Australian Broker Call

Citi rates ALL as Buy (1) -

Citi assesses Aristocrat Leisure has a sizeable lead across its three key segments in the US. This supports further ship share and participation gains over the next 12 months.

While competitors are making some progress towards narrowing the performance gap, Citi forecasts around 41% participation share by FY22, underpinning the business.

Buy rating and $39.50 price target maintained.

Target price is $39.50 Current Price is $36.90 Difference: $2.6
If ALL meets the Citi target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $37.29, suggesting upside of 1.0% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.9

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

Citi rates API as Neutral (3) -

The company has guided to a decline in net profit in the first half because of subdued consumer sentiment affecting Priceline Pharmacy. There is also a profit drag from the newly-opened ClearSkin Care clinics.

A recovery is anticipated in the second half. Citi assesses the risk to consensus forecasts is to the downside. The broker reduces estimates for FY20-22 by -1-8% and lowers the target to $1.40 from $1.50. Neutral maintained.

Target price is $1.40 Current Price is $1.32 Difference: $0.08
If API meets the Citi target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $1.33, suggesting upside of 1.0% (ex-dividends)

The company's fiscal year ends in August.

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

Credit Suisse rates API as Underperform (5) -

The company has guided to a decline in underlying net profit in the first half because of challenging industry conditions that particularly affect the retail business. An improvement is expected in the second half.

Credit Suisse notes earnings are typically skewed to the second half anyway and, while expecting a 53% skew, does not forecast an improvement as trading conditions are likely to remain the same.

The broker is forecasting a -6% decline in underlying net profit in the first half. Underperform rating maintained. Target is reduced to $1.25 from $1.28.

Target price is $1.25 Current Price is $1.32 Difference: minus $0.07 (current price is over target).
If API meets the Credit Suisse target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $1.33, suggesting upside of 1.0% (ex-dividends)

The company's fiscal year ends in August.

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

Macquarie rates CVN as Outperform (1) -

Drilling and overheads were in line with expectations in the December quarter. Macquarie considers Dorado transformative for the company, with FEED expected in the second half of 2020. First production is forecast for FY22.

The company appears to be well funded through to completion of FEED and is looking at development funding options. The broker retains an Outperform rating and $0.60 target.

Target price is $0.60 Current Price is $0.35 Difference: $0.25
If CVN meets the Macquarie target it will return approximately 71% (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

UBS rates DMP as Neutral (3) -

UBS assesses customer engagement improved in Australia and Germany in the first half but softened in France.

While the broker is comfortable with the digital trends, weak store growth in the EU and the weighting of openings to December could mean some risk to sentiment in the near term.

There is a strong opportunity in the EU, but UBS believes this is priced into the stock. Neutral rating and $50 target maintained.

Target price is $50.00 Current Price is $55.44 Difference: minus $5.44 (current price is over target).
If DMP meets the UBS target it will return approximately minus 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $43.96, suggesting downside of -20.7% (ex-dividends)

The company's fiscal year ends in June.

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

Ord Minnett rates IAG as Hold (3) -

Ord Minnett notes rate momentum in the commercial segment but asserts incumbents need to address the sharp loss of market share over many years in personal lines.

Otherwise, this could lead to increased competition in the industry and place pressure on margins. Ahead of the first half result on February 12, Ord Minnett maintains a Hold rating and raises the target to $7.18 from $7.10.

Target price is $7.18 Current Price is $7.71 Difference: minus $0.53 (current price is over target).
If IAG meets the Ord Minnett target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $7.65, suggesting downside of -0.8% (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

Citi rates JHG as Neutral (3) -

Citi expects net outflows in the fourth quarter will deteriorate and allows for more lumpy outflows from Intech funds. The broker observes reduced trade tensions and risk-on sentiment contributed to a solid rise in global equity markets in the quarter.

Industry data are also showing improving trends for underlying retail flows. A new modest share buyback is anticipated in 2020. The broker retains a Neutral rating and raises the target to $38.40 from $35.65.

Target price is $38.40 Current Price is $36.39 Difference: $2.01
If JHG meets the Citi target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $33.85, suggesting downside of -7.0% (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 OSH as Overweight (1) -

The Mitquq-1 well has encountered hydrocarbons. This is the first of two exploration wells being drilled in the company's tenements in Alaska.

Morgan Stanley notes it is too early to know the commerciality of the discovery but finds the news encouraging.

A higher-risk well to the south called Stirru is about to commence with drilling targeting a materially larger structure.

Overweight rating, In-Line industry view and $8 target.

Target price is $8.00 Current Price is $7.81 Difference: $0.19
If OSH meets the Morgan Stanley target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $7.58, suggesting downside of -2.9% (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: 0.1

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

Citi rates QAN as Neutral (3) -

Reports of an outbreak of coronavirus in Asia have left many investors concerned that the industry could experience a similar downturn to that experienced during the SARS outbreak in 2002.

Citi suspects any risks to demand in the second half could put pressure on market pre-tax profit forecasts.

Based on the company's disclosure, Asia-Pacific accounts for around 20% of global airline profitability. With the international business performing strongly the risk to earnings is skewed to the second half, given the timing of the events.

Citi expects, given a decent multiple re-rating, there is limited scope for any earnings weakness over FY20 for Qantas. Neutral rating and $7.45 target maintained.

Target price is $7.45 Current Price is $6.67 Difference: $0.78
If QAN meets the Citi target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $7.41, suggesting upside of 11.1% (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 RRL as Neutral (3) -

December quarter production of 90,800 ounces has taken the first half production to 50.3% of the mid point of FY20 guidance. The Rosemont underground development is on budget and the scoping study on Garden Well is nearing completion.

Credit Suisse found the production report solid and maintains a Neutral rating. A downgrade to estimates for FY20 earnings per share reflects higher cost guidance. Target is reduced to $4.75 from $4.95.

Target price is $4.75 Current Price is $4.38 Difference: $0.37
If RRL meets the Credit Suisse target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $4.84, suggesting upside of 10.4% (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

Macquarie rates RRL as Downgrade to Underperform from Neutral (5) -

Production was solid in the December quarter and beat Macquarie's forecasts. Timing on the decision for the development of McPhillamys looks to have been delayed and the broker reduces valuation for the project.

While positive on the outlook for Duketon, this does not breach the valuation gap to McPhillamys and Macquarie downgrades to Underperform from Neutral. Target is reduced -7% to $4.20.

Target price is $4.20 Current Price is $4.38 Difference: minus $0.18 (current price is over target).
If RRL 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 $4.84, suggesting upside of 10.4% (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

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

Gold production was ahead of estimates in the December quarter, although Morgan Stanley notes costs are elevated. The company is now expecting the upper end of cost guidance.

The broker does not necessarily consider this negative, as several satellite pits achieved commercial production in FY20 and this may have caused the cost uplift.

There is potential to add value over the next 12 months, in the broker's view, from exploration.

Equal-weight. Target is reduced to $4.70 from $4.75. Industry view is In-Line.

Target price is $4.70 Current Price is $4.38 Difference: $0.32
If RRL meets the Morgan Stanley target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $4.84, suggesting upside of 10.4% (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 RRL as Buy (1) -

Production for the December quarter was in line with expectations. Costs were 5% higher than UBS estimated. Management has indicated costs in FY20 will be at the upper end of the $1125-1195/oz guidance range.

UBS suspects the market is discounting the possibility of exploration extending the mine life.

At Garden Well, drilling indicates gold mineralisation extending 700 metres down plunge from the open pit. A pre-feasibility study for an underground mine will begin in the March quarter.

The broker also factors in a delay to approval at McPhillamys. Buy rating and $5.30 target maintained.

Target price is $5.30 Current Price is $4.38 Difference: $0.92
If RRL meets the UBS target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $4.84, suggesting upside of 10.4% (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

Citi rates RSG as Buy (1) -

A $196m equity raising and the expected sale of Ravenswood have removed -$0.20 from Citi's target, now $1.60.

The capital raising alleviates immediate risk to the balance sheet and the relatively large size suggests the company wishes to have the capacity to pursue other growth opportunities.

Meeting March quarter expectations at Syama could be key to instilling confidence, the broker adds. Buy/High Risk rating maintained.

Target price is $1.60 Current Price is $1.20 Difference: $0.4
If RSG meets the Citi target it will return approximately 33% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

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 SBM as Neutral (3) -

The company has flagged another delay at Gwalia and a weaker outlook at Simberi. The news is disappointing as Citi notes guidance for Gwalia has been pulled back several times.

The broker also envisages a slippage of the timeline for development of the Moose River satellites.

Citi assesses there will be a time to own the stock but maintains a Neutral rating for now, pending the March quarter news flow. Target is reduced to $2.80 from $2.90.

Target price is $2.80 Current Price is $2.82 Difference: minus $0.02 (current price is over target).
If SBM 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 $3.00, suggesting upside of 6.4% (ex-dividends)

The company's fiscal year ends in June.

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

Credit Suisse rates SBM as Outperform (1) -

A third downgrade to Gwalia, albeit small, related to ventilation delays has been reported. However, three of the four fence shafts have now been commissioned.

Simberi output has also been downgraded to 105-115,000 ounces at $1500-1645/oz because of lower grades and more transitional ore.

While disappointed with the update, Credit Suisse notes these are not structural issues. Outperform rating and $3.20 target maintained.

Target price is $3.20 Current Price is $2.82 Difference: $0.38
If SBM meets the Credit Suisse target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $3.00, suggesting upside of 6.4% (ex-dividends)

The company's fiscal year ends in June.

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

Ord Minnett rates SBM as Buy (1) -

FY20 production guidance has been lowered by around -4% for Gwalia with a delay to the extension project. A poor result was also noted at Simberi in the December quarter, attributed to grade and a sign that oxides are being depleted.

Ord Minnett still believes there is value to be unlocked from a larger resource base and this could present upside to the valuation. McPhillamys accounts for 21% of valuation but the broker envisages risks to the timeline. Buy rating and $3.40 target maintained.

Target price is $3.40 Current Price is $2.82 Difference: $0.58
If SBM meets the Ord Minnett target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $3.00, suggesting upside of 6.4% (ex-dividends)

The company's fiscal year ends in June.

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 Buy (1) -

Citi assesses, after a strongly executed fourth quarter, the stock could exceed $10 a share in 2020. Ongoing catalysts include FID at Barossa, completing fiscal terms in PNG LNG and the environmental impact statement at Narrabri.

In the broker's view the market is factoring in greater risk to growth so, if these catalysts allow the market to become more liberal on risk, then at US$65/bbl oil the valuation outcome is $10.26. Buy rating and $8.90 target maintained.

Target price is $8.90 Current Price is $8.82 Difference: $0.08
If STO meets the Citi target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $8.79, suggesting downside of -0.3% (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 STO as No Rating (-1) -

Credit Suisse finds the risk outlook for 2020 balanced. Positive and likely catalysts include crude price premium in WA, GLNG outperformance, higher WA gas prices and Barossa FID.

The broker is restricted on providing a rating or target at present.

Current Price is $8.82. Target price not assessed.

Current consensus price target is $8.79, suggesting downside of -0.3% (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) -

December quarter results were in line with expectations. Organic growth and acquisitions should allow Santos to reach its 120 mmboe production goal by 2025, Macquarie assesses.

The broker believes increased crude production, driven by Dorado, differentiates the company's offering from other Australian major oil producers. Outperform rating maintained. Target is raised 7% to $9.60.

Target price is $9.60 Current Price is $8.82 Difference: $0.78
If STO meets the Macquarie target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $8.79, suggesting downside of -0.3% (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 Hold (3) -

December quarter production was strong, with total output at the top end of guidance. Upstream production set a new record at GLNG and higher gas production offset lower crude output in the Cooper Basin.

An emerging concern for the broker are the weak east coast gas prices. This is been driven primarily by increased supply from Victoria and Queensland. The company has reiterated 2020 guidance. Hold rating and $9.10 target maintained.

Target price is $9.10 Current Price is $8.82 Difference: $0.28
If STO meets the Ord Minnett target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $8.79, suggesting downside of -0.3% (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) -

The final investment decision for Barossa is due in the first quarter of 2020 and FEED for Dorado in the second quarter. December quarter sales revenue was in line with UBS estimates as higher realised oil prices offset a -4% miss in production.

The broker expects a number of positive catalysts over the next 12 months. Santos is in control of the Barossa and Dorado timelines and UBS believes this is factored into the share price. Hence a Neutral rating is maintained. Target is $8.30.

Target price is $8.30 Current Price is $8.82 Difference: minus $0.52 (current price is over target).
If STO meets the UBS target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $8.79, suggesting downside of -0.3% (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 SUN as Hold (3) -

Ord Minnett assesses, at current share price levels, there is some potential upside to valuation. The broker remains concerned that the effort to recover growth may not be a success.

Ahead of the first half result on February 11, the broker retains a Hold rating and raises the target to $13.97 from $13.12.

Target price is $13.97 Current Price is $13.22 Difference: $0.75
If SUN meets the Ord Minnett target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $13.45, suggesting upside of 1.7% (ex-dividends)

Forecast for FY20:

Forecast for FY21:

Market Sentiment: -0.1

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

Credit Suisse rates SYR as Outperform (1) -

Price realisation increased in the December quarter to US$458/t. Price increases reflect favourable product mix and sales, Credit Suisse observes.

The broker notes the price of fines started to rise late in the December quarter as the impact of production cuts and a reduction in inventory tightened the market.

This coincided with Chinese winter production cuts and a material reduction in supply from Madagascar. Outperform rating and $1.30 target maintained.

Target price is $1.30 Current Price is $0.58 Difference: $0.72
If SYR meets the Credit Suisse target it will return approximately 124% (excluding dividends, fees and charges).

Current consensus price target is $0.64, suggesting upside of 9.5% (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 SYR as Underperform (5) -

Graphite production of 15,000t with sales of 17,000t in the December quarter were in line with the company's curtailed production rate.

Macquarie notes a drawing down of inventory helped prices stabilise from late 2019. Nevertheless, it remains difficult to envisage how, at full production, the product will be able to re-enter the market without a significant improvement in graphite demand and quality.

Underperform rating and $0.35 target maintained.

Target price is $0.35 Current Price is $0.58 Difference: minus $0.23 (current price is over target).
If SYR meets the Macquarie target it will return approximately minus 40% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $0.64, suggesting upside of 9.5% (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

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

Production tonnage was in line with expectations in the December quarter but the mix was skewed to lower-value fines. Although the sales price rose, Morgan Stanley suspects this could reflect a greater proportion of sales from coarse product stocks.

Equal-weight rating maintained. Target is $0.45. Industry view is In-Line. Achievement of target recovery and product splits at Balama are key going forward, in the broker's view.

Target price is $0.45 Current Price is $0.58 Difference: minus $0.13 (current price is over target).
If SYR meets the Morgan Stanley target it will return approximately minus 22% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $0.64, suggesting upside of 9.5% (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

UBS rates SYR as Neutral (3) -

Production in the December quarter was in line with expectations. Graphite sales were ahead of UBS estimates because of a drawing down of inventory.

Recovery grades were 68% versus the broker's estimates of 70%, as the company prioritised cost reductions.

Nevertheless, the broker finds the way forward is not yet clear.

While depletion of inventory at Balama has meant the excess supply has largely been removed, the largest driver of price recovery has come from seasonal disruptions to natural graphite production in China.

Neutral rating and $0.44 target maintained.

Target price is $0.44 Current Price is $0.58 Difference: minus $0.14 (current price is over target).
If SYR meets the UBS target it will return approximately minus 24% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $0.64, suggesting upside of 9.5% (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