Australian Broker Call

October 06, 2016

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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: 11:01 AM

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
NEC - NINE ENTERTAINMENT Downgrade to Neutral from Buy UBS
ALQ  ALS LIMITED

Commercial Services & Supplies

Overnight Price: $5.97

Deutsche Bank rates ALQ as Hold (3) -

The latest investor presentation in Hong Kong reveals to Deutsche Bank that mineral sample flow volumes have improved, with growth above 10% for the last month and peaking around 25%, above the rates suggested at the AGM in July.

The broker increases FY17 geochemistry revenue growth to 10% versus previous estimates of 1%. FX revisions have led to earnings-per-share forecast reductions of 0.6% for FY17-20. Deutsche Bank retains a Hold rating. Target is raised to $5.02 from $4.41.

Target price is $5.02 Current Price is $5.97 Difference: minus $0.95 (current price is over target).
If ALQ meets the Deutsche Bank target it will return approximately minus 16% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.69, suggesting downside of -21.8% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY17:

Deutsche Bank forecasts a full year FY17 dividend of 11.00 cents and EPS of 22.00 cents.
At the last closing share price the estimated dividend yield is 1.84%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 27.14.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 16.2, implying annual growth of N/A.

Current consensus DPS estimate is 13.3, implying a prospective dividend yield of 2.2%.

Current consensus EPS estimate suggests the PER is 37.0.

Forecast for FY18:

Deutsche Bank forecasts a full year FY18 dividend of 17.00 cents and EPS of 34.00 cents.
At the last closing share price the estimated dividend yield is 2.85%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 17.56.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 26.2, implying annual growth of 61.7%.

Current consensus DPS estimate is 13.9, implying a prospective dividend yield of 2.3%.

Current consensus EPS estimate suggests the PER is 22.9.

Market Sentiment: -0.5

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

APN  APN NEWS & MEDIA LIMITED

Media

Overnight Price: $3.49

UBS rates APN as Neutral (3) -

UBS strategists ponder whether the growth trade is becoming vulnerable with a backdrop of negative earnings revisions and a potential lift in bond yields.

At current prices APN appears inexpensive but weaker radio momentum has led UBS to cut EBITDA forecasts for the division by 10%. The broker concedes management has executed well and driven shareholder value through the de-merger, radio/outdoor initiatives and de-leveraging.

The broker retains a Neutral rating and price target is moved to $3.50 from $4.20.

Target price is $3.50 Current Price is $3.49 Difference: $0.01
If APN meets the UBS target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $4.64, suggesting upside of 32.9% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY16:

UBS forecasts a full year FY16 dividend of 6.00 cents and EPS of 21.00 cents.
At the last closing share price the estimated dividend yield is 1.72%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 16.62.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 30.6, implying annual growth of N/A.

Current consensus DPS estimate is 5.3, implying a prospective dividend yield of 1.5%.

Current consensus EPS estimate suggests the PER is 11.4.

Forecast for FY17:

UBS forecasts a full year FY17 dividend of 13.00 cents and EPS of 27.00 cents.
At the last closing share price the estimated dividend yield is 3.72%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.93.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 33.3, implying annual growth of 8.8%.

Current consensus DPS estimate is 15.0, implying a prospective dividend yield of 4.3%.

Current consensus EPS estimate suggests the PER is 10.5.

Market Sentiment: 0.6

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

APO  APN OUTDOOR GROUP LIMITED

Media

Overnight Price: $5.44

UBS rates APO as Buy (1) -

With the recent share price recovery APN Outdoor is still trading at a discount to the market, UBS observes. Recent industry data points to sector growth being buoyant.

UBS still envisages an earnings rebound in the first half of 2017 with overall market demand improving after a weaker fourth quarter that was partly affected by the Olympics. Buy retained. Target is raised to $6.00 from $5.50.

Target price is $6.00 Current Price is $5.44 Difference: $0.56
If APO meets the UBS target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $6.27, suggesting upside of 15.9% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY16:

UBS forecasts a full year FY16 dividend of 18.00 cents and EPS of 30.00 cents.
At the last closing share price the estimated dividend yield is 3.31%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 18.13.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 30.1, implying annual growth of 15.8%.

Current consensus DPS estimate is 17.1, implying a prospective dividend yield of 3.2%.

Current consensus EPS estimate suggests the PER is 18.0.

Forecast for FY17:

UBS forecasts a full year FY17 dividend of 20.00 cents and EPS of 34.00 cents.
At the last closing share price the estimated dividend yield is 3.68%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 16.00.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 35.8, implying annual growth of 18.9%.

Current consensus DPS estimate is 20.4, implying a prospective dividend yield of 3.8%.

Current consensus EPS estimate suggests the PER is 15.1.

Market Sentiment: 0.7

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

BAP  BAPCOR LIMITED

Retailing

Overnight Price: $6.23

Macquarie rates BAP as Neutral (3) -

Bapcor will acquire specialist wholesale business, MTQ Engine Systems for $17m. At first blush the acquisition appears sound to Macquarie.

While the company is well managed and has a defensible growth outlook with a solid balance sheet the broker considers the trading multiples in the near term are full. Neutral retained. Target is raised to $6.89 from $6.78.

Target price is $6.89 Current Price is $6.23 Difference: $0.66
If BAP meets the Macquarie target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $6.50, suggesting upside of 5.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Macquarie forecasts a full year FY17 dividend of 14.80 cents and EPS of 24.70 cents.
At the last closing share price the estimated dividend yield is 2.38%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 25.22.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 23.6, implying annual growth of 32.2%.

Current consensus DPS estimate is 14.6, implying a prospective dividend yield of 2.4%.

Current consensus EPS estimate suggests the PER is 26.2.

Forecast for FY18:

Macquarie forecasts a full year FY18 dividend of 18.40 cents and EPS of 30.60 cents.
At the last closing share price the estimated dividend yield is 2.95%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 20.36.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 28.4, implying annual growth of 20.3%.

Current consensus DPS estimate is 17.6, implying a prospective dividend yield of 2.8%.

Current consensus EPS estimate suggests the PER is 21.8.

Market Sentiment: 0.5

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

BHP  BHP BILLITON LIMITED

Materials

Overnight Price: $22.85

Citi rates BHP as Neutral (3) -

The company has updated on its petroleum business at a briefing in London. Citi observes there was more disclosure than ever before but it is unlikely to make any meaningful change to broker views.

Volumes in the petroleum business are expected to decline unless there is a pick up in oil and gas prices and the US onshore business is considered likely to struggle to achieve positive cash flow in the current environment.

Citi's main concern is that, under a high gas price scenario, the whole US industry will increase, thereby keeping a cap on any potential price recovery and returns from the company's onshore business.

Neutral retained with a $21 target.

Target price is $21.00 Current Price is $22.85 Difference: minus $1.85 (current price is over target).
If BHP meets the Citi target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $23.29, suggesting upside of 0.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Citi forecasts a full year FY17 dividend of 62.37 cents and EPS of 82.85 cents.
At the last closing share price the estimated dividend yield is 2.73%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 27.58.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 92.0, implying annual growth of N/A.

Current consensus DPS estimate is 57.6, implying a prospective dividend yield of 2.5%.

Current consensus EPS estimate suggests the PER is 25.2.

Forecast for FY18:

Citi forecasts a full year FY18 dividend of 61.02 cents and EPS of 82.17 cents.
At the last closing share price the estimated dividend yield is 2.67%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 27.81.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 97.9, implying annual growth of 6.4%.

Current consensus DPS estimate is 63.1, implying a prospective dividend yield of 2.7%.

Current consensus EPS estimate suggests the PER is 23.6.

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 BHP as Outperform (1) -

The company's latest briefing confirmed Macquarie's view that higher energy prices will be required to grow volumes in the petroleum division.

Declining conventional production is considered only likely to be offset by shale if oil and gas prices move back towards US$60-70/bbl and US$3.25-3.50/mmbtu respectively.

The recent rise in coking coal prices and sustained strength in iron ore present material upside to base case forecasts, the broker believes. Outperform retained with $25 target.

Target price is $25.00 Current Price is $22.85 Difference: $2.15
If BHP meets the Macquarie target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $23.29, suggesting upside of 0.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Macquarie forecasts a full year FY17 dividend of 58.31 cents and EPS of 104.95 cents.
At the last closing share price the estimated dividend yield is 2.55%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 21.77.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 92.0, implying annual growth of N/A.

Current consensus DPS estimate is 57.6, implying a prospective dividend yield of 2.5%.

Current consensus EPS estimate suggests the PER is 25.2.

Forecast for FY18:

Macquarie forecasts a full year FY18 dividend of 50.33 cents and EPS of 99.71 cents.
At the last closing share price the estimated dividend yield is 2.20%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 22.92.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 97.9, implying annual growth of 6.4%.

Current consensus DPS estimate is 63.1, implying a prospective dividend yield of 2.7%.

Current consensus EPS estimate suggests the PER is 23.6.

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


Morgans rates BHP as Add (1) -

Morgans maintains its view that BHP Billiton is an attractive investment at the bottom of the cycle. The broker believes OPEC's decision to remove 750,000 bopd is a positive signal that the cartel will defend its market share.

Further upside is on offer in oil, the broker believes, given the market appears close to balanced supply and, as a result, vulnerable to any near-term disruptions.

Add rating and $25.30 target retained.

Target price is $25.30 Current Price is $22.85 Difference: $2.45
If BHP meets the Morgans target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $23.29, suggesting upside of 0.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Morgans forecasts a full year FY17 dividend of 63.73 cents and EPS of 98.98 cents.
At the last closing share price the estimated dividend yield is 2.79%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 23.08.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 92.0, implying annual growth of N/A.

Current consensus DPS estimate is 57.6, implying a prospective dividend yield of 2.5%.

Current consensus EPS estimate suggests the PER is 25.2.

Forecast for FY18:

Morgans forecasts a full year FY18 dividend of 73.22 cents and EPS of 146.44 cents.
At the last closing share price the estimated dividend yield is 3.20%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 15.60.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 97.9, implying annual growth of 6.4%.

Current consensus DPS estimate is 63.1, implying a prospective dividend yield of 2.7%.

Current consensus EPS estimate suggests the PER is 23.6.

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


ADDED

Ord Minnett rates BHP as Hold (3) -

The petroleum division briefing signals a 20% drop in production between FY17 and FY21 because of natural field decline in US onshore business. Under consensus pricing the business does not generate material free cash flow until FY21.

Ord Minnett's estimates are around break even for free cash flow until FY21 and considered to be similar to the outlook projected by the company. Ord Minnett retains a Hold rating and $20 target.

Target price is $21.00 Current Price is $22.85 Difference: minus $1.85 (current price is over target).
If BHP meets the Ord Minnett target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $23.29, suggesting upside of 0.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Ord Minnett forecasts a full year FY17 dividend of 44.75 cents and EPS of 66.44 cents.
At the last closing share price the estimated dividend yield is 1.96%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 34.39.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 92.0, implying annual growth of N/A.

Current consensus DPS estimate is 57.6, implying a prospective dividend yield of 2.5%.

Current consensus EPS estimate suggests the PER is 25.2.

Forecast for FY18:

Ord Minnett forecasts a full year FY18 dividend of 66.44 cents and EPS of 69.15 cents.
At the last closing share price the estimated dividend yield is 2.91%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 33.04.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 97.9, implying annual growth of 6.4%.

Current consensus DPS estimate is 63.1, implying a prospective dividend yield of 2.7%.

Current consensus EPS estimate suggests the PER is 23.6.

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

BSL  BLUESCOPE STEEL LIMITED

Materials

Overnight Price: $7.79

Deutsche Bank rates BSL as Hold (3) -

Deutsche Bank updates forecasts in line with its quarterly commodities review and as a result FY17 and FY18 profit estimates decline by 14% and 9% respectively.

 While management expects first half EBIT to increase by around 50% versus the prior half the broker believes it will actually decline around 42%, largely because of lower steel prices and higher costs such as for coking coal.

The broker retains a Hold rating. Target is reduced to $7.65 from $7.86.

Target price is $7.65 Current Price is $7.79 Difference: minus $0.14 (current price is over target).
If BSL meets the Deutsche Bank target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $9.30, suggesting upside of 20.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Deutsche Bank forecasts a full year FY17 dividend of 9.00 cents and EPS of 78.00 cents.
At the last closing share price the estimated dividend yield is 1.16%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 9.99.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 91.1, implying annual growth of 46.8%.

Current consensus DPS estimate is 10.5, implying a prospective dividend yield of 1.4%.

Current consensus EPS estimate suggests the PER is 8.5.

Forecast for FY18:

Deutsche Bank forecasts a full year FY18 dividend of 18.00 cents and EPS of 83.00 cents.
At the last closing share price the estimated dividend yield is 2.31%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 9.39.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 78.2, implying annual growth of -14.2%.

Current consensus DPS estimate is 15.0, implying a prospective dividend yield of 1.9%.

Current consensus EPS estimate suggests the PER is 9.9.

Market Sentiment: 0.6

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

FXJ  FAIRFAX MEDIA LIMITED

Media

Overnight Price: $0.96

UBS rates FXJ as Neutral (3) -

UBS strategists ponder whether the growth trade is becoming vulnerable with a backdrop of negative earnings revisions and a potential lift in bond yields.

On valuation Fairfax appears attractive to UBS, relative to other online classifieds, with Domain the main driver. Further growth should benefit from the roll out of the agent equity model. Still, print declines are likely to drive the company's earnings lower in FY17.

The broker maintains a Neutral rating and $1.00 target.

Target price is $1.00 Current Price is $0.96 Difference: $0.04
If FXJ meets the UBS target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $1.06, suggesting upside of 9.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

UBS forecasts a full year FY17 dividend of 4.00 cents and EPS of 6.00 cents.
At the last closing share price the estimated dividend yield is 4.17%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 16.00.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 6.2, implying annual growth of N/A.

Current consensus DPS estimate is 3.9, implying a prospective dividend yield of 4.1%.

Current consensus EPS estimate suggests the PER is 15.5.

Forecast for FY18:

UBS forecasts a full year FY18 dividend of 4.00 cents and EPS of 6.00 cents.
At the last closing share price the estimated dividend yield is 4.17%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 16.00.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 6.4, implying annual growth of 3.2%.

Current consensus DPS estimate is 4.0, implying a prospective dividend yield of 4.2%.

Current consensus EPS estimate suggests the PER is 15.0.

Market Sentiment: 0.6

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

IGO  INDEPENDENCE GROUP NL

Materials

Overnight Price: $3.96

Macquarie rates IGO as Outperform (1) -

The company has announced a 19c a share bid for Windward Resources ((WIN)), which owns a large tenement that is adjacent to the Nova project. This significantly increases the holding in the Fraser Range.

Macquarie observes that securing additional tenements provides the potential to extend the life of the Nova nickel project. Outperform maintained. Target is $4.80.

Target price is $4.80 Current Price is $3.96 Difference: $0.84
If IGO meets the Macquarie target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $3.81, suggesting downside of -6.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Macquarie forecasts a full year FY17 dividend of 10.00 cents and EPS of 3.90 cents.
At the last closing share price the estimated dividend yield is 2.53%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 101.54.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 8.3, implying annual growth of N/A.

Current consensus DPS estimate is 3.5, implying a prospective dividend yield of 0.9%.

Current consensus EPS estimate suggests the PER is 49.0.

Forecast for FY18:

Macquarie forecasts a full year FY18 dividend of 12.00 cents and EPS of 28.30 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 13.99.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 33.1, implying annual growth of 298.8%.

Current consensus DPS estimate is 10.8, implying a prospective dividend yield of 2.7%.

Current consensus EPS estimate suggests the PER is 12.3.

Market Sentiment: -0.2

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

MYO  MYOB LIMITED

Software & Services

Overnight Price: $3.77

UBS rates MYO as Neutral (3) -

UBS strategists ponder whether the growth trade is becoming vulnerable with a backdrop of negative earnings revisions and a potential lift in bond yields.

MYOB is a quality business UBS believes, with the benefit of an incumbent position and recurring revenue. The long-term growth profile hinges on cloud penetration and market share and the broker forecasts cloud penetration to lift to 80% in the long term.

The broker forecasts revenue growth of 11% and earnings per share growth of 12%. Neutral rating retained. Target is $3.60.

Target price is $3.60 Current Price is $3.77 Difference: minus $0.17 (current price is over target).
If MYO meets the UBS target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.01, suggesting upside of 6.4% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY16:

UBS forecasts a full year FY16 dividend of 11.00 cents and EPS of 16.00 cents.
At the last closing share price the estimated dividend yield is 2.92%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 23.56.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 15.3, implying annual growth of 40.1%.

Current consensus DPS estimate is 11.2, implying a prospective dividend yield of 3.0%.

Current consensus EPS estimate suggests the PER is 24.6.

Forecast for FY17:

UBS forecasts a full year FY17 dividend of 13.00 cents and EPS of 18.00 cents.
At the last closing share price the estimated dividend yield is 3.45%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 20.94.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 16.7, implying annual growth of 9.2%.

Current consensus DPS estimate is 12.3, implying a prospective dividend yield of 3.3%.

Current consensus EPS estimate suggests the PER is 22.5.

Market Sentiment: 0.5

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

NEC  NINE ENTERTAINMENT CO. HOLDINGS LIMITED

Media

Overnight Price: $1.01

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

UBS strategists ponder whether the growth trade is becoming vulnerable with a backdrop of negative earnings revisions and a potential lift in bond yields. TV is qualitatively the broker's least preferred media with audience declines still outpacing revenues.

UBS reduces TV forecasts because of the soft ad market outlook for FY17, cutting Nine's earnings per share estimates by 27% and by 26% for FY18.

The broker downgrades to Neutral from Buy given the structural concerns. Valuation appears reasonable but UBS believes the risk to earnings is skewed to the downside. Target is lowered to 90c from $1.30.

Target price is $0.90 Current Price is $1.01 Difference: minus $0.115 (current price is over target).
If NEC meets the UBS target it will return approximately minus 11% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $1.05, suggesting upside of 5.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

UBS forecasts a full year FY17 dividend of 9.00 cents and EPS of 10.00 cents.
At the last closing share price the estimated dividend yield is 8.87%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 10.15.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 12.1, implying annual growth of -67.2%.

Current consensus DPS estimate is 10.7, implying a prospective dividend yield of 10.7%.

Current consensus EPS estimate suggests the PER is 8.3.

Forecast for FY18:

UBS forecasts a full year FY18 dividend of 10.00 cents and EPS of 11.00 cents.
At the last closing share price the estimated dividend yield is 9.85%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 9.23.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 11.5, implying annual growth of -5.0%.

Current consensus DPS estimate is 10.7, implying a prospective dividend yield of 10.7%.

Current consensus EPS estimate suggests the PER is 8.7.

Market Sentiment: -0.2

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

ORE  OROCOBRE LIMITED

Materials

Overnight Price: $3.52

Macquarie rates ORE as Outperform (1) -

FY16 results revealed a net loss of US$22m, in line with Macquarie. FY17 production guidance is for over 15,000t. 

Macquarie finds the outlook less rosy than previously forecasts, with additional supply coming to the market putting a ceiling on prices while the lithium market appear to be coming off the boil.

If aspiring hard rock producers fail to bring production to market then the broker believes Orecobre is best placed to benefit. Outperform retained. Target drops to $4.30 from $5.00.

Target price is $4.30 Current Price is $3.52 Difference: $0.78
If ORE meets the Macquarie target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $4.12, suggesting upside of 16.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Macquarie forecasts a full year FY17 dividend of 0.00 cents and EPS of 13.60 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 25.88.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is -0.6, 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 N/A.

Forecast for FY18:

Macquarie forecasts a full year FY18 dividend of 0.00 cents and EPS of 15.40 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 22.86.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 4.1, 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 86.3.

Market Sentiment: 0.5

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

PPS  PRAEMIUM LIMITED

Software & Services

Overnight Price: $0.47

Morgans rates PPS as Add (1) -

The company will acquire Wensley Mackay, a provider of self managed pension services in the UK. Morgans conservatively estimate the deal will boost earnings per share by 5.5% by year four.

Until this deal the broker observes Praemium was unable to offer a complete investment solution in the UK for the pensions market.

Add rating retained and the target rises to 61c from 57c.

Target price is $0.61 Current Price is $0.47 Difference: $0.145
If PPS meets the Morgans target it will return approximately 31% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY17:

Morgans forecasts a full year FY17 dividend of 0.00 cents and EPS of 1.10 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 42.27.

Forecast for FY18:

Morgans forecasts a full year FY18 dividend of 0.00 cents and EPS of 1.80 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 25.83.

Market Sentiment: 1.0

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

RMD  RESMED INC

Health Care Equipment & Services

Overnight Price: $8.38

ADDED

Credit Suisse rates RMD as Outperform (1) -

Credit Suisse reviews assumptions ahead of the first quarter results.

The broker remains aware that nationalisation of US competitive bidding remains a risk, with the potential for manufacturers to provide relief via price discounting, but believes the industry should benefit from robust underlying volume growth.

Target is reduced to $9.40 from $9.80 and Outperform retained.

Target price is $9.40 Current Price is $8.38 Difference: $1.02
If RMD meets the Credit Suisse target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $9.63, suggesting upside of 14.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Credit Suisse forecasts a full year FY17 dividend of 18.31 cents and EPS of 34.29 cents.
At the last closing share price the estimated dividend yield is 2.18%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 24.44.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 35.0, implying annual growth of N/A.

Current consensus DPS estimate is 17.5, implying a prospective dividend yield of 2.1%.

Current consensus EPS estimate suggests the PER is 24.0.

Forecast for FY18:

Credit Suisse forecasts a full year FY18 dividend of 19.93 cents and EPS of 38.39 cents.
At the last closing share price the estimated dividend yield is 2.38%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 21.83.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 36.5, implying annual growth of 4.3%.

Current consensus DPS estimate is 19.7, implying a prospective dividend yield of 2.3%.

Current consensus EPS estimate suggests the PER is 23.0.

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

SWM  SEVEN WEST MEDIA LIMITED

Media

Overnight Price: $0.74

Macquarie rates SWM as Neutral (3) -

The company has sold its 50% stake in Presto to Foxtel. Macquarie expects, with the price undisclosed, that it is likely an impairment of the asset will follow. The removal of the associate losses is judged to be 5% accretive to adjusted earnings.

Macquarie continues to find the outlook for Seven West challenging, with increasing cost pressures and structural difficulties in the broader TV market. Neutral rating and 90c target retained.

Target price is $0.90 Current Price is $0.74 Difference: $0.16
If SWM meets the Macquarie target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $0.81, suggesting upside of 9.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Macquarie forecasts a full year FY17 dividend of 6.60 cents and EPS of 11.00 cents.
At the last closing share price the estimated dividend yield is 8.92%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 6.73.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 10.6, implying annual growth of -13.1%.

Current consensus DPS estimate is 6.5, implying a prospective dividend yield of 8.8%.

Current consensus EPS estimate suggests the PER is 7.0.

Forecast for FY18:

Macquarie forecasts a full year FY18 dividend of 6.20 cents and EPS of 10.40 cents.
At the last closing share price the estimated dividend yield is 8.38%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 7.12.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 9.9, implying annual growth of -6.6%.

Current consensus DPS estimate is 6.3, implying a prospective dividend yield of 8.5%.

Current consensus EPS estimate suggests the PER is 7.5.

Market Sentiment: -0.3

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


UBS rates SWM as Neutral (3) -

UBS strategists ponder whether the growth trade is becoming vulnerable with a backdrop of negative earnings revisions and a potential lift in bond yields.

TV is qualitatively the broker's least preferred media with audience declines still outpacing revenues. Yet Seven Network continues to perform strongly in terms of audience share.

Near-term upside hinges on cost reductions, UBS believes. FY18 earnings per share estimates are lowered by 3.5% because of a reduction in TV revenue forecasts. Neutral rating is maintained. Target falls to 75c from 85c.

Target price is $0.75 Current Price is $0.74 Difference: $0.01
If SWM meets the UBS target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $0.81, suggesting upside of 9.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

UBS forecasts a full year FY17 dividend of 6.00 cents and EPS of 10.00 cents.
At the last closing share price the estimated dividend yield is 8.11%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 7.40.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 10.6, implying annual growth of -13.1%.

Current consensus DPS estimate is 6.5, implying a prospective dividend yield of 8.8%.

Current consensus EPS estimate suggests the PER is 7.0.

Forecast for FY18:

UBS forecasts a full year FY18 dividend of 5.00 cents and EPS of 10.00 cents.
At the last closing share price the estimated dividend yield is 6.76%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 7.40.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 9.9, implying annual growth of -6.6%.

Current consensus DPS estimate is 6.3, implying a prospective dividend yield of 8.5%.

Current consensus EPS estimate suggests the PER is 7.5.

Market Sentiment: -0.3

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

SXL  SOUTHERN CROSS MEDIA GROUP

Media

Overnight Price: $1.53

UBS rates SXL as Neutral (3) -

UBS strategists ponder whether the growth trade is becoming vulnerable with a backdrop of negative earnings revisions and a potential lift in bond yields. TV is qualitatively the broker's least preferred media with audience declines still outpacing revenues.

That said UBS envisages potential for Southern Cross to record a result at the top end of the guidance range for FY17 of $177-183m in EBITDA. Profitability is also expected to lift in FY18, with further upside should Southern Cross improve on the regional TV share that WIN was able to deliver.

The stock's valuation now looks stretched and UBS retains a Neutral rating. Target rises to $1.50 from $1.10.

Target price is $1.50 Current Price is $1.53 Difference: minus $0.025 (current price is over target).
If SXL meets the UBS target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $1.35, suggesting downside of -11.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

UBS forecasts a full year FY17 dividend of 8.00 cents and EPS of 12.00 cents.
At the last closing share price the estimated dividend yield is 5.25%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.71.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 11.4, implying annual growth of 12.6%.

Current consensus DPS estimate is 7.6, implying a prospective dividend yield of 5.0%.

Current consensus EPS estimate suggests the PER is 13.4.

Forecast for FY18:

UBS forecasts a full year FY18 dividend of 8.00 cents and EPS of 13.00 cents.
At the last closing share price the estimated dividend yield is 5.25%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 11.73.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 12.0, implying annual growth of 5.3%.

Current consensus DPS estimate is 8.4, implying a prospective dividend yield of 5.5%.

Current consensus EPS estimate suggests the PER is 12.7.

Market Sentiment: 0.0

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

SYR  SYRAH RESOURCES LIMITED

Materials

Overnight Price: $3.35

Credit Suisse rates SYR as Outperform (1) -

Credit Suisse is surprised by the resignation of managing director Tolga Kumova. While stepping down from the position is a positive, allowing Mr Kumova to focus on the spherical business, the broker believes his resignation from the board needs explanation.

Chairman Jim Askew will be acting MD until a new one is recruited. Outperform rating retained. Target is $7.80.

Target price is $7.80 Current Price is $3.35 Difference: $4.45
If SYR meets the Credit Suisse target it will return approximately 133% (excluding dividends, fees and charges).

Current consensus price target is $6.36, suggesting upside of 72.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY16:

Credit Suisse forecasts a full year FY16 dividend of 0.00 cents and EPS of minus 5.59 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 59.93.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is -6.5, 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 N/A.

Forecast for FY17:

Credit Suisse forecasts a full year FY17 dividend of 0.00 cents and EPS of 29.93 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 11.19.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 9.2, implying annual growth of N/A.

Current consensus DPS estimate is 1.3, implying a prospective dividend yield of 0.4%.

Current consensus EPS estimate suggests the PER is 40.1.

Market Sentiment: 0.5

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


Deutsche Bank rates SYR as Buy (1) -

Deutsche Bank considers the resignation of managing director Tolga Kumova a positive step. While Mr Kumova took the company to a fully funded developer of the world's highest grade graphite project he does not believe he has the appropriate skill set to take it to the commercial production phase.

Deutsche Bank is confident in the quality of the project and strength of the operations team. The broker's Buy rating is retained. Target is $7.30.

Target price is $7.30 Current Price is $3.35 Difference: $3.95
If SYR meets the Deutsche Bank target it will return approximately 118% (excluding dividends, fees and charges).

Current consensus price target is $6.36, suggesting upside of 72.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY16:

Deutsche Bank forecasts a full year FY16 dividend of 0.00 cents and EPS of minus 2.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 167.50.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is -6.5, 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 N/A.

Forecast for FY17:

Deutsche Bank forecasts a full year FY17 dividend of 4.00 cents and EPS of 6.00 cents.
At the last closing share price the estimated dividend yield is 1.19%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 55.83.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 9.2, implying annual growth of N/A.

Current consensus DPS estimate is 1.3, implying a prospective dividend yield of 0.4%.

Current consensus EPS estimate suggests the PER is 40.1.

Market Sentiment: 0.5

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


ADDED

Morgan Stanley rates SYR as Underweight (5) -

Morgan Stanley believes the sudden resignation of managing director Tolga Kumova raises some questions. Chairman Jim Askew will take on an executive role while the board searches for a replacement.

The broker acknowledges the move reflects an evolving strategic direction, as the company moves to a producer from explorer, but wonders whether the announcement could have been better planned and why a transition could not have been carried out in parallel.

The broker retains an Underweight rating and $3.75 target. Industry view is Attractive.

Target price is $3.75 Current Price is $3.35 Difference: $0.4
If SYR meets the Morgan Stanley target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $6.36, suggesting upside of 72.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY16:

Morgan Stanley forecasts a full year FY16 EPS of minus 9.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 37.22.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is -6.5, 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 N/A.

Forecast for FY17:

Morgan Stanley forecasts a full year FY17 EPS of minus 1.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 335.00.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 9.2, implying annual growth of N/A.

Current consensus DPS estimate is 1.3, implying a prospective dividend yield of 0.4%.

Current consensus EPS estimate suggests the PER is 40.1.

Market Sentiment: 0.5

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

WES  WESFARMERS LIMITED

Food & Staples Retailing

Overnight Price: $44.15

ADDED

Ord Minnett rates WES as Hold (3) -

Ord Minnett reviews the company's divisional performance and identifies concerns regarding the slowing EBIT growth at Coles. Yet, the broker suggests Bunnings is under appreciated for its strong growth and high return on capital.

Overall the stock remains attractive to the broker but, given the share price performance, there is modest valuation support. Hold rating retained. Target rises to $44 from $40.

Target price is $44.00 Current Price is $44.15 Difference: minus $0.15 (current price is over target).
If WES meets the Ord Minnett target it will return approximately minus 0% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $42.59, suggesting downside of -4.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Ord Minnett forecasts a full year FY17 dividend of 190.00 cents and EPS of 247.00 cents.
At the last closing share price the estimated dividend yield is 4.30%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 17.87.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 243.5, implying annual growth of 572.7%.

Current consensus DPS estimate is 201.8, implying a prospective dividend yield of 4.5%.

Current consensus EPS estimate suggests the PER is 18.3.

Forecast for FY18:

Ord Minnett forecasts a full year FY18 dividend of 212.00 cents and EPS of 268.00 cents.
At the last closing share price the estimated dividend yield is 4.80%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 16.47.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 261.1, implying annual growth of 7.2%.

Current consensus DPS estimate is 216.5, implying a prospective dividend yield of 4.9%.

Current consensus EPS estimate suggests the PER is 17.1.

Market Sentiment: 0.0

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

XRO  XERO LIMITED

Software & Services

Overnight Price: $18.50

Macquarie rates XRO as Neutral (3) -

Macquarie updates forecasts to account for currency following the first half result. The business is in a rapid growth phase and is making significant investments in product and marketing.

The broker recalibrates its forecasts and raises the target to NZ$20.50 from NZ$16.50. The stock is judged to be the fifth most expensive when viewed against a sample of software comparables but has the third highest growth rate. This suggests to Macquarie the stock is trading around fair value and a Neutral rating is maintained.

Current Price is $18.50. Target price not assessed.

Current consensus price target is $18.00, suggesting downside of -3.1% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY17:

Macquarie forecasts a full year FY17 dividend of 0.00 cents and EPS of minus 50.66 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 36.52.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is -48.1, 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 N/A.

Forecast for FY18:

Macquarie forecasts a full year FY18 dividend of 0.00 cents and EPS of minus 30.17 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 61.31.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is -23.5, 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 N/A.

Market Sentiment: 0.4

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

Summaries
ALQ - ALS LIMITED Hold - Deutsche Bank Overnight Price $5.97
APN - APN NEWS & MEDIA Neutral - UBS Overnight Price $3.49
APO - APN OUTDOOR Buy - UBS Overnight Price $5.44
BAP - BAPCOR LIMITED Neutral - Macquarie Overnight Price $6.23
BHP - BHP BILLITON Neutral - Citi Overnight Price $22.85
Outperform - Macquarie Overnight Price $22.85
Add - Morgans Overnight Price $22.85
Hold - Ord Minnett Overnight Price $22.85
BSL - BLUESCOPE STEEL Hold - Deutsche Bank Overnight Price $7.79
FXJ - FAIRFAX MEDIA Neutral - UBS Overnight Price $0.96
IGO - INDEPENDENCE GROUP Outperform - Macquarie Overnight Price $3.96
MYO - MYOB Neutral - UBS Overnight Price $3.77
NEC - NINE ENTERTAINMENT Downgrade to Neutral from Buy - UBS Overnight Price $1.01
ORE - OROCOBRE Outperform - Macquarie Overnight Price $3.52
PPS - PRAEMIUM Add - Morgans Overnight Price $0.47
RMD - RESMED Outperform - Credit Suisse Overnight Price $8.38
SWM - SEVEN WEST MEDIA Neutral - Macquarie Overnight Price $0.74
Neutral - UBS Overnight Price $0.74
SXL - SOUTHERN CROSS MEDIA Neutral - UBS Overnight Price $1.53
SYR - SYRAH RESOURCES Outperform - Credit Suisse Overnight Price $3.35
Buy - Deutsche Bank Overnight Price $3.35
Underweight - Morgan Stanley Overnight Price $3.35
WES - WESFARMERS Hold - Ord Minnett Overnight Price $44.15
XRO - XERO Neutral - Macquarie Overnight Price $18.50
RATING SUMMARY
Rating No. Of Recommendations
1. Buy

9

3. Hold

14

5. Sell

1

Thursday 06 October 2016

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Disclaimer:
The content of this information does in no way reflect the opinions of FNArena, or of its journalists. In fact we don't have any opinion about the stock market, its value, future direction or individual shares. FNArena solely reports about what the main experts in the market note, believe and comment on. By doing so we believe we provide intelligent investors with a valuable tool that helps them in making up their own minds, reading market trends and getting a feel for what is happening beneath the surface. This document is provided for informational purposes only. It does not constitute an offer to sell or a solicitation to buy any security or other financial instrument. FNArena employs very experienced journalists who base their work on information believed to be reliable and accurate, though no guarantee is given that the daily report is accurate or complete. Investors should contact their personal adviser before making any investment decision.