Australian Broker Call

Citi rates ALG as Buy (1) -

Another update has led to a lift in target price to $1.75 as Main Event competitor Dave & Busters might be acquired by KKR. The private equity firm has been increasing its equity stake to 10.7% according to the latest update.

The analysts believe Ardent Leisure stands to equally benefit from corporate interest in the sector. No changes have been made to forecasts post recent flash floods and bushfires.? Citi retains the Buy rating.

Target price is $1.75 Current Price is $1.59 Difference: $0.16
If ALG meets the Citi target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $1.39, suggesting downside of -12.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.3

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

Citi rates AWC as Neutral (3) -

Analysts at Citi retain a positive view on the outlook for alumina prices. They note China alumina imports are already recovering. Citi forecasts a 2020 alumina price of US$335/t versus spot of US$276/t.

Citi has lifted 2019 EPS estimate by 9% on the back of Alcoa’s Q4 results. CY20 EPS estimate went up 2%. The analysts state they cannot get excited bout the short-term dividend outlook, but improving dynamics for alumina are seen as constructive for an investment in this stock.

For investors who'd like to buy exposure to the theme, Citi suggests South32 ((S32)) is the cheaper alternative. The broker maintains a Neutral rating. Target unchanged at $2.20.

Target price is $2.20 Current Price is $2.32 Difference: minus $0.12 (current price is over target).
If AWC meets the Citi target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.08, suggesting downside of -10.2% (ex-dividends)

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

Macquarie rates COL as Neutral (3) -

While remaining bullish on the medium-term outlook and appreciating the extensive distribution network and track record, Macquarie notes sales momentum has slowed and there is a heightened capital expenditure profile over the short term.

Hence, the broker retains a Neutral rating and $17.10 target.

Target price is $17.10 Current Price is $16.09 Difference: $1.01
If COL meets the Macquarie target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $14.00, suggesting downside of -13.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: -0.6

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

UBS rates DXS as Upgrade to Buy from Neutral (1) -

UBS upgrades to Buy from Neutral. After a prolonged period of above-trend rental growth in Sydney and Melbourne office markets, the broker anticipates a moderation in 2020/21, with net effective rental growth of 1-3% per annum.

Importantly, the broker envisages ongoing capitalisation rate compression, strong cash flow from annual escalations and positive leasing spreads. Target is raised to $13.60 from $12.90.

Target price is $13.60 Current Price is $12.48 Difference: $1.12
If DXS meets the UBS target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $12.94, suggesting upside of 3.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.3

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

Macquarie rates IAG as Underperform (5) -

Macquarie is concerned about softer reserve releases and a weaker economic environment. The broker updates its view, given the new reinsurance program, first half catastrophe losses and marking to markets.

The broker anticipates the PE multiple vs peers could come under pressure in the medium term. The stock is currently trading at an 11-15% premium to its long-term average two-year forward PE multiple.

Macquarie maintains an Underperform rating and raises the target to $7.05 from $7.00.

Target price is $7.05 Current Price is $7.65 Difference: minus $0.6 (current price is over target).
If IAG meets the Macquarie target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $7.63, suggesting downside of -0.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.0

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

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

Infigen Energy's output from the wind farms connected to the National Electricity Market was 22% higher in the first half. The major driver was a full half output from the Bodangora farm.

Futures point to a softer spot market in the second half, which Morgans suspects will be positive for Infigen Energy.

Morgans upgrades earnings forecasts for FY20, envisaging less volatility in the spot market that will take the pressure off spot purchases.

The broker believes an increasing focus on carbon emissions could mean that the stock is useful as a hedge against potentially increasing carbon prices.

Rating is upgraded to Add from Hold and the target raised to $0.76 from $0.64.

Target price is $0.76 Current Price is $0.75 Difference: $0.01
If IFN meets the Morgans target it will return approximately 1% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.5

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

Credit Suisse rates KGN as Outperform (1) -

The deceleration in exclusive brands sales surprised the market, which Credit Suisse assesses appears to be from temporarily-elevated competition in televisions.

The broker downgrades first half estimates for operating earnings (EBITDA) by -12%. However, upgrades to marketplace assumptions result in a 4% lift to FY20 forecasts.

Outperform maintained. Target is raised to $7.37 from $7.18.

Target price is $7.37 Current Price is $5.70 Difference: $1.67
If KGN meets the Credit Suisse target it will return approximately 29% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.5

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

UBS rates KGN as Neutral (3) -

The first half update was below expectations, with UBS noting second quarter trends slowed materially. The weakness was driven by a slowing in exclusive brands, which grew around 17% in the first half vs 35% in the first quarter.

Competition in private-label TVs also increased. The broker considers the trends are likely to continue but retains a Neutral rating, given additional earnings drivers in the second half and contribution from new verticals. Target is reduced to $6.30 from $6.90.

Target price is $6.30 Current Price is $5.70 Difference: $0.6
If KGN meets the UBS target it will return approximately 11% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.5

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

Ord Minnett rates LLC as Buy (1) -

Press speculation suggests Lendlease has been unsuccessful in finding a buyer for its services business, with both John Holland and Service Stream ((SSM)) withdrawing from the process.

Ord Minnett is surprised by the development, given the services business is generally considered a desirable platform with a consistent profit history.

The broker now lifts projected gearing levels to 18% to June 2020. The balance sheet has become more important, although the broker believes the shares remain undervalued.

Buy rating maintained. Target is reduced to $21.00 from $22.50.

Target price is $21.00 Current Price is $18.08 Difference: $2.92
If LLC meets the Ord Minnett target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $20.97, suggesting upside of 16.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.8

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

Morgans rates MFG as Hold (3) -

Marking to market funds under management and performance fees results in a 4-6% increase to forecasts across FY20-22. Morgans notes growth over the first half was driven by retail inflows, institutional inflows and fund performance.

The broker believes the company's initiatives can deliver significant medium-term growth. However, the stock is susceptible to any short-term market volatility. Hold maintained. Target is raised to $59.70 from $57.80.

Target price is $59.70 Current Price is $63.40 Difference: minus $3.7 (current price is over target).
If MFG meets the Morgans target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $50.67, suggesting downside of -20.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: -0.7

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

UBS rates MGR as Upgrade to Neutral from Sell (3) -

UBS upgrades to Neutral from Sell after incorporating recently-acquired projects. Mirvac is the preferred A-REIT for a residential recovery, having underperform Stockland ((SGP)) by -18% since the 2019 election, and given the preference for office over retail.

If Mirvac can execute on its strategy and introduce third-party capital to the BTR projects, the broker assesses it should be able to reach its medium-term target of 5000 units by FY24. Target is raised to $3.30 from $3.00.

Target price is $3.30 Current Price is $3.35 Difference: minus $0.05 (current price is over target).
If MGR meets the UBS target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.33, suggesting downside of -0.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.2

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

Morgans rates MHJ as Hold (3) -

Same-store sales growth for Michael Hill slowed in the second quarter, as expected. Pressures on gross margin continue, with price increases meant to offset FX and the gold price evidently competed away.

While a return to top-line growth is a credit to new management, Morgans still suspects margin pressure may continue for longer than the market generally expects. The broker retains a Hold rating and reduces the target to $0.67 from $0.68.

Target price is $0.67 Current Price is $0.69 Difference: minus $0.02 (current price is over target).
If MHJ meets the Morgans target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $0.74, suggesting upside of 7.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.8

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

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

Macquarie upgrades to Neutral from Underperform, as the share price has fallen to the target of $2.65. The broker assesses the stock screens cheap on a discounted cash flow measure.

However, Macquarie remains concerned over the prospect of further customer losses and the associated operating de-leverage.

Target price is $2.65 Current Price is $2.65 Difference: $0
If MTS meets the Macquarie target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $2.81, suggesting upside of 5.9% (ex-dividends)

The company's fiscal year ends in April.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.3

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

Citi rates NHF as Neutral (3) -

nib Holdings' profit warning followed a similar confession by competitor Medibank Private late last year. Citi analysts have reduced estimates by -12% for FY20, and by -6% for FY21-FY22.

Neutral rating retained, while the price target tumbles to $5.80 from $6.85. At first glance, comment the analysts, the market's reaction to the news appears harsh, but then the finer details behind the downgrade have not been made public as yet.

Target price is $5.80 Current Price is $5.63 Difference: $0.17
If NHF meets the Citi target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $5.83, suggesting upside of 3.5% (ex-dividends)

Forecast for FY20:

Forecast for FY21:

Market Sentiment: -0.3

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

Credit Suisse rates NHF as Underperform (5) -

The company has revised FY20 guidance to underlying operating profit of at least $170m. The downgrade is attributed to an increase in claims expenses.

Credit Suisse notes all divisions have hit peak historical margins in recent periods and this has increased the risk of earnings normalisation.

While the stock has underperformed the market by around -35% in the last six months, the broker considers the valuation remains a stretch and the risk of earnings disappointment remains elevated.

Underperform maintained. Target is reduced to $5.30 from $5.75.

Target price is $5.30 Current Price is $5.63 Difference: minus $0.33 (current price is over target).
If NHF meets the Credit Suisse target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.83, suggesting upside of 3.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: -0.3

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

Macquarie rates NHF as Neutral (3) -

The company has downgraded FY20 underlying operating profit guidance by -15%. As policyholder growth slows, Macquarie suggests there could be opportunities for nib Holdings to pay out a higher dividend vs the current 60-70% range.

The broker maintains a Neutral rating, believing FY20 will be a tough year for the industry. Target is reduced to $5.70 from $7.15 and FY20 and FY21 estimates are downgraded by -13.2% and -7.9% respectively.

Target price is $5.70 Current Price is $5.63 Difference: $0.07
If NHF meets the Macquarie target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $5.83, suggesting upside of 3.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: -0.3

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

Morgans rates NHF as Hold (3) -

The company has downgraded guidance for FY20 underlying operating profit by around -15% to at least $170m. The main driver is increasing health insurance claims trends.

Morgans downgrades estimates for FY20 and FY21 by -15% and lowers the target to $6.07 from $6.68.

The broker remains concerned that the recent spike in industry claims trends could worsen and considers the stock fair value. Hold maintained.

Target price is $6.07 Current Price is $5.63 Difference: $0.44
If NHF meets the Morgans target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $5.83, suggesting upside of 3.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: -0.3

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

Ord Minnett rates NHF as Hold (3) -

The company has guided to FY20 underlying profit of at least $170m, a downgrade from previous guidance of at least $200m.

Nib Holdings expects to deliver a margin of around 6% in Australian resident health insurance and has stated that most of the pressures in this division were from increased costs stemming from claims equalisation.

Given the sharp decline in the share price following the announcement, Ord Minnett assesses some valuation upside but finds it difficult to have confidence in the trajectory of margins until there is more detail about the causes of the downgrade.

Hold rating maintained. Target is reduced to $6.27 from $7.15.

Target price is $6.27 Current Price is $5.63 Difference: $0.64
If NHF meets the Ord Minnett target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $5.83, suggesting upside of 3.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: -0.3

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

UBS rates NHF as Upgrade to Neutral from Sell (3) -

The company has lowered its guidance for FY20 underlying profit by -15%, to more than $170m from more than $200m. A component of the downgrade relates to higher costs but most of the pressure has been blamed on higher claims inflation.

UBS downgrades estimates for FY20 by -16% and FY21 by -10%. The stock is now trading on a more sustainable footing and the broker upgrades to Neutral from Sell. Target is reduced to $5.85 from $6.50.

Target price is $5.85 Current Price is $5.63 Difference: $0.22
If NHF meets the UBS target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $5.83, suggesting upside of 3.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: -0.3

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

UBS rates RHC as Neutral (3) -

UBS notes it is unclear whether a true recovery in private hospital volume growth is occurring, although public waiting lists for elective surgery are certainly growing.

Public hospital funding and capacity does not appear to be keeping pace with demand and the broker suggests governments will need to work on a circuit breaker.

Neutral rating maintained. Target is raised to $76 from $71, as the broker's model is rolled over.

Target price is $76.00 Current Price is $77.84 Difference: minus $1.84 (current price is over target).
If RHC meets the UBS target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $69.10, suggesting downside of -11.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.3

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

Morgans rates RIO as Hold (3) -

The company reported a solid fourth quarter for its flagship iron ore operations. Morgans believes Rio Tinto will enter the results period with significant potential to reward shareholders.

While the broker expects iron ore prices will decrease over 2020, the company's earnings are expected to remain healthy. Hold rating maintained. Target is reduced to $95.89 from $96.38.

Target price is $95.89 Current Price is $106.39 Difference: minus $10.5 (current price is over target).
If RIO meets the Morgans target it will return approximately minus 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $99.20, suggesting downside of -6.8% (ex-dividends)

The company's fiscal year ends in December.

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

UBS rates SCG as Downgrade to Sell from Neutral (5) -

UBS downgrades to Sell from Neutral, noting occupancy, income and valuations remain under pressure. Store closures and retailers entering administration over the past month have been abnormally high and, the broker assesses, could impact up to 84 tenancies across the company's portfolio.

With income uncertainty increasing at a time when there is a large number of retail assets on the market, UBS expects valuations will be under pressure. Target is reduced to $3.70 from $3.90. The broker also updates earnings estimates to reflect the Booragoon acquisition.

Target price is $3.70 Current Price is $3.94 Difference: minus $0.24 (current price is over target).
If SCG meets the UBS target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.84, suggesting downside of -2.7% (ex-dividends)

The company's fiscal year ends in December.

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

UBS rates SGP as Sell (5) -

With gearing of 27% already at the upper end of the stated 20-30% target range, UBS is of the view that Stockland requires additional external capital.

The broker believes the business would be better placed to achieve optimal outcomes with respect to third-party capital if gearing was lower, as it would provide better negotiating leverage and allow the pursuit of other emerging opportunities.

Sell rating maintained. Target rises to $4.65 from $4.40.

Target price is $4.65 Current Price is $4.99 Difference: minus $0.34 (current price is over target).
If SGP meets the UBS target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.53, suggesting downside of -9.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: -0.3

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

Macquarie rates SLR as Neutral (3) -

The second quarter was strong, with production and costs better than Macquarie expected. Sales guidance has been lifted 11% to 230-240,000 ounces for the first half.

Macquarie believes there is potential for guidance to be bettered, particularly if Daisy continues to outperform and grades improve at French Kiss. Outperform rating maintained. Target is lifted 21% to $1.70.

Target price is $1.70 Current Price is $1.51 Difference: $0.19
If SLR meets the Macquarie target it will return approximately 13% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.0

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

Credit Suisse rates STX as Outperform (1) -

The company has made progress on its Perth Basin assets although cash burn in the December quarter was higher than Credit Suisse expected. The next well has been approved, expected in the second half.

The broker assesses material upside from the potential for higher prices and exploration success which the market is yet to factor in.

Once up and running, Credit Suisse believes the business should present a long-life, high-margin cash generation prospect, with limited price volatility and minimal ongoing costs.

Outperform maintained. Target is reduced to $0.27 from $0.28.

Target price is $0.27 Current Price is $0.21 Difference: $0.06
If STX meets the Credit Suisse target it will return approximately 29% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 1.0

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

Citi rates SUL as Buy (1) -

It shouldn't have come as a major surprise, but Super Retail was forced to issue a profit warning as its Outdoor businesses are heavily exposed to the bushfires. Citi points out the market update also highlighted, once again, the resilience of Auto and Rebel.

Cti analysts are not counting on an Outdoor recovery in H2 as bushfire risk continues. In addition the potential remains for clearance activity across the industry. Buy rating and $9.90 price target have been retained.

Target price is $9.90 Current Price is $9.32 Difference: $0.58
If SUL meets the Citi target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $9.86, suggesting upside of 5.8% (ex-dividends)

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.6

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

Credit Suisse rates SUL as Neutral (3) -

Credit Suisse considers it likely investors will look through the fire-related impact on stores in the first half. Nevertheless, more frequent and extreme events have the potential to affect retailer performance.

The stock is not priced for growth and the broker suggests there is little downside risk while Supercheap Auto and rebel continue to perform well.

Estimates are downgraded to reflect the first half guidance and expectations of a poor third quarter. Neutral rating maintained. Target is reduced to $9.46 from $9.50.

Target price is $9.46 Current Price is $9.32 Difference: $0.14
If SUL meets the Credit Suisse target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $9.86, suggesting upside of 5.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.6

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

Morgan Stanley rates SUL as Overweight (1) -

The company's business in the first half was materially affected by the drought and the bushfires, with forecast first half sales -2% below Morgan Stanley's estimates and provisional earnings -11% lower.

Most of the miss to the broker's forecasts was within the leisure business. However, Supercheap Auto and rebel trading were also affected by the disruptions, particularly within NSW.

Morgan Stanley lowers FY20 estimates for earnings per share by -7% and assesses the medium-term outlook as uncertain, given the ongoing disruption.

Overweight rating maintained. Target is raised to $10.50 from $10.00. Industry View: Cautious.

Target price is $10.50 Current Price is $9.32 Difference: $1.18
If SUL meets the Morgan Stanley target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $9.86, suggesting upside of 5.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.6

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

Morgans rates SUL as Add (1) -

The first half trading update has highlighted the earnings pressure on BCF and Macpac resulting from the bushfires. Setting these one-off impacts aside, Morgans believes there are some positives in the trading update, such as solid top-line growth in Supercheap Auto and rebel.

While a return to more normal trading conditions is considered inevitable, timing around a recovery in 'outdoor ' business remains uncertain. Morgans now forecasts a decline in earnings in the second half of -2.2% and an FY20 operational profit (EBIT) of $215m.

Add rating maintained. Target is reduced to $10.67 from $11.04.

Target price is $10.67 Current Price is $9.32 Difference: $1.35
If SUL meets the Morgans target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $9.86, suggesting upside of 5.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.6

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

Ord Minnett rates SUL as Hold (3) -

The impact of the bushfires on the company's stores has proved greater than expected. Super Retail has guided to first half earnings of $113-115m, below Ord Minnett's forecast of $128m.

Also weighing on earnings were higher labour costs and margins at Macpac. The broker still considers the business attractive, with Rebel Sport benefiting from cost savings post the Amart combination.

BCF and Macpac are the main sources of concern and execution risks remain elevated. Ord Minnett would be more constructive at a lower share price and when there is greater evidence of improvement in the latter divisions. Hold rating and $10 target maintained.

Target price is $10.00 Current Price is $9.32 Difference: $0.68
If SUL meets the Ord Minnett target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $9.86, suggesting upside of 5.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.6

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

UBS rates SUL as Buy (1) -

The company expects first half earnings (EBIT) of $113-115m which is -10-12% below UBS estimates. The broker reduces forecast for FY20 by -6% but believes the downgrade needs to be viewed as largely one-off.

Slowing sales in December drove the downgrade. Moreover, regional stores in certain areas have been affected by bushfires.

UBS acknowledges the outlook for the second half is uncertain but notes gross margin trends improved in the second quarter and Macpac should experience an increase in earnings. Buy rating and $9.90 target maintained.

Target price is $9.90 Current Price is $9.32 Difference: $0.58
If SUL meets the UBS target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $9.86, suggesting upside of 5.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.6

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

Macquarie rates SYD as Downgrade to Neutral from Outperform (3) -

International traffic declined -0.4% in December while domestic rose 1.3%. Macquarie notes the outlook for international capacity growth in 2020 has shifted to a contraction of -0.5-1.5%.

The broker now considers the valuation is challenged and downgrades to Neutral from Outperform.

Macquarie reduces operating earnings (EBITDA) estimates by -1.7% for 2020 and 2021, reflecting lower international passenger expectations. Target is reduced to $8.68 from $8.77.

Target price is $8.68 Current Price is $8.71 Difference: minus $0.03 (current price is over target).
If SYD meets the Macquarie target it will return approximately minus 0% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $8.37, suggesting downside of -4.0% (ex-dividends)

The company's fiscal year ends in December.

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

Ord Minnett rates SYD as Lighten (4) -

Total passenger numbers rose 0.6% in December, dragged down by a decline in international of -0.4%. Ord Minnett expects a slowdown in international traffic will have an impact on earnings as it accounts for around 70% of per-passenger revenue.

The broker assesses the stock is running well ahead of its target price of $8.20 and, amid continued softness in passenger growth, maintains a Lighten rating.

Target price is $8.20 Current Price is $8.71 Difference: minus $0.51 (current price is over target).
If SYD 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 $8.37, suggesting downside of -4.0% (ex-dividends)

The company's fiscal year ends in December.

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

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

Macquarie upgrades to Outperform from Neutral, envisaging upside to earnings from strong same-store sales growth. The broker likes the dominant store footprint and potential efficiency gains.

Moreover, Woolworths is well-positioned to undertake capital management once the Endeavour assets are distributed. Target is raised to $42.40 from $37.00.

Target price is $42.40 Current Price is $39.97 Difference: $2.43
If WOW meets the Macquarie target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $37.44, suggesting downside of -6.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.0

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