Australian Broker Call

Macquarie rates AZJ as Neutral (3) -

The Queensland Competition Authority has accepted the company's undertaking and will now implement UT5. Macquarie assesses Aurizon is entering a positive upgrade cycle in FY20 but there is still uncertainty over the sustainability of earnings in FY21.

FY22, meanwhile, will be affected by UT6. Without structural changes, or movement in bonds, the broker expects flat earnings in the ensuing five years.

Macquarie maintains a Neutral rating and reduces the target to $4.35 from $4.45.

Target price is $4.35 Current Price is $4.74 Difference: minus $0.39 (current price is over target).
If AZJ meets the Macquarie target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.45, suggesting downside of -6.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.0

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

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

First half results were in line and distribution guidance is reiterated at $0.09 per security. Morgans notes some good leasing activity during the half.

The company offers exposure to east coast office/industrial property with weighted average rent reviews around 3.3% per annum. Morgans updates forecasts to account for new industrial developments and does not assume any divestments.

The broker moves to FY21 as a base year for capturing the income from developments. Given the strong appreciation in the security the broker downgrades to Hold from Add. Target is raised to $1.35 from $1.29.

Target price is $1.35 Current Price is $1.37 Difference: minus $0.02 (current price is over target).
If GDF meets the Morgans target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.0

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

Ord Minnett rates HVN as Hold (3) -

A trek through Harvey Norman's stores in Singapore and Malaysia has left the broker more confident in the company's growth plans, leading to an increase in forecast earnings. Target rises to $3.75 from $3.50.

Hold retained on the balance of the challenges being faced by the key Australian franchises.

Target price is $3.75 Current Price is $3.84 Difference: minus $0.09 (current price is over target).
If HVN 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 $3.70, suggesting downside of -3.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.0

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

Citi rates MHJ as Neutral (3) -

We missed this update during reporting season, but that's hereby corrected: the interim report has triggered minor increases to Citi's forecasts, which pushes up the price target to 64c from 63c.

Now that prior growth avenues through Emma and Roe and the US market have been abandoned, Citi analysts fret about what exactly can be expected from mature core markets in Australia, New Zealand and Canada in terms of sustainable growth?

Neutral rating retained, while potential upside is seen through management's turnaround efforts.

Target price is $0.64 Current Price is $0.79 Difference: minus $0.15 (current price is over target).
If MHJ meets the Citi target it will return approximately minus 19% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $0.76, suggesting downside of -4.2% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.8

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

Morgan Stanley rates MYO as Underweight (5) -

MYOB has disclosed a request from substantial shareholder, Manikay, that the board reconsider the bid from private equity. This is on the basis of the improved equity and financial markets since the reduced bid of $3.40.

Manikay's stated valuation is over $4 per share. Morgan Stanley notes the 10% stake the new shareholder holds is not sufficient to block a vote, so it would be dependent on eliciting support from others.

This does not change the broker's view that this business is structurally challenged and risks are to the downside.

Underweight rating retained. Price target is $2.80. Industry View is Attractive.

Target price is $2.80 Current Price is $3.39 Difference: minus $0.59 (current price is over target).
If MYO meets the Morgan Stanley target it will return approximately minus 17% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.23, suggesting downside of -4.7% (ex-dividends)

The company's fiscal year ends in December.

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

Citi rates MYR as Sell (5) -

First half results were better than expected because of the improved gross margin, amid reduced discounting intensity and lower operating costs. Citi believes this is not a path to sustainable sales growth.

The broker notes operating leverage is high, resulting in large earnings upgrades from relatively small changes in the gross margin and cost outlook.

The broker upgrades FY19 estimates for earnings (EBIT) by 16%. Target is raised to $0.44 from $0.36 but Citi maintains a Sell rating, continuing to find medium-term earnings and covenant pressure.

Target price is $0.44 Current Price is $0.47 Difference: minus $0.03 (current price is over target).
If MYR meets the Citi target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $0.45, suggesting downside of -3.5% (ex-dividends)

The company's fiscal year ends in July.

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

Credit Suisse rates MYR as Underperform (5) -

First half results were in line and Credit Suisse notes profit and cash flow stabilised. Still, sales growth is being driven entirely by the online channel and total sales revenue declined.

Management has also acknowledged the probability that store-based sales will continue to decline over the longer term. The business will attempt to maintain profitability by reducing space and improving the supply chain and operations.

Hence, the broker finds it hard to tell whether the market is more enthusiastic about the company because of an in-line result or the confidence expressed by management in driving its productivity agenda.

Credit Suisse maintains an Underperform rating and raises the target to $0.44 from $0.31.

Target price is $0.44 Current Price is $0.47 Difference: minus $0.03 (current price is over target).
If MYR meets the Credit Suisse target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $0.45, suggesting downside of -3.5% (ex-dividends)

The company's fiscal year ends in July.

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

Deutsche Bank rates MYR as Upgrade to Hold from Sell (3) -

Deutsche Bank found some positive signs in the Myer first half result. Operating costs declined and sales trends improved.

The broker still believes the business is challenged and remains unconvinced that sales and gross margin can move in the right direction at the same time.

Still, the risk/reward is more balanced and the rating is upgraded to Hold from Sell. Target is raised to $0.50 from $0.36.

Target price is $0.50 Current Price is $0.47 Difference: $0.03
If MYR meets the Deutsche Bank target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $0.45, suggesting downside of -3.5% (ex-dividends)

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 MYR as Neutral (3) -

First half underlying net profit was ahead of Macquarie's expectations. The gross profit margin improved and the broker was pleased with the cost reduction efforts.

Given a highly competitive and challenging category, the broker still envisages risks to sales. Sales growth remains negative, with first half like-for-like declines of -2.3%.

Macquarie maintains a Neutral rating and raises the target to $0.45 from $0.39.

Target price is $0.45 Current Price is $0.47 Difference: minus $0.02 (current price is over target).
If MYR meets the Macquarie target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $0.45, suggesting downside of -3.5% (ex-dividends)

The company's fiscal year ends in July.

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 MYR as Lighten (4) -

Myer's result beat the broker, driven by a better sales performance and higher gross margins. However the broker notes the retailer was cycling a weak prior period.

The broker remains uncertain over further improvement in sales and the transition to new brands and more exclusive brands, as well as costs and store network optimisation. Given the risks, current valuation does not offer support. Lighten retained. Target price rises to 42c from 40c.

Target price is $0.42 Current Price is $0.47 Difference: minus $0.05 (current price is over target).
If MYR meets the Ord Minnett target it will return approximately minus 11% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $0.45, suggesting downside of -3.5% (ex-dividends)

The company's fiscal year ends in July.

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

UBS rates MYR as Neutral (3) -

First half earnings were in line with UBS estimates. The broker found the reduced discounting and increase in gross margins positive, while the negatives included a softer outlook on sales and near-term cost growth, amid increased investment.

UBS cuts FY19-21 estimates for earnings per share by -6-14%. The broker maintains a Neutral rating and raises the target to $0.47 from $0.38.

Target price is $0.47 Current Price is $0.47 Difference: $0
If MYR meets the UBS target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $0.45, suggesting downside of -3.5% (ex-dividends)

The company's fiscal year ends in July.

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

Citi rates OZL as Buy (1) -

The scoping study has proposed an increase to Carrapateena copper production to 105-125,000tpa after 2026 by expanding the sub-level cave operation to a larger block cave.

The expansion, although modestly accretive, would make Carrapateena a more strategically significant mine, Citi believes. A final decision will be made in 2021.

There is also potential to grow production by bringing in ore from regional deposits. Citi maintains a Buy rating and $12.50 target.

Target price is $12.50 Current Price is $10.31 Difference: $2.19
If OZL meets the Citi target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $11.21, suggesting upside of 8.8% (ex-dividends)

The company's fiscal year ends in December.

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

Credit Suisse rates OZL as Underperform (5) -

Credit Suisse notes the company has deferred lower-grade opportunities for a future review, with the Carrapateena expansion scoping study signalling a preferred option in converting the lower-risk, albeit higher cost, sub-level cave to a block cave.

Headline expenditure is above expectations and Credit Suisse believes it is too early to pay fully for the opportunity, although the announcement is a step towards development of the province.

The broker maintains an Underperform rating and raises the target to $9.50 from $9.00.

Target price is $9.50 Current Price is $10.31 Difference: minus $0.81 (current price is over target).
If OZL meets the Credit Suisse target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $11.21, suggesting upside of 8.8% (ex-dividends)

The company's fiscal year ends in December.

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 OZL as Outperform (1) -

Macquarie is encouraged by the economics of the Carrapateena expansion study. The increased production, due mid next decade, will more than offset the decline in output that is forecast from Prominent Hill.

Project completion and first production is on schedule for the fourth quarter of 2019. Updated expansion or development studies on all of the remaining core projects are expected during 2019.

Macquarie maintains an Outperform rating and $12 target.

Target price is $12.00 Current Price is $10.31 Difference: $1.69
If OZL meets the Macquarie target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $11.21, suggesting upside of 8.8% (ex-dividends)

The company's fiscal year ends in December.

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

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

Morgan Stanley believes the capital expenditure of $1-1.3bn on the Carrapateena expansion is considerable when viewed in light of the production uplift and reduction in operating costs.

The broker acknowledges the expansion is at an early stage and there are options in the region yet to be assessed. Potentially, the expansion could enable future add-on block caves and incorporate regional deposits.

Equal-Weight rating and $11 target. Industry view is Attractive.

Target price is $11.00 Current Price is $10.31 Difference: $0.69
If OZL meets the Morgan Stanley target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $11.21, suggesting upside of 8.8% (ex-dividends)

The company's fiscal year ends in December.

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

UBS rates OZL as Buy (1) -

UBS assesses, from the scoping study, that the transition to a block cave from a sub-level cave in order to mine the lower half of the Carrapateena ore body is accretive. The broker believes the plan and sequencing makes sense.

UBS suspects investors will be reluctant to include value upfront and will look, instead, for milestones such as first production in the fourth quarter of 2019. Buy rating and $12 target maintained.

Target price is $12.00 Current Price is $10.31 Difference: $1.69
If OZL meets the UBS target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $11.21, suggesting upside of 8.8% (ex-dividends)

The company's fiscal year ends in December.

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 TPE as Upgrade to Add from Hold (1) -

2018 results were below expectations and guidance. Profit was affected by several negative items including lower capacity utilisation, softer manufacturing throughput and inadequate staffing, Morgans observes.

Nevertheless, the company appears to be making progress and was profitable in the fourth quarter and the broker also expects volume gains to continue and further operating efficiencies to drive profitable growth.

While 2019-21 forecasts are lowered the broker's estimates for earnings remain in the black.

Rating is upgraded to Add from Hold and Morgans considers the current trading levels attractive for more speculative investors. Target is reduced to $1.31 from $1.71.

Target price is $1.31 Current Price is $1.05 Difference: $0.26
If TPE meets the Morgans target it will return approximately 25% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

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