Australian Broker Call

Credit Suisse rates AAD as Outperform (1) -

Credit Suisse acknowledges the temptation to take a more subdued view on the back of a weak margin in the second half, but observes that centre trends have improved and there are strengthening tailwinds.

The broker believes it is punishing the company too much to capitalise margins at current levels. Outperform retained. Target is reduced to $2.05 from $2.25.

Target price is $2.05 Current Price is $1.93 Difference: $0.12
If AAD meets the Credit Suisse target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $1.80, suggesting downside of -4.2% (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

Citi rates ALQ as Buy (1) -

Citi analysts have been updating their modeling for the anticipated divestment of oil and gas servicing operations, as well as updated forecasts for Life Sciences and margins in the Commodities division.

The end result has been for increases to EPS estimates to the tune of 5-13% for FY18-FY20. Target price jumps to $8.15 from $6.90 in response. Citi analysts are awaiting company guidance at the AGM, scheduled for July 20. Buy rating retained.

Note: DPS estimates have equally received a boost.

Target price is $8.15 Current Price is $7.20 Difference: $0.95
If ALQ meets the Citi target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $6.82, suggesting downside of -12.3% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.4

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

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

Gold miners have re-capitalised and exploration budgets have troughed. Credit Suisse estimates the capital raised by juniors alone could underpin a 50% increase in exploration activity over the next 2-3 years.

Despite its optimism, the broker models a recovery to around 75% of the prior peak, which leaves room for upside. Moreover, global testing peers continue to expect trend revenue growth and expansion of margins and this provides a supportive backdrop to turnaround underperforming areas within the company's life sciences segment.

Rating is upgraded to Outperform from Neutral. Target is raised to $7.80 from $6.70.

Target price is $7.80 Current Price is $7.20 Difference: $0.6
If ALQ meets the Credit Suisse target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $6.82, suggesting downside of -12.3% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.4

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

Macquarie rates ASB as Outperform (1) -

Austal has won a contract for a Literal Combat Ship worth up to US$584m. This will be the 14th vessel constructed as prime contractor at the company's US shipyard in Alabama.

Macquarie observes the company has a large opportunity and, as more vessels are delivered and contracts are won, growth in the support division will provide scope for a material annuity-style revenue stream.

Outperform rating and $2.09 target retained.

Target price is $2.09 Current Price is $1.80 Difference: $0.29
If ASB meets the Macquarie target it will return approximately 16% (excluding dividends, fees and charges).

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

Morgan Stanley rates BHP as Overweight (1) -

Morgan Stanley remains positive on the mining industry but discussions with investors suggest they are cautious.

The broker finds the global outlook favourable, with a low risk of a slump in China, and commodity prices are beneficial, particularly as bulk commodities are finding support levels. While the broker acknowledges the setting is not "red-hot" it is constructive.

Overweight rating, Attractive sector view retained. Target is reduced to $29.50 from $31.50.

Target price is $29.50 Current Price is $22.45 Difference: $7.05
If BHP meets the Morgan Stanley target it will return approximately 31% (excluding dividends, fees and charges).

Current consensus price target is $27.14, suggesting upside of 21.1% (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: 0.6

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

Ord Minnett rates BHP as Hold (3) -

BHP has approved initial spending on the South Flank replacement mine. The US$2.4-3.2bn in capital expenditure is in line with Ord Minnett's forecasts.

The start update is earlier than expected with first ore targeted in 2021 versus the broker's expectations of 2023. Ord Minnett does not expect any increase in long-term iron ore production from the company as a result of the project.

Hold rating retained. Target price $25.

Target price is $25.00 Current Price is $22.45 Difference: $2.55
If BHP meets the Ord Minnett target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $27.14, suggesting upside of 21.1% (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: 0.6

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

UBS rates BHP as Buy (1) -

BHP has approved funding for its 85% owned South Flank iron ore project in WA, chosen to replace production from the lower grade Yandi mine. The broker believes the project represents value accretion.

But this is already priced into the broker's, and consensus, valuation. Buy and $28 target retained.

Target price is $28.00 Current Price is $22.45 Difference: $5.55
If BHP meets the UBS target it will return approximately 25% (excluding dividends, fees and charges).

Current consensus price target is $27.14, suggesting upside of 21.1% (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: 0.6

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

Deutsche Bank rates CKF as Hold (3) -

FY17 results were solid, in Deutsche Bank's view and a slight beat to expectations. The broker believes the acquisition of the Australian Yum stores is a good addition, as it adds two new states to the group business and enhances scale.

A Hold rating is retained on valuation grounds and the broker notes the stock is in a key execution phase as it implements an offshore expansion strategy. Target is raised to $5.70 from $5.40.

Target price is $5.70 Current Price is $5.17 Difference: $0.53
If CKF meets the Deutsche Bank target it will return approximately 10% (excluding dividends, fees and charges).

The company's fiscal year ends in April.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.0

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

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

Morgan Stanley resumes coverage of the Australasian gaming industry with a Cautious industry view. The broker observes Crown has shifted its focus towards the domestic portfolio and maintenance of a solid balance sheet following the selling down of international assets.

The broker expects earnings growth over the medium term to be driven largely by the $500m buy-back undertaken over FY17-18 as well as the paying down of debt. Equal-weight rating retained. Target is $12.50.

Target price is $12.50 Current Price is $12.79 Difference: minus $0.29 (current price is over target).
If CWN meets the Morgan Stanley target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $13.24, suggesting upside of 5.1% (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

Macquarie rates DXS as Neutral (3) -

Macquarie reinstates coverage with a Neutral rating and $10.22 target after the removal of research restrictions. The broker believes investors in the A-REIT sector should have exposure to the Sydney office market, where trends are most favourable.

The broker acknowledges the price to be paid for this exposure has increased substantially this year, such that absolute return expectations are lower albeit still favourable.

Target price is $10.22 Current Price is $10.07 Difference: $0.15
If DXS meets the Macquarie target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $9.39, suggesting downside of -5.7% (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

Ord Minnett rates ENN as Buy (1) -

Ord Minnett observes the funds management business is performing according to expectations, while the value of the balance sheet assets is expected to increase by $30m.

On the basis of a 90% pay-out ratio the company's total FY17 distributions of 12.37c implies a downgrade to the broker's normalised net profit of -14.9%. While disappointing, Ord Minnett remains attracted to the asset backing and retains a Buy rating. Target is reduced to $2.41 from $2.44.

Target price is $2.41 Current Price is $2.14 Difference: $0.27
If ENN meets the Ord Minnett target it will return approximately 13% (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

Morgans rates FXL as Add (1) -

The company has reaffirmed FY17 net profit guidance of $90-93m. Morgans acknowledges there is a high degree of execution risk in the company's outlook and the margin pressure in Certegy and restructuring costs create uncertainty for near-term forecasts.

Longer term, the broker believes there is opportunity to grow Australian cards and turn around underperforming divisions. The low valuation provides a solid risk/reward option, in the broker's opinion. Add rating retained. Target is reduced to $2.20 from $2.73.

Target price is $2.20 Current Price is $1.69 Difference: $0.51
If FXL meets the Morgans target it will return approximately 30% (excluding dividends, fees and charges).

Current consensus price target is $2.08, suggesting upside of 24.2% (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

Ord Minnett rates GUD as Hold (3) -

Divestment of the Dexion division is a positive, Ord Minnett believes, as it increases the concentration of the portfolio towards the high-quality automotive business. Moreover, the broker does not envisage a large FY17 earnings risk, given the reiteration of guidance in early May.

The broker maintains a Hold rating, struggling with valuation support following continued appreciation of the share price, and raises the target to $11.00 from $9.90.

Target price is $11.00 Current Price is $13.21 Difference: minus $2.21 (current price is over target).
If GUD meets the Ord Minnett target it will return approximately minus 17% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $10.92, suggesting downside of -16.0% (ex-dividends)

The company's fiscal year ends in June.

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

Credit Suisse rates IAG as Outperform (1) -

Credit Suisse believes the earnings growth potential for the company over the next three years is compelling. The broker considers Insurance Australia to be at the early stages of what could be significant growth in earnings per share.

The broker acknowledges that turning around an insurer can take time and expects the growth to be back-ended but notes the company is looking to address the downside risk during this process.

Should the company pull out the full $250m in targeted cost savings and benefit from 200 basis points of favourable margin, Credit Suisse calculates this would imply over 20% upside to FY20 earnings expectations. Outperform rating and $6.90 target retained.

Target price is $6.90 Current Price is $6.56 Difference: $0.34
If IAG meets the Credit Suisse target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $6.21, suggesting downside of -4.6% (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

Credit Suisse rates IGO as Outperform (1) -

Credit Suisse observes the ramp up of Nova and infill drilling is progressing. The broker takes comfort in the achievement of continuous operations and guidance for nameplate underground ore production to be achieved in the September quarter.

Outperform retained. Target is reduced to $3.50 from $4.30 following a review of assumptions and a change in coverage..

Target price is $3.50 Current Price is $3.12 Difference: $0.38
If IGO meets the Credit Suisse target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $3.75, suggesting upside of 21.9% (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

Macquarie rates IGO as Neutral (3) -

The company expects to declare commercial production at Nova from the end of this month. Nameplate capacity is expected to be reached in the first quarter of FY18.

Macquarie believes a release of the final update on the Tropicana Long Island study may present a positive catalyst, should production and cost estimates be better-than-expected.

Macquarie retains a Neutral rating and target of $3.30.

Target price is $3.30 Current Price is $3.12 Difference: $0.18
If IGO meets the Macquarie target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $3.75, suggesting upside of 21.9% (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

Morgan Stanley rates IGO as Overweight (1) -

Morgan Stanley finds the downgrade to production forecasts for Nova disappointing. The company has flagged that its ramping up is going to plan but incorrect guidance had inadvertently been provided previously. Apparently, mill feed figures had been guided instead of metal in concentrate.

Morgan Stanley accepts errors can occur but questions why the guidance was not corrected back in April when it was first downgraded to 5-6,000t from 9-10,000t. The company has now flagged 3,400t of nickel production for FY17.

Overweight retained. Target is $4.20. Attractive sector view retained.

Target price is $4.20 Current Price is $3.12 Difference: $1.08
If IGO meets the Morgan Stanley target it will return approximately 35% (excluding dividends, fees and charges).

Current consensus price target is $3.75, suggesting upside of 21.9% (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

Macquarie rates ILU as Underperform (5) -

Mining at Jacinth/Ambrosia will restart in December. The company has also reduced the initial development plan for Balranald and written off the value of the Hamilton process plant.

Macquarie upgrades 2018 zircon production forecasts by 15% to match the company's new guidance. The broker is not surprised by the delay and reduced scale of Balranald and has not included development of this project in forecasts.

The stock appears expensive compared to most ASX listed mining companies, in Macquarie's opinion, and an Underperform rating is retained. Target is $6.70.

Target price is $6.70 Current Price is $8.56 Difference: minus $1.86 (current price is over target).
If ILU meets the Macquarie target it will return approximately minus 22% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $8.64, suggesting downside of -0.7% (ex-dividends)

The company's fiscal year ends in December.

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

UBS rates ILU as Buy (1) -

Iluka has decided to restart the Jacinth-Ambrosia mine and delay development at Balranald. While the delay reduces net present value, the broker believes the market is failing to factor in the recovery in zircon and rutile prices underway.

In separate news, BHP Billiton's decision to fund South Flank has implications for Iluka given the company holds revenue based royalty and production capacity based payment over the area that includes South Flank, the broker notes. Target rises to $10.50 from $9.62, Buy retained.

Target price is $10.50 Current Price is $8.56 Difference: $1.94
If ILU meets the UBS target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $8.64, suggesting downside of -0.7% (ex-dividends)

The company's fiscal year ends in December.

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

Citi rates LNK as Upgrade to Buy from Neutral (1) -

Citi labels the acquisition of Capita Asset Services (CAS) "transformational", destined to facilitate "significant EPS accretion" from FY19 onwards. No double guessing as to why the broker has decided to upgrade to Buy from Neutral.

No doubt, an acquisition this size represents a challenge for management, acknowledge the analysts, while the price paid seems pretty full. But Citi seems firmly of the view the upside potential outweighs the potential negatives.

EPS estimates have been lifted by 3% this year, reduced by -3% for FY18 and lifted by 13% for FY19. The accompanying trading update is seen as slightly positive. Target jumps to $9.20 from $8.25.

Target price is $9.20 Current Price is $7.83 Difference: $1.37
If LNK meets the Citi target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $8.85, suggesting upside of 13.0% (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

Macquarie rates LNK as Outperform (1) -

The company has a binding agreement to acquire Capita Assets Services for GBP888m. The acquisition will be funded via a fully underwritten pro rata accelerated renounceable entitlement offer.

Given the size of the acquisition, and associated integration risks as well as diminished financial flexibility, Macquarie expects some compression in the stock's multiple, which should partially offset some of the upside to earnings.

Outperform rating retained. Target is raised to $9.50 from $9.20.

Target price is $9.50 Current Price is $7.83 Difference: $1.67
If LNK meets the Macquarie target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $8.85, suggesting upside of 13.0% (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 LNK as Hold (3) -

Link has acquired Capita Asset Services in the UK for GBP888m. On Morgans' estimates the acquisition appears to provide double-digit accretion to earnings when factoring in the expected efficiency benefits.

The broker does not include the acquisition in forecasts as yet, awaiting completion of the capital raising. The acquisition is being funded by $664m in debt and a $883m entitlement offer. Hold rating retained. Target rises to $8.29 from $8.16.

Target price is $8.29 Current Price is $7.83 Difference: $0.46
If LNK meets the Morgans target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $8.85, suggesting upside of 13.0% (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

UBS rates LNK as Neutral (3) -

Link's acquisition of Capita Asset Services in the UK is in line with the company's strategy but it is a material move, the broker notes. Synergies are key to delivering potential.

The broker believes the deal provides an appropriate platform for offshore growth but limited visibility limits the broker's conviction on medium term growth. Target rises to $8.55 from $8.10 but Neutral retained.

Target price is $8.55 Current Price is $7.83 Difference: $0.72
If LNK meets the UBS target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $8.85, suggesting upside of 13.0% (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

Citi rates MND as Sell (5) -

A new analyst in charge and an update to the broker's modeling have led to increases to EPS estimates by 4-22% for FY17-FY19. In addition, Citi notes the strength of the balance sheet provides "growth optionality" (don't you like this brokers lingo).

The stockbroker finds Monadelphous is a well-managed company, but the share price is too high for comfort. New price target only lifts to $12.40 from $11. Sell rating retained.

Target price is $12.40 Current Price is $13.70 Difference: minus $1.3 (current price is over target).
If MND meets the Citi target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $10.01, suggesting downside of -26.7% (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

Citi rates MTS as Neutral (3) -

On Citi's assessment, the reported 9% growth in net profits in the interim update overstates the real momentum inside the business, but it is a positive nevertheless. The analysts suggest growth, realistically, was more like 3.2% during the six months period.

Citi continues to forecast modest earnings growth ahead, predominantly derived from synergies and cost savings. Target price lifts to $2.50 from $2.35. Neutral rating retained.

Target price is $2.50 Current Price is $2.30 Difference: $0.2
If MTS meets the Citi target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $2.39, suggesting upside of 7.7% (ex-dividends)

The company's fiscal year ends in April.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.1

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

Credit Suisse rates MTS as Downgrade to Neutral from Outperform (3) -

FY17 results were better than Credit Suisse expected. The broker was surprised by the re-introduction of the final dividend at 4.5c.

The broker downgrades earnings forecasts to largely reflect a refining of a 52-week EBIT estimate. Target drops to $2.38 from $2.54. The share price appreciation leads Credit Suisse to downgrade to Neutral from Outperform.

Target price is $2.38 Current Price is $2.30 Difference: $0.08
If MTS meets the Credit Suisse target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $2.39, suggesting upside of 7.7% (ex-dividends)

The company's fiscal year ends in April.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.1

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

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

FY17 results pleased Deutsche Bank. Food sales were not as bad as forecast, the balance sheet was better and cost reductions have lifted the margin.

While the outlook is tough and the second half revealed slowing market growth, intense discounting and the continuing spread of Aldi, sales did not come under as much pressure as the broker had feared.

Rating is upgraded to Hold from Sell. Target is raised to $2.30 from $1.60.

Target price is $2.30 Current Price is $2.30 Difference: $0
If MTS meets the Deutsche Bank target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $2.39, suggesting upside of 7.7% (ex-dividends)

The company's fiscal year ends in April.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.1

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

Macquarie rates MTS as Outperform (1) -

FY17 results suggest to Macquarie the company is continuing to deliver. Underlying net profit was $194.8m, up 9.3%.

Ian Morrice will retire next year and Macquarie believes a future CEO could swing back towards a growth strategy as his tenure has focused on balance sheet repair.

Earnings appear to have stabilised over FY17 and Macquarie expects modest growth of 1% in FY18. There is also now enough free cash flow to comfortably sustain a dividend paid-out ratio of 60% and use remaining cash flow to further reduce debt, in the broker's observation.

Outperform rating retained. Target is $2.60.

Target price is $2.60 Current Price is $2.30 Difference: $0.3
If MTS meets the Macquarie target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $2.39, suggesting upside of 7.7% (ex-dividends)

The company's fiscal year ends in April.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.1

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

Morgan Stanley rates MTS as Overweight (1) -

FY17 top-line growth in the core supermarkets business was weak, Morgan Stanley observes. Yet, importantly, earnings held up and cost reduction initiatives were successful, and the convenience business was brought back to break even.

When the supermarket sales performance improves the broker expects the company to re-rate. The potential in the hardware business is also under appreciated in Morgan Stanley's view.

Overweight rating maintained. Cautious sector view. Target is $2.80.

Target price is $2.80 Current Price is $2.30 Difference: $0.5
If MTS meets the Morgan Stanley target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $2.39, suggesting upside of 7.7% (ex-dividends)

The company's fiscal year ends in April.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.1

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

Ord Minnett rates MTS as Hold (3) -

FY17 results were ahead of Ord Minnett's expectations. The broker believes the stock lacks valuation support and maintains a Hold rating, raising the target to $2.15 from $2.10.

Food sales are challenged because of a weak Western Australian economy and the competitive environment, while the prospect of a return to food inflation is uncertain, the broker observes.

Hardware remains a significant opportunity although the path of synergies is occurring a little later than the broker previously expected.

Target price is $2.15 Current Price is $2.30 Difference: minus $0.15 (current price is over target).
If MTS meets the Ord Minnett target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.39, suggesting upside of 7.7% (ex-dividends)

The company's fiscal year ends in April.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.1

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

UBS rates MTS as Sell (5) -

Metcash's result beat the broker and consensus despite grocery revenues continuing to deteriorate due, in the broker's opinion, to supermarket competition and a weak WA. The difference was cost reductions, providing for a surprise in cash flow.

That cash flow has allowed the company to reinstate its dividend but the broker notes cost cuts can only last so long, east coast competition is reemerging and investment in price will be required. The broker has lifted earnings forecasts and its target to $2.00 from $1.85 noting the stock is inexpensive, but Sell retained.

Target price is $2.00 Current Price is $2.30 Difference: minus $0.3 (current price is over target).
If MTS meets the UBS target it will return approximately minus 13% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.39, suggesting upside of 7.7% (ex-dividends)

The company's fiscal year ends in April.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.1

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

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

Morgan Stanley remains positive on the mining industry but discussions with investors suggest they are cautious.

The broker finds the global outlook favourable, with a low risk of a slump in China, and commodity prices are beneficial, particularly as bulk commodities are finding support levels. While the broker acknowledges the setting is not "red-hot" it is constructive.

Morgan Stanley downgrades to Underweight from Equal-weight, not because there are specific downside risks, but rather because value is captured in the share price and other miners screen better. Target is reduced to $20.75 from $21.50.  Attractive industry view.

Target price is $20.75 Current Price is $21.02 Difference: minus $0.27 (current price is over target).
If NCM meets the Morgan Stanley target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $19.55, suggesting downside of -6.7% (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

Morgan Stanley rates NST as Downgrade to Underweight from Overweight (5) -

Morgan Stanley remains positive on the mining industry but discussions with investors suggest they are cautious.

The broker finds the global outlook favourable, with low risk of a slump in China, and commodity prices are beneficial, particularly as bulk commodities are finding support levels. While the broker acknowledges the setting is not "red-hot" it is constructive.

Morgan Stanley downgrades to Underweight from Overweight, not because there are specific downside risks, but rather because value is captured in the share price and other miners screen better. Target is $4.85.  Industry view: Attractive.

Target price is $4.85 Current Price is $4.71 Difference: $0.14
If NST meets the Morgan Stanley target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $4.47, suggesting downside of -5.2% (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

Credit Suisse rates OGC as Outperform (1) -

The company has delivered a positive exploration update across its global portfolio. Credit Suisse finds the most compelling results are from Haile (US).

The first underground mine at Horseshoe will be developed to operate for an initial six years commencing in 2020 and the underground contribution beyond this appears highly probable from drilling results, in the broker's opinion.

Credit Suisse retains an Outperform rating and $4.20 target.

Target price is $4.20 Current Price is $4.23 Difference: minus $0.03 (current price is over target).
If OGC meets the Credit Suisse target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.75, suggesting upside of 15.3% (ex-dividends)

The company's fiscal year ends in December.

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: 0.5

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

Macquarie rates ORE as Neutral (3) -

Severe weather is expected to reduce volume for both lithium and borax in the final quarter of FY17. The company has downgraded June quarter production to 2,400-500t from the implied 2,700-3,200 range provided at the first quarter result.

With the Olaroz lithium plant only stopping for three days, a -10-30% drop in forecast production surprises Macquarie and, in combination with the drop in February, suggests final production will be around 3,000 tonnes lower than forecast back in January.

Neutral maintained. Target is $3.17.

Target price is $3.17 Current Price is $3.40 Difference: minus $0.23 (current price is over target).
If ORE meets the Macquarie target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.35, suggesting upside of 24.2% (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

UBS rates RIO as Buy (1) -

In FY16, Rio couldn't give Coal & Allied away, the broker recalls. Now having had its initial Yancoal ((YAL)) trumping offer rejected, Glencore is back with a higher offer for the coal business. It may be hard for Rio to knock this one back.

But Yancoal's offer represents more certainty with regard regulation, the broker notes, and the company might still come back with another counter. Watch this space. Buy and $75 target retained.

Target price is $75.00 Current Price is $59.57 Difference: $15.43
If RIO meets the UBS target it will return approximately 26% (excluding dividends, fees and charges).

Current consensus price target is $71.38, suggesting upside of 20.1% (ex-dividends)

The company's fiscal year ends in December.

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: 0.9

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

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

Morgan Stanley remains positive on the mining industry but discussions with investors suggest they are cautious.

The broker finds the global outlook favourable with a low risk of a slump in China and commodity prices are beneficial, particularly as bulk commodities are finding support levels. While the broker acknowledges the setting is not "red-hot" it is constructive.

Morgan Stanley downgrades to Underweight from Equal-weight, not because there are specific downside risks, but rather because value is captured in the share price and other miners screen better. Target is reduced to $5.90 from $6.40. Industry view is Attractive.

Target price is $5.90 Current Price is $5.54 Difference: $0.36
If SFR meets the Morgan Stanley target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $6.71, suggesting upside of 20.8% (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

Morgan Stanley rates SGR as Overweight (1) -

Morgan Stanley resumes coverage of the Australasian gaming industry with a Cautious industry view. The broker believes The Star is better positioned than its peers and expects the return on invested capital to improve over FY18-19.

Morgan Stanley expects solid domestic earnings growth over the medium term, supported by the conclusion of capital works in the completion of property expansions.Earnings growth is expected to rebound strongly in FY18 and FY19.

Overweight rating and $5.70 target.

Target price is $5.70 Current Price is $4.96 Difference: $0.74
If SGR meets the Morgan Stanley target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $6.07, suggesting upside of 23.6% (ex-dividends)

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

Credit Suisse rates TAH as Downgrade to Neutral from Outperform (3) -

Credit Suisse downgrades FY18-20 forecasts for earnings per share by around -4% because of growth in retail commissions, as the company introduces a geo-locating system to allow venues to participate in digital turnover. While knowing this initiative was underway, the broker did not anticipate the material cost involved.

Also contributing to the downgrade is a lower FY17 wagering revenue base. Rating is downgrade to Neutral from Outperform as previously the broker believed there was enough value for investors to take on the synergy growth option, and now the stock has to fall for the risk/reward to be attractive. Target is reduced to $4.80 from $5.00.

Target price is $4.80 Current Price is $4.54 Difference: $0.26
If TAH meets the Credit Suisse target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $4.59, suggesting upside of 3.6% (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

Credit Suisse rates TCL as Outperform (1) -

Transurban is targeting a financial close on the West Gate Tunnel project in Melbourne by the end of the year. Credit Suisse believes the risk to the project proceeding is low but the timing of the financial close may be pushed out to 2018.

Outperform reiterated. Target is raised to $13.40 from $12.60 to include a valuation for the tunnel.

Target price is $13.40 Current Price is $12.57 Difference: $0.83
If TCL meets the Credit Suisse target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $12.18, suggesting downside of -2.7% (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

Deutsche Bank rates VVR as Buy (1) -

The company has completed and $80m institutional placement and upgraded FY17 earnings guidance to 13.2c per security from 13.07c.

Funds will be used for the acquisition of eight assets across Victoria, Queensland, NSW and NT. Based on Deutsche Bank's estimates the acquisitions are expected to be accretive to earnings.

Buy rating retained. Target is raised to $2.62 from $2.52.

Target price is $2.62 Current Price is $2.33 Difference: $0.29
If VVR meets the Deutsche Bank target it will return approximately 12% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

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 WHC as Upgrade to Overweight from Equal-weight (1) -

Morgan Stanley remains positive on the mining industry but discussions with investors suggest they are cautious.

The broker finds the global outlook favourable, with a low risk of a slump in China, and commodity prices are beneficial, particularly as bulk commodities are finding support levels. While the broker acknowledges the setting is not "red-hot" it is constructive.

Morgan Stanley upgrades to Overweight from Equal-weight on the back of a more upbeat thermal coal outlook. Target is raised to $3.55 from $3.30. Industry view: Attractive.

Target price is $3.55 Current Price is $2.73 Difference: $0.82
If WHC meets the Morgan Stanley target it will return approximately 30% (excluding dividends, fees and charges).

Current consensus price target is $3.25, suggesting upside of 13.1% (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