Australian Broker Call

UBS rates ANZ as Neutral (3) -

Having placed all ratings and price targets under review prior to the RBA rate cut, UBS analysts have now responded by reducing earnings estimates and price targets across the sector. National Australia Bank is the only bank that does not see its price target decline (zero change).

UBS is anticipating yet another -25bp rate cut from the RBA in April. Next step is, potentially, quantitative easing if the domestic economy deteriorates further. The banks will lower deposit rates, but UBS confidently predicts this won't be sufficient to offset downward pressure on the net interest margin (NIM).

UBS suggests investors should remain cautious towards the sector, arguing current share price weakness is a reflection of the new reality for the sector. Price target for ANZ Bank loses -$1.50 to $24. Neutral rating retained.

Target price is $24.00 Current Price is $23.15 Difference: $0.85
If ANZ meets the UBS target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $25.98, suggesting upside of 12.2% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.1

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

Morgan Stanley rates APE as Overweight (1) -

Morgan Stanley re-sets its base in the wake of the results. While the outlook is unclear, the broker believes the company is delivering on what it can control.

The magnitude of the deceleration in profits from missed incentives and lower volumes provides some indication of the quantum of upside once conditions stabilise and recover, the report suggests.

Overweight maintained. Target is reduced to $11.00 from $13.50. Industry view: In-Line.

Target price is $11.00 Current Price is $8.29 Difference: $2.71
If APE meets the Morgan Stanley target it will return approximately 33% (excluding dividends, fees and charges).

Current consensus price target is $10.30, suggesting upside of 24.2% (ex-dividends)

The company's fiscal year ends in December.

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 BEN as Sell (5) -

Having placed all ratings and price targets under review prior to the RBA rate cut, UBS analysts have now responded by reducing earnings estimates and price targets across the sector. National Australia Bank is the only bank that does not see its price target decline (zero change).

UBS is anticipating yet another -25bp rate cut from the RBA in April. Next step is, potentially, quantitative easing if the domestic economy deteriorates further. The banks will lower deposit rates, but UBS confidently predicts this won't be sufficient to offset downward pressure on the net interest margin (NIM).

UBS suggests investors should remain cautious towards the sector, arguing current share price weakness is a reflection of the new reality for the sector. For Bendalaide Bank the reduced forecasts translate into a price target cut to $8.25 from $9. Sell.

Target price is $8.25 Current Price is $8.54 Difference: minus $0.29 (current price is over target).
If BEN 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 $8.97, suggesting upside of 5.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: -1.0

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

Ord Minnett rates BHP as Upgrade to Accumulate from Hold (2) -

The company's share price is down -17% since the peak on January 20, amid significant uncertainty about how coronavirus will spread and the duration of the impact.

Ord Minnett takes the view that, by mid-year, the market will look through the economic impact and this should drive a re-rating for some of the miners.

Following the correction, BHP Group's valuation metrics appear compelling and the broker upgrades to Accumulate from Hold. Target is $42.

Target price is $42.00 Current Price is $33.67 Difference: $8.33
If BHP meets the Ord Minnett target it will return approximately 25% (excluding dividends, fees and charges).

Current consensus price target is $39.75, suggesting upside of 18.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

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

Market Sentiment: 0.2

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

UBS rates BOQ as Neutral (3) -

Having placed all ratings and price targets under review prior to the RBA rate cut, UBS analysts have now responded by reducing earnings estimates and price targets across the sector. National Australia Bank is the only bank that does not see its price target decline (zero change).

UBS is anticipating yet another -25bp rate cut from the RBA in April. Next step is, potentially, quantitative easing if the domestic economy deteriorates further. The banks will lower deposit rates, but UBS confidently predicts this won't be sufficient to offset downward pressure on the net interest margin (NIM).

UBS suggests investors should remain cautious towards the sector, arguing current share price weakness is a reflection of the new reality for the sector. For Bank of Queensland the reduced forecasts translate into a price target cut to $7.50 from $8.25. Neutral.

Target price is $7.50 Current Price is $7.14 Difference: $0.36
If BOQ meets the UBS target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $7.73, suggesting upside of 8.2% (ex-dividends)

The company's fiscal year ends in August.

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 BSL as Accumulate (2) -

Ord Minnett notes, in China, 90% of people are back at work within BlueScope Steel's business. Supply chains are building to full capacity.

Still, there remains a question of how the steel industry will deal with the inventory build from a logistics point of view. The only other market affected for the company is Vietnam.

There has been no impact on demand for Australian steel products from the coronavirus outbreak. The main issue is whether there will be an impact on price. Accumulate rating and $16 target maintained.

Target price is $16.00 Current Price is $11.66 Difference: $4.34
If BSL meets the Ord Minnett target it will return approximately 37% (excluding dividends, fees and charges).

Current consensus price target is $14.51, suggesting upside of 24.4% (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

Ord Minnett rates CBA as Lighten (4) -

The major banks have responded by passing through the full reduction in the cash rate to mortgage rates. Ord Minnett had assumed the banks would hold back more than one third of any reduction and estimates the full passing through of the 25 basis points will reduce major bank net profits by -3-4%.

The broker suspects the Reserve Bank will cut again in April. Ord Minnett also increases estimates for the bad and doubtful debts for Commonwealth Bank and reduces the buyback to $6bn from $7bn. Lighten maintained. Target is reduced to $74.20 from $78.20.

Target price is $74.20 Current Price is $76.92 Difference: minus $2.72 (current price is over target).
If CBA 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 $74.26, suggesting downside of -3.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: -1.0

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

UBS rates CBA as Sell (5) -

Having placed all ratings and price targets under review prior to the RBA rate cut, UBS analysts have now responded by reducing earnings estimates and price targets across the sector. National Australia Bank is the only bank that does not see its price target decline (zero change).

UBS is anticipating yet another -25bp rate cut from the RBA in April. Next step is, potentially, quantitative easing if the domestic economy deteriorates further. The banks will lower deposit rates, but UBS confidently predicts this won't be sufficient to offset downward pressure on the net interest margin (NIM).

UBS suggests investors should remain cautious towards the sector, arguing current share price weakness is a reflection of the new reality for the sector. CommBank's price target loses -5% to $71. Dividend forecast for FY20 has been lowered to $3.72. Sell rating retained.

Target price is $71.00 Current Price is $76.92 Difference: minus $5.92 (current price is over target).
If CBA meets the UBS target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $74.26, suggesting downside of -3.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: -1.0

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

UBS rates CSL as Buy (1) -

In terms of the coronavirus implications for CSL, there are a number of unknowns but two issues stand out for UBS.

Albumin sales in China, which represent around 8% of Behring, could be delayed as the physical distribution of product from ports to hospitals is hampered. This is likely to be temporary, assuming additional regions are not subject to quarantine.

The other aspect is that the US supplies around 75% of global plasma and a pandemic could affect the ability of people to donate.

Given that the only recent precedents were swine flu cases, where around 20% of the population was affected, this had no discernible impact on donated volume.

Buy rating and $365 target maintained.

Target price is $365.00 Current Price is $305.10 Difference: $59.9
If CSL meets the UBS target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $326.39, suggesting upside of 7.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

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 DUB as Hold (3) -

First half results were in line with expectations. Morgans would prefer to accumulate the stock once there is greater confidence in the trajectory of key partner sales, specifically the Cisco and AT&T relationships.

The company continued to add quality names to its customers over the first half, including Sprint and Telstra ((TLS)). However, conversion to active customers remains slower than Morgans would have liked.

Hold maintained. Target is reduced to $1.03 from $1.15.

Target price is $1.03 Current Price is $0.94 Difference: $0.09
If DUB meets the Morgans target it will return approximately 10% (excluding dividends, fees and charges).

Market Sentiment: 0.0

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

UBS rates FMG as Upgrade to Buy from Sell (1) -

UBS suspects, given commodity volatility stemming from the coronavirus outbreak, China is likely to introduce commodity-intensive stimulus to soften any economic downturn.

The broker upgrades 2020 and 2021 iron ore prices by 9% and 7% respectively. With West Pilbara fines becoming a larger proportion of the product mix in late 2020, the broker lifts price realisation to 90%.

Rating is upgraded to Buy from Sell and the target is lifted to $10.20 from $9.30.

Target price is $10.20 Current Price is $9.56 Difference: $0.64
If FMG meets the UBS target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $10.01, suggesting upside of 4.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

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

Macquarie rates JHC as Neutral (3) -

The company expects operating earnings will be -10% lower in FY20. Macquarie assesses uncertain earnings and high gearing provide higher downside risk for investors.

The broker retains a Neutral rating and still requires more certainty and clarity on the structure of the industry before turning positive. Target is reduced to $0.90 from $1.05.

Target price is $0.90 Current Price is $0.86 Difference: $0.04
If JHC meets the Macquarie target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $0.89, suggesting upside of 2.9% (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

Morgans rates MWY as Hold (3) -

First half results were in line with forecasts, albeit weak. A material reduction in earnings reflected a significant fall in wood fibre export shipments because of the excess production of paper pulp in Brazil and US tariffs on Chinese paper imports.

While value exists in the stock, Morgans prefers to gain greater certainty on the outlook, maintaining a Hold rating.

The company expects to meet consensus expectations amid a second half improvement. Increase shipments will be the driver of the second half recovery, Morgans points out. Target is reduced to $1.65 from $1.88.

Target price is $1.65 Current Price is $1.45 Difference: $0.2
If MWY meets the Morgans target it will return approximately 14% (excluding dividends, fees and charges).

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

UBS rates NAB as Sell (5) -

Having placed all ratings and price targets under review prior to the RBA rate cut, UBS analysts have now responded by reducing earnings estimates and price targets across the sector. National Australia Bank is the only bank that does not see its price target decline (zero change).

UBS is anticipating yet another -25bp rate cut from the RBA in April. Next step is, potentially, quantitative easing if the domestic economy deteriorates further. The banks will lower deposit rates, but UBS confidently predicts this won't be sufficient to offset downward pressure on the net interest margin (NIM).

UBS suggests investors should remain cautious towards the sector, arguing current share price weakness is a reflection of the new reality for the sector. Price target for NAB remains unchanged at $25. Sell rating retained.

Target price is $25.00 Current Price is $23.29 Difference: $1.71
If NAB meets the UBS target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $27.34, suggesting upside of 17.4% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.1

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

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

Having reviewed the gold sector after the recent results, Ord Minnett notes guidance ranges were retained and balance sheets are not unduly stretched. The main headwind for production and costs are declining grades.

Newcrest Mining has pulled back recently so the broker upgrades to Hold from Lighten. Target is $26.

Target price is $26.00 Current Price is $28.12 Difference: minus $2.12 (current price is over target).
If NCM meets the Ord Minnett target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $28.12, suggesting upside of 0.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

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

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

Having reviewed the gold sector after the recent results, Ord Minnett notes guidance ranges were retained and balance sheets are not unduly stretched. The main headwind for production and costs are declining grades.

Regis Resources has pulled back recently so Ord Minnett upgrades to Hold from Lighten. Target is $3.90.

Target price is $3.90 Current Price is $4.04 Difference: minus $0.14 (current price is over target).
If RRL meets the Ord Minnett target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.77, suggesting upside of 18.1% (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 SBM as Buy (1) -

The Simberi sulphide reserve has grown to 1.8m ounces with the grade steady at 2.3g/t. The remaining oxide reserve grew to 335,000 ounces.

The larger inventory provides Ord Minnett with confidence around the viability of the sulphide project and continued production from the asset beyond the current 12-month mine life.

Ahead of the definitive feasibility study, the broker raises the target to $3.60 from $3.40 and maintains a Buy rating.

Target price is $3.60 Current Price is $2.49 Difference: $1.11
If SBM meets the Ord Minnett target it will return approximately 45% (excluding dividends, fees and charges).

Current consensus price target is $3.08, suggesting upside of 23.5% (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

UBS rates WBC as Neutral (3) -

Having placed all ratings and price targets under review prior to the RBA rate cut, UBS analysts have now responded by reducing earnings estimates and price targets across the sector. National Australia Bank is the only bank that does not see its price target decline (zero change).

UBS is anticipating yet another -25bp rate cut from the RBA in April. Next step is, potentially, quantitative easing if the domestic economy deteriorates further. The banks will lower deposit rates, but UBS confidently predicts this won't be sufficient to offset downward pressure on the net interest margin (NIM).

UBS suggests investors should remain cautious towards the sector, arguing current share price weakness is a reflection of the new reality for the sector. Westpac's price target falls to $23.50 from $24.50. Neutral rating retained.

Target price is $23.50 Current Price is $22.24 Difference: $1.26
If WBC meets the UBS target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $25.78, suggesting upside of 15.9% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.1

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

Ord Minnett rates XF1 as Downgrade to Hold from Buy (3) -

Or Minnett notes a slowing growth profile in sales has meant management has turned attention to self-activation via Xref Light and Template builder.

There are no material signs yet the strategy is taking hold and the broker will need to witness a marked improvement in sales and a rationalisation of costs in the second half to become more confident.

In the interim, the rating is downgraded to Hold from Speculative Buy and the target lowered to $0.25 from $0.60.

Target price is $0.25 Current Price is $0.21 Difference: $0.04
If XF1 meets the Ord Minnett target it will return approximately 19% (excluding dividends, fees and charges).

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

UBS rates Z1P as Buy (1) -

The first half result met expectations. However, UBS notes, in a similar vein to Afterpay ((APT)), the market underestimated the costs required to support underlying growth.

The company has guided for cash earnings to remain close to breaking even and UBS forecasts net losses of -$47m in FY20 and -$8m in FY21. Consequently, the target is reduced to $4.40 from $4.80. Buy maintained.

Target price is $4.40 Current Price is $2.56 Difference: $1.84
If Z1P meets the UBS target it will return approximately 72% (excluding dividends, fees and charges).

Current consensus price target is $3.64, suggesting upside of 42.3% (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