Australian Broker Call

Deutsche Bank rates ALL as Buy (1) -

Deutsche Bank increases underlying earnings forecast by 6-7% to reflect a stronger-than-expected performance from Australia and digital business in the first half.

Nevertheless, this is largely offset by changes to FX assumptions. Earnings growth of 34% is expected in 2017, above the top end of the company's guidance range of 20-30%.

Deutsche Bank retains a Buy rating and $21.70 target.

Target price is $21.70 Current Price is $18.12 Difference: $3.58
If ALL meets the Deutsche Bank target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $19.04, suggesting upside of 5.0% (ex-dividends)

The company's fiscal year ends in September.

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

Credit Suisse rates AZJ as Underperform (5) -

Credit Suisse estimates a financial impact from Cyclone Debbie of around $100m of EBIT in FY17. Around $80m of this is expected to be in the network business and the company is likely to recover much of the amount via regulated price increases in FY19.

The Goonyella system has suffered the most damage so far with significant landslips and may take five weeks to re-open. The broker trims the price target to $4.90 from $5.00 and retains an Underperform rating.

Target price is $4.90 Current Price is $5.19 Difference: minus $0.29 (current price is over target).
If AZJ meets the Credit Suisse target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.80, suggesting downside of -6.2% (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

Macquarie rates AZJ as Neutral (3) -

Macquarie estimates the cost of the closure and ongoing disruption to the coal network from Cyclone Debbie will be around $62m in FY17 revenue, of which around $33m is associated with lost network revenue and $29m from the above-rail business.

The broker expects the company to recover the shortfall in FY19. The more immediate impact is expected to be on the FY17 dividend.  At this stage, the broker expects the dividend to be maintained at FY16's  levels.

Neutral rating and $4.98 target retained..

Target price is $4.98 Current Price is $5.19 Difference: minus $0.21 (current price is over target).
If AZJ 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 $4.80, suggesting downside of -6.2% (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

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

The company has flagged that operational disruptions caused by Cyclone Debbie are likely to be a negative for FY17 earnings.

Morgan Stanley considers the loss a minor negative because such weather events are not frequent and the company is likely to recover the  below-rail losses by regulatory allowance adjustments in later periods.

Equal-weight retained. Target is $4.85. Industry view is Attractive.

Target price is $4.85 Current Price is $5.19 Difference: minus $0.34 (current price is over target).
If AZJ meets the Morgan Stanley target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.80, suggesting downside of -6.2% (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

UBS rates AZJ as Neutral (3) -

The company has provided estimates further the reopening of its four coal export systems in Queensland in the wake of Cyclone Debbie.

Blackwater is expected to re-open at the end of this week but the Goonyella system will be closed for an additional five weeks. The closures will have a negative impact on volume and earnings in FY17 but the company believes it is too early to assess whether there will be a change to guidance.

UBS estimates a -5% negative impact to FY17 coal haulage volumes. There is no evidence of major damage to mines which suggests to the broker the industry will seek to recover some of the lost output by maximising railings after the networks re-open. Sell rating and $4.80 target retained.

Target price is $4.80 Current Price is $5.19 Difference: minus $0.39 (current price is over target).
If AZJ meets the UBS target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.80, suggesting downside of -6.2% (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 BSL as Outperform (1) -

BlueScope will sell the Taharoa export iron sands business to Taharoa Mining Investments. The company will make a cash contribution of NZ $51m and cease to have any future liability associated with the operation, which at present includes finance lease liabilities of NZ$76.5m.

Credit Suisse retains an outperform rating and $13.30 target. The sale has been updated in its numbers for negligible impact on earnings and valuation.

Target price is $13.30 Current Price is $11.93 Difference: $1.37
If BSL meets the Credit Suisse target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $13.63, suggesting upside of 13.7% (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 BSL as Outperform (1) -

The company has announced the sale of its export iron sands business in Taharoa, New Zealand.  The business has been sold to Taharoa Mining Investments. BlueScope will pay NZ$51m while the buyer will assume all liabilities.

The transaction is expected to reduce net debt by -NZ$25.5m. Macquarie believes this streamlines the NZ business and reduces the distraction that Taharoa presented, while dealing with the lease commitments and growing capital expectations in the operation.

The broker notes steel spreads remain elevated and further US trade determinations remain positive for US market dynamics. Outperform retained. Target is $14.95.

Target price is $14.95 Current Price is $11.93 Difference: $3.02
If BSL meets the Macquarie target it will return approximately 25% (excluding dividends, fees and charges).

Current consensus price target is $13.63, suggesting upside of 13.7% (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

Ord Minnett rates BXB as Re-initiate coverage with Buy rating (1) -

Ord Minnett believes investor concerns surrounding CHEP in the US are overdone. US growth should return as cyclical factors normalise and the broker estimates 39% of group earnings should be generated by Pallets Americas.

The broker re-initiates coverage with a Buy rating and $12.65 target.

Target price is $12.65 Current Price is $9.40 Difference: $3.25
If BXB meets the Ord Minnett target it will return approximately 35% (excluding dividends, fees and charges).

Current consensus price target is $10.27, suggesting upside of 9.0% (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: 0.1

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

Macquarie rates CIM as Outperform (1) -

The company's subsidiary CPB has been named as preferred bidder with John Holland for the $5.5bn Western Distributor in Melbourne. Macquarie notes the size of the contract for Cimic is a $2.5bn share spread over five years.

Outperform and $42.50 target retained.

Target price is $42.50 Current Price is $36.01 Difference: $6.49
If CIM meets the Macquarie target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $32.40, suggesting downside of -10.0% (ex-dividends)

The company's fiscal year ends in December.

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

UBS rates HSO as Buy (1) -

The company has appointed former Telstra ((TLS)) executive Gordon Ballantyne as CEO.

UBS finds the choice of a non-hospital background interesting but suspects the board may see merit in a more strategic, non-health managerial skill set against direct operations experience.

In the longer term the broker envisages a broad range of sector opportunities for the business. Buy and $3.00 target retained.

Target price is $3.00 Current Price is $2.18 Difference: $0.82
If HSO meets the UBS target it will return approximately 38% (excluding dividends, fees and charges).

Current consensus price target is $2.63, suggesting upside of 19.5% (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

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

The company's maximum loss from Cyclone Debbie is capped at $140m. This means the company exhausts its FY17 estimated catastrophe budget with three months left to run.

Morgan Stanley observes, with the aggregate reinsurance cover triggered, the maximum retention from another event is $20m. As guidance assumes no reserve releases in the second half this should provide some offset to elevated catastrophe losses, the broker suggests.

Equal-weight rating, $6.30 target retained. Industry view is In-Line.

Target price is $6.30 Current Price is $5.98 Difference: $0.32
If IAG meets the Morgan Stanley target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $6.01, suggesting upside of 0.6% (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 NUF as Downgrade to Neutral from Outperform (3) -

Credit Suisse believes there is limited downside to owning the stock but reasonable upside, should Nufarm find a complimentary acquisition.

Without an acquisition, the broker believes investors can expect 10% compound EBIT growth over FY17-18, principally through cost savings. Longer term, the broker believes organic growth assumptions of 2-3% ex Australia are achievable.

Credit Suisse observes FMC has moved quickly to take a key acquisition target - the DuPont herbicide/insecticide business - which had been earmarked as a possibility for Nufarm.

There are still other potential acquisitions, albeit smaller, in crop protection and also with canola seeds, the broker notes. Rating is downgraded to Neutral from Outperform. Target is reduced to $10.10 from $10.60.

Target price is $10.10 Current Price is $9.58 Difference: $0.52
If NUF meets the Credit Suisse target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $9.56, suggesting upside of 0.8% (ex-dividends)

The company's fiscal year ends in July.

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 ORA as Neutral (3) -

Credit Suisse finds mounting evidence that Vizy could be adding a second plant in New Zealand, a high-value market for Orora.

The broker observes the company's fibre division will become more dependent on price increases over the next 12-24 months at a time when new industry capacity is being installed.

While Orora can probably recover most input costs inflation,  the broker suspects a full recovery may be difficult. Credit Suisse reduces FY18 and FY19 EBIT estimates by around -3%. Neutral retained. Target falls to $3.15 from $3.25.

Target price is $3.15 Current Price is $2.92 Difference: $0.23
If ORA meets the Credit Suisse target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $3.23, suggesting upside of 12.7% (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

Citi rates ORG as Sell (5) -

Citi marks to market estimates for the March quarter oil and currency changes along with adjustment to production forecasts.

While FY17 net profit estimates decrease by -6.0%, FY18 and FY19 estimates increase by under 1% and 2.1% respectively.

Sell rating retained. Target rises to $6.86 from $6.80.

Target price is $6.86 Current Price is $7.04 Difference: minus $0.18 (current price is over target).
If ORG meets the Citi target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $7.24, suggesting upside of 3.0% (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

Macquarie rates PRU as Neutral (3) -

The company's revised life-of-mine plan for Sissingue incorporates a reduction in the resource and reserve and the addition of the Bele resource and reserve.

Macquarie incorporates the revised plan and updates its Edikan mining assumptions to better reflect the company's recently revised five-year plan.

The broker continues to assume more modest production rates and prefers to await a sustained demonstration of the capability before factoring in more optimistic assumptions. Neutral rating and $0.32 target retained.

Target price is $0.32 Current Price is $0.32 Difference: $0
If PRU meets the Macquarie target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $0.45, suggesting upside of 37.0% (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

Macquarie rates SEH as Outperform (1) -

First quarter production was below Macquarie's estimates. This resulted from longer-than-planned downstream maintenance at the Chinalco facilities.

With peak demand occurring in the northern winter, the broker is disappointed the company was unable to take advantage of higher winter pricing or find a place for the sought-after production. As a result production expectations are reduced over 2017.

Outperform and $0.20 target retained.

Target price is $0.20 Current Price is $0.10 Difference: $0.104
If SEH meets the Macquarie target it will return approximately 108% (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

Ord Minnett rates SPO as Hold (3) -

The company has secured extensions to some of its key health contracts, comprising revenue of $210m over five years, and other contract renewals of $120m in total revenue.

Ord Minnett finds the application statement to the Takeovers Panel regarding the Downer EDI ((DOW)) take-over bid an interesting development, given the board is yet to formally respond to the bid. The statement said the Downer bid contained a number of material defects and misleading and deceptive statements.

Hold rating and $1.05 target. Upside risk to the broker's rating on target include a higher offer emerging from the same or a new third-party suitor.

Target price is $1.05 Current Price is $1.08 Difference: minus $0.03 (current price is over target).
If SPO meets the Ord Minnett target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $0.89, suggesting downside of -17.5% (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

Citi rates STO as Buy (1) -

Citi marks to market estimates for the March quarter oil and currency changes along with adjustment to production forecasts.

2017 core net profit is reduced by -6.1%. Buy rating retained. Target falls to $5.44 from $5.46.

Target price is $5.44 Current Price is $3.74 Difference: $1.7
If STO meets the Citi target it will return approximately 45% (excluding dividends, fees and charges).

Current consensus price target is $4.63, suggesting upside of 24.5% (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

Morgan Stanley rates SUN as Underweight (5) -

The company's maximum loss from Cyclone Debbie is capped at $250m under its main reinsurance. The financial impact is expected to be nil as Suncorp has an additional $300m in reinsurance cover for large events.

Nevertheless, Morgan Stanley calculates that the company will likely exceed its FY17 catastrophe budget by over $100m.

Underweight rating, $12 target and In-Line industry view retained.

Target price is $12.00 Current Price is $12.98 Difference: minus $0.98 (current price is over target).
If SUN meets the Morgan Stanley target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $13.64, suggesting upside of 6.1% (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

Deutsche Bank rates WLD as Hold (3) -

Deutsche Bank views the $52m re-capitalisation as a minor positive despite the dilutive impact as it provides further balance sheet strength at a time when the company is in breach of covenants.

Concerns linger regarding the timing of the recovery, as the company now indicates it will not return to profitability until FY18. Hold retained.Target is raised to $0.22 from $0.21.

Target price is $0.22 Current Price is $0.22 Difference: $0
If WLD meets the Deutsche Bank target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $0.19, suggesting downside of -15.9% (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

Citi rates WPL as Neutral (3) -

Citi marks to market estimates for the March quarter oil and currency changes along with adjustment to production forecasts.

2017 net profit is reduced by  -1.5%. Neutral retained. Target falls to $31.91 from $32.06.

Target price is $31.91 Current Price is $32.13 Difference: minus $0.22 (current price is over target).
If WPL meets the Citi target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $32.68, suggesting upside of 1.6% (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: 0.2

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