Australian Broker Call

Deutsche Bank rates BHP as Hold (3) -

Fears for a Sino-USA trade war have pushed down prices for commodities, and related share prices, but Deutsche Bank analysts see resilient demand plus policy response in China as the harbinger of better times ahead.

All in all, the sector update includes an upgraded outlook for Aluminium prices as well as short term Alumina prices. Price forecasts have also increased for Thermal Coal, crude oil, iron ore, manganese and Coking coal. Downgrades have been implemented for shorter term copper, zinc and cobalt forecasts.

Recommendation for BHP remains Hold, but the price target has lifted to $36 from $34.50.

Target price is $36.00 Current Price is $35.13 Difference: $0.87
If BHP meets the Deutsche Bank target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $36.73, suggesting upside of 4.5% (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: 0.7

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

Macquarie rates COE as Outperform (1) -

The ACCC has published its LNG netback time series. Netback pricing averaged $11.20/gigajoule in the September quarter and pricing is expected to average around $12.20/gigajoule in 2019, ahead of expectations.

Macquarie observes, of those oil stocks under coverage, Cooper Energy has the largest uncontracted volume over 2019 at around 14PJ. Around 12 PJ of uncontracted gas from Sole is expected to commence in mid 2019, with upside for an additional 2PJ from commissioning.

The broker currently forecasts the company's pricing of uncontracted gas at around $10/GJ from Sole. Outperform rating and $0.55 target maintained.

Target price is $0.55 Current Price is $0.46 Difference: $0.09
If COE meets the Macquarie target it will return approximately 20% (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

Morgan Stanley rates FMG as Reinstate Coverage with Underweight (5) -

Morgan Stanley observes higher Chinese steel mill margins have kept the company's achieved pricing at a steady level, despite a significant increase in the benchmark iron ore price. The company's price discount between March and September has risen to -43% from -17%.

Fortescue's updated product mix should allow a sustained uplift in price realisation but the broker suspects this will not come without some reversal of the cost savings that were achieved through low grading.

The broker envisages downside risk to consensus expectations for FY20 and FY21. Morgan Stanley reinstates coverage with an Underweight rating and target of $3.30. Industry view is In-Line.

Target price is $3.30 Current Price is $3.72 Difference: minus $0.42 (current price is over target).
If FMG meets the Morgan Stanley target it will return approximately minus 11% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.66, suggesting upside of 25.3% (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

Credit Suisse rates IGO as Underperform (5) -

The company's September quarter result will mark the first with only two assets, Nova and Tropicana, in the portfolio. Credit Suisse expects Nova to be in line and future value will be defined by metal prices and exploration success.

At Tropicana, over 500,000 ounces is expected to be produced by mid 2020, while profile enhancement looks increasingly likely from the emerging underground Boston Shaker and Havana Deeps.

Underperform rating and $3.95 target maintained.

Target price is $3.95 Current Price is $4.69 Difference: minus $0.74 (current price is over target).
If IGO meets the Credit Suisse target it will return approximately minus 16% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.66, suggesting downside of -0.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: -0.2

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

Deutsche Bank rates OGC as Downgrade to Hold from Buy (3) -

Fears for a Sino-USA trade war have pushed down prices for commodities, and related share prices, but Deutsche Bank analysts see resilient demand plus policy response in China as the harbinger of better times ahead.

For OceanaGold, however, the rating has nevertheless been downgraded to Hold from Buy. Valuation is the prime motivator here. Price target moved to $4.30.

All in all, the sector update includes an upgraded outlook for Aluminium prices as well as short term Alumina prices. Price forecasts have also increased for Thermal Coal, crude oil, iron ore, manganese and Coking coal. Downgrades have been implemented for shorter term copper, zinc and cobalt forecasts.

Target price is $4.30 Current Price is $4.26 Difference: $0.04
If OGC meets the Deutsche Bank target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $4.67, suggesting upside of 9.5% (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: 0.8

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

Macquarie rates ORG as Outperform (1) -

The ACCC has published its LNG netback time series. Netback pricing averaged $11.20/gigajoule in the September quarter and pricing is expected to average around $12.20/gigajoule in 2019, ahead of expectations.

Macquarie expects the higher LNG netback price to progressively impact earnings for Origin Energy as legacy contracts with Esso in FY20 and Lattice in FY21/22 are re-priced. Outperform and $9.51 target retained.

Target price is $9.51 Current Price is $8.48 Difference: $1.03
If ORG meets the Macquarie target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $9.25, suggesting upside of 9.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.4

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

Deutsche Bank rates RIO as Hold (3) -

Fears for a Sino-USA trade war have pushed down prices for commodities, and related share prices, but Deutsche Bank analysts see resilient demand plus policy response in China as the harbinger of better times ahead.

All in all, the sector update includes an upgraded outlook for Aluminium prices as well as short term Alumina prices. Price forecasts have also increased for Thermal Coal, crude oil, iron ore, manganese and Coking coal. Downgrades have been implemented for shorter term copper, zinc and cobalt forecasts.

Recommendation for Rio Tinto remains Hold, but the price target has lifted to $84 from $78.

Target price is $84.00 Current Price is $78.80 Difference: $5.2
If RIO meets the Deutsche Bank target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $87.73, suggesting upside of 11.3% (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: 0.8

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

Deutsche Bank rates SBM as Upgrade to Buy from Hold (1) -

Fears for a Sino-USA trade war have pushed down prices for commodities, and related share prices, but Deutsche Bank analysts see resilient demand plus policy response in China as the harbinger of better times ahead.

St Barbara's rating has been upgraded to Buy from Hold.

All in all, the sector update includes an upgraded outlook for Aluminium prices as well as short term Alumina prices. Price forecasts have also increased for Thermal Coal, crude oil, iron ore, manganese and Coking coal. Downgrades have been implemented for shorter term copper, zinc and cobalt forecasts.

Target price is $4.20 Current Price is $3.62 Difference: $0.58
If SBM meets the Deutsche Bank target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $4.17, suggesting upside of 15.2% (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

Credit Suisse rates SYR as Outperform (1) -

A fire at the Balama graphite concentrator has stopped production and, while damage is yet to be quantified, it is isolated to the primary classifier screen.

The stock has been placed in a trading halt as the damage is assessed. Sensitivity is heightened because of the current share purchase plan.

Credit Suisse is mainly concerned about the apparent lack of control in operations, although any investigation is yet to reveal whether the fire was caused by operator error, design shortcoming or equipment failure.

Outperform rating and $5.50 target maintained.

Target price is $5.50 Current Price is $2.33 Difference: $3.17
If SYR meets the Credit Suisse target it will return approximately 136% (excluding dividends, fees and charges).

Current consensus price target is $3.63, suggesting upside of 55.8% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.6

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

UBS rates XRO as Neutral (3) -

UBS suspects subscriber growth in the first half will be at record levels as, historically, there has been a high correlation between net subscriber growth by market and search trends on Google.

The broker suggests subscriber momentum in Australia and the UK is accelerating while the US and New Zealand appear similar to FY18. UBS currently forecasts net additions of over 205,000 in the first half and over 409,000 in FY19. Neutral and $45.50 target retained.

Target price is $45.50 Current Price is $49.93 Difference: minus $4.43 (current price is over target).
If XRO meets the UBS target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $41.51, suggesting downside of -16.9% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY19:

Forecast for FY20:

This company reports in NZD. 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