Australian Broker Call

Morgan Stanley rates AGL as Underweight (5) -

Morgan Stanley estimates potential accretion of 8-13c per security, should AGL Energy proceed with the acquisition of Vocus Group ((VOC)), assuming generic cost synergies and benign debt market conditions. The broker still expects a declining earnings profile for AGL to FY22.

The broker notes Vocus presents a complex integration task, having different customer bases, and this complicates the cross selling opportunity for AGL. Underweight rating. Target is reduced to $19.23 from $20.23. Industry view is Cautious.

Target price is $19.23 Current Price is $19.59 Difference: minus $0.36 (current price is over target).
If AGL meets the Morgan Stanley target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $19.23, suggesting downside of -1.9% (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

Morgan Stanley rates AMP as Downgrade to Underweight from Equal-weight (5) -

While the stock has de-rated, Morgan Stanley believes the risk/reward indicates the valuation is not compelling and downgrades to Underweight from Equal-weight.

The broker believes it will take more than three years to re-model advice and the reshaping and strategic overhaul will consume capital released from the sale of the life business.

The broker suspects investors expecting a capital return will be disappointed. Target is reduced to $1.80 from $2.15. Industry view is In-Line.

Target price is $1.80 Current Price is $2.12 Difference: minus $0.32 (current price is over target).
If AMP 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 $2.12, suggesting upside of 0.2% (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

Macquarie rates ANZ as Neutral (3) -

APRA's latest update on capital requirements reiterates a 10.5% plus tier one capital target but the broker sees a mild softening in the regulator's approach in selected areas. This is a small positive for the majors but largely neutral for the regionals.

The broker still believes bank capital positions will increase and thus return on equity will decline. Additional capital will be required to satisfy RBNZ requirements. Meanwhile, competition for mortgages should intensify.

Neutral and $28.50 target retained for ANZ.

Target price is $28.50 Current Price is $28.17 Difference: $0.33
If ANZ meets the Macquarie target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $28.04, suggesting downside of -0.4% (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

Deutsche Bank rates AZJ as Buy (1) -

Deutsche Bank assesses, with Adani's Carmichael coal mine obtaining final Queensland environmental approvals, that Aurizon's Newlands network will likely be used for coal transport while the rail link to Abbot Point is finalised.

The first stage of the Carmichael project could add up to 10mtpa to the company's network business over time, the broker suggests. Buy rating and $5.40 target maintained.

Target price is $5.40 Current Price is $5.35 Difference: $0.05
If AZJ meets the Deutsche Bank target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $4.81, suggesting downside of -10.0% (ex-dividends)

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.1

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

Macquarie rates BEN as Underperform (5) -

APRA's latest update on capital requirements reiterates a 10.5% plus tier one capital target but the broker sees a mild softening in the regulator's approach in selected areas. This is a small positive for the majors but largely neutral for the regionals.

The broker still believes bank capital positions will increase and thus return on equity will decline. Additional capital will be required to satisfy RBNZ requirements. Meanwhile, competition for mortgages should intensify.

Underperform and $10.00 target retained for Bendigo & Adelaide Bank.

Target price is $10.00 Current Price is $11.48 Difference: minus $1.48 (current price is over target).
If BEN meets the Macquarie target it will return approximately minus 13% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $9.64, suggesting downside of -16.0% (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

Macquarie rates BOQ as Underperform (5) -

APRA's latest update on capital requirements reiterates a 10.5% plus tier one capital target but the broker sees a mild softening in the regulator's approach in selected areas. This is a small positive for the majors but largely neutral for the regionals.

The broker still believes bank capital positions will increase and thus return on equity will decline. Additional capital will be required to satisfy RBNZ requirements. Meanwhile, competition for mortgages should intensify.

Underperform and $8.50 target retained for Bank of Queensland.

Target price is $8.50 Current Price is $9.53 Difference: minus $1.03 (current price is over target).
If BOQ meets the Macquarie target it will return approximately minus 11% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $8.74, suggesting downside of -8.3% (ex-dividends)

The company's fiscal year ends in August.

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 BSL as Upgrade to Buy from Neutral (1) -

Citi notes the stock has pulled back substantially and sector sentiment remains weak amid falling steel/scrap prices and minimal buying interest. Still, the broker suspects a market nadir may be close.

Consensus downgrades are now largely priced in, and the broker points out the company's free cash flow yield remains over 10%, enabling a continuation of the $500m per annum share buyback. Citi upgrades to Buy from Neutral and maintains its target of $14.

Target price is $14.00 Current Price is $11.77 Difference: $2.23
If BSL meets the Citi target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $14.31, suggesting upside of 21.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.2

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

Credit Suisse rates CAR as Outperform (1) -

Underlying earnings guidance of $209-211m has been provided for FY19. While in line with expectations, the revenue forecast of $418-420m was lower than Credit Suisse expected.

The broker believes the company is still being affected by a difficult advertising environment. No details were provided on the performance of the divisions. Outperform rating and $15 target maintained.

Target price is $15.00 Current Price is $13.40 Difference: $1.6
If CAR meets the Credit Suisse target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $14.04, suggesting upside of 4.8% (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 CAR as Neutral (3) -

The company intends to exit its 50.1% interest in Stratton. UBS considers this a positive move as Stratton provided a minor financial contribution relative to the significant effort by management required to deal with the issues.

Strategic reasons for owning the business have also subsided. The identities of potential acquirers are unknown but the broker expects a trade buyer may be the most interested.

After the company's guidance update the broker's FY19-21 forecasts for net profit are broadly unchanged. UBS maintains a Neutral rating and $14 target.

Target price is $14.00 Current Price is $13.40 Difference: $0.6
If CAR meets the UBS target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $14.04, suggesting upside of 4.8% (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

Macquarie rates CBA as Underperform (5) -

APRA's latest update on capital requirements reiterates a 10.5% plus tier one capital target but the broker sees a mild softening in the regulator's approach in selected areas. This is a small positive for the majors but largely neutral for the regionals.

The broker still believes bank capital positions will increase and thus return on equity will decline. Additional capital will be required to satisfy RBNZ requirements. Meanwhile, competition for mortgages should intensify.

Underperform and $71 target retained for CBA.

Target price is $71.00 Current Price is $79.64 Difference: minus $8.64 (current price is over target).
If CBA meets the Macquarie target it will return approximately minus 11% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $70.69, suggesting downside of -11.2% (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

Morgan Stanley rates CBA as Underweight (5) -

Commonwealth Bank has sold Count Financial to CountPlus ((CUP)) for $2.5m. CBA will provide a $200m indemnity for customer remediation and the transaction is expected to be completed in October.

CBA also intends to sell its 35.9% shareholding in Count Plus in "an orderly manner".  Morgan Stanley maintains a $64 target and Underweight rating. Industry view: In-Line.

Target price is $64.00 Current Price is $79.64 Difference: minus $15.64 (current price is over target).
If CBA meets the Morgan Stanley target it will return approximately minus 20% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $70.69, suggesting downside of -11.2% (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

Citi rates CGF as Neutral (3) -

Citi incorporates the company's new guidance for FY20, lowering estimates by -11%. The FY20 normalised profit guidance is subject to interpretation but seems to the broker to imply a significant reduction in sales from an already-subdued FY19. Adviser disruption has been flagged as a key factor.

Citi was not surprised Challenger abandoned its return-on-equity target (18%) but notes its new target implies just 11%. The broker expects some investors may question whether this is sufficient for the risk in a business such as Challenger's, although the return should improve when a higher interest rate environment eventually returns.

Neutral maintained. Target is reduced to $7.20 from $8.35.

Target price is $7.20 Current Price is $6.52 Difference: $0.68
If CGF meets the Citi target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $7.36, suggesting upside of 12.8% (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 CGF as Neutral (3) -

Credit Suisse has concluded that ongoing weak sales are a more severe earnings headwind for the company, compared with annuity spreads. The company has also guided to FY20, which implies -7-12% downgrades to forecasts.

Credit Suisse increases FY20 distributions by 7% on the assumption of a flat dividend in FY19. For the market to regain confidence, domestic sales need to demonstrate signs of a recovery, in the broker's view.

Neutral rating maintained. Target is reduced to $7.50 from $8.00.

Target price is $7.50 Current Price is $6.52 Difference: $0.98
If CGF meets the Credit Suisse target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $7.36, suggesting upside of 12.8% (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

Deutsche Bank rates CGF as Hold (3) -

After the annual strategy briefing, Deutsche Bank welcomes the update to targets and a more sensible approach to earnings expectations in the new low interest rate environment.

Deutsche Bank maintains a Hold rating and $7 target.

Target price is $7.00 Current Price is $6.52 Difference: $0.48
If CGF meets the Deutsche Bank target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $7.36, suggesting upside of 12.8% (ex-dividends)

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 CGF as Outperform (1) -

At its investor day, Challenger reset its return on equity target and lowered its capital growth assumptions for equities, better reflecting, the broker suggests, a lower-for-longer interest rate environment. While disappointing, such changes would have remained an overhang on the market, the broker believes, if not made.

Hopefully this is the end of the rebasing process, and from here the broker sees medium term growth potential and valuation support at a -13% discount to 5-year average PE. Outperform retained, target falls to $8.80 from $9.50.

Target price is $8.80 Current Price is $6.52 Difference: $2.28
If CGF meets the Macquarie target it will return approximately 35% (excluding dividends, fees and charges).

Current consensus price target is $7.36, suggesting upside of 12.8% (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

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

The company has now guided to pre-tax profit for FY19 at the lower end of the $545-565m target. FY20 normalised pre-tax profit guidance is $500-550m, -10% below Morgan Stanley's previous forecasts.

Equal-weight rating maintained. Target is $7.50. Industry view: In-line.

Target price is $7.50 Current Price is $6.52 Difference: $0.98
If CGF meets the Morgan Stanley target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $7.36, suggesting upside of 12.8% (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 CGF as Hold (3) -

The investor briefing has provided a material re-basing of FY20 earnings expectations and the long-term return-on-equity target. Morgans downgrades FY20 estimates by -10% and lowers the target to $7.39 from $8.44. Hold maintained

The broker notes the sales growth initiatives will focus on building the customer demand and partnering with not-for-profit members.

Target price is $7.39 Current Price is $6.52 Difference: $0.87
If CGF meets the Morgans target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $7.36, suggesting upside of 12.8% (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

Ord Minnett rates CGF as Lighten (4) -

Challenger has re-set its strategy on the retail annuity model and the framework for the return-on-equity target. Earnings expectations for FY19 and FY20 have also been downgraded.

The company is seeking to offset pressures in the retail channel through expenditure on consumer education and improving the efficiency of processes with independent financial advisers.

Nevertheless, Ord Minnett does not believe there has been enough of a re-set of normalised earnings expectations and remains concerned about whether the risk-adjusted returns are sufficient.

Lighten rating maintained. Target is reduced to $6.52 from $6.94.

Target price is $6.52 Current Price is $6.52 Difference: $0
If CGF meets the Ord Minnett target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $7.36, suggesting upside of 12.8% (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 CGF as Neutral (3) -

The company has revised its pre-tax return-on-equity target to the Reserve Bank's cash rate plus 14%, from 18% previously. Normalised pre-tax profit for FY19 is now expected at the bottom end of the prior $545-565m range.

Meanwhile, the new FY20 guidance of $500-550m is -7% below consensus, UBS points out. The broker believes ongoing pressure on life spread margins and domestic sales prospects will constrain any improvements.

Neutral maintained. Target is reduced to $6.95 from $8.20.

Target price is $6.95 Current Price is $6.52 Difference: $0.43
If CGF meets the UBS target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $7.36, suggesting upside of 12.8% (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

Ord Minnett rates COH as Lighten (4) -

Next month, Cochlear and key competitors will be subject to new reporting rules that will provide clinics and patients with objective data on reliability.

Ahead of the details, Ord Minnett believes Cochlear will be able to claim the reliability of its Profile series is comparable, and probably superior, to competitors.

The broker suggests, if this is confirmed, it may allow the company to expand its market-leading position. However, downside risk to near-term results is envisaged.

Ord Minnett maintains a Lighten rating and $162 target.

Target price is $162.00 Current Price is $204.28 Difference: minus $42.28 (current price is over target).
If COH meets the Ord Minnett target it will return approximately minus 21% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $169.80, suggesting downside of -16.9% (ex-dividends)

The company's fiscal year ends in June.

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

Credit Suisse rates CWN as Neutral (3) -

Credit Suisse makes changes to modelling after the downgrade by Star Entertainment ((SGR)). Crown Resorts Melbourne's second half domestic table revenue estimates have been downgraded to a fall of -1% and slot machine contraction has been increased to -2%.

Credit Suisse takes a view that the company's major shareholder may exit without a takeover premium, reducing the target to $11 from $14. Neutral rating maintained.

Target price is $11.00 Current Price is $11.97 Difference: minus $0.97 (current price is over target).
If CWN meets the Credit Suisse target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $11.69, suggesting downside of -2.3% (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

Deutsche Bank rates HLS as Downgrade to Hold from Buy (3) -

Healius has made progress, Deutsche Bank observes, with some expansion in margins, increased GP billings and a high number of GP additions in the first half.

Still, the transformation program is in the early stages and the broker observes substantial work remains to be done on rolling out a new pathology LIS platform and refurbishing medical centres.

Deutsche Bank downgrades to Hold from Buy as the stock has moved above fundamental valuation. Target is $3.01.

Target price is $3.01 Current Price is $3.15 Difference: minus $0.14 (current price is over target).
If HLS meets the Deutsche Bank target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.07, suggesting downside of -2.6% (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

Macquarie rates HT1 as Neutral (3) -

HT&E is a high cash-generating radio business operating in a robust ad market, the broker suggests, offering corporate appeal in a consolidating market and capital management potential. It is, however, well priced.

Neutral retained, target rises to $1.90 from $1.75 on an extended buyback.

Target price is $1.90 Current Price is $1.75 Difference: $0.15
If HT1 meets the Macquarie target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $1.81, suggesting upside of 3.6% (ex-dividends)

The company's fiscal year ends in December.

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

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

Morgan Stanley reduces estimates for earnings per share by -30% in FY20. The broker believes the path to unlocking value will be volatile and require patience.

The broker suggests a dramatic overhaul of the company's business is required and its strategy needs to be fast tracked. Nevertheless, the stock appears cheap on historical metrics, irrespective of the outcome of the ANZ P&I.

Equal-weight rating is maintained. Target is reduced to $4.95 from $5.45. Industry view: In Line.

Target price is $4.95 Current Price is $5.27 Difference: minus $0.32 (current price is over target).
If IFL 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 $5.53, suggesting upside of 4.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: -0.2

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

Morgan Stanley rates LNK as Overweight (1) -

Morgan Stanley believes investors in Link Administration are likely to have a free option on retail outsourcing, as retail operators re-evaluate how value is captured and where they want to compete.

There is a possibility the trustees will re-visit fund administration capabilities if they are in member best interests. Overweight rating reiterated and $8.20 target maintained. Industry view is In-Line.

Target price is $8.20 Current Price is $5.61 Difference: $2.59
If LNK meets the Morgan Stanley target it will return approximately 46% (excluding dividends, fees and charges).

Current consensus price target is $7.06, suggesting upside of 25.8% (ex-dividends)

The company's fiscal year ends in June.

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 NAB as Neutral (3) -

APRA's latest update on capital requirements reiterates a 10.5% plus tier one capital target but the broker sees a mild softening in the regulator's approach in selected areas. This is a small positive for the majors but largely neutral for the regionals.

The broker still believes bank capital positions will increase and thus return on equity will decline. Additional capital will be required to satisfy RBNZ requirements. Meanwhile, competition for mortgages should intensify.

Outperform and $27.00 target retained for CBA.

Target price is $27.00 Current Price is $26.68 Difference: $0.32
If NAB meets the Macquarie target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $26.85, suggesting upside of 0.6% (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

UBS rates NCM as Sell (5) -

UBS undertakes a comprehensive review of Newcrest, its assets, earnings and valuation. The broker now explicitly models the operations of Fruta del Norte and Red Chris. Both offer near and long-term growth. Fruta del Norte is set to enter production in FY20.

Still, on balance, UBS maintains a Sell rating and $24 target, noting the stock is trading at a 20% premium to its estimate of net present value and pricing in a US$1500/oz long-term gold price.

Target price is $24.00 Current Price is $30.10 Difference: minus $6.1 (current price is over target).
If NCM meets the UBS target it will return approximately minus 20% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $23.81, suggesting downside of -20.9% (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: -0.4

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

Ord Minnett rates PPE as Buy (1) -

The company has acquired Halcyon Knights, an IT recruitment firm with operations in Sydney and Melbourne and a growing international presence.

A $20m capital raising is being undertaken by way of a placement at $2.70. This is expected to bolster the balance sheet for future acquisitions and build out the nursing operation.

Ord Minnett believes management is highly adept at executing on the right transactions, while continuing to deliver solid organic growth. The broker maintains a Buy rating and raises the target to $3.25 from $2.73.

Target price is $3.25 Current Price is $3.07 Difference: $0.18
If PPE meets the Ord Minnett target it will return approximately 6% (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

Citi rates SGM as Upgrade to Buy from Neutral (1) -

Citi notes the stock has pulled back substantially and sector sentiment remains weak amid falling steel/scrap prices and minimal buying interest. Still, the broker suspects a market nadir may be close.

Given recent volatility and the sharp fall in scrap prices in the US, Citi reduces FY19 estimates by -5% and FY20-21 by -1%. A rising capital expenditure outlook reduces free cash flow but the company should be a beneficiary of improving scrap demand from expanded electric furnace capacity in the US.

Given a favourable risk/reward the rating is upgraded to Buy from Neutral. Target is steady at $11.50.

Target price is $11.50 Current Price is $10.12 Difference: $1.38
If SGM meets the Citi target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $11.58, suggesting upside of 14.4% (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

Deutsche Bank rates SGP as Buy (1) -

The investor briefing highlighted stronger residential inquiry levels in Sydney and Melbourne after the federal election, although the residential metrics continue to ease. Enquiries are yet to lead to conversions, Deutsche Bank points out.

The broker expects residential earnings to decline -8% in FY20. A Buy rating is maintained as Stockland still maintains one of the highest dividend yields in the sector. Target is $4.60.

Target price is $4.60 Current Price is $4.37 Difference: $0.23
If SGP meets the Deutsche Bank target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $4.05, suggesting downside of -7.4% (ex-dividends)

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 SGP as Outperform (1) -

At its investor day, Stockland reaffirmed FY19 earnings guidance but noted residential sales volumes have continued to moderate in the June quarter. The broker notes this has been a concern for the market.

The broker nevertheless believes the recent incremental changes impacting on residential demand should see Stockland benefit. Outperform and $4.48 target retained.

Target price is $4.48 Current Price is $4.37 Difference: $0.11
If SGP meets the Macquarie target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $4.05, suggesting downside of -7.4% (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

Ord Minnett rates SGP as Hold (3) -

The company has delivered a weak outlook for FY20 at its investor briefing, expecting residential settlements to be at the lower end of its 5000-6000 target. FY19 retail leasing spreads are expected to deteriorate further.

Ord Minnett considers the residential assumptions too bearish and finds the pick up in enquiries following the federal election encouraging. This is expected to translate into a material recovery in sales volumes in FY20.

Stockland is looking to reduce its exposure to both the retail and retirement segments via asset sales and joint ventures, increasing exposure to industrial via development. Ord Minnett notes this is a difficult market in which to sell and execution risk continues, while pricing is uncertain.

Hold rating and $4.30 target maintained.

Target price is $4.30 Current Price is $4.37 Difference: minus $0.07 (current price is over target).
If SGP meets the Ord Minnett target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.05, suggesting downside of -7.4% (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 SXL as Outperform (1) -

The broker sees Southern Cross as a defensive exposure within a media sector facing difficult market conditions, given the company-specific drivers of market share gains and regional opportunities.

Outperform retained, target rises to $1.45 from $1.30 on a reduction in the risk-free (government bond) rate.

Target price is $1.45 Current Price is $1.27 Difference: $0.18
If SXL meets the Macquarie target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $1.15, suggesting downside of -9.4% (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 WBC as Neutral (3) -

APRA's latest update on capital requirements reiterates a 10.5% plus tier one capital target but the broker sees a mild softening in the regulator's approach in selected areas. This is a small positive for the majors but largely neutral for the regionals.

The broker still believes bank capital positions will increase and thus return on equity will decline. Additional capital will be required to satisfy RBNZ requirements. Meanwhile, competition for mortgages should intensify.

Neutral and $28.00 target retained for Westpac.

Target price is $28.00 Current Price is $27.82 Difference: $0.18
If WBC meets the Macquarie target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $27.25, suggesting downside of -2.0% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: -0.1

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

Citi rates WES as Sell (5) -

Wesfarmers has downgraded its outlook for the discount department stores. Citi notes two key issues were raised, including the lack of a post-election rebound in sales for retailers, and the pervasive impact of higher wage costs, which are coinciding with weak like-for-like sales growth.

The broker downgrades earnings estimates by -1% for FY19 and -5% for FY20-21. Sell rating maintained. Target is raised to $29.20 from $29.00.

Target price is $29.20 Current Price is $35.62 Difference: minus $6.42 (current price is over target).
If WES meets the Citi target it will return approximately minus 18% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $32.09, suggesting downside of -9.9% (ex-dividends)

The company's fiscal year ends in June.

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

Credit Suisse rates WES as Neutral (3) -

Credit Suisse forecasts flat earnings through to FY20 with the performance still dependent on growth at Bunnings. The target has increased to $33.41 from $33.12, largely as a result of an increasing earnings contribution from Bunnings.

Forecasts for Bunnings have been upgraded for FY20-22 and the absence of a trading update by the company has been taken to mean that trading is stable through the second half.

While continuing to envisage longer-term opportunities in the industrial and safety segments, Credit Suisse suspects management considers it too early to be talking about longer-term upside. Neutral maintained.

Target price is $33.41 Current Price is $35.62 Difference: minus $2.21 (current price is over target).
If WES meets the Credit Suisse target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $32.09, suggesting downside of -9.9% (ex-dividends)

The company's fiscal year ends in June.

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

Deutsche Bank rates WES as Downgrade to Sell from Hold (5) -

Deutsche Bank observes, while the outlook has deteriorated for the company's discount department store earnings, the stock has still outperformed.

Some improvement may have occurred after the federal election, but the broker also believes weaker demand in housing categories is affecting Bunnings, compounded by cycling the past success of this key division.

Recent M&A activity also signals the portfolio is pivoting towards riskier assets with longer-dated return profiles. Hence, Deutsche Bank believes the current multiple is too high and downgrades to Sell from Hold. Target is reduced to $31 from $32.

Target price is $31.00 Current Price is $35.62 Difference: minus $4.62 (current price is over target).
If WES meets the Deutsche Bank target it will return approximately minus 13% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $32.09, suggesting downside of -9.9% (ex-dividends)

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 WES as Neutral (3) -

At its strategy briefing, Wesfarmers provided a weak trading update for Target-Kmart and noted softer conditions for Bunnings in particular, suggesting no benefit from the election result or RBA rate cut. The company continues to focus on capital allocation, seeing opportunities in existing businesses but also new businesses, such as Lynas ((LYC)).

The broker suggests Wesfarmers is not the only stock running ahead of valuation on perceived election/RBA upside. Given sluggish earnings growth, Neutral retained. Target falls to $36.42 from $37.13.

Target price is $36.42 Current Price is $35.62 Difference: $0.8
If WES meets the Macquarie target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $32.09, suggesting downside of -9.9% (ex-dividends)

The company's fiscal year ends in June.

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

Morgan Stanley rates WES as Underweight (5) -

Wesfarmers has guided that Kmart group earnings (EBIT) for FY19 are likely to be between $515-565m. At the mid point this is a -8% downgrade to Morgan Stanley's estimates. The broker notes increased price investment and higher promotional activity has affected margins.

Underweight rating. Target is $29. Cautious industry view.

Target price is $29.00 Current Price is $35.62 Difference: minus $6.62 (current price is over target).
If WES meets the Morgan Stanley target it will return approximately minus 19% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $32.09, suggesting downside of -9.9% (ex-dividends)

The company's fiscal year ends in June.

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

Morgans rates WES as Hold (3) -

The strategy briefing provided insight into the individual business segments and whilst the update for Bunnings was largely in line with previous comments, the trading update for the discount department stores was weaker than expected.

Morgans believes management has done a good job re-positioning the portfolio over the last 12-18 months. However, the tough retail environment remains of concern. Hold rating maintained and the target is lowered to $34.61 from $35.49.

Target price is $34.61 Current Price is $35.62 Difference: minus $1.01 (current price is over target).
If WES meets the Morgans target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $32.09, suggesting downside of -9.9% (ex-dividends)

The company's fiscal year ends in June.

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

Ord Minnett rates WES as Lighten (4) -

Ord Minnett notes Kmart group earnings (EBIT) were downgraded at the strategy briefing and the company highlighted cautious consumers and rising labour costs.

Market conditions for Kmart and Target remain highly competitive, with increased price investment and a higher level of promotional activity.

Ord Minnett maintains a Lighten rating and increases the target to $31 from $30, as the model is rolled forward.

Target price is $31.00 Current Price is $35.62 Difference: minus $4.62 (current price is over target).
If WES meets the Ord Minnett target it will return approximately minus 13% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $32.09, suggesting downside of -9.9% (ex-dividends)

The company's fiscal year ends in June.

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

UBS rates WES as No Rating (-1) -

UBS has become more cautious about the near-term outlook after the strategy briefing. Retail trade is challenging and all retail businesses have noted no uptick post the federal election.

The broker reduces estimates for earnings per share by -2-4% to reflect the downgrade to department store earnings, enterprise bargaining impacts and higher interest cost guidance.

UBS is restricted on providing a rating and target at present.

Current Price is $35.62. Target price not assessed.

Current consensus price target is $32.09, suggesting downside of -9.9% (ex-dividends)

The company's fiscal year ends in June.

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