Australian Broker Call

Credit Suisse rates BLD as Underperform (5) -

Boral has announced the sale of its US block business for US$156m. Credit Suisse also notes Boral is in discussion with Knauf over either an expanded joint venture or a move to 100% ownership.

Boral has stated it would prefer to fund an acquisition without raising equity and Credit Suisse estimates this would be manageable, although does not rule out a small equity raising should the company choose to be conservative.

Underperform and $6.40 target retained.

Target price is $6.40 Current Price is $6.09 Difference: $0.31
If BLD meets the Credit Suisse target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $7.54, suggesting upside of 28.5% (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 CMA as Add (1) -

The company has acquired four office assets for $520.9m, funded by a capital raising and new debt. The assets are underpinned by 90% fixed rental reviews averaging 3.7% per annum.

Morgans highlights Centuria Metropolitan is one of the few remaining pure office A-REITs and offers an attractive distribution yield. The broker maintains an Add rating and reduces the target to $2.52 from $2.59.

Target price is $2.52 Current Price is $2.41 Difference: $0.11
If CMA meets the Morgans target it will return approximately 5% (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

Citi rates DMP as Sell (5) -

Citi notes two features stood out at the company's investor briefing. Firstly, a record has been set in the Netherlands for fast delivery and the company's network appears to be way ahead of the global benchmark. The broker notes predictive ordering is being installed and greater store density shortens delivery times.

Secondly, in marketing, the company is ramping up YouTube advertising and using a more segmented approach, which leverages customer insights. Sell rating is maintained. Target is $45.20.

Target price is $45.20 Current Price is $54.85 Difference: minus $9.65 (current price is over target).
If DMP meets the Citi target it will return approximately minus 18% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $49.24, suggesting downside of -10.9% (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

Credit Suisse rates DMP as Underperform (5) -

After the company's briefing, Credit Suisse has no questions about management's creativity and does not question the logic of being closer to the customer. However, the broker envisages some inevitable erosion of digital first-mover advantage in Australia, as platforms for alternative food offerings improve.

The fractionalisation of store costs also needs to be addressed to support franchise profitability. These factors contribute to the broker's view of lower store targets and sales growth. Underperform rating of $35.93 target maintained.

Target price is $35.93 Current Price is $54.85 Difference: minus $18.92 (current price is over target).
If DMP meets the Credit Suisse target it will return approximately minus 34% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $49.24, suggesting downside of -10.9% (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

Deutsche Bank rates DMP as Sell (5) -

Returning from the company's Investor Day, Deutsche Bank analysts retain the Sell rating, accompanied by a $36 price target, unchanged.

The analysts believe management will need to focus on franchisee profitability, and this could impact on either margins or store rollout. They also expect food inflation to represent a challenge for franchisees over the next year or so.

Target price is $36.00 Current Price is $54.85 Difference: minus $18.85 (current price is over target).
If DMP meets the Deutsche Bank target it will return approximately minus 34% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $49.24, suggesting downside of -10.9% (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

Macquarie rates DMP as Outperform (1) -

Domino's investor day featured plans to introduce new products, use new media in marketing, such as YouTube, and further improve technology. Data suggest Domino's has 45% of the pizza market but only 3% of fast food in general, the broker notes.

Another initiative is to split stores in particular catchments to reflect population shifts. The broker continues to see double-digit earnings growth with risk skewed to the upside. Outperform retained, target rises to $61 from $57.

Target price is $61.00 Current Price is $54.85 Difference: $6.15
If DMP meets the Macquarie target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $49.24, suggesting downside of -10.9% (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 DMP as Overweight (1) -

The company's investor briefing provided greater insight into the digital initiatives such as advertising, purchasing, rostering and food safety. The economics of store splits was also an area of focus.

With significant available growth in existing territories, the company has indicated it will not pursue a fast food format outside of pizza but will continue evolving the non-pizza area of its menu.

Overweight rating retained. Cautious industry view. Target is $65.

Target price is $65.00 Current Price is $54.85 Difference: $10.15
If DMP meets the Morgan Stanley target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $49.24, suggesting downside of -10.9% (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

Ord Minnett rates DMP as Lighten (4) -

The company's investor briefing was upbeat, Ord Minnett notes, and Domino's Pizza remains confident about achieving its ambitious target of 4650 stores by 2025. The broker observes while the company's pizza market share is high its fast food market share is low.

The company plans to attract new customers through additional menu items, new media and improving its digital targeting. Lighten rating and $42.50 target maintained.

Target price is $42.50 Current Price is $54.85 Difference: minus $12.35 (current price is over target).
If DMP meets the Ord Minnett target it will return approximately minus 23% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $49.24, suggesting downside of -10.9% (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

UBS rates EBO as Neutral (3) -

Neutral and NZ$20.50 target retained as the company has announced agreement to fully acquire Terry White Group, with the deal to mop up minority shareholders still subject to a few conditions.

UBS analysts remark the deal doesn't mean much in terms of financial impact, but it makes strategic sense.

Of more importance, possibly, will be the Federal Government's review into the Community Service Obligation (CSO), due to be presented in the next few weeks, UBS believes.

The analysts expect a benign outcome, but major changes could impact significantly on wholesaler profitability, they add.

Current Price is $20.18. Target price not assessed.

Current consensus price target is N/A

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

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

Market Sentiment: 0.0

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

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

Citi analysts see downside risks to FY19 earnings momentum, which is driving their decision to downgrade to Sell from Neutral.

Medium-to-long-term, the analysts admit this company has growth potential from its property development pipeline, plus the shares look "cheap" on current multiples.

Estimates have been cut. Target price falls by -16% to $12.95.

Target price is $12.95 Current Price is $14.01 Difference: minus $1.06 (current price is over target).
If EVT meets the Citi target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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

Macquarie rates MFG as Outperform (1) -

Magellan delivered 3% year on year funds under management inflows in the Sep Q, mostly in August, indicating improvement in retail flows. Market performance was strong, again with August the main driver.

Magellan remains the broker's preferred exposure in wealth management. Outperform retained, target falls to $30.00 from $30.50.

Target price is $30.00 Current Price is $27.19 Difference: $2.81
If MFG meets the Macquarie target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $28.86, suggesting upside of 7.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.5

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

Deutsche Bank rates NUF as Upgrade to Hold from Sell (3) -

Following significant share price weakness, Deutsche Bank has upgraded to Hold from Sell, while sticking with its price target of $6.10.

Target price is $6.10 Current Price is $5.80 Difference: $0.3
If NUF meets the Deutsche Bank target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $7.69, suggesting upside of 36.0% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.7

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

Macquarie rates PDL as Outperform (1) -

Net outflows of -0.3% in the Sep Q suggest the rate of outflows from Pendal funds has now slowed after a few poor quarters, the broker notes. JOHCM continues to drag but the broker expects improvement as the roll-off of the UK Opportunities fund at end-2017 drops out of the numbers.

The broker does not see valuation as too demanding. Outperform retained, target falls to $10 from $11.

Target price is $10.00 Current Price is $8.39 Difference: $1.61
If PDL meets the Macquarie target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $9.97, suggesting upside of 20.5% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.3

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

Macquarie rates PPT as Upgrade to Neutral from Underperform (3) -

Perpetual's outflows accelerated to -$1.0bn in the Sep Q from -$0.3bn in June, predominantly from Australian equities, the broker notes. A challenging environment for value managers and the departure of the general manager of wholesale distribution suggests to the broker further downside risk.

A weak share price nevertheless suggests the emergence of valuation support. Upgrade to Neutral from Underperform with a $38 target.

Target price is $38.00 Current Price is $35.01 Difference: $2.99
If PPT meets the Macquarie target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $41.68, suggesting upside of 21.1% (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

Ord Minnett rates PPT as Hold (3) -

The company reported net outflows of -$1bn in the September quarter funds update, primarily in Australian equities. Given market volatility, a weaker fund performance and the outflows Ord Minnett expects the share price to be under pressure.

The underlying performance of many of the company's strategies is below the historical track record. The broker maintains a Hold rating and reduces the target to $40 from $48.

Target price is $40.00 Current Price is $35.01 Difference: $4.99
If PPT meets the Ord Minnett target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $41.68, suggesting upside of 21.1% (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

Macquarie rates PTM as Neutral (3) -

Platinum enjoyed $623m of net inflows in the Sep Q but management admits the number largely reflects dividend reinvestment. Market performance again dragged on funds under management and it won't get any better in October, the broker notes.

The broker thus sees further downside risk to flows. Neutral retained, target falls to $5.10 from $5.30.

Target price is $5.10 Current Price is $4.98 Difference: $0.12
If PTM meets the Macquarie target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $5.28, suggesting upside of 4.6% (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

Morgan Stanley rates RMD as Overweight (1) -

Morgan Stanley suspects growth in earnings per share will exceed top-line growth, as the industry enters a less restrictive reimbursement environment. The broker likes the superior growth in free cash flow yield of ResMed versus other Australian offshore operators in the healthcare sector.

The business also has a more resilient long-term gross margin under US competitive bidding proposals as well as an underutilised balance sheet.

Overweight rating. Target is reduced to US$122 from US$125. Industry view: In Line.

Current Price is $14.82. Target price not assessed.

Current consensus price target is $14.52, suggesting upside of 1.1% (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: 0.3

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

Citi rates RRL as Upgrade to Neutral from Sell (3) -

Citi observes downside risk from delays at McPhillamys but upside from growth of the Duketon underground. September quarter production was in line with estimates and beat on costs.

The company is pushing ahead with the low-cost underground mining at Duketon. At McPhillamys a definitive feasibility study and environmental impact statement in the March quarter are expected to trigger a decision to mine.

Rating is upgraded to Neutral from Sell after a pullback in the share price and an earnings boost from a weaker Australian dollar. Target is raised to $4.25 from $3.75.

Target price is $4.25 Current Price is $4.18 Difference: $0.07
If RRL meets the Citi target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $4.18, suggesting downside of -0.1% (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

Credit Suisse rates RRL as Upgrade to Outperform from Neutral (1) -

The September quarter performance was consistent with FY19 guidance, Credit Suisse observes. The broker notes the definitive feasibility study and environmental impact statement for McPhillamys has slipped into the March quarter.

The offer for Capricorn Metals has been withdrawn and the broker suggests the company has shown discipline in withdrawing when it was apparent the controlling shareholder would not accept the offer.

Rating is upgraded to Outperform from Neutral. Target is $4.45.

Target price is $4.45 Current Price is $4.18 Difference: $0.27
If RRL meets the Credit Suisse target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $4.18, suggesting downside of -0.1% (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

Macquarie rates RRL as Outperform (1) -

Regis' Sep Q production met the broker's expectation and costs came in lower. End of quarter cash and reserves were in line. Progress continues at the company's promising growth option projects, the broker notes, including Rosemont underground and McPhillamys open pit.

Garden Well is also moving towards its maiden underground resource. The broker retains Outperform. Target rises to $4.50 from $4.40.

Target price is $4.50 Current Price is $4.18 Difference: $0.32
If RRL meets the Macquarie target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $4.18, suggesting downside of -0.1% (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 RRL as Underweight (5) -

September quarter production was ahead of Morgan Stanley's estimates. While gold grade was below expectations it was offset by more tonnage being processed.

The broker expects sustaining expenditure to rise through FY19. At Rosemont, exploration upside continues but, while there is high potential for small increases to the underground resource, drilling has not yet demonstrated any scale, Morgan Stanley observes.

Underweight rating maintained. Target is $3.30. Industry view is In-Line.

Target price is $3.30 Current Price is $4.18 Difference: minus $0.88 (current price is over target).
If RRL meets the Morgan Stanley target it will return approximately minus 21% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.18, suggesting downside of -0.1% (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

Ord Minnett rates RRL as Hold (3) -

Gold production in the September quarter was in line with expectations. Costs were better than expected, mainly because of lower waste movement and stockpiling of ore from Tooheys Well.

Ord Minnett finds the company at an interesting juncture as the business evolves to more satellite mining areas, amid construction of a new project in NSW. The value in the stock is observed to be gravitating towards growth projects and this provides more risk.

However, cash generation and a strong dividend pay-out is in place. Ord Minnett considers the stock fairly valued and maintains a Hold rating. Target is raised to $4.20 from $4.00.

Target price is $4.20 Current Price is $4.18 Difference: $0.02
If RRL meets the Ord Minnett target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $4.18, suggesting downside of -0.1% (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

UBS rates RRL as Neutral (3) -

September quarter production was ahead of forecasts while costs were better than expected. UBS expects costs to lift as higher grade ore from the Tooheys Well mine is processed in the next few quarters.

The permit process at McPhillamys is the upcoming catalyst after several delays. UBS assumes first production occurs in the March quarter of 2021. Neutral rating maintained. Target is raised to $4.30 from $4.20.

Target price is $4.30 Current Price is $4.18 Difference: $0.12
If RRL meets the UBS target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $4.18, suggesting downside of -0.1% (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

Morgans rates SIV as Downgrade to Reduce from Hold (5) -

Silver Chef has recently received waiver extensions for its debt covenants to March 31, 2019. The waiver is conditional on the raising of $45m in additional capital and ensuring the net rental asset loan-to-valuation ratio is less than 65%. The company expects to introduce subordinated debt to its capital structure as part of the agreement with bankers.

Morgans has highlighted the earnings risk for some time and believes the requirement to raise additional capital has further increased the risk for equity holders in the near term. Rating is downgraded to Reduce from Hold until stability in the business returns. Target is reduced to $1.62 from $2.57.

Target price is $1.62 Current Price is $1.86 Difference: minus $0.24 (current price is over target).
If SIV meets the Morgans target it will return approximately minus 13% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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

Macquarie rates SYD as Underperform (5) -

Sydney Airport's Sep Q data show international traffic is softening, but of greater concern is a fall in capacity growth, the broker suggests, now below 2%. Domestic growth is moderate, reflecting the economy and airline discipline.

2019 growth is being challenged, the broker believes, and the upcoming Productivity Commission review and the T2 aero agreement renegotiation, with T1 pending as well, add to uncertainty. Underperform retained, target falls to $6.85 from $7.13.

Target price is $6.85 Current Price is $6.62 Difference: $0.23
If SYD meets the Macquarie target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $7.46, suggesting upside of 14.7% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.3

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