Australian Broker Call

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May 27, 2019

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COMPANIES DISCUSSED IN THIS ISSUE

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The number next to the symbol represents the number of brokers covering it for this report -(if more than 1).

Last Updated: 05:00 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
BSL - BLUESCOPE STEEL Downgrade to Neutral from Buy UBS
CSR - CSR Downgrade to Sell from Neutral Citi
EHE - ESTIA HEALTH Downgrade to Neutral from Buy UBS
KDR - KIDMAN RESOURCES Downgrade to Hold from Buy Ord Minnett
OZL - OZ MINERALS Upgrade to Add from Hold Morgans
PLS - PILBARA MINERALS Downgrade to Lighten from Hold Ord Minnett
QBE - QBE INSURANCE Downgrade to Neutral from Outperform Credit Suisse
ASL  AUSDRILL LIMITED

Mining Sector Contracting

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Overnight Price: $1.50

Deutsche Bank rates ASL as Buy (1) -

Ausdrill has announced a three-year extension of the equipment hire contract with Peabody at $126m. Deutsche Bank suspects there was likely to be a marginal price increase to reflect tighter equipment availability and potentially better terms.

Buy rating and $2.04 target maintained.

Target price is $2.04 Current Price is $1.50 Difference: $0.54
If ASL meets the Deutsche Bank target it will return approximately 36% (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

BSL  BLUESCOPE STEEL LIMITED

Steel & Scrap

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Overnight Price: $11.38

Credit Suisse rates BSL as Outperform (1) -

Credit Suisse US steel analysts have reduced hot rolled coil (HRC) and steel spread assumptions citing planned capacity additions, declining US steel tariff protection and the likely rise in scrap.

More HRC will enter the market in the second half of 2019 and the new capacity materially exceeds the most ambitious growth forecasts, in the broker's view.

This will force the closure of high-cost capacity. BlueScope's multiple geographic and end-market exposure as well as low steel production costs does reduce earnings volatility, the broker assesses.

Outperform and $16.50 target retained.

Target price is $16.50 Current Price is $11.38 Difference: $5.12
If BSL meets the Credit Suisse target it will return approximately 45% (excluding dividends, fees and charges).

Current consensus price target is $15.16, suggesting upside of 33.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Credit Suisse forecasts a full year FY19 dividend of 14.00 cents and EPS of 182.00 cents.
At the last closing share price the estimated dividend yield is 1.23%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 6.25.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 183.3, implying annual growth of 23.6%.

Current consensus DPS estimate is 14.0, implying a prospective dividend yield of 1.2%.

Current consensus EPS estimate suggests the PER is 6.2.

Forecast for FY20:

Credit Suisse forecasts a full year FY20 dividend of 14.00 cents and EPS of 136.00 cents.
At the last closing share price the estimated dividend yield is 1.23%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 8.37.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 141.1, implying annual growth of -23.0%.

Current consensus DPS estimate is 14.8, implying a prospective dividend yield of 1.3%.

Current consensus EPS estimate suggests the PER is 8.1.

Market Sentiment: 0.4

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


UBS rates BSL as Downgrade to Neutral from Buy (3) -

The removal of Canadian & Mexican steel tariffs and high iron ore prices as well as softening demand for housing in Australia all conspire to put pressure on the business, UBS believes. Rating is downgraded to Neutral from Buy.

FY20 and FY21 estimates for earnings are cut by -36%. Despite weakening US spreads, the broker believes the company will still push ahead with the expansion of North Star as this is the right strategy for the long-term. Target is reduced to $13 from $16.

Target price is $13.00 Current Price is $11.38 Difference: $1.62
If BSL meets the UBS target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $15.16, suggesting upside of 33.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

UBS forecasts a full year FY19 dividend of 12.00 cents and EPS of 177.00 cents.
At the last closing share price the estimated dividend yield is 1.05%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 6.43.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 183.3, implying annual growth of 23.6%.

Current consensus DPS estimate is 14.0, implying a prospective dividend yield of 1.2%.

Current consensus EPS estimate suggests the PER is 6.2.

Forecast for FY20:

UBS forecasts a full year FY20 dividend of 9.00 cents and EPS of 96.00 cents.
At the last closing share price the estimated dividend yield is 0.79%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 11.85.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 141.1, implying annual growth of -23.0%.

Current consensus DPS estimate is 14.8, implying a prospective dividend yield of 1.3%.

Current consensus EPS estimate suggests the PER is 8.1.

Market Sentiment: 0.4

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

COH  COCHLEAR LIMITED

Medical Equipment & Devices

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Overnight Price: $197.73

Macquarie rates COH as Underperform (5) -

A survey of 21 US-based audiologists, conducted by Macquarie, has highlighted favourable attributes of the company's product, albeit with Advanced Bionics recently taking share.

Macquarie believes increased uptake of cochlear implants amongst adults is the main opportunity. As current multiples are elevated and there is near-term earnings risk from increased competition, Macquarie retains an Underperform rating. Target is reduced to $166 from $170.

The broker estimates unit sales growth would need to increase to over 13% per annum over the next five years in order to justify the current share price.

Target price is $166.00 Current Price is $197.73 Difference: minus $31.73 (current price is over target).
If COH meets the Macquarie target it will return approximately minus 16% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $169.80, suggesting downside of -14.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Macquarie forecasts a full year FY19 dividend of 312.70 cents and EPS of 454.90 cents.
At the last closing share price the estimated dividend yield is 1.58%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 43.47.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 463.7, implying annual growth of 8.5%.

Current consensus DPS estimate is 322.0, implying a prospective dividend yield of 1.6%.

Current consensus EPS estimate suggests the PER is 42.6.

Forecast for FY20:

Macquarie forecasts a full year FY20 dividend of 353.90 cents and EPS of 505.50 cents.
At the last closing share price the estimated dividend yield is 1.79%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 39.12.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 514.5, implying annual growth of 11.0%.

Current consensus DPS estimate is 360.4, implying a prospective dividend yield of 1.8%.

Current consensus EPS estimate suggests the PER is 38.4.

Market Sentiment: -0.6

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

CSR  CSR LIMITED

Building Products & Services

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Overnight Price: $4.09

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

Citi observes the shares have strongly outperformed this year, amid easing alumina cost concerns and the boost in housing market sentiment. The stock has now priced in the rally and the broker downgrades to Sell from Neutral. Target is $3.50.

The broker believes the recent court decision in Brazil to lift production restrictions at Alunorte should help improve supply but this may not be of help to CSR. CSR recently secured a new contract for half of its alumina requirements at around 18-18.5% linkage to the LME aluminium price.

Target price is $3.50 Current Price is $4.09 Difference: minus $0.59 (current price is over target).
If CSR meets the Citi target it will return approximately minus 14% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.41, suggesting downside of -16.7% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY20:

Citi forecasts a full year FY20 dividend of 22.00 cents and EPS of 31.50 cents.
At the last closing share price the estimated dividend yield is 5.38%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.98.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 30.2, implying annual growth of -16.3%.

Current consensus DPS estimate is 22.6, implying a prospective dividend yield of 5.5%.

Current consensus EPS estimate suggests the PER is 13.5.

Forecast for FY21:

Citi forecasts a full year FY21 dividend of 22.00 cents and EPS of 31.80 cents.
At the last closing share price the estimated dividend yield is 5.38%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.86.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 29.1, implying annual growth of -3.6%.

Current consensus DPS estimate is 21.9, implying a prospective dividend yield of 5.4%.

Current consensus EPS estimate suggests the PER is 14.1.

Market Sentiment: -0.4

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

CTD  CORPORATE TRAVEL MANAGEMENT LIMITED

Travel, Leisure & Tourism

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Overnight Price: $22.84

Morgans rates CTD as Add (1) -

Given global uncertainty, such as Brexit and the US/China trade conflict, Morgans believes it is appropriate to move forecasts in line with the company's FY19 guidance.

Data has recently suggested that demand for corporate travel is slowing locally and whether this recovers now the federal election has passed remains unclear. Still, the broker believes the company can report solid earnings growth as it wins new clients and experiences the benefits of its technology.

Morgans maintains an Add rating and reduces the target to $27.50 from $31.65.

Target price is $27.50 Current Price is $22.84 Difference: $4.66
If CTD meets the Morgans target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $30.15, suggesting upside of 32.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Morgans forecasts a full year FY19 dividend of 43.00 cents and EPS of 91.00 cents.
At the last closing share price the estimated dividend yield is 1.88%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 25.10.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 94.7, implying annual growth of 30.8%.

Current consensus DPS estimate is 42.7, implying a prospective dividend yield of 1.9%.

Current consensus EPS estimate suggests the PER is 24.1.

Forecast for FY20:

Morgans forecasts a full year FY20 dividend of 51.00 cents and EPS of 106.00 cents.
At the last closing share price the estimated dividend yield is 2.23%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 21.55.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 111.6, implying annual growth of 17.8%.

Current consensus DPS estimate is 50.7, implying a prospective dividend yield of 2.2%.

Current consensus EPS estimate suggests the PER is 20.5.

Market Sentiment: 0.8

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

EHE  ESTIA HEALTH LIMITED

Aged Care & Seniors

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Overnight Price: $2.81

Ord Minnett rates EHE as Hold (3) -

The company has indicated that FY19 operating earnings (EBITDA) will be lower than previously anticipated, albeit up 2-4%.

Ord Minnett continues to believe funding to the sector will be increased following the Royal Commission but awaits the interim report, due in October. Occupancy levels, in the interim, are expected to be below par.

The broker maintains a Hold rating and raises the target to $2.70 from $2.50.

This stock is not covered in-house by Ord Minnett. Instead, the broker whitelabels research by JP Morgan.

Target price is $2.70 Current Price is $2.81 Difference: minus $0.11 (current price is over target).
If EHE meets the Ord Minnett target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.73, suggesting downside of -2.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Ord Minnett forecasts a full year FY19 dividend of 16.00 cents and EPS of 14.00 cents.
At the last closing share price the estimated dividend yield is 5.69%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 20.07.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 16.4, implying annual growth of 3.8%.

Current consensus DPS estimate is 15.6, implying a prospective dividend yield of 5.6%.

Current consensus EPS estimate suggests the PER is 17.1.

Forecast for FY20:

Ord Minnett forecasts a full year FY20 dividend of 16.00 cents and EPS of 14.00 cents.
At the last closing share price the estimated dividend yield is 5.69%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 20.07.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 15.8, implying annual growth of -3.7%.

Current consensus DPS estimate is 15.7, implying a prospective dividend yield of 5.6%.

Current consensus EPS estimate suggests the PER is 17.8.

Market Sentiment: 0.0

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


UBS rates EHE as Downgrade to Neutral from Buy (3) -

The company has downgraded underlying earnings guidance by -6% at the mid point for FY19, as occupancy deteriorates. The company now expects like-for-like EBITDA to be $86-88m.

UBS notes the share price has risen 27% since the beginning of 2019 despite the weakening outlook and pressure on staff costs.

With the possibility of a more favourable policy environment under a Labor government now removed, and meaningful sector reform unlikely until the final report from the Royal Commission is tabled, the broker believes the operating environment in the near term is challenging.

Rating is downgraded to Neutral from Buy and the target lowered to $2.85 from $3.00.

Target price is $2.85 Current Price is $2.81 Difference: $0.04
If EHE meets the UBS target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $2.73, suggesting downside of -2.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

UBS forecasts a full year FY19 dividend of 15.00 cents and EPS of 16.00 cents.
At the last closing share price the estimated dividend yield is 5.34%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 17.56.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 16.4, implying annual growth of 3.8%.

Current consensus DPS estimate is 15.6, implying a prospective dividend yield of 5.6%.

Current consensus EPS estimate suggests the PER is 17.1.

Forecast for FY20:

UBS forecasts a full year FY20 dividend of 15.00 cents and EPS of 15.00 cents.
At the last closing share price the estimated dividend yield is 5.34%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 18.73.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 15.8, implying annual growth of -3.7%.

Current consensus DPS estimate is 15.7, implying a prospective dividend yield of 5.6%.

Current consensus EPS estimate suggests the PER is 17.8.

Market Sentiment: 0.0

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

EPW  ERM POWER LIMITED

Infrastructure & Utilities

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Overnight Price: $1.83

Morgans rates EPW as Add (1) -

The company has acquired the Smithfield Open Cycle Gas Turbine for up to $74m. Morgans lifts its estimated value of the Oakey power station to $140m to reflect a similar multiple.

Estimated value for Neerabup is also increased to $57m. Subsequently, the broker suggests there is more upside to the share price and raises the target to $2.05 from $1.86. Add maintained.

Target price is $2.05 Current Price is $1.83 Difference: $0.22
If EPW meets the Morgans target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $1.97, suggesting upside of 7.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Morgans forecasts a full year FY19 dividend of 12.00 cents and EPS of 17.00 cents.
At the last closing share price the estimated dividend yield is 6.56%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 10.76.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 17.3, implying annual growth of -36.2%.

Current consensus DPS estimate is 12.0, implying a prospective dividend yield of 6.6%.

Current consensus EPS estimate suggests the PER is 10.6.

Forecast for FY20:

Morgans forecasts a full year FY20 dividend of 11.00 cents and EPS of 21.00 cents.
At the last closing share price the estimated dividend yield is 6.01%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 8.71.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 20.9, implying annual growth of 20.8%.

Current consensus DPS estimate is 11.8, implying a prospective dividend yield of 6.4%.

Current consensus EPS estimate suggests the PER is 8.8.

Market Sentiment: 0.8

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

FNP  FREEDOM FOODS GROUP LIMITED

Food, Beverages & Tobacco

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Overnight Price: $5.00

UBS rates FNP as Buy (1) -

The company has made a fully underwritten equity raising of around $130m to support growth plans for its nutritionals business. Revenue guidance for FY19 has been downgraded to $480-490m from the lower end of $500-530m.

The company's expected annualised return on capital employed is considered conservative as UBS envisages material upside risk to lactoferrin prices.

The broker believes the stock screens attractively and maintains a Buy rating. Target is raised to $7.10 from $6.60.

Target price is $7.10 Current Price is $5.00 Difference: $2.1
If FNP meets the UBS target it will return approximately 42% (excluding dividends, fees and charges).

Current consensus price target is $6.06, suggesting upside of 21.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

UBS forecasts a full year FY19 dividend of 6.00 cents and EPS of 8.00 cents.
At the last closing share price the estimated dividend yield is 1.20%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 62.50.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 8.6, implying annual growth of 43.8%.

Current consensus DPS estimate is 5.5, implying a prospective dividend yield of 1.1%.

Current consensus EPS estimate suggests the PER is 58.1.

Forecast for FY20:

UBS forecasts a full year FY20 dividend of 7.00 cents and EPS of 17.00 cents.
At the last closing share price the estimated dividend yield is 1.40%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 29.41.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 17.2, implying annual growth of 100.0%.

Current consensus DPS estimate is 7.2, implying a prospective dividend yield of 1.4%.

Current consensus EPS estimate suggests the PER is 29.1.

Market Sentiment: 0.8

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

KDR  KIDMAN RESOURCES LIMITED

New Battery Elements

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Overnight Price: $1.89

Ord Minnett rates KDR as Downgrade to Hold from Buy (3) -

Ord Minnett reduces forecasts for global supply of lithium by -8% in 2020 and -14% in 2021, although continued market surplus is still considered likely.

The broker lowers battery-grade price expectations for the next two years by -10%, to US$11,500-12,000/t of lithium carbonate equivalent, and concentrate pricing by -14% to US$550/t.

Rating is downgraded to Hold from Speculative Buy and the target reduced to $1.90 from $3.00.

This stock is not covered in-house by Ord Minnett. Instead, the broker whitelabels research by JP Morgan.

Target price is $1.90 Current Price is $1.89 Difference: $0.01
If KDR meets the Ord Minnett target it will return approximately 1% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY19:

Ord Minnett forecasts a full year FY19 dividend of 0.00 cents and EPS of minus 2.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 94.50.

Forecast for FY20:

Ord Minnett forecasts a full year FY20 dividend of 0.00 cents and EPS of minus 4.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 47.25.

Market Sentiment: 0.0

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

MLX  METALS X LIMITED

Tin

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Overnight Price: $0.24

Macquarie rates MLX as Outperform (1) -

The company has upgraded the resource estimate at Renison by 22%, boosted by a material increase in grade. An updated reserve and life of mine plan are due in the first quarter of FY20 and present upside risk to Macquarie's base case.

The broker extends mine life assumptions by two years to reflect the large resource base. Target rises to $0.47 from $0.45. Outperform maintained.

Target price is $0.47 Current Price is $0.24 Difference: $0.23
If MLX meets the Macquarie target it will return approximately 96% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY19:

Macquarie forecasts a full year FY19 dividend of 0.00 cents and EPS of minus 0.50 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 48.00.

Forecast for FY20:

Macquarie forecasts a full year FY20 dividend of 0.00 cents and EPS of 3.90 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 6.15.

Market Sentiment: 1.0

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

OZL  OZ MINERALS LIMITED

Copper

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Overnight Price: $9.26

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

Morgans believes the stock's retreat of nearly -20% since early April is overdone. The broker suspects sentiment is the culprit because of ongoing US/China trade uncertainty.

The broker suspects marginal investors use OZ Minerals as a proxy for the outlook for both the copper market and global growth, given its status as the largest and most liquid ASX-listed pure copper play.

The broker marks down copper prices for 2019-21 and raises gold assumptions for 2019. Overall, earnings forecasts improve by 6% over 2019-20 but are -12% lower for 2021.

Rating is upgraded to Add from Hold, as the current valuation is a key buy trigger, Morgans suggests. Target is reduced to $11.27 from $11.40.

Target price is $11.27 Current Price is $9.26 Difference: $2.01
If OZL meets the Morgans target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $11.21, suggesting upside of 21.0% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY19:

Morgans forecasts a full year FY19 dividend of 18.00 cents and EPS of 59.00 cents.
At the last closing share price the estimated dividend yield is 1.94%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 15.69.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 63.5, implying annual growth of -11.8%.

Current consensus DPS estimate is 21.3, implying a prospective dividend yield of 2.3%.

Current consensus EPS estimate suggests the PER is 14.6.

Forecast for FY20:

Morgans forecasts a full year FY20 dividend of 22.00 cents and EPS of 73.00 cents.
At the last closing share price the estimated dividend yield is 2.38%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.68.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 76.2, implying annual growth of 20.0%.

Current consensus DPS estimate is 26.7, implying a prospective dividend yield of 2.9%.

Current consensus EPS estimate suggests the PER is 12.2.

Market Sentiment: 0.4

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

PLS  PILBARA MINERALS LIMITED

New Battery Elements

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Overnight Price: $0.73

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

Ord Minnett reduces forecasts for global supply of lithium by -8% in 2020 and -14% in 2021, although continued market surplus is still considered likely.

The broker lowers battery-grade price expectations for the next two years by -10%, to US$11,500-12,000/t of lithium carbonate equivalent, and concentrate pricing by -14% to US$550/t.

Ord Minnett lowers its rating to Lighten from Hold. Target is unchanged at $0.65, as falling concession prices add pressure for improved operating rates in order to deliver positive cash flow.

This stock is not covered in-house by Ord Minnett. Instead, the broker whitelabels research by JP Morgan.

Target price is $0.65 Current Price is $0.73 Difference: minus $0.08 (current price is over target).
If PLS meets the Ord Minnett target it will return approximately minus 11% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $0.90, suggesting upside of 23.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Ord Minnett forecasts a full year FY19 dividend of 0.00 cents and EPS of minus 1.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 73.00.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is -0.1, implying annual growth of N/A.

Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A.

Current consensus EPS estimate suggests the PER is N/A.

Forecast for FY20:

Ord Minnett forecasts a full year FY20 dividend of 0.00 cents and EPS of 3.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 24.33.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 3.8, implying annual growth of N/A.

Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A.

Current consensus EPS estimate suggests the PER is 19.2.

Market Sentiment: 0.3

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

QBE  QBE INSURANCE GROUP LIMITED

Insurance

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Overnight Price: $12.31

Credit Suisse rates QBE as Downgrade to Neutral from Outperform (3) -

The share price has outperformed the market over the past three months and moved close to the target. Credit Suisse reviews the earnings outlook and key drivers for the next leg up in the share price.

While the company is benefiting from favourable premium rates and early-stage expense efficiency, it also faces a slowdown in the important lender mortgage insurance division, as well as increased volatility from adverse weather claims.

Rating is downgraded to Neutral from Outperform. Target is steady at $13.

Target price is $13.00 Current Price is $12.31 Difference: $0.69
If QBE meets the Credit Suisse target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $13.11, suggesting upside of 6.5% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY19:

Credit Suisse forecasts a full year FY19 dividend of 69.36 cents and EPS of 81.84 cents.
At the last closing share price the estimated dividend yield is 5.63%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 15.04.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 91.9, implying annual growth of N/A.

Current consensus DPS estimate is 76.1, implying a prospective dividend yield of 6.2%.

Current consensus EPS estimate suggests the PER is 13.4.

Forecast for FY20:

Credit Suisse forecasts a full year FY20 dividend of 79.07 cents and EPS of 91.55 cents.
At the last closing share price the estimated dividend yield is 6.42%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 13.45.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 106.2, implying annual growth of 15.6%.

Current consensus DPS estimate is 86.8, implying a prospective dividend yield of 7.1%.

Current consensus EPS estimate suggests the PER is 11.6.

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: 0.6

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

SKI  SPARK INFRASTRUCTURE GROUP

Infrastructure & Utilities

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Overnight Price: $2.33

Macquarie rates SKI as Neutral (3) -

Macquarie updates its model to allow for the Bomen solar acquisition and draft  positions for the SA and Victorian power networks.

The broker assesses the acquisition of the Bomen solar farm is a minor contributor to 2020 and 2021 earnings in the order of $11m per annum.

Macquarie maintains a Neutral rating. Target is $2.28.

Target price is $2.28 Current Price is $2.33 Difference: minus $0.05 (current price is over target).
If SKI meets the Macquarie target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.25, suggesting downside of -3.5% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY19:

Macquarie forecasts a full year FY19 dividend of 15.00 cents and EPS of 12.30 cents.
At the last closing share price the estimated dividend yield is 6.44%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 18.94.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 6.7, implying annual growth of N/A.

Current consensus DPS estimate is 15.0, implying a prospective dividend yield of 6.4%.

Current consensus EPS estimate suggests the PER is 34.8.

Forecast for FY20:

Macquarie forecasts a full year FY20 dividend of 15.00 cents and EPS of 11.90 cents.
At the last closing share price the estimated dividend yield is 6.44%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 19.58.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 6.3, implying annual growth of -6.0%.

Current consensus DPS estimate is 15.2, implying a prospective dividend yield of 6.5%.

Current consensus EPS estimate suggests the PER is 37.0.

Market Sentiment: -0.3

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

SYR  SYRAH RESOURCES LIMITED

New Battery Elements

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Overnight Price: $1.15

Credit Suisse rates SYR as Outperform (1) -

The company's AGM has confirmed 2019 guidance. The production target has been held at 250,000t, subject to demand.

Fines graphite remains in surplus, Credit Suisse observes, while the deficit in coarse graphite is likely to ease.

The company's cash drawdown is expected to decline significantly in the third quarter.

Outperform rating and $3.30 target maintained.

Target price is $3.30 Current Price is $1.15 Difference: $2.15
If SYR meets the Credit Suisse target it will return approximately 187% (excluding dividends, fees and charges).

Current consensus price target is $2.20, suggesting upside of 91.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY19:

Credit Suisse forecasts a full year FY19 dividend of 0.00 cents and EPS of minus 6.59 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 17.45.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is -4.3, implying annual growth of N/A.

Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A.

Current consensus EPS estimate suggests the PER is N/A.

Forecast for FY20:

Credit Suisse forecasts a full year FY20 dividend of 0.00 cents and EPS of 11.21 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 10.26.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 12.6, implying annual growth of N/A.

Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A.

Current consensus EPS estimate suggests the PER is 9.1.

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: 0.6

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

Today's Price Target Changes
Company Broker New Target Prev Target Change
BSL BLUESCOPE STEEL UBS 13.00 16.00 -18.75%
COH COCHLEAR Macquarie 166.00 170.00 -2.35%
CTD CORPORATE TRAVEL Morgans 27.50 31.65 -13.11%
EHE ESTIA HEALTH Ord Minnett 2.70 2.50 8.00%
UBS 2.85 3.00 -5.00%
EPW ERM POWER Morgans 2.05 1.86 10.22%
FNP FREEDOM FOODS UBS 7.10 6.60 7.58%
KDR KIDMAN RESOURCES Ord Minnett 1.90 3.00 -36.67%
MLX METALS X Macquarie 0.47 0.45 4.44%
OZL OZ MINERALS Morgans 11.27 11.40 -1.14%
Summaries
ASL AUSDRILL Buy - Deutsche Bank Overnight Price $1.50
BSL BLUESCOPE STEEL Outperform - Credit Suisse Overnight Price $11.38
Downgrade to Neutral from Buy - UBS Overnight Price $11.38
COH COCHLEAR Underperform - Macquarie Overnight Price $197.73
CSR CSR Downgrade to Sell from Neutral - Citi Overnight Price $4.09
CTD CORPORATE TRAVEL Add - Morgans Overnight Price $22.84
EHE ESTIA HEALTH Hold - Ord Minnett Overnight Price $2.81
Downgrade to Neutral from Buy - UBS Overnight Price $2.81
EPW ERM POWER Add - Morgans Overnight Price $1.83
FNP FREEDOM FOODS Buy - UBS Overnight Price $5.00
KDR KIDMAN RESOURCES Downgrade to Hold from Buy - Ord Minnett Overnight Price $1.89
MLX METALS X Outperform - Macquarie Overnight Price $0.24
OZL OZ MINERALS Upgrade to Add from Hold - Morgans Overnight Price $9.26
PLS PILBARA MINERALS Downgrade to Lighten from Hold - Ord Minnett Overnight Price $0.73
QBE QBE INSURANCE Downgrade to Neutral from Outperform - Credit Suisse Overnight Price $12.31
SKI SPARK INFRASTRUCTURE Neutral - Macquarie Overnight Price $2.33
SYR SYRAH RESOURCES Outperform - Credit Suisse Overnight Price $1.15
RATING SUMMARY
Rating No. Of Recommendations
1. Buy

8

3. Hold

6

4. Reduce

1

5. Sell

2

Monday 27 May 2019

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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.