Australian Broker Call

Morgans rates ACK as Hold (3) -

The company has entered into subscription agreements with Ellerston Capital and Robert Coombe with the aim of enhancing its competitive position.

 Morgans believes the announcement is positive as, while both subscription agreements are at favourable discounts to the recent share price, they add tremendous knowledge/capability to the company.

Morgans makes minor downgrades to FY17 and FY18 earnings per share of -3-4%.. Hold rating retained. Target rises to $0.59 from $0.53.

Target price is $0.59 Current Price is $0.65 Difference: minus $0.06 (current price is over target).
If ACK meets the Morgans target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.0

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

Macquarie rates APA as Neutral (3) -

The company has acquired the rights to develop the Darling Downs solar farm as well as the rights to develop the adjacent Beelbee SF for $180m net of government subsidies. The company has signed an agreement with Origin Energy ((ORG)) until 2030.

While the company had signalled a move into the east coast renewables market, Macquarie believes this development does little to answer the strategic question of what the company brings to an asset with no gas exposure.

Neutral rating retained and target is raised to $9.61 from $9.42.

Target price is $9.61 Current Price is $9.40 Difference: $0.21
If APA meets the Macquarie target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $9.16, suggesting downside of -1.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: -0.1

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

Credit Suisse rates AST as Neutral (3) -

The decision by the Australian Energy Regulator on the electricity transmission proposal was in line with expectations. The final decision included an upward revision to the operating expenditure allowance less a decrease in the allowed return on capital.

All up, this results in a -3.8% downgrade to Credit Suisse net profit estimates for FY18 and -8.2% for FY19.

Neutral rating retained. Target is raised to $1.70 from $1.65.

Target price is $1.70 Current Price is $1.77 Difference: minus $0.07 (current price is over target).
If AST meets the Credit Suisse target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $1.62, suggesting downside of -6.9% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.1

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

Ord Minnett rates CGC as Initiation of coverage with Lighten (4) -

Ord Minnett has initiated coverage but found the risk-reward equation is currently unattractive, hence why the opening rating is Lighten. Maiden target price is $3.79. The analysts find growth is set to moderate in FY18 and beyond, and this prospect is not captured in consensus estimates nor in valuation.

Target price is $3.79 Current Price is $4.50 Difference: minus $0.71 (current price is over target).
If CGC meets the Ord Minnett target it will return approximately minus 16% (excluding dividends, fees and charges - negative figures indicate an expected loss).

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.0

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

Ord Minnett rates CHC as Hold (3) -

Ord Minnett's analysis suggests the recently announced capital raising is only marginally dilutive to FY18 earnings but it provides materially improved cash balances for the next 12–24 months.

In addition, suggest the analysts, Charter Hall will have the capacity to buy a further $1.8bn in assets, of which $1.5bn will come from the establishment of three new vehicles.

The analysts remain confident in short term growth outlook, but warn current pace is unlikely to be sustainable longer term. Target improves to $5.40 from $5.15. Hold rating retained.

Target price is $5.40 Current Price is $5.73 Difference: minus $0.33 (current price is over target).
If CHC 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 $5.38, suggesting downside of -7.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.2

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

Macquarie rates CLQ as Outperform (1) -

The company has provided a development update on the Syerston nickel/cobalt project. The catalysts, Macquarie observes, are securing offtake agreements for the products.

The broker observes the company is well funded to complete its definitive feasibility study. Macquarie does not currently ascribed any value to the water projects.

Outperform and $1.30 target retained.

Target price is $1.30 Current Price is $0.75 Difference: $0.555
If CLQ meets the Macquarie target it will return approximately 74% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 1.0

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

Morgan Stanley rates IPL as Underweight (5) -

Weakening fertiliser prices may mean positive sentiment which has lifted the stock over the last six months reverses, Morgan Stanley warns. Against this backdrop the stock appears overvalued to the broker.

Morgan Stanley observes urea, which has acted as a lead indicator, has now fallen -29% from its January peak.

The broker retains a Underweight rating and Cautious industry view. The target is raised to $2.53 from $2.36.

Target price is $2.53 Current Price is $3.75 Difference: minus $1.22 (current price is over target).
If IPL meets the Morgan Stanley target it will return approximately minus 33% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.62, suggesting downside of -1.8% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.3

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

Macquarie rates KAR as Outperform (1) -

March quarter results disappointed Macquarie. The company has been unable to find a joint venture partner for its Echidna/Kangaroo assets and has had to release the rig.  The rig was contracted to conduct a two-well appraisal program last September.

Macquarie pushes back development activity another 12 months, with first oil forecast in the first quarter of 2021.Outperform retained. Target slips to $2.30 from $2.40.

Target price is $2.30 Current Price is $1.42 Difference: $0.885
If KAR meets the Macquarie target it will return approximately 63% (excluding dividends, fees and charges).

Current consensus price target is $2.09, suggesting upside of 48.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.7

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

UBS rates LLC as Buy (1) -

Lend Lease's Engineering & Services market update suggested medium term upside for the division but a disappointing contract win rate, including missing out on West Gate. Given stiff overseas competition, the market is questioning medium term targets, the broker notes, which otherwise suggest material upside.

The opportunity in Australian construction is clearly improving, the broker suggests, but such targets are more aspirational than readily achievable. Buy and $16.70 target retained.

Target price is $16.70 Current Price is $16.18 Difference: $0.52
If LLC meets the UBS target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $16.70, suggesting upside of 0.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.8

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

Macquarie rates LOV as Outperform (1) -

The company has provided a trading update and announced an offshore acquisition. Like-for-like sales for the March quarter were up 6.7% while year-to-date sales are up 10.9%.

The company has acquired 17 fashion accessory stores from Klines South Africa, the majority of which will be re-branded following the hand over.

Despite the company successfully cycling tough comparables, Macquarie has not changed its assumptions of negative first half FY18 like-for-like sales growth. The broker acknowledges this could prove conservative as there is significant momentum in the business.

Target is raised to $5.06 from $4.71. Outperform retained.

Target price is $5.06 Current Price is $3.84 Difference: $1.22
If LOV meets the Macquarie target it will return approximately 32% (excluding dividends, fees and charges).

Current consensus price target is $4.36, suggesting upside of 17.9% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.7

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

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

The company has reported March quarter like-for-like sales growth of 6.7% and same-store sales growth of 10.9% in the year to date.

The company has also acquired Klines South Africa, which comprises 17 store locations. Morgans believes the stock is reasonable value at current levels and upgrades to Add from Hold. Target is raised to $4.48 from $4.37.

The broker believes the company's low basket size and solid execution has buffered it against softer retail conditions. Further international expansion may provide more upside too.

Target price is $4.48 Current Price is $3.84 Difference: $0.64
If LOV meets the Morgans target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $4.36, suggesting upside of 17.9% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.7

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

Macquarie rates MGX as Outperform (1) -

The company has formally approved the re-development of the Koolan Island project. March quarter production was below Macquarie's expectations.

The broker had already factored in a re-start of Koolan Island but assumed a later date, and the confirmation is a significant positive as it will extend production to at least 2022.  Importantly, Koolan Island produces a high-grade product that should demand a premium to benchmark prices.

The delayed start and a smaller reserve, combined with increased discounting for lower grade products, means the broker's price target is reduced to $0.45 from $0.55. Outperform maintained.

Target price is $0.45 Current Price is $0.36 Difference: $0.095
If MGX meets the Macquarie target it will return approximately 27% (excluding dividends, fees and charges).

Current consensus price target is $0.46, suggesting upside of 31.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.3

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

Macquarie rates MHJ as Outperform (1) -

March quarter sales mirrored the first half trend, Macquarie observes.

The broker expects, as the company invests in infrastructure and restructures its US business, there will be a negative near-term impact on earnings and FY17 forecasts are adjusted accordingly.

Outperform rating and $1.64 target retained.

Target price is $1.64 Current Price is $1.21 Difference: $0.43
If MHJ meets the Macquarie target it will return approximately 36% (excluding dividends, fees and charges).

Current consensus price target is $1.59, suggesting upside of 31.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 1.0

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

Credit Suisse rates MYX as Neutral (3) -

The company's investor briefing signalled growth is expected to be driven by a mix of R&D investment and M&A. Credit Suisse believes the Greenville expansion offers increased capacity and capabilities.

FY17 Teva sales are expected to be below guidance, given a tougher pricing  environment. The broker expects the company's multi-channel distribution strategy will mitigate ongoing price erosion in the retail channel, should this continue beyond the current cycle.

Neutral retained. Target is $1.55.

Target price is $1.55 Current Price is $1.21 Difference: $0.345
If MYX 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 FY17:

Forecast for FY18:

Market Sentiment: 0.5

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

UBS rates MYX as Buy (1) -

Mayne's investor day highlighted a plan to triple sales by 2021 through new product launches and M&A, which might have been exciting had the company not also revealed -10-15% quarterly price deflation in the generic portfolio acquired from Teva. Buyer consolidation was blamed.

The broker agrees with Mayne that this should normalise by 2018 and while revenue forecasts have been trimmed, earnings are little changed. Outside of Teva, each division is outperforming. Buy and $2.20 target retained.

Target price is $2.20 Current Price is $1.21 Difference: $0.995
If MYX meets the UBS target it will return approximately 83% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.5

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

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

Ord Minnett reports its analysis of recent operating trends suggests no significant improvement in key domestic and international air travel markets. This conclusion has led to the decision to downgrade Qantas to Hold from Buy. Target price falls to $4.05 from $4.30.

Target price is $4.05 Current Price is $4.35 Difference: minus $0.3 (current price is over target).
If QAN meets the Ord Minnett target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.40, suggesting upside of 2.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.9

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

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

Citi expects the company to appear on the radar of value investors after a -47% fall in the share price since the first half result.

While retail conditions have been patchy, the broker expects the weakness to fuel the debate around the sustainability of the athletic-leisure trend.

The broker downgrades FY17-19 forecasts for earnings per share by -13-20%. Rating is upgraded to Buy from Neutral. Target is reduced to $0.88 from $1.23.

Target price is $0.88 Current Price is $0.61 Difference: $0.275
If RCG meets the Citi target it will return approximately 45% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.5

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

Morgans rates RCG as Downgrade to Hold from Add (3) -

The trading update disappointed Morgans and the recommendation is downgraded to Hold from Add.

The broker lowers FY17 sales assumptions to be in line with the company's downgraded forecasts, as  FY17 underlying EBITDA is reduced to $74-80m versus previous guidance of $85-88m.

The broker is now prepared to wait until positive momentum re-emerges in sales growth before becoming more comfortable with the stock. Target is reduced to $0.68 from $1.32.

Target price is $0.68 Current Price is $0.61 Difference: $0.075
If RCG meets the Morgans target it will return approximately 12% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.5

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

Macquarie rates RCR as Outperform (1) -

The company has won two more solar projects, worth around $50m. Macquarie expects these contracts will contribute strongly to FY18 in earnings.

The broker now estimates the company has FY17 revenue forecasts of $1.1bn in hand when combined with regular recurring income. A strong lift is expected in FY18, given the full workload that will be carried into that year.

Outperform retained. Target is trimmed to $3.29 from $3.33.

Target price is $3.29 Current Price is $3.08 Difference: $0.21
If RCR meets the Macquarie target it will return approximately 7% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 1.0

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

Citi rates REA as Buy (1) -

The company has informed agents of a new pricing structure effective from July. Citi's observations suggest an average price increase of 15% for agents on a Premiere-All contract and larger increases for everyone else.

This is significantly higher than the increase the broker had expected. FY18 in forecasts for earnings per share are raised by 1% and FY19 estimates by 5%.

Price target rises to $72.50 from $62.00.. Buy recommendation retained.

Target price is $72.50 Current Price is $61.71 Difference: $10.79
If REA meets the Citi target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $61.25, suggesting downside of -1.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.6

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

Morgan Stanley rates RMD as Overweight (1) -

Masks growth outpaced devices in the March quarter, with US sales soft and a stronger rest-of-world.

Morgan Stanley continues to envisage upside to gross margins in FY18 and, once back-order issues are resolved, expects accelerating re-supply sales.

Overweight rating. Industry view is In-Line. Price target is raised to US$76.30 from US$73.10.

Current Price is $9.21. Target price not assessed.

Current consensus price target is $9.62, suggesting upside of 4.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

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

Macquarie rates STO as Outperform (1) -

The Australian government is proposing to introduce export limits for LNG where there is a shortfall in the domestic market. Macquarie believes it is a mistake to punish Santos for a perception that it will suffer under such a mechanism.

If the owners of the GLNG project are the target, the company could break its Horizon contract and re-sell gas at higher prices. If the joint venture is the target  then the broker does not believe forced domestic sales will make much of a difference.

Outperform rating and $4.60 target retained.

Target price is $4.60 Current Price is $3.45 Difference: $1.15
If STO meets the Macquarie target it will return approximately 33% (excluding dividends, fees and charges).

Current consensus price target is $4.40, suggesting upside of 25.1% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY17:

Forecast for FY18:

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

Morgan Stanley rates TLS as Underweight (5) -

The ACCC is expected to reach a decision on mobiles in the next few weeks which Morgan Stanley suspects has the potential to diminish Telstra's network advantage.

As consensus seems to expect no change, the broker believes this highlights the risks to the downside. Morgan Stanley's base case is for no change and forecasts Telstra's mobile to achieve market share of 49% and EBITDA margins of 38% in 2019.

Underweight. Target is $4.50. Sector view In-Line.

Target price is $4.50 Current Price is $4.26 Difference: $0.24
If TLS meets the Morgan Stanley target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $4.49, suggesting upside of 6.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: -0.1

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

Citi rates TTS as Neutral (3) -

The board has rejected the bid by Pacific Consortium and the consortium has indicated it will walk away.

Citi is not surprised by the decision to reject the bid, given its conditional nature and less certainty around regulatory approvals.

The broker retains a Neutral rating and raises the target to $4.25 from $4.20.

Target price is $4.25 Current Price is $4.42 Difference: minus $0.17 (current price is over target).
If TTS meets the Citi target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.28, suggesting downside of -1.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.0

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

Ord Minnett rates TWE as Accumulate (2) -

A handful of factors has led the analysts to cut forecasts for FY18 and FY19, by -6.0% and -3.4% respectively, including start-up costs for the new US and French portfolios and the impact of the Australian vintage size and quality versus that of a year ago and the 2015 vintage.

Accumulate rating retained as the stockbroker remains a believer in the favourable macro-trend. Target price lifts to $13.25 from $12.50.

Target price is $13.25 Current Price is $12.17 Difference: $1.08
If TWE meets the Ord Minnett target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $11.93, suggesting downside of -4.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.1

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