Australian Broker Call

Morgan Stanley rates BOQ as Overweight (1) -

A surprised Morgan Stanley notes BOQ is re-pricing all mortgages +15bp, ahead of peers. On the analysts calculations, this move drives circa 4% potential upside to their present forecast FY17 earnings, or circa 1.5% assuming a volume impact with flat mortgage growth.

The analysts see further evidence in support of their Overweight rating. They suggest strong capital position and lower volumes reduce the risk of a dividend cut, despite an 80% payout ratio. Sector view In-Line. Target $12.00.

Target price is $12.00 Current Price is $11.63 Difference: $0.37
If BOQ meets the Morgan Stanley target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $11.46, suggesting downside of -4.0% (ex-dividends)

The company's fiscal year ends in August.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.1

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

Deutsche Bank rates BSL as Hold (3) -

Through a combination of supply-side discipline and fiscal stimulus in China, bulk markets have tightened significantly  and Deutsche Bank considers this a positive for  the company.

As a result, BlueScope's FY17 net profit estimate increases 3%. Hold rating retained. Target rises to $8.98 from $8.76.

Target price is $8.98 Current Price is $9.17 Difference: minus $0.19 (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 $9.39, suggesting upside of 4.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.7

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

Credit Suisse rates BTT as Downgrade to Underperform from Neutral (5) -

Performance fees from the JO Hambro division, the majority of the company's performance fee accrual, has softened since September. Credit Suisse estimates that accrued performance fees at the end of November were roughly half the level they were at the end of September.

The broker expects JO Hambro's FY17 performance fees will be disappointing for the market when they are announced in early to mid January.

The broker downgrades to Underperform from Neutral. With the share price now above the target price of $10.10, valuation is considered stretched.  The broker remains supportive of the company's growth strategy and considers this a trading opportunity.

Target price is $10.10 Current Price is $11.10 Difference: minus $1 (current price is over target).
If BTT meets the Credit Suisse target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $10.08, suggesting downside of -2.9% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.0

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

Citi rates CBA as Neutral (3) -

CommBank has decided to sell its equity holdings in Visa parallel to the decision to accelerate amortisation on certain capitalised software assets at the upcoming interim result.

Citi analysts have updated their modeling for these events, but there is -bottom line- a rather "negligible" impact, in their words. We spotted small adjustments to estimates. Neutral. Target $75.

Target price is $75.00 Current Price is $81.43 Difference: minus $6.43 (current price is over target).
If CBA 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 $77.35, suggesting downside of -6.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.1

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

Deutsche Bank rates CBA as Hold (3) -

The bank has sold its remaining share in Visa for $439m, which Deutsche Bank believes will drive improved capital ratios. With the gains on sale offset by a one-off acceleration of amortisation expenses, the impact on the P&L is less than 1% per annum.

Deutsche Bank retains a Hold rating and raises the target to $83.50 from $80.70.

Target price is $83.50 Current Price is $81.43 Difference: $2.07
If CBA meets the Deutsche Bank target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $77.35, suggesting downside of -6.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.1

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

Macquarie rates CBA as Neutral (3) -

The bank has sold down its share in Visa, coinciding with its decision to accelerate amortisation of capitalised software.

Macquarie observes, although largely offsetting for first half cash earnings, these transactions provide a small boost to core capital and an ongoing earnings benefit.

Neutral retained. Target is $81.50.

Target price is $81.50 Current Price is $81.43 Difference: $0.07
If CBA meets the Macquarie target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $77.35, suggesting downside of -6.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.1

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

Ord Minnett rates CBA as Hold (3) -

The bank has sold its residual stake in Visa for a post-tax profit of $278m. Ord Minnett is uncertain as to whether the profit will flow through to the bottom line or simply make room for a higher rate of directly expensed project costs in future.

Ord Minnett retains a forecast for FY17 costs growth of around 3.5%. The broker maintains a Hold recommendation and $75 target price.

Target price is $75.00 Current Price is $81.43 Difference: minus $6.43 (current price is over target).
If CBA 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 $77.35, suggesting downside of -6.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.1

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

Ord Minnett rates CLW as Initiate Coverage with a Hold rating (3) -

Ord Minnett initiates coverage with a Hold rating and $4.15 target. The trust holds a high-quality, low-risk property portfolio, with the long-dated, weighted average lease expiry its primary investment characteristic, report the analysts.

The portfolio has no material capital expenditure or lease expiry risk until FY21 and the largest five tenants comprise 88% of income, according to the report. The trust gearing is within its target range and acquisitions will be made on a case-by-case basis.

Target price is $4.15 Current Price is $4.00 Difference: $0.15
If CLW meets the Ord Minnett target it will return approximately 4% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: -0.5

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

Macquarie rates CWN as Underperform (5) -

Macquarie has confirmed an Underperform rating and $10.95 target on the back of the company's update on major initiatives to enhance shareholder value.

The trading update was significantly below the broker's expectations, with VIP down and Perth soft. Crown has cut its stake in Melco and will use the proceeds to pay debt and fund a distribution and buy-back.

The company is in a trading half pending an announcement on a further sale of part of the remaining Melco stake.

Macquarie considers the abandonment of the Alon project a positive with the company exploring alternatives to optimise the value including an outright sale.

Target price is $10.95 Current Price is $11.13 Difference: minus $0.18 (current price is over target).
If CWN meets the Macquarie target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $12.60, suggesting upside of 13.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.5

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

UBS rates DLX as Neutral (3) -

UBS believes the business deserves a premium multiple but the non-paint segment is anaemic. Potential in garage doors exists but the broker suspects a meaningful turnaround is long dated.

Given an inferior growth outlook for earnings the broker considers the stock's recent de-rating is warranted and retains a Neutral rating. Target is reduced to $6.10 from $6.50.

Target price is $6.10 Current Price is $6.29 Difference: minus $0.19 (current price is over target).
If DLX meets the UBS target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $6.05, suggesting downside of -3.0% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: -0.4

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

Ord Minnett rates EVT as Buy (1) -

Ord Minnett had anticipated negative box office growth in FY17 but strong trading at the start of the year has provided the confidence to forecast modest same-screen sales growth, despite a seeming loss of market share to Hoyts.

The broker continues to rate the stock a Buy, envisaging the hard asset backing and improvement in hotel returns as key attractions. Target is reduced to $16.25 from $16.88.

Target price is $16.25 Current Price is $13.93 Difference: $2.32
If EVT meets the Ord Minnett target it will return approximately 17% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.0

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

Macquarie rates GTY as Neutral (3) -

First half distribution will be 3.5c versus Macquarie's 4.5c estimate. The company has reiterated guidance for FY17 profit growth of 5%, with a heavy weighting to the second half.

Macquarie envisages growth in the sector, driven by several positive long-term trends such as an ageing population, financial pressure on retirees and housing affordability. Certainty on the FY17 outlook needs to increase before the broker will consider upgrading its recommendation.

Neutral and $2.28 target retained.

Target price is $2.28 Current Price is $2.12 Difference: $0.16
If GTY meets the Macquarie target it will return approximately 8% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.5

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

Morgans rates ING as Initiate Coverage with Add rating (1) -

Ingham's is the largest vertically integrated poultry producer in Australasia. Morgans forecasts double-digit earnings growth over FY17-19.

For a market leader with an integrated network  the broker believes the stock is undervalued and initiates coverage with an Add rating and $4.00 target.

Morgans believes the company's scale in an industry with clear barriers to entry provides bargaining power with customers. A strong first half result is expected in February and, over time,  the broker expects the stock be placed in the ASX200.

Target price is $4.00 Current Price is $3.06 Difference: $0.94
If ING 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:

Forecast for FY18:

Market Sentiment: 1.0

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

Morgan Stanley rates PRU as Overweight (1) -

Yet another batch of negative news is disappointing, the analysts acknowledge, but they still regard the subsequent sell-down in the share price as significantly overdone.

The analysts point out Perseus, being a debt-free, self-funded future producer of circa 500k oz gold per annum, now has a market cap of just $350m. Target moves to 65c from 80c. Overweight rating reiterated. Industry view Attractive.

Target price is $0.65 Current Price is $0.35 Difference: $0.3
If PRU meets the Morgan Stanley target it will return approximately 86% (excluding dividends, fees and charges).

Current consensus price target is $0.68, suggesting upside of 95.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.6

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

Morgans rates REA as Add (1) -

The company has announced plans to take a larger share of the home lending value chain through a marketing strategy in partnership with National Australia Bank ((NAB)). Morgans expects the deal to be accretive to earnings from FY18.

The main risk from the deal, in the broker's view, is that rival banks may choose to punish REA by taking mortgage advertising elsewhere. but this is considered to be a short-term revenue risk only.

Morgans retains a Add rating and raises the target to $58.90 from $56.59.

Target price is $58.90 Current Price is $52.99 Difference: $5.91
If REA meets the Morgans target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $59.27, suggesting upside of 11.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.9

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

Deutsche Bank rates RIO as Buy (1) -

Turquoise Hill ((TRQ)) has announced  production and financial guidance for 2017 for the Oyu Tolgoi copper mine, Mongolia. Rio Tinto has a 51% stake in Turquoise Hill.

Copper and gold production is expected to be 130-160,000t and 100-140,000 ozs respectively.

This is slightly lower than what Deutsche Bank expected, because of mining through an area of low head grade in phase 4 of the open pit. Lower production is expected to be more than offset by a reduction in operating cash costs.

A Buy rating is retained and the target is $66.

Target price is $66.00 Current Price is $59.55 Difference: $6.45
If RIO meets the Deutsche Bank target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $66.33, suggesting upside of 12.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY16:

Forecast for FY17:

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

Market Sentiment: 0.7

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

Credit Suisse rates S32 as Neutral (3) -

The company has downgraded production and sales guidance for Illawarra metallurgical coal. Saleable coal production of 7.9mt is expected  in FY17. Geological issues have resulted in increased unit costs  for FY17.

Credit Suisse incorporates the revised production and sales tonnage as well as cost guidance. The net result is a reduction of 4.9% in FY17 underlying EBITDA.

Neutral retained. Target is $2.80.

Target price is $2.80 Current Price is $2.66 Difference: $0.14
If S32 meets the Credit Suisse target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $2.89, suggesting upside of 11.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

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

Market Sentiment: 0.4

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

Macquarie rates S32 as Outperform (1) -

The company now expects Illawarra to produce 7.9mt in FY17, 4% below Macquarie's forecasts. Operational issues are persisting at Illawarra and Macquarie notes that the product mix is also weaker and impacting on earnings.

While the reductions to guidance are disappointing the broker notes spot prices for many of the company's commodities are trading well ahead of forecasts. Outperform and $3.60 target retained.

Target price is $3.60 Current Price is $2.66 Difference: $0.94
If S32 meets the Macquarie target it will return approximately 35% (excluding dividends, fees and charges).

Current consensus price target is $2.89, suggesting upside of 11.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

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

Market Sentiment: 0.4

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

Deutsche Bank rates SGM as Hold (3) -

Through a combination of supply-side discipline and fiscal stimulus in China, bulk markets have tightened significantly  and Deutsche Bank considers this a positive for  the company.

As a result, Sims' FY17 net profit estimate increases 3%. Hold rating retained. Target rises to $11.72 from $9.56.

Target price is $11.72 Current Price is $13.34 Difference: minus $1.62 (current price is over target).
If SGM meets the Deutsche Bank target it will return approximately minus 12% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $10.67, suggesting downside of -19.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.2

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

Morgans rates SHJ as Add (1) -

The company's market update demonstrates to Morgans the continued weakness in some emerging practice areas,  particularly in relation to the energy and resource exposure.

Guidance implies an 11.6% downgrade to the broker's FY17 forecasts. While disappointed with the update, the broker believes management has identified the issues and is putting processes in place to support some sustainable growth in the future.

Add rating retained. Target falls to $1.21 from $1.46.

Target price is $1.21 Current Price is $0.83 Difference: $0.385
If SHJ meets the Morgans target it will return approximately 47% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 1.0

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

Citi rates STO as Buy (1) -

While the recent capital raising has left many confused in the market, Citi analysts simply think the equity raise was opportunistic given a higher share price and institutional money likely on hand in anticipation of a Shell/WPL block trade.

Santos board couldn't resists to build-in some extra security in case oil prices take another dive in 2017, is the underlying suggestion made. The company's credit outlook has thus improved considerably, on the analysts' calculations.

Drawing a comparison with Woodside's unexpected capital raising experience post February which caused the shares to initially underperform, Citi analysts suggest a similar outlook might now be Santos's. Come back in August is the explicit suggestion made. Buy. Target $5.02.

Target price is $5.02 Current Price is $3.98 Difference: $1.04
If STO meets the Citi target it will return approximately 26% (excluding dividends, fees and charges).

Current consensus price target is $4.84, suggesting upside of 22.5% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY16:

Forecast for FY17:

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

Market Sentiment: 0.5

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

Ord Minnett rates VRL as Upgrade to Buy from Hold (1) -

Ord Minnett had anticipated negative box office growth in FY17 but strong trading at the start of the year has provided the confidence to forecast modest same-screen sales growth, despite a seeming loss of market share to Hoyts.

Following a further de-rating of the stock post the AGM the broker is upgrading to Buy from Hold. Asset sales remain the key positive catalyst and the broker also believes Gold Coast tourism could prove more resilient  than previously expected. Target rises to $5.37 from $5.11.

Target price is $5.37 Current Price is $4.24 Difference: $1.13
If VRL meets the Ord Minnett target it will return approximately 27% (excluding dividends, fees and charges).

Current consensus price target is $5.06, suggesting upside of 17.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.8

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

Morgans rates VRT as Hold (3) -

Morgans suspects monthly Medicare data is unlikely to improve in the short term. The broker moderate its FY17 cycle growth forecast to 0% from 1%.

To reflect lower volumes through the non-IVF business, Morgans revises its margin assumption to 26% from 27%.

Net profit estimates are reduced by 7.0% for FY17 and by 1.6%  for FY18 and FY19.

Hold maintained. Target is reduced to $6.61 from $6.83.

Target price is $6.61 Current Price is $6.22 Difference: $0.39
If VRT meets the Morgans target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $7.52, suggesting upside of 24.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.3

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