Australian Broker Call

Ord Minnett rates AQZ as Buy (1) -

The company has guided to having 44 active aircraft in service by the end of the year, having recently acquired five Fokker 100 aircraft.

Ord Minnett remains attracted to the business, believing the stock is cheap with an enterprise value/operating earnings (EBITDA) ratio of 5.0x for FY20. Buy rating maintained. Target is raised to $2.90 from $2.70.

Target price is $2.90 Current Price is $2.75 Difference: $0.15
If AQZ meets the Ord Minnett target it will return approximately 5% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

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 BHP as Equal-weight (3) -

Morgan Stanley updates estimates to reflect realised production, prices and costs for FY19 as well as new guidance for FY20. On average, operating earnings (EBITDA) estimates are trimmed by -3% and earnings per share by -5-10%.

Equal-weight maintained. Industry view: In-Line. Target is reduced by -2% to GBP18.10.

Current Price is $41.55. Target price not assessed.

Current consensus price target is $40.23, suggesting downside of -3.2% (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: 0.1

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

Macquarie rates CVW as Neutral (3) -

A trading update from ClearView suggested an FY19 profit -7.6% below the broker's forecast, due to the adverse impact of a change in income protection claims assumptions. Changes have been made by management in all of expense, claims, lapse and discount rate assumptions to take into account recent experience.

With operating conditions remaining challenging in the sector, the broker retains Neutral. Target falls to 69c from 88c. Management has flagged a buyback to replace the final dividend.

Target price is $0.69 Current Price is $0.67 Difference: $0.02
If CVW meets the Macquarie target it will return approximately 3% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.0

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

UBS rates DHG as Downgrade to Sell from Neutral (5) -

The stock is now trading at 11% above the UBS price target of $2.75 and the broker lowers the rating to Sell from Neutral. Besides valuation, downside to near-term earnings expectations is also envisaged.

Listings remain extremely weak. The broker factors in revenue declines continuing into the first half of FY20, remaining hopeful of a second-half recovery.

Target price is $2.75 Current Price is $2.86 Difference: minus $0.11 (current price is over target).
If DHG meets the UBS target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.70, suggesting downside of -5.6% (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

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

The company presents a medium-long term growth story, Ord Minnett suggests, with likely earnings volatility at times. Growth is expected to come from the development of substantial property projects that currently exist on the balance sheet.

The hotels & resorts division is expected to be adversely affected by the recent deterioration in revenue growth in both Sydney and Melbourne. Yet Ord Minnett remains confident in management's ability to extract value.

The broker downgrades to Hold from Buy, given the near-term headwinds. Target is reduced to $13.99 from $15.20.

Target price is $13.99 Current Price is $12.39 Difference: $1.6
If EVT 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 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 Buy (1) -

Citi believes there is an opportunity for consolidation of the store network in order to drive higher levels of profitability through lower rent and labour costs.

The broker calculates that closing stores in Australia could drive $5-8m of pre-tax profit upside over two years, assuming half of the total transaction value is transferred to nearby stores.

Citi considers Flight Centre on track to deliver pre-tax profit within guidance of $335-360m. Buy rating and $49.20 target maintained.

Target price is $49.20 Current Price is $44.67 Difference: $4.53
If FLT meets the Citi target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $46.91, suggesting upside of 5.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.6

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

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

While there are signs outflows may be lower in the second half of the year, Morgan Stanley assesses a sustainable re-rating requires more evidence of the company addressing its structural challenges.

Investment performance is stabilising across the group, with the broker noting this is particularly so in the case of INTECH, where a sustained improvement could remove a key risk for outflows. Further cost savings and executing on the institutional growth option would make the broker more positive.

Equal-weight rating is maintained. Target is reduced to $33.30 from $35.00. Industry view is In-Line.

Target price is $33.30 Current Price is $31.97 Difference: $1.33
If JHG meets the Morgan Stanley target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $33.74, suggesting upside of 5.5% (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: 0.0

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

Macquarie rates KLL as Outperform (1) -

A quarterly update from Kalium reveals $5m spent to date on early works at Beyondie with spending expected to accelerate over the first half FY20 following a final investment decision. The company has secured financing for Beyondie as well as operating and capital contractors.

The rapid advancement of the project suggests to the broker a positive final investment decision will be forthcoming shortly. Outperform and $1.00 target retained.

Target price is $1.00 Current Price is $0.68 Difference: $0.32
If KLL meets the Macquarie target it will return approximately 47% (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

Macquarie rates NGI as Downgrade to Neutral from Outperform (3) -

An update from Navigator shows FY19 earnings coming in ahead of guidance and Macquarie's forecast thanks to an improved investment performance in the second half. Assets under management also improved although MAS flows remain in the negative and Lighthouse flows were also negative.

The broker has lifted its target price to $3.62 from $3.45 but on continuing outflows, the need to cut costs to achieve the broker's FY20 forecasts and a 20% rally off 2019 lows, Macquarie downgrades to Neutral from Outperform.

Target price is $3.62 Current Price is $3.57 Difference: $0.05
If NGI meets the Macquarie target it will return approximately 1% (excluding dividends, fees and charges).

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

Morgan Stanley rates OSH as Upgrade to Overweight from Equal-weight (1) -

Morgan Stanley upgrades to Overweight from Equal-weight. The stock has been driven to multi-year lows amid political concerns and delays in expansion. The broker believes it is now an attractive time to build a position.

The recent de-rating has meant the market effectively wiped out any value for expansion, in the broker's view.

The resource base is considered enormous in PNG and Morgan Stanley believes in 5-10 years there will be another wave of expansions. Target is $8.00. Industry view is In-Line.

Target price is $8.00 Current Price is $6.96 Difference: $1.04
If OSH meets the Morgan Stanley target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $8.13, suggesting upside of 16.8% (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 PPT as Hold (3) -

Ord Minnett notes the business continues to experience meaningful fund outflows and believes investors will focus on the new plan to grow the business via acquisitions.

However, at this stage, it is difficult to assess the growth plans and potential success. The broker retains a Hold rating and reduces the target to $38 from $40.

Target price is $38.00 Current Price is $37.92 Difference: $0.08
If PPT meets the Ord Minnett target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $38.85, suggesting upside of 2.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: -0.1

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

Macquarie rates QBE as Neutral (3) -

The UK Ministry of Justice has increased the Ogden rate from -0.75% to -0.25% which results in reserve releases for peers but an increased reserve requirement for QBE Insurance, leading to an earnings impact of some -6.5% in 2019. The loss is nevertheless non-recurring, the broker notes, and should not impact on the dividend.

QBE Insurance is heading in the right direction, the broker suggests, but is running up against falling bond yields and a chance of higher than anticipated US crop losses in the second half. Target falls to $12.20 from $12.50, Neutral retained.

Target price is $12.20 Current Price is $11.68 Difference: $0.52
If QBE meets the Macquarie target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $12.83, suggesting upside of 9.9% (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

Credit Suisse rates RMD as Outperform (1) -

The company reports its FY19 results on July 26. Credit Suisse forecasts revenue growth of 15% in constant currency terms and earnings (EBIT) growth of 8%. Market share gains are expected to continue into FY20.

While the next round of competitive bidding in the US remains a risk it is not due for more than 12 months. Outperform rating and $18.45 target maintained.

Target price is $18.45 Current Price is $17.39 Difference: $1.06
If RMD meets the Credit Suisse target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $17.01, suggesting downside 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

UBS rates RWC as Initiation of coverage with Neutral (3) -

UBS initiates coverage on Reliance Worldwide with a Neutral rating and $3.75 target. The broker believes the company has an edge in brand recognition and the breadth of its product spread into large chains such as Home Depot and Lowe's.

Growth now depends on converting plumbers to PTC (push to connect) and any new products. UBS is attracted to the company's strategic position in the repair market and two-year compound growth rate of 16% in earnings per share. The stock is trading in line with valuation.

Target price is $3.75 Current Price is $3.65 Difference: $0.1
If RWC meets the UBS target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $4.63, suggesting upside of 26.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.6

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

Citi rates SAR as Sell (5) -

The company is targeting increased gold production in FY20. Overall, June quarter gold production of 88,100 ounces at an all-in sustainable cost of $1026/oz was close to Citi's estimates.

The broker considers the growth story attractive, as production is on its way to a possible long-term rate of 400,000 ounces per annum, but this does not support the current share price. Sell retained. Target is raised to $3.30 from $2.95.

Target price is $3.30 Current Price is $4.18 Difference: minus $0.88 (current price is over target).
If SAR meets the Citi target it will return approximately minus 21% (excluding dividends, fees and charges - negative figures indicate an expected loss).

The company's fiscal year ends in June.

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 SAR as Neutral (3) -

Saracen Mineral's June Q production was in line with expectation but costs were above. FY20 production guidance is lower than expected and leads the broker to cut its target to $3.50 from $3.80.

The broker retains a positive outlook for Saracen but not to the extent the current share price suggests. Neutral retained.

Target price is $3.50 Current Price is $4.18 Difference: minus $0.68 (current price is over target).
If SAR meets the Macquarie target it will return approximately minus 16% (excluding dividends, fees and charges - negative figures indicate an expected loss).

The company's fiscal year ends in June.

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 TWE as Sell (5) -

Citi expects a strong result for FY19, given the premium wine sales into China. Recent data on the wine industry have reinforced the view that growth is likely to be driven by Asia, particularly China.

Meanwhile, the broker notes the company is still losing share in the US. Sell rating and $14.90 price target retained.

Target price is $14.90 Current Price is $16.55 Difference: minus $1.65 (current price is over target).
If TWE meets the Citi target it will return approximately minus 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $17.99, suggesting upside of 8.7% (ex-dividends)

The company's fiscal year ends in June.

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 TWE as Equal-weight (3) -

Morgan Stanley acknowledges the valuation appears cheap but retains an Equal-weight rating. Industry view: Cautious. Price target $17.

The broker is cautious about reading too much into the 37% increase in Australian wine exports to China by value in the second quarter.

Broadly, luxury demand appears strong in China which limits earnings risk for Treasury Wine, but any interpretation of the data is complicated by customs delays experienced in May and the early timing of the Penfolds launch, Morgan Stanley suggests.

Target price is $17.00 Current Price is $16.55 Difference: $0.45
If TWE meets the Morgan Stanley target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $17.99, suggesting upside of 8.7% (ex-dividends)

The company's fiscal year ends in June.

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