Australian Broker Call

Citi rates A2M as Neutral (3) -

Analysts at Citi have adopted the view the changing regulatory environment for infant formula produce in China is starting to benefit local producers versus international brands. The projection is now that local producers in China will increase market share to 53% by FY22 from 40% in 2015.

For Australian producers this translates into likely slower growth, and possibly to no further increase in market share, as is now cautiously assumed for Bellamy's (the analysts do concede this is a rather conservative approach).

Earnings estimates have been scaled back for a2 Milk. Citi's base case assumes the company achieves 4% market share by FY22. If that were to grow to 6% the analysts see 27% upside to their target price, currently at $10.65 (down from $10.80). Neutral.

Target price is $10.65 Current Price is $10.74 Difference: minus $0.09 (current price is over target).
If A2M meets the Citi target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $11.87, suggesting upside of 10.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

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

Market Sentiment: 0.7

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

Ord Minnett rates AMP as Accumulate (2) -

Ord Minnett has marked-to-market, resulting in small changes for expected fee income, but also reduced forecasts for Funds under Management (FUM), and elsewhere.

Estimates have been reduced by up to -4.8% for the years ahead. Accumulate rating retained. Target unchanged at $2.90.

Target price is $2.90 Current Price is $2.55 Difference: $0.35
If AMP meets the Ord Minnett target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $2.85, suggesting upside of 11.9% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.3

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

Ord Minnett rates ARB as Upgrade to Hold from Lighten (3) -

Ord Minnett analysts observe the shares have meaningfully de-rated since June-August last year, significantly underperforming the S&P/ASX Small Industrials. They only see minor near-term risk to earnings.

Following the above changes, the analysts believe the risk-reward looks balanced for investors who'd like a piece of what remains a "high-quality business led by seasoned management, with a business model that has continued to see sales growth despite economic cycles".

Recommendation has been upgraded to Hold from Lighten, while the target price has been pulled back to $15.70 from $17.

Target price is $15.70 Current Price is $15.45 Difference: $0.25
If ARB meets the Ord Minnett target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $18.80, suggesting upside of 21.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.5

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

Ord Minnett rates ASX as Hold (3) -

The ASX is scheduled to report interim results on February 14 and Ord Minnett has raised its price target to $63.91 from $61.80 ahead of the event. Rating remains Hold.

The analysts believe the ASX recorded its highest revenue growth in FY18 since FY10. They still like the defensive nature of the company's earnings, alongside other positive characteristics, but also believe the shares are fully valued.

Target price is $63.91 Current Price is $62.11 Difference: $1.8
If ASX meets the Ord Minnett target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $57.17, suggesting downside of -7.9% (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

Citi rates BAL as Buy (1) -

Analysts at Citi have adopted the view the changing regulatory environment for infant formula produce in China is starting to benefit local producers versus international brands. The projection is now that local producers in China will increase market share to 53% by FY22 from 40% in 2015.

For Australian producers this translates into likely slower growth, and possibly to no further increase in market share, as is now cautiously assumed for Bellamy's (the analysts do concede this is a rather conservative approach).

Citi has also taken the view that SAMR registration won't be finalised until the end of 2019, suggesting regulatory uncertainty will linger for longer. Buy rating alongside a price target of $10.65, down from $12.10 previously.

Target price is $10.65 Current Price is $7.26 Difference: $3.39
If BAL meets the Citi target it will return approximately 47% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.5

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

Macquarie rates CGC as Outperform (1) -

Post profit warning, Macquarie analysts stick with the view this company remains solidly positioned with (still) a solid track record, though the latest market update must have come as an unwelcome surprise.

Macquarie was previously of the view everything was looking swell and solid from an operational point of view. Its own forecast was for double digit percentage growth, well above company guidance and certainly well above yesterday's update for a flat outlook for the present year.

Apparently demand for tomatoes, berries and avocados during December 2018 disappointed, while January too is growing below expectations. Estimates culled by -8-15%. Target price drops to $5.55 from $7.60.

Target price is $5.55 Current Price is $4.64 Difference: $0.91
If CGC meets the Macquarie target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $6.61, suggesting upside of 42.5% (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

Ord Minnett rates CGC as Hold (3) -

Share price gut thumped following a profit warning yesterday. Ord Minnett analysts are of the view the event has placed the risk of oversupply in a number of core categories firmly into perspective, meaning a rerating for the shares should not be expected in the near term, in their view.

They do believe revised guidance looks achievable, but management has now a few things to prove to disappointed investors. Hold rating retained, while price target drops to $4.74 from $7. Estimates have been scaled back, in particular DPS forecasts.

Target price is $4.74 Current Price is $4.64 Difference: $0.1
If CGC meets the Ord Minnett target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $6.61, suggesting upside of 42.5% (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

Ord Minnett rates CL1 as Downgrade to Hold from Buy (3) -

Ord Minnett focuses on the rapidly slowing pace of growth for the company, with the analysts starting to question how large precisely the ultimately addressable client base turns out to be.

The broker has made further material cuts to forecasts. Target price tumbles to $1.30 from $2.43. Recommendation is downgraded to Hold from Buy.

Target price is $1.30 Current Price is $1.33 Difference: minus $0.03 (current price is over target).
If CL1 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 $1.73, suggesting upside of 29.8% (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

Macquarie rates MPL as Neutral (3) -

Macquarie highlights margin pressure for H1, albeit due to seasonal factors, but the analysts believe Medibank is operating on lofty margins as is and growth therefore needs to exceed industry claims trends to maintain these lofty margins.

On the other hand, even though Macquarie doesn't believe the 2% average price cap (Labor) is fully priced in, the analyst do believe there is valuation support for the share price. Neutral rating retained. Price target unchanged at $2.65.

Forecasts slightly reduced short term, and slightly increased for following years.

Target price is $2.65 Current Price is $2.58 Difference: $0.07
If MPL meets the Macquarie target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $2.60, suggesting upside of 0.9% (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

Morgans rates MVF as Upgrade to Add from Hold (1) -

Share price action suggests the IVF sector is poised for more disruption, argue analysts at Morgans. They note company management stuck to guidance at the AGM in November, albeit with a stronger H2 to compensate for a weak H1.

The stockbroker has taken the view that investors are probably too negative (as judged by share price weakness) and thus the rating is upgraded to Add from Hold. Price target falls to $1.13 from $1.21 on reduced "underlying" forecasts.

Target price is $1.13 Current Price is $0.96 Difference: $0.17
If MVF meets the Morgans target it will return approximately 18% (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

Morgan Stanley rates NEA as Overweight (1) -

Morgan Stanley thought Nearmap's market update, well-received by investors yesterday, was definitely yet another positive.

The underlying suggestion is this company appears on track to outperform expectations, with management reiterating guidance to reach breakeven in FY19, excluding capital raise and new growth initiatives.

Morgan Stanley analysts certainly believe the prospect for management to deliver on its promises appears "very realistic". Overweight. Industry view In-Line. Price target $2.

Target price is $2.00 Current Price is $1.80 Difference: $0.2
If NEA meets the Morgan Stanley target it will return approximately 11% (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

Deutsche Bank rates TWE as Hold (3) -

Deutsche Bank has retained its Hold rating post market update by competitor Constellation Brands and subsequently a market guidance update by Treasury Wine in Australia yesterday.

Price target has declined to $15.50 from $18.

Target price is $15.50 Current Price is $14.85 Difference: $0.65
If TWE meets the Deutsche Bank target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $17.61, suggesting upside of 18.6% (ex-dividends)

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

Macquarie rates TWE as Outperform (1) -

The share price came under pressure following a disappointing market update from competitor Constellation Brands, but Macquarie is not worried, also noting the company updated the market with a positive outlook after hours yesterday.

The analysts note commercial wines seem to be struggling more, plus there are some Constellation specific factors in play too. Treasury Wine reiterated guidance for 25% EBITS growth for FY19, with Macquarie having penciled in 24% growth.

Outperform rating retained. Price target $18.22 (unchanged). No changes made to forecasts.

Target price is $18.22 Current Price is $14.85 Difference: $3.37
If TWE meets the Macquarie target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $17.61, suggesting upside of 18.6% (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

Morgan Stanley rates TWE as Overweight (1) -

Following a disappointing market update by competitor Constellation Brands, Treasury Wine has repeated its FY19 guidance for EBITS growth of circa 25%. This compares with Morgan Stanley's growth estimate of 24%.

The analysts suggest the market update should calm the nervous Nellies in today's volatile share market. While the analysts do believe growth is set to slow post FY19, they also believe it will still be around 15% in FY20.

Two conclusions have been drawn: margins are benefiting from US distribution changes and weaker Chinese demand is being compensated for through the company's push into lower tier cities. Overweight. Industry view Cautious. Price target $17.

Target price is $17.00 Current Price is $14.85 Difference: $2.15
If TWE meets the Morgan Stanley target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $17.61, suggesting upside of 18.6% (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

Ord Minnett rates TWE as Accumulate (2) -

Following a disappointing market update by Constellation Brands in the US, Treasury Wine has quickly responded by reiterating its guidance for FY19 which translates into SGARA/EBITS advancing 25% for the year. Ord Minnett has drawn extra confidence from the company's quick response.

The analysts observe there is now a lesser skew to H2 to achieve FY19 guidance. Target of $20 remains intact, as well as the Accumulate rating.

Special note: SGARA refers to "self-generating and regenerating assets", part of AASB141 accounting for agricultural producers.

Target price is $20.00 Current Price is $14.85 Difference: $5.15
If TWE meets the Ord Minnett target it will return approximately 35% (excluding dividends, fees and charges).

Current consensus price target is $17.61, suggesting upside of 18.6% (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