Australian Broker Call

Ord Minnett rates ALQ as Resume coverage with Hold (3) -

Ord Minnett resumes coverage of the contractor sector and notes ALS Ltd is currently trading in line with global peers. The broker assumes coverage with a Hold rating and $9 target.

Target price is $9.00 Current Price is $9.35 Difference: minus $0.35 (current price is over target).
If ALQ 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 $8.86, suggesting downside of -5.3% (ex-dividends)

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.2

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

UBS rates CGC as Buy (1) -

UBS tracks both retail and wholesale pricing across four of the company's main domestic categories and notes trends throughout December generally improved.

The main unknown is the supply of berries, as the industry has been affected by the bushfires and reduced water supply.

Nevertheless, the broker considers 2019 guidance is realistic, for net profit of around $28m. Buy rating and $3.25 target maintained.

Target price is $3.25 Current Price is $2.49 Difference: $0.76
If CGC meets the UBS target it will return approximately 31% (excluding dividends, fees and charges).

Current consensus price target is $2.90, suggesting upside of 16.6% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.2

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

Ord Minnett rates CIM as Resume coverage with Buy (1) -

Ord Minnett resumes coverage of the contractor sector and CIMIC Group is its key preference. The broker believes the company is best placed to benefit from record levels of public infrastructure investment.

The stock is trading at a discount to peers and, if assumptions are correct, the broker believes it could re-rate. Ord Minnett allocates a Buy rating and $43 target.

Target price is $43.00 Current Price is $32.99 Difference: $10.01
If CIM meets the Ord Minnett target it will return approximately 30% (excluding dividends, fees and charges).

Current consensus price target is $37.45, suggesting upside of 13.5% (ex-dividends)

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

Ord Minnett rates DOW as Resume coverage with Accumulate (2) -

Ord Minnett presumes coverage of the contractor sector. Downer EDI is assessed as having potential to capture upside from a shift towards greater public expenditure on infrastructure.

A potential sale of the mining division could allow for de-leveraging and simplify operations. Ord Minnett resumes coverage with an Accumulate rating and $9.50 target.

Target price is $9.50 Current Price is $8.75 Difference: $0.75
If DOW meets the Ord Minnett target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $8.62, suggesting downside of -1.5% (ex-dividends)

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.5

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

UBS rates EVN as Neutral (3) -

Evolution Mining's share price has underperformed because of market concerns about water supply at Cowal, which forms around 30% of FY20 estimates for earnings.

The company's recent downgrade to production expectations for FY20 was centred on Mount Carlton which drives a -5% downgrade to UBS's FY20 net profit forecasts.

The broker believes value is starting to emerge in the stock but assesses there is a lack of clear catalysts for the near term. Neutral rating with a $4.25 price target, down from $4.60..

Target price is $4.25 Current Price is $3.63 Difference: $0.62
If EVN meets the UBS target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $4.15, suggesting upside of 14.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.3

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

Credit Suisse rates HUB as Neutral (3) -

Credit Suisse downgrades earnings estimates by -3-4%. The broker believes the company has one of the best products in the market and is able to gain market share through capturing an outsized share of flow.

While believing there are barriers to prevent an immediate shift in pricing, Credit Suisse expects there will be a multi-year erosion to platform revenue margins. Nevertheless, profit growth is expected to remain high. The broker maintains a Neutral rating and $13 target.

Target price is $13.00 Current Price is $11.81 Difference: $1.19
If HUB meets the Credit Suisse target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $12.81, suggesting upside of 8.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.0

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

Ord Minnett rates MND as Resume coverage with Lighten (4) -

Ord Minnett notes Monadelphous is trading above its five-year average multiple relative to the S&P/ASX 200 index. It is also trading at higher multiples vs CIMIC ((CIM)) and Downer EDI ((DOW)), despite appearing to derive just less than half of its operating earnings from construction.

The broker resumes coverage of the contractor sector and currently envisages -13% downside to the share price, assuming it reverts to the price target of $15. Lighten rating.

Target price is $15.00 Current Price is $16.99 Difference: minus $1.99 (current price is over target).
If MND meets the Ord Minnett target it will return approximately minus 12% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $16.29, suggesting downside of -4.1% (ex-dividends)

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.0

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

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

Citi upgrades Netwealth Group to Buy from Neutral, envisaging upside to near-term earnings from better-than-expected flows. Target is steady at $9.60.

Findex, an advisory firm with $17bn under advice, has launched a new platform offering. Pricing is materially lower than current platform pricing but Citi does not expects this to impact the near-term earnings of its competitors, given the likely time required to gain traction among independent wealth firms.

Target price is $9.60 Current Price is $8.19 Difference: $1.41
If NWL meets the Citi target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $7.98, suggesting downside of -2.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: -0.3

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

Credit Suisse rates NWL as Underperform (5) -

Credit Suisse lowers revenue margin assumptions to account for ongoing price pressure and raises expense assumptions. The operating earnings (EBITDA) margin is expected to fall by around -150 basis points in FY20.

The broker believes there is increased risk that the platform market will shift to a new lower pricing paradigm. However, Netwealth continues to win significant new business and has resisted some of the pricing pressure to date.

Underperform rating maintained. Target is reduced to $7.40 from $7.60.

Target price is $7.40 Current Price is $8.19 Difference: minus $0.79 (current price is over target).
If NWL meets the Credit Suisse target it will return approximately minus 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $7.98, suggesting downside of -2.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: -0.3

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

Ord Minnett rates NXT as Hold (3) -

Macquarie Group's ((MQG)) Infrastructure & Real Assets has signed a deal to take control of AirTrunk, one of NextDC's main competitors in the wholesale data centre sector.

Ord Minnett believes this investment by MIRA bodes well for the Australian data centre industry, signalling confidence in demand.

The broker acknowledges the move could also be interpreted as suggesting greater confidence in AirTrunk's lower-cost operating model relative to NextDC's premium offering.

The potential pressure posed by AirTrunk leads the broker to maintain a Hold rating and $7 target.

Target price is $7.00 Current Price is $6.62 Difference: $0.38
If NXT meets the Ord Minnett target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $7.81, suggesting upside of 18.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.8

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

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

Morgan Stanley suspects the recent trends in packaging will continue amid concerns over Orora's North American performance. The broker continues to favour Amcor ((AMC)) in the sector.

Orora is expected to report a first half EBIT result of $177m, up 1%. Morgan Stanley lowers estimates by -3% across the forecast period to account for the top-line pressures in North America.

Equal-weight. Price target is raised to $3.30 from $3.00. Sector view is Cautious.

Target price is $3.30 Current Price is $3.22 Difference: $0.08
If ORA meets the Morgan Stanley target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $3.24, suggesting upside of 0.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.3

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

UBS rates SGM as Sell (5) -

Twitch prices have finally started to recover, which marks the first improvement in pricing since May 2019, UBS notes. The broker considers it too early to tell if prices will rally, although suggests the downside risk is limited.

The impact of structurally lower non-ferrous scrap prices on margins remains unknown and, therefore, UBS is wary of the earnings outlook. Sell rating and $8.05 target maintained.

Target price is $8.05 Current Price is $11.54 Difference: minus $3.49 (current price is over target).
If SGM meets the UBS target it will return approximately minus 30% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $10.09, suggesting downside of -12.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.0

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

Ord Minnett rates SVW as Resume coverage with Hold (3) -

Ord Minnett believes the WesTrac and Coates businesses should perform well given the company's exposure to both east and west coast construction.

The stock is trading above median forward EV/EBITDA and PE multiples of global peers and the broker resumes coverage with a Hold rating and $21 target.

Target price is $21.00 Current Price is $20.71 Difference: $0.29
If SVW meets the Ord Minnett target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $21.13, suggesting upside of 2.0% (ex-dividends)

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.8

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

UBS rates TWE as Buy (1) -

Nielsen data from the US indicates the company's December sales were weak, with volume sales down -3.5% in the month. Top brands fared better, up 0.2% year-on-year and an improvement vs November.

Overall, UBS found the data incrementally negative for the company's Americas business albeit consistent with expectations. UBS retains a Buy rating and a $20.50 target.

Target price is $20.50 Current Price is $17.28 Difference: $3.22
If TWE meets the UBS target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $19.00, suggesting upside of 9.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.5

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

Credit Suisse rates WES as Underperform (5) -

Credit Suisse downgrades earnings forecasts for the industrial and safety division, catching up with some commentary made by the company at the AGM. The broker calculates comparable store sales growth in the first half of 4% for Bunnings, 2% for Kmart and 1% for Target.

The broker believes the stock has a growth/valuation dilemma, finding it difficult to reconcile why the stock is more closely aligned with growth peers at a time when its earnings growth has slowed.

Credit Suisse does not dismiss the potential for Wesfarmers to use an under-geared balance sheet to acquire earnings but considers this a speculative argument rather than an investment case. The broker maintains an Underperform rating and raises the target to $32.51 from $32.16.

Target price is $32.51 Current Price is $43.37 Difference: minus $10.86 (current price is over target).
If WES meets the Credit Suisse target it will return approximately minus 25% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $35.13, suggesting downside of -19.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: -0.6

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

Macquarie rates WPL as Neutral (3) -

The Sangomar project phase 1 has received final approval from the Senegalese government and will move to execution and development. This is a major step forward for the company's growth strategy, suggests Macquarie.

De-risking Sangomar to a 75% risk weighting has increased Macquarie's target to $36 from $35. Still, the broker continues to envisage challenges for Woodside Petroleum in the medium term because of (the potential of) further delays to North West Shelf/Pluto. Neutral maintained.

Target price is $36.00 Current Price is $35.71 Difference: $0.29
If WPL meets the Macquarie target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $36.36, suggesting upside of 1.8% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY19:

Forecast for FY20:

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

Market Sentiment: 0.4

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

UBS rates Z1P as Buy (1) -

The trading update for the second quarter revealed active customer numbers that were ahead of UBS estimates. Quarterly active customer growth was 336,000, split between Australia and New Zealand.

Revenue yield fell to 16.2% vs 16.8% in the first quarter, which UBS suspects was partly because of the timing of the Partpay acquisition as well as Christmas sales.

The company is targeting an exit run rate in FY20 of $2.2bn in transaction volumes and 2.25m active customers. Buy rating and $4.80 target.

Target price is $4.80 Current Price is $3.63 Difference: $1.17
If Z1P meets the UBS target it will return approximately 32% (excluding dividends, fees and charges).

Current consensus price target is $4.16, suggesting upside of 14.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.5

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