Australian Broker Call

Ord Minnett rates FMG as Accumulate (2) -

The price Fortescue Metals has achieved for its iron ore over the past few months has improved materially, which Ord Minnett believes the market has completely overlooked. The Fortescue blend and super special fines have risen more than 20% since the lows of early July while the share price has fallen -15%.

The broker acknowledges the stigma associated with low-grade ore but believes the business is in good shape. Returns should be strong and the dividend yield is now 7% based on a 64% pay-out ratio. The next catalyst is expected to be the ramping up of the West Pilbara fines, which will replace around 40mtpa of Fortescue blend at a significantly lower discount.

Accumulate rating and $5.40 target.

Target price is $5.40 Current Price is $3.71 Difference: $1.69
If FMG meets the Ord Minnett target it will return approximately 46% (excluding dividends, fees and charges).

Current consensus price target is $4.67, suggesting upside of 25.9% (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 GDG as Add (1) -

Sales inflow was $52m in the September quarter, up 41% on the prior September quarter albeit down on the stellar June quarter. While execution by the new management team has impressed Morgans, a further leg up in sales growth remains key to a re-rating.

The broker downgrades estimates for earnings per share by -2% in FY19 and -10% in FY20 on more conservative sales forecasts. Morgans notes the company, while young, is now profitable and at an inflection point where performance can be significantly ramped up.

Add rating maintained. Target is reduced to $1.33 from $1.44.

Target price is $1.33 Current Price is $1.07 Difference: $0.26
If GDG meets the Morgans target it will return approximately 24% (excluding dividends, fees and charges).

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

Macquarie rates HT1 as Resume Coverage with Neutral (3) -

Macquarie resumes coverage with a Neutral rating and $2.13 target. The broker believes the streamlined company is a highly cash-generating radio business that is operating in a robust advertising market.

HT&E is also a potential takeover target in a media sector which is consolidating and additional capital management is considered likely. However, on balance, the broker assesses the stock is trading in line with expectations for a metro radio business.

Target price is $2.13 Current Price is $2.07 Difference: $0.06
If HT1 meets the Macquarie target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $2.57, suggesting upside of 24.2% (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

Morgan Stanley rates MNF as Overweight (1) -

The company has provided guidance for FY19 and FY20 which suggests to Morgan Stanley the organic business has underperformed. Further details have been provided regarding the acquisition of the Inabox wholesale and enablement business, which is expected to be accretive in FY19 and FY20.

MNF Group currently earns around 70% more revenue per customer and twice the margin versus the Inabox acquisition, the broker calculates.

Overweight rating maintained. Target is $7.30. Industry view: In-Line.

Target price is $7.30 Current Price is $4.77 Difference: $2.53
If MNF meets the Morgan Stanley target it will return approximately 53% (excluding dividends, fees and charges).

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

Citi rates MQG as Neutral (3) -

Macquarie Group has exceeded earnings expectations so far in FY19 and the sale of PEXA is set to be a catalyst, in Citi's opinion. The sale is expected to push growth in FY19 cash earnings to 15%.

The broker is surprised that the stock has only had modest growth in 2018, given the market has usually rewarded growth stories with a substantial re-rating. Still, Citi maintains a Neutral rating because the record contribution from asset sales and performance fees is not considered a 'new normal' for Macquarie Group.

The business remains a cyclical operation and the broker chooses to value the stock across the full spectrum of market conditions. Target is raised to $125 from $120.

Target price is $125.00 Current Price is $118.06 Difference: $6.94
If MQG meets the Citi target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $122.10, suggesting upside of 3.4% (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

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

Navitas has received a bid at $5.50 a share from a private equity-led consortium. Macquarie considers the transaction multiple to be fair. The proposal remains subject to further review.

The proposal removes uncertainties regarding the incremental investment that is required to optimise the portfolio and would enable the realisation of value at levels consistent with the broker's expectations.

Macquarie downgrades to Neutral from Outperform, reflecting the move in the share price and the low probability of a competing bid. Target is raised to $5.50 from $4.80.

Target price is $5.50 Current Price is $5.30 Difference: $0.2
If NVT meets the Macquarie target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $4.64, suggesting downside of -12.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: -0.2

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

UBS rates NVT as Neutral (3) -

A consortium of suitors, also including former CEO Rodney Jones, has launched an unsolicited, preliminary, conditional and non-binding proposal of a full take-over to the value of $5.50 per share.

There is also a cash plus script option available, note the analysts. They add there are a number of conditions attached to the proposal. No changes made at this stage. Neutral. Target $4.35.

Target price is $4.35 Current Price is $5.30 Difference: minus $0.95 (current price is over target).
If NVT meets the UBS target it will return approximately minus 18% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.64, suggesting downside of -12.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: -0.2

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

Macquarie rates OML as Resume Coverage with Outperform (1) -

Macquarie resumes coverage with an Outperform rating and $6.30 target. The acquisition of Adshel is not accretive to earnings until 2020 because of competitive tension at the time of the acquisition and the timing of synergies.

However, Macquarie observes it will provide the company with increased exposure to structural growth and extends the platform over which investment in data and technology can be leveraged.

Target price is $6.30 Current Price is $5.00 Difference: $1.3
If OML meets the Macquarie target it will return approximately 26% (excluding dividends, fees and charges).

Current consensus price target is $5.81, suggesting upside of 16.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.9

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

Citi rates RHC as Buy (1) -

The board of Capio has unanimously recommended the RGdS offer of SEK58 per share. Capio has consequently cancelled the planned sale of the French division to a third party and RGdS has lowered the minimum acceptance condition to 75% from 90%.

The bid values the Capio equity at EUR783m. Citi observes the Capio assets provide Ramsay Health Care entry to the Scandinavian and German markets as well as opportunities for further synergies in France.

Citi maintains a Buy rating and $62 target.

Target price is $62.00 Current Price is $53.78 Difference: $8.22
If RHC meets the Citi target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $57.53, suggesting upside of 7.0% (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

UBS rates RHC as Neutral (3) -

Ramsay's French subsidiary has increased its takeover bid for Capio AB by 20% and the target's board has now unanimously recommended shareholders accept the offer.

On UBS's projections, the deal should add 4% to Ramsay's net profits by 2022. The deal still requires shareholders approval, point out the analysts.

And then there is still necessary approval from the French Competition Authority also. No changes made in the meantime. Neutral. Target $54.

Target price is $54.00 Current Price is $53.78 Difference: $0.22
If RHC meets the UBS target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $57.53, suggesting upside of 7.0% (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

Macquarie rates SCP as Resume Coverage with Underperform (5) -

The company has upgraded guidance for FY19 by 3.8%, to 16.2c per share from 15.6c per share subsequent to the equity raising and acquisition of assets.

Macquarie observes the quality of the assets is reasonable and the scale benefits of the transaction are clear. However, around 47% of the assets are in Western Australia and the risk to valuations are skewed to the downside.

Macquarie resumes coverage with an Underperform rating and $2.28 target.

Target price is $2.28 Current Price is $2.38 Difference: minus $0.1 (current price is over target).
If SCP meets the Macquarie target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.37, suggesting downside of -0.5% (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