Australian Broker Call

Macquarie rates ANN as Upgrade to Outperform from Neutral (1) -

Macquarie finds macro economic data is broadly supportive of organic revenue growth, while further moderation in raw material prices offers the potential for gains in margin.

In view of the flexibility in the balance sheet and incremental benefits from the company's transformation program, as well as undemanding valuations, Macquarie upgrades to Outperform from Neutral.

Target is reduced to $26.50 from $27.20 to reflect lower long-term growth assumptions.

Target price is $26.50 Current Price is $22.52 Difference: $3.98
If ANN meets the Macquarie target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $25.65, suggesting upside of 13.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

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

Market Sentiment: 0.4

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

Credit Suisse rates AQG as Outperform (1) -

The preliminary production result for 2018 of 170,865 ounces has beaten guidance for 110-130,000 ounces.

Credit Suisse expects guidance for 2019 to be delivered in February along with the full quarterly result, which should plug the knowledge gap and enable assessment of the ramp up of the sulphide circuit.

Outperform rating maintained with a $5.05 target.

Target price is $5.05 Current Price is $2.82 Difference: $2.23
If AQG meets the Credit Suisse target it will return approximately 79% (excluding dividends, fees and charges).

Current consensus price target is $4.15, suggesting upside of 47.2% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

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

Market Sentiment: 1.0

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

Deutsche Bank rates AQG as Buy (1) -

2018 production was ahead of Deutsche Bank's estimates and oxide production more than doubled quarter on quarter in December. The broker believes 2019 will be a transition year as the sulphide plant ramps up.

The stock continues to trade at a deep discount to valuation and the broker considers there is little value being attributed for the expansion potential of the oxide operation as well as projected mine life for the sulphide operation.

Buy rating maintained. Target is $4.20.

Target price is $4.20 Current Price is $2.82 Difference: $1.38
If AQG meets the Deutsche Bank target it will return approximately 49% (excluding dividends, fees and charges).

Current consensus price target is $4.15, suggesting upside of 47.2% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

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

Market Sentiment: 1.0

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

Macquarie rates AQG as Outperform (1) -

The company has reported strong preliminary December quarter production from  Copler, beating Macquarie's expectations by 64%. The 81,600 ounces were produced from higher heap leach production, higher grade and stacked volumes and a better-than-expected ramp up of the sulphide plant.

The company has met its 2018 guidance on production and beat on costs. Macquarie maintains an Outperform rating and raises the target to $3.60 from $2.70.

Target price is $3.60 Current Price is $2.82 Difference: $0.78
If AQG meets the Macquarie target it will return approximately 28% (excluding dividends, fees and charges).

Current consensus price target is $4.15, suggesting upside of 47.2% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

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

Market Sentiment: 1.0

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

Credit Suisse rates BLD as Neutral (3) -

Credit Suisse reduces forecasts for 2019 based on the outlook for US housing starts and a lower recovery in Australia.

The broker now forecasts 16% growth in constant currency earnings versus guidance for 20% or more, noting the company retained its guidance despite a poor first quarter. The company does expect a strong skew to the second half and Credit Suisse models a 45:55 EBIT split.

Boral expects a resolution to the USG joint venture by the first half results. Credit Suisse envisages a positive outcome in most scenarios. Neutral rating maintained. Target is reduced to $5.30 from $5.80.

Target price is $5.30 Current Price is $4.91 Difference: $0.39
If BLD meets the Credit Suisse target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $7.04, suggesting upside of 43.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.6

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

Ord Minnett rates BOQ as Hold (3) -

Bank of Queensland's increased interest rates across a number of home loan products are expected to boost margins in the short term, although Ord Minnett suggests this could be indicative of greater margin pressure versus peers.

Earnings forecasts are broadly unchanged because of offsets from funding costs and slower loan growth. Hold rating and $10.60 target maintained.

Target price is $10.60 Current Price is $10.27 Difference: $0.33
If BOQ meets the Ord Minnett target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $10.64, suggesting upside of 3.6% (ex-dividends)

The company's fiscal year ends in August.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.0

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

Ord Minnett rates BSL as Accumulate (2) -

Ord Minnett lowers earnings estimates for FY19 by -11% and FY20 by -8%. Despite the revisions, the broker still believes the stock is cheap, while the company is expected to focus on higher value-added product.

Lower hot rolled coil prices have hurt commodity steel making operations but lower substrate prices may lead to margin expansion for building products, the broker suggests.

Accumulate maintained. Target is reduced to $19.80 from $20.70.

Target price is $19.80 Current Price is $11.55 Difference: $8.25
If BSL meets the Ord Minnett target it will return approximately 71% (excluding dividends, fees and charges).

Current consensus price target is $17.06, suggesting upside of 47.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.6

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

Ord Minnett rates CLV as Buy (1) -

The stock has moved back to a level Ord Minnett finds attractive and concerns regarding short term issues are believed to be overlooking a stronger medium-longer term outlook.

The company has cleared the regulatory hurdle regarding visibility on sales, as the Chinese government announced that cross-border e-commerce sales of infant formula would not need the onerous registration required for off-line sales.

Ord Minnett reiterates a Buy rating and $1.70 target.

Target price is $1.70 Current Price is $1.35 Difference: $0.35
If CLV meets the Ord Minnett target it will return approximately 26% (excluding dividends, fees and charges).

The company's fiscal year ends in July.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 1.0

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

Ord Minnett rates CLW as Hold (3) -

Following site visits to the Metcash ((MTS)) facility in Perth and the Woolworths ((WOW)) facility in Melbourne, Ord Minnett updates earnings estimates. The business is believed to be well-positioned for the maintenance of full occupancy at the two sites.

The broker would expect materially lower rents on the renewal of the Metcash lease and higher expiry capital expenditure versus previous assumptions on both assets. This leads to lower full year earnings estimates for FY21-23, reduced by -1%, and FY24, reduced by -3.5%.

Ord Minnett maintains a Hold rating and reduces the target to $4.15 from $4.25.

Target price is $4.15 Current Price is $4.30 Difference: minus $0.15 (current price is over target).
If CLW meets the Ord Minnett target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.08, suggesting downside of -5.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: -0.3

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

Morgans rates GDG as Add (1) -

December quarter sales were solid, Morgans observes. The company has now cycled its higher cost base associated with Project Clearwater.

Estimates for earnings per share are downgraded by -15% for FY19 and FY20, reflecting the effect of recent market declines on forecast fund levels.

Pursuant to recent regulatory changes in superannuation, the broker believes alternative low tax investment options such as investment bonds will obtain significant structural growth.

Add rating maintained. Target is reduced to $1.13 from $1.33.

Target price is $1.13 Current Price is $0.80 Difference: $0.33
If GDG meets the Morgans target it will return approximately 41% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 1.0

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

Morgan Stanley rates HVN as Underweight (5) -

Morgan Stanley lowers earnings estimates for discretionary retail across FY19-21 to reflect a softer macro environment and the weak Christmas trading. Channel checks indicate Christmas trading was soft for non-food retailers.

Morgan Stanley notes Harvey Norman's earnings are the most tied to the Australian housing cycle, which will face increasing pressure. Moreover, the broker expects recent improvements in international operations will fade as global conditions deteriorate.

Underweight rating. Target is reduced to $3.00 from $3.10. Cautious industry view maintained.

Target price is $3.00 Current Price is $3.22 Difference: minus $0.22 (current price is over target).
If HVN meets the Morgan Stanley target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.63, suggesting upside of 12.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: -0.1

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

Morgan Stanley rates JBH as Overweight (1) -

Morgan Stanley lowers earnings estimates for discretionary retail across FY19-21 to reflect a softer macro environment and the weak Christmas trading. Channel checks indicate Christmas trading was soft for non-food retailers.

JB Hi-Fi?'s mall-based high foot traffic locations and low operating costs make it perform relatively well in this difficult environment. Competitive intensity and white goods is expected to ease in 2019.

Overweight rating maintained. Industry view: Cautious. Target is reduced to $28 from $32.

Target price is $28.00 Current Price is $21.29 Difference: $6.71
If JBH meets the Morgan Stanley target it will return approximately 32% (excluding dividends, fees and charges).

Current consensus price target is $25.12, suggesting upside of 18.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.1

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

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

While asset managers are cheap Morgan Stanley suspects ongoing outflows will mean a re-rating in the near term is unlikely.

Janus Henderson is considered an exception among Australian listed stocks as, while it appears cheap versus peers, it is actually trading in line with global peers on the basis of the level of flows.

Equal-weight rating maintained. Target is reduced to $34 from $35. Industry view is In-Line.

Target price is $34.00 Current Price is $29.47 Difference: $4.53
If JHG meets the Morgan Stanley target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $38.21, suggesting upside of 29.7% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

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

Market Sentiment: 0.2

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

Credit Suisse rates JHX as Outperform (1) -

Credit Suisse reduces EBIT estimates for North America by -0.2% in FY19 and -0.6% in FY20. The broker envisages little respite from input costs, while pulp prices continue to increase albeit freight costs are abating.

The target is reduced to $20.70 from $21.20. Continued improvement in market share through FY19 should demonstrate a return to double-digit net profit growth in FY20, despite the moderation in new housing.

Such growth would warrant a premium to the market, in the broker's view, and an Outperform rating is maintained.

Target price is $20.70 Current Price is $15.06 Difference: $5.64
If JHX meets the Credit Suisse target it will return approximately 37% (excluding dividends, fees and charges).

Current consensus price target is $21.17, suggesting upside of 40.6% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY19:

Forecast for FY20:

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

Market Sentiment: 0.9

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

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

While asset managers are cheap Morgan Stanley suspects ongoing outflows will mean a re-rating in the near term is unlikely. In contrast to global peers, Australian stocks appear at a premium, even accounting for flows.

Morgan Stanley upgrades Magellan Financial to Equal-weight from Underweight, given its stronger investment performance versus peers. Target is raised to $25.00 from $21.50. Industry view: In-Line.

Target price is $25.00 Current Price is $26.64 Difference: minus $1.64 (current price is over target).
If MFG meets the Morgan Stanley target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $29.24, suggesting upside of 9.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.8

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

Morgan Stanley rates PDL as Overweight (1) -

While asset managers are cheap Morgan Stanley suspects ongoing outflows will mean a re-rating in the near term is unlikely.

The broker retains a preference for Pendal Group and maintains an Overweight rating. Target is reduced to $10.00 from $10.80. Industry view: In-Line.

Target price is $10.00 Current Price is $7.75 Difference: $2.25
If PDL meets the Morgan Stanley target it will return approximately 29% (excluding dividends, fees and charges).

Current consensus price target is $9.08, suggesting upside of 17.1% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.2

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

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

While asset managers are cheap Morgan Stanley suspects ongoing outflows will mean a re-rating in the near term is unlikely.

Morgan Stanley looks for the new CEO to accelerate growth through several means. The broker also believes diversifying the investments business is crucial as Perpetual has had the worst outflows of Australian asset managers in the past six months.

Equal-weight rating. Target is reduced to $36 from $48. Industry view: In-line.

Target price is $36.00 Current Price is $32.39 Difference: $3.61
If PPT meets the Morgan Stanley target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $37.68, suggesting upside of 16.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.0

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

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

While asset managers are cheap Morgan Stanley suspects ongoing outflows will mean a re-rating in the near term is unlikely. Looking forward, the broker believes Platinum Asset Management faces the greatest risk of de-rating as flows are expected to deteriorate.

The stock is also trading at a high on the broker's FY19 forecasts. Morgan Stanley downgrades to Underweight from Equal-weight, as this is the most expensive stock in the group under coverage.

Industry view is In-Line. Target is reduced to $3.50 from $6.00.

Target price is $3.50 Current Price is $4.55 Difference: minus $1.05 (current price is over target).
If PTM meets the Morgan Stanley target it will return approximately minus 23% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.44, suggesting downside of -2.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: -0.8

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

Ord Minnett rates SGM as Buy (1) -

Ord Minnett lowers earnings estimates for FY19 by -8% and FY20 by -5%. First half estimates are increased modestly. The broker believes the operating dynamics are challenged because of the imposition of non-ferrous tariffs from China and muted demand in Turkey for scrap.

Media reports suggest mild US weather has led to ample supply of scrap throughout the winter. Buy rating maintained, as the stock is trading well below net present value estimates. Target is reduced to $15.40 from $16.00.

Target price is $15.40 Current Price is $9.94 Difference: $5.46
If SGM meets the Ord Minnett target it will return approximately 55% (excluding dividends, fees and charges).

Current consensus price target is $14.21, suggesting upside of 42.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.6

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

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

Morgan Stanley lowers earnings estimates for discretionary retail across FY19-21 to reflect a softer macro environment and the weak Christmas trading. Channel checks indicate Christmas trading was soft for non-food retailers.

The stock is at its deepest-ever discount to the ASX industrials, the broker observes, and earnings resilience is under appreciated at current multiples. Multiples, however, are likely to be capped as the CEO transition process concludes ahead of an updated strategic plan.

Equal-weight rating. Target is reduced to $7.40 from $9.60. Industry View: Cautious.

Target price is $7.40 Current Price is $6.38 Difference: $1.02
If SUL meets the Morgan Stanley target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $9.15, suggesting upside of 43.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.4

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

Morgans rates TWE as Reinstate Coverage with Add (1) -

Morgans reinstates coverage with an Add rating and $17.20 target. The broker observes Treasury Wine is on track to deliver 25% growth in operating earnings (EBIT) in FY19.

The broker forecasts strong double-digit growth over the next few years largely because of the luxury and masstige inventory.

Morgans has a positive view based on the strong market position globally and the impressive management team. The stock is considered attractively priced for its growth profile.

Target price is $17.20 Current Price is $14.37 Difference: $2.83
If TWE meets the Morgans target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $17.56, suggesting upside of 22.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.4

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