Australian Broker Call

Ord Minnett rates AAD as Hold (3) -

The company has sold its marinas for $126m, allowing it to further reduce gearing and fund the roll out of the Main Event business. Ord Minnett acknowledges there is a sizeable profit opportunity with the aggressive roll out of Main Event.

The broker's primary concern is the degree to which market estimates, therefore the share price, already reflect a bull case scenario. Hold retained  with $1.90 target.

Target price is $1.90 Current Price is $2.27 Difference: minus $0.37 (current price is over target).
If AAD meets the Ord Minnett target it will return approximately minus 16% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.27, suggesting downside of -0.4% (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 AWE as Underperform (5) -

The company has sold its 57.5% stake in the Tui oilfield. The deal remains subject to New Zealand government approval and joint venture consent.

Sale proceeds are expected to be US$1.5m but there is a working capital/cash balance transfer to the acquirer of US$10.8m. Despite paying to sell an asset, the deal appears prudent to Credit Suisse, as management acknowledges there is a short field life remaining  with the operation.

The company will also book a $28m non-cash profit after tax. The stock's value is now almost exclusively underpinned by BassGas, Casino, Perth Basin an -in the broker's view for those bullish on oil- Ande Ande Lumut.

The broker retains an Underperform rating and 65c target.

Target price is $0.65 Current Price is $0.63 Difference: $0.02
If AWE meets the Credit Suisse target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $0.71, suggesting upside of 13.0% (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

UBS rates AWE as Neutral (3) -

AWE has sold its Tui oil field interest, pending approval from the JV members and NZ government. The price is in line with the broker's valuation.

While the sale will generate a profit, more importantly it will remove an abandonment liability and a loss-making hedge book, the broker notes. Tui is the last asset to go in AWE' divestment process, leaving the focus now on Waitsia appraisal and diminishing the stock's direct leverage to the oil price. 

Neutral retained, target falls to 68c from 72c.

Target price is $0.68 Current Price is $0.63 Difference: $0.05
If AWE meets the UBS target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $0.71, suggesting upside of 13.0% (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

Ord Minnett rates AZJ as Resume Coverage with Sell rating (5) -

Recent strength in the company's share price is likely more of a function of the spike in spot coal prices, Ord Minnett believes. The broker resumes coverage with a Sell rating and $4.20 target.

The broker finds a lack of valuation support and envisages clouds on the horizon. These include increasing competition, potential end of the line for iron ore operations, freight business not pulling its weight and a potentially unfavourable regulatory decision on UT5.

Target price is $4.20 Current Price is $5.04 Difference: minus $0.84 (current price is over target).
If AZJ meets the Ord Minnett target it will return approximately minus 17% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.66, suggesting downside of -4.9% (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

Macquarie rates BHP as Outperform (1) -

There are reports that the March quarter hard coking coal contract has settled at US$285/t, US$100//t higher than Macquarie forecast.

The broker incorporates the prices into its estimates, noting the strong contract result comes despite spot prices falling to around US$270/t from US$300/t in just over a week.

This drives an upgrade of 10% to earnings per share estimates for FY17. Outperform retained. Target rises to $30 from $28.

Target price is $30.00 Current Price is $26.12 Difference: $3.88
If BHP meets the Macquarie target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $26.09, suggesting upside of 0.4% (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: 0.3

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

Morgan Stanley rates BHP as Overweight (1) -

Debt reduction and increased returns from better cash flow should drive momentum in the stock, in Morgan Stanley's view.

The broker's commodities team has turned bullish on the outlook for 2017, with upward revisions to coking coal forecasts of 58%, thermal coal 36%, iron ore 16%, copper 13% and aluminium 10%.

The large miners appear attractive and feature as top picks for the broker in the sector. Overweight retained. Target rises to $30 from $27.50. Attractive sector view.

Target price is $30.00 Current Price is $26.12 Difference: $3.88
If BHP meets the Morgan Stanley target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $26.09, suggesting upside of 0.4% (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: 0.3

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

Citi rates BPT as Downgrade to Sell from Neutral (5) -

Short to medium term, Citi remains of the view oil prices are in an uptrend. Longer term, the analysts have come to the conclusion the global cost curve has compressed. This implies the long term incentive price for new supply is no longer at US$70/bbl but instead inside the US$55-65/bbl range.

Citi has reduced its long term price estimate to US$65/bbl from US$70/bbl. In general terms, the analysts note oil & gas stocks are no longer cheaply priced. For Beach Energy, the rating has been pulled back to Sell/High Risk from Neutral/High Risk. Target falls to $0.65 from $0.74.

Target price is $0.65 Current Price is $0.92 Difference: minus $0.265 (current price is over target).
If BPT meets the Citi target it will return approximately minus 29% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $0.67, suggesting downside of -25.4% (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

Citi rates CTX as Buy (1) -

Refinery margins have been better than expected in recent months, but Citi analysts maintain the view this is more likely due to the regional maintenance cycle rather than structurally higher refining margins.

The analysts forecast CY17 realised CRM of US$10.86/bbl, which would be slightly higher than the estimated CY16 average of US$10.23/bbl. Also, Citi analysts expect Caltex's CY16 profit guidance will be announced... imminently. So stay tuned!

Buy rating retained. Price target $34.82.

Target price is $34.82 Current Price is $29.42 Difference: $5.4
If CTX meets the Citi target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $35.26, suggesting upside of 16.1% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY16:

Forecast for FY17:

Market Sentiment: 0.6

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

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

November sales and margins data reveal a sales from production run-rate that suggests the best year for Caltex in UBS' recent memory. Operational performance at Lytton has been the key focus since Kurnell closed, and on a belief outperformance can be sustained, the broker has lifted earnings forecasts.

Caltex' share price has been weak for the past couple of months on concerns the sale of Woolworth's ((WOW)) fuel business may mean the end of Caltex' contract. While this would clearly impact on earnings, UBS suggests the share price fall has already taken such a loss into account. Upgrade to Buy. Target rises to $34.50 from $33.90. 

Target price is $34.50 Current Price is $29.42 Difference: $5.08
If CTX meets the UBS target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $35.26, suggesting upside of 16.1% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY16:

Forecast for FY17:

Market Sentiment: 0.6

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

Macquarie rates FXL as Neutral (3) -

Macquarie does not believe the company's newly launched product, Oxipay, will be a game changer. Nevertheless, success will be important in establishing credibility for the new CEO and his plans to grow the business.

The broker expects retailers will have more than one instalment provider, but the integration at online checkout is an attractive feature and the ability to access this will depend on whether retailers are willing to offer more than one instalment payment solution. Macquarie will be watching this development closely.

Neutral rating and $2.29 target retained.

Target price is $2.29 Current Price is $2.45 Difference: minus $0.16 (current price is over target).
If FXL meets the Macquarie target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.55, suggesting upside of 4.1% (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 GOZ as Neutral (3) -

The broker has updated its valuation to incorporate Growthpoint's acquisition of GPT Metro Office Fund. The broker estimates 5% earnings accretion but debt will rise to 46% against management's 35-45% target range, making Growthpoint the most leveraged REIT under the broker's coverage.

Required deleveraging means that while Growthpoint should still be able to grow dividends ahead, the payout ratio will need to be initially reduced, the broker suggests, temporarily diluting DPS growth. Neutral retained, target rises to $3.07 from $2.97.

Target price is $3.07 Current Price is $3.13 Difference: minus $0.06 (current price is over target).
If GOZ meets the UBS target it will return approximately minus 2% (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

Morgans rates KSL as Add (1) -

The company has updated the market on 2016 profit expectations. As part of the update, the company also signals that its corresponding banking partner for US dollar transactions has withdrawn from the FX market.

While the FX issue may impact the second half, the revised profit guidance of PGK39-41m is only around 1% below the broker's prior forecasts.

Morgans reduces the target to $1.49 from $1.54. Add rating retained.

Target price is $1.49 Current Price is $1.07 Difference: $0.42
If KSL meets the Morgans target it will return approximately 39% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

Forecast for FY16:

Forecast for FY17:

Market Sentiment: 1.0

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

Deutsche Bank rates NXT as Buy (1) -

The stock has underperformed recently. Deutsche Bank expect headwinds to abate and believes that competitive concerns are largely overplayed.

The broker finds the valuation compelling and the risks should be re-priced more favourably over time. Buy rating retained. Target falls to $4.10 from $4.60.

Target price is $4.10 Current Price is $3.03 Difference: $1.07
If NXT meets the Deutsche Bank target it will return approximately 35% (excluding dividends, fees and charges).

Current consensus price target is $4.49, suggesting upside of 41.5% (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

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

The share price has fallen dramatically over the last six months and now looks compelling to Morgans. Thus, the broker upgrades to an Add rating. Target is reduced to $4.01 from $4.43.

The broker believes investors have the jitters as new wholesale supply comes to the market.

The broker attributes a large portion of the share price fall to rising interest rates, which lowers valuations, and also to confusion over market dynamics. The former may be justified but the latter is misplaced, in the broker's opinion, and that creates an opportunity.

Target price is $4.01 Current Price is $3.03 Difference: $0.98
If NXT meets the Morgans target it will return approximately 32% (excluding dividends, fees and charges).

Current consensus price target is $4.49, suggesting upside of 41.5% (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

Citi rates OGC as Buy/High Risk (1) -

The company has officially provided guidance for 2017. Citi analysts have been forced to make several adjustments to their forecasts, including potentially higher than anticipated operational costs. This is the key reason for a dip in the price target to $4.70 from $5.10.

As uncertainty remains over Didipio’s licence, the Buy rating also has "High Risk" attached to it. All in all, production guidance was in-line with the analysts' projections.

Target price is $4.70 Current Price is $3.86 Difference: $0.84
If OGC meets the Citi target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $4.87, suggesting upside of 22.5% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY16:

Forecast for FY17:

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

Credit Suisse rates OGC as Outperform (1) -

2017 production and costs guidance has been confirmed. A 35% increase in gold production is expected with a 15% reduction in all-in sustaining costs, driven largely by the commencement  of the Haile gold mine in the US.

This is expected to generate strong free cash flow, comfortably funding the completion of Didipio underground, the future Horseshoe underground at Haile and a strong exploration program as well as debt reduction.

Credit Suisse retains an Outperform rating and raises the target to $4.20 from $4.10.

Target price is $4.20 Current Price is $3.86 Difference: $0.34
If OGC meets the Credit Suisse target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $4.87, suggesting upside of 22.5% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY16:

Forecast for FY17:

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

Citi rates ORG as Downgrade to Sell from Neutral (5) -

Short to medium term, Citi remains of the view oil prices are in an uptrend. Longer term, the analysts have come to the conclusion the global cost curve has compressed. This implies the long term incentive price for new supply is no longer at US$70/bbl but instead inside the US$55-65/bbl range.

Citi has reduced its long term price estimate to US$65/bbl from US$70/bbl. In general terms, the analysts note oil & gas stocks are no longer cheaply priced. For Origin Energy, the rating has been pulled back to Sell from Neutral. Target falls to $6.32 from $6.95.

Target price is $6.32 Current Price is $6.72 Difference: minus $0.4 (current price is over target).
If ORG meets the Citi target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $6.18, suggesting downside of -8.6% (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 ORI as Neutral (3) -

Citi analysts have taken a more sanguine view on the threat for cheap imports of ammonium nitrate (AN) into Australia. Also because the domestic market has shown relative price resilience, and lower than feared foreign imports.

Citi is of the view the situation for AN in Australia is relatively stable while the treat for Chinese spoilers has pretty much abated. The analysts are happy to own Orica shares both for company specific factors as well as a future cyclical turnaround for the sector overall. Neutral. Target $17.50.

Target price is $17.50 Current Price is $16.91 Difference: $0.59
If ORI meets the Citi target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $16.15, suggesting downside of -3.8% (ex-dividends)

The company's fiscal year ends in September.

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

Morgan Stanley rates RIO as Overweight (1) -

Debt reduction and increased returns from better cash flow should drive momentum in the stock, in Morgan Stanley's view.

The broker's commodities team has turned bullish on the outlook for 2017, with upward revisions to coking coal forecasts of 58%, thermal coal 36%, iron ore 16%, copper 13% and aluminium 10%.

The large miners appear attractive and feature as top picks for the broker in the sector. Overweight rating retained. Target rises to $71 from $59.50. Attractive sector view retained.

Target price is $71.00 Current Price is $61.25 Difference: $9.75
If RIO meets the Morgan Stanley target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $66.33, suggesting upside of 8.6% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY16:

Forecast for FY17:

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

Market Sentiment: 0.7

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

Macquarie rates S32 as Outperform (1) -

There are reports that the March quarter hard coking coal contract has settled at US$285/t, US$100//t higher than Macquarie forecast.

The broker incorporates the prices into its estimates, noting the strong contract result comes despite spot prices falling to around US$270/t from US$300/t in just over a week.

Macquarie upgrades forecasts for earnings per share for FY17 by 12%. Outperform retained. Target rises to $3.60 from $3.40.

Target price is $3.60 Current Price is $2.89 Difference: $0.71
If S32 meets the Macquarie target it will return approximately 25% (excluding dividends, fees and charges).

Current consensus price target is $2.88, suggesting upside of 0.9% (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: 0.4

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

Deutsche Bank rates SGR as Buy (1) -

Deutsche Bank increases earnings forecasts by 6-7% amid higher-than-expected VIP turnover.

While the first half will be relatively soft, the broker is more positive about the second half given weaker comparables, the expansion of the main gaming floor at Sydney, the re-launch of the loyalty program and absence of construction disruption.

Buy rating retained. Target is raised to $6.40 from $6.00.

Target price is $6.40 Current Price is $5.09 Difference: $1.31
If SGR meets the Deutsche Bank target it will return approximately 26% (excluding dividends, fees and charges).

Current consensus price target is $6.33, suggesting upside of 20.9% (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

Citi rates SXY as Downgrade to Neutral from Buy (3) -

Short to medium term, Citi remains of the view oil prices are in an uptrend. Longer term, the analysts have come to the conclusion the global cost curve has compressed. This implies the long term incentive price for new supply is no longer at US$70/bbl but instead inside the US$55-65/bbl range.

Citi has reduced its long term price estimate to US$65/bbl from US$70/bbl. In general terms, the analysts note oil & gas stocks are no longer cheaply priced. For Senex Energy, the rating has been pulled back to Neutral/High Risk from Buy/High Risk. Target falls to $0.28 from $0.33.

Target price is $0.28 Current Price is $0.28 Difference: $0
If SXY meets the Citi target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $0.28, suggesting upside of 3.6% (ex-dividends)

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

Deutsche Bank rates TPM as Buy (1) -

Draft amendments to the telecommunications act have been tabled for consultation. The main impact for TPG is the implementation of a regional broadband scheme and amendments to the level playing field rules.

Assuming a charge of $7.09/line/month is fully borne by the company, Deutsche Bank estimates this would reduce FTTB EBITDA margins to 50% from 60% and reduce FY20 earnings per share by 2.5%.

Deutsche Bank retains a Buy rating and target of $11.01.

Target price is $11.01 Current Price is $7.23 Difference: $3.78
If TPM meets the Deutsche Bank target it will return approximately 52% (excluding dividends, fees and charges).

Current consensus price target is $9.41, suggesting upside of 30.1% (ex-dividends)

The company's fiscal year ends in July.

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

Credit Suisse rates WES as Neutral (3) -

Credit Suisse updates forecasts for coal prices. Hard coking coal benchmark prices are expected to be US$200/t for 2017 and US$130//t for 2018.

The analysts expect above-cycle coking coal prices to linger because of stronger global steel production and a slow response in China. The broker believes this is a good time to sell a coal business. Coal forecast upgrades add $1.2bn, equivalent to $1 per share to valuation.

Neutral retained. Target rises to $41.94 from $41.18.

Target price is $41.94 Current Price is $41.25 Difference: $0.69
If WES meets the Credit Suisse target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $41.24, suggesting downside of -0.7% (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 WPL as Downgrade to Neutral from Buy (3) -

Short to medium term, Citi remains of the view oil prices are in an uptrend. Longer term, the analysts have come to the conclusion the global cost curve has compressed. This implies the long term incentive price for new supply is no longer at US$70/bbl but instead inside the US$55-65/bbl range.

Citi has reduced its long term price estimate to US$65/bbl from US$70/bbl. In general terms, the analysts note oil & gas stocks are no longer cheaply priced. For Woodside, the rating has been pulled back to Neutral from Buy. Target falls to $30.53 from $33.48.

Target price is $30.53 Current Price is $31.65 Difference: minus $1.12 (current price is over target).
If WPL 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 $29.82, suggesting downside of -6.5% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY16:

Forecast for FY17:

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