Australian Broker Call

Credit Suisse rates AUB as Outperform (1) -

Credit Suisse adjusts its view around domestic premium rate increases, raising estimates to 3-5% in 2017, up from a previous increase estimate of 1-3%. This is being driven by increased confidence that commercial lines can achieve premium rate changes at the top end of this range.

Following a strong increase in the share price, Credit Suisse suspects many investors will be concerned they have missed out.

However, the stock has unwound the price/earnings de-rating received during the soft market of recent years and the broker believes earnings risk is to the upside, and this could drive the share price higher over 2017.

Outperform retained. Target rises to $14.70 from $12.00.

Target price is $14.70 Current Price is $13.40 Difference: $1.3
If AUB meets the Credit Suisse target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $13.35, suggesting downside of -0.7% (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

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

Ord Minnett expects the trust to maintain its current distribution over FY18 and FY19 despite the elevated risks following the announcement that Bunnings will vacate several assets to backfill former Masters stores.

The broker believes occupancy is holding up well and there is minimal downward pressure on rents, which should be offset by underlying income growth.

These factors mean the broker believes there is minimal risk to the distribution and raises its recommendation to Hold from Lighten. Target rises to $3.10 from $2.85.

Target price is $3.10 Current Price is $2.98 Difference: $0.12
If BWP meets the Ord Minnett target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $2.75, suggesting downside of -7.3% (ex-dividends)

The company's fiscal year ends in June.

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

UBS rates HGG as Buy (1) -

Following the completion of the merger with Janus the company will de-list from the London Stock Exchange. UBS moves coverage to the new entity on the New York Stock Exchange, with code JHG.

As a result, forecasts shift from a stand-alone basis to the combined entity and US accounting standards. This means the outer year forecasts for earnings per share lift 10%, to reflect the merger accretion.

The benefit has already been allowed for in the price target, which shifts to US$35.25 from GBP2.75. The broker retains a Buy rating.

Current Price is $41.30. Target price not assessed.

Current consensus price target is $41.20, suggesting downside of -0.2% (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: 0.3

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

Credit Suisse rates IAG as Upgrade to Outperform from Neutral (1) -

Credit Suisse adjusts its view around domestic premium rate increases, raising estimates to 3-5% in 2017, up from a previous increase estimate of 1-3%. This is being driven by increased confidence that commercial lines can achieve premium rate changes at the top end of this range.

Credit Suisse elevates the stock to its top pick, upgrading to Outperform from Neutral. Insurance Australia Group offers the most outer-year earnings upside risk, in the broker's opinion, with actions being taken to correct the insurance margin and protect the balance sheet.

While the stock has outperformed the market by around 5% recently the broker does not believe all upside is factored in. Target is raised to $6.90 from $6.05.

Target price is $6.90 Current Price is $6.23 Difference: $0.67
If IAG meets the Credit Suisse target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $6.18, suggesting downside of -2.5% (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 ILU as Neutral (3) -

The broker notes the improved sentiment around the mineral sands market since the start of 2017, following years of stagnation. Credit Suisse believes momentum has been on the company's side, with the share price up around 28% in the year to date.

The broker calculates that, as a result, plenty is priced in and there is limited valuation upside. On Credit Suisse's revised pricing EBITDA estimates increase 17% and 63% for 2017 and 2018 respectively.

Neutral retained. Target rises to $9.40 from $7.30.

Target price is $9.40 Current Price is $9.21 Difference: $0.19
If ILU meets the Credit Suisse target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $8.40, suggesting downside of -8.8% (ex-dividends)

The company's fiscal year ends in December.

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 ISD as Outperform (1) -

Macquarie analyses newly available financial information from the company's media intelligence peers, including Meltwater. Despite a precarious funding position, Meltwater remains highly competitive in Australasia over the first half.

The broker observes Isentia has the best earnings growth track record of the peers examined and there are some early positive signs that are emerging, suggesting the Australasian business could be turning a corner.

Macquarie envisages value in the stock, but with two earnings downgrades in three months suspects it will take time for this to be realised. Target is reduced to $2.10 from $2.36. Outperform retained.

Target price is $2.10 Current Price is $1.73 Difference: $0.37
If ISD meets the Macquarie target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $2.03, suggesting upside of 17.9% (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

Citi rates OSH as Neutral (3) -

Citi increases its estimates of exploration spending by US$20m for 2017 to account for the disclosure that the company will fulfill seismic commitments for the farm-in to the Exxon acreage in PNG.

No changes to earnings estimates are made as this additional expenditure will be capitalised. Neutral rating and $7.19 target retained.

Target price is $7.19 Current Price is $7.23 Difference: minus $0.04 (current price is over target).
If OSH 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 $7.99, suggesting upside of 11.5% (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: 0.6

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

Credit Suisse rates SDF as Outperform (1) -

Credit Suisse adjusts its view around domestic premium rate increases, raising estimates to 3-5% in 2017, up from a previous increase estimate of 1-3%. This is being driven by increased confidence that commercial lines can achieve premium rate changes at the top end of this range.

The stock has experienced a strong run recently and, while the price/earnings premium is starting to get full, Credit Suisse notes the company still has over $100m in head room for debt that supports a higher price/earnings ratio.

If most initiatives go to plan, combined with a more favourable premium rate environment, the broker believes the earnings growth opportunity could be significant in FY19/20. Outperform retained. Target rises to $3.10 from $2.60.

Target price is $3.10 Current Price is $2.72 Difference: $0.38
If SDF meets the Credit Suisse target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $2.77, suggesting upside of 1.7% (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

Citi rates SEH as Buy (1) -

The company has received its share of revenue from prior production from the Sanjiaobei PSC amounting to US$1m.

Citi observes, while only small, the delayed payments have overhung the stock, given the market's perception the company has limited negotiating leverage in China.

This perception may not change immediately but the broker expects that regular quarterly payments and a ramp up in production to target should help. Buy, High Risk retained. Target is $0.17.

Target price is $0.17 Current Price is $0.09 Difference: $0.08
If SEH meets the Citi target it will return approximately 89% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

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 SIG as Upgrade to Outperform from Neutral (1) -

Credit Suisse observes the current legal proceedings with Chemist Warehouse present the company with inherent challenges based on the size of the contract.

While this risk remains, the broker believes the current share price is factoring in a worst-case scenario and this ignores any working capital release from total contract loss and the potential to re-invest this in accretive acquisitions.

As a result, Credit Suisse upgrades to Outperform from Neutral. Target is reduced to $0.90 from $1.20.

Target price is $0.90 Current Price is $0.80 Difference: $0.1
If SIG meets the Credit Suisse target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $0.79, suggesting downside of -0.6% (ex-dividends)

The company's fiscal year ends in January.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.5

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

Credit Suisse rates SUN as Downgrade to Neutral from Outperform (3) -

Credit Suisse adjusts its view around domestic premium rate increases, raising estimates to 3-5% in 2017, up from a previous increase estimate of 1-3%. This is being driven by increased confidence that commercial lines can achieve premium rate changes at the top end of this range.

FY17 earnings remain well protected from unpredictable weather events, Credit Suisse believes, but uncertainty into FY18 has increased in recent months after a period of outperformance.

With the closing of the valuation gap relative to peers, the broker downgrades to Neutral from Outperform. Target is raised to $14.50 from $14.20.

Target price is $14.50 Current Price is $13.95 Difference: $0.55
If SUN meets the Credit Suisse target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $13.77, suggesting downside of -0.2% (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

Morgans rates VHT as Add (1) -

The company posted a net loss of NZ$9.6m for FY17, slightly weaker than Morgans expected. As of March 31 the company has signed 14 software-as-a-service contracts.

The total contract value signed in FY17 was NZ$4.1m versus NZ$2.5m in FY16. Morgans adjusts forecasts for accounting changes and rolling forward its model.

The company has recently announced the commercial launch of VolparaEnterprise, an enhanced version of its cloud-based imaging analytics platform which the broker believes will encourage greater adoption by customers.

Add rating maintained. Target is reduced to $0.81 from $0.87.

Target price is $0.81 Current Price is $0.35 Difference: $0.46
If VHT meets the Morgans target it will return approximately 131% (excluding dividends, fees and charges).

The company's fiscal year ends in March.

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

Morgans rates VLW as Add (1) -

The company is seeking to issue 500,000 unsubordinated, unsecured senior bonds at $100, raising $50m.

Morgans observes the bonds will provide investors with portfolio diversification as a senior corporate bond with floating-rate coupons. The company develops and markets residential land and house & land estates on Australia's east coast.

Add rating and $2.83 target retained.

Target price is $2.83 Current Price is $2.33 Difference: $0.5
If VLW meets the Morgans target it will return approximately 21% (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

Macquarie rates WES as Outperform (1) -

The company has announced three senior executive appointments as part of the leadership transition for FY18. Macquarie observes changes in a management team are a risk in the face of the soft outlook for Australian retail.

The broker expects new management will act decisively on strategy and optimising the portfolio to ensure the next five years continue to deliver growth and improve returns.

The broker believes the growth outlook is robust at around 11% compound out to FY19 with a forecast dividend yield of 5.7% in FY18. Outperform rating and $45 target retained.

Target price is $45.00 Current Price is $42.55 Difference: $2.45
If WES meets the Macquarie target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $42.49, suggesting upside of 0.8% (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 Hold (3) -

Ord Minnett observes the company is undergoing significant leadership changes in a short time, with the group finance director to step down later this year and new managing directors of both the industrials division and Bunnings being appointed.

The broker believes the stepping down of finance director Terry Bowen is a negative, as he has been well known and respected by investors for a focus on cash flow and working capital management.

Hold rating and $45 target retained.

Target price is $45.00 Current Price is $42.55 Difference: $2.45
If WES meets the Ord Minnett target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $42.49, suggesting upside of 0.8% (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