Australian Broker Call

Deutsche Bank rates ACX as Hold (3) -

The board has approved a $7.80 per share cash takeover proposal from Oracle.

Deutsche Bank observes the offer implies an 86% control premium and follows a challenging 18 months for Aconex, where the company ramped up costs amid limited visibility on recurring revenue and earnings growth.

Hold rating retained. Target is raised to $7.80 from $4.20.

Target price is $7.80 Current Price is $7.68 Difference: $0.12
If ACX meets the Deutsche Bank target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $6.65, suggesting downside of -13.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.0

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

Macquarie rates ACX as Neutral (3) -

Oracle has proposed the acquisition of Aconex for $7.80 cash per share. The bid is a 47% premium to the last close. The board unanimously recommends shareholders vote in favour.

Macquarie believes this bid is a good result for shareholders and would remove the risk from the company's international expansion.

The broker believes it unlikely another suitor will turn up, considering the premium that is being paid and the low number of competitors in the space.

Neutral and target raised to $7.65 from $3.70.

Target price is $7.65 Current Price is $7.68 Difference: minus $0.03 (current price is over target).
If ACX meets the Macquarie target it will return approximately minus 0% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $6.65, suggesting downside of -13.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.0

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

Morgan Stanley rates ACX as Downgrade to Equal-weight from Overweight (3) -

Oracle is set to acquire Aconex, entering into a binding scheme inflammation deed for $7.80 a share. The main upside risk is a counter bid and Morgan Stanley does not rule this out completely.

The downside is regulatory risk in the form of FIRB approval. The combination of Aconex with Oracle's existing products in the construction vertical may also raise some competition concerns, in the broker's view.

Rating is downgraded to Equal-weight from Overweight. Industry view is In-line. Target is raised to $7.80 from $5.50.

Target price is $7.80 Current Price is $7.68 Difference: $0.12
If ACX meets the Morgan Stanley target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $6.65, suggesting downside of -13.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.0

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

UBS rates ACX as Neutral (3) -

Oracle has a binding agreement to acquire the company by way of a scheme of arrangement for $7.80 a share. The proposal has been unanimously recommended by the board.

UBS does not expect a competing bid and therefore maintains a Neutral rating with a target of $7.80, raised from $4.25.

The broker believes the likelihood of a competing bid is relatively low based on the protracted nature of the negotiation and the support from the board. The implied multiple reflects a material premium to listed comparables.

Target price is $7.80 Current Price is $7.68 Difference: $0.12
If ACX meets the UBS target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $6.65, suggesting downside of -13.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.0

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

Citi rates ANZ as Neutral (3) -

Citi updates its model to reflect the announcement of a $1.5bn buyback, expected to commence January 2018. The broker upgrades forecasts for earnings per share in FY18/19 by 1%.

Neutral rating and $30 target maintained.

Target price is $30.00 Current Price is $29.05 Difference: $0.95
If ANZ meets the Citi target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $30.28, suggesting upside of 4.2% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.3

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

Credit Suisse rates ANZ as Re-instate Coverage with Neutral (3) -

Following the bank's stated intention to buy back up to $1.5bn of shares on market, Credit Suisse upgrades estimates by 1-3%. The announcement is earlier than expected but the quantum is considered modest.

Accordingly, scope for more capital management going forward has been flagged. Credit Suisse estimates pro forma surplus capital of $6bn, albeit with receipt of this capital scheduled out as far as FY19.

The broker reinstates coverage with a Neutral rating and $31 target.

Target price is $31.00 Current Price is $29.05 Difference: $1.95
If ANZ meets the Credit Suisse target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $30.28, suggesting upside of 4.2% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.3

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

Deutsche Bank rates ANZ as Hold (3) -

ANZ has announced an on-market share buyback of $1.5bn, to commence in January. This coincides with the sale of the stake in Shanghai Rural Commercial Bank.

Deutsche Bank suggests this is the first step in an ongoing capital management plan to return excess capital to shareholders and anticipates further initiatives once additional divestments are completed. 

Target is $30. Hold rating retained.

Target price is $30.00 Current Price is $29.05 Difference: $0.95
If ANZ meets the Deutsche Bank target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $30.28, suggesting upside of 4.2% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.3

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

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

The bank has completed the sale of the 20% stake in Shanghai Rural Commercial which releases $1.5bn or 40 basis points of CET1 capital. The bank has also announced a buyback of up to $1.5bn in shares, likely to begin in January.

The buyback announcement is earlier than Morgan Stanley expected but the size is in line with the capital release from the Shanghai Rural sale.

The broker believes capital management is necessary to mitigate the dilutions to earnings per share from the asset sales and forecast another $3.3bn buyback in the second half of FY19.

Rating is Equal-weight. Target is $29.00. Sector view is In-Line.

Target price is $29.00 Current Price is $29.05 Difference: minus $0.05 (current price is over target).
If ANZ meets the Morgan Stanley target it will return approximately minus 0% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $30.28, suggesting upside of 4.2% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.3

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

Morgans rates ANZ as Add (1) -

The bank has completed the sale of its 20% stake in Shanghai Rural Commercial and announced a $1.5bn on-market share buyback.

Morgans continues to forecast $6.4bn of share buybacks in total, but adjusts the forecasts to allow for the earlier introduction. Cash earnings per share forecasts for FY18 increase by 0.7%.

Add rating retained. Target at $30.

Target price is $30.00 Current Price is $29.05 Difference: $0.95
If ANZ meets the Morgans target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $30.28, suggesting upside of 4.2% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.3

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

Ord Minnett rates ANZ as Accumulate (2) -

The bank has announced a $1.5bn on-market buyback and completed the sale of its 20% stake in Shanghai Rural Commercial. The buyback will mean pro forma capital ratios remain broadly unchanged.

Ord Minnett believes the bank's strong capital position gives it more flexibility versus its peers to manage through any deterioration in the asset quality cycle.

Accumulate recommendation. Target is $31.20.

Target price is $31.20 Current Price is $29.05 Difference: $2.15
If ANZ meets the Ord Minnett target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $30.28, suggesting upside of 4.2% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.3

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

Credit Suisse rates AZJ as Underperform (5) -

The Queensland Competition Authority's draft decision has proposed allowable revenue that is -$1bn below Aurizon's requested level. Credit Suisse lowers earnings per share estimates by -7-8% for FY19 and FY20.

The broker assumes there will be a slight improvement in the final decision. Target is reduced to $4.70 from $4.90. Underperform maintained.

Target price is $4.70 Current Price is $4.96 Difference: minus $0.26 (current price is over target).
If AZJ meets the Credit Suisse target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.78, suggesting downside of -3.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.3

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

Macquarie rates AZJ as Outperform (1) -

The Queensland Competition Authority has delivered its draft UT5 decision. Macquarie observes drafts are always a worst-case scenario with expectations that the final decision will present a more moderate outcome.

The draft ruling highlights the disconnect between the federal position and the stated QCA position, with Macquarie noting the latter typically takes a harsher position.

Nevertheless, the broker suggests the volume expectations highlight a significant opportunity in the GAPE/Goonyella system.

With FY18 transitional tariffs in place the company has reaffirmed FY18 guidance. Target is reduced to $5.15 from $5.33. Outperform maintained.

Target price is $5.15 Current Price is $4.96 Difference: $0.19
If AZJ meets the Macquarie target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $4.78, suggesting downside of -3.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.3

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

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

The Queensland Competition Authority has released his draft determination for the UT5 undertaking. The company considers the draft harsh and believes the QCA has made fundamental errors and miscalculations, and will consider all avenues of appeal.

FY18 operating earnings guidance has been reiterated.  Equal-weight rating retained. Target is $5.13. Industry view is Cautious.

Target price is $5.13 Current Price is $4.96 Difference: $0.17
If AZJ meets the Morgan Stanley target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $4.78, suggesting downside of -3.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.3

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

Morgans rates AZJ as Hold (3) -

The Queensland Competition Authority's draft decision on the UT5 network was weaker than expected. Morgans reduces FY19-21 earnings forecasts materially, with operating earnings estimates reduced by -12-29%.

In the final decision, the broker suspects the QCA will be unlikely to amend the rate of return, but assumes Aurizon is able to claw back 50% of the operating and maintenance costs shortfall.

Target is reduced to $4.71 from $5.13. Hold rating retained.

Target price is $4.71 Current Price is $4.96 Difference: minus $0.25 (current price is over target).
If AZJ meets the Morgans target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.78, suggesting downside of -3.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.3

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

Ord Minnett rates AZJ as Sell (5) -

The Queensland Competition Authority has handed down its interim decision on the draft access undertaking, UT5. Ord Minnett notes this is not a good result for Aurizon. The company has until March 12, 2018 to respond to the draft decision.

Despite the fall in the share price the broker believes it still fails to fully capture the risk associated with UT5.

Sell rating retained along with a $4.15 target.

Target price is $4.15 Current Price is $4.96 Difference: minus $0.81 (current price is over target).
If AZJ meets the Ord Minnett target it will return approximately minus 16% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.78, suggesting downside of -3.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.3

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

UBS rates AZJ as Neutral (3) -

The Queensland Competition Authority has issued the draft decision on Aurizon's regulatory undertaking. UBS suggests the draft is a materially lower position than previously expected.

Incorporating this into forecasts means a -15% downgrade to average pre-tax profit forecasts for Aurizon over the next four years.

Nevertheless, the broker suggests this should be viewed as the low end of a possible range of outcomes. Neutral rating and $4.90 target maintained.

Target price is $4.90 Current Price is $4.96 Difference: minus $0.06 (current price is over target).
If AZJ 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 $4.78, suggesting downside of -3.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.3

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

UBS rates CAR as Downgrade to Sell from Neutral (5) -

The company has announced price increases for dealer-lead fees to be implemented on January 1, 2018. Prices have increased across all three tiers. Irrespective of price increases, UBS believes the dealer division should also benefit from increases in depth penetration.

While the company is a strongly entrenched number one operator in the domestic market the broker believes the growth expectations embedded in the current share price could be optimistic.

Rating is downgraded to Sell from Neutral. Target is raised to $14.00 from $12.50.

Target price is $14.00 Current Price is $14.81 Difference: minus $0.81 (current price is over target).
If CAR 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 $14.02, suggesting downside of -5.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.4

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

Macquarie rates CCL as Outperform (1) -

Macquarie envisages risks to consensus forecasts for earnings per share over 2018 as the container deposit scheme being installed in NSW is taken on board.

In the three weeks since the scheme was introduced the broker notes price increases have had a bigger impact on cheaper private-label containers with the same fee passing through regardless of pack size or value.

The broker believes the current share price incorporates a degree of downside while Coca-Cola Amatil's outlook in Indonesia is strong.

Outperform. Price target is $9.06.

Target price is $9.06 Current Price is $8.57 Difference: $0.49
If CCL meets the Macquarie target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $8.46, suggesting downside of -1.2% (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

Macquarie rates DOW as Outperform (1) -

Downer and Adani have mutually agreed to cancel prior 2014 letters of award regarding mine services and related infrastructure. Macquarie had not factored in Adani, given the uncertainties regarding funding.

This does take away a potential growth driver for Downer, but the broker does not believe the market factored in much probability of Adani going ahead either. There is no financial impact as this was not in the company's work-in-hand and costs were being expensed.

The broker retains an Outperform rating and $7.60 target.

Target price is $7.60 Current Price is $6.84 Difference: $0.76
If DOW meets the Macquarie target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $7.31, suggesting upside of 6.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.4

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

Deutsche Bank rates DXS as Hold (3) -

The company has externally re-valued 96 of its 103 assets, resulting in a $660m uplift to its book value.

Deutsche Bank notes that, while this has created a strong uplift to NTA, the stock is still trading at a 12% premium versus its historical average of a 3% discount.

Hold rating retained. Target rises to $9.33 from $9.07.

Target price is $9.33 Current Price is $10.26 Difference: minus $0.93 (current price is over target).
If DXS meets the Deutsche Bank target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $9.65, suggesting downside of -5.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.1

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

Citi rates NXT as Buy (1) -

The acquisition of Metronode by Equinix brings its capacity into line with NextDC. Citi suggests the competitive dynamics are largely unchanged, although it does increase the Equinix wholesale offering and competition for large scale and government deals.

The broker believes the material increases in capacity announced by NextDC at the FY17 result are based on genuine visibility re client demand and recommends investors buy the stock in advance of the expected client announcements.

Buy retained. Target is $6.03.

Target price is $6.03 Current Price is $5.99 Difference: $0.04
If NXT meets the Citi target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $5.70, suggesting downside of -4.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 1.0

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

Morgan Stanley rates ORE as Underweight (5) -

The company has flagged a 25% increase to pricing for the first half of FY18, which is largely factored in by Morgan Stanley.

The broker notes the December quarter price appears flat or slightly lower than the September quarter in a rising carbonate price environment.

Morgan Stanley retains an Underweight rating, an Attractive industry view and $4.50 target.

Target price is $4.50 Current Price is $6.40 Difference: minus $1.9 (current price is over target).
If ORE meets the Morgan Stanley target it will return approximately minus 30% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.59, suggesting downside of -12.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.3

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

Ord Minnett rates PLG as Downgrade to Hold from Accumulate (3) -

The company has sold 73 Miller Street from one managed fund into a newly formed fund for $150m, crystallising a $3.4m performance fee while maintaining the asset as part of its external funds under management.

FY18 distributable earnings guidance is also upgraded by around 5% as a result of the transaction. Ord Minnett increases the target to $1.05 from $0.95. On a valuation basis, however, the broker downgrades to Hold from Accumulate.

Target price is $1.05 Current Price is $1.02 Difference: $0.03
If PLG meets the Ord Minnett target it will return approximately 3% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.5

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

Morgans rates SIV as Hold (3) -

The company has executed its new $200m securitisation warehouse facility to improve the capital efficiency of the business.

The company's trading update has highlighted some of the short-term risks. Morgans points out the arrears collections performance of the non-performing GoGetta contracts and believes this presents downside risks to FY18 guidance.

The company has substantial opportunity for growth in hospitality as well as offshore expansion but, in the short term, Morgans believes the domestic environment is becoming more challenging.

Hold rating maintained. Target drops to $7.96 from $8.55.

Target price is $7.96 Current Price is $6.98 Difference: $0.98
If SIV meets the Morgans target it will return approximately 14% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.0

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

Citi rates TWE as Sell (5) -

Citi calculates the potential boost to Treasury Wine from the US tax changes is around 8% for 2018. Treasury Wine generates around 42% of its revenue and EBIT from the Americas.

The broker considers the stock expensive for its rate of growth but acknowledges the tax benefit represents upside to forecasts.

Sell rating and $10.90 target maintained.

Target price is $10.90 Current Price is $16.14 Difference: minus $5.24 (current price is over target).
If TWE meets the Citi target it will return approximately minus 32% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $13.76, suggesting downside of -14.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.1

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

Morgans rates VHT as Add (1) -

Morgans observes growing interest in medicine and artificial intelligence and a shift in favour of machine learning from traditional symptom-based diagnoses.

The company's trading update notes growing annual recurring revenue of NZ$2.6m, up 138% on the prior comparable period. It is now clear to Morgans the FY18 guidance of 200% growth is likely to be exceeded.

The broker is also encouraged that earlier contracts are now being renewed. Add and 81c target maintained.

Target price is $0.81 Current Price is $0.64 Difference: $0.17
If VHT meets the Morgans target it will return approximately 27% (excluding dividends, fees and charges).

The company's fiscal year ends in March.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 1.0

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

Deutsche Bank rates WPL as Hold (3) -

Deutsche Bank envisages an improved outlook for LNG demand emerging in the Pacific basin, with imports across the major Southeast Asian LNG markets up by 14% in the year to October.

While this is driven by seasonal factors, the broker also believes it reflects a wider structural change occurring in the region, particularly in China.

Hold rating retained. Target is raised to $31.35 from $27.45.

Target price is $31.35 Current Price is $32.25 Difference: minus $0.9 (current price is over target).
If WPL meets the Deutsche Bank target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $30.45, suggesting downside of -5.6% (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: -0.1

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