Australian Broker Call

Deutsche Bank rates ASX as Sell (5) -

ASX has started the new financial year strongly from a cash market trading perspective. Deutsche Bank notes value traded is up 11% for the first two months of the year and there is a 14% increase in volume traded.

This is considered to be a good indicator for overall activity and confidence. Sell rating and $58.50 target maintained.

Target price is $58.50 Current Price is $65.09 Difference: minus $6.59 (current price is over target).
If ASX meets the Deutsche Bank target it will return approximately minus 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $56.93, suggesting downside of -12.5% (ex-dividends)

Forecast for FY19:

Forecast for FY20:

Market Sentiment: -0.8

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

UBS rates CSL as Neutral (3) -

CSL is considered well-placed to benefit from growth in its core plasma products. Demand for both immunoglobulin and albumin in the significant markets of both the US and China remains robust.

UBS maintains a Neutral rating, raising the target to $232 from $230 on the back of a slightly lower AUD/USD forecast.

Target price is $232.00 Current Price is $223.72 Difference: $8.28
If CSL meets the UBS target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $215.14, suggesting downside of -3.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

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

Market Sentiment: 0.3

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

Morgans rates IDR as Hold (3) -

The company has acquired a new industrial asset in Melbourne for $10.6m. The acquisition was funded by debt and gearing is currently around 34%.

FY19 guidance has been upgraded to free funds from operations of 19.05-19.25c per security. This implies growth of 3-4%, Morgans suggests.

Hold rating and $2.67 target maintained.

Target price is $2.67 Current Price is $2.73 Difference: minus $0.06 (current price is over target).
If IDR meets the Morgans target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.64, suggesting downside of -3.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.0

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

Macquarie - Cessation of coverage

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

Morgans rates MP1 as Add (1) -

FY18 results were stronger than expected. Data centres that are enabled grew 34% and revenue was up 85%. While sales grew strongly, Morgans would like to have witnessed more acceleration.

This requires cost investment and suggests FY19 operating costs will rise in order to accelerate sales. The broker maintains an Add rating and $4.44 target.

Target price is $4.44 Current Price is $3.96 Difference: $0.48
If MP1 meets the Morgans target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $4.90, suggesting upside of 23.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 1.0

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

Morgan Stanley rates MQG as Overweight (1) -

Morgan Stanley suggests, next week, Macquarie Group will guide to first half earnings being broadly in line with the prior corresponding half and this could mean some short-term pressure on the stock.

Nevertheless, the broker is more confident in the full year outlook because of strong markets, a weaker Australian dollar and the Quadrant sale.

Overweight. Industry view is In-Line and the target is $130.

Target price is $130.00 Current Price is $124.69 Difference: $5.31
If MQG meets the Morgan Stanley target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $118.54, suggesting downside of -4.9% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.4

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

Ord Minnett rates NCM as Accumulate (2) -

BHP Billiton ((BHP)) will purchase a 6.1% equity investment in LSE-listed SolGold, which owns the Cascabel copper-gold project in Ecuador. Newcrest Mining is SolGold's larger shareholder, owning 14.5%.

Newcrest has stated previously that Cascabel has potential to host the fifth tier-1 asset it is looking for. The presence of BHP on the register, Ord Minnett suggests, may make it more difficult for Newcrest if it wants to take a controlling stake in the future. Accumulate rating and $23 target maintained.

Target price is $23.00 Current Price is $18.80 Difference: $4.2
If NCM meets the Ord Minnett target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $20.76, suggesting upside of 10.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

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

Market Sentiment: 0.1

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

Morgans rates OEL as Add (1) -

Morgans reviews assumptions for Otto Energy. The stand-out development over the last month was the eight-well exploration program. The company has also raised $20m in equity via a placement and entitlement offer.

The potential for exploration success and support from existing cash flow puts the business on a solid track, in the broker's opinion. Add rating maintained. Target rises to $0.12 from $0.11.

Target price is $0.12 Current Price is $0.07 Difference: $0.05
If OEL meets the Morgans target it will return approximately 71% (excluding dividends, fees and charges).

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: 1.0

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

Credit Suisse rates ORE as Outperform (1) -

The company has confirmed Argentina is imposing a tax on exports equivalent to around 8% of sales. This tax rate is on the basis exported lithium carbonate will be classified as a non-primary product, attracting a slightly lower tax rate.

The company has suggested the recent rapid deterioration in the Argentine currency will, to some extent, counter the tax impact. Credit Suisse suggests this benefit is likely to be temporary and more modest than the formalised tax.

 Despite the tax eroding some competitive advantage the broker still likes the stock for the high-quality Olaroz asset and its established market position. Outperform rating and target reduced to $5.50 from $5.70.

Target price is $5.50 Current Price is $3.50 Difference: $2
If ORE meets the Credit Suisse target it will return approximately 57% (excluding dividends, fees and charges).

Current consensus price target is $5.82, suggesting upside of 66.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.8

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

Macquarie rates ORE as Upgrade to Outperform from Neutral (1) -

Operating in Argentina always has its risks, Macquarie notes, hence the announcement of temporary export taxes (or tariffs, or royalties -- the broker uses all three in its report), imposed in order to help the country's foundering economy and appease the IMF, should come as no shock.

The broker thus assumes a worst case scenario of the taxes being made permanent and not assuming any forex offset in revaluing Orocobre, and this still leads to an upgrade to Outperform from Neutral. Even is this case Macquarie sees value, particularly given talk around a buyback and of possible suitors sniffing around.

Target falls to $4.40 from $5.00.

Target price is $4.40 Current Price is $3.50 Difference: $0.9
If ORE meets the Macquarie target it will return approximately 26% (excluding dividends, fees and charges).

Current consensus price target is $5.82, suggesting upside of 66.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.8

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

Ord Minnett rates ORE as Buy (1) -

The company has confirmed its Olaroz lithium project will be required to pay a temporary export duty that has recently been levied by Argentina. The duty is equivalent to an 8% tax on revenue at the current exchange rate.

Ord Minnett noted 45% of costs for Olaroz are denominated in pesos, which has devalued by -80% in the last four months. Of greater concern is the increased risk in that country, the broker suggests, and until capital begins to flow back there is a lingering risk that further measures will be introduced, although not necessarily affecting Olaroz.

Ord Minnett maintains a Buy rating and reduces the target to $6 from $8.

Target price is $6.00 Current Price is $3.50 Difference: $2.5
If ORE meets the Ord Minnett target it will return approximately 71% (excluding dividends, fees and charges).

Current consensus price target is $5.82, suggesting upside of 66.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.8

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

Credit Suisse rates QBE as Neutral (3) -

The stock is trading at a discount to domestic insurers and operating in an environment that has improved, so Credit Suisse finds reasons to like QBE. Europe has attracted the broker's attention, with a reserve increase in the half-year results. History suggests a small increase is usually followed by a larger one.

The stock is trading at around a -20% PE discount to the market, a slight premium to the historical -25% discount and this could continue to re-rate if the business turns around. Credit Suisse envisages value but lacks confidence and maintains a Neutral rating with an $11 target.

Target price is $11.00 Current Price is $10.97 Difference: $0.03
If QBE meets the Credit Suisse target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $11.80, suggesting upside of 7.5% (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: 0.6

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

Ord Minnett rates RWC as Accumulate (2) -

Ord Minnett simplifies its approach to forecasting earnings by division and also updates currency assumptions. These changes have resulted in downgrades in average earnings per share of -1.4% over FY19-21.

Accumulate rating maintained. Target is reduced to $6.20 from $6.30.

Target price is $6.20 Current Price is $5.47 Difference: $0.73
If RWC meets the Ord Minnett target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $5.89, suggesting upside of 7.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.3

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

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

Credit Suisse believes the company has managed well the migration of its Sydney premium mass customers to an interim facility. The broker is confident that the company can at least hold Sydney premium mass revenue level in FY19.

The broker downgrades to Neutral from Outperform because of share price appreciation. Target is steady at $5.60. The next catalyst is considered to be the potential for Chou Tai Fook and Far East to increase their combined holding to 20% from 10%.

Target price is $5.60 Current Price is $5.43 Difference: $0.17
If SGR meets the Credit Suisse target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $6.12, suggesting upside of 12.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.9

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

Credit Suisse rates SYR as Outperform (1) -

The company has raised additional working capital of $94m to accelerate its strategy for Balama. The ramp up has progressed materially, Credit Suisse observes, significantly de-risking the mining and processing operation.

September quarter cash consumption is expected to exceed guidance because of continued delays in customs inspections at the port and an unforeseen need to carry higher port stocks to cater for unpredictable shipping schedules. Outperform rating. Target is reduced to $5.50 from $6.60.

Target price is $5.50 Current Price is $2.38 Difference: $3.12
If SYR meets the Credit Suisse target it will return approximately 131% (excluding dividends, fees and charges).

Current consensus price target is $3.71, suggesting upside of 55.9% (ex-dividends)

The company's fiscal year ends in December.

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

Deutsche Bank rates SYR as Downgrade to Hold from Buy (3) -

The company's dilutive capital raising should be sufficient to fund commercial production, at which point Deutsche Bank expects guidance on a realised basket prices. The graphite market is opaque and the broker believes it is up to Syrah Resources to set clear expectations.

On this basis, the broker downgrades long-term realised price expectations to US$800/t from US$920/t, leading to a -20% fall in valuation. Rating is downgraded to Hold from Buy. Target is reduced to $2.70 from $4.20.

Target price is $2.70 Current Price is $2.38 Difference: $0.32
If SYR meets the Deutsche Bank target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $3.71, suggesting upside of 55.9% (ex-dividends)

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

Macquarie rates TLS as Underperform (5) -

Telstra has issued a fresh profit warning, on the back of lower than previously anticipated one-off receipts from NBN. Macquarie analysts, in an initial response, note this is yet another piece of evidence the operational environment for Telstra remains challenging.

They also believe today's profit warning is largely immaterial to the intrinsic valuation of Telstra shares. Irrespective, Macquarie sticks with Underperform rating and $2.80 price target, while noting the NBN migration provides very challenging economics for the telco.

Target price is $2.80 Current Price is $3.12 Difference: minus $0.32 (current price is over target).
If TLS meets the Macquarie target it will return approximately minus 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.19, suggesting upside of 2.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.1

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

Ord Minnett rates WBC as Accumulate (2) -

Ord Minnett updates to account for changes to mortgage pricing, on the back of an increase of 14 basis points to variable mortgage rates, along with the settlement with ASIC regarding the responsible lending case.

The broker maintains an Accumulate rating and raises the target to $31.30 from $30.50 to reflect the revisions. Cash forecasts have been reduced by -0.3% for FY18 and raised by 2.7-3.0% across FY19-21.

Target price is $31.30 Current Price is $27.80 Difference: $3.5
If WBC meets the Ord Minnett target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $30.60, suggesting upside of 10.1% (ex-dividends)

The company's fiscal year ends in September.

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