Australian Broker Call

UBS rates AIZ as Buy (1) -

UBS believes its survey of NZ consumers suggests they are likely to increase air travel in the next 12 months, particularly international trips.

This supports a positive view on the airline and makes the broker suspect the market is not pricing in the potential strong cash flow likely to be generated between FY20-24. UBS reiterates a Buy rating. Target is NZ$2.90.

Current Price is $2.56. 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

Macquarie rates AMI as Outperform (1) -

Aurelia Metals sustained a soft performance in the March quarter, with gold production well below Macquarie's estimates. This was because of an underperforming high-grade Chronos ore body.

Nevertheless, Macquarie expects a solid finish to FY19, with concentrate shipments returning to normal at Hera. Chronos is also expected to improve.

Outperform rating and $1 target maintained.

Target price is $1.00 Current Price is $0.73 Difference: $0.27
If AMI meets the Macquarie target it will return approximately 37% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 1.0

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

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

AP Eagers has announced the sale and leaseback of the three properties in Newstead, Brisbane. The company will receive $55.5m in cash and will continue to operate out of the facilities.

Morgan Stanley considers this further evidence of the company's longer-term strategy to consolidate its presence within certainty geographies as well as to better leverage the cost base of the current dealer network.

While the sale should be viewed positively by the market, the broker believes, given the current offer for Automotive Holdings ((AHG)), the stock is likely to trade away from fundamentals.

Equal-weight retained. Target is $7. Industry view: In line.

Target price is $7.00 Current Price is $8.74 Difference: minus $1.74 (current price is over target).
If APE meets the Morgan Stanley target it will return approximately minus 20% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $7.63, suggesting downside of -12.7% (ex-dividends)

The company's fiscal year ends in December.

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

Citi rates CGC as Buy (1) -

Citi expects strong growth to return in FY19. The broker has reviewed the prospects in Morocco and forecasts revenue growth of 29%. International operating earnings (EBITDA) are expected to rise 67% and contribute 40% of group earnings growth.

 There are a number of growth drivers over the next three years, all within the company's control. These include growth in hectares for mushrooms, tomatoes and berries, with improved yields in avocados and berries. Steady Buy rating and $5.80 target.

Target price is $5.80 Current Price is $5.48 Difference: $0.32
If CGC meets the Citi target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $5.87, suggesting upside of 7.0% (ex-dividends)

The company's fiscal year ends in December.

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

Citi rates FLT as Neutral (3) -

Citi observes the market has once again been disappointed, as earnings guidance for FY19 has been cut for the third time. Visibility is low and the broker believes the risk around Australian earnings remains high.

Forecasts are cut by -13%. Citi suspects the rate of decline in the second half was faster than in the first half, despite an easier previous period being cycled. Citi maintains a Neutral rating and reduces the target to $42.30 from $47.50.

Target price is $42.30 Current Price is $39.03 Difference: $3.27
If FLT meets the Citi target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $44.54, suggesting upside of 14.1% (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

Credit Suisse rates FLT as Neutral (3) -

The company has downgraded guidance by -12% to $335-360m for pre-tax profit in FY19. Credit Suisse notes the Australian leisure business continues to be challenged and total transaction value appears to have declined in the first months of 2019.

Meanwhile, the Americas are apparently performing strongly amid growth in corporate. The broker considers Flight Centre is moving towards a more sustainable base in its Australian leisure business and leisure is becoming less material overall.

Neutral rating maintained. Target is reduced to $39.72 from $41.97.

Target price is $39.72 Current Price is $39.03 Difference: $0.69
If FLT meets the Credit Suisse target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $44.54, suggesting upside of 14.1% (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

Deutsche Bank rates FLT as Hold (3) -

Deutsche Bank suspects trading conditions for travel agents have been tough since late 2018, despite inquiry levels remaining high. The broker also suspects the wealth affect from housing is beginning to have an impact.

While offshore business is still strong, the magnitude of the profit downgrade the company has announced is a reminder to Deutsche Bank of the operating leverage in the business.

The stock appears to be cheap in an expensive market, although the broker requires some signs of stabilisation in Australian leisure before becoming more comfortable. Hold rating and $41 target.

Target price is $41.00 Current Price is $39.03 Difference: $1.97
If FLT meets the Deutsche Bank target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $44.54, suggesting upside of 14.1% (ex-dividends)

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

Macquarie rates FLT as Neutral (3) -

Pre-tax profit has been downgraded to $335-360m from $390-420m. Australian leisure was the source of weakness.

Macquarie suspects the leisure business is continuing to lose market share and, while management believes the issues are largely transitory, is concerned that this could be more enduring.

While value is starting to appear in the stock, Macquarie finds it difficult to envisage a bottom and maintains a Neutral rating. Target is reduced to $37.60 from $43.50.

Target price is $37.60 Current Price is $39.03 Difference: minus $1.43 (current price is over target).
If FLT meets the Macquarie target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $44.54, suggesting upside of 14.1% (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

Morgan Stanley rates FLT as Overweight (1) -

Morgan Stanley is concerned about execution, the macro exposure and structural pressures in Australian leisure following the downgrade to FY19 pre-tax profit guidance.

It appears greater proportion of the soft performance in the year to date is from disruption, stemming from store closures, rebranding and new wage deals.

Morgan Stanley is now questioning whether these pressures are not more structural. Based on broadly flat FY20 estimates for leisure earnings the broker expects corporate business will generate 65% of group profits.

Morgan Stanley maintains an Overweight rating and reduces the target to $46 from $51. Industry view: Cautious.

Target price is $46.00 Current Price is $39.03 Difference: $6.97
If FLT meets the Morgan Stanley target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $44.54, suggesting upside of 14.1% (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 FLT as Hold (3) -

The quantum of the FY19 downgrade to guidance was greater than Morgans expected. Flight Centre now expects pre-tax profit of $335-360m.

The downgrade is largely driven by Australian leisure and comes because of subdued trading conditions and internal challenges, including the roll-out of a new sales staff wages model as well as the consolidation of brands.

Morgans downgrades forecast by -13.2% across the forecast period. Given the uncertainty, the broker maintains a Hold rating. Target is reduced to $41.65 from $47.37. While the company is committed to its business transformation targets, the broker expects the pre-tax profit margin in FY19 will fall to 1.4%.

Target price is $41.65 Current Price is $39.03 Difference: $2.62
If FLT meets the Morgans target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $44.54, suggesting upside of 14.1% (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

Ord Minnett rates FLT as Buy (1) -

Friday's was the profit warning that simply had to be issued and it's not representative for the way forward. Such is Ord Minnett's view, with the analysts suggesting it's almost a perfect storm that has hit the company this financial year.

On that basis, the Buy rating has been retained while the target price falls to $52.47 from $55.47 on reduced forecasts. As long as Australia can avoid an economic recession, the broker suggests overall volumes should hold up relatively well.

Target price is $52.47 Current Price is $39.03 Difference: $13.44
If FLT meets the Ord Minnett target it will return approximately 34% (excluding dividends, fees and charges).

Current consensus price target is $44.54, suggesting upside of 14.1% (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

UBS rates FLT as Buy (1) -

UBS reduces forecasts by -8-9% after the company cut FY19 guidance for pre-tax profit by around -10% at the mid point. UBS calculates that over two thirds of the factors contributing to the downgrade are specific to the company and less than one third are cyclical or structural.

The broker points out that, with the exception of Australasian leisure, the rest of the business is performing well. Margins are expected to trough and efficiency measures, a cycling of one-offs and corporate growth should mean margins grow in FY20.

If this occurs, then the stock is likely to re-rate and, coupled with upside risk to the international business, this drives a Buy rating. UBS reduces the target to $55.60 from $61.20.

Target price is $55.60 Current Price is $39.03 Difference: $16.57
If FLT meets the UBS target it will return approximately 42% (excluding dividends, fees and charges).

Current consensus price target is $44.54, suggesting upside of 14.1% (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

Credit Suisse rates HLS as Upgrade to Neutral from Underperform (3) -

Amid reports a private equity consortium is working on a bid for Healius, Credit Suisse notes the speculation involves selling of the diagnostic imaging operations to one party and the rump of the operation to another.

Credit Suisse estimates a break-up value of $3.80 a share. On a fundamental basis, there is significant earnings risk with headwinds from labour costs and execution risk from strategic initiatives.

However, in the short term, the share price is likely to be supported by the prospect of M&A. Credit Suisse upgrades to Neutral from Underperform and raises the target to $3.10 from $2.35.

Target price is $3.10 Current Price is $3.15 Difference: minus $0.05 (current price is over target).
If HLS meets the Credit Suisse target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.07, suggesting downside of -2.6% (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

Ord Minnett rates MQG as Accumulate (2) -

Macquarie Group will report its FY19 result on May 3. Ord Minnett forecasts net profit of $2.96bn, up 16%. Strong growth is expected in market-facing businesses together with a lower effective tax rate.

FY20 guidance will be key and the broker expects 3% growth in earnings. Accumulate rating and $133 target maintained.

Target price is $133.00 Current Price is $134.50 Difference: minus $1.5 (current price is over target).
If MQG meets the Ord Minnett target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $129.31, suggesting downside of -3.9% (ex-dividends)

The company's fiscal year ends in March.

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

Credit Suisse rates PRU as Outperform (1) -

The government of Côte d'Ivoire has given permission to develop and operate the US$264m Yaoure gold mine. A mining convention remains to be negotiated to lock in fiscal terms and conditions.

Credit Suisse believes Perseus Mining needs to progress ground clearing and earthmoving activities urgently, in order to complete the work before the wet season. Awaiting a mining convention is likely to risk a budget increase and schedule slippage if the wet season is worse than usual.

Credit Suisse maintains an Outperform rating and $0.57 target.

Target price is $0.57 Current Price is $0.46 Difference: $0.11
If PRU meets the Credit Suisse target it will return approximately 24% (excluding dividends, fees and charges).

Current consensus price target is $0.59, suggesting upside of 28.3% (ex-dividends)

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

Credit Suisse rates RMD as Outperform (1) -

Ahead of the March quarter results on May 3 Credit Suisse forecasts revenue growth of 14% in constant currency terms.

The broker decreases estimates for earnings per share by an average of -2% because of lower growth for the base Brightree business.

Credit Suisse maintains an Outperform rating and $15.35 target.

Target price is $15.35 Current Price is $14.75 Difference: $0.6
If RMD meets the Credit Suisse target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $15.08, suggesting upside of 2.2% (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

Morgans rates SKI as Hold (3) -

Morgans is not convinced the investment in the Bomen solar farm is attractive. It adds additional risk and the broker finds it difficult to envisage how economic returns will be generated without strong wholesale prices.

The broker is comfortable with the counterparty and contractual arrangements that will de-risk the construction phase but does not believe sufficient revenue will be generated across the 30-year asset life to deliver the economic return required.

Hold rating maintained. Target is reduced to $2.25 from $2.28.

Target price is $2.25 Current Price is $2.27 Difference: minus $0.02 (current price is over target).
If SKI meets the Morgans target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.25, suggesting downside of -0.9% (ex-dividends)

The company's fiscal year ends in December.

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

Credit Suisse rates SYR as Outperform (1) -

Mozambique has been hit by second cyclone which made landfall closer to the Balama operations. This could have impact on supplies brought to the site.

Key operating numbers and cash position details have been pre-released but June quarter projections are awaited with the March quarter production report.

This could now be unclear Credit Suisse suggests, pending the progress of the cyclone. Outperform rating and $3.30 target maintained.

Target price is $3.30 Current Price is $1.13 Difference: $2.17
If SYR meets the Credit Suisse target it will return approximately 192% (excluding dividends, fees and charges).

Current consensus price target is $2.48, suggesting upside of 119.5% (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: 0.6

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