Australian Broker Call

UBS rates ADI as Neutral (3) -

The company has acquired four industrial assets in Melbourne for $38m, funded by $30m equity raising and debt. Strong rental growth is expected over time.

Management has also provided FY20 preliminary guidance of 2.5-3.0% growth in free funds from operations, considered a positive given UBS forecasts for 2.8% growth.

The broker maintains a Neutral rating and $2.99 target.

Target price is $2.99 Current Price is $2.76 Difference: $0.23
If ADI meets the UBS target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $2.92, suggesting upside of 5.7% (ex-dividends)

The company's fiscal year ends in June.

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 AHG as Underweight (5) -

The company has downgraded operating net profit guidance to $50m from $52-56m, below Morgan Stanley's estimates. The broker believes the federal election could also place further risk on guidance being met.

The company has also announced a review of the refrigerated logistics receivables balance. Considering, the business is also under strategic review, the broker believes there is a risk that, were it to be sold, the value realised could be lower.

Morgan Stanley does not expect this to have an impact on the AP Eagers ((APE)) bid. The broker maintains an Equal-weight rating and $2.20 target. Industry view: In Line.

Target price is $2.20 Current Price is $2.34 Difference: minus $0.14 (current price is over target).
If AHG meets the Morgan Stanley target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.13, suggesting downside of -9.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.0

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

Citi rates AST as Downgrade to Sell from Neutral (5) -

Post FY19 results release, Citi analysts have added 14% to their target price, but they also downgraded to Sell from Neutral with the share price up 19% year-to-date. Also, the increase in target reflects a short term view on interest rates and bond yields, explain the analysts.

Further out, Citi's valuation has actually declined by -6%, thanks to weaker cash flow forecasts. Revised forecasts are -8% below market consensus, on the analysts' assessment. The FY19 report itself proved pretty much in-line on just about every metric.

AusNet's FY20 dividend guidance proved better-than-expected. Citi continues to forecast 3% growth in dividends per annum. Price target moves to $1.71 from $1.50.

Target price is $1.71 Current Price is $1.84 Difference: minus $0.13 (current price is over target).
If AST meets the Citi target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $1.76, suggesting downside of -4.2% (ex-dividends)

The company's fiscal year ends in March.

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

Credit Suisse rates BHP as Neutral (3) -

Credit Suisse lifts iron ore price forecasts by 21% for 2019 and 33% for 2020. The broker expects the price to peak at US$110/t in the September quarter when China's port inventory is expected to be at its tightest.

Metallurgical coal price forecasts are also lifted, as the broker gains confidence in the sustainability of the Chinese coking coal price because of quality shortages. The net impact is a lift in the BHP price target to $40 from $36. Neutral maintained.

Target price is $40.00 Current Price is $37.20 Difference: $2.8
If BHP meets the Credit Suisse target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $37.89, suggesting upside of 1.9% (ex-dividends)

The company's fiscal year ends in June.

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

Credit Suisse rates BSL as Outperform (1) -

Credit Suisse has softened its outlook for FY20 because of an expected -10% decline in Australian residential construction, diverting around 75,000t from domestic to lower-margin exports for BlueScope.

FY19 forecasts are in line with guidance, despite compression in US steel spreads. The broker maintains an Outperform rating and reduces the target to $16.50 from $17.00.

Target price is $16.50 Current Price is $12.97 Difference: $3.53
If BSL meets the Credit Suisse target it will return approximately 27% (excluding dividends, fees and charges).

Current consensus price target is $15.59, suggesting upside of 20.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.5

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 lifts metallurgical coal price forecasts, gaining confidence in the sustainability of the Chinese coking coal price because of quality shortages. Headwinds capping the share price for Coronado Global are, nonetheless, observed unchanged.

These consist of a lack of liquidity and the reluctance by some investors to be exposed to pure-play coal companies. Regardless, the broker raises the target to $4.80 from $3.80 and maintains an Outperform rating.

Target price is $4.80 Current Price is $2.92 Difference: $1.88
If CRN meets the Credit Suisse target it will return approximately 64% (excluding dividends, fees and charges).

Current consensus price target is $4.25, suggesting upside of 45.5% (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

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

The company is scheduled to release first half results on May 15, which will reflect the acquisition of Virgin Money. Morgans continues to expect net interest margins will be affected by intense competition in the mortgage and customer deposit segments.

Amid Brexit-related uncertainty and the commencement of legal action on fixed rate tailored business loans, along with downgrades to underlying earnings forecasts, Morgans reduces the target to $3.64 from $4.39 and downgrades to Hold from Add.

Target price is $3.64 Current Price is $3.46 Difference: $0.18
If CYB meets the Morgans target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $3.17, suggesting downside of -8.4% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY19:

Forecast for FY20:

This company reports in GBP. 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

Citi rates DCN as Initiation of coverage with Buy (1) -

Citi initiates coverage with a Buy/High Risk rating and a $3 target. After commissioning of Mt Morgans, volumes in the March quarter missed expectations and the broker is cautious about the ramp-up rate, hence the High Risk call.

Meeting June quarter and FY19 production guidance could, however, be a significant positive catalyst. The broker notes $14m has been allocated to exploration drilling over FY19 and there is potential for resource definition along the mineralised trend near Westralia.

Target price is $3.00 Current Price is $1.83 Difference: $1.17
If DCN meets the Citi target it will return approximately 64% (excluding dividends, fees and charges).

Current consensus price target is $3.05, suggesting upside of 66.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 1.0

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

Ord Minnett rates EPW as Accumulate (2) -

The company posted an investor briefing regarding its views on the wholesale electricity market. Ord Minnett believes the opportunity in energy solutions is becoming more apparent, notwithstanding the fact that capital is being set aside for acquisition opportunities.

Management has indicated that 45-50% of revenue from energy solutions is now coming from annuity-like sources such as digital subscriptions. The broker maintains an Accumulate rating and $2 target.

Target price is $2.00 Current Price is $1.82 Difference: $0.18
If EPW meets the Ord Minnett target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $1.90, suggesting upside of 4.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.8

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

Citi rates FMG as Neutral (3) -

Fortescue Metals has declared a special dividend of $0.60 a share to be paid on June 14. Guidance for the dividend pay-out ratio is unchanged 50-80%. Citi asserts the payment is likely being made because of concerns around changes to Australian dividend imputation and increased confidence around 2019 cash flow. 

Citi believes there is potential to declare a further final dividend and slightly increases FY19 total forecasts to $0.93 per share, assuming an 80% pay-out. The broker maintains a Neutral rating and $7.20 target.

Target price is $7.20 Current Price is $8.14 Difference: minus $0.94 (current price is over target).
If FMG meets the Citi target it will return approximately minus 12% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $7.42, suggesting downside of -8.9% (ex-dividends)

The company's fiscal year ends in June.

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

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

Credit Suisse lifts iron ore price forecasts by 21% for 2019 and 33% for 2020. The broker expects the price to peak at US$110/t in the September quarter when China's port inventory is expected to be at its tightest.

This drives an increase to Fortescue Metals' price target to $8.20 from $6.40, and the rating is upgraded to Outperform from Neutral.

The company has also declared a $0.60 dividend, payable June 14, which is outside the standard February/August dividend announcements that typically come with results.

Credit Suisse considers the dividend is pulling forward all or part of the dividend that otherwise would have been announced in August. The payment makes sense to the broker, in light of any potential changes to the franking credit regime that may, or may not, occur after the federal election.

Target price is $8.20 Current Price is $8.14 Difference: $0.06
If FMG meets the Credit Suisse target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $7.42, suggesting downside of -8.9% (ex-dividends)

The company's fiscal year ends in June.

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

Macquarie rates FMG as Outperform (1) -

Fortescue's announced 60c special dividend came as a surprise given typically such announcements are reserved for the result release. The broker calculates 60c represents 80% of second half earnings using its own (lower) iron ore price forecasts, and the company had flagged a payout ratio of 50-80%.

But, if iron ore prices continue to hold at current levels, the broker can see another special of 20c with the result on an 80% payout.

For the time being Fortescue has paid a fully franked yield of 11%. The broker notes that were iron ore spot prices input into its valuation model, forecasts earnings would rise by 22% and 100% in FY19-20. For now, no changes so Outperform and $8.70 target retained.

Target price is $8.70 Current Price is $8.14 Difference: $0.56
If FMG meets the Macquarie target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $7.42, suggesting downside of -8.9% (ex-dividends)

The company's fiscal year ends in June.

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

Morgans rates FMG as Reduce (5) -

The company has announced a $0.60 per share dividend, fully franked. Morgans calculates this puts Fortescue Metals on track for a dividend yield of 20% for the year.

Iron ore fundamentals are positive, amid stimulus-fueled demand conditions in China and ongoing uncertainty over the time it will take for Vale to bring suspended capacity back on line.

Morgans believes this is all priced into the stock and, while momentum can carry prices higher, iron ore is trading at 45% above long-term sustainable levels.

As a result, the broker maintains a Reduce rating and raises the target to $5.94 from $5.54.

Target price is $5.94 Current Price is $8.14 Difference: minus $2.2 (current price is over target).
If FMG meets the Morgans target it will return approximately minus 27% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $7.42, suggesting downside of -8.9% (ex-dividends)

The company's fiscal year ends in June.

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

Ord Minnett rates FMG as Buy (1) -

Fortescue Metals made an early declaration of a dividend payment of $0.60 a share. This brings the full year return to $0.90 a share, equating to a 73% pay-out ratio. Ord Minnett believes this reflects the company's desire to accelerate the distribution of franking credits to shareholders.

The broker expects more returns to be a feature of FY20, as the iron ore market remains tight and the company's achieved prices are at recent highs of US$82/t. The company has not ruled out a further payment with the August results but Ord Minnett does not expect any.

The broker forecasts an FY20 dividend of $1.09 a share. Buy rating and $8.60 target maintained.

Target price is $8.60 Current Price is $8.14 Difference: $0.46
If FMG meets the Ord Minnett target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $7.42, suggesting downside of -8.9% (ex-dividends)

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

UBS rates FMG as Sell (5) -

The company has declared a $0.60 fully franked special dividend to be paid on June 14. The decision is supported by strong operating cash flows and facilitates an accelerated return of franking credits, management stated.

UBS notes the price in the stock has reacted positively, lifting 7%. The company maintains a dividend pay-out policy of 50-80% of net profit, although the interim dividends now represent 104% of first half net profit.

Iron ore prices remain favourable but UBS believes the current price is unsustainable. Sell rating maintained. Target is raised to $6.30 from $6.15.

Target price is $6.30 Current Price is $8.14 Difference: minus $1.84 (current price is over target).
If FMG meets the UBS target it will return approximately minus 23% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $7.42, suggesting downside of -8.9% (ex-dividends)

The company's fiscal year ends in June.

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

Deutsche Bank rates IVC as Sell (5) -

The first quarter trading update highlighted a strong sales and earnings performance, Deutsche Bank notes. Revenue was up 7.8%, operating EBITDA up 22.2% and operating net profit up 9%.

Deutsche Bank maintains a Sell rating and $11.70 target.

Target price is $11.70 Current Price is $15.22 Difference: minus $3.52 (current price is over target).
If IVC meets the Deutsche Bank target it will return approximately minus 23% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $13.56, suggesting downside of -10.9% (ex-dividends)

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 IVC as Equal-weight (3) -

Morgan Stanley notes a lack of FY19 guidance at the AGM trading update, although believes the bulls will focus on the sales acceleration to 7.8% and operating earnings (EBITDA) up 22.2%.

Rating is Equal-weight, as the broker envisages the capital expenditure program will create a disconnect between structural growth drivers and the performance of the business. Target is $13. In-Line industry view.

Target price is $13.00 Current Price is $15.22 Difference: minus $2.22 (current price is over target).
If IVC meets the Morgan Stanley target it will return approximately minus 15% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $13.56, suggesting downside of -10.9% (ex-dividends)

The company's fiscal year ends in December.

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

Morgans rates IVC as Hold (3) -

The first quarter trading update was in line with expectations. First quarter revenue rose 7.8%, excluding the impact from accounting changes, and underlying operating earnings (EBITDA) were up 22.2%.

Management has advised that improved trading conditions, noted at the start of the year, have continued. Morgans maintains a Hold rating and raises the target to $14.44 from $14.02.

Target price is $14.44 Current Price is $15.22 Difference: minus $0.78 (current price is over target).
If IVC 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 $13.56, suggesting downside of -10.9% (ex-dividends)

The company's fiscal year ends in December.

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

Ord Minnett rates IVC as Hold (3) -

First quarter trading indicated a positive trajectory, which Ord Minnett expected because of the cycling of a low death rate and poor trading activity, as well as a substantial increase in the number of influenza cases reported in 2019 to date.

Given the difficulty in forecasting the number of deaths in the high-volume winter months, the company has not provided full-year earnings guidance. Hold rating maintained. Target is raised to $14.30 from $13.60.

Target price is $14.30 Current Price is $15.22 Difference: minus $0.92 (current price is over target).
If IVC meets the Ord Minnett target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $13.56, suggesting downside of -10.9% (ex-dividends)

The company's fiscal year ends in December.

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

Morgans rates KSL as Add (1) -

Morgans envisages an earnings-driven re-rating over the next 12-18 months. The company appears likely to benefit from continuing organic growth and the material advantages of the ANZ PNG acquisition.

The broker believes the stock continues to rank well against peers on a range of metrics and maintains an Add rating. Target is raised to $1.42 from $1.31.

Target price is $1.42 Current Price is $1.27 Difference: $0.15
If KSL meets the Morgans target it will return approximately 12% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

Forecast for FY19:

Forecast for FY20:

This company reports in PGK. 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 LLC as Outperform (1) -

Lendlease has dismissed takeover speculation, stating it has not received any approach. Credit Suisse takes no view on the probability of a potential acquirer, nor of the likely success of a deal.

However, given low interest rates in Japan and the JPY/AUD at its highest level since 2016, the depressed share price of Lendlease may look relatively more attractive in Japan versus past cycles.

The broker forecasts underlying FY20 operating earnings (EBITDA) of $1.24bn, excluding estimates for a further -$200m loss in the engineering construction business. Outperform and $16.20 target retained.

Target price is $16.20 Current Price is $14.02 Difference: $2.18
If LLC meets the Credit Suisse target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $15.57, suggesting upside of 11.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.9

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

Macquarie rates LLC as Outperform (1) -

Having crunched the numbers, the broker believes a restructuring cost of -$450-550m for Lendlease's Engineering & Services division seems reasonable, and that E&S could be sold for $250m despite a market cap loss of around -$2bn.

While there are risks around the E&S decision, the broker believes these are already priced in and M&A opportunities may otherwise present. Outperform and $15.03 target retained.

Target price is $15.03 Current Price is $14.02 Difference: $1.01
If LLC meets the Macquarie target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $15.57, suggesting upside of 11.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.9

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

Morgans rates MSV as Speculative Buy (1) -

Morgans has reinstated coverage with a Speculative Buy rating and 9.5c target. Recent acceleration in operating cash flow has confirmed the company's long-awaited financial leverage to an improving drilling sector.

The broker believes the equity appeal has hit an inflection point from cash generation and rapid de-gearing and the business is on track to achieve a net cash position in FY20.

Target price is $0.10 Current Price is $0.07 Difference: $0.025
If MSV meets the Morgans target it will return approximately 36% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 1.0

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

Credit Suisse rates MYX as Downgrade to Neutral from Outperform (3) -

The company has announced a significant deterioration in the performance of its generic products since the first half results because of increased competition and -US$4m in one-off adverse items. The high-margin specialty brands revenue is also weaker than expected.

Revenue declined -15% in January to April and gross profit was down -20%. The company is currently reviewing the carrying value of generic assets which could result in an impairment.

Credit Suisse downgrades to Neutral from Outperform and reduces the target to $0.64 from $1.00. The broker envisages merit in the strategy to pivot towards the more stable earnings profile in specialty brands, but the outlook for FY20 remains unclear.

Target price is $0.64 Current Price is $0.56 Difference: $0.08
If MYX meets the Credit Suisse target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $0.69, suggesting upside of 22.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.0

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

Macquarie rates MYX as Underperform (5) -

Mayne Pharma has posted year to April numbers that show a -36% fall in Generics revenue against the broker's -22% forecast, and a 42% gain for Specialty Brands against the broker's 52%. Forecast earnings fall -53% and -43% in FY19-20.

The broker includes medium term contributions from key pipeline products in its forecasts but, near term, competition remains a risk in Generics and Specialty Brands may also have to cope with new competitor product launches.

Target falls to 55c from 75c. Underperform retained.

Target price is $0.55 Current Price is $0.56 Difference: minus $0.01 (current price is over target).
If MYX 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 $0.69, suggesting upside of 22.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.0

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

UBS rates MYX as Neutral (3) -

The company has provided an update and signalled competitor launches have negatively affected its generic product revenue. UBS updates its operating assumptions and, because of the high fixed cost nature of the business, downgrades estimates for earnings per share across FY19-21 by -18-58%.

The company is continuing its focus on the more durable earnings streams in specialty products but the broker awaits tangible evidence that this is having a positive impact on division earnings. Neutral rating maintained. Target is reduced to $0.60 from $0.73.

Target price is $0.60 Current Price is $0.56 Difference: $0.04
If MYX meets the UBS target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $0.69, suggesting upside of 22.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.0

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

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

Credit Suisse has become more bearish on thermal coal because of increased competition from displaced European coal, which it believes is undermining the Newcastle price. A mild winter in Europe has meant coal inventory has built up and an LNG glut is driving down gas prices.

The broker lowers Newcastle F.O.B. thermal coal forecasts by -8% in 2019 to US$87/t and by -6% to US$80/t for 2020. Nevertheless, the broker upgrades to Outperform from Neutral because of recent underperformance in the share price. Target is reduced to $3.50 from $4.00.

Target price is $3.50 Current Price is $2.70 Difference: $0.8
If NHC meets the Credit Suisse target it will return approximately 30% (excluding dividends, fees and charges).

Current consensus price target is $3.43, suggesting upside of 27.2% (ex-dividends)

The company's fiscal year ends in July.

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 RHC as Equal-weight (3) -

Morgan Stanley believes the outcome of the Australian federal election on May 18 may affect Ramsay Health Care's earnings and valuation, calculating almost 90% chance of downside risk.

Also, APRA quarterly private health data on May 21 should provide details of private insurance membership growth, a useful indicator for the company's top line.

Equal-weight. Target is $58. Industry view is In-Line.

Target price is $58.00 Current Price is $64.42 Difference: minus $6.42 (current price is over target).
If RHC meets the Morgan Stanley target it will return approximately minus 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $62.52, suggesting downside of -2.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.0

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

Morgans rates RHL as Hold (3) -

First half results were in line with guidance and solid, Morgans observes. Despite tough operating conditions, the company has benefited from the diversity of geography, products and services as well as channels to market.

Ruralco remains cautious about the short-term seasonal conditions. In light of this, Morgans reduces FY19 and FY20 forecasts by -4.4% and -3.2% respectively. The focus is now on the Nutrien takeover bid.

Morgans finds the $4.40 offer price attractive and believes there is limited scope for a higher offer. The scheme is expected to be completed by September 30. Hold rating and $4.40 target maintained.

Target price is $4.40 Current Price is $4.40 Difference: $0
If RHL meets the Morgans target it will return approximately 0% (excluding dividends, fees and charges).

The company's fiscal year ends in September.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.0

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

Credit Suisse rates RIO as Neutral (3) -

Credit Suisse lifts iron ore price forecasts by 21% for 2019 and 33% for 2020. The broker expects the price to peak at US$110/t in the September quarter when China's port inventory is expected to be at its tightest.

Nevertheless, even with revised iron ore prices, the broker cannot get its valuation to stack up for Rio Tinto. Limited options for capital deployment outside special dividends limit the catalysts. Neutral rating reiterated. Target is raised to $95 from $84.

Target price is $95.00 Current Price is $98.38 Difference: minus $3.38 (current price is over target).
If RIO meets the Credit Suisse target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $97.49, suggesting downside of -0.9% (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

Ord Minnett rates RWC as Accumulate (2) -

The company now expects FY19 operating earnings (EBITDA) to be in the range of 260-270m. There has been a sharper decline in the Australian residential market than Reliance Worldwide expected, as well as a delay in launching new product ranges in Asia-Pacific.

EMEA legacy business has also fallen short of expectations while US channel partners are lowering inventory levels.

Ord Minnett was disappointed with the update but takes some comfort from commentary that the Americas are experiencing strong sales at the point of sale and the integration of John Guest is on track.

Earnings per share estimates are downgraded by an average -9% over FY19-21. Accumulate maintained. Target is reduced to $5.10 from $5.70.

Target price is $5.10 Current Price is $3.60 Difference: $1.5
If RWC meets the Ord Minnett target it will return approximately 42% (excluding dividends, fees and charges).

Current consensus price target is $4.71, suggesting upside of 30.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.5

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

Citi rates S32 as Buy (1) -

Citi believes the concerns regarding alumina are overdone. The fall in spot western alumina prices coincides with a time when Chinese aluminium prices have moved up and there are alumina production cuts in Shanxi.

With Chinese alumina reduction now being constrained and aluminium production still expanding, it appears near-term imports of alumina to China will rise.

Citi observes South32 is the cheapest of the large cap Australian miners and maintains a Buy rating and $4.20 target.

Target price is $4.20 Current Price is $3.47 Difference: $0.73
If S32 meets the Citi target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $3.90, suggesting upside of 12.4% (ex-dividends)

The company's fiscal year ends in June.

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

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

The stock has underperformed the A-REIT index by -7% since its February result, Credit Suisse observes. Underperformance has been driven by a deterioration in retail trading conditions as well as concerns around the balance sheet and ability to fund future developments.

The broker is of the view that these factors are now reflected in the share price and the stock is again offering material value. Rating is upgraded to Outperform from Neutral. Target is steady at $4.20.

Target price is $4.20 Current Price is $3.77 Difference: $0.43
If SCG meets the Credit Suisse target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $3.83, suggesting upside of 1.6% (ex-dividends)

The company's fiscal year ends in December.

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

Credit Suisse rates SPK as Underperform (5) -

Credit Suisse notes, after a long period looking to exit New Zealand, a consortium of Infratil/Brookfield will purchase Vodafone NZ at a valuation multiple broadly in line with where Spark NZ is trading.

Vodafone NZ will have opportunities to improve its performance following a period in which it was distracted by the parent's exit plans. The broker believes the new owners will take a rational approach to the market and focus on improving operating margins and customer service.

Credit Suisse finds it difficult to assess any material negatives for Spark NZ. Underperform rating and target of NZ$3.39.

Current Price is $3.56. Target price not assessed.

Current consensus price target is N/A

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

This company reports in NZD. 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 WES as Downgrade to Neutral from Outperform (3) -

Macquarie believes a further move into EVs, were Wesfarmers to take over Kidman Resources ((KDR)), makes sense. While oversupply will likely lead to lower lithium prices over the next 12 months, over five years lithium, cobalt and nickel should all be winners on battery demand. Kidman's 50% owned Mt Holland project is substantial, but not without risk.

Meanwhile, the broker believes the market is being too cautious over Bunnings, yet total shareholder return upside is becoming limited and risks are moving to the downside. Downgrade to Neutral from Outperform. Target unchanged at $37.13.

Target price is $37.13 Current Price is $36.30 Difference: $0.83
If WES meets the Macquarie target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $32.25, suggesting downside of -11.2% (ex-dividends)

The company's fiscal year ends in June.

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 WHC as Outperform (1) -

Credit Suisse has become more bearish on thermal coal, because of increased competition from displaced European coal, which it believes is undermining the Newcastle price. Inventory has built up in Europe because of a mild winter and a glut of LNG is driving down gas prices.

On the other hand, the broker has become more bullish on metallurgical coal, gaming confidence in the sustainability of the Chinese coking coal price because of quality shortages.

Market support for pure coal plays remains soft, Credit Suisse notes, despite the cash flow being generated and potential shareholder returns. Outperform rating and $5.10 target maintained.

Target price is $5.10 Current Price is $4.18 Difference: $0.92
If WHC meets the Credit Suisse target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $5.05, suggesting upside of 20.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.9

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

UBS rates WOW as Downgrade to Neutral from Buy (3) -

UBS notes the Australian grocery market has become more rational while inflation has returned. While believing an improved inflation outlook provides near-medium term upside risk to forecasts, this appears to the broker to be priced in.

UBS downgrades Woolworths to Neutral from Buy and now prefers Metcash ((MTS)) in the grocery sector. Target is raised to $32.90 from $30.80.

Target price is $32.90 Current Price is $33.25 Difference: minus $0.35 (current price is over target).
If WOW 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 $29.85, suggesting downside of -10.2% (ex-dividends)

The company's fiscal year ends in June.

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