Australian Broker Call

Credit Suisse rates AMC as Neutral (3) -

The company reviewed its major business segments in June. The question Credit Suisse raises is: can the stock hold its enterprise value/EBITDA ratio of 12?

To do this, new growth options will be needed, in the broker's opinion. The broker's target of $15.70 does not cover the option of new initiatives. Neutral retained.

Target price is $15.70 Current Price is $16.04 Difference: minus $0.34 (current price is over target).
If AMC meets the Credit Suisse target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $16.17, suggesting downside of -0.6% (ex-dividends)

The company's fiscal year ends in June.

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: 0.4

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

Deutsche Bank rates AMC as Buy (1) -

Following changes to FX assumptions Deutsche Bank reviews earnings estimates for the paper and packaging sector. Changes are positive and Amcor's earnings estimates are increased by 3%.

Buy rating retained. Target is raised to $17.90 from $17.30.

Target price is $17.90 Current Price is $16.04 Difference: $1.86
If AMC meets the Deutsche Bank target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $16.17, suggesting downside of -0.6% (ex-dividends)

The company's fiscal year ends in June.

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: 0.4

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

Ord Minnett rates ANN as Hold (3) -

Ord Minnett revises its estimates following the sale of the company's sexual wellness business. Revisions include slower sales growth as the remaining divisions are more reliant on economic activity, which remain subdued.

Sales estimate reductions are offset by currency revisions, particular a stronger euro. Hold rating retained. Target is reduced to $24 from $26.

Target price is $24.00 Current Price is $23.23 Difference: $0.77
If ANN meets the Ord Minnett target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $23.76, suggesting upside of 2.1% (ex-dividends)

The company's fiscal year ends in June.

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: -0.2

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

Macquarie rates AVN as Outperform (1) -

The broker has returned from research restriction on Aventus with an Outperform rating and a $2.37 target, having been advising on the fund's latest large format retail (LFR) acquisition. While not substantial, the acquisition does increase exposure to the large Sydney market, the broker notes.

Pricing has become tighter in the LFR market, but the broker remains attracted to the consolidation opportunity and relatively positive outlook, along with an undemanding valuation for the REIT.

Target price is $2.37 Current Price is $2.29 Difference: $0.08
If AVN meets the Macquarie target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $2.45, suggesting upside of 6.4% (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

Morgans rates AZY as Add (1) -

Drilling at Minyari and WACA continue to produce high-grade gold intersections. While the lack of activity has been frustrating, Morgans acknowledges, catalysts are expected in the next six months, revealing the development potential of Minyari.

Morgans retains a Speculative Add rating and raises the target to 3.7c from 3.1c.

Target price is $0.04 Current Price is $0.03 Difference: $0.009
If AZY meets the Morgans target it will return approximately 32% (excluding dividends, fees and charges).

Market Sentiment: 1.0

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

Macquarie rates CTX as Outperform (1) -

On the back of improving refiner margins, Caltex has upgraded first half guidance, with a stronger performance from marketing & supply also contributing, the broker notes. The company has also received approval for the acquisition of Gull NZ.

The broker expects more news on cost outs with the result in August and while momentum continues to recover, retains Outperform. Target rises to $32.77 from $32.65.

Target price is $32.65 Current Price is $31.18 Difference: $1.47
If CTX meets the Macquarie target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $33.12, suggesting upside of 4.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.4

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

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

Ord Minnett reviews estimates, focusing on the Sydney CBD exposure and incorporating the acquisition of the MLC and Pyrmont buildings. The broker also notes the share prices declined by around -11% in the last two weeks an underperformed the sector.

Continued strength in Sydney is priced in, the broker believes. Hence, rating is upgraded to Hold from Lighten and the target is increased to $9.50 from $9.00.

Target price is $9.50 Current Price is $9.40 Difference: $0.1
If DXS meets the Ord Minnett target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $9.47, suggesting downside of -0.5% (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

Morgans rates EHL as Initiate coverage with Add (1) -

The company has completed a re-capitalisation and merger that significantly improves its credit metrics, increases the size of the fleet and the business presence across Australia.

Morgans initiates coverage with an Add rating and target of $0.15. The broker is attracted to the stronger balance sheet of the merged entity and the financial discipline displayed by new management. The business is also exposed to a cyclical recovery in resources.

Target price is $0.15 Current Price is $0.11 Difference: $0.04
If EHL meets the Morgans target it will return approximately 36% (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

Citi rates FXJ as Neutral (3) -

Negotiations have ended, with no result, between the board and two private equity suitors and Citi analysts declare it is time to revert back to simply fundamental valuation for Fairfax. Price target tumbles by -12% to $1.06.

The analysts observe the company's latest trading update confirms Domain trends are improving, but that newspaper revenue declines are accelerating. Citi's conclusion: "Domain was the prize, the newspapers are the problem".

Projections for FY18 have been scaled back. Neutral rating retained.

Target price is $1.06 Current Price is $0.98 Difference: $0.08
If FXJ meets the Citi target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $1.14, suggesting upside of 19.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.4

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

Credit Suisse rates FXJ as Re-instate Coverage with Outperform (1) -

Credit Suisse believes the uncertainty created by the failure of the private equity bids to progress has created a buying opportunity ahead of the Domain de-merger.

The broker believes there is potential for the de-merged Domain stock to trade well above the level implied by the current FXJ price. FY17 EBITDA estimates for Fairfax are reduced by -4.4% to reflect the guidance range of $262-266m.

Credit Suisse re-instates coverage with an Outperform rating and $1.10 target.

Target price is $1.10 Current Price is $0.98 Difference: $0.12
If FXJ meets the Credit Suisse target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $1.14, suggesting upside of 19.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.4

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

Macquarie rates FXJ as No Rating (-1) -

Both private equity suitors have abandoned their bids for Fairfax following due diligence. The company will return to its plan to spin off Domain.

The broker is advising and as such is restricted from making a recommendation.

Current Price is $0.98. Target price not assessed.

Current consensus price target is $1.14, suggesting upside of 19.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.4

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

Morgan Stanley rates FXJ as Overweight (1) -

The company has confirmed that neither private equity proposals have resulted in a formal bid. Morgan Stanley is disappointed, having expected at least one firm bid.

While no specific reasons were provided by either party, the broker understands there may be some issues regarding acquiring the whole business as opposed to Domain only.

Nevertheless, Morgan Stanley is positive on the fundamentals and the strategy in place for value to be realised. The company has reiterated that the Domain spin-off remains on track for completion by the end of the year.

The broker reiterates an Overweight rating and Attractive industry view. Target is $1.50.

Target price is $1.50 Current Price is $0.98 Difference: $0.52
If FXJ meets the Morgan Stanley target it will return approximately 53% (excluding dividends, fees and charges).

Current consensus price target is $1.14, suggesting upside of 19.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.4

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

UBS rates FXJ as Neutral (3) -

UBS notes there is still no definitive reason as to why TPG walked away from its proposal to acquire the business. The company suggests that TPG did not want to bid for 100% of Fairfax.

The trading update was broadly in line with expectations and FY17 EBITDA is now expected to be $262-266m.  The company continues to proceed with its original de-merger plan.

Without greater disclosure, UBS is hesitant to apply REA Group's ((REA)) current multiple to the Domain digital business. Neutral retained. Target is reduced to $1.00 from $1.20.

Target price is $1.00 Current Price is $0.98 Difference: $0.02
If FXJ meets the UBS target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $1.14, suggesting upside of 19.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.4

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

Ord Minnett rates HSN as Downgrade to Accumulate from Buy (2) -

The company has made a sizeable acquisition with Enoro but Ord Minnett notes, unfortunately, it was combined with a downgrade to second half underlying earnings. Hence, the broker finds FY18 estimates end up relatively flat overall, post the capital dilution.

The broker has no problem with the Enoro business, or the price paid, but the magnitude of the earnings downgrade creates a reason to be cautious.

Ord Minnett no longer envisages sufficient upside to retain a Buy rating and downgrades to Accumulate. Target is reduced to $4.59 from $4.73.

Target price is $4.59 Current Price is $4.04 Difference: $0.55
If HSN meets the Ord Minnett target it will return approximately 14% (excluding dividends, fees and charges).

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

Morgan Stanley rates IAG as Overweight (1) -

The company's new reserve release guidance, at 5% of NEP, implies around a 17.5% upgrade Morgan Stanley's FY17 cash net profit estimates.

The broker believes the stock offers superior Australasian general insurance exposure, a leading personal lines franchise and the best leverage to small-medium enterprise pricing momentum.

Overweight retained. Target is $7.00. Industry view is In-Line.

Target price is $7.00 Current Price is $6.74 Difference: $0.26
If IAG meets the Morgan Stanley target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $6.57, suggesting downside of -3.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.0

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

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

Ord Minnett believes the outlook for the company Sydney portfolio has improved because of the pace at which market rents continue to rise in recent sales, which suggest asset values have increased a further 15% in the past three months.

Earnings forecasts are increased by 10%. The broker upgrades to Accumulate from Hold. Target is $5.00.

Target price is $5.00 Current Price is $4.37 Difference: $0.63
If IOF meets the Ord Minnett target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $4.61, suggesting upside of 3.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: -0.4

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

UBS rates JHG as Buy (1) -

UBS observes stronger global equity returns have favoured offshore rather than domestic fund managers in June. Marking to market, the broker makes minor revisions to FY17 estimates. The broker prefers Janus Henderson on the merger -related value upside.

The broker retains a Buy rating. Target is raised to US$36.30 from US$35.25.

Current Price is $42.88. Target price not assessed.

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: 0.5

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

Credit Suisse rates LNK as Initiation of coverage with Underperform (5) -

Credit Suisse initiates coverage with an Underperform rating and $7.70 target. The broker estimates the stock offers around 50% growth in earnings per share over FY17-20, supported by its recent European acquisition and margin expansion in the Australian business.

Beyond FY20, the broker considers it a low-growth business, albeit with high free cash flow, which bears regulatory, pricing and integration risks.

Target price is $7.70 Current Price is $7.81 Difference: minus $0.11 (current price is over target).
If LNK meets the Credit Suisse target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $8.79, suggesting upside of 12.7% (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

Macquarie rates MTR as Outperform (1) -

Ahead of Mantra's result release, the broker anticipates a softer finish in the Gold Coast and Melbourne than previously assumed. A flat result is expected for the CBD division, while Ala Moana in Hawaii is off to a good start.

The broker has trimmed forecast earnings and lowered its target to $3.78 from $4.02. Given Mantra continues to trade at a -30% discount to global hotel peers, Outperform retained.

Target price is $3.78 Current Price is $3.03 Difference: $0.75
If MTR meets the Macquarie target it will return approximately 25% (excluding dividends, fees and charges).

Current consensus price target is $3.35, suggesting upside of 9.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.5

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

UBS rates PDN as Neutral (3) -

EdF has a stated it will not agree to a standstill agreement. Paladin had sought a standstill agreement until it resolved the restructuring of its debt and possible sale of Langer Heinrich. Now, Paladin has been advised that EdF requires payment of US$277m on July 10.

The company has stated that it is now considering the implications of EdF's position on its future. Paladin has said its ability to continue as a going concern is dependent upon achieving either the original restructure proposal, or an alternative, both of which require the EdF long-term supply contract to remain afloat.

Neutral rating and $0.12 target retained. The broker notes shares remain suspended from trading until the situation is resolved and considers this a high risk investment.

Target price is $0.12 Current Price is $0.05 Difference: $0.073
If PDN meets the UBS target it will return approximately 155% (excluding dividends, fees and charges).

Current consensus price target is $0.12, suggesting upside of 155.3% (ex-dividends)

The company's fiscal year ends in June.

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: 0.0

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

Citi rates SGR as Buy (1) -

Citi analysts call this stock "THE value trade" on the ASX, noting the shares are offering (estimated) 18% EPS growth in FY18 while only trading on 16x PE multiple. No wonder, the broker considers Star the top pick in the sector.

Of late, the analysts note share price action has been "wobbly" due to concerns on the health of the Australian consumer.  They anticipate a pick up in May and June in growth to 5% as the company is cycling weak comps.

Target price is $6.65 Current Price is $5.03 Difference: $1.62
If SGR meets the Citi target it will return approximately 32% (excluding dividends, fees and charges).

Current consensus price target is $6.07, suggesting upside of 19.4% (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

UBS rates SUN as Buy (1) -

UBS makes minor revisions to FY17 estimates, marking to market. The broker prefers Suncorp among the domestic general insurers given the improving domestic rate cycle.

Buy rating retained.  Target is  raised to $15.50 from $14.45.

Target price is $15.50 Current Price is $14.71 Difference: $0.79
If SUN meets the UBS target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $14.06, suggesting downside of -6.1% (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

Citi rates XRO as Buy (1) -

Citi analysts are no longer forecasting a net decline in subscriber numbers from FY21, but they have also reduced their margin projections. The end result has been for small changes to previous forecasts only.

Buy/High Risk rating retained, as well as the target price of NZ$29.10. No changes to forecasts shorter term.

Current Price is $24.00. Target price not assessed.

Current consensus price target is N/A

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