Australian Broker Call

Citi rates ANN as Sell (5) -

Citi analysts are of the view investors already have priced in a bullish scenario regarding the intended divestment of the Sexual Wellness division. The analysts have run a scenario whereby most of the proceeds will be spent on a share buy back.

All in all, the analysts remain of the belief that headwinds from raw materials (input prices for Ansell) are too strong to ignore, including a highly successful sale of the division and a lucrative share buy back.

Citi remains of the view consensus forecasts look too high and downgrades are to be expected. Sell. Target $20. Citi thinks the sale of the Sexual Wellness division could generate after-tax proceeds of US$600m, translating to $5.30 per share.

Target price is $20.00 Current Price is $22.94 Difference: minus $2.94 (current price is over target).
If ANN meets the Citi target it will return approximately minus 13% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $22.26, suggesting downside of -3.3% (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: -0.2

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

Citi rates FBU as Buy (1) -

Yesterday's profit warning seems to be a follow-up on the same troubled project that already caused a miss for the recent interim report, comment the analysts. Three weeks after management indicated confidence in their guidance, this is not pretty, they admit.

While investors are now likely to take a wait-and-see-what-comes-next approach, Citi analysts are of the opinion the share price already reflects more than enough caution. They also acknowledge the additional provisioning taken for a major commercial project.

On the basis that the share price looks too low, Citi retains its Buy rating. New target price of NZ$10.20 compares with NZ$11.40 previously.

Current Price is $7.51. Target price not assessed.

Current consensus price target is $9.00, suggesting upside of 17.5% (ex-dividends)

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: 0.7

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

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

The company has lowered FY17 EBIT guidance to NZ$610-650m from NZ$720-760m following a detailed review of its uncompleted contracts in construction.

Credit Suisse, while finding the downgrade unwelcome, is sufficiently comforted by the detail shared during the conference call that corrective actions are in place to ensure that losses of this magnitude are not repeated.

The broker upgrades to Outperform from Neutral and reduces the target to NZ$9.80 from NZ$10.10.

Current Price is $7.51. Target price not assessed.

Current consensus price target is $9.00, suggesting upside of 17.5% (ex-dividends)

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: 0.7

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

Deutsche Bank rates FBU as Buy (1) -

The company has announced a -NZ$110m reduction to FY17 EBIT guidance following further analysis of construction-related losses, largely from two major projects which the broker suspects are the Justice Precinct in Canterbury and the Sky City development in Auckland.

While the market is concerned around future project and cost uncertainty, Deutsche Bank believes the risk is currently priced in and maintains a Buy recommendation Target is reduced to NZ$10.15 from NZ$11.67.

Current Price is $7.51. Target price not assessed.

Current consensus price target is $9.00, suggesting upside of 17.5% (ex-dividends)

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: 0.7

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

Macquarie rates FBU as Underperform (5) -

The company has lowered its FY17 EBIT estimate by -15% following the completion of a review which has identified additional losses in the construction division.

The majority of the losses stem from one large new project, as well as an increase in the estimated loss from the one-off project loss identified at the first half result.

Macquarie adjusts forecasts to account for the new guidance, reducing FY17 and FY18 estimates by -18% and -3% respectively.Target is reduced to NZ$7.87 from NZ$8.00. Underperform retained.

Current Price is $7.51. Target price not assessed.

Current consensus price target is $9.00, suggesting upside of 17.5% (ex-dividends)

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: 0.7

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

Morgan Stanley rates FBU as Overweight (1) -

Morgan Stanley is disappointed at the downgrade to FY17 guidance after the company reviewed its construction division losses. FY17 EBIT Is downgraded by -10-20%.

The downgrade relates entirely to the construction division and the company has confirmed the trading at other divisions is in line with guidance.The broker downgrades FY18 forecasts slightly and reduces the target to reflect a lower multiple that should be paid for the earnings.

Overweight rating, In-Line industry view retained. Target is reduced to $9.00 from $10.70.

Target price is $9.00 Current Price is $7.51 Difference: $1.49
If FBU meets the Morgan Stanley target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $9.00, suggesting upside of 17.5% (ex-dividends)

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: 0.7

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

UBS rates FBU as Buy (1) -

The company has increased its estimated project losses in construction following a review of outstanding contracts.

This is evenly split between the increased loss, raised to -$80m from -$30m, on the major project announced in the first half result and provision for the loss on another major project that is to be completed in FY19.

UBS observes the main issues driving the over-run in costs have been design complexity, higher subcontractor costs and time delays.

UBS expects a re-rating may take time as investor confidence is re-built. Buy rating and NZ$9.85 maintained.

Current Price is $7.51. Target price not assessed.

Current consensus price target is $9.00, suggesting upside of 17.5% (ex-dividends)

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: 0.7

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

Credit Suisse rates HSO as Neutral (3) -

The analysts have taken another detailed look into what makes the inner-growth engine tick at Ramsay Health Care, as well as what goes on under the bonnet at peer Healthscope.

The end result is another confirmation that Ramsay, simply put, is the better performer, and is likely to continue doing exactly that. Minor adjustments have been made to forecasts, with the explicit mention that things need to pick up post FY18 or else there is downside risk for Healthscope's growth projections.

Healthscope is banking on opening brown field projects in the next three years, which should support growth. Credit Suisse doesn't think its performance will match that of peer Ramsay. Target $2.45. Neutral.

Target price is $2.45 Current Price is $2.22 Difference: $0.23
If HSO meets the Credit Suisse target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $2.63, suggesting upside of 18.9% (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

Morgans rates IPL as Hold (3) -

Morgans makes material upgrades to forecasts, having reviewed the drivers of the company's earnings base.

Fertiliser prices, particularly ammonia, have risen and there has been a bigger summer cropping season, while explosive demand has improved.  FY17 and FY18 net profit forecasts are raised by 24.5% and 24.1% respectively.

Hold rating retained, as the stock is considered fairly priced in the absence of any further appreciation in fertiliser prices.Target is raised to $3.74 from $3.00.

Target price is $3.74 Current Price is $3.82 Difference: minus $0.08 (current price is over target).
If IPL meets the Morgans target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.60, suggesting downside of -5.5% (ex-dividends)

The company's fiscal year ends in September.

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

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

The company has launched a new product, "Front Page". Financial analysis of the new product is difficult, UBS asserts,  given limited disclosures. Nevertheless, pending future disclosures, the broker suspects actual upside could be much larger.

New product upside, headline price increases and continued depth penetration provide the broker with confidence that the company should at least meet FY18 consensus forecasts, which is for EBITDA growth of around 18%.

UBS downgrades to Neutral from Buy as the stock is trading in line with its revised target. Target rises to $58 from $56.

Target price is $58.00 Current Price is $57.58 Difference: $0.42
If REA meets the UBS target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $59.75, suggesting upside of 4.7% (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

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

The analysts have taken another detailed look into what makes the inner-growth engine tick at Ramsay Health Care, as well as what goes on under the bonnet at peer Healthscope.

The end result is another confirmation that Ramsay, simply put, is the better performer, and is likely to continue doing exactly that. Ramsay's group estimates have received a minor cut due to international headwinds.

Tariff reductions in the UK and France as well as a stronger AUD/GBP present headwinds for FY18 earnings growth, acknowledge the analysts, but underneath it all is above industry growth in Australia. Upgrade to Outperform from Neutral. Target falls to $74.50 from $75.

Target price is $74.50 Current Price is $65.56 Difference: $8.94
If RHC meets the Credit Suisse target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $76.10, suggesting upside of 14.5% (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

Deutsche Bank rates SEK as Hold (3) -

The company has entered a binding agreement to increase its interest in Online Education Services to 80% from 50% for $119m.

Deutsche Bank believes the price is attractive from the company's perspective, and reflects the lack of other obvious buyers given the company's existing holding in the asset.

The broker expects a transaction to be accretive to both valuation and earnings. Target is raised to $15.30 from $15.20. Hold retained.

Target price is $15.30 Current Price is $14.96 Difference: $0.34
If SEK meets the Deutsche Bank target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $16.05, suggesting upside of 4.2% (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

Morgans rates SEK as Add (1) -

The company's decision to take a majority ownership of Online Education Services suggests to Morgans a deeply ingrained view that the opportunity in education is as big as it is in employment.

Morgans observes Online Education Services has plenty of capacity but requires a lot more content, such as degree programs, to become an earnings powerhouse.

After heavy investment in business development, new products and innovation the broker believes the company is on track to deliver many more years of double-digit earnings growth. Add rating retained. Target is raised to $16.56 from $16.25.

Target price is $16.56 Current Price is $14.96 Difference: $1.6
If SEK meets the Morgans target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $16.05, suggesting upside of 4.2% (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

UBS rates SEK as Sell (5) -

The company is purchasing a further 30% stake in Online Education Services, taking its stake to 80% from 50%. The transaction is expected to be accretive to cash earnings per share in FY18.

UBS believes the deal makes sense, as a greater stake could facilitate new university partners on the platform.The broker factors in the transaction into forecasts.

FY17 Impact  is minimal but earnings per share estimates lift 2% for FY18. Sell rating and $14 target retained.

Target price is $14.00 Current Price is $14.96 Difference: minus $0.96 (current price is over target).
If SEK meets the UBS target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $16.05, suggesting upside of 4.2% (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

Macquarie rates SYD as Outperform (1) -

February traffic numbers have been reported, with total passengers growth flat compared with the prior corresponding period. This primarily reflects the impact of a leap year.

The International traffic outlook continues to track above Macquarie's expectations. Growth for the year to date is adjusted for the leap year impact and is 8.6%, well above capacity growth of 5.2% through the first quarter. This suggests to the broker a load factor improvement.

Outperform rating and $7.15 target retained. 2017 and 2018 EBITDA estimates are reduced by -1.6% and -1.5% respectively.

Target price is $7.15 Current Price is $6.44 Difference: $0.71
If SYD meets the Macquarie target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $6.65, suggesting upside of 4.4% (ex-dividends)

The company's fiscal year ends in December.

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 SYD as Overweight (1) -

International passenger growth was up 7.2% for the first two months of FY17. Morgan Stanley continues to expect underlying strength in this number over the course of the year.

This should also support the company's retail operations via higher per-passenger spending.The broker expects the company will not proceed with the Western Sydney Airport proposals if required to fund all the $5-6bn in capital expenditure.

Investor fears over the loss of the Kingsford Smith monopoly on NSW air travel are abating, in the broker's view, because the share price has recovered much of the losses it experienced when the government released its notice of intention last December.

Morgan Stanley retains a Overweight rating, $7.07 target and Cautious industry view.

Target price is $7.07 Current Price is $6.44 Difference: $0.63
If SYD meets the Morgan Stanley target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $6.65, suggesting upside of 4.4% (ex-dividends)

The company's fiscal year ends in December.

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

UBS rates WSA as Sell (5) -

UBS observes short interest in the stock is at 17.8%, Making it one of the top shorted stocks in the Small Ordinaries. The broker envisages supply risk from the Philippines and Indonesia  are likely to counter each other.

On the demand side, positive growth globally for stainless steel supports the lifting of the broker's nickel price forecast to US$5.60/lb and US$6.25/lb in 2017 and 2018 respectively. Sell rating retained. Target is $2.38.

Target price is $2.38 Current Price is $2.44 Difference: minus $0.06 (current price is over target).
If WSA meets the UBS target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.49, suggesting upside of 1.8% (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