Australian Broker Call

UBS rates AGL as Neutral (3) -

Higher wholesale electricity prices are providing short-term upside. However, UBS believes this is partially offset by headwinds from higher hedging costs and an earnings hole arising from the closure of Liddell, as well as an expensive gas supply portfolio.

Near term earnings estimates are increased by 3-6%. The broker remains concerned that the prevailing market and policy settings will continue to stifle the company's ability to source and execute on attractive growth projects.

Neutral rating maintained. Target rises to $18.85 from $18.50.

Target price is $18.85 Current Price is $19.36 Difference: minus $0.51 (current price is over target).
If AGL 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 $18.21, suggesting downside of -5.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: -0.6

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

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

While the stock is priced for a recovery in geochemistry Credit Suisse finds little evidence this is occurring. The focus at the upcoming result is likely to be on the volume growth in geochemistry and continued margin improvement in life sciences.

The broker estimates the share price has already priced moderate sample volume growth in the second half of FY20 and, given the history of volatility at results announcements, the rating is lowered to Neutral from Outperform.

Target is steady at $8.40. The company will report its FY20 first half results on November 19.

Target price is $8.40 Current Price is $8.08 Difference: $0.32
If ALQ meets the Credit Suisse target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $8.07, suggesting downside of -0.1% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.4

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

Morgan Stanley rates APT as Initiation of coverage with Overweight (1) -

Morgan Stanley observes Afterpay Touch has revolutionised point-of-sale finance and disrupted traditional payments and consumer finance operators.

The company has achieved mass adoption in Australia and 2m users in its first year in the US. Morgan Stanley envisages an opportunity to build a niche, although achieving mass user adoption and ubiquity in US payments beyond this niche will be very tough.

The broker initiates coverage with an Overweight rating and $44 target. Industry view is In-Line.

Target price is $44.00 Current Price is $36.57 Difference: $7.43
If APT meets the Morgan Stanley target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $36.14, suggesting downside of -1.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.8

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

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

Bank of Queensland will report its FY19 result on October 17. Citi believes underlying growth in cash earnings will remain challenged relative to the major banks.

The broker believes the bank has plenty of catching up to do in terms of streamlining the back office processes and improving customer facing technology. Moreover, the issues are unlikely to be resolved the next couple of years and the broker expects the home loan book will struggle to grow without compromising too much on margins.

Rating is downgraded to Reduce from Hold and the target is steady at $8.

Target price is $8.00 Current Price is $9.59 Difference: minus $1.59 (current price is over target).
If BOQ meets the Morgans target it will return approximately minus 17% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $8.80, suggesting downside of -8.2% (ex-dividends)

The company's fiscal year ends in August.

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

Credit Suisse rates BPT as Neutral (3) -

Credit Suisse observes the stock is up 20% versus peers since July because of the appeal of its oil & domestic gas exposure versus larger LNG-weighted peers.

The broker considers the valuation full, although near-term catalysts are largely positive. Valuation is primarily dependent on production increases in line with long-term targets.

Neutral rating maintained. Target is raised to $2.34 from $2.11.

Target price is $2.34 Current Price is $2.33 Difference: $0.01
If BPT meets the Credit Suisse target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $2.32, suggesting downside of -0.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.0

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

Macquarie rates CVN as Outperform (1) -

Carnarvon Petroleum's Sep Q drilling and corporate costs were in line with the broker's expectation. Following the company's recent capital raising it should be well funded to progress the Dorado prospect through to completion of front-end engineering & design (FEED).

Since the quarter-end, strong flow test results for Caley have provided a positive. The broker retains Outperform and a 50c target.

Target price is $0.50 Current Price is $0.42 Difference: $0.08
If CVN meets the Macquarie target it will return approximately 19% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 1.0

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

Macquarie rates FPH as Neutral (3) -

Fisher & Paykel Healthcare has received earlier than expected FDA approval for its new OSA mask, leading to FY20 revenue and profit guidance upgrades on a now earlier than expected rebound in mask growth. The broker increases forecast earnings and its target, net of forex adjustment, to NZ$18.38 from NZ$16.61.

The broker nevertheless sees the stock as well priced on 37x forward earnings compared to competitor ResMed's ((RMD)) 32x. The market is not factoring in the risk of a highly competitive environment, the broker believes. Neutral retained.

Current Price is $17.52. Target price not assessed.

Current consensus price target is N/A

The company's fiscal year ends in March.

Forecast for FY20:

Forecast for FY21:

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

Market Sentiment: -0.8

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

UBS rates FPH as Sell (5) -

The company has lifted FY20 net profit guidance to NZ$255-265m on revenue of NZ$1.19bn. This reflects a combination of stronger OSA revenue and hospital revenue growth as well as cost control.

UBS believes hospital sales are likely benefiting from high market share. The broker considers the re-rating of the share price is overdone and retains a Sell rating. Target is raised to NZ$13.85 from NZ$12.85.

Current Price is $17.52. Target price not assessed.

Current consensus price target is N/A

The company's fiscal year ends in March.

Forecast for FY20:

Forecast for FY21:

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

Market Sentiment: -0.8

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

Morgans rates HUB as Hold (3) -

The company entered the first quarter with funds under administration of $14.4bn, up 11.8%. Adviser numbers remain strong with 1,705 now using the platform.

The main risk, the broker observes, centres on the sensitivity of earnings in transaction cash account balances. Hold rating maintained. Target is raised to $13.79 from $13.24.

Target price is $13.79 Current Price is $12.83 Difference: $0.96
If HUB meets the Morgans target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $12.69, suggesting downside of -1.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.0

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

Ord Minnett rates MP1 as Initiation of coverage with Accumulate (2) -

Ord Minnett initiates coverage with an Accumulate rating and $10.50 target. The broker believes the company has built a strong business in the form of its 300-plus installed locations amid the depth of cloud platforms and services on its network.

Ord Minnett forecasts three-year revenue growth of 48% over FY19-22.

Target price is $10.50 Current Price is $10.01 Difference: $0.49
If MP1 meets the Ord Minnett target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $9.58, suggesting downside of -4.3% (ex-dividends)

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.8

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

UBS rates MYX as Neutral (3) -

UBS notes first quarter script volumes in generic products demonstrate competitors are taking share in several of the company's key categories, albeit at a slower pace than previously.

This includes liothyronine and dofetilide. In order to compensate for generic price erosion and competition, the broker suggests the company needs to ensure that product launches in generics are well prosecuted and recent brands successfully commercialised, such as Tolsura.

Neutral rating and $0.66 target maintained.

Target price is $0.66 Current Price is $0.57 Difference: $0.09
If MYX meets the UBS target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $0.64, suggesting upside of 11.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.0

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

Morgans rates NWL as Hold (3) -

Record net inflows occurred in the first quarter, up 39.7%. Morgans expects momentum will continue through FY20, supported by strong adviser growth and increasing funds per adviser.

Earnings and cash transaction account balances remain the biggest risk. The broker maintains a Hold rating and raises the target to $8.19 from $8.07.

Target price is $8.19 Current Price is $9.00 Difference: minus $0.81 (current price is over target).
If NWL meets the Morgans target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $7.74, suggesting downside of -14.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: -0.3

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

UBS rates ORG as Buy (1) -

Higher wholesale electricity prices are driving upgrades to estimates for earnings per share. UBS upgrades FY20-21 estimates by 4-9%.

While the company is net short on generation, its fleet is suited to a more volatile wholesale price environment and UBS believes this will allow Origin Energy to generate higher electricity margins beyond FY21.

Buy rating maintained. Target rises to $9.10 from $8.80.

Target price is $9.10 Current Price is $8.05 Difference: $1.05
If ORG meets the UBS target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $8.49, suggesting upside of 5.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.7

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

Morgans rates PDL as Hold (3) -

Funds under management in the fourth quarter were down -1% on the prior quarter while JO Hambro experienced further net outflows.

Morgans suggests an outcome for Brexit could be a turning point for macro-driven flows in the EU and UK as well as sentiment towards the stock.

However, the broker acknowledges evidence that the investment performance is turning around in JO Hambro is uppermost in importance. Hold rating maintained. Target is reduced to $7.96 from $8.90.

Target price is $7.96 Current Price is $7.03 Difference: $0.93
If PDL meets the Morgans target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $8.01, suggesting upside of 13.9% (ex-dividends)

The company's fiscal year ends in September.

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

Ord Minnett rates PDL as Accumulate (2) -

Fourth quarter funds under management were marginally below the prior quarter. Net outflows were offset partially by market movements.

Ord Minnett believes the current share price presents an attractive risk/reward balance and maintains an Accumulate rating. Target is reduced to $8.20 from $8.80.

Target price is $8.20 Current Price is $7.03 Difference: $1.17
If PDL meets the Ord Minnett target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $8.01, suggesting upside of 13.9% (ex-dividends)

The company's fiscal year ends in September.

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

Ord Minnett rates RHP as Reinstate coverage with Accumulate (2) -

Ord Minnett reinstates coverage with an Accumulate rating and $3 target. The broker believes the business is attractive and light on capital requirements, while the entry into Japan could represent material upside potential.

Rhipe is a cloud master reseller in the Asia-Pacific region and a key partner of Microsoft in the SME market.

Target price is $3.00 Current Price is $2.69 Difference: $0.31
If RHP meets the Ord Minnett target it will return approximately 12% (excluding dividends, fees and charges).

Market Sentiment: 0.5

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

Ord Minnett rates SLC as Initiation of coverage with Accumulate (2) -

Ord Minnett initiates coverage with an Accumulate rating and $1.20 target. Following a $90m capital raising in September, the broker notes this business has repaired the balance sheet and re-set expectations.

Ord Minnett assesses the stock presents an undemanding valuation and is an inexpensive option to gain exposure to the cloud adoption sector.

Target price is $1.20 Current Price is $1.09 Difference: $0.11
If SLC meets the Ord Minnett target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $1.32, suggesting upside of 20.8% (ex-dividends)

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.5

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

Citi rates STO as Neutral (3) -

Citi observes the acquisition of ConocoPhillips' northern Australian assets is accretive. The broker upgrades 2020-21 estimates for earnings by more than 20%.

Citi notes Santos, now as operator of DLNG, is largely able to monetise its gas resources over competing fields as it can dictate which gas enters the plant. Neutral rating maintained. Target rises to $7.76 from $7.40.

Target price is $7.76 Current Price is $7.69 Difference: $0.07
If STO meets the Citi target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $7.96, suggesting upside of 3.5% (ex-dividends)

The company's fiscal year ends in December.

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

Macquarie rates STO as Outperform (1) -

The broker believes Santos has paid a fair price for ConocoPhillips' Northern Australian assets, funded by cash flow and a new debt facility, but the broker anticipates a sell-down of some of the stake to align its interests across the NT.

The acquisition should deliver 19% earnings accretion, the broker calculates, and lower Santos' cash flow breakeven price by -US$4/bbl. Net of anticipated sell-down, forecast earnings rise 10% and 9% in 2020-21 and target rises to $8.80 from $8.20. Outperform retained.

Target price is $8.80 Current Price is $7.69 Difference: $1.11
If STO meets the Macquarie target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $7.96, suggesting upside of 3.5% (ex-dividends)

The company's fiscal year ends in December.

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

Morgan Stanley rates STO as Downgrade to Equal-weight from Overweight (3) -

Morgan Stanley downgrades to Equal-weight after being Overweight for three years. The broker assesses the free cash story is diminishing and investors will be required to invest for a medium-term uplift in production. Meanwhile, risks are building across LNG industry and the stock appears fully valued.

The company has announced a US$1.4bn deal to buy the northern Australian interests of ConocoPhillips. While the deal is solid, Morgan Stanley believes it will change the free cash flow profile of the company. Target is $8.00. Industry view: In-Line.

Target price is $8.00 Current Price is $7.69 Difference: $0.31
If STO meets the Morgan Stanley target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $7.96, suggesting upside of 3.5% (ex-dividends)

The company's fiscal year ends in December.

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

Ord Minnett rates STO as Downgrade to Hold from Buy (3) -

Santos has emerged as the buyer of the ConocoPhillips northern Australian assets, comprising the Darwin LNG, Bayu-Undan, Barossa and Poseidon projects. Ord Minnett considers the transaction positive in so far it gives Santos a majority stake.

Ord Minnett downgrades to Hold from Buy based on valuation and lowers the target to $7.75 from $7.85.

Target price is $7.75 Current Price is $7.69 Difference: $0.06
If STO meets the Ord Minnett target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $7.96, suggesting upside of 3.5% (ex-dividends)

The company's fiscal year ends in December.

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

UBS rates STO as Neutral (3) -

Santos will acquire ConocoPhillips' northern Australian assets for $1.39bn. The transaction will be funded from free cash flow and $750m in new debt facilities as well as a 25% equity sell-down of Bayu-Undan and Darwin LNG.

The transaction increases forecast production by 12% and UBS estimates the acquisition will deliver 9% upside to operating earnings (EBITDA) in 2020. Neutral rating maintained. Target rises to $8.10 from $7.20.

Target price is $8.10 Current Price is $7.69 Difference: $0.41
If STO meets the UBS target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $7.96, suggesting upside of 3.5% (ex-dividends)

The company's fiscal year ends in December.

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

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

Credit Suisse expects the company will review its targets in coming months as these are unlikely to be achieved in coming years unless the business takes on more risk.

While Suncorp has reduced earnings volatility and improved the underwriting profit of the insurance division, Credit Suisse suggests this is being more than offset by lower bond yields.

The broker considers a 10% return on equity a stretch. FY20 net profit estimates from business lines are decreased by -6%. Rating is downgraded to Underperform from Neutral and the target reduced to $12.75 from $13.90.

Target price is $12.75 Current Price is $13.33 Difference: minus $0.58 (current price is over target).
If SUN meets the Credit Suisse target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $13.48, suggesting upside of 1.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.0

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