Australian Broker Call

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

Ord Minnett has downgraded to Lighten from Hold following a review of the earnings outlook, and given a lack of valuation support.

The broker remains concerned about the margin pressures in mortgages and the digital offering, which is a long way behind peers, will require investment to fix its problems.

Despite recent growth in transaction deposits, the broker is yet to be convinced that the funding disadvantage has been reduced. Target is raised to $11.20 from $11.00.

Target price is $11.20 Current Price is $11.97 Difference: minus $0.77 (current price is over target).
If BOQ meets the Ord Minnett target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $12.11, suggesting upside of 1.1% (ex-dividends)

The company's fiscal year ends in August.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.5

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

Citi rates CTX as Upgrade to Buy from Neutral (1) -

The stock has underperformed since its results and Citi suggests, while the earnings outlook is a little uncertain, the disciplined strategy and prudent capital allocation has consistently delivered top quartile returns, historically.

The broker suspects the market is underestimating the medium-term outlook for earnings growth and upgrades to Buy from Neutral. Target is steady at $39.71.

Target price is $39.71 Current Price is $34.13 Difference: $5.58
If CTX meets the Citi target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $36.84, suggesting upside of 8.0% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.3

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

Macquarie rates CTX as Neutral (3) -

Macquarie suggests that the report from the Fair Work Ombudsman, which found 76% of inspected retail sites were non-compliant with workplace laws, will have a one-off impact, rather than be capitalised. This is because of the transition to a company-owned network.

The broker suggests the financial impact of the underpayments should be manageable, given the size of the company. Caltex plans to transition all franchise sites to company-owned businesses over the next three years. Macquarie maintains a Neutral rating. Target is $36.20.

Target price is $36.20 Current Price is $34.13 Difference: $2.07
If CTX meets the Macquarie target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $36.84, suggesting upside of 8.0% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.3

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

Morgans rates FDV as Add (1) -

The company met or exceeded expectations in 2017 and Morgans suggests 2018 promises to be another year of high double-digit revenue growth.

Better performances in the second half from some businesses more than offset the negative effect of divestments and unfavourable foreign exchange rate movements. Morgans improves estimates modestly.

The broker maintains an Add rating and $0.92 target.

Target price is $0.92 Current Price is $0.75 Difference: $0.17
If FDV meets the Morgans target it will return approximately 23% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 1.0

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

UBS rates FMG as Buy (1) -

Despite higher discounts and the market's concern that discounts may well be higher for longer, UBS points out the company is making a healthy margin.

The broker believes the market is missing the fact that a high discount means a steeper cost curve and thus a higher price for the Platts 62 index. UBS also notes worries about rising port stocks in China, with the understanding that upwards of two thirds is low-grade.

UBS makes no changes to estimates. Buy retained and target is $5.50.

Target price is $5.50 Current Price is $4.82 Difference: $0.68
If FMG meets the UBS target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $5.49, suggesting upside of 14.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

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

Market Sentiment: 0.5

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

Deutsche Bank rates NCM as Upgrade to Hold from Sell (3) -

Newcrest is expected to produce an update on the Wafi-Golpu Feasibility Study aiming to improve the design and business case shortly. Deutsche Bank analysts have modeled three scenarios, while arguing this will be the key growth denominator for the years to follow.

For now, they have incorporated the middle of the road scenario in their analysis, suggesting 14Mtpa (rather than 6Mtpa or 20Mtpa) shall be produced annually once all is done and settled.

This leads to a 4% increase in Net Present Value (NPV) to $20.53, in addition to an upgrade in recommendation to Hold from Sell, based upon valuation.

Target price is $20.53 Current Price is $21.66 Difference: minus $1.13 (current price is over target).
If NCM meets the Deutsche Bank target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $21.39, suggesting downside of -1.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

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

Market Sentiment: -0.1

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

Macquarie rates OSH as Outperform (1) -

ExxonMobil expects the PNG LNG project to be off-line for around eight weeks because of damage sustained at the upstream facilities following the earthquake. As the oil facilities were largely undamaged, Oil Search will commence restoring production within the next two weeks.

Macquarie estimates a -19% downgrade to 2018 earnings per share as a result of the earthquake. Further news regarding drilling on neighbouring acreage in Alaska and PNG LNG expansion updates suggests to the broker that any sell-off in the stock would be a buying opportunity.

Outperform maintained. Target is reduced to $8.10 from $8.20.

Target price is $8.10 Current Price is $7.25 Difference: $0.85
If OSH meets the Macquarie target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $8.16, suggesting upside of 12.6% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

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

Market Sentiment: 0.3

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

UBS rates OSH as Neutral (3) -

ExxonMobil, operator of the PNG LNG project, has stated that it may take eight weeks to repair and restore production from upstream operations following the earthquake.

UBS anticipates a slow ramp up in oil output as individual field wells are assessed and brought back on line. As further after-shocks continue, the broker envisages downside risk for the start up of PNG LNG and maintains a Neutral rating. Target is $8.10.

Target price is $8.10 Current Price is $7.25 Difference: $0.85
If OSH meets the UBS target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $8.16, suggesting upside of 12.6% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

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

Market Sentiment: 0.3

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

Morgans rates PPT as Hold (3) -

First half results were sound, Morgans believes, and FY18 and FY19 estimates are lifted by 1-3%. The company is building a track record of consistent delivery, in the broker's opinion.

Perpetual Private and Corporate Trust results were strong. Morgans acknowledges difficult conditions exist for Perpetual Investments' value/quality investment bias.

Hold rating maintained. Target rises to $51.98 from $51.15.

Target price is $51.98 Current Price is $50.49 Difference: $1.49
If PPT meets the Morgans target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $52.20, suggesting upside of 3.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.3

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

Macquarie rates QUB as Neutral (3) -

First half results were broadly in line with Macquarie's forecasts. The broker notes the market is continuing to factor in long-term value for Moorebank and recent investments. Macquarie expects the investment case for Moorebank to de-risk over time as more tenant agreements are announced.

The broker remodels the business and lowers estimates for earnings per share by -24% and -14% for FY18 and FY19 respectively, taking into account higher interest costs and lower associate income. Target is reduced to $2.60 from $2.89. Neutral maintained.

Target price is $2.60 Current Price is $2.40 Difference: $0.2
If QUB meets the Macquarie target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $2.72, suggesting upside of 13.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.3

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

Citi rates SEK as Sell (5) -

Australia's employment cycle is a driver of earnings growth, despite the company's continued investment in Asia, Citi notes.

The broker remains cautious about the entire Australian internet sector because of full valuations. The view on Seek is also affected by rising capital expenditure, and Citi suspects the peak in Australian job ads is nigh.

Sell rating maintained. Target rises to $15.10 from $15.00.

Target price is $15.10 Current Price is $20.46 Difference: minus $5.36 (current price is over target).
If SEK meets the Citi target it will return approximately minus 26% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $18.95, suggesting downside of -7.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.2

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

UBS rates STO as Neutral (3) -

ExxonMobil, operator of the PNG LNG project, has stated that it may take eight weeks to repair and restore production from upstream operations following the earthquake.

UBS anticipates a slow ramp up in oil output as individual field wells are assessed and brought back on line. As further after-shocks continue, the broker envisages downside risk for the start up of PNG LNG.

Santos has a 13.5% stake in the project and this is one of the company's key long-life gas assets. The impact, UBS calculates, is a -2% reduction in the company's total production and a -9% decline in 2018 earnings per share. UBS reduces valuation slightly. Target is $5.20. Neutral.

Target price is $5.20 Current Price is $5.06 Difference: $0.14
If STO meets the UBS target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $5.32, suggesting upside of 5.1% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

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

Market Sentiment: 0.3

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

UBS rates SUN as Buy (1) -

UBS observes the focus has shifted squarely to operating expenditure, following a sharp increase in expenses over the past six months. The broker suggests current estimates for expenditure should provide sufficient leverage to insurance margins to underpin earnings over the next two years.

The company's target of $2.7bn for FY19 appears challenging and more likely to occur in FY20, and UBS estimates $2.77bn is more likely until then. Buy rating maintained. Target is raised to $14.60 from $14.20.

Target price is $14.60 Current Price is $13.92 Difference: $0.68
If SUN meets the UBS target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $14.19, suggesting upside of 1.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.6

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