Australian Broker Call

Macquarie rates BHP as Outperform (1) -

Macquarie updates forecasts after incorporating the latest reserves and resource estimates and recent capital costs announcements for Olympic Dam.

Earnings estimates fall -3% for FY18 and FY19, and are largely unchanged in FY20. Outperform retained. Target is $31.

Target price is $31.00 Current Price is $25.98 Difference: $5.02
If BHP meets the Macquarie target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $29.08, suggesting upside of 11.9% (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: 0.6

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

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

Morgan Stanley expects the bank will confirm its strong capital by neutralising its distribution reinvestment plan and credit quality could also positively surprise at the results.

The broker expects the bank to deliver around 7% earnings growth in the second half and recover margin. The key to this is the re-pricing that has occurred on both sides of the balance sheet.

Target rises to $12.00 from $11.70. Equal-weight rating and In-Line industry view retained.

Target price is $12.00 Current Price is $12.90 Difference: minus $0.9 (current price is over target).
If BOQ meets the Morgan Stanley target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $11.99, suggesting downside of -7.0% (ex-dividends)

The company's fiscal year ends in August.

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

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

Citi upgrades to Buy from Neutral and raises FY18-20 underlying net profit forecasts by 33-40%. This comes largely on the back of incorporating the integration of Spotless into forecasts after a period of restriction, with a subsequent transfer of coverage to another analyst.

The broker increases the target to $7.50 from $7.26 following the revisions. Citi remains attracted to the diversification and leverage to infrastructure-related sectors.

Target price is $7.50 Current Price is $6.43 Difference: $1.07
If DOW meets the Citi target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $6.68, suggesting upside of 3.9% (ex-dividends)

The company's fiscal year ends in June.

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

Morgan Stanley rates EVN as Downgrade to Underweight from Overweight (5) -

A heightened risk backdrop means Morgan Stanley adopts a more defensive stance while retaining a positive view on the resources sector.

The broker downgrades to Underweight from Overweight on valuation grounds. Target is reduced to $2.10 from $2.70. Sector view: Attractive.

Target price is $2.10 Current Price is $2.26 Difference: minus $0.16 (current price is over target).
If EVN meets the Morgan Stanley target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.47, suggesting upside of 9.3% (ex-dividends)

The company's fiscal year ends in June.

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

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

A heightened risk backdrop means Morgan Stanley adopts a more defensive stance while retaining a positive view on the resources sector.

A risk of a commodity price correction by the end of the year, in addition to specific concerns for the elevated 58% grade discount, means the broker downgrades to Underweight from Equal-weight.

Target is reduced to $4.50 from $5.40. Attractive industry view.

Target price is $4.50 Current Price is $5.13 Difference: minus $0.63 (current price is over target).
If FMG meets the Morgan Stanley target it will return approximately minus 12% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $6.05, suggesting upside of 17.8% (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: 0.2

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

Citi rates FXJ as Buy (1) -

Citi observes the company's trading update and the Domain scheme booklet identifies higher-than-expected corporate costs and the split isn't altogether positive.

The trading update shows revenue trends have deteriorated slightly over the past month and year-to-date group revenue is now -4-5% below last year. Growth rates for Domain have also slowed slightly.

Target of $1.10 and Buy rating retained.

Target price is $1.10 Current Price is $0.96 Difference: $0.145
If FXJ meets the Citi target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $1.16, suggesting upside of 21.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.6

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

UBS rates FXJ as Neutral (3) -

The company has released the scheme document for Domain. UBS interprets Domain delivering FY18 net profit of around $48m and growing at around 30% compound by FY20.

The broker's revised forecasts suggest a stand-alone per share valuation of $7-9 or around 70-90c per Fairfax share today, given one Domain share for every 10 Fairfax shares. Neutral rating retained. Price target steady at $1.

Target price is $1.00 Current Price is $0.96 Difference: $0.045
If FXJ meets the UBS target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $1.16, suggesting upside of 21.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.6

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

Morgan Stanley rates GXY as Overweight (1) -

A heightened risk backdrop means Morgan Stanley adopts a more defensive stance while retaining a positive view on the resources sector.

Overweight rating and Attractive industry view retained. Target is raised to $3.00 from $2.25.

Target price is $3.00 Current Price is $2.42 Difference: $0.58
If GXY meets the Morgan Stanley target it will return approximately 24% (excluding dividends, fees and charges).

Current consensus price target is $2.44, suggesting upside of 0.7% (ex-dividends)

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.8

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

Ord Minnett rates PLG as Accumulate (2) -

The board has rejected a $0.95 per share proposal from Centuria Capital Group. The offer comprised 5.5 cents per share cash and securities in Centuria Capital ((CNI)) and Centuria Industrial REIT ((CIP)).

Ord Minnett suggests, while Centuria could make its proposal a former offer, it is unlikely to be successful in the absence of board approval. This means the offer needs to be raised, or the cash component materially increased. Ord Minnett maintains an Accumulate rating and $0.95 target.

This stock is not covered in-house by Ord Minnett. Instead, the broker whitelabels research by JP Morgan.

Target price is $0.95 Current Price is $0.90 Difference: $0.05
If PLG 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 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

Citi rates PMV as Buy (1) -

Citi found the FY17 result strong amid a challenging retail fashion environment. The broker upgrades FY18 forecasts for earnings per share by 4.5%.

Smiggle and Peter Alexander have become so significant to the business that these two brands are expected to drive double-digit growth in earnings per share to FY20. This more than offsets the stagnation in core brands that Citi expects over the next four years.

Buy rating retained. Target rises to $15.30 from $13.80.

Target price is $15.30 Current Price is $13.40 Difference: $1.9
If PMV meets the Citi target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $15.14, suggesting upside of 12.9% (ex-dividends)

The company's fiscal year ends in July.

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

Credit Suisse rates PMV as Outperform (1) -

Despite difficult store-based conditions, Credit Suisse found the main revelations in the FY17 result centred on the diversification of the business globally, as an increasing proportion of profit is sustained by Smiggle and Peter Alexander.

Strong online growth also continues to counter store-based risks. The broker retains a degree of confidence in a strong uplift in profit in FY18. Outperform retained. Target reduced to $14.91 from $15.04.

Target price is $14.91 Current Price is $13.40 Difference: $1.51
If PMV meets the Credit Suisse target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $15.14, suggesting upside of 12.9% (ex-dividends)

The company's fiscal year ends in July.

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 PMV as Buy (1) -

Deutsche Bank observes the FY17 result highlights the resilience of the company against a weak apparel retail environment. Sales growth of 5.7% largely reflected the growing contribution of Smiggle but also highlighted strong cost control, in the broker's opinion.

The UK footprint for Smiggle has been firmly establishing the global credentials of the brand and Deutsche Bank notes Smiggle will open in Belgium and the Netherlands, with management targeting 40-50 stores over the next 4-5 years.

Buy rating retained. Target is reduced to $14.80 from $15.00.

Target price is $14.80 Current Price is $13.40 Difference: $1.4
If PMV meets the Deutsche Bank target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $15.14, suggesting upside of 12.9% (ex-dividends)

The company's fiscal year ends in July.

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

Macquarie rates PMV as Outperform (1) -

FY17 results were dominated by the Smiggle, Peter Alexander and online strategy, Macquarie observes, supporting sales growth of 5.7% and retail earnings up 7.3%.

Macquarie notes the company continues to hold 10.77% of Myer ((MYR)) and believes the stake is strategic. The company is not expected to increase its position above 20%.

Outperform rating retained. Target reduced to $15.95 from $16.28.

Target price is $15.95 Current Price is $13.40 Difference: $2.55
If PMV meets the Macquarie target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $15.14, suggesting upside of 12.9% (ex-dividends)

The company's fiscal year ends in July.

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

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

Morgan Stanley finds more to like about Smiggle and Peter Alexander after the FY17 results but notes core brands are facing structural pressures and the consumer environment is challenging.

Core brands, while a drag on returns, are making up a reduced portion of sales but the risks hold the broker back from turning more positive on the stock.

Equal-weight rating,  In-Line industry view retained. Target is reduced to $13.20 from $14.00.

Target price is $13.20 Current Price is $13.40 Difference: minus $0.2 (current price is over target).
If PMV meets the Morgan Stanley target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $15.14, suggesting upside of 12.9% (ex-dividends)

The company's fiscal year ends in July.

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

UBS rates PMV as Buy (1) -

FY17 results were reasonable, UBS believes, affected by weak conditions in women's apparel. Cash performance was below expectations.

The broker notes the company has previously stated it did not intend to make a takeover offer for Myer ((MYR)) although calculates a potential takeover could be around 17% accretive.

Still, UBS remains wary of the long lease tail in the department stores and the significant pressure that Myer faces.

Buy rating retained. Target is reduced to $16.65 from $16.90.

Target price is $16.65 Current Price is $13.40 Difference: $3.25
If PMV meets the UBS target it will return approximately 24% (excluding dividends, fees and charges).

Current consensus price target is $15.14, suggesting upside of 12.9% (ex-dividends)

The company's fiscal year ends in July.

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

Macquarie rates RCR as Re-instate Coverage with Outperform (1) -

Macquarie resumes coverage following a $90m capital raising, with an Outperform rating and $4.64 target.

The broker believes the company is well-placed to capitalise on the growing renewable sector and other infrastructure projects, also benefiting from any improvement in the resources sector.

Target price is $4.64 Current Price is $4.25 Difference: $0.39
If RCR meets the Macquarie target it will return approximately 9% (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

Morgan Stanley rates SFR as Upgrade to Equal-weight from Underweight (3) -

A heightened risk backdrop means Morgan Stanley adopts a more defensive stance while retaining a positive view on the resources sector.

The broker lifts its rating for Sandfire Resources to Equal-weight from Underweight on valuation grounds. Target is reduced to $5.70 from $6.00. Industry view is Attractive.

Target price is $5.70 Current Price is $5.58 Difference: $0.12
If SFR meets the Morgan Stanley target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $6.26, suggesting upside of 12.1% (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

Citi rates SHL as Sell (5) -

US Medicare has proposed a reduction to reimbursement rates and estimates the proposed changes would reduce expenditure by -10% in 2018. Citi observes the company derives around 4% of its total revenue from US Medicare.

Such reductions are not in guidance, Citi notes, and there is a risk of a downgrade to forecasts as a result.

The broker does not believe the stock represents a favourable risk/reward for potential investors. Sell rating reiterated. Target is $21.50.

Target price is $21.50 Current Price is $21.42 Difference: $0.08
If SHL meets the Citi target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $23.29, suggesting upside of 8.7% (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

Credit Suisse rates SHL as Underperform (5) -

US Medicare has proposed reductions to fees for 2018. Medicare is seeking public comment until October 23 and final rates will be subsequently published.

The US represents 22% of the company's revenue in FY17 and Credit Suisse notes around 20% of US revenue is funded by Medicare. The broker's calculations, assuming price reductions of -9.5% in 2018 and -7.5% in 2019, result in a downgrade to net profit estimates of -3% over the forecasts.

Target is reduced to $21.40 from $22.40. Underperform retained.

Target price is $21.40 Current Price is $21.42 Difference: minus $0.02 (current price is over target).
If SHL meets the Credit Suisse target it will return approximately minus 0% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $23.29, suggesting upside of 8.7% (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

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

US Medicare has released proposed fees schedules for 2018 and the reductions are deeper than Ord Minnett expected. Final rates will be published in November following a consultation period.

The broker believes the impact of the rate reduction should be manageable and the company will probably seek savings to offset the cuts.

Rating is upgraded to Hold from Lighten despite the negative news, given the share price is now close to the target. Target is steady at $21.20.

This stock is not covered in-house by Ord Minnett. Instead, the broker whitelabels research by JP Morgan.

Target price is $21.20 Current Price is $21.42 Difference: minus $0.22 (current price is over target).
If SHL meets the Ord Minnett target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $23.29, suggesting upside of 8.7% (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

UBS rates SHL as Neutral (3) -

US Medicare has proposed fees be cut by -22% over three years from 2018. Applying this on a half-year basis in FY18, suggests to UBS a -5% effect on US operating earnings.

At a group level this would be slightly above the company's guidance of a -1% impact. Neutral retained. Target is $23.

Target price is $23.00 Current Price is $21.42 Difference: $1.58
If SHL meets the UBS target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $23.29, suggesting upside of 8.7% (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

Morgan Stanley rates WHC as Downgrade to Underweight from Overweight (5) -

A heightened risk backdrop means Morgan Stanley adopts a more defensive stance while retaining a positive view on the resources sector.

The broker envisages the stock at risk of a commodity price correction by the end of the year and downgrades to Underweight from Overweight. Target falls to $3.20 from $3.60. Industry view: Attractive.

Target price is $3.20 Current Price is $3.47 Difference: minus $0.27 (current price is over target).
If WHC meets the Morgan Stanley target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.19, suggesting downside of -8.0% (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