Australian Broker Call

September 15, 2016

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COMPANIES DISCUSSED IN THIS ISSUE

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Last Updated: 11:18 AM

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
APA - APA Downgrade to Underperform from Neutral Credit Suisse
CBA - COMMBANK Upgrade to Neutral from Underperform Macquarie
TRS - THE REJECT SHOP Upgrade to Overweight from Equal-weight Morgan Stanley
APA  APA GROUP

Utilities

Overnight Price: $8.75

Credit Suisse rates APA as Downgrade to Underperform from Neutral (5) -

Credit Suisse believes the Council Of Australian Governments' meeting in December is looming as a negative catalyst. The group is considering replacing the coverage test that determines whether pipelines qualify for full regulation.

Credit Suisse believes it is now probable that COAG adopts ACCC findings and lowers the threshold for full regulation of APA's pipelines, calculating the company is over-earning the theoretical regulated revenue level by 1.8 times.

The broker downgrades to Underperform from Neutral. Target falls to $7.95 from $9.15.

Target price is $7.95 Current Price is $8.75 Difference: minus $0.8 (current price is over target).
If APA meets the Credit Suisse target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $9.45, suggesting upside of 13.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Credit Suisse forecasts a full year FY17 dividend of 43.50 cents and EPS of 22.41 cents.
At the last closing share price the estimated dividend yield is 4.97%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 39.05.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 22.6, implying annual growth of 40.4%.

Current consensus DPS estimate is 44.0, implying a prospective dividend yield of 5.3%.

Current consensus EPS estimate suggests the PER is 36.9.

Forecast for FY18:

Credit Suisse forecasts a full year FY18 dividend of 45.68 cents and EPS of 22.63 cents.
At the last closing share price the estimated dividend yield is 5.22%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 38.67.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 24.9, implying annual growth of 10.2%.

Current consensus DPS estimate is 47.0, implying a prospective dividend yield of 5.6%.

Current consensus EPS estimate suggests the PER is 33.5.

Market Sentiment: 0.2

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

AQG  ALACER GOLD CORP

Materials

Overnight Price: $3.51

Credit Suisse rates AQG as Outperform (1) -

The pre-feasibility study for Gediktepe, a 50:50 joint venture with Lidya Mining, has indicated a 2.5 year pay-back, which suggests to Credit Suisse the low capital, three-year oxide cap heap leach star operation will fund the 10-year copper-zinc sulphide flotation project.

The fact the project transitions to a dominant base metals operation from year four is largely irrelevant, in the broker's view, in the context of its apparent contribution.

Credit Suisse retains Outperform rating and raises the target to $5.45 from $4.85.

Target price is $5.45 Current Price is $3.51 Difference: $1.94
If AQG meets the Credit Suisse target it will return approximately 55% (excluding dividends, fees and charges).

Current consensus price target is $4.32, suggesting upside of 17.7% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY16:

Credit Suisse forecasts a full year FY16 dividend of 0.00 cents and EPS of 16.46 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 21.32.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 18.7, 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 19.6.

Forecast for FY17:

Credit Suisse forecasts a full year FY17 dividend of 0.00 cents and EPS of minus 3.57 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 98.37.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 0.2, implying annual growth of -98.9%.

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

Current consensus EPS estimate suggests the PER is 1835.0.

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

Market Sentiment: 0.4

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


UBS rates AQG as Buy (1) -

The pre-feasibility for the Gediktepe project in western Turkey has been delivered. Alacer Gold has a 50% interest in the project which is expected to be mined in a similar way to Alacer's Copler mine.

UBS is yet to model the project but the pre-feasibility suggests a 47% internal rate of return and net present value of US$475m at a 5% discount rate.

UBS would not be surprised if the current 50:50 partnership with Lidya Mining is changed as the project is material for Lidya and relatively minor for Alacer. The broker maintains a Buy rating and $5.20 target.

Target price is $5.20 Current Price is $3.51 Difference: $1.69
If AQG meets the UBS target it will return approximately 48% (excluding dividends, fees and charges).

Current consensus price target is $4.32, suggesting upside of 17.7% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY16:

UBS forecasts a full year FY16 dividend of 0.00 cents and EPS of 9.53 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 36.82.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 18.7, 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 19.6.

Forecast for FY17:

UBS forecasts a full year FY17 dividend of 0.00 cents and EPS of 8.17 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 42.96.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 0.2, implying annual growth of -98.9%.

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

Current consensus EPS estimate suggests the PER is 1835.0.

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

Market Sentiment: 0.4

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

BLD  BORAL LIMITED

Materials

Overnight Price: $6.24

Credit Suisse rates BLD as Neutral (3) -

No new guidance guidance was issued at the US investor briefing but the company was optimistic about the longer-term opportunity in its US brick JV and the fly ash contribution. 

Credit Suisse observes Boral is looking to diversify from its highly cyclical US new home construction market and by increasing its footprint across the renovations and non-residential construction market a more stable earnings profile can be achieved.

Neutral rating and $7.00 target retained.

Target price is $7.00 Current Price is $6.24 Difference: $0.76
If BLD meets the Credit Suisse target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $6.72, suggesting upside of 7.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Credit Suisse forecasts a full year FY17 dividend of 24.00 cents and EPS of 37.17 cents.
At the last closing share price the estimated dividend yield is 3.85%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 16.79.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 38.5, implying annual growth of 12.6%.

Current consensus DPS estimate is 24.4, implying a prospective dividend yield of 3.9%.

Current consensus EPS estimate suggests the PER is 16.3.

Forecast for FY18:

Credit Suisse forecasts a full year FY18 dividend of 27.00 cents and EPS of 41.36 cents.
At the last closing share price the estimated dividend yield is 4.33%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 15.09.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 42.8, implying annual growth of 11.2%.

Current consensus DPS estimate is 26.9, implying a prospective dividend yield of 4.3%.

Current consensus EPS estimate suggests the PER is 14.6.

Market Sentiment: 0.2

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


Deutsche Bank rates BLD as Buy (1) -

Deutsche Bank observes management is committed to growing its US business through further acquisitions and is intent on lowering US fixed costs and reducing the overall focus on single family housing starts.

Deutsche Bank believes the strategy is sensible. The broker also considers the expectations for break-even EBIT on the US bricks joint venture is conservative and currently factors in US$3m in EBIT in FY17 compared with the FY16 EBIT loss of US$6m.

Deutsche Bank retains a Buy and $7.25 target.

Target price is $7.25 Current Price is $6.24 Difference: $1.01
If BLD meets the Deutsche Bank target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $6.72, suggesting upside of 7.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Deutsche Bank forecasts a full year FY17 dividend of 28.00 cents and EPS of 43.00 cents.
At the last closing share price the estimated dividend yield is 4.49%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.51.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 38.5, implying annual growth of 12.6%.

Current consensus DPS estimate is 24.4, implying a prospective dividend yield of 3.9%.

Current consensus EPS estimate suggests the PER is 16.3.

Forecast for FY18:

Deutsche Bank forecasts a full year FY18 dividend of 33.00 cents and EPS of 51.00 cents.
At the last closing share price the estimated dividend yield is 5.29%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.24.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 42.8, implying annual growth of 11.2%.

Current consensus DPS estimate is 26.9, implying a prospective dividend yield of 4.3%.

Current consensus EPS estimate suggests the PER is 14.6.

Market Sentiment: 0.2

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


Macquarie rates BLD as Neutral (3) -

After a visit to the company's US business Macquarie observes Boral is pushing the fly ash opportunity and is investing heavily in R&D. Boral is also intent on driving efficiencies overall, in the context of improving market conditions.

Macquarie believes the move to form a brick joint venture in the US is a good strategic development and the potential in lightweight building products is becoming more obvious.

Neutral rating and $6.60 target retained.

Target price is $6.60 Current Price is $6.24 Difference: $0.36
If BLD meets the Macquarie target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $6.72, suggesting upside of 7.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Macquarie forecasts a full year FY17 dividend of 23.00 cents and EPS of 37.50 cents.
At the last closing share price the estimated dividend yield is 3.69%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 16.64.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 38.5, implying annual growth of 12.6%.

Current consensus DPS estimate is 24.4, implying a prospective dividend yield of 3.9%.

Current consensus EPS estimate suggests the PER is 16.3.

Forecast for FY18:

Macquarie forecasts a full year FY18 dividend of 23.00 cents and EPS of 37.50 cents.
At the last closing share price the estimated dividend yield is 3.69%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 16.64.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 42.8, implying annual growth of 11.2%.

Current consensus DPS estimate is 26.9, implying a prospective dividend yield of 4.3%.

Current consensus EPS estimate suggests the PER is 14.6.

Market Sentiment: 0.2

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


Ord Minnett rates BLD as Hold (3) -

After the US investor briefing Ord Minnett notes fly ash business is surprisingly strong, with management indicating it contributes a high level of earnings to the division.

The company is continuing to target fly ash growth through organic means, geographic expansion and new products. The US brick joint venture's synergy targets have been reiterated and management noted it could exit the brick business once the JV is fully integrated and synergies realised.

Ord Minnett maintains a Hold rating and $6.50 target.

Target price is $6.50 Current Price is $6.24 Difference: $0.26
If BLD meets the Ord Minnett target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $6.72, suggesting upside of 7.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Ord Minnett forecasts a full year FY17 dividend of 24.00 cents and EPS of 37.00 cents.
At the last closing share price the estimated dividend yield is 3.85%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 16.86.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 38.5, implying annual growth of 12.6%.

Current consensus DPS estimate is 24.4, implying a prospective dividend yield of 3.9%.

Current consensus EPS estimate suggests the PER is 16.3.

Forecast for FY18:

Ord Minnett forecasts a full year FY18 dividend of 27.00 cents and EPS of 45.00 cents.
At the last closing share price the estimated dividend yield is 4.33%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 13.87.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 42.8, implying annual growth of 11.2%.

Current consensus DPS estimate is 26.9, implying a prospective dividend yield of 4.3%.

Current consensus EPS estimate suggests the PER is 14.6.

Market Sentiment: 0.2

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

CBA  COMMONWEALTH BANK OF AUSTRALIA

Banks

Overnight Price: $70.16

Macquarie rates CBA as Upgrade to Neutral from Underperform (3) -

Macquarie upgrades to Neutral from Underperform, given the stock's recent de-rating and the fact the bank has greater cost management flexibility compared with peers.

The broker continues to envisage and acknowledge risks around the bank's overweight exposure to Western Australia and further return-on-equity convergence with peers. Yet, at current levels, the stock offers a 6% dividend yield. Target is raised to $76.50 from $75.50.

Target price is $76.50 Current Price is $70.16 Difference: $6.34
If CBA meets the Macquarie target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $76.83, suggesting upside of 8.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Macquarie forecasts a full year FY17 dividend of 422.60 cents and EPS of 542.20 cents.
At the last closing share price the estimated dividend yield is 6.02%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.94.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 549.6, implying annual growth of -1.0%.

Current consensus DPS estimate is 420.8, implying a prospective dividend yield of 5.9%.

Current consensus EPS estimate suggests the PER is 12.9.

Forecast for FY18:

Macquarie forecasts a full year FY18 dividend of 428.40 cents and EPS of 556.70 cents.
At the last closing share price the estimated dividend yield is 6.11%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.60.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 560.0, implying annual growth of 1.9%.

Current consensus DPS estimate is 416.1, implying a prospective dividend yield of 5.9%.

Current consensus EPS estimate suggests the PER is 12.6.

Market Sentiment: 0.0

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

CYB  CYBG PLC

Banks

Overnight Price: $4.39

Macquarie rates CYB as Neutral (3) -

The bank's update has revised medium term targets, tempering revenue growth forecasts and suggesting a greater focus on costs.

Macquarie remains a fan of the stock and considers it offers one of the best restructuring opportunities in European banking. The broker likes the new targets but accepts there are risks in areas such as the pension deficit and the sustainability of the hedge contribution.

Neutral rating and $4.66 target retained.

Target price is $4.66 Current Price is $4.39 Difference: $0.27
If CYB meets the Macquarie target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $4.34, suggesting downside of -1.0% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY16:

Macquarie forecasts a full year FY16 dividend of 13.63 cents and EPS of 15.57 cents.
At the last closing share price the estimated dividend yield is 3.10%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 28.19.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 23.2, implying annual growth of N/A.

Current consensus DPS estimate is 2.3, implying a prospective dividend yield of 0.5%.

Current consensus EPS estimate suggests the PER is 18.9.

Forecast for FY17:

Macquarie forecasts a full year FY17 dividend of 99.28 cents and EPS of 36.99 cents.
At the last closing share price the estimated dividend yield is 22.62%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 11.87.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 34.0, implying annual growth of 46.6%.

Current consensus DPS estimate is 21.8, implying a prospective dividend yield of 5.0%.

Current consensus EPS estimate suggests the PER is 12.9.

Market Sentiment: -0.3

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


Morgans rates CYB as Hold (3) -

The earnings outlook from the time of the IPO has now been downgraded, Morgans observes. Cost cutting will not be enough on its own to achieve double digit returns on equity and, as the broker suspected, the target is now reliant upon accreditation for the mortgage portfolio.

Morgans allows for AIRB accreditation to be achieved in the second half of FY18, with the average mortgage risk weight reduced to 20%. Special dividends are allowed for in calculations over the second half of FY18 and in FY19.

The target is raised to $4.17 from $3.75. Hold rating is maintained.

Target price is $4.17 Current Price is $4.39 Difference: minus $0.22 (current price is over target).
If CYB meets the Morgans target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.34, suggesting downside of -1.0% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY16:

Morgans forecasts a full year FY16 dividend of 0.00 cents and EPS of 28.58 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 15.36.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 23.2, implying annual growth of N/A.

Current consensus DPS estimate is 2.3, implying a prospective dividend yield of 0.5%.

Current consensus EPS estimate suggests the PER is 18.9.

Forecast for FY17:

Morgans forecasts a full year FY17 dividend of 3.89 cents and EPS of 36.99 cents.
At the last closing share price the estimated dividend yield is 0.89%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 11.87.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 34.0, implying annual growth of 46.6%.

Current consensus DPS estimate is 21.8, implying a prospective dividend yield of 5.0%.

Current consensus EPS estimate suggests the PER is 12.9.

Market Sentiment: -0.3

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

GNC  GRAINCORP LIMITED

Food, Beverage & Tobacco

Overnight Price: $8.13

Deutsche Bank rates GNC as Buy (1) -

Forecast winter crop production in FY17 has been revised up 8%. The mid point of forecasts now represents a 22% increase on the prior period and a return to above-average crop volumes.

Nevertheless, Deutsche Bank expects the share price performance will be constrained in the near term by the perceived overhang of ADM's stake. Buy rating retained. Target slips to $8.90 from $9.00.

Target price is $8.90 Current Price is $8.13 Difference: $0.77
If GNC meets the Deutsche Bank target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $8.92, suggesting upside of 10.7% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY16:

Deutsche Bank forecasts a full year FY16 dividend of 10.00 cents and EPS of 19.00 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 42.79.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 21.0, implying annual growth of 56.7%.

Current consensus DPS estimate is 11.2, implying a prospective dividend yield of 1.4%.

Current consensus EPS estimate suggests the PER is 38.4.

Forecast for FY17:

Deutsche Bank forecasts a full year FY17 dividend of 21.00 cents and EPS of 41.00 cents.
At the last closing share price the estimated dividend yield is 2.58%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 19.83.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 38.9, implying annual growth of 85.2%.

Current consensus DPS estimate is 19.5, implying a prospective dividend yield of 2.4%.

Current consensus EPS estimate suggests the PER is 20.7.

Market Sentiment: 0.6

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

MPL  MEDIBANK PRIVATE LIMITED

Insurance

Overnight Price: $2.56

ADDED

Ord Minnett rates MPL as Accumulate (2) -

Medibank Private's CEO has made changes to the leadership, with the main change being that of the chief financial officer who has left the company. Ord Minnett finds the decision to dispense with Paul Koppelman a little worrying, as he was an architect of the operating margin rising to 8.3% in 2016.

The broker is concerned about an excessive prioritising of growth over margin but accepts there was always a risk that a new CEO would re-base expectations and seek to address weaknesses in the previous administration. Ord Minnett awaits the strategy briefing later in the year.

Accumulate rating and $3.00 target remains in place.

Target price is $3.00 Current Price is $2.56 Difference: $0.44
If MPL meets the Ord Minnett target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $2.78, suggesting upside of 9.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Ord Minnett forecasts a full year FY17 dividend of 12.00 cents and EPS of 15.00 cents.
At the last closing share price the estimated dividend yield is 4.69%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 17.07.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 14.7, implying annual growth of -3.3%.

Current consensus DPS estimate is 11.3, implying a prospective dividend yield of 4.5%.

Current consensus EPS estimate suggests the PER is 17.2.

Forecast for FY18:

Ord Minnett forecasts a full year FY18 dividend of 12.00 cents and EPS of 16.00 cents.
At the last closing share price the estimated dividend yield is 4.69%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 16.00.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 14.9, implying annual growth of 1.4%.

Current consensus DPS estimate is 11.5, implying a prospective dividend yield of 4.6%.

Current consensus EPS estimate suggests the PER is 16.9.

Market Sentiment: -0.2

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

TRS  THE REJECT SHOP LIMITED

Retailing

Overnight Price: $10.08

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

The stock has fallen 32% since the FY16 result, which was in line with Morgan Stanley's estimates but below the market's "lofty" expectations.

The broker believes the turnaround in the business is continuing and, despite tough comparables in the first quarter, considers the stock a buying opportunity.

The stock has been oversold, in the broker's view, and margin improvement and sustainable revenue growth are forecast over the next two to three years.

Hence, rating is upgraded to Overweight from Equal-Weight. Target is $12.80. Industry view is In-Line.

Target price is $12.80 Current Price is $10.08 Difference: $2.72
If TRS meets the Morgan Stanley target it will return approximately 27% (excluding dividends, fees and charges).

Current consensus price target is $13.30, suggesting upside of 26.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Morgan Stanley forecasts a full year FY17 dividend of 52.00 cents and EPS of 85.00 cents.
At the last closing share price the estimated dividend yield is 5.16%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 11.86.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 83.3, implying annual growth of 40.5%.

Current consensus DPS estimate is 52.3, implying a prospective dividend yield of 5.0%.

Current consensus EPS estimate suggests the PER is 12.7.

Forecast for FY18:

Morgan Stanley forecasts a full year FY18 dividend of 60.00 cents and EPS of 99.00 cents.
At the last closing share price the estimated dividend yield is 5.95%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 10.18.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 95.4, implying annual growth of 14.5%.

Current consensus DPS estimate is 52.3, implying a prospective dividend yield of 5.0%.

Current consensus EPS estimate suggests the PER is 11.1.

Market Sentiment: 0.7

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

VVR  VIVA ENERGY REIT

Real Estate

Overnight Price: $2.43

Morgans rates VVR as Initiation of coverage with Add (1) -

The portfolio of 425 service station sites offers an attractive 2016 annualised distribution yield around 5.3%, Morgans observes. Potential catalysts include accretive acquisitions and inclusion in the index.

The portfolio is secured by income from leases with terms of 10-18 years, with fixed rental increases of 3% per annum.

Risks relate to higher interest rates and, longer term, to tenant default or disruptions to petrol-based retailing. Morgans initiates coverage on the stock with an Add rating and $2.56 target. 

Target price is $2.56 Current Price is $2.43 Difference: $0.13
If VVR meets the Morgans target it will return approximately 5% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

Forecast for FY16:

Morgans forecasts a full year FY16 dividend of 5.10 cents and EPS of 5.10 cents.
At the last closing share price the estimated dividend yield is 2.10%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 47.65.

Forecast for FY17:

Morgans forecasts a full year FY17 dividend of 13.50 cents and EPS of 13.50 cents.
At the last closing share price the estimated dividend yield is 5.56%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 18.00.

Market Sentiment: 1.0

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

WES  WESFARMERS LIMITED

Food & Staples Retailing

Overnight Price: $42.64

Citi rates WES as Sell (5) -

Coal prices continue to surprise to the upside and Citi analysts observe for the first time in years it appears the risk in consensus estimates for Wesfarmers is to the upside, thanks to coal.

The analysts estimate present upside potential is circa 10% for FY17. However, it is sustainability that remains in question and with underlying growth more like 6% and valuation stretched, Citi retains a Sell rating. Target remains $38.50.

Target price is $38.50 Current Price is $42.64 Difference: minus $4.14 (current price is over target).
If WES 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 $41.88, suggesting downside of -1.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Citi forecasts a full year FY17 dividend of 200.00 cents and EPS of 238.30 cents.
At the last closing share price the estimated dividend yield is 4.69%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 17.89.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 235.9, implying annual growth of 551.7%.

Current consensus DPS estimate is 200.9, implying a prospective dividend yield of 4.7%.

Current consensus EPS estimate suggests the PER is 18.1.

Forecast for FY18:

Citi forecasts a full year FY18 dividend of 207.00 cents and EPS of 246.00 cents.
At the last closing share price the estimated dividend yield is 4.85%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 17.33.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 256.0, implying annual growth of 8.5%.

Current consensus DPS estimate is 215.1, implying a prospective dividend yield of 5.1%.

Current consensus EPS estimate suggests the PER is 16.6.

Market Sentiment: 0.0

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

Summaries
APA - APA Downgrade to Underperform from Neutral - Credit Suisse Overnight Price $8.75
AQG - ALACER GOLD Outperform - Credit Suisse Overnight Price $3.51
Buy - UBS Overnight Price $3.51
BLD - BORAL Neutral - Credit Suisse Overnight Price $6.24
Buy - Deutsche Bank Overnight Price $6.24
Neutral - Macquarie Overnight Price $6.24
Hold - Ord Minnett Overnight Price $6.24
CBA - COMMBANK Upgrade to Neutral from Underperform - Macquarie Overnight Price $70.16
CYB - CYBG Neutral - Macquarie Overnight Price $4.39
Hold - Morgans Overnight Price $4.39
GNC - GRAINCORP Buy - Deutsche Bank Overnight Price $8.13
MPL - MEDIBANK PRIVATE Accumulate - Ord Minnett Overnight Price $2.56
TRS - THE REJECT SHOP Upgrade to Overweight from Equal-weight - Morgan Stanley Overnight Price $10.08
VVR - VIVA ENERGY REIT Initiation of coverage with Add - Morgans Overnight Price $2.43
WES - WESFARMERS Sell - Citi Overnight Price $42.64
RATING SUMMARY
Rating No. Of Recommendations
1. Buy

6

2. Accumulate

1

3. Hold

6

5. Sell

2

Thursday 15 September 2016

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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.