Australian Broker Call

UBS rates AMA as Initiation of coverage with Buy (1) -

Via a series of acquisitions, AMA Group has become the key consolidator and largest player in the fragmented Australian panel beating industry. The industry is undergoing major change, the broker notes, through consolidation, the closure of smaller players and a preference from insurers to use larger players.

A similar process has already begun playing out in the US and UK and the broker sees Australia following the same path. On a solid growth profile, the broker initiates coverage of AMA with a Buy rating and $1.25 target.

Target price is $1.25 Current Price is $0.92 Difference: $0.335
If AMA meets the UBS target it will return approximately 37% (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

Macquarie rates ASX as Underperform (5) -

November activity signals to Macquarie that the stock is trading at a maximum premium. SFE trading results were varied while cash market activity was higher because of one more trading day.

The broker finds the relative valuation unattractive and retains a Underperform rating. Target is raised to $42.90 from $42.50.

Target price is $42.90 Current Price is $47.65 Difference: minus $4.75 (current price is over target).
If ASX meets the Macquarie target it will return approximately minus 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $45.67, suggesting downside of -4.2% (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

Ord Minnett rates AWC as Upgrade to Accumulate from Hold (2) -

Ord Minnett has increased its forecasts for coal, iron ore and copper, while downgrading near-term gold price forecasts. The broker also raises forecasts for alumina. Spot alumina continues to look strong at US$325/t and presents upside potential to the broker's earnings estimates.

The broker upgrades AWC to Accumulate from Hold and raises the target to $1.80 from $1.60. The upgrade is driven by a higher valuation and strong forecasts for free cash flow.

Target price is $1.80 Current Price is $1.70 Difference: $0.1
If AWC meets the Ord Minnett target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $1.50, suggesting downside of -13.9% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY16:

Forecast for FY17:

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: -0.4

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

Macquarie rates BAP as Neutral (3) -

The company has increased its offer for Hellaby to NZ$3.60. Hellaby directors have indicated they will not support the revised offer unless an NZ$0.18 dividend is paid out pre-acquisition.

Macquarie estimates, based on FY18 earnings and asset sales, that the acquisition would be around 10% accretive. The broker considers Burson a well-managed company with a defensible growth outlook and solid balance sheet but the near term trading multiples are full.

A Neutral rating is retained and the target is reduced to $5.19 from $6.89, given the uncertainty over the status of the offer.

Target price is $5.19 Current Price is $4.99 Difference: $0.2
If BAP meets the Macquarie target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $5.92, suggesting upside of 18.5% (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

Morgans rates BAP as Upgrade to Add from Hold (1) -

The company has increased its takeover bid for Hellaby to NZ$3.60 and received irrevocable shareholder acceptances representing 40% of issued capital.

Morgans now factors in the acquisition, but notes there is some risk to Bapcor gaining full control.The broker acknowledges the company has been particularly accretive in recent years, which brings higher integration risk.

Nonetheless, the broker believes the deal stacks up from an accretion perspective. Morgans upgrades to Add from Hold and reduces the target to $5.75 from $6.36.

Target price is $5.75 Current Price is $4.99 Difference: $0.76
If BAP meets the Morgans target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $5.92, suggesting upside of 18.5% (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

Morgan Stanley rates CSL as Underweight (5) -

Morgan Stanley's investigations suggest the US uptake of Idelvion is progressing well. Nevertheless, the broker finds the market increasingly competitive as it is evolving from one player into five players.

The company's supply contract for Helixate is set to expire in 2017 and the broker removes the contribution of this product from forecasts.

Morgan Stanley retains a Underweight rating and reduces the target to $96 from $97. Industry view: In-Line.

Target price is $96.00 Current Price is $95.64 Difference: $0.36
If CSL meets the Morgan Stanley target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $108.99, suggesting upside of 13.5% (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: 0.3

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

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

The company has been awarded the Sydney growth trains contract. The $1.7bn contract follows the contractual close on the Victorian government's $2bn high-capacity metro trains project.

Credit Suisse takes the opportunity to review its assumptions, noting  the company has positioned itself to diversify away from the challenged mining and engineering construction sectors. Over 55% of revenue is now generated from servicing public infrastructure customers in Australasia.

Despite raising the target to $5.30 from $4.70, the broker downgrades to Underperform from Neutral, as the business needs to prove its earnings now that it is trading almost on a market multiple where earnings estimates for FY19 will be roughly flat versus FY16.

Target price is $5.30 Current Price is $6.00 Difference: minus $0.7 (current price is over target).
If DOW 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 $5.42, suggesting downside of -9.6% (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

Credit Suisse rates DUE as Upgrade to Neutral from Underperform (3) -

The company has confirmed a non-binding offer of $3.00 from Cheung Kong infrastructure. Credit Suisse observes the bid price is in line with the upper end of recent transactions in NSW for Transgrid and Ausgrid.

The high initial offer reduces the likelihood of a counter bid. The broker acknowledges some uncertainty regarding approval by the Foreign Investment Review Board.

Credit Suisse upgrades to Neutral from Underperform and raises the target to $2.80 from $2.30.

Target price is $2.80 Current Price is $2.74 Difference: $0.06
If DUE meets the Credit Suisse target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $2.69, suggesting downside of -0.7% (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

Morgans rates DUE as Upgrade to Hold from Reduce (3) -

The company has confirmed that it is considering a takeover bid from Cheung Kong Infrastructure. Given the corporate activity, Morgans lifts its rating to Hold from Reduce.

The broker does not factor corporate activity into the target, including the takeover premium that the company may be willing to pay to gain control of the stock.The broker sets the target at the indicative bid price of $3.00.

Cheung Kong may be attracted to the yield but also could merge its Victorian distribution networks with DUET networks, the broker observes. Morgans expects cash flow supporting the distribution to materially fall away early next decade.

Target price is $3.00 Current Price is $2.74 Difference: $0.26
If DUE meets the Morgans target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $2.69, suggesting downside of -0.7% (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

Ord Minnett rates DUE as Hold (3) -

Ord Minnett believes the timing and $3.00 bid price by Cheung Kong Infrastructure caught the market by surprise, considering the rising interest rate environment.

The broker does not envisage a competing offer and expects the Foreign Investment Review Board will ultimately approve the transaction. The broker does not envisage enough reward in the offer price for the risk involved and maintains a Hold rating. Target is raised to $2.80 from $2.40.

Target price is $2.80 Current Price is $2.74 Difference: $0.06
If DUE meets the Ord Minnett target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $2.69, suggesting downside of -0.7% (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

Ord Minnett rates ENN as Initiation of coverage with Buy (1) -

Elanor Investors is a diversified investment and funds management business.  Assets under management have grown to an estimated $640m from $87m in 2014.

Ord Minnett believes the market does not fully appreciate the value of these assets,  which offer Investors an opportunity to get in early on a growing and historically successful funds management business for a fraction of its worth.

The broker initiates coverage with a Buy rating and $2.38 target.

Target price is $2.38 Current Price is $2.04 Difference: $0.34
If ENN meets the Ord Minnett target it will return approximately 17% (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

UBS rates FPH as Neutral (3) -

FP Healthcare has had preliminary injunctions granted to ResMed ((RMD)) in Germany overturned, allowing the company to resume sales of its full face masks. The broker sees no material impact in the near term.

In the longer term, the broker warns the story is not over yet, with a German or European patent court yet to be involved and moves afoot in the US as well. The broker has no previous guide as to what might transpire. Neutral and NZ$9.50 target retained.

Current Price is $7.99. 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

Morgans rates FTT as Add (1) -

The AGM update has outlined a number of catalysts for 2017. A read out of the phase 2 venous leg ulcer trial is expected in the third or fourth quarter.

The company continues to identify expanded applications for its technology, including the treatment of diabetic foot ulcers and potential ocular indications.

Morgans retains an Add rating and 9.3c target.

Target price is $0.09 Current Price is $0.08 Difference: $0.016
If FTT meets the Morgans target it will return approximately 21% (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

Morgan Stanley rates GNC as Overweight (1) -

In addition to the robust grain receival data, supportive of a record FY17 east coast crop, Morgan Stanley notes the recent sell down by ADM and rapid repair of the balance sheet eliminates two overhangs on sentiment.

The broker believes the stock is more than just a FY17 harvest story and FY18 earnings estimates look compelling. The broker also notes confidence in consensus upgrades is growing with each harvest update.

The broker retains a Overweight rating, Attractive industry view and $10.00 target.

Target price is $10.00 Current Price is $8.85 Difference: $1.15
If GNC meets the Morgan Stanley target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $9.12, suggesting upside of 3.1% (ex-dividends)

The company's fiscal year ends in September.

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

Credit Suisse rates MFG as Outperform (1) -

Strong flows were reported in November with funds under management up 6% in the month. Credit Suisse observes these strong flows emanate despite a more muted environment and market volatility.

The broker expects the company to continue to attract flows above the rates of its peers, which will underpin future earnings growth. The broker maintains an Outperform rating and $26 target.

Target price is $26.00 Current Price is $22.38 Difference: $3.62
If MFG meets the Credit Suisse target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $25.21, suggesting upside of 13.7% (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 MFG as Outperform (1) -

Funds under management were up 6.2% in November with positive net inflows. Fund performance is mixed but does not appear to be impacting on flows.

Macquarie notes the fund flows in the year to date, up 17.6%, continue to exceed expectations and supports an Outperform rating. Target is raised to $24.95 from $24.19.

Target price is $24.95 Current Price is $22.38 Difference: $2.57
If MFG meets the Macquarie target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $25.21, suggesting upside of 13.7% (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 MGC as Neutral (3) -

The company will terminate its framework agreement with Mead Johnson Nutrition. The agreement was negotiating a strategic alliance for the supply of nutritional products to China. Chinese regulatory changes make the existing framework unworkable.

While Macquarie did not include this agreement in its numbers it concedes this was a growth area for the business, and the announcement is a setback on underwriting the new facility. A Neutral rating and $1.15 target are retained.

Target price is $1.15 Current Price is $0.96 Difference: $0.195
If MGC meets the Macquarie target it will return approximately 20% (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 MML as Neutral (3) -

Citi's outlook has turned positive on resources sector in general for the two years ahead, but not so for gold. Neutral/High Risk rating retained. Target falls to 62c from 70c. Estimates have been reduced.

Target price is $0.62 Current Price is $0.52 Difference: $0.105
If MML meets the Citi target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $0.61, suggesting upside of 19.6% (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: 0.0

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

Citi rates NCM as Buy (1) -

Citi's outlook has turned positive on resources sector in general for the two years ahead, but not so for gold. Buy rating retained, but price target reduced to $24.60 from $26.20.

Target price is $24.60 Current Price is $18.88 Difference: $5.72
If NCM meets the Citi target it will return approximately 30% (excluding dividends, fees and charges).

Current consensus price target is $20.58, suggesting upside of 10.5% (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

Citi rates NST as Buy (1) -

Citi's outlook has turned positive on resources sector in general for the two years ahead, but not so for gold. Buy rating retained. Price target gains 10c to $4.80.

Target price is $4.80 Current Price is $3.47 Difference: $1.33
If NST meets the Citi target it will return approximately 38% (excluding dividends, fees and charges).

Current consensus price target is $4.64, suggesting upside of 35.3% (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

Citi rates OGC as Buy (1) -

Citi's outlook has turned positive on resources sector in general for the two years ahead, but not so for gold. Buy/High Risk rating retained, as well as the $5.10 price target. Small adjustments have been made to forecasts.

Target price is $5.10 Current Price is $3.87 Difference: $1.23
If OGC meets the Citi target it will return approximately 32% (excluding dividends, fees and charges).

Current consensus price target is $4.94, suggesting upside of 29.0% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY16:

Forecast for FY17:

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

Citi rates OZL as Buy (1) -

Citi's outlook has turned positive on resources sector in general for the two years ahead, but not so for gold. Buy rating retained, while price target jumps to $10.20 from $8.80.

Target price is $10.20 Current Price is $8.09 Difference: $2.11
If OZL meets the Citi target it will return approximately 26% (excluding dividends, fees and charges).

Current consensus price target is $7.56, suggesting downside of -9.0% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY16:

Forecast for FY17:

Market Sentiment: 0.1

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

Citi rates PRU as Neutral (3) -

Citi's outlook has turned positive on resources sector in general for the two years ahead, but not so for gold. Neutral rating retained. Target lifts by 1c to 59c

Target price is $0.59 Current Price is $0.57 Difference: $0.02
If PRU meets the Citi target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $0.73, suggesting upside of 30.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.6

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

Macquarie rates QBE as Outperform (1) -

Macquarie reviews the recent increase in investment yields. With QBE having rallied around 27% from its lows of late September it has closed the gap to the broker's benchmark and is now at 1% premium to peers.

Nevertheless, during 2015 the stock traded at 15.2 times one-year forward price/earnings, which would support a share price on FY17 earnings per share estimates of $13.44.

Hence, Macquarie retains an Outperform rating and raises the target to $12.34 from $11.30.

Target price is $12.34 Current Price is $11.50 Difference: $0.84
If QBE meets the Macquarie target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $11.29, suggesting downside of -3.8% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY16:

Forecast for FY17:

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: 0.4

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

UBS rates SAI as Neutral (3) -

SAI shareholders yesterday voted in favour of the $4.75ps takeover offer from private equity. Assuming government approval, the shares will cease trading on December 12, the broker notes.

The broker has not changed its $3.65 target or Neutral rating.

Target price is $3.65 Current Price is $4.73 Difference: minus $1.08 (current price is over target).
If SAI meets the UBS target it will return approximately minus 23% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.28, suggesting downside of -9.8% (ex-dividends)

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

Morgan Stanley rates SRX as Overweight (1) -

Morgan Stanley considers the recent update on colon cancers from the National Comprehensive Cancer Network will be supportive of the company's dose sales in the Americas over 2-5 years.The guidelines are widely used by US oncologists to help inform patient management.

Overweight rating and $40.80 target retained. Industry view is In-Line.

Target price is $40.80 Current Price is $26.19 Difference: $14.61
If SRX meets the Morgan Stanley target it will return approximately 56% (excluding dividends, fees and charges).

Current consensus price target is $35.47, suggesting upside of 36.4% (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

Morgan Stanley rates SYD as Overweight (1) -

Australia and China have entered into an open skies agreement, which should boost the international passenger growth outlook for Sydney Airport. Morgan Stanley remains constructive on both Australian and New Zealand airports.

The broker envisages a risk that the correlation with bond yields could be lower in 2017. The stock has benefited in past years from falling global bond yields and rising regional aviation, but in the near term the broker expects yields to remain a valuation headwind.

Morgan Stanley retains an Overweight rating alongside a Cautious sector view. Target is reduced to $7.06 from $7.37.

Target price is $7.06 Current Price is $6.10 Difference: $0.96
If SYD meets the Morgan Stanley target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $6.89, suggesting upside of 12.2% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY16:

Forecast for FY17:

Market Sentiment: 0.3

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

Ord Minnett rates WHC as Upgrade to Accumulate from Hold (2) -

Ord Minnett has increased its forecasts for coal, iron ore and copper, while downgrading near-term gold price forecasts. The broker upgrades Whitehaven Coal to Accumulate from Hold and the target to $3.30 from $3.00.

The upgrade is driven by a higher valuation and a strong free cash flow forecast.  Ord Minnett recognises it is late in its call but estimates the stock will be net cash within a year.

Target price is $3.30 Current Price is $2.90 Difference: $0.4
If WHC meets the Ord Minnett target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $3.16, suggesting upside of 0.2% (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

Citi rates WSA as Sell (5) -

Citi's outlook has turned positive on resources sector in general for the two years ahead. Sell rating retained. Target lifts to $1.92 from $1.83.

Target price is $1.92 Current Price is $3.20 Difference: minus $1.28 (current price is over target).
If WSA meets the Citi target it will return approximately minus 40% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.61, suggesting downside of -20.9% (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