Australian Broker Call

Credit Suisse rates ALL as Outperform (1) -

Digital revenue momentum is "almost certainly" not accelerating for Aristocrat, the broker suggests. New apps are providing benefits but revenue from older games is dropping.

The broker still believes the company will capture a larger share of the mobile games market through expanded investment but the resultant step-up in revenue will come later than originally assumed. The broker has thus trimmed forecasts, while maintaining an Outperform rating and $35 target.

Target price is $35.00 Current Price is $29.56 Difference: $5.44
If ALL meets the Credit Suisse target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $34.65, suggesting upside of 17.2% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.8

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

Macquarie rates ALX as Outperform (1) -

Macquarie suggests there is an opportunity for Atlas Arteria to acquire the MEIF2 stake. This would make sense strategically as it would stop a third party gaining a blocking stake and provide easier negotiation with Eiffage.

The company's investment in APRR is naturally de-gearing and the company has latent borrowing capacity that should allow the acquisition. Macquarie suggests acquiring the interest with debt could add 5% to the valuation without materially changing the risk. Outperform rating maintained. Target is raised to $7.35 from $6.82.

Target price is $7.35 Current Price is $6.78 Difference: $0.57
If ALX meets the Macquarie target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $7.11, suggesting upside of 4.9% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.8

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

UBS rates APA as Neutral (3) -

The ACCC will not oppose the proposed acquisition by the CKI consortium. The main regulatory approval that is required, however, is from the Foreign Investment Review Board.

The decision by the ACCC illustrates that the proposed acquisition will not affect the current competitive dynamic on the east coast gas market, UBS suggests. Neutral rating and $10 target maintained.

Target price is $10.00 Current Price is $9.90 Difference: $0.1
If APA meets the UBS target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $10.10, suggesting upside of 2.0% (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

Macquarie rates FMG as Outperform (1) -

The company's shipping rate has fallen to 160-170mtpa after a record month of over 200mtpa in June. Macquarie reduces first quarter FY19 shipment forecasts by -11% after a soft July and August.

Outperform rating maintained. Target is $4.80. The broker observes the shares are now trading well below spot price valuation as the stock appears to have ignored the recent improvement in low-grade prices.

Target price is $4.80 Current Price is $3.53 Difference: $1.27
If FMG meets the Macquarie target it will return approximately 36% (excluding dividends, fees and charges).

Current consensus price target is $4.94, suggesting upside of 39.9% (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: 0.5

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

Citi rates GMG as Buy (1) -

Citi believes FY19 guidance is likely to be raised at least once. The broker's analysis signals positive momentum and notes the impact on the security price from positive revisions has historically been magnified.

Management earnings are the main driver and the broker's analysis assumes no increase in development earnings. Buy rating $11.90 target maintained.

Target price is $11.90 Current Price is $10.63 Difference: $1.27
If GMG meets the Citi target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $9.89, suggesting downside of -6.9% (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

Macquarie rates KLL as Outperform (1) -

FY18 results revealed a -$10.8m loss. The Beyondie bankable feasibility study is expected shortly. Test work to date, particularly recovery and bore flow rates, signals to Macquarie there could be upside risk to production assumptions.

Outperform rating and $0.65 target maintained.

Target price is $0.65 Current Price is $0.45 Difference: $0.2
If KLL meets the Macquarie target it will return approximately 44% (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 MYR as Sell (5) -

FY18 results were in line but sales and gross margins were better than Citi expected. The broker notes Myer has pulled back on discounting but suggests caution should prevail regarding any retailer trying to unwind promotional activity, given customers are accustomed to buying on promotion.

The improvement in gross margins was primarily from favourable weather, that resulted in less discounting, and the broker does not expect the same factors to be repeated in FY19. Sell rating maintained. Target is reduced to $0.36 from $0.41.

Target price is $0.36 Current Price is $0.42 Difference: minus $0.06 (current price is over target).
If MYR meets the Citi target it will return approximately minus 14% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $0.39, suggesting downside of -7.1% (ex-dividends)

The company's fiscal year ends in July.

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 MYR as Underperform (5) -

Myer's FY18 result matched underwhelming expectations. A refinancing package provides a stable funding platform to execute on the retailer's strategy to remove unprofitable sales, which while promoting an initial sales decline in FY19 should lead to improved margins, the broker suggests.

But it all comes down to execution and the broker has seen this movie before, and it hasn't worked. What might be different this time? Target rises to 31c from 20c on reduced risk through refinancing, Underperform retained.

Target price is $0.31 Current Price is $0.42 Difference: minus $0.11 (current price is over target).
If MYR meets the Credit Suisse target it will return approximately minus 26% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $0.39, suggesting downside of -7.1% (ex-dividends)

The company's fiscal year ends in July.

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

Macquarie rates MYR as Neutral (3) -

FY18 results were weak but broadly in line with Macquarie's expectations. Underlying net profit declined -52% to $32.5m. New management has stressed the importance of profitable sales, yet Macquarie believes the risk to the top-line has now increased should the offer not resonate with the consumer.

Opportunities for savings that do not affect the consumer are likely to become increasingly scarce, in the broker's view. Macquarie envisages earnings and share price risk skewed to the downside, albeit with some modest potential for corporate activity.

FY19 and FY20 estimates are reduced by -14% and -4% respectively. Target is reduced to $0.45 from $0.50. Neutral maintained.

Target price is $0.45 Current Price is $0.42 Difference: $0.03
If MYR meets the Macquarie target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $0.39, suggesting downside of -7.1% (ex-dividends)

The company's fiscal year ends in July.

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

Ord Minnett rates MYR as Upgrade to Hold from Lighten (3) -

FY18 results were ahead of Ord Minnett's forecasts because of higher gross margins and lower tax. The broker has confidence in the new strategy, despite the weakness in sales over the near term. Rating is upgraded to Hold from Lighten and the target raised to $0.43 from $0.37.

The broker believes the new CEO has announced a credible strategy, with a focus on online sales growth, a smaller store network and improved organisational structure. This is a strategy that appears more willing to engage with the "discount value" customer and less with the more "aspirational" customer.

Target price is $0.43 Current Price is $0.42 Difference: $0.01
If MYR meets the Ord Minnett target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $0.39, suggesting downside of -7.1% (ex-dividends)

The company's fiscal year ends in July.

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

UBS rates MYR as Upgrade to Neutral from Sell (3) -

UBS observes the focus of the FY18 result was how the new CEO, John King, will do things differently, given the business has been in a turnaround mode for the past five years. The broker notes some key positives such as improvement in like-for-like sales and FY19 tracking in line with the fourth quarter of FY18.

Still, UBS is sceptical around the ability to re-invigorate the top line. Pressure on the balance sheet has been alleviated for the near term and the broker upgrades to Neutral from Sell. FY19-21 estimates for EBIT are revised up 6-9%. Target is raised to $0.41 from $0.37.

Target price is $0.41 Current Price is $0.42 Difference: minus $0.01 (current price is over target).
If MYR meets the UBS target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $0.39, suggesting downside of -7.1% (ex-dividends)

The company's fiscal year ends in July.

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

Morgan Stanley rates QBE as Overweight (1) -

Hurricane Florence is set to make landfall on Friday on the east coast of the US. Morgan Stanley observes QBE's catastrophe budget has US$635m remaining   for the second half. The benign first half leaves US$900m aggregate largely preserved, lifting capacity for large losses to US$1.5bn.

Applying QBE's market share to the potential loss ranges implies a US$50-$100m impact. The broker suggests, given the company's market share, potential losses are unlikely to hit the maximum allowed for the event.

Overweight rating. Target is $12.00. Industry view is In-Line.

Target price is $12.00 Current Price is $10.93 Difference: $1.07
If QBE meets the Morgan Stanley target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $11.80, suggesting upside of 7.9% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

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 SGR as Buy (1) -

Ord Minnett observes main gaming floor trends are positive for the first half of FY19 and VIP visits are observable, although it is difficult to calculate the performance.

The broker reduces FY19 forecast by -1.7% because of the disruption to the Sovereign Room. This leads to the target being lowered to $6.10 from $6.20. Buy rating maintained.

Target price is $6.10 Current Price is $5.19 Difference: $0.91
If SGR meets the Ord Minnett target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $6.11, suggesting upside of 17.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.9

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

Ord Minnett rates SYD as Buy (1) -

The company has agreed a deal which allows the NSW government to use 10ha of airport land to build the Sydney Gateway Motorway, connecting the airport to the WestConnex toll road, in return for a payment of $170m in three years time.

Ord Minnett considers this a critical piece of infrastructure which should improve airport accessibility. Sydney Airport plans to use the funds to improve road and rail access to the domestic and international terminals.

Ord Minnett maintains a Buy rating, with a target of $8.45.

Target price is $8.45 Current Price is $7.32 Difference: $1.13
If SYD meets the Ord Minnett target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $7.48, suggesting upside of 2.2% (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