings in FY17 were slightly above Credit Suisse forecasts.The broker observes the share price was up over 15% on the four months leading up to the result, likely driven by positive expectations around insurance pricing.
However, the business is being held back by the low-growth bank and life divisions, in the broker's opinion. The run-up in the share price was not justified, Credit Suisse believes, and the pull back now puts it at fair value.
Neutral rating and $14.50 target maintained.
Target price is $14.50 Current Price is $13.57 Difference: $0.93
If SUN meets the Credit Suisse target it will return approximately 7% (excluding dividends, fees and charges).
Current consensus price target is $14.17, suggesting upside of 3.4% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Credit Suisse forecasts a full year FY18 dividend of 73.00 cents and EPS of 89.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 88.4, implying annual growth of 5.4%. Current consensus DPS estimate is 74.7, implying a prospective dividend yield of 5.5%. Current consensus EPS estimate suggests the PER is 15.5. |
Forecast for FY19:
Credit Suisse forecasts a full year FY19 dividend of 75.00 cents and EPS of 100.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 96.4, implying annual growth of 9.0%. Current consensus DPS estimate is 75.3, implying a prospective dividend yield of 5.5%. Current consensus EPS estimate suggests the PER is 14.2. |
Market Sentiment: 0.1
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Deutsche Bank rates SUN as Buy (1) -
The market clearly had high expectations, as the broker believes Suncorp's result was better than the sharp share price response might suggest. Both of the Insurance and Banking & Wealth divisions produced very solid results in the broker's view.
The drag was provided by NZ earthquake claims and a loss on the failed takeover of Tower in NZ. On balance the result thus "wasn't great", the broker acknowledges, but on the share price drop the broker is happy to retain Buy and a $14.60 target.
Target price is $14.60 Current Price is $13.57 Difference: $1.03
If SUN meets the Deutsche Bank target it will return approximately 8% (excluding dividends, fees and charges).
Current consensus price target is $14.17, suggesting upside of 3.4% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Deutsche Bank forecasts a full year FY18 dividend of 73.00 cents and EPS of 88.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 88.4, implying annual growth of 5.4%. Current consensus DPS estimate is 74.7, implying a prospective dividend yield of 5.5%. Current consensus EPS estimate suggests the PER is 15.5. |
Forecast for FY19:
Deutsche Bank forecasts a full year FY19 dividend of 74.00 cents and EPS of 92.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 96.4, implying annual growth of 9.0%. Current consensus DPS estimate is 75.3, implying a prospective dividend yield of 5.5%. Current consensus EPS estimate suggests the PER is 14.2. |
Market Sentiment: 0.1
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Macquarie rates SUN as Neutral (3) -
FY17 results revealed a strong environment, Macquarie observes, yet the company underperformed on gross written premium growth. The broker does not expect the stock to outperform until it executes on its additional investment and generates related returns.
There was no special dividend and the broker does not anticipate one in the first half of FY18. More downside to the stock is expected in the short term and Macquarie is happy to stay on the sidelines with a Neutral rating. Target is reduced to $14.50 from $14.90.
Target price is $14.50 Current Price is $13.57 Difference: $0.93
If SUN meets the Macquarie target it will return approximately 7% (excluding dividends, fees and charges).
Current consensus price target is $14.17, suggesting upside of 3.4% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Macquarie forecasts a full year FY18 dividend of 76.00 cents and EPS of 95.40 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 88.4, implying annual growth of 5.4%. Current consensus DPS estimate is 74.7, implying a prospective dividend yield of 5.5%. Current consensus EPS estimate suggests the PER is 15.5. |
Forecast for FY19:
Macquarie forecasts a full year FY19 dividend of 71.00 cents and EPS of 88.40 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 96.4, implying annual growth of 9.0%. Current consensus DPS estimate is 75.3, implying a prospective dividend yield of 5.5%. Current consensus EPS estimate suggests the PER is 14.2. |
Market Sentiment: 0.1
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Morgan Stanley rates SUN as Underweight (5) -
Morgan Stanley observes second half operating expenditure trends deteriorated and FY18 underlying margins are falling, while the stakes on the company's "marketplace" strategy are increasing.
In terms of the latter, the broker believes tangible upside demands a leap of faith. For FY18, the higher catastrophe budget is the major headwind in the broker's opinion.
Target is reduced to $12.90 from $13.50. Underweight retained. In-Line sector view.
Target price is $12.90 Current Price is $13.57 Difference: minus $0.67 (current price is over target).
If SUN 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 $14.17, suggesting upside of 3.4% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Morgan Stanley forecasts a full year FY18 dividend of 74.00 cents and EPS of 86.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 88.4, implying annual growth of 5.4%. Current consensus DPS estimate is 74.7, implying a prospective dividend yield of 5.5%. Current consensus EPS estimate suggests the PER is 15.5. |
Forecast for FY19:
Morgan Stanley forecasts a full year FY19 dividend of 75.00 cents and EPS of 98.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 96.4, implying annual growth of 9.0%. Current consensus DPS estimate is 75.3, implying a prospective dividend yield of 5.5%. Current consensus EPS estimate suggests the PER is 14.2. |
Market Sentiment: 0.1
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Morgans rates SUN as Hold (3) -
FY17 cash net profit was below forecasts. The company achieved a 12% second half underlying insurance margin. Morgans notes guidance on expenditure associated with the marketplace strategy and the timeline for achieving the bank cost-to-income target appear to have changed.
The broker finds it hard to attribute direct benefit or value from the marketplace program at present. Management has also indicated its 50% bank cost-to-income ratio target remains more a medium-term strategy. Hold retained. Target is raised to $14.31 from $14.24.
Target price is $14.31 Current Price is $13.57 Difference: $0.74
If SUN meets the Morgans target it will return approximately 5% (excluding dividends, fees and charges).
Current consensus price target is $14.17, suggesting upside of 3.4% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Morgans forecasts a full year FY18 dividend of 76.60 cents and EPS of 91.60 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 88.4, implying annual growth of 5.4%. Current consensus DPS estimate is 74.7, implying a prospective dividend yield of 5.5%. Current consensus EPS estimate suggests the PER is 15.5. |
Forecast for FY19:
Morgans forecasts a full year FY19 dividend of 75.70 cents and EPS of 102.20 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 96.4, implying annual growth of 9.0%. Current consensus DPS estimate is 75.3, implying a prospective dividend yield of 5.5%. Current consensus EPS estimate suggests the PER is 14.2. |
Market Sentiment: 0.1
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Ord Minnett rates SUN as Hold (3) -
FY17 net profit slightly missed Ord Minnett's forecasts. The broker observes pressure on the share price after the result appears to stem from concerns about the quality and the forecasts for FY18.
Suncorp faces margin pressures in its general insurance business and cost increases from the acceleration of the marketplace strategy and Ord Minnett observes the market appears to be surprised by the size of these factors, hence the slump in the share price.
Hold rating retained. Target drops to $13.75 from $14.20.
Target price is $13.75 Current Price is $13.57 Difference: $0.18
If SUN meets the Ord Minnett target it will return approximately 1% (excluding dividends, fees and charges).
Current consensus price target is $14.17, suggesting upside of 3.4% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Ord Minnett forecasts a full year FY18 dividend of 71.00 cents and EPS of 82.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 88.4, implying annual growth of 5.4%. Current consensus DPS estimate is 74.7, implying a prospective dividend yield of 5.5%. Current consensus EPS estimate suggests the PER is 15.5. |
Forecast for FY19:
Ord Minnett forecasts a full year FY19 dividend of 72.00 cents and EPS of 95.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 96.4, implying annual growth of 9.0%. Current consensus DPS estimate is 75.3, implying a prospective dividend yield of 5.5%. Current consensus EPS estimate suggests the PER is 14.2. |
Market Sentiment: 0.1
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
UBS rates SUN as Buy (1) -
Soft trends across the business disappointed UBS. The most surprising development for the broker was the decision to accelerate the expenditure on the marketplace strategy.
UBS suggests the company's earlier belief that it could fund this strategy by cost efficiencies has proved optimistic. Still, the broker continues to view the Australasian general insurance business positively.
Buy rating retained. Target is lowered to $14.80 from $15.50.
Target price is $14.80 Current Price is $13.57 Difference: $1.23
If SUN meets the UBS target it will return approximately 9% (excluding dividends, fees and charges).
Current consensus price target is $14.17, suggesting upside of 3.4% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
UBS forecasts a full year FY18 dividend of 78.00 cents and EPS of 90.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 88.4, implying annual growth of 5.4%. Current consensus DPS estimate is 74.7, implying a prospective dividend yield of 5.5%. Current consensus EPS estimate suggests the PER is 15.5. |
Forecast for FY19:
UBS forecasts a full year FY19 dividend of 81.00 cents and EPS of 98.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 96.4, implying annual growth of 9.0%. Current consensus DPS estimate is 75.3, implying a prospective dividend yield of 5.5%. Current consensus EPS estimate suggests the PER is 14.2. |
Market Sentiment: 0.1
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Citi rates TAH as Sell (5) -
Citi analysts note FY17 result was in-line with recent pre-guidance, but both wagering and media missed the stockbroker's expectations. The difference was a beat delivered by gaming services.
The analysts also picked up that management delivered a hint that JV Sun Bets in the UK might not have its support forever, unless certain revenue payment obligations to News UK will be met.
Sell rating and target price of $4 retained.
Target price is $4.00 Current Price is $4.29 Difference: minus $0.29 (current price is over target).
If TAH meets the Citi target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $4.59, suggesting upside of 5.7% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY17:
Citi forecasts a full year FY17 dividend of 25.00 cents and EPS of 21.10 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 20.8, implying annual growth of 2.0%. Current consensus DPS estimate is 25.1, implying a prospective dividend yield of 5.8%. Current consensus EPS estimate suggests the PER is 20.9. |
Forecast for FY18:
Citi forecasts a full year FY18 dividend of 23.50 cents and EPS of 20.60 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 22.9, implying annual growth of 10.1%. Current consensus DPS estimate is 25.1, implying a prospective dividend yield of 5.8%. Current consensus EPS estimate suggests the PER is 19.0. |
Market Sentiment: -0.3
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Morgans rates WEB as Upgrade to Add from Hold (1) -
The company will acquire UK-based JacTravel for $330m. Morgans observes the size and nature of the transaction means the acquisition is not without risk but the strategic importance of the deal is irrefutable, as it transforms Webjet into the number two player in business-to-business travel globally.
The transaction will be funded via a combination of an entitlement offer, cash and debt. Morgans continues to view diversification into this higher quality and higher margin market positively.
With a materially stronger growth profile, the broker believes the valuation is compelling and upgrades to Add from Hold. Target is raised to $13.50 from $12.80.
Target price is $13.50 Current Price is $11.10 Difference: $2.4
If WEB meets the Morgans target it will return approximately 22% (excluding dividends, fees and charges).
Current consensus price target is $12.65, suggesting upside of 0.9% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY17:
Morgans forecasts a full year FY17 dividend of 18.00 cents and EPS of 40.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 43.4, implying annual growth of 58.6%. Current consensus DPS estimate is 18.9, implying a prospective dividend yield of 1.5%. Current consensus EPS estimate suggests the PER is 28.9. |
Forecast for FY18:
Morgans forecasts a full year FY18 dividend of 26.00 cents and EPS of 59.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 52.9, implying annual growth of 21.9%. Current consensus DPS estimate is 24.2, implying a prospective dividend yield of 1.9%. Current consensus EPS estimate suggests the PER is 23.7. |
Market Sentiment: 0.6
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Ord Minnett rates WEB as Buy (1) -
The dispute with the auditor affects the look of the company, in Ord Minnett's view, especially for one on the ASX200, but a resolution is likely before the release of the results.
Meanwhile, attention has been distracted by the announcement of the largest acquisition in the company's history with the intended purchase of JacTravel for $330m. Ord Minnett observes the accretion in the deal has been enhanced by the high level of cash/debt being used to strengthen the balance sheet.
Buy rating retained. Target is raised to $15.13 from $13.79.
Target price is $15.13 Current Price is $11.10 Difference: $4.03
If WEB meets the Ord Minnett target it will return approximately 36% (excluding dividends, fees and charges).
Current consensus price target is $12.65, suggesting upside of 0.9% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY17:
Ord Minnett forecasts a full year FY17 dividend of 22.00 cents and EPS of 55.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 43.4, implying annual growth of 58.6%. Current consensus DPS estimate is 18.9, implying a prospective dividend yield of 1.5%. Current consensus EPS estimate suggests the PER is 28.9. |
Forecast for FY18:
Ord Minnett forecasts a full year FY18 dividend of 28.90 cents and EPS of 57.70 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 52.9, implying annual growth of 21.9%. Current consensus DPS estimate is 24.2, implying a prospective dividend yield of 1.9%. Current consensus EPS estimate suggests the PER is 23.7. |
Market Sentiment: 0.6
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
UBS rates WEB as Neutral (3) -
The company will acquire JacTravel, based in the UK, making it the second largest global provider of B2B hotel inventory. The acquisition will cost $330m and be paid for by a $164m entitlement offer, equity to vendors, cash and new debt.
Excluding synergies, management expects 25% accretion to earnings in FY17 on a pro-forma basis. UBS estimates the company has compound growth in earnings per share for FY17-20 of 15%, before the JacTravel acquisition, and will re-visit forecasts at the FY17 result.
Neutral. Target is $11.50.
Target price is $11.50 Current Price is $11.10 Difference: $0.4
If WEB meets the UBS target it will return approximately 4% (excluding dividends, fees and charges).
Current consensus price target is $12.65, suggesting upside of 0.9% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY17:
UBS forecasts a full year FY17 dividend of 16.50 cents and EPS of 40.80 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 43.4, implying annual growth of 58.6%. Current consensus DPS estimate is 18.9, implying a prospective dividend yield of 1.5%. Current consensus EPS estimate suggests the PER is 28.9. |
Forecast for FY18:
UBS forecasts a full year FY18 dividend of 18.00 cents and EPS of 49.10 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 52.9, implying annual growth of 21.9%. Current consensus DPS estimate is 24.2, implying a prospective dividend yield of 1.9%. Current consensus EPS estimate suggests the PER is 23.7. |
Market Sentiment: 0.6
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Deutsche Bank rates WOR as Buy (1) -
WorleyParsons' US peer KBR posted a June Q earnings beat but the broker sees a neutral read-through for WorleyParsons given KBR's engineering & contracting division continues to suffer declining revenues and a backlog, but the E&C pipeline is improving. Buy and $13.74 target retained.
Target price is $13.74 Current Price is $12.24 Difference: $1.5
If WOR meets the Deutsche Bank target it will return approximately 12% (excluding dividends, fees and charges).
Current consensus price target is $12.30, suggesting downside of -0.1% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY17:
Deutsche Bank forecasts a full year FY17 EPS of 19.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 46.2, implying annual growth of 386.3%. Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A. Current consensus EPS estimate suggests the PER is 26.7. |
Forecast for FY18:
Deutsche Bank forecasts a full year FY18 EPS of 65.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 68.6, implying annual growth of 48.5%. Current consensus DPS estimate is 10.5, implying a prospective dividend yield of 0.9%. Current consensus EPS estimate suggests the PER is 18.0. |
Market Sentiment: 0.8
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Summaries
| AMP - | AMP | Neutral - Citi | Overnight Price $5.41 |
| API - | AUS PHARMACEUTICAL IND | Underweight - Morgan Stanley | Overnight Price $1.53 |
| CAT - | CATAPULT GROUP | Add - Morgans | Overnight Price $2.00 |
| CWN - | CROWN RESORTS | Buy - Citi | Overnight Price $12.77 |
| FMG - | FORTESCUE | Downgrade to Hold from Add - Morgans | Overnight Price $5.67 |
| GMG - | GOODMAN GRP | Buy - Citi | Overnight Price $8.08 |
| KGL - | KGL RESOURCES | Add - Morgans | Overnight Price $0.30 |
| KMD - | KATHMANDU | Buy - Deutsche Bank | Overnight Price $2.10 |
| Outperform - Macquarie | Overnight Price $2.10 | ||
| NST - | NORTHERN STAR | Neutral - Citi | Overnight Price $4.67 |
| Neutral - Credit Suisse | Overnight Price $4.67 | ||
| Hold - Deutsche Bank | Overnight Price $4.67 | ||
| Upgrade to Outperform from Neutral - Macquarie | Overnight Price $4.67 | ||
| Sell - UBS | Overnight Price $4.67 | ||
| SGM - | SIMS METAL MANAGEMENT | Buy - Citi | Overnight Price $15.32 |
| SUN - | SUNCORP | Neutral - Citi | Overnight Price $13.57 |
| Neutral - Credit Suisse | Overnight Price $13.57 | ||
| Buy - Deutsche Bank | Overnight Price $13.57 | ||
| Neutral - Macquarie | Overnight Price $13.57 | ||
| Underweight - Morgan Stanley | Overnight Price $13.57 | ||
| Hold - Morgans | Overnight Price $13.57 | ||
| Hold - Ord Minnett | Overnight Price $13.57 | ||
| Buy - UBS | Overnight Price $13.57 | ||
| TAH - | TABCORP HOLDINGS | Sell - Citi | Overnight Price $4.29 |
| WEB - | WEBJET | Upgrade to Add from Hold - Morgans | Overnight Price $11.10 |
| Buy - Ord Minnett | Overnight Price $11.10 | ||
| Neutral - UBS | Overnight Price $11.10 | ||
| WOR - | WORLEYPARSONS | Buy - Deutsche Bank | Overnight Price $12.24 |
RATING SUMMARY
| Rating | No. Of Recommendations |
| 1. Buy | 13 |
| 3. Hold | 11 |
| 5. Sell | 4 |
Friday 04 August 2017
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Disclaimer:
The content of this information does in no way reflect the opinions of
FNArena, or of its journalists. In fact we don't have any opinion about
the stock market, its value, future direction or individual shares. FNArena solely reports about what the main experts in the market note, believe
and comment on. By doing so we believe we provide intelligent investors
with a valuable tool that helps them in making up their own minds, reading
market trends and getting a feel for what is happening beneath the surface.
This document is provided for informational purposes only. It does not
constitute an offer to sell or a solicitation to buy any security or other
financial instrument. FNArena employs very experienced journalists who
base their work on information believed to be reliable and accurate, though
no guarantee is given that the daily report is accurate or complete. Investors
should contact their personal adviser before making any investment decision.
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