Australian Broker Call

Credit Suisse rates AMP as Neutral (3) -

The broker has adjusted wealth manager earnings forecasts on a mark to market for movements in the March Q. Equity market gains for AMP were largely offset by adverse currency movements on international investments.

Neutral and $5.20 target retained.

Target price is $5.20 Current Price is $5.14 Difference: $0.06
If AMP meets the Credit Suisse target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $5.54, suggesting upside of 8.2% (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 BDR as Sell (5) -

UBS believes the appreciating Brazilian real is likely to mean the company's margins come under pressure and this could  cap share price momentum.

The broker suspects the guidance on costs for 2017 is at risk as, at spot Brazilian real, forecasts lift to the top end of the US$830-930/oz range.

Nevertheless, the broker notes the company's transformation is underway and the impact of management changes a year or so ago is having a positive impact.

Sell rating retained. Target is reduced to $0.29 from $0.31.

Target price is $0.29 Current Price is $0.30 Difference: minus $0.01 (current price is over target).
If BDR meets the UBS target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $0.30, suggesting downside of -0.5% (ex-dividends)

The company's fiscal year ends in December.

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

Credit Suisse rates BTT as Neutral (3) -

Data suggest BT continued to attract solid funds inflow in the first two months of the year, however the benefits were offset by weakness in the pound against the Aussie, the broker notes.

BT is trading at its historical average PE premium and while successfully executing on its plans, the broker suggests, is beholden to regulatory risk, competition and volatile markets. Neutral and $10.00 target retained.

Target price is $10.00 Current Price is $10.19 Difference: minus $0.19 (current price is over target).
If BTT meets the Credit Suisse target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $10.48, suggesting upside of 1.1% (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

Credit Suisse rates CGF as Outperform (1) -

The broker has adjusted wealth manager earnings forecasts on a mark to market for movements in the March Q. Equity market losses in the quarter lead the broker to cut its FY17 Challenger earnings forecast by -3.5%.

Outperform and $12.00 target retained.

Target price is $12.00 Current Price is $12.61 Difference: minus $0.61 (current price is over target).
If CGF meets the Credit Suisse target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $11.35, suggesting downside of -10.5% (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

Credit Suisse rates HGG as Neutral (3) -

The pace of Henderson's retail funds outflows in the UK and US declined in the first two months of the year but Europe saw weakness, the broker notes. While the stock is offering valuation appeal it may be some time before a re-rate is likely.

Aside from outflows, Henderson is also facing regulatory, competition and market volatility risk, the broker warns. Neutral and $3.80 target retained.

Target price is $3.80 Current Price is $3.83 Difference: minus $0.03 (current price is over target).
If HGG meets the Credit Suisse target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.88, suggesting upside of 1.6% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY17:

Forecast for FY18:

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

Market Sentiment: 0.0

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

Credit Suisse rates IAG as Neutral (3) -

The broker has adjusted insurance company earnings forecasts on a mark to market for movements in the March Q. In the case of general insurers, the broker has also made assumptions regarding the level of Debbie claims.

The broker suggests IAG should have enough claims cover to see it through any new event in FY17, but if this comes sooner rather than later then further reinsurance may be required. Neutral and $6.05 target retained.

Target price is $6.05 Current Price is $5.97 Difference: $0.08
If IAG meets the Credit Suisse target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $6.01, suggesting upside of 2.7% (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

Citi rates IOF as Neutral (3) -

As suitor Cromwell ((CMW)) has now made an unsolicited, indicative non-binding proposal to acquire all the units in IOF for $4.85 per IOF unit in cash, Citi analysts still are not convinced this is the final draw.

Cromwell's financial backers remain anonymous, note the analysts, which has been a problem and thus remains to be a problem for investors not on Cromwell's side. Other issues remain outstanding too.

Citi analysts do not exclude a higher bid from another party might emerge. Neutral rating and $4.51 price target retained.

Target price is $4.51 Current Price is $4.72 Difference: minus $0.21 (current price is over target).
If IOF meets the Citi target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.56, suggesting downside of -4.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: -0.5

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

Morgan Stanley rates IOF as Underweight (5) -

Morgan Stanley believes a potential transaction with Cromwell ((CMW)) is unlikely. The company has stated that it plans to engage with Cromwell in relation to the proposal, particularly regarding the disclosure of the identity of the proposed equity investors.

This appears to the broker to be a sticking point as the details are still missing. Cromwell has indicated that it would provide further details once a process agreement on similar terms to those offered to Dexus (DXS)) is agreed. The broker believes this could prove difficult given the difference in the quality of the two companies' covenants.

Underweight and $4.45 target retained. Industry view is Cautious.

Target price is $4.45 Current Price is $4.72 Difference: minus $0.27 (current price is over target).
If IOF 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 $4.56, suggesting downside of -4.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: -0.5

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

Ord Minnett rates IOF as Lighten (4) -

Ord Minnett believes the proposed offer from Cromwell ((CMW))  is reasonably strong. Cromwell is, nonetheless, proposing to disclose the composition of its equity funding to the Investa board only after it executes a process deed.

The broker believes the deed will be a meaningful step in the transaction and expects discussions to focus on the risk to the equity.

Ord Minnett maintains a Lighten rating and raises the target to $4.75 from $4.30. The broker moderates earnings and distribution forecasts for Investa following a review of major re-leasing projects.

Target price is $4.75 Current Price is $4.72 Difference: $0.03
If IOF meets the Ord Minnett target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $4.56, suggesting downside of -4.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: -0.5

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

Deutsche Bank rates NVT as Hold (3) -

The investor briefing set out the long-term strategic direction as well as provided targets for FY20.  Deutsche Bank's updated forecasts fall slightly below the company's targets.

Given continued risks associated with contract losses the broker is comfortable in remaining slightly below the company's  targets.  Hold rating retained. Target is reduced  to $4.70 from $5.00.

Target price is $4.70 Current Price is $4.40 Difference: $0.3
If NVT meets the Deutsche Bank target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $4.63, suggesting upside of 7.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.2

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

Macquarie rates NVT as Outperform (1) -

The company has reiterated FY17 guidance at an investor briefing and expressed a high level of confidence that contract renewals in 2017 will be successful.

Macquarie believes the company is being conservative and envisages significant upside to the company's revenue growth targets.

The broker forecasts a higher compound growth rate of 3% for prices versus the company's 2% target, supported by industry feedback which highlights strong inelasticity in demand.

Outperform rating retained. Target lifts 3% to $5.00.

Target price is $5.00 Current Price is $4.40 Difference: $0.6
If NVT meets the Macquarie target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $4.63, suggesting upside of 7.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.2

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

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

After the investor briefing Morgan Stanley adjusts forecast to account for the recent contract loss and the benefit of better signals for long-term operating earnings and capital expenditure targets.

If the company achieve its new FY20 objectives, all else being equal, the broker estimates this could add 50c to $1 per share to discounted cash flow value.

Nevertheless, Morgan Stanley expects the market to take a conservative approach to pricing in this upside and awaits evidence of execution. Equal-weight  rating retained. Target is reduced to $4.95 from $5.00. Industry view: Attractive.

Target price is $4.95 Current Price is $4.40 Difference: $0.55
If NVT meets the Morgan Stanley target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $4.63, suggesting upside of 7.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.2

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

Credit Suisse rates QBE as Underperform (5) -

The broker has adjusted insurance company earnings forecasts on a mark to market for movements in the March Q. In the case of general insurers, the broker has also made assumptions regarding the level of Debbie claims.

QBE's Debbie-related risk will not come through until the second half, the broker notes, and US events will also impact on claims. Market movements have had little impact on forecasts but the broker has adjusted for currency changes.

Underperform and $12.60 target retained.

Target price is $12.60 Current Price is $12.75 Difference: minus $0.15 (current price is over target).
If QBE meets the Credit Suisse target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $13.17, suggesting upside of 2.7% (ex-dividends)

The company's fiscal year ends in December.

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: 0.3

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

Morgans rates REA as Downgrade to Hold from Add (3) -

The share price has performed strongly in recent days and Morgans downgrades to Hold from Add. The shares now trade in line with the broker's target of $60.73.

 Morgans does not yet incorporate the impact on reported profits of the recent purchase of PropTiger in India. The broker suspects that business is likely to result in ongoing losses.

Most of the broker's valuation stems from the Australian business, where the opportunity is expected to exist for several years for strong earnings growth.

Should the Asian and/or the US business deliver substantial earnings growth over time than the current valuation would be too conservative. Nevertheless, the broker believes it is too early to make a call on this.

Target price is $60.73 Current Price is $60.71 Difference: $0.02
If REA meets the Morgans target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $59.75, suggesting upside of 0.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.6

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

Citi rates SBM as Re-initiation with Buy (1) -

It's almost exactly three years ago since we last heard from Citi about this company. Back then, this was a different kettle of fish as witnessed by Citi's price target at that time: 17c and a Sell rating.

Today, Citi has officially re-initiated coverage with a Buy rating and $2.93 price target. The short term outlook is based upon compelling short-term cash flow and potential for a beat on consensus FY17 earnings, explain the analysts.

St Barbara, highlights Citi, has the luxury of being one of the gold industry’s lowest cost producers (estimated AISC at A$896/oz in FY17). Further out, the analysts expect a steady fall in Gwalia gold grades, while company management expects Simberi to close in 2-3 years.

Citi thinks it likely management is looking around to purchase assets. Alternatively, St Barbara itself might become a prey too, suggest the analysts.

Target price is $2.93 Current Price is $2.53 Difference: $0.4
If SBM meets the Citi target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $2.91, suggesting upside of 11.6% (ex-dividends)

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

Credit Suisse rates SUN as Outperform (1) -

The broker has adjusted insurance company earnings forecasts on a mark to market for movements in the March Q. In the case of general insurers, the broker has also made assumptions regarding the level of Debbie claims.

The broker notes Suncorp will remain protected through claims cover for any new disaster in FY17. Outperform and $14.20 target retained.

Target price is $14.20 Current Price is $12.83 Difference: $1.37
If SUN meets the Credit Suisse target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $13.64, suggesting upside of 6.7% (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

Ord Minnett rates TOX as Hold (3) -

Ord Minnett observes the anticipated return on invested capital and the duration of business has now significantly changed as construction projects roll off.

The main question for the broker is whether the earnings of the business have been re-based. Given the profile of the business since FY11 it remains clear it benefited significantly from contracts associated with resource construction projects.

This accentuated the return profile of the results and allowed the company to raise equity to purchase businesses to offset the earnings declines that are now being experienced.

The broker suspects FY17 guidance will be difficult to achieve, but also that FY18 remains a bigger challenge. Hold rating retained. Target is reduced to $2.15 from $2.20.

Target price is $2.15 Current Price is $2.25 Difference: minus $0.1 (current price is over target).
If TOX meets the Ord Minnett target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.30, suggesting upside of 2.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.0

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

Morgans rates VTG as Add (1) -

Press reports suggest a leaked internal document from Telstra ((TLS)) has identified 16 stores which would be more profitable for Telstra if they were brought back under control. The majority of these stores are reportedly controlled by Vita Group.

Morgans understands that, under the master agreement, Telstra does not have the right to take back control or acquire individual stores within the Vita network.

While there may be no operating impact on the company the article has raised uncertainties surrounding the longer-term intentions of Telstra in regard to its retail store footprint and licensee agreements.

Morgans believes the stock represents solid value and maintains an Add recommendation. Nevertheless, the broker cautions that negative sentiment is likely to affect short-term performance. Target is lowered to $3.49 from $4.10.

Target price is $3.49 Current Price is $2.54 Difference: $0.95
If VTG meets the Morgans target it will return approximately 37% (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

Citi rates WES as Sell (5) -

Citi has released an in-depth supermarket sector update, expressing its view that overall momentum resides with Woolworths, which thus has the preference in the sector.

As the share price is above the price target, Citi's rating for Wesfamers remains Sell. Estimates have been slightly lifted on better margin assumptions for Coles. The analysts do point out, any further downside in Supermarket earnings is likely to be highly impactful for their Wesfarmers assumptions and valuation.

Target price is $39.00 Current Price is $44.78 Difference: minus $5.78 (current price is over target).
If WES 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 $42.25, suggesting downside of -4.3% (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

Ord Minnett rates WES as Downgrade to Hold from Accumulate (3) -

Ord Minnett downgrades to Hold from Accumulate following a strong share price performance recently. The target is steady at $45.50.

The broker also modestly adjusts earnings estimates, reducing EBIT estimates for Coles following the decline in the first half. Estimates for Bunnings are also reduced because of a moderation in the trajectory of growth in the UK and Ireland.

Target price is $45.50 Current Price is $44.78 Difference: $0.72
If WES meets the Ord Minnett target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $42.25, suggesting downside of -4.3% (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

Morgan Stanley rates WHC as Downgrade to Equal-weight from Overweight (3) -

The stock has rallied 20% in three days after the disruption to coal supplies from the cyclone in Queensland. While remaining constructive on the company's assets, Morgan Stanley notes this is a temporary disruption and shifts to an Equal-weight rating from Overweight, while looking for the next opportunity to enter the stock.

The company predominantly supplies thermal coal, the price of which is rising on the back of what is primarily an outage for metallurgical coal, which should see a more direct uplift in prices.

The broker acknowledges the stock's fundamental drivers remain in place and additional cash flow from higher coal prices can bring forward the date at which the company reaches a net cash position. Target is $3.30. Industry view: Attractive.

Target price is $3.30 Current Price is $3.27 Difference: $0.03
If WHC meets the Morgan Stanley target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $3.17, suggesting downside of -4.8% (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

Morgan Stanley rates WOR as Overweight (1) -

Morgan Stanley suspects the company may be at the point of a significant earnings inflection. An investor briefing scheduled for May may be able to outline this potential and prove to be a material positive catalyst, in the broker's view.

Morgan Stanley suggests the company is targeting a return to double-digit  EBIT. As consensus is forecasting margins to hold at around 6% through FY19 the broker envisages earnings risk is significantly skewed to the upside.

Overweight rating and Cautious industry view are retained. Target is raised to $12.52 from $11.94.

Target price is $12.52 Current Price is $10.59 Difference: $1.93
If WOR meets the Morgan Stanley target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $10.30, suggesting downside of -4.6% (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

Citi rates WOW as Neutral (3) -

Citi analysts have resumed coverage with a Neutral rating and $27.40 price target. It is their view Woolworths is in the early stages of a multi-year recovery, and likely to surprise to the upside over the next six months.

Citi analysts also believe this prospect is already largely reflected in the share price. Their sector preference is clearly with Woolworths over Wesfarmers. The latter is rated Sell.

Target price is $27.40 Current Price is $26.73 Difference: $0.67
If WOW meets the Citi target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $25.97, suggesting downside of -3.1% (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