Australian Broker Call

Morgans rates FNP as Hold (3) -

The company has recently made a number of strategic acquisitions and investments funded via capital raising, cash flow and increased debt.

Morgans believes the acquisitions provide a strong foundation for future growth and there is likely to be material synergies with existing business. The broker includes the recent acquisitions and equity raising in forecasts.

These are been largely offset by more conservative business unit assumptions following a weaker-than-expected interim result. Hence, forecasts for earnings per share have decreased by -25.5% and -23.5% for FY17 and FY18 respectively.

Hold rating retained. Target is reduced to $4.65 from $5.20.

Target price is $4.65 Current Price is $4.49 Difference: $0.16
If FNP meets the Morgans target it will return approximately 4% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.0

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

Citi rates FPH as Buy (1) -

The company is scheduled to report FY17 financials on Monday 22 May. Citi analysts note market consensus anticipates net profits of NZ$169.6m, Citi sits at NZ$168.5m.

Into the finer details, Citi analysts are expecting Hospital growth of +16% to NZ$504m: 26% in New Application (high flow) and 5% in Legacy Products (humidifiers). Buy.

Current Price is $9.38. Target price not assessed.

Current consensus price target is N/A

The company's fiscal year ends in March.

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

Deutsche Bank rates FXJ as Hold (3) -

The company has confirmed it received a rival bid from funds associated with Hellman & Friedman at a cash price of $1.225-25 per share. The board has invited both Hellman & Friedman and the TPG Consortium to conduct due diligence.

As there are now two separate cash bidders, this presents the potential for further increases in the offer price, Deutsche Bank asserts.

The broker has previously suggested that fairly aggressive assumptions would need to be used to justify bids at these levels. Nevertheless, as the two offers on the table suggest, such assumptions are being adopted by private equity bidders.

Hold rating and $1.05 target retained.

Target price is $1.05 Current Price is $1.24 Difference: minus $0.19 (current price is over target).
If FXJ meets the Deutsche Bank target it will return approximately minus 15% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $1.15, suggesting downside of -7.0% (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

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

UBS observes since the first half result the share price has appreciated by 23%. While momentum in automotive remains encouraging, the broker downgrades to Sell from Neutral on valuation grounds.

UBS observes both Brown & Watson and Ryco are on track for double-digit growth in FY17. Meanwhile, the earnings consistency of Oates is being challenged by margin pressure on the difficulty in securing price increases in the retail segment.

The broker believes a divestment of Dexion, and potentially Oates, could provide the cash to pay down debt and be deployed into further automotive acquisitions. Target is raised to $11.30 from $10.15.

Target price is $11.30 Current Price is $12.34 Difference: minus $1.04 (current price is over target).
If GUD 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 $10.70, suggesting downside of -11.4% (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 HGG as Neutral (3) -

As the merger with Janus has now been approved Credit Suisse introduces full merger financials to its models. Industry data signals to the broker that fund flows are improving in line with the general pickup across the industry.

Neutral rating retained. Target rises to $4.10 from $3.80.

Target price is $4.10 Current Price is $4.01 Difference: $0.09
If HGG meets the Credit Suisse target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $4.12, suggesting upside of 1.0% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY17:

Forecast for FY18:

This company reports in GBP. 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

Ord Minnett rates HUO as Upgrade to Buy from Accumulate (1) -

On the back of continuing demand growth, reduced competition, and the option to export to prevent oversupply, Ord Minnett factors in higher wholesale salmon prices for Australia. This has a result of increasing estimates for the company's operating earnings by 11% and 13% for FY17 and FY18 respectively.

Rating is upgraded to Buy from Accumulate and the target to $5.86 from $5.31. The broker makes the stock its preferred pick in the salmon sector as it has greater upside potential thanks to higher leverage to wholesale prices.

Target price is $5.86 Current Price is $4.60 Difference: $1.26
If HUO meets the Ord Minnett target it will return approximately 27% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

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

Citi rates JHX as Neutral (3) -

Post a quarterly update that yet again failed to meet market expectations, Citi analysts suggest James Hardie's track record and high quality reputation is translating into too optimistic projections which will have to be scaled back given the maturity of the business.

Earnings estimates have been reduced. Price target falls to $19.50 from $19.90. Rating remains Neutral.

Target price is $19.50 Current Price is $19.90 Difference: minus $0.4 (current price is over target).
If JHX meets the Citi target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $20.98, suggesting upside of 5.4% (ex-dividends)

The company's fiscal year ends in March.

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

Credit Suisse rates JHX as Outperform (1) -

Credit Suisse reduces forecasts to reflect higher unit costs in the North American business, which continue to impair near-term margins. The broker believes investors are justifiably frustrated with the leverage story, which has now been pushed out for at least another year.

Nevertheless, with no fundamental change to the growth and market penetration story, the broker suspects this may provide an opportunity for the patient investor to step up to the stock. Target falls to $20.85 from $21.60. Outperform retained.

Target price is $20.85 Current Price is $19.90 Difference: $0.95
If JHX meets the Credit Suisse target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $20.98, suggesting upside of 5.4% (ex-dividends)

The company's fiscal year ends in March.

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

Deutsche Bank rates JHX as Buy (1) -

FY17 results were below Deutsche Bank expectations largely because of weaker US margins. The broker reduces its forecasts for US EBIT margins for FY18 to 23% from 27%.

Buy rating retained, as the broker believes margins will increase from the first quarter of FY18. Target is reduced to $22.54 from $22.73.

Target price is $22.54 Current Price is $19.90 Difference: $2.64
If JHX meets the Deutsche Bank target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $20.98, suggesting upside of 5.4% (ex-dividends)

The company's fiscal year ends in March.

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

Macquarie rates JHX as Outperform (1) -

FY17 results were below Macquarie's expectations. The miss was mostly driven by North American production inefficiencies. The company has also announced greenfield capacity expansion in Alabama for FY20.

Despite the disappointing result Macquarie considers the sell-off in the stock an opportunity and there is an improving trajectory for profitability ahead.

Outperform retained. Targets slips to $22.20 from $22.25.

Target price is $22.20 Current Price is $19.90 Difference: $2.3
If JHX meets the Macquarie target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $20.98, suggesting upside of 5.4% (ex-dividends)

The company's fiscal year ends in March.

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 JHX as Hold (3) -

FY17 net profit was slightly below Ord Minnett's estimates The broker believes FY17 may be the year James Hardie would like to forget, as top-line growth was held back by capacity constraints and myriad issues combined to weigh on EBIT for the North American fibre cement business.

The broker expects a recovery in the second quarter of the current financial year. Hold rating maintained. Target is reduced to $18.70 from $19.25.

Target price is $18.70 Current Price is $19.90 Difference: minus $1.2 (current price is over target).
If JHX meets the Ord Minnett target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $20.98, suggesting upside of 5.4% (ex-dividends)

The company's fiscal year ends in March.

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

UBS rates JHX as Buy (1) -

FY17 fibre cement business in North America disappointed UBS. No specific FY18 guidance was provided but the broker observes the company expects to be within its 20-25% EBIT target range for North American fibre cement.

UBS reduces FY18 net profit estimates by -9%. The broker continues to foresee a further 1-2 quarters of execution risk around plant performance before the return to the EBIT target range.

Beyond this, the broker likes exposure to the recovery in US housing and the structural growth the fibre cement provides in the wood-look siding market. Buy rating and $22.50 target retained.

Target price is $22.50 Current Price is $19.90 Difference: $2.6
If JHX meets the UBS target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $20.98, suggesting upside of 5.4% (ex-dividends)

The company's fiscal year ends in March.

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

Credit Suisse rates QUB as Downgrade to Underperform from Neutral (5) -

Credit Suisse expects the Moorebank Logistics Park to deliver significant value for the company. Yet the high-value growth potential of Moorebank is likely to be diluted by weaker value creation in the ports & bulk and Patrick segments.

The stock's valuation appears too stretched for the broker. Rating is downgraded to Underperform from Neutral. Target is $2.30.

Target price is $2.30 Current Price is $2.62 Difference: minus $0.32 (current price is over target).
If QUB meets the Credit Suisse target it will return approximately minus 12% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.68, suggesting upside of 4.5% (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

UBS rates SRX as Buy (1) -

UBS notes the American Society of Oncology abstracts for the company's FOXFIRE/Gloval study shows overall survival rates were not enhanced by Sir-Spheres.

The abstracts are limited in detail and further sub-group analysis may yet reveal differences. UBS has not taken a view on the outcome and its price target relies on existing indications.

Target is $30.30. Buy retained.

Target price is $30.30 Current Price is $10.75 Difference: $19.55
If SRX meets the UBS target it will return approximately 182% (excluding dividends, fees and charges).

Current consensus price target is $25.65, suggesting upside of 123.8% (ex-dividends)

The company's fiscal year ends in June.

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

Ord Minnett rates TGR as Buy (1) -

Ord Minnett takes a more bullish view on salmon prices for the second half of FY17 and for FY18, fuelled by continuing growth in demand, reduced competition and the option to export to prevent oversupply.

Operating earnings estimates for Tassal are raised by 3% and 9% for FY17 and FY18 respectively. Buy rating retained. Target is trimmed to $5.23 from $5.33.

Target price is $5.23 Current Price is $4.42 Difference: $0.81
If TGR meets the Ord Minnett target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $5.01, suggesting upside of 13.8% (ex-dividends)

The company's fiscal year ends in June.

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

Ord Minnett rates VAH as Lighten (4) -

The company posted a loss of -$62.3m in the third quarter, worse than Ord Minnett expected. This leads the broker to believe that risks to earnings are on the downside.

The estimated increase in domestic air fares in March was encouraging but the broker suspects this could be tested in the face of what is a very weak demand environment.

Lighten retained. Target is $0.15.

Target price is $0.15 Current Price is $0.17 Difference: minus $0.02 (current price is over target).
If VAH meets the Ord Minnett target it will return approximately minus 12% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $0.19, suggesting upside of 10.5% (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