Australian Broker Call

Macquarie rates AGL as Neutral (3) -

Macquarie adjusts earnings from the sale of the gas assets in North Queensland, which leads to improved cash flow, although it is unclear how much cash the company paid to remove the liability.

The broker observes valuation is attractive but the ACCC report into retail pricing overhangs the stock. The recent government initiative regarding Liddell is positive for the company, highlighting the need for firming capacity which the broker suggests could provide a capital expenditure opportunity.

Neutral retained. Target is $25.40.

Target price is $25.40 Current Price is $23.65 Difference: $1.75
If AGL meets the Macquarie target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $26.48, suggesting upside of 12.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.4

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

UBS rates AMA as Buy (1) -

FY17 results were in line with UBS. The company in FY18 to date has completed four acquisitions and is considering another 14.

Greenfield losses are expected to remain a headwind for a net contribution in FY19. Management has provided operating earnings guidance of over $48m for FY18.

Buy retained.  Target reduced to $1.20 from $1.30.

Target price is $1.20 Current Price is $0.93 Difference: $0.27
If AMA meets the UBS target it will return approximately 29% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 1.0

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

Macquarie rates ASB as Outperform (1) -

The company has a been awarded a $44m contract for two 550-passenger capacity catamarans, including an option for a third vessel of the same design. This is the first commercial contract award from Taiwan.

The accelerating pace of commercial wins is a positive sign in Macquarie's opinion and this could make a solid contribution to earnings  in coming years. Outperform rating retained. Target is $1.89.

Target price is $1.89 Current Price is $1.68 Difference: $0.21
If ASB meets the Macquarie target it will return approximately 12% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.8

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

Deutsche Bank rates ASX as Hold (3) -

Trading activity improved over the first two months of FY18. Volume is up 12% and the value traded is up 6%. Deutsche Bank notes this has been offset by weakness in capital markets.

The broker suspects the shift to passive investing is likely to weigh on turnover velocity. Hold retained. Target is $54.50.

Target price is $54.50 Current Price is $54.05 Difference: $0.45
If ASX meets the Deutsche Bank target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $51.32, suggesting downside of -4.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.5

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

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

Morgan Stanley believes the assumption of conservatism in the company's guidance by the market may be unfounded. The company's constant currency FY18 net profit guidance range of US$1480-1550m implies 0-5% profit growth in the plasma business.

This assumption of conservatism has minimised the negative revisions to estimates. The broker suspects the street under-appreciates the cost growth within the business and prior guidance was only conservative in FY17 because of unforeseen circumstances, rather than as a deliberate strategy.

Equal-weight rating and In-Line industry view are retained. Target is $117.

Target price is $117.00 Current Price is $130.88 Difference: minus $13.88 (current price is over target).
If CSL meets the Morgan Stanley target it will return approximately minus 11% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $134.90, suggesting upside of 2.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: 0.8

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

Macquarie rates CSR as Neutral (3) -

After an investment briefing Macquarie continues to  envisage a lack of clear catalysts to drive any re-rating or sustainable price performance.

Despite increased supply from competitors and apartment activity slowing, gyprock continues to hold share for now, the analysts observe.

The peaking of the housing cycle remains the key headwind, although the broker is becoming incrementally more positive on aluminium.

Neutral retained. Target is reduced to $4.40 from $4.60.

Target price is $4.40 Current Price is $4.16 Difference: $0.24
If CSR meets the Macquarie target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $4.38, suggesting upside of 6.8% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.2

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

Macquarie rates IAG as Underperform (5) -

Macquarie  has a negative outlook on the Australian general insurance sector. The broker normalises FY17 underlying margins for one-off items and suspects some of the more material items will be taken into FY18.

FY18 estimates are reduced by -4.4% and FY19 raised by 1.2%. Underperform retained.  Target is reduced to $5.50 from $5.80.

Target price is $5.50 Current Price is $6.45 Difference: minus $0.95 (current price is over target).
If IAG meets the Macquarie target it will return approximately minus 15% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $6.27, suggesting upside of 1.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.1

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

Deutsche Bank rates IPL as Buy (1) -

Deutsche Bank believes the outlook has improved with the company recently appointing a new CEO and global nitrogen prices improving of late.

The broker does not expect Hurricane Harvey to have a significant impact on earnings although it may depress  activity in the region in the near term ahead of a likely re-building.

Buy. Target is reduced to $4.05 from $4.15.

Target price is $4.05 Current Price is $3.38 Difference: $0.67
If IPL meets the Deutsche Bank target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $3.62, suggesting upside of 6.5% (ex-dividends)

The company's fiscal year ends in September.

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

Citi rates SEK as Sell (5) -

Seek's Australian operations are too much weighted towards the local housing cycle, says Citi. The analysts highlight more than a third of volume growth in this cycle is directly attributable to Seek's core business.

Job ads for architects already stopped growing last year, point out the analysts. They see this as the proverbial canary. It remains Citi's view Seek is facing a downgrade cycle ahead, hence why the rating remains Sell. Target $13.75.

Target price is $13.75 Current Price is $16.38 Difference: minus $2.63 (current price is over target).
If SEK meets the Citi target it will return approximately minus 16% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $16.84, suggesting upside of 2.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.1

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

UBS rates SFR as Neutral (3) -

UBS notes the Black Butte copper project is the company's next growth project. The broker believes the market is paying  little attention to this opportunity.

Given the likely heightened environmental sensitivity, production upside is expected to be limited to 10-20%. Key to a higher valuation, in the broker's opinion, will be cost control, grade, recoveries and mine life.

Neutral retained. Target is raised to $6.21 from $6.02.

Target price is $6.21 Current Price is $6.25 Difference: minus $0.04 (current price is over target).
If SFR 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 $6.38, suggesting upside of 1.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.1

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

Macquarie rates SUN as Downgrade to Underperform from Neutral (5) -

Macquarie  has a negative outlook on the Australian general insurance sector.

Macquarie believes the company's underlying margins will take a structural step down in FY18 as reinsurance changes and Queensland CTP reform flow through the book.

The broker expects a -30 basis points headwind to margins from the changes to the reinsurance allowance.  Rating is downgraded to Underperform from Neutral. Target  is reduced to $12.70 from $14.50.

Target price is $12.70 Current Price is $12.80 Difference: minus $0.1 (current price is over target).
If SUN meets the Macquarie target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $13.95, suggesting upside of 11.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.1

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

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

The Queensland government has awarded the company an acreage position in the Surat Basin for nil cost and Citi analysts consider it favourably, pointing out the positioning is surrounded by Tier 1 projects.

The company expects to obtain regulatory approvals by mid-CY18 with first gas deliveries expected in CY19. This is sufficient for Citi to upgrade to Buy/High Risk from Neutral. Target price gains 5c to 35c.

The analysts explain their unrisked valuation has lifted to $0.51/shr, but in a bull-case scenario whereby the company performs better in terms of CSM costs, reserves and the gas price this valuation could well rise above $0.60/shr.

Target price is $0.35 Current Price is $0.27 Difference: $0.08
If SXY meets the Citi target it will return approximately 30% (excluding dividends, fees and charges).

Current consensus price target is $0.36, suggesting upside of 7.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.7

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

Credit Suisse rates SXY as Outperform (1) -

The company has been awarded a 58 km2 block in the Surat Basin by the Queensland government for nil consideration. Credit Suisse observes the acreage is high-quality and close to established infrastructure options.

The broker considers the market reaction overly subdued from a value perspective as, while there is still much to be learned about the ultimate economics, the resource size and annual production guidance suggests around an 18-year reserve life  at around 11PJ/a.

Outperform rating retained. Target rises to $0.40 from $0.30.

Target price is $0.40 Current Price is $0.27 Difference: $0.13
If SXY meets the Credit Suisse target it will return approximately 48% (excluding dividends, fees and charges).

Current consensus price target is $0.36, suggesting upside of 7.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.7

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

Deutsche Bank rates SXY as Hold (3) -

The company has been awarded CSG acreage in the Surat Basin by the Queensland government for nil consideration under a competitive tender.  The gas is required for domestic use under the terms of the tender.

The company is targeting first gas production from 2019 and expects to ramp up to plateau production of over 30 TJ/d.

Hold rating retained. Target is $0.30.

Target price is $0.30 Current Price is $0.27 Difference: $0.03
If SXY meets the Deutsche Bank target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $0.36, suggesting upside of 7.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.7

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

Macquarie rates SXY as Upgrade to Outperform from Neutral (1) -

The company has been granted the Queensland government's domestic gas acreage in the Surat Basin. The project is expected to deliver first gas by 2019.

Macquarie believes this is a gift from the Queensland government and far better than any other project in the company's portfolio. The broker believes the project has the potential to deliver around 2mmboe per year at plateau rates, double the company's current production.

The main risk remains regarding reserve development is limited to wells that have been drilled on the permit to date. Rating upgraded to Outperform from Neutral. Target raised to $0.35 from $0.30.

Target price is $0.35 Current Price is $0.27 Difference: $0.08
If SXY meets the Macquarie target it will return approximately 30% (excluding dividends, fees and charges).

Current consensus price target is $0.36, suggesting upside of 7.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.7

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

Morgans rates SXY as Add (1) -

The company has won a government tender for a high-quality development block in the Surat Basin.

Morgans assesses the block's existing P50 recoverable gas estimate of 201PJ should comfortably mean enough reserves are delineated to support long-term production additions.

 Add rating retained and target rises to $0.48 from $0.39.

Target price is $0.48 Current Price is $0.27 Difference: $0.21
If SXY meets the Morgans target it will return approximately 78% (excluding dividends, fees and charges).

Current consensus price target is $0.36, suggesting upside of 7.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.7

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

Citi rates TWE as Sell (5) -

CLSA has Treasury Wine as a High Conviction Buy, while Citi sits on the other end of the spectrum, sticking with a Sell rating. So what would it take to become more positive, Citi analysts ask today?

The answer is Citi analysts need more confidence the company can deliver meaningful underlying revenue growth from pricing plus provide visibility about the future reduction in its commercial wine portfolio.

Treasury Wines price per case in each of its markets has been flat to down in the past two years, points out Citi. Also, the stock is priced like a luxury stock, but more than half its volumes are commercial, and commercial volumes may shrink further, the analysts add.

Don't hold your breath for Citi to change its view anytime soon.

Target price is $10.90 Current Price is $14.33 Difference: minus $3.43 (current price is over target).
If TWE meets the Citi target it will return approximately minus 24% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $13.00, suggesting downside of -10.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.1

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

Morgans rates VMY as Add (1) -

Mulga Rock resources have been lifted to 71.2m tonnes at 570ppm containing 90.1m pounds of uranium oxide.

Morgans will revisit valuation when the terms for funding the development are announced and will incorporate a revised cost structure with a higher head grade.

The main risk to the broker's valuation is the FID decision, funding structure terms and marketing agreements, as well as a weak uranium spot price.

Morgans retains an Add rating and reduces the target to $0.38 from $0.42.

Target price is $0.38 Current Price is $0.12 Difference: $0.265
If VMY meets the Morgans target it will return approximately 230% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 1.0

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

UBS rates WEB as Neutral (3) -

FY17 was driven by a combination of strong organic and acquired growth.  Results were marginally ahead of UBS estimates.

UBS makes material earnings revisions, upgrading forecasts for earnings per share by 11% for FY19 and by 23% for FY20.

Neutral. Target is raised to $12.50 from $11.50.

Target price is $12.50 Current Price is $11.52 Difference: $0.98
If WEB meets the UBS target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $13.08, suggesting upside of 12.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.4

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

Morgans rates WLD as Upgrade to Hold from Reduce (3) -

FY17 results were extremely weak, Morgans observes, although in line with recent guidance.

FY18 is expected to be another challenging year. Uncertainty remains high and the broker does not expect the company to return to profitability until FY19.

Morgans suggests that further asset sales and/or new equity raisings may be necessary. The broker suspects the company is through the worst and upgrades to Hold from Reduce. Target is reduced to $0.11 from $0.15.

Target price is $0.11 Current Price is $0.11 Difference: $0.005
If WLD meets the Morgans target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $0.12, suggesting upside of 14.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.0

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