Australian Broker Call

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September 24, 2019

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COMPANIES DISCUSSED IN THIS ISSUE

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The number next to the symbol represents the number of brokers covering it for this report -(if more than 1).

Last Updated: 05:00 PM

Your daily news report on the latest recommendation, valuation, forecast and opinion changes.

This report includes concise but limited reviews of research recently published by Stockbrokers, which should be considered as information concerning likely market behaviour rather than advice on the securities mentioned. Do not act on the contents of this Report without first reading the important information included at the end.

For more info about the different terms used by stockbrokers, as well as the different methodologies behind similar sounding ratings, download our guide HERE

Today's Upgrades and Downgrades
A2M - A2 MILK Downgrade to Sell from Neutral Citi
CLV - CLOVER CORP Downgrade to Neutral from Buy UBS
FMG - FORTESCUE Downgrade to Underweight from Equal-weight Morgan Stanley
RRL - REGIS RESOURCES Upgrade to Equal-weight from Underweight Morgan Stanley
A2M  THE A2 MILK COMPANY LIMITED

Dairy

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Overnight Price: $12.25

Citi rates A2M as Downgrade to Sell from Neutral (5) -

Citi remains convinced margin pressure will make consensus forecasts look too optimistic and the analysts have now downgraded to Sell from Neutral. The target price declines to $12.20 from $15.15.

Citi finds a2 Milk needs to increase investment in order to pursue growth in China and the US, and this translates into margin pressure. In addition, the analysts find the daigou channel is no longer reliable to drive growth and competition is increasing.

Forecasts have been reduced following incorporation of lower margins. Target price decrease also includes a reduction in valuation premium.

Target price is $12.20 Current Price is $12.25 Difference: minus $0.05 (current price is over target).
If A2M meets the Citi target it will return approximately minus 0% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $13.59, suggesting upside of 10.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Citi forecasts a full year FY20 dividend of 0.00 cents and EPS of 45.66 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 26.83.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 43.2, implying annual growth of N/A.

Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A.

Current consensus EPS estimate suggests the PER is 28.4.

Forecast for FY21:

Citi forecasts a full year FY21 dividend of 0.00 cents and EPS of 57.76 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 21.21.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 54.0, implying annual growth of 25.0%.

Current consensus DPS estimate is 4.6, implying a prospective dividend yield of 0.4%.

Current consensus EPS estimate suggests the PER is 22.7.

This company reports in NZD. 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

CLV  CLOVER CORPORATION

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Overnight Price: $2.80

Ord Minnett rates CLV as Buy (1) -

Revenue was up 22% in FY19, driven by the global DHA uptake and the trend towards premium infant formula.

Ord Minnett notes the company is yet to benefit from several catalysts, including EU regulation and being only one of three infant formula brands receiving Chinese registration in the last 12 months.

The broker envisages strong organic value in the business, and now includes the option for Chinese DHA regulation in its target. Buy rating retained. Target rises to $3.31 from $2.00.

Target price is $3.31 Current Price is $2.80 Difference: $0.51
If CLV meets the Ord Minnett target it will return approximately 18% (excluding dividends, fees and charges).

The company's fiscal year ends in July.

Forecast for FY20:

Ord Minnett forecasts a full year FY20 dividend of 3.30 cents and EPS of 7.90 cents.
At the last closing share price the estimated dividend yield is 1.18%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 35.44.

Forecast for FY21:

Ord Minnett forecasts a full year FY21 dividend of 4.50 cents and EPS of 10.70 cents.
At the last closing share price the estimated dividend yield is 1.61%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 26.17.

Market Sentiment: 0.5

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


UBS rates CLV as Downgrade to Neutral from Buy (3) -

In FY19 growth occurred in all regions, and while cash flow was weak it improved in the second half. UBS continues to believe the outlook strongly favours the company but, following the share price appreciation of 98% since February, most of the positive outlook appears factored in.

Hence, the rating is downgraded to Neutral from Buy and the target raised to $2.75 from $2.15.

The broker forecasts European revenues to increase out to FY21 as new regulations come into effect while any new competitor is at least 2-3 years away. There is also upside risk to forecasts should China mandate DHA increases.

Target price is $2.75 Current Price is $2.80 Difference: minus $0.05 (current price is over target).
If CLV 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 July.

Forecast for FY20:

UBS forecasts a full year FY20 dividend of 2.80 cents and EPS of 6.90 cents.
At the last closing share price the estimated dividend yield is 1.00%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 40.58.

Forecast for FY21:

UBS forecasts a full year FY21 dividend of 3.80 cents and EPS of 9.30 cents.
At the last closing share price the estimated dividend yield is 1.36%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 30.11.

Market Sentiment: 0.5

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

EVN  EVOLUTION MINING LIMITED

Gold & Silver

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Overnight Price: $4.80

Ord Minnett rates EVN as Hold (3) -

Ord Minnett assesses the company is not immune to the cost inflation across the gold industry, and the natural grade decline that is prevalent in its peer group.

The broker envisages FY20 earnings dropping -11% and increases capital expenditure and exploration estimates. Production growth looks like coming mostly from the Cowal and Mount Carlton operations.

Hold rating maintained. Target is reduced to $4.60 from $4.80.

This stock is not covered in-house by Ord Minnett. Instead, the broker whitelabels research by JP Morgan.

Target price is $4.60 Current Price is $4.80 Difference: minus $0.2 (current price is over target).
If EVN meets the Ord Minnett target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.40, suggesting downside of -8.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Ord Minnett forecasts a full year FY20 dividend of 11.50 cents and EPS of 28.00 cents.
At the last closing share price the estimated dividend yield is 2.40%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 17.14.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 24.7, implying annual growth of 92.1%.

Current consensus DPS estimate is 11.3, implying a prospective dividend yield of 2.4%.

Current consensus EPS estimate suggests the PER is 19.4.

Forecast for FY21:

Ord Minnett forecasts a full year FY21 EPS of 28.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 17.14.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 24.5, implying annual growth of -0.8%.

Current consensus DPS estimate is 11.3, implying a prospective dividend yield of 2.4%.

Current consensus EPS estimate suggests the PER is 19.6.

Market Sentiment: -0.1

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

FMG  FORTESCUE METALS GROUP LTD

Iron Ore

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Overnight Price: $8.78

Morgan Stanley rates FMG as Downgrade to Underweight from Equal-weight (5) -

Morgan Stanley acknowledges Fortescue Metals is a high-quality company but the stock is now 13% above the target. The broker expects the headline iron ore price and 58% price realisation will recede from current highs in the first half of 2020 as supply rises.

Rating is downgraded to Underweight from Equal-weight. Target is raised to $7.85 from $7.65. Industry view is Attractive.

Target price is $7.85 Current Price is $8.78 Difference: minus $0.93 (current price is over target).
If FMG meets the Morgan Stanley target it will return approximately minus 11% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $8.09, suggesting downside of -7.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Morgan Stanley forecasts a full year FY20 dividend of 104.99 cents and EPS of 194.38 cents.
At the last closing share price the estimated dividend yield is 11.96%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 4.52.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 190.6, implying annual growth of N/A.

Current consensus DPS estimate is 126.2, implying a prospective dividend yield of 14.4%.

Current consensus EPS estimate suggests the PER is 4.6.

Forecast for FY21:

Morgan Stanley forecasts a full year FY21 dividend of 41.15 cents and EPS of 93.64 cents.
At the last closing share price the estimated dividend yield is 4.69%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 9.38.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 105.1, implying annual growth of -44.9%.

Current consensus DPS estimate is 60.2, implying a prospective dividend yield of 6.9%.

Current consensus EPS estimate suggests the PER is 8.4.

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

Market Sentiment: 0.0

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

NST  NORTHERN STAR RESOURCES LTD

Gold & Silver

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Overnight Price: $11.68

Credit Suisse rates NST as Underperform (5) -

Credit Suisse observes management is genuinely impressed with the exploration opportunity at Pogo and confident it will be its best mine within three years.

The broker notes the mine appears to have been operated for closure prior to Northern Star taking ownership, and while renovation is progressing well it appears to be a larger and longer task than previously expected.

The mill expansion to 1.3mtpa will proceed with some capital being allocated to move the next bottleneck to 1.5mt, in anticipation of reserves and production growth. The broker maintains an Underperform rating and $6.30 target predicated on a lower gold price deck.

Target price is $6.30 Current Price is $11.68 Difference: minus $5.38 (current price is over target).
If NST meets the Credit Suisse target it will return approximately minus 46% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $11.39, suggesting downside of -2.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Credit Suisse forecasts a full year FY20 dividend of 15.84 cents and EPS of 49.07 cents.
At the last closing share price the estimated dividend yield is 1.36%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 23.80.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 62.3, implying annual growth of 155.3%.

Current consensus DPS estimate is 16.3, implying a prospective dividend yield of 1.4%.

Current consensus EPS estimate suggests the PER is 18.7.

Forecast for FY21:

Credit Suisse forecasts a full year FY21 dividend of 17.92 cents and EPS of 57.34 cents.
At the last closing share price the estimated dividend yield is 1.53%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 20.37.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 73.1, implying annual growth of 17.3%.

Current consensus DPS estimate is 17.7, implying a prospective dividend yield of 1.5%.

Current consensus EPS estimate suggests the PER is 16.0.

Market Sentiment: 0.0

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


UBS rates NST as Neutral (3) -

The company plans to expand the processing plant at Pogo in two stages with the first stage to I.3mtpa using US$30m in capital expenditure. A further lift to 1.5mtpa for capital expenditure of US$17m was flagged albeit not yet committed.

From the briefing, UBS concludes the turnaround is achievable but will take some time because of the need for the mine to ramp up to match the plant. Neutral maintained. Target rises to $12.00 from $11.50.

Target price is $12.00 Current Price is $11.68 Difference: $0.32
If NST meets the UBS target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $11.39, suggesting downside of -2.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

UBS forecasts a full year FY20 dividend of 17.00 cents and EPS of 68.00 cents.
At the last closing share price the estimated dividend yield is 1.46%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 17.18.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 62.3, implying annual growth of 155.3%.

Current consensus DPS estimate is 16.3, implying a prospective dividend yield of 1.4%.

Current consensus EPS estimate suggests the PER is 18.7.

Forecast for FY21:

UBS forecasts a full year FY21 dividend of 19.00 cents and EPS of 82.00 cents.
At the last closing share price the estimated dividend yield is 1.63%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.24.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 73.1, implying annual growth of 17.3%.

Current consensus DPS estimate is 17.7, implying a prospective dividend yield of 1.5%.

Current consensus EPS estimate suggests the PER is 16.0.

Market Sentiment: 0.0

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

PMV  PREMIER INVESTMENTS LIMITED

Apparel & Footwear

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Overnight Price: $19.77

UBS rates PMV as Buy (1) -

FY19 results were strong and the online business continues to perform well, UBS observes.

The potential in the broad-based roll-out of Smiggle remains intact even if the skew is increasingly to third-party online and wholesale sales.

UBS maintains a Buy rating and raises the target to $20.95 from $19.80.

Target price is $20.95 Current Price is $19.77 Difference: $1.18
If PMV meets the UBS target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $19.46, suggesting downside of -1.6% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY20:

UBS forecasts a full year FY20 dividend of 74.00 cents and EPS of 91.90 cents.
At the last closing share price the estimated dividend yield is 3.74%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 21.51.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 91.6, implying annual growth of 35.7%.

Current consensus DPS estimate is 75.9, implying a prospective dividend yield of 3.8%.

Current consensus EPS estimate suggests the PER is 21.6.

Forecast for FY21:

UBS forecasts a full year FY21 dividend of 78.00 cents and EPS of 104.00 cents.
At the last closing share price the estimated dividend yield is 3.95%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 19.01.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 103.4, implying annual growth of 12.9%.

Current consensus DPS estimate is 84.1, implying a prospective dividend yield of 4.3%.

Current consensus EPS estimate suggests the PER is 19.1.

Market Sentiment: 0.4

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

RED  RED 5 LIMITED

Gold & Silver

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Overnight Price: $0.32

Morgans rates RED as Initiation of coverage with Add (1) -

RED 5 is a multi-asset gold producer with two operating mines in Western Australia: Darlot and King of the Hills. The latter's expansion pre-feasibility study outlines a reserve that supports 140,000 ounces per annum operation with a 10-year mine life.

Bulk mining is expected to commence in early 2022. A study is underway looking to integrate the bulk open pit and underground mining operations with a satellite open pit opportunity. Morgans initiates coverage with an Add rating and $0.50 target.

Target price is $0.50 Current Price is $0.32 Difference: $0.18
If RED meets the Morgans target it will return approximately 56% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY19:

Morgans forecasts a full year FY19 EPS of 0.50 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 64.00.

Forecast for FY20:

Morgans forecasts a full year FY20 EPS of 4.10 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 7.80.

Market Sentiment: 1.0

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

RRL  REGIS RESOURCES LIMITED

Gold & Silver

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Overnight Price: $4.88

Morgan Stanley rates RRL as Upgrade to Equal-weight from Underweight (3) -

Morgan Stanley introduces a new valuation system for its gold stocks under coverage to better capture value and more accurately represent the current value.

The broker points out gold miners under coverage have continually found new resources and reserves and extended mine life, which is particularly pronounced for the mid-cap miners which operate assets with short lives.

The broker raises estimates for FY20 by 8% for Regis Resources and upgrades to Equal-weight from Underweight. Target is raised to $5.20 from $4.65. Industry view is Attractive.

Target price is $5.20 Current Price is $4.88 Difference: $0.32
If RRL meets the Morgan Stanley target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $4.97, suggesting upside of 1.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Morgan Stanley forecasts a full year FY20 dividend of 16.00 cents and EPS of 40.00 cents.
At the last closing share price the estimated dividend yield is 3.28%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.20.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 43.3, implying annual growth of 34.6%.

Current consensus DPS estimate is 17.6, implying a prospective dividend yield of 3.6%.

Current consensus EPS estimate suggests the PER is 11.3.

Forecast for FY21:

Morgan Stanley forecasts a full year FY21 dividend of 15.00 cents and EPS of 39.00 cents.
At the last closing share price the estimated dividend yield is 3.07%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.51.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 46.5, implying annual growth of 7.4%.

Current consensus DPS estimate is 16.1, implying a prospective dividend yield of 3.3%.

Current consensus EPS estimate suggests the PER is 10.5.

Market Sentiment: 0.2

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

TAH  TABCORP HOLDINGS LIMITED

Gaming

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Overnight Price: $4.87

Ord Minnett rates TAH as Lighten (4) -

Ord Minnett notes "jackpot fatigue" has caught up with Tabcorp after the recent $150m Powerball. Jackpot fatigue occurs when players wait for a larger prize before purchasing a ticket, resulting in fewer ticket sales and stymied growth in prizes.

In contrast, the fear-of-missing-out threshold, where players fear missing out on large jackpots, creates an increase in ticket sales and new lottery players. Record-breaking jackpots significantly move this threshold higher.

The broker also notes Tabcorp is exposed to a decline in wagering and competitive pressures. Lighten rating maintained. Target is raised to $4.10 from $4.05.

This stock is not covered in-house by Ord Minnett. Instead, the broker whitelabels research by JP Morgan.

Target price is $4.10 Current Price is $4.87 Difference: minus $0.77 (current price is over target).
If TAH 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 $4.85, suggesting downside of -0.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Ord Minnett forecasts a full year FY20 EPS of 20.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 24.35.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 20.2, implying annual growth of 12.2%.

Current consensus DPS estimate is 21.3, implying a prospective dividend yield of 4.4%.

Current consensus EPS estimate suggests the PER is 24.1.

Forecast for FY21:

Ord Minnett forecasts a full year FY21 EPS of 20.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 24.35.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 21.5, implying annual growth of 6.4%.

Current consensus DPS estimate is 23.1, implying a prospective dividend yield of 4.7%.

Current consensus EPS estimate suggests the PER is 22.7.

Market Sentiment: 0.2

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

WEB  WEBJET LIMITED

Travel, Leisure & Tourism

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Overnight Price: $11.52

Morgan Stanley rates WEB as Equal-weight (3) -

Thomas Cook has entered compulsory liquidation with the main impact on Webjet expected to be a reduction of -$7m in operating earnings for FY20 and a total transaction value loss of -$150-200m in B2B.

There is also EUR27m in unpaid receivables from Thomas Cook. Morgan Stanley notes there is no impact on the 3000 hotel contracts the company acquired and these remain available for sale to WebBeds customers at full margin.

The company has noted in the first 10 weeks of FY20 the WebBeds transaction value was up 50%, although this includes the contribution from Destinations of the World. Equal-weight. Target is $13.80. Industry View is In-Line.

Target price is $13.80 Current Price is $11.52 Difference: $2.28
If WEB meets the Morgan Stanley target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $15.08, suggesting upside of 30.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Morgan Stanley forecasts a full year FY20 EPS of 79.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.58.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 67.1, implying annual growth of 42.8%.

Current consensus DPS estimate is 27.0, implying a prospective dividend yield of 2.3%.

Current consensus EPS estimate suggests the PER is 17.2.

Forecast for FY21:

Morgan Stanley forecasts a full year FY21 EPS of 89.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.94.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 83.6, implying annual growth of 24.6%.

Current consensus DPS estimate is 30.3, implying a prospective dividend yield of 2.6%.

Current consensus EPS estimate suggests the PER is 13.8.

Market Sentiment: 0.6

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


Morgans rates WEB as Hold (3) -

Webjet expects the collapse of Thomas Cook will reduce FY20 operating earnings (EBITDA) by up to -$7m. Thomas Cook also owes Webjet EUR27m in unpaid receivables.

Morgans removes the incremental contribution to earnings from forecasts and reviews depreciation & amortisation assumptions, which results in material downgrades.

While costs associated with integrating the Thomas Cook contracts have been embedded in the broader WebBeds business, Morgans had assumed an incremental improvement in earnings as the agreement shifted to a volume-based model from June 1, 2019.

Hold rating maintained. Target is reduced to $12.18 from $13.65.

Target price is $12.18 Current Price is $11.52 Difference: $0.66
If WEB meets the Morgans target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $15.08, suggesting upside of 30.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Morgans forecasts a full year FY20 dividend of 24.00 cents and EPS of 71.00 cents.
At the last closing share price the estimated dividend yield is 2.08%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 16.23.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 67.1, implying annual growth of 42.8%.

Current consensus DPS estimate is 27.0, implying a prospective dividend yield of 2.3%.

Current consensus EPS estimate suggests the PER is 17.2.

Forecast for FY21:

Morgans forecasts a full year FY21 dividend of 26.00 cents and EPS of 80.00 cents.
At the last closing share price the estimated dividend yield is 2.26%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.40.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 83.6, implying annual growth of 24.6%.

Current consensus DPS estimate is 30.3, implying a prospective dividend yield of 2.6%.

Current consensus EPS estimate suggests the PER is 13.8.

Market Sentiment: 0.6

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


Ord Minnett rates WEB as Buy (1) -

Ord Minnett notes the decision to enter into a sourcing partnership with Thomas Cook has been the source of controversy from the beginning.

The collapse of Thomas Cook is expected to reduce FY20 operating earnings by up to -$7m, and Webjet will also incur an -EUR27m impairment for unpaid receivables.

Nevertheless, the broker concedes the transaction was a crucial building block to Webjet becoming the number two player in the global B2B hotel segment. Buy rating maintained. Target is reduced to $16.77 from $17.35.

Target price is $16.77 Current Price is $11.52 Difference: $5.25
If WEB meets the Ord Minnett target it will return approximately 46% (excluding dividends, fees and charges).

Current consensus price target is $15.08, suggesting upside of 30.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Ord Minnett forecasts a full year FY20 dividend of 24.00 cents and EPS of 32.20 cents.
At the last closing share price the estimated dividend yield is 2.08%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 35.78.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 67.1, implying annual growth of 42.8%.

Current consensus DPS estimate is 27.0, implying a prospective dividend yield of 2.3%.

Current consensus EPS estimate suggests the PER is 17.2.

Forecast for FY21:

Ord Minnett forecasts a full year FY21 dividend of 26.00 cents and EPS of 71.90 cents.
At the last closing share price the estimated dividend yield is 2.26%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 16.02.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 83.6, implying annual growth of 24.6%.

Current consensus DPS estimate is 30.3, implying a prospective dividend yield of 2.6%.

Current consensus EPS estimate suggests the PER is 13.8.

Market Sentiment: 0.6

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


UBS rates WEB as Buy (1) -

While the liquidation of Thomas Cook is clearly disappointing, UBS notes the arrangement with Webjet leaves the latter with an additional 3000 directly-contracted hotels, that have been sold into the rest of the B2B operations.

While affected by a reduction in direct Thomas Cook revenues, the company has confirmed there is no change to other FY20 earnings drivers. FY20 guidance is expected at the AGM on November 20.

The broker continues to believe Webjet has structural and market share benefits. Buy rating maintained. Target is reduced to $18.65 from $19.50.

Target price is $18.65 Current Price is $11.52 Difference: $7.13
If WEB meets the UBS target it will return approximately 62% (excluding dividends, fees and charges).

Current consensus price target is $15.08, suggesting upside of 30.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

UBS forecasts a full year FY20 dividend of 28.70 cents and EPS of 75.20 cents.
At the last closing share price the estimated dividend yield is 2.49%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 15.32.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 67.1, implying annual growth of 42.8%.

Current consensus DPS estimate is 27.0, implying a prospective dividend yield of 2.3%.

Current consensus EPS estimate suggests the PER is 17.2.

Forecast for FY21:

UBS forecasts a full year FY21 dividend of 34.90 cents and EPS of 91.40 cents.
At the last closing share price the estimated dividend yield is 3.03%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.60.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 83.6, implying annual growth of 24.6%.

Current consensus DPS estimate is 30.3, implying a prospective dividend yield of 2.6%.

Current consensus EPS estimate suggests the PER is 13.8.

Market Sentiment: 0.6

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

Today's Price Target Changes
Company Last Price Broker New Target Prev Target Change
A2M A2 MILK $12.25 Citi 12.20 15.15 -19.47%
AWC ALUMINA $2.41 Morgan Stanley 2.80 2.95 -5.08%
CLV CLOVER CORP $2.80 Ord Minnett 3.31 2.00 65.50%
UBS 2.75 2.15 27.91%
EVN EVOLUTION MINING $4.80 Morgan Stanley 4.00 3.30 21.21%
Ord Minnett 4.60 4.80 -4.17%
FMG FORTESCUE $8.78 Morgan Stanley 7.85 7.65 2.61%
GXY GALAXY RESOURCES $1.11 Morgan Stanley 1.20 1.35 -11.11%
IGO INDEPENDENCE GROUP $6.48 Morgan Stanley 6.10 6.00 1.67%
ILU ILUKA RESOURCES $7.85 Morgan Stanley 11.15 10.90 2.29%
MIN MINERAL RESOURCES $13.74 Morgan Stanley 18.20 18.00 1.11%
NCM NEWCREST MINING $37.06 Morgan Stanley 29.60 26.00 13.85%
NST NORTHERN STAR $11.68 Morgan Stanley 9.65 8.60 12.21%
UBS 12.00 11.50 4.35%
ORE OROCOBRE $2.66 Morgan Stanley 2.80 2.75 1.82%
OZL OZ MINERALS $9.60 Morgan Stanley 10.70 10.50 1.90%
PMV PREMIER INVESTMENTS $19.77 UBS 20.95 19.80 5.81%
RRL REGIS RESOURCES $4.88 Morgan Stanley 5.20 4.65 11.83%
S32 SOUTH32 $2.66 Morgan Stanley 3.50 3.95 -11.39%
SFR SANDFIRE $6.47 Morgan Stanley 7.55 7.65 -1.31%
SYR SYRAH RESOURCES $0.52 Morgan Stanley 0.55 0.85 -35.29%
TAH TABCORP HOLDINGS $4.87 Ord Minnett 4.10 4.05 1.23%
WEB WEBJET $11.52 Morgan Stanley 13.80 14.00 -1.43%
Morgans 12.18 13.65 -10.77%
Ord Minnett 16.77 17.35 -3.34%
UBS 18.65 19.50 -4.36%
WHC WHITEHAVEN COAL $3.11 Morgan Stanley 4.80 4.75 1.05%
WSA WESTERN AREAS $3.18 Morgan Stanley 3.45 3.30 4.55%
Summaries
A2M A2 MILK Downgrade to Sell from Neutral - Citi Overnight Price $12.25
CLV CLOVER CORP Buy - Ord Minnett Overnight Price $2.80
Downgrade to Neutral from Buy - UBS Overnight Price $2.80
EVN EVOLUTION MINING Hold - Ord Minnett Overnight Price $4.80
FMG FORTESCUE Downgrade to Underweight from Equal-weight - Morgan Stanley Overnight Price $8.78
NST NORTHERN STAR Underperform - Credit Suisse Overnight Price $11.68
Neutral - UBS Overnight Price $11.68
PMV PREMIER INVESTMENTS Buy - UBS Overnight Price $19.77
RED Initiation of coverage with Add - Morgans Overnight Price $0.32
RRL REGIS RESOURCES Upgrade to Equal-weight from Underweight - Morgan Stanley Overnight Price $4.88
TAH TABCORP HOLDINGS Lighten - Ord Minnett Overnight Price $4.87
WEB WEBJET Equal-weight - Morgan Stanley Overnight Price $11.52
Hold - Morgans Overnight Price $11.52
Buy - Ord Minnett Overnight Price $11.52
Buy - UBS Overnight Price $11.52
RATING SUMMARY
Rating No. Of Recommendations
1. Buy

5

3. Hold

6

4. Reduce

1

5. Sell

3

Tuesday 24 September 2019

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