Australian Broker Call

Macquarie rates AGL as Outperform (1) -

While a warmer winter is a drag for AGL, particularly in terms of gas, Macquarie believes there are offsets around coal generation normalising and wind generation up by 10% on the prior corresponding period.

The broker considers electricity pricing provides positive momentum, offsetting the headwind from slowing gas profitability. Outperform retained. Target slips to $20.04 from $20.50.

Target price is $20.04 Current Price is $16.95 Difference: $3.09
If AGL meets the Macquarie target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $19.82, suggesting upside of 16.7% (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

Credit Suisse rates ALU as Initiation of coverage with Neutral (3) -

Altium provides printed circuit board design software and recorded compound annual EBITDA growth over FY13-16 of 69.2%. Credit Suisse observes the business is high quality and occupies a strong market position.

The broker initiates coverage with a Neutral rating and $9 target. The broker is confident the company's targets are achievable but considers the current share price captures a large portion of these ambitious growth targets.

Target price is $9.00 Current Price is $9.05 Difference: minus $0.05 (current price is over target).
If ALU meets the Credit Suisse target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $8.95, suggesting downside of -1.6% (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

Citi rates AMP as Buy (1) -

Citi analysts are suggesting a short term boost may be on the horizon for AMP shares. Problems in AMP’s wealth protection division are well-known by now, and they seem likely to continue in the shorter term, according to the analysts, but tranche 1 of a reinsurance program may not be too far away.

The latter will likely start off in moderate fashion, but, in time, say the analysts, this has the potential to see meaningful amounts of capital returned to shareholders. This initial step might just be the trigger for more investor confidence in a revamped outlook.

Buy rating and $6.05 target retained. AMP is Citi's most preferred insurance stock.

Target price is $6.05 Current Price is $5.27 Difference: $0.78
If AMP meets the Citi target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $5.96, suggesting upside of 12.7% (ex-dividends)

Forecast for FY16:

Forecast for FY17:

Market Sentiment: 0.7

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

Ord Minnett rates CCP as Accumulate (2) -

The company has acquired National Credit Management for $22.6m. The business has both debt purchasing and agency collection operations.

Ord MInnett believes the new business will provide upside from a better managed PDL liquidation profile and forward flow agreements which add inventory.

Accumulate rating retained. Target is raised to $16.92 from $16.11.

Target price is $16.92 Current Price is $16.48 Difference: $0.44
If CCP 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 FY17:

Forecast for FY18:

Market Sentiment: 0.5

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

Citi rates CWN as Buy (1) -

Citi analysts have put further analysis behind the thesis that growth in inbound tourism from Asia bodes well for local casino operators. The analysis suggests strong inbound Chinese and South East Asian tourism trends are pointing to longer term upside for the sector in Australia.

Among the projections made in the study is an increase in Chinese and SE Asian main floor tourists from circa 4% current to circa 10% by FY25. Star Entainment and Crown Resorts are the two preferred exposures to play the theme.

Target price is $15.35 Current Price is $13.22 Difference: $2.13
If CWN meets the Citi target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $13.98, suggesting upside of 4.7% (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

Deutsche Bank rates CWN as Hold (3) -

Deutsche Bank analysts are becoming more positive on Macau, as spending per visitor is increasing. The broker believes gross gaming revenue growth in the mass market will accelerate to over 10% in the second half and to over 12% in 2017.

The broker increases earnings forecasts by 1-3% to reflect a higher contribution from Melco Crown. The Hold rating is unchanged. Target price rises to $14.35 from $13.70.

Target price is $14.35 Current Price is $13.22 Difference: $1.13
If CWN meets the Deutsche Bank target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $13.98, suggesting upside of 4.7% (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 CYB as Sell (5) -

The bank's management is scheduled to present at the Capital Management Day in the UK later today and Citi analysts are using the opportunity to reiterate their Sell rating for the stock.

Citi analysts are not comfortable with the UK environment of heightened competition and ultra-low interest rates. They are keen to find out more insights about Net Interest Margin (NIM) pressures.Target GBP 2.30.

Current Price is $4.75. Target price not assessed.

Current consensus price target is $4.26, suggesting downside of -7.9% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY16:

Forecast for FY17:

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 EDI along with its consortium has won a Victorian passenger trains contract which involves construction of a $300m rail depot as well as long-term maintenance.

Macquarie considers the win a good step, as the company was considered less likely to win Victorian as opposed to Sydney rail contracts. There remains a $1bn Sydney trains contract up for grabs on which the broker believes the company is well placed.

Outperform retained. Target is raised to $5.55 from $4.82.

Target price is $5.55 Current Price is $4.93 Difference: $0.62
If DOW meets the Macquarie target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $4.85, suggesting downside of -2.1% (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

Morgans rates ELD as Add (1) -

The company will exit the live export business which Morgans contends is a smart move as it is loss making. The move will release $26m in working capital to be deployed.

Elders will immediately cease long-haul export of live cattle and will eventually exit the short-haul live business. The live export business is expected to report a loss in FY16 of $8-9m.

Morgans observes the core business of the company continues to perform strongly. The company will also benefit from recent acquisitions and the broker expects more on that front in the future.

Morgans upgrades underlying forecasts. Target is raised to $4.65 from $4.50. An Add rating is retained.

Target price is $4.65 Current Price is $3.68 Difference: $0.97
If ELD meets the Morgans target it will return approximately 26% (excluding dividends, fees and charges).

The company's fiscal year ends in September.

Forecast for FY16:

Forecast for FY17:

Market Sentiment: 1.0

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

Ord Minnett rates FMG as Accumulate (2) -

Ord Minnett has raised its forecasts for the iron ore price in 2017 and 2018 to US$54/t and US$50/t respectively, given strong steel demand in China and a slower ramp up in supply expected from Vale's Serra Sul project.

The broker also increases long-term production assumptions for Fortescue Metals to 180mt from 170mt. Ord Minnett retains an Accumulate rating and raises the target price to $5.70 from $5.20.

Target price is $5.70 Current Price is $4.70 Difference: $1
If FMG meets the Ord Minnett target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $4.61, suggesting downside of -5.5% (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: -0.1

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

Macquarie rates MGX as Outperform (1) -

Macquarie has completed an assessment of the potential to rebuild the seawall at Koolan Island. The company is currently completing an evaluation study.

The broker suspects Koolan Island could extend iron ore production by six years and there is a strong investment case at an iron ore price of US$50/t.

The broker incorporates redevelopment of Koolan Is into forecasts for the first time and, incorporating Iron Hill as well, considers the earnings outlook is transformed.

Outperform maintained. Target rises to 47c from 30c.

Target price is $0.47 Current Price is $0.28 Difference: $0.185
If MGX meets the Macquarie target it will return approximately 65% (excluding dividends, fees and charges).

Current consensus price target is $0.37, suggesting upside of 27.9% (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 MYR as Buy (1) -

Myer releases its FY16 financials on Thursday. Citi analysts are expecting Myer to report FY16 net profits of $74m. This is above market consensus and 3% above the top end of management's guidance of $66-$72m, according to Citi.

For the company to generate further investor confidence in the 'New Myer' strategy, Citi analysts believe LFL sales growth will need to be sustained.

Gross margin is expected to remain under pressure. Citi analysts concede there is downside risk given the warmer start to winter and the commencement of clearance sales a week earlier than last year. Buy rating retained. Target $1.40.

Target price is $1.40 Current Price is $1.25 Difference: $0.15
If MYR meets the Citi target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $1.33, suggesting upside of 3.5% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY16:

Forecast for FY17:

Market Sentiment: 0.4

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

Macquarie rates ORI as Upgrade to Neutral from Underperform (3) -

The company is guiding to flat second half ammonium nitrate volumes which implies for Macquarie a 9% reduction over the FY16 year.

The broker continues to highlight a range of structural pressures and competitive pressures from new entrants. Still the risk/return is considered more balanced now with the business stabilising. Global commodity prices have rallied and the rate of decline in US coal has eased.

Rating is upgraded to Neutral from Underperform and the target reduced to $15.00 from $15.21.

Target price is $15.00 Current Price is $13.95 Difference: $1.05
If ORI meets the Macquarie target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $14.29, suggesting upside of 1.0% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY16:

Forecast for FY17:

Market Sentiment: 0.0

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

Ord Minnett rates RIO as Upgrade to Accumulate from Hold (2) -

Ord Minnett has revised its iron ore supply and demand outlook, which suggests the market will only be modestly over supplied in the near term.

On this basis the broker's forecasts are upgraded for 2017 and 2018 by 26% and 21% respectively for Rio Tinto's earnings per share.

Ord Minnett upgrades to Accumulate from a Hold rating. Price target is raised to $54 from $51. The broker acknowledges there are no stock-specific catalysts but expects Rio Tinto to re-rate over time as the upgrade cycle plays out.

Target price is $54.00 Current Price is $47.41 Difference: $6.59
If RIO meets the Ord Minnett target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $53.90, suggesting upside of 13.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY16:

Forecast for FY17:

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

Citi rates SGR as Buy (1) -

Citi analysts have put further analysis behind the thesis that growth in inbound tourism from Asia bodes well for local casino operators. The analysis suggests strong inbound Chinese and South East Asian tourism trends point to longer term upside for the sector in Australia.

Among the projections made in the study is an increase in Chinese and SE Asian main floor tourists from circa 4% current to circa 10% by FY25. Star Entainment and Crown Resorts are the two preferred exposures to play the theme.

Target price is $6.80 Current Price is $5.73 Difference: $1.07
If SGR meets the Citi target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $6.53, suggesting upside of 13.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.9

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

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

Further to the first half result, Morgan Stanley expects the improved performance to be maintained for at least FY17. Growth in the hospital franchise and working capital initiatives all provide confidence.

Morgan Stanley believes the current multiples reflect a de-risked outlook and a higher and more visible earnings profile. With the share price at or near the new target an Equal-weight rating is maintained. In-Line sector view retained. Target is lifted to $1.28 from $1.15.

Target price is $1.28 Current Price is $1.36 Difference: minus $0.075 (current price is over target).
If SIP 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 $1.26, suggesting downside of -10.9% (ex-dividends)

The company's fiscal year ends in January.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.2

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

Credit Suisse rates TLS as Underperform (5) -

Telstra has reduced prices for the iPhone 7 launch. Credit Suisse expects mobile competition to remain intense as iPhone 6 subscribers come out of contract.

The broker forecasts Telstra's mobile retail service revenue to fall 0.8% and EBITDA to fall 4.5% in FY17. Target price is $5.00. Underperform retained.

Target price is $5.00 Current Price is $4.99 Difference: $0.01
If TLS meets the Credit Suisse target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $5.21, suggesting upside of 3.9% (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 TME as Overweight (1) -

Morgan Stanley remains a structural bear on traditional media as the rate of change in technology and consumer behaviour increases and the global leakage of advertising spending continues.

Trade Me is among the broker's highest conviction Overweight ratings. Sector view is Attractive. Target is raised to NZ$6.00 from NZ$5.00.

Current Price is $5.20. Target price not assessed.

Current consensus price target is N/A

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

This company reports in NZD. 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

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

The company's acquisition of Diageo is centred around diverting more wine to China, Morgan Stanley observes. The broker suspects there is a considerable opportunity as china is now the fifth largest consumer of wine globally.

Morgan Stanley also notes that the US produces nearly double the wine Australia does, but is yet to establish a meaningful export channel into China.

The broker believes this is the opportunity and challenge for Treasury Wine. Valuation remains fair in Morgan Stanley's view. Hence an Equal-weight rating is maintained. Target is $10 and In-Line industry view is maintained.

Target price is $10.00 Current Price is $10.79 Difference: minus $0.79 (current price is over target).
If TWE meets the Morgan Stanley target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $10.41, suggesting downside of -3.6% (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

Deutsche Bank rates VVR as Initiation of coverage with Buy (1) -

Viva Energy REIT's portfolio comprises 425 service station assets in metropolitan and regional areas of Australia.

All sites operate under an alliance between Coles Express and Viva Energy, the sole tenant, where Coles Express acts as the on-site retail operator and Viva Energy supplies oil products and sub-leases the properties to Coles Express.

The sites retain Shell branding which is governed by a long-term licensing agreement, which results in an attractive branding proposition in Deutsche Bank's view.

The broker initiates coverage on the stock with a Buy rating and $2.75 target. The A-REIT has a long dated weighted average lease expiry of 16.3 years and this compares favourably to peers, Deutsche Bank believes.

Target price is $2.75 Current Price is $2.36 Difference: $0.39
If VVR meets the Deutsche Bank target it will return approximately 17% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

Forecast for FY16:

Forecast for FY17:

Market Sentiment: 1.0

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

UBS rates WES as Neutral (3) -

UBS has reviewed coal price forecasts, upgrading near-term estimates by 6-13%. A material tightening in China's coal markets has flowed through to higher seaborne prices, driving the upgrades.

While spot prices are above current forecasts, the broker expects China's coal markets will re-balance over the next 3-6 months, via both policy and supply responses.

The upgrades drive a 4% upgrade to the broker's estimates for Wesfarmers for FY17. UBS now expects the resources division to generate a $35m profit versus previous expectations for a $101m loss. Neutral rating and $43 target retained.

Target price is $43.00 Current Price is $42.50 Difference: $0.5
If WES meets the UBS target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $41.88, suggesting downside of -1.6% (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