Australian Broker Call

Credit Suisse rates BHP as Neutral (3) -

Credit Suisse has reviewed forecasts for bulk commodities and, significantly for BHP Group, has reduced 2020 iron ore price estimates by -6%, metallurgical coal price estimates by -15% and thermal coal estimates by -18%.

Neutral rating maintained. Target is reduced to $37 from $40.

Target price is $37.00 Current Price is $37.00 Difference: $0
If BHP meets the Credit Suisse target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $37.78, suggesting upside of 2.1% (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

UBS rates CGC as Buy (1) -

Wholesale prices remain weak and mushrooms are particularly soft, UBS observes. The broker had expected some improvement in mushroom pricing by now and assesses some risks exist in terms of the company's guidance.

The December quarter is now critically important. UBS retains a Buy rating because the earnings outlook for 2020-23 is strong and, following three downgrades, sentiment has turned negative.

Nevertheless, the broker envisages few catalysts until the market is confident that 2019 guidance will be met. Target is $5.20.

Target price is $5.20 Current Price is $3.72 Difference: $1.48
If CGC meets the UBS target it will return approximately 40% (excluding dividends, fees and charges).

Current consensus price target is $4.14, suggesting upside of 11.2% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.6

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

Macquarie rates CLQ as No Rating (-1) -

Macquarie notes CleanTeq's front-end design and engineering process is still behind schedule and a delay is expected.

The broker is currently restricted from making a recommendation.

Current Price is $0.31. Target price not assessed.

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

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

Credit Suisse rates CRN as Outperform (1) -

Credit Suisse has reviewed forecasts for bulk commodities, reducing near-term metallurgical coal price estimates by -27% for the fourth quarter of 2019 and by -15% for 2020.

Despite the softness, there are no concerns over the company's balance sheet and it has the flexibility to deal with a prolonged market downturn, in the broker's view.

Credit Suisse maintains an Outperform rating and reduces the target to $4.00 from $4.60.

Target price is $4.00 Current Price is $2.32 Difference: $1.68
If CRN meets the Credit Suisse target it will return approximately 72% (excluding dividends, fees and charges).

Current consensus price target is $3.30, suggesting upside of 42.2% (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: 1.0

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

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

Credit Suisse has downgraded iron ore forecasts for the second half of 2020 by -12% and for 2021 by -13%. The broker downgrades to Underperform from Neutral, given the recent share price strength.

However, this is largely a call on the commodity outlook, as it will be difficult for the stock to outperform in a falling price environment.

That said, the company has shown a willingness to return funds to shareholders and there are two projects driving organic growth, Credit Suisse acknowledges. Target is reduced to $7.50 from $8.00.

Target price is $7.50 Current Price is $8.75 Difference: minus $1.25 (current price is over target).
If FMG 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 $8.10, suggesting downside of -7.4% (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

Credit Suisse rates NHC as Outperform (1) -

Credit Suisse has reduced near-term thermal coal forecasts by -15-20% out until the end of 2021. This drives earnings downgrades of -25-35% for the next two fiscal years.

The issue is how long cheap gas persists and how long tonnage from Russia has an impact, as this is more than offsetting US and Colombian rationalisation.

Credit Suisse maintains an Outperform rating and reduces the target to $2.70 from $3.00.

Target price is $2.70 Current Price is $2.20 Difference: $0.5
If NHC meets the Credit Suisse target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $2.58, suggesting upside of 17.0% (ex-dividends)

The company's fiscal year ends in July.

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

Citi rates NST as Buy (1) -

With a mill expansion on the table and the prospect of reserve growth from Goodpastor, Citi has high expectations for Pogo. The main catalysts will be achieving development run rates and further resource updates.

Buy rating maintained. Target is raised to $13.70 from $13.30.

Target price is $13.70 Current Price is $10.96 Difference: $2.74
If NST meets the Citi target it will return approximately 25% (excluding dividends, fees and charges).

Current consensus price target is $11.69, suggesting upside of 6.7% (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

Credit Suisse rates NUF as Outperform (1) -

The company has been able to divest its South American business at an attractive price, removing the financing risk. A lower leverage target should appeal to a market that requires management to focus on operations, Credit Suisse assesses.

The broker notes FY20 will be about targeting structural improvements in earnings amid hopes of improved seasonal conditions in Australia and Europe in the second half. Outperform rating maintained. Target is raised to $8.30 from $8.24.

Target price is $8.30 Current Price is $6.50 Difference: $1.8
If NUF meets the Credit Suisse target it will return approximately 28% (excluding dividends, fees and charges).

Current consensus price target is $6.48, suggesting downside of -0.3% (ex-dividends)

The company's fiscal year ends in July.

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 NUF as Upgrade to Outperform from Neutral (1) -

No surprises from the Nufarm FY19 result given the company kept the market well-informed. The surprise came with the sale of the LatAm business, which had been soaking up 33% of working capital while representing 28% of earnings, suffering negative cash flow for the last five years and exposed currency risk, at what Macquarie describes as a "good price".

Significantly, the sale reduces debt to a comfortable level at this difficult time. The broker has subtracted LatAm earnings forecasts but lifted its target to $6.56 from $5.30, noting the stock trades at an enterprise value discount to global peers and the market is ascribing no value to Omega-3. The sale also increases Nufarm's leverage to improved seasonal conditions in Australia. Upgrade to Outperform.

Target price is $6.56 Current Price is $6.50 Difference: $0.06
If NUF meets the Macquarie target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $6.48, suggesting downside of -0.3% (ex-dividends)

The company's fiscal year ends in July.

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

Morgan Stanley rates NUF as Overweight (1) -

FY19 results were in line with Morgan Stanley's expectations. The broker welcomes the sale of the South American business at an attractive multiple as it simplifies Nufarm and provides repair for the balance sheet.

With gearing reduced, the company is better placed to withstand difficult seasonal conditions. The broker reiterates an Overweight rating and Cautious industry view. Target is raised to $7.20 from $6.80.

Target price is $7.20 Current Price is $6.50 Difference: $0.7
If NUF meets the Morgan Stanley target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $6.48, suggesting downside of -0.3% (ex-dividends)

The company's fiscal year ends in July.

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

Morgans rates NUF as Hold (3) -

Morgans assesses the sale of the South American business to Sumitomo has overshadowed the FY19 result. The sale is expected to improve cash flow and, importantly, it restores the balance sheet to conservative levels.

FY20 outlook commentary was weaker than the broker expected, because of the drought in Australia, supply issues and increased competition.

Hold rating maintained. Target is raised to $5.48 from $5.25.

Target price is $5.48 Current Price is $6.50 Difference: minus $1.02 (current price is over target).
If NUF meets the Morgans target it will return approximately minus 16% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $6.48, suggesting downside of -0.3% (ex-dividends)

The company's fiscal year ends in July.

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

Ord Minnett rates NUF as Hold (3) -

FY19 operating earnings were in line with guidance and slightly ahead of Ord Minnett's forecasts. The company also announced the sale of its South American crop protection and seed treatment operations to Sumitomo for $1.19bn.

The broker asserts Nufarm has decisively addressed its vulnerable capital position and investors can now focus on the fundamentals.

Ord Minnett retains a Hold rating and increases the target to $5.35 from $4.90. The broker would be interested to find out the timeline for when the dividend is likely to be reinstated.

Target price is $5.35 Current Price is $6.50 Difference: minus $1.15 (current price is over target).
If NUF meets the Ord Minnett target it will return approximately minus 18% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $6.48, suggesting downside of -0.3% (ex-dividends)

The company's fiscal year ends in July.

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

Morgans rates OEL as Add (1) -

Morgans notes Otto Energy continues to transform its earnings, accumulating relatively smaller discoveries that remain meaningful from an earnings perspective. The FY19 result was broadly in line with estimates.

The broker suspects the market is watching for any debt financing being secured, to remove any remaining dilution risk. Add rating maintained. Target is raised to 15.6c from 14c.

Target price is $0.16 Current Price is $0.05 Difference: $0.106
If OEL meets the Morgans target it will return approximately 212% (excluding dividends, fees and charges).

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: 1.0

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

Macquarie rates PAN as Outperform (1) -

Panoramic has reported a -3% reduction in nickel reserves net of depletion and a -31% decrease in resources post the sale of the Lanfranchi project.

The broker retains Outperform and a 45c target as it awaits this month's quarterly production report.

Target price is $0.45 Current Price is $0.32 Difference: $0.13
If PAN meets the Macquarie target it will return approximately 41% (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

Macquarie rates PDL as Outperform (1) -

Pendal's net outflows accelerated in the Sep Q to -$1.0bn from -$0.4bn in the June Q, primarily from UK/Europe funds. However most of the damage was done in July, the broker notes, with improvement being seen thereafter.

The stock trades at a forward PE -21% below its five-year average and a -12% discount to listed fund managers thus the broker sees the scope for a re-rate if improvement continues. Outperform and $8.75 target retained.

Target price is $8.75 Current Price is $7.53 Difference: $1.22
If PDL meets the Macquarie target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $8.44, suggesting upside of 12.0% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.4

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

Credit Suisse rates RIO as Underperform (5) -

Credit Suisse has reviewed forecasts for bulk commodities. Iron ore forecasts are reduced by -6% and -13% for 2020 and 2021 respectively.

Credit Suisse maintains an Underperform rating, noting some material operating challenges are still to be navigated in iron ore and at Oyu Tolgoi. Target is reduced to $86 from $92.

Target price is $86.00 Current Price is $92.60 Difference: minus $6.6 (current price is over target).
If RIO meets the Credit Suisse target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $99.25, suggesting upside of 7.2% (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: 0.3

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

Credit Suisse rates S32 as Outperform (1) -

Credit Suisse has reviewed forecasts for bulk commodities, reducing metallurgical coal price estimates by -11% for 2019 and by -15% for 2020.

The broker is comfortable with the longer-term value in the stock but embedded growth will take some time to materialise and current coal markets are likely to make the economics of Eagle Downs challenging.

Outperform maintained. Target is reduced to $3.20 from $3.30.

Target price is $3.20 Current Price is $2.66 Difference: $0.54
If S32 meets the Credit Suisse target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $3.10, suggesting upside of 16.7% (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: 0.4

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

UBS rates SGM as Sell (5) -

Sims Metal has indicated Turkish scrap prices are now so low that, for some of its metal suppliers, there is no incentive to collect and deliver materials to the yards.

The company has not outlined explicit volume targets for the first half but UBS notes some reports are suggesting input volumes are down -20% in the US and -50% in the UK. Volumes are also falling in Australia.

On non-ferrous prices, the broker suspects low prices are likely to persist as China continues to withdraw and global automotive demand remains soft.

FY20 estimates for net profit are reduced by -46%. UBS also considers the first half dividend is at risk. Sell rating maintained. Target is reduced to $8.30 from $9.90.

Target price is $8.30 Current Price is $10.15 Difference: minus $1.85 (current price is over target).
If SGM meets the UBS target it will return approximately minus 18% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $10.33, suggesting upside of 1.8% (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

Credit Suisse rates WBC as Outperform (1) -

Credit Suisse observes a recovery in the housing market is starting to gain momentum. This will amplify the need for capital and the broker estimates that for every additional 1% per annum growth in Australian housing credit Westpac requires $177m of capital.

The broker forecasts a $2bn capital raising via a partially underwritten dividend reinvestment plan along with a reduction to the half-year dividend to $0.84 per share. This would bring the CET1 ratio to 11% throughout the forecast horizon.

Credit Suisse maintains an Outperform rating and $30.55 target.

Target price is $30.55 Current Price is $29.74 Difference: $0.81
If WBC meets the Credit Suisse target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $28.96, suggesting downside of -2.6% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.3

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

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

Morgan Stanley reduces estimates for operating earnings (EBITDA) by -6-7% for FY20. This reflects adjustments for Thomas Cook and Amoma, both having permanently ceased operations. The broker notes a significant hit in terms of receivables, which will be written down to zero.

Given the company has historically guided conservatively, the broker does not anticipate a significant positive impulse from the AGM. Equal-weight rating maintained. Target is reduced to $12.40 from $13.80. Industry View is In-Line.

Target price is $12.40 Current Price is $10.52 Difference: $1.88
If WEB meets the Morgan Stanley target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $14.20, suggesting upside of 35.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.4

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

Credit Suisse rates WHC as Outperform (1) -

Credit Suisse has reduced near-term thermal coal forecasts by -15-20% out until the end of 2021. This drives earnings downgrades for Whitehaven Coal of -50% for the next two fiscal years.

The issue is how long cheap gas persists and how long tonnage from Russia has an impact, as this is more than offsetting US and Colombian rationalisation.

The broker maintains an Outperform rating and reduces the target to $4.10 from $4.40.

Target price is $4.10 Current Price is $3.15 Difference: $0.95
If WHC meets the Credit Suisse target it will return approximately 30% (excluding dividends, fees and charges).

Current consensus price target is $3.96, suggesting upside of 25.6% (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