Australian Broker Call

Morgan Stanley rates AGL as Equal-weight (3) -

If implemented, the Finkel Review recommendation should be a long-term positive for utility stocks,  Morgan Stanley asserts. This is because of reduced uncertainty.

The broker believes the review marginally favours Origin Energy ((ORG)) over AGL in view of relative carbon intensity and retail & gas market position.

Equal-weight and $25.94 target. Industry view: Cautious.

Target price is $25.94 Current Price is $25.32 Difference: $0.62
If AGL meets the Morgan Stanley target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $27.20, suggesting upside of 6.8% (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 ANN as Upgrade to Overweight from Equal-weight (1) -

Morgan Stanley expects the company to be a strong performer in the next 12 months, although raw materials remain the swing factor.

Positive manufacturing data from the US and inflection points in emerging markets make the broker confident that the company can maintain organic growth at the upper end of guidance.

The broker also suspects the influence of foreign exchange will be largely neutral in FY17. This could also continue into the next year and offset the influence of raw material price inflation.

Rating is upgraded to Overweight from Equal-weight and the target is raised to $25.35 from $23.59. Sector view is In-Line.

Target price is $25.35 Current Price is $22.65 Difference: $2.7
If ANN meets the Morgan Stanley target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $24.09, suggesting upside of 3.9% (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: -0.2

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

Macquarie rates BIN as Initiation of coverage with Outperform (1) -

Macquarie believes the Australian waste market is a growth industry with low levels of cyclicality. There are two main drivers within the 7m tonnes per annum building and demolition sector in NSW. These are population & general economic growth and construction activity.

Bingo operates across the collection, processing, separation and recycling components of the waste value chain and has an expanding presence in Sydney's commercial and industrial sector.

The broker commences coverage of Bingo with an Outperform rating and $2.33 target.

Target price is $2.33

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

Credit Suisse rates BSL as Outperform (1) -

Credit Suisse visited the US site centred in Kansas. The broker believes excess capacity, cost and site rationalisation and a more comprehensive global focus position the business to leverage its non-residential US recovery with incremental tonnage.

Forecast volume growth is modest, the broker acknowledges, unless the steel building market share grows from the current 15% of low-rise non-residential.

Outperform rating and $13.30 target retained.

Target price is $13.30 Current Price is $12.01 Difference: $1.29
If BSL meets the Credit Suisse target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $13.54, suggesting upside of 7.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.7

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

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

Deutsche Bank recently visited the company's Wodgina lithium mine in Western Australia. The company is set to become a 100,000 tonne per annum producer in FY18. The inclusion of  direct shipping ore has increased the broker's valuation for Wodgina.

The scale suggests to Deutsche Bank that the company will soon be the world's largest lithium producer once Mt Marion and Wodgina are ramped up.

FY18 and FY19 estimates for earnings per share have increased by 85% and 32% respectively. The broker upgrades to Buy from Hold and raises the target to $12.00 from $10.80.

Target price is $12.00 Current Price is $9.92 Difference: $2.08
If MIN meets the Deutsche Bank target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $13.22, suggesting upside of 19.4% (ex-dividends)

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 MVF as Overweight (1) -

Morgan Stanley believes there is some risk for FY19 volumes after a key fertility specialist departed the company.

Nevertheless, given management's demonstrated conservatism and non-competing clauses as well as a potential for mitigating strategies, the broker maintains an Overweight rating. Target is $2.60. In-Line industry view.

Target price is $2.60 Current Price is $1.72 Difference: $0.885
If MVF meets the Morgan Stanley target it will return approximately 52% (excluding dividends, fees and charges).

Current consensus price target is $2.13, suggesting upside of 24.8% (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 NCK as Downgrade to Neutral from Buy (3) -

Downside risks arising from a slowing domestic housing cycle combined with weak consumer environment have made Citi analysts uncomfortable with their Buy rating and elevated price target for Nick Scali.

Hence the decision was made to downgrade to Neutral from Buy. Earnings per share estimates for FY18 and FY19 have been reduced by -7% and -17% respectively. Target price falls by -23% to $6.45.

Target price is $6.45 Current Price is $6.25 Difference: $0.2
If NCK meets the Citi target it will return approximately 3% (excluding dividends, fees and charges).

Market Sentiment: 0.5

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

Morgan Stanley rates ORG as Overweight (1) -

If implemented, the Finkel Review recommendation should be a long-term positive for utility stocks,  Morgan Stanley asserts. This is because of reduced uncertainty.

The broker believes the review marginally favours Origin Energy over AGL Energy ((AGL)) in view of relative carbon intensity and retail & gas market position.

Overweight rating. $8.63 target. Industry view: Cautious.

Target price is $8.82 Current Price is $7.32 Difference: $1.5
If ORG meets the Morgan Stanley target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $7.63, suggesting upside of 3.6% (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

Morgan Stanley rates PTM as Underweight (5) -

Morgan Stanley estimates that May was the third month with around -$500m in outflows in the current half-year. The broker now projects a longer-dated recovery with around -10% outflows in FY18.

Updating for the impact of re-pricing reduces the broker's price target to $3.90 from $4.30. An Underweight rating is retained as Morgan Stanley does not consider the stock cheap. Industry view: In-Line.

Target price is $3.90 Current Price is $4.68 Difference: minus $0.78 (current price is over target).
If PTM meets the Morgan Stanley target it will return approximately minus 17% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.22, suggesting downside of -9.1% (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

Credit Suisse rates QUB as Underperform (5) -

Patrick has announced an infrastructure surcharge. Credit Suisse estimates the increased charges may provide $30m in additional revenue. The charges could be broadly neutral for the division's EBIT.

Underperform rating and $2.30 target retained.

Target price is $2.30 Current Price is $2.68 Difference: minus $0.38 (current price is over target).
If QUB meets the Credit Suisse target it will return approximately minus 14% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.66, suggesting downside of -0.2% (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

UBS rates QUB as Buy (1) -

The company's Patrick joint venture has announced material increases in infrastructure surcharges from July 10. Rates will increase to $33 per full container movement in Brisbane and $32 in Melbourne. Additionally, a new infrastructure surcharge of $26 per full container in Sydney and $5 in Fremantle has been announced.

Logically, UBS observes, the charge will be passed on to the underlying importer or exporter and is unlikely to be material in the context  of a total landside logistics cost.

UBS has already reflected the potential for increases in its forecasts against a backdrop of falling prices. Buy rating retained. Target is $2.90.

Target price is $2.90 Current Price is $2.68 Difference: $0.22
If QUB meets the UBS target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $2.66, suggesting downside of -0.2% (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

Macquarie rates SKI as Outperform (1) -

Macquarie believes the Finkel Review presents some risks for the company, as it cites a need for the network operators to demonstrate they are acting in the best interests of the users of the networks.

The dynamics of rising wholesale prices and the influx of renewables are also putting greater scrutiny on the operators.

Nevertheless, the broker retains its current view and maintains an Outperform rating. Target is $2.82.

Target price is $2.82 Current Price is $2.76 Difference: $0.06
If SKI meets the Macquarie target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $2.51, suggesting downside of -9.4% (ex-dividends)

The company's fiscal year ends in December.

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

Deutsche Bank rates STO as Buy (1) -

The draft domestic gas security mechanism provides additional clarity on the policy, although Deutsche Bank notes there is still no specific mechanism for how the government will determine the existence of a shortage.

The mechanism reduces the risk for GLNG, the broker suspects, as any restrictions of third-party gas used by GLNG will not be issued at short notice and this boosts the flexibility to manage any third-party gas restrictions faced in the future.

Buy rating retained. Target is $4.50.

Target price is $4.50 Current Price is $3.12 Difference: $1.38
If STO meets the Deutsche Bank target it will return approximately 44% (excluding dividends, fees and charges).

Current consensus price target is $4.25, suggesting upside of 35.0% (ex-dividends)

The company's fiscal year ends in December.

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: 0.6

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

Ord Minnett rates VCX as Accumulate (2) -

The company's investor briefing in Perth, where it has strong exposure, suggests to Ord Minnett that returns at Mandurah and Galleria are relatively tight and leasing a challenge, while the DFO centre appears to be a great project.

The broker continues to find value in the stock but would prefer it expands the asset sale program. The company has a view that it is comfortable with its portfolio and it is largely done on asset sales.

Accumulate. Target $3.20.

Target price is $3.20 Current Price is $2.74 Difference: $0.46
If VCX meets the Ord Minnett target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $3.00, suggesting upside of 7.0% (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

Macquarie rates WSA as Underperform (5) -

The company will sell its 18.8% equity stake in Bluejay Mining. This should boost the cash balance by $27m, Macquarie calculates.

The opportunistic sale is well timed in the broker's opinion, although cash losses are expected to be recorded for the June quarter,  given the current weakness in nickel prices.

Nevertheless, the broker considers the company is now better positioned to ride out a period of weakness with this increased cash balance. Underperform rating maintained. Target is $2.00.

Target price is $2.00 Current Price is $2.04 Difference: minus $0.04 (current price is over target).
If WSA meets the Macquarie target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.31, suggesting upside of 15.0% (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