Australian Broker Call

Citi rates AGL as Sell (5) -

Citi analysts reiterate their Sell recommendation for AGL Energy, while further reducing the price target to $16.28 from $16.46. In line with previous analysis, the analysts remain of the view the market is seriously underestimating the degree to which the company's earnings may continue to contract.

On revised forecasts, Citi is now positioned some -12% below market consensus with the analysts firmly keeping both eyes fixed on the operational headwinds challenging the company's outlook.

Equally important, Citi is forecasting a sharply lower dividend profile for the years ahead. Origin Energy ((ORG)) is seen as a better alternative in the sector.

Target price is $16.28 Current Price is $18.98 Difference: minus $2.7 (current price is over target).
If AGL meets the Citi target it will return approximately minus 14% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $18.16, suggesting downside of -4.3% (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

Morgans rates CGR as Add (1) -

The company has acquired Classic Funding Group for $11m. The business provides invoice discounting and equipment finance. Morgans observes the acquisition provides significant scale for emerging divisions and is attractive from a strategic and valuation perspective.

Whilst any finance book comes with risk, the broker suggests CML Group has the management in place to lower execution risk. Add maintained. Target is raised to $0.60 from $0.52.

Target price is $0.60 Current Price is $0.52 Difference: $0.08
If CGR meets the Morgans 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

Ord Minnett rates NEC as Reinstate coverage with Buy (1) -

Nine Entertainment has diversified away from traditional broadcast TV into digital media, while its low debt levels provide opportunities for further M&A or a capital return.

On the basis of this assessment Ord Minnett reinstates coverage with a Buy rating and $2.55 target.

Only 47% of revenue is generated from TV and the business is now less susceptible to the structural and cyclical headwinds of TV advertising expenditure. Ownership of Stan and its stake in Domain ((DHG)) should help boost long-term growth, the broker adds.

Target price is $2.55 Current Price is $2.04 Difference: $0.51
If NEC meets the Ord Minnett target it will return approximately 25% (excluding dividends, fees and charges).

Current consensus price target is $2.17, suggesting upside of 6.2% (ex-dividends)

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 ORG as Buy (1) -

UBS slightly reduces forecasts for oil prices through to 2021 but retains a long-term oil price at US$70/bbl, which is expected through 2022-24. The revised outlook for the next couple of years reflects a more subdued view on global demand, in line with economic forecasts.

In turn, energy sector company valuations are reduced by -1-3%. Companies with more value attributed to growth are least exposed to downward revisions in near-term oil prices.

The main drag on global oil demand is the impact of the US/China trade dispute as these two countries account for around 33% of global oil demand and around half of the broker's forecast global growth in 2020.

Somewhat countering this, Origin is expected to receive an increase in distributions from APLNG. Buy rating maintained. Target is lowered to $8.80 from $8.95.

Target price is $8.80 Current Price is $7.72 Difference: $1.08
If ORG meets the UBS target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $8.37, suggesting upside of 8.4% (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

UBS rates OSH as Neutral (3) -

UBS slightly reduces forecasts for oil prices through to 2021 but retains a long-term oil price at US$70/bbl, which is expected through 2022-24. The revised outlook for the next couple of years reflects a more subdued view on global demand, in line with economic forecasts.

In turn, energy sector company valuations are reduced by -1-3%. Companies with more value attributed to growth, such as Oil Search, are least exposed to downward revisions in near-term oil prices.

The main drag on global oil demand is the impact of the US/China trade dispute as these two countries account for around 33% of global oil demand and around half of the broker's forecast global growth in 2020.

Neutral rating maintained. Target is lowered to $7.45 from $7.60.

Target price is $7.45 Current Price is $7.33 Difference: $0.12
If OSH meets the UBS target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $7.65, suggesting upside of 4.4% (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 PLS as Resume coverage with Outperform (1) -

The company has completed the institutional proportion of its $91.5m capital raising. The second portion is a strategic investment from CATL, a Chinese-based global manufacturer of electric vehicles and energy storage batteries.

Macquarie resumes coverage with an Outperform rating and $0.60 target and believes the funding will go a long way to shoring up the company's working capital during the ramp up of Pilgangoora.

Furthermore, the broker expects the large, high-quality resource and processing infrastructure will provide expansion options that will deliver value.

Target price is $0.60 Current Price is $0.35 Difference: $0.25
If PLS meets the Macquarie target it will return approximately 71% (excluding dividends, fees and charges).

Current consensus price target is $0.55, suggesting upside of 57.1% (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

UBS rates STO as Neutral (3) -

UBS slightly reduces forecasts for oil prices through to 2021 but retains a long-term oil price at US$70/bbl, which is expected through 2022-24. The revised outlook for the next couple of years reflects a more subdued view on global demand, in line with economic forecasts.

In turn, energy sector company valuations are reduced by -1-3%. Companies with more value attributed to growth are least exposed to downward revisions in near-term oil prices.

The main drag on global oil demand is the impact of the US/China trade dispute as these two countries account for around 33% of global oil demand and around half of the broker's forecast global growth in 2020.

Santos is the least exposed of the Australian energy sector as it has materially reduced its oil exposure following the acquisition of Quadrant. Neutral maintained. Target is reduced to $7.20 from $7.30.

Target price is $7.20 Current Price is $7.40 Difference: minus $0.2 (current price is over target).
If STO meets the UBS target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $7.64, suggesting upside of 3.2% (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: 0.6

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

Ord Minnett rates SWM as Reinstate coverage with Buy (1) -

A new CEO has been brought in to transform the company, either through a sale or through acquisitions that should dramatically change the revenue composition, Ord Minnett assesses.

On this basis, the broker reinstates coverage with a Buy rating and $0.65 target. Moreover, the company is under-earning on its metro TV audience share and the broker envisages upside as revenue share catches up.

Target price is $0.65 Current Price is $0.43 Difference: $0.22
If SWM meets the Ord Minnett target it will return approximately 51% (excluding dividends, fees and charges).

Current consensus price target is $0.48, suggesting upside of 11.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.2

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

Credit Suisse rates SYR as Outperform (1) -

2019 production estimates have been downgraded by more than -30% to 152,000t. Credit Suisse notes this is driven by the market rather than operations, given a softening in demand and prices.

This is attributed to increased domestic supply in China and supply from Madagascar. Purchases in China have been delayed as customers draw on inventory. The broker notes similar buying behaviour in the lithium sector.

Regardless, Credit Suisse considers the increased reliance on lithium-ion battery technology is unchanged. Target is reduced to $2.30 from $2.40. Outperform retained.

Target price is $2.30 Current Price is $0.54 Difference: $1.76
If SYR meets the Credit Suisse target it will return approximately 326% (excluding dividends, fees and charges).

Current consensus price target is $1.24, suggesting upside of 129.2% (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) -

Despite the value in the equity, Morgan Stanley retains an Equal-weight rating, believing there is yet to be operating stability in terms of recoveries and flake distribution.

The company has downgraded production estimates for 2019 to 152,000t, with an expected price in the third quarter of US$400/t versus US$457/t in the prior quarter.

The broker observes achieving lower costs in the absence of nameplate volumes is a challenge. Target is $0.85. Industry view is Attractive.

Target price is $0.85 Current Price is $0.54 Difference: $0.31
If SYR meets the Morgan Stanley target it will return approximately 57% (excluding dividends, fees and charges).

Current consensus price target is $1.24, suggesting upside of 129.2% (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 WPL as Neutral (3) -

UBS slightly reduces forecasts for oil prices through to 2021 but retains a long-term oil price at US$70/bbl, which is expected through 2022-24. The revised outlook for the next couple of years reflects a more subdued view on global demand, in line with economic forecasts.

In turn, energy sector company valuations are reduced by -1-3%. Companies with more value attributed to growth are least exposed to downward revisions in near-term oil prices.

The main drag on global oil demand is the impact of the US/China trade dispute as these two countries account for around 33% of global oil demand and around half of the broker's forecast global growth in 2020.

Woodside has the most material revision for 2020 estimates of earnings per share, down -23%. Neutral rating maintained. Target is lowered to $31.60 from $32.60.

Target price is $31.60 Current Price is $32.06 Difference: minus $0.46 (current price is over target).
If WPL meets the UBS target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $33.12, suggesting upside of 3.3% (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: 0.1

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