Australian Broker Call

Credit Suisse rates ALL as Upgrade to Outperform from Neutral (1) -

Credit Suisse upgrades to Outperform from Neutral amid continued momentum in the digital business. The broker also notes Cashman game upgrades have lifted revenue well above the trough.

A pandemic may have some impact on the land-based revenue, if people avoid casinos in North America and to a lesser extent Europe and Latin America.

However, in Macau, the broker estimates that the company has virtually no revenue share exposure, as casinos there prefer outright purchases. Target is steady at $35.

Target price is $35.00 Current Price is $33.51 Difference: $1.49
If ALL meets the Credit Suisse target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $37.29, suggesting upside of 11.3% (ex-dividends)

The company's fiscal year ends in September.

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

Credit Suisse rates AMC as Upgrade to Outperform from Neutral (1) -

Credit Suisse upgrades to Outperform from Neutral because of the recent fall in the share price. Value has emerged, in the broker's opinion, and Amcor did not fully participate in the recent market rally.

The broker suspects revenue is less likely to be affected by an economic slowdown associated with the possible coronavirus pandemic.

This stems from the fact Amcor manufactures packaging for defensive industries and its exposure to China is about 4% of revenue. Target is steady at $16.25.

Target price is $16.25 Current Price is $14.51 Difference: $1.74
If AMC meets the Credit Suisse target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $16.69, suggesting upside of 15.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

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 ANN as Downgrade to Underperform from Neutral (5) -

Macquarie considers the downside risks to organic revenue growth have increased and outweigh support from various business initiatives.

This is particularly the case if confirmed cases of coronavirus continue to expand outside mainland China.

Rating is downgraded to Underperform from Neutral and the target lowered to $27.50 from $30.00.

Target price is $27.50 Current Price is $29.33 Difference: minus $1.83 (current price is over target).
If ANN meets the Macquarie target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $30.84, suggesting upside of 5.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

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

Morgans rates AX1 as Downgrade to Hold from Add (3) -

Morgans continues to like the business and the growth potential. Surprises on earnings are being driven by the store roll-out profile, which may continue should some of the new concepts gain traction.

Yet, Morgans downgrades to Hold from Add, preferring other retail stocks at similar valuations in the current environment. Target is reduced to $1.92 from $2.15.

Target price is $1.92 Current Price is $1.60 Difference: $0.32
If AX1 meets the Morgans target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $2.09, suggesting upside of 30.4% (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

Morgans rates BGA as Hold (3) -

First half results were weak, Morgans notes. The competitive pressure for milk was most intense in northern Victoria which significantly affected the performance of Tatura Milk.

FY20 guidance is reiterated although cost reduction targets are yet to be quantified. As the outlook remains tough, Morgans retains a Hold rating. Target is raised to $4.17 from $3.60.

Target price is $4.17 Current Price is $4.27 Difference: minus $0.1 (current price is over target).
If BGA meets the Morgans target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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

UBS rates BGA as Buy (1) -

First half results were below expectations. Guidance has been reaffirmed for FY20 operating earnings of (EBITDA) of $95-105m.

UBS assesses the core Bega business, including Koroit, appears to be the source of division upside.

The company's internal review aims to have a material impact on the FY21 cost base, once completed in the second half. Improved seasonal conditions are expected in FY21.

UBS retains a Buy rating and reduces the target to $5.00 from $5.10.

Target price is $5.00 Current Price is $4.27 Difference: $0.73
If BGA meets the UBS target it will return approximately 17% (excluding dividends, fees and charges).

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

UBS rates CBA as Sell (5) -

UBS places all its ratings and targets for the banking sector under review pending details of policy responses.

This stems from the rapidly changing environment regarding coronavirus and the fact the market is pricing in a reduction in the Reserve Bank's cash rate of 25 basis points.

Sell rating. Target is $75.

Target price is $75.00 Current Price is $79.18 Difference: minus $4.18 (current price is over target).
If CBA meets the UBS target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $75.04, suggesting downside of -5.2% (ex-dividends)

The company's fiscal year ends in June.

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

Morgans rates CGR as Hold (3) -

Scottish Pacific has formalised its offer, entering a binding agreement at $0.57 cash per share plus a 3c fully franked dividend. There is a possible impediment in that COG holds a 17.3% stake.

The broker retains a Hold rating but notes the risk the transaction does not proceed and believes shareholders should consider de-risking holdings and taking profits. Target is $0.57. Meanwhile, first half net profit was in line with expectations.

Target price is $0.57 Current Price is $0.56 Difference: $0.01
If CGR meets the Morgans target it will return approximately 2% (excluding dividends, fees and charges).

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

Credit Suisse rates COL as Upgrade to Outperform from Neutral (1) -

After FY20, Credit Suisse believes mid to high single-digit earnings growth will be largely driven by a targeted renewal program and the development of the supermarket range.

While liquor is not central to the investment case, earnings should lift in FY21 with a clean inventory position.

Fuel convenience remains the option, with earnings largely dependent on investment from Viva Energy ((VEA)) to drive fuel volumes.

However there is little downside envisaged for Coles in fuel convenience. Rating is upgraded to Outperform from Neutral. Target is raised to $17.80 from $17.72.

Target price is $17.80 Current Price is $15.12 Difference: $2.68
If COL meets the Credit Suisse target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $15.85, suggesting upside of 4.8% (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

Morgans rates DMP as Upgrade to Add from Reduce (1) -

Morgans believes Domino's Pizza is well-placed, with limited exposure to coronavirus and a reasonably solid growth profile.

The broker points out there are few large cap stocks with double-digit growth profiles and defensive attributes.

Moreover, the company has noted its Japanese operations experienced a trading benefit during the SARS outbreak.

Rating is lifted to Add from Reduce and the target raised to $60.30 from $57.61.

Target price is $60.30 Current Price is $56.44 Difference: $3.86
If DMP meets the Morgans target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $57.99, suggesting upside of 2.7% (ex-dividends)

The company's fiscal year ends in June.

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

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

2019 results were strong and above expectations. Commission-style transaction fees from real estate portals continue to be the main engine of growth.

Morgans observes the business has created significant value since investing in its portfolio companies and is expected to continue doing so.

As the stock is now well below valuation the rating is upgraded to Add from Hold. Target is $1.09.

Target price is $1.09 Current Price is $0.94 Difference: $0.15
If FDV meets the Morgans target it will return approximately 16% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

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

Macquarie rates FMG as Outperform (1) -

Macquarie believes the company is well-placed to beat FY20 cash cost guidance and hit the upper end of its shipment guidance.

The broker notes the company's benchmark prices have been comparatively stable despite the volatility in the iron ore price.

A strong balance sheet and using project debt for Iron Bridge should mean Fortescue Metals can sustain elevated dividends over the next two years.

Outperform rating maintained. Target is reduced to $12.40 from $13.00.

Target price is $12.40 Current Price is $9.49 Difference: $2.91
If FMG meets the Macquarie target it will return approximately 31% (excluding dividends, fees and charges).

Current consensus price target is $9.88, suggesting upside of 4.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

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 IPL as Outperform (1) -

Macquarie observes the stock is now trading below book value and, while the asset sale process is ongoing, the environment remains tough. Several options remain to be assessed and the company expects to finalise its position during the second half.

Macquarie expects more concrete news by the first half result in May. The broker retains an Outperform rating and reduces the target to $3.45 and $3.78. Estimates for FY20 are reduced by -6% to reflect a marking to market of fertiliser prices/Australian dollar.

Target price is $3.45 Current Price is $2.76 Difference: $0.69
If IPL meets the Macquarie target it will return approximately 25% (excluding dividends, fees and charges).

Current consensus price target is $3.45, suggesting upside of 24.9% (ex-dividends)

The company's fiscal year ends in September.

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

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

Morgans assesses investors will be best placed sticking with large, more defensive names such as JB Hi-Fi in the current environment. The company revealed resilient like-for-like sales growth in the recent results.

Moreover, online expansion was still doing the heavy lifting and the business reported one of the highest rates of growth in this segment. The broker upgrades to Add from Hold. Target is $40.66.

Target price is $40.66 Current Price is $36.01 Difference: $4.65
If JBH meets the Morgans target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $40.46, suggesting upside of 12.4% (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

Ord Minnett rates LYC as Buy (1) -

First half results were mixed, with earnings missing Ord Minnett's forecasts because of higher depreciation and amortisation. The main issue for the broker is how the company plans to self fund its $500m growth ambition. This is considered a stretched target.

Ord Minnett reiterates a Buy rating and reminds investors that the market perception of risk versus reality will quickly narrow and should soon re-rate from current distressed levels. Target is reduced to $4.65 from $4.80.

Target price is $4.65 Current Price is $1.74 Difference: $2.91
If LYC meets the Ord Minnett target it will return approximately 167% (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

Morgan Stanley rates NXT as Overweight (1) -

On further review Morgan Stanley considers the bullishness around contracts outside of Sydney and recent transaction multiples are positive qualitative aspects of the latest results.

The broker assesses the stock is a differentiated asset which is exposed to long-term structural growth. Cash flow generation is predictable and growing.

Overweight maintained. In-Line industry view. Target is raised to $9.00 from $8.40.

Target price is $9.00 Current Price is $8.06 Difference: $0.94
If NXT meets the Morgan Stanley target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $8.82, suggesting upside of 9.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.8

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

UBS rates NXT as Buy (1) -

UBS observes activation of megawatts was ahead of expectations in the first half and this is the key catalyst for further contract wins in hyper-scale.

With the S2 enterprise capacity finally coming on line the broker envisages scope for contract wins.

While gaps in contract announcements marginally push out operating earnings growth this has not changed the bigger picture, in the broker's view.

Buy maintained. Target rises to $9.10 from $8.60.

Target price is $9.10 Current Price is $8.06 Difference: $1.04
If NXT meets the UBS target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $8.82, suggesting upside of 9.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.8

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

Ord Minnett rates OGC as Accumulate (2) -

The company has pre-sold 48,000 ounces along with its 15% stake in junior explorer Gold Standard Ventures. Ord Minnett believes this is an indication that 2020 will be a tough year without the cash flow from Didipio.

The broker lowers 2020 earnings forecasts. 2020 guidance remains at 360-380,000 ounces. Accumulate rating and $3.10 target maintained.

Target price is $3.10 Current Price is $2.32 Difference: $0.78
If OGC meets the Ord Minnett target it will return approximately 34% (excluding dividends, fees and charges).

Current consensus price target is $3.93, suggesting upside of 69.4% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Forecast for FY21:

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 PAN as Neutral (3) -

First half earnings and cash outflow were better than Macquarie expected. The decline in the nickel price has increased the funding pressure on the company, even if the ramp up of Savannah North proceeds.

While funding concerns have temporarily eased with the recent rights issue and share sale Macquarie remains cautious and retains a Neutral rating. Target is $0.20.

Target price is $0.20 Current Price is $0.20 Difference: $0
If PAN meets the Macquarie target it will return approximately 0% (excluding dividends, fees and charges).

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

UBS rates RFF as Buy (1) -

First half results were slightly ahead of UBS estimates. The company has continued to sell poultry assets and acquire cattle properties and two of the latter are to be converted to macadamia orchards.

UBS observes the recent transactions improve the growth outlook and tenant covenant while reducing related-party conflicts and associated market concerns.

No assets have been materially affected by drought or bushfire. Buy rating maintained. Target is reduced to $2.30 from $2.42.

Target price is $2.30 Current Price is $2.00 Difference: $0.3
If RFF meets the UBS target it will return approximately 15% (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

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

First half net losses were extended and weaker than Morgans expected. Higher costs occurred across most expense lines. Revenue increased 24% from sales of the traditional Turbine and Mute devices.

Morgans revises forecasts lower in line with the higher operating cost base and lower sales traction but remains cautiously optimistic about new products. Target is reduced to $0.22 from $0.28.

Rating is upgraded to Speculative Buy from Hold because of recent share price weakness.

Target price is $0.22 Current Price is $0.15 Difference: $0.07
If RNO meets the Morgans target it will return approximately 47% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Market Sentiment: 1.0

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

Credit Suisse rates SBM as Outperform (1) -

The updated reserve and resource statement reveals a 29% increase in reserves at Simberi, to 2.2m ounces, and a 5% increase to resources, to 4.4m ounces.

Credit Suisse notes the opportunity for further reserve growth exists on resource conversion, subject to drilling. This will feed into a revised feasibility study, due at the end of 2020, to inform the decision whether to retain and develop the project or potentially divest it.

Either way, the broker believes the stock screens favourably on valuation and an Outperform rating and $3.20 target are maintained.

Target price is $3.20 Current Price is $2.50 Difference: $0.7
If SBM meets the Credit Suisse target it will return approximately 28% (excluding dividends, fees and charges).

Current consensus price target is $3.03, suggesting upside of 21.0% (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

Macquarie rates STO as Outperform (1) -

The company has announced a final investment decision on the infill development of Van Gogh and the tie back to Ningaloo will boost liquids production. First production is anticipated in late 2021.

While recent decreases in global oil and gas prices have meant the share price has dropped by -20% since the start of 2020, Macquarie believes Santos is in control of its portfolio and continues to expand its production profile while at the same time driving down costs.

Outperform maintained. Target is lowered -7% to $8.60.

Target price is $8.60 Current Price is $7.00 Difference: $1.6
If STO meets the Macquarie target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $8.51, suggesting upside of 21.5% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Forecast for FY21:

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

Credit Suisse rates SUL as Upgrade to Outperform from Neutral (1) -

Overall, Credit Suisse observes Super Retail has achieved solid revenue growth and built one of the better digital capabilities in the retail sector.

While BCF has underperformed, its influence on the investment case is minor.

The broker upgrades to Outperform from Neutral, believing the business is well-positioned for medium-term growth. Target is steady at $9.94.

Target price is $9.94 Current Price is $8.02 Difference: $1.92
If SUL meets the Credit Suisse target it will return approximately 24% (excluding dividends, fees and charges).

Current consensus price target is $10.16, suggesting upside of 26.7% (ex-dividends)

The company's fiscal year ends in June.

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

Macquarie rates SXY as Outperform (1) -

The initial drilling program at Roma North has been completed with production nearing capacity. The drilling campaign now focuses on Project Atlas.

Completion of Roma North should enable Senex Energy to achieve its targeted 18PJ/annum initial production plateau by the end of FY21. Macquarie retains an Outperform rating and $0.50 target.

Target price is $0.50 Current Price is $0.27 Difference: $0.23
If SXY meets the Macquarie target it will return approximately 85% (excluding dividends, fees and charges).

Current consensus price target is $0.45, suggesting upside of 65.4% (ex-dividends)

The company's fiscal year ends in June.

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 TCL as Neutral (3) -

Macquarie notes pandemic fears are an exogenous risk that has a material impact on traffic flows. Roads with dynamic tolling in the US could be the hardest hit, the broker points out.

The economic impact post a pandemic is a lower base and slower ramping up of traffic as congestion has to re-build.

While there is a dividend risk, Macquarie notes, relative to general industrials, this is materially lower for Transurban. Moreover, the opportunity pipeline favours larger players. Neutral maintained. Target is $15.64.

Target price is $15.64 Current Price is $15.12 Difference: $0.52
If TCL meets the Macquarie target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $14.70, suggesting downside of -2.8% (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