Australian Broker Call

Ord Minnett rates ALL as Accumulate (2) -

The company is due to report first half results on May 24 and Ord Minnett expects net profit to be up 19.9%. The broker notes Aristocrat has significantly increased digital exposures, developing titles for both land-based and digital platforms.

Further capital management opportunities are considered to be available, coupled with strong execution and a scarcity of earnings growth in the market. Accumulate rating and target is raised to $29.00 from $27.50.

Target price is $29.00 Current Price is $28.16 Difference: $0.84
If ALL meets the Ord Minnett target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $29.65, suggesting upside of 5.3% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.7

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

Morgan Stanley rates AMP as Upgrade to Overweight from Equal-weight (1) -

Morgan Stanley believes AMP offers deep value and a potential path to rebuilding its brand. Elevated uncertainty, fear and speculation around the future of the company's business model appear overdone to the broker.

Morgan Stanley believes the company's resilience will likely surprise and upgrades to Overweight from Equal-weight. Target is reduced to $4.50 from $5.75. Industry view: In line.

Target price is $4.50 Current Price is $4.02 Difference: $0.48
If AMP meets the Morgan Stanley target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $4.37, suggesting upside of 8.7% (ex-dividends)

The company's fiscal year ends in December.

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

Ord Minnett rates ANN as Accumulate (2) -

Ord Minnett is increasingly confident in the outlook because of the economic conditions, stable input prices and potential for the company to deliver gains in market share from distributor partnerships.

The broker also envisages potential for M&A from an under utilised balance sheet. The transformation program is expected to weigh on reported results but the promised savings are expected to become apparent in the FY18 result.

Accumulate retained. Target is raised to $29.00 from $26.80.

Target price is $29.00 Current Price is $26.50 Difference: $2.5
If ANN meets the Ord Minnett target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $25.97, suggesting downside of -2.0% (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: 0.3

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

UBS rates BHP as Buy (1) -

UBS believes the company is the best positioned of the diversified miners and has a compelling valuation. It is currently trading at a -15-20% discount to Rio Tinto ((RIO)). Valuations are expected to converge over the next 12 months as BHP lifts returns to shareholders materially, the first time this cycle.

Over time, the broker envisages potential for BHP to again trade at a premium to Rio Tinto given its superior organic growth options. UBS maintains a Buy rating and raises the target to $36 from $34.

Target price is $36.00 Current Price is $33.71 Difference: $2.29
If BHP meets the UBS target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $33.12, suggesting downside of -1.8% (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: 0.8

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

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

In the wake of the company's upgrade to FY18 guidance Morgan Stanley envisages the stock will continue to trade towards its bull case. The upgrade was higher than expected and the broker was surprised by the low growth in costs and R&D expense in the first half.

R&D expenditure is expected to increase in FY19. Still, Morgan Stanley expects the stock to deliver solid growth through FY19 in a market where growth is scarce.

Equal-weight rating. In-Line industry view. Target is raised to $166 from $155.

Target price is $166.00 Current Price is $184.33 Difference: minus $18.33 (current price is over target).
If CSL meets the Morgan Stanley target it will return approximately minus 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $188.69, suggesting upside of 2.4% (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 CTD as Overweight (1) -

The company's growth has exceeded expectations since its IPO in 2010 yet the market share is small and the market is highly fragmented. Morgan Stanley believes the main debate is how the model is now scaled and envisages scale can be delivered in 4-5 years via technology, capital and M&A.

The broker forecasts $300m in operating earnings in FY25 but assumes no M&A and inefficient capital management in its estimates. Morgan Stanley reiterates an Overweight rating, In-Line industry view and raises the target to $31 from $27.

Target price is $31.00 Current Price is $25.71 Difference: $5.29
If CTD meets the Morgan Stanley target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $26.29, suggesting upside of 2.3% (ex-dividends)

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

Credit Suisse rates ECX as Outperform (1) -

Credit Suisse is firmly of the view that the de-rating of the company over the past six months is overdone. Earnings are growing, operating conditions are stable and the momentum is positive.

The broker acknowledges that, like many small cap diversified financials, the risks associated with the business can limit the upper PE multiple the stock can achieve. At a 12.5x 12-month forward PE the stock is considered cheap.

Outperform rating retained. Target is reduced to $4.10 from $4.50.

Target price is $4.10 Current Price is $3.42 Difference: $0.68
If ECX meets the Credit Suisse target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $4.42, suggesting upside of 29.2% (ex-dividends)

The company's fiscal year ends in September.

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

Macquarie rates LLC as Outperform (1) -

Despite the recent bid loss on the Singapore project Holland Park, the company remains committed to growing in the region and disciplined on price, Macquarie observes.

The broker attended a briefing of the company's Asian division and notes that the company wants to have four large projects underway at any one time in the region and there are six government sites in the market for developer allocation in the next 12-24 months.

Outperform and $18.30 target retained.

Target price is $18.30 Current Price is $18.25 Difference: $0.05
If LLC meets the Macquarie target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $18.23, suggesting downside of -0.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.4

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

Ord Minnett rates PNI as Downgrade to Hold from Buy (3) -

The company has outperformed recently and, while Ord Minnett understands newly-formed boutiques are performing well, current pricing appears to be offering little margin of safety.

The broker upgrades assumed funds under management for Firetrail but pairs back those for most other boutiques following a soft investment performance in the third quarter. While remaining positive on the stock Ord Minnett considers the price full and downgrades to Hold from Buy. Target price reduced to $5.19 from $5.31.

Target price is $5.19 Current Price is $5.24 Difference: minus $0.05 (current price is over target).
If PNI meets the Ord Minnett 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 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

Macquarie rates PNL as Outperform (1) -

The company has raised $30.2m from an underwritten placement and entitlement offer. The development plan has been revised to meet new regulations, with additional soil stabilisation required following recent slope failure at a nearby mine. This has necessitated raising additional equity.

Macquarie continues to believe the medium-term earnings profile and cash flow from Poplar Grove remain robust. Outperform rating, and target reduced to $0.30 from $0.60.

Target price is $0.30 Current Price is $0.25 Difference: $0.05
If PNL meets the Macquarie target it will return approximately 20% (excluding dividends, fees and charges).

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: 1.0

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

Morgans rates SKI as Add (1) -

The regulator has released the final decision regarding Transgrid regulated revenue for the five-year period from July 2018. While important for Transgrid, Morgans notes the result is not significant for Spark Infrastructure as it has only a 15% equity interest relative to its 49% stakes in VPN and SAPN.

The broker points out the company has previously indicated it intends releasing distribution guidance for 2019 at its results in February 2019. Thus, Morgans expects no meaningful update at the upcoming AGM on May 24.

The broker retains an Add rating, based on the sector-high yield of 7.4% and high quality assets, as well as takeover potential. Target is reduced to $2.57 from $2.54.

Target price is $2.57 Current Price is $2.22 Difference: $0.35
If SKI meets the Morgans target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $2.56, suggesting upside of 15.5% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.4

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

Macquarie rates STO as Neutral (3) -

As expected, Harbour Energy issued a revised proposal, increasing the offer to US$5.21 a share. This remains conditional on the company entering additional hedging in 2018/19. The offer could reach $7.00 if hedging is also undertaken in 2020.

Macquarie suggests, with conditions aplenty, undertaking hedging before FIRB approval could mean shareholders are stuck with less oil exposure if approval is not forthcoming.

The broker suspects the board may agree to enter into a scheme of arrangement and leave the decision up to shareholders at a vote later this year. Neutral and $6.30 target retained.

Target price is $6.30 Current Price is $6.44 Difference: minus $0.14 (current price is over target).
If STO meets the Macquarie target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.73, suggesting downside of -11.0% (ex-dividends)

The company's fiscal year ends in December.

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: 0.0

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

UBS rates SVW as Buy (1) -

The company held its investor briefing, showcasing WesTrac WA facilities and Coates Hire operations. The company also reiterated its recent upgrade to FY18 earnings guidance, expecting growth of 20-25%.

UBS expects double-digit earnings growth as the mining maintenance and infrastructure capital expenditure cycles strengthen. Buy rating maintained. Target is $22.55.

Target price is $22.55 Current Price is $19.99 Difference: $2.56
If SVW meets the UBS target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $20.91, suggesting upside of 4.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.9

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

UBS rates TLS as Neutral (3) -

UBS believes escalating competition and debt constraints have worsened and Telstra can no longer support its "A" credit rating. Potential remedies all have drawbacks yet, assuming the company acts to limit the credit rating downside, progressive cuts to the dividend from FY20 are probably required.

UBS assumes the dividend holds at $0.22 for FY18-19 and then drops to $0.18 in FY20 and $0.14 in FY21-22. The broker acknowledges these forecasts remain subject to any initiatives the company announces at its upcoming strategy briefing. Target is reduced to $2.80 from $3.10. Neutral rating maintained.

Target price is $2.80 Current Price is $2.74 Difference: $0.06
If TLS meets the UBS target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $3.36, suggesting upside of 22.4% (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

Citi rates WPL as Sell (5) -

Citi calculates that an oil price of US$69/bbl into perpetuity is required to justify the prevailing share price. Considering this is not too far away from most investor long-term views on oil the broker considers the stock priced to perfection.

Hence, Citi looks for Woodside to provide clarity at its investor briefing on May 23 regarding LNG expansion, re-pricing of Pluto LNG, Corpus Christi and exploration guidance. Sell rating and $28.68 target maintained.

Target price is $28.68 Current Price is $34.21 Difference: minus $5.53 (current price is over target).
If WPL meets the Citi target it will return approximately minus 16% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $31.31, suggesting downside of -8.5% (ex-dividends)

The company's fiscal year ends in December.

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: 0.0

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

Morgan Stanley rates WTC as Overweight (1) -

The company has issued $100m in new shares to Capital Group's Smallcap World Fund at $13.30 a share. The funds are to be used to strengthen the balance sheet and accelerate long-term growth.

Morgan Stanley observes this is a continuation of the existing strategy, with a potential step up in pace. Overweight maintained. Industry view: Attractive. Target is $15.

Target price is $15.00 Current Price is $14.38 Difference: $0.62
If WTC meets the Morgan Stanley target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $12.00, suggesting downside of -16.5% (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