Australian Broker Call

Macquarie rates A2M as Outperform (1) -

Macquarie continues to envisage a positive medium-long term opportunity for the company to build a position as a disruptor in dairy. A2 Milk has concentrated its focus on corporate daigou to improve the sustainability of the channel.

While there is elevated risk around Chinese regulatory changes in the short term, Macquarie notes the company has historically demonstrated an ability to adjust.

A2 Milk experienced significant market share gains in China over the first quarter, increasing to 6.1%, which the broker believes highlights strong demand amid management claims that a2 Platinum is the fastest-growing infant formula brand in China.

Outperform rating retained. Target is raised to $12.60 from $12.50.

Target price is $12.60 Current Price is $9.74 Difference: $2.86
If A2M meets the Macquarie target it will return approximately 29% (excluding dividends, fees and charges).

Current consensus price target is $11.78, suggesting upside of 21.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

This company reports in NZD. 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

Deutsche Bank rates APA as Buy (1) -

The Commonwealth Treasurer has indicated that the proposed acquisition of APA by CK Asset Holdings would result in undue concentration of foreign ownership in Australia's most significant gas transmission business.

Deutsche Bank believes further investors may be introduced into the CK Asset consortium and, without this, an alternative bidder could well be awaiting an opportunity.

Buy rating and $11 target maintained.

Target price is $11.00 Current Price is $8.57 Difference: $2.43
If APA meets the Deutsche Bank target it will return approximately 28% (excluding dividends, fees and charges).

Current consensus price target is $10.47, suggesting upside of 22.2% (ex-dividends)

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.6

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

Citi rates CBA as Neutral (3) -

Citi analysts note revenue growth in Q1 turned out weaker-than-expected, but all-in-all, they are calling the trading update largely in-line, before remediation costs. Flat net interest income was offset by better fee income, the analysts observe, while NIMs were weaker due to higher funding costs and continued mortgage competition.

Mortgage repricing virtually guarantees better revenue growth in Q2, the analysts surmise. It appears management is keeping a lid on costs, but more customer remediation is still in the pipeline. Neutral rating retained.

Target price is $72.00 Current Price is $70.62 Difference: $1.38
If CBA meets the Citi target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $73.95, suggesting upside of 4.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.1

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

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

Following the first quarter trading update Credit Suisse upgrades FY19-21 earnings estimates by 3%. Compositionally, the broker notes a robust update, with falling operating expenses and a strong capital position.

It seems to the broker that many of the regulatory and compliance headwinds have been, or are being, dealt with. Therefore, a focus on cost reductions is expected and capital management also enters the scene.

Credit Suisse upgrades to Outperform from Neutral and raises the target to $78 from $75.

Target price is $78.00 Current Price is $70.62 Difference: $7.38
If CBA meets the Credit Suisse target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $73.95, suggesting upside of 4.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.1

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

Deutsche Bank rates CBA as Hold (3) -

The first quarter net profit of $2.5bn was broadly in line with Deutsche Bank's expectations and implies less than 3% growth is required in order to meet first half estimates.

The broker suggests this is achievable, given the forthcoming benefit from mortgage re-pricing. Hold rating and $75 target.

Target price is $75.00 Current Price is $70.62 Difference: $4.38
If CBA meets the Deutsche Bank target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $73.95, suggesting upside of 4.7% (ex-dividends)

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.1

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

Morgan Stanley rates CBA as Underweight (5) -

First quarter cash profit was in line with Morgan Stanley's estimates. The margin was lower than expected while housing loans were slightly ahead of forecasts. The broker notes credit quality remains sound.

Underweight. Target is $64.50. Industry view: In-Line.

Target price is $64.50 Current Price is $70.62 Difference: minus $6.12 (current price is over target).
If CBA meets the Morgan Stanley target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $73.95, suggesting upside of 4.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.1

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

Morgans rates CBA as Add (1) -

Morgans found the trading update consistent with a view that CBA is offering good value at the current share price. Revenue is expected to benefit in the second quarter from recent home loan re-pricing while credit quality remains sound.

The broker notes the CET1 ratio was 10.0% as of September and divestments are expected to provide an uplift of around 120 basis points. This creates scope for capital management, in the broker's view.

Morgans maintains an Add rating and reduces the target to $76 from $78.

Target price is $76.00 Current Price is $70.62 Difference: $5.38
If CBA meets the Morgans target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $73.95, suggesting upside of 4.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.1

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

Ord Minnett rates CBA as Hold (3) -

CBA is on track to meet Ord Minnett's forecasts for the first half net profit of $5.04bn. The first quarter benefited from lower impairment expenses but strong growth is needed in the second quarter to achieve the broker's profit estimates.

Ord Minnett estimates there was no revenue growth in the quarter. Small downgrades are made to earnings forecasts which leads to a reduction in the target to $77.60 from $78.00. Hold rating maintained.

Target price is $77.60 Current Price is $70.62 Difference: $6.98
If CBA meets the Ord Minnett target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $73.95, suggesting upside of 4.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.1

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

UBS rates CBA as Neutral (3) -

CBA's first quarter cash profit came in 3% above expectation. One quarter does not a year make in the volatile banking market, but the broker notes business momentum is continuing despite the problems of the last twelve months. Assuming the completion of intended divestments, the broker is assuming a buyback from late 2019.

The outlook for the banks is weak as house prices fall but CBA's core retail franchise remains intact, the broker suggests. Neutral and $72 retained in the face of a potential local credit crunch.

Target price is $72.00 Current Price is $70.62 Difference: $1.38
If CBA meets the UBS target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $73.95, suggesting upside of 4.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.1

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

Citi rates DMP as Sell (5) -

The AGM update has indicated a slowdown in same-store sales growth at the start of FY19. Citi observes, while it is still likely the roll-out of stores will accelerate as the year progresses, risks are building that these will occur later and make a smaller contribution to earnings.

The broker notes the shares are trading as if the company will beat FY19 guidance but remains unconvinced. Sell rating is maintained. Target is $45.20.

Target price is $45.20 Current Price is $49.72 Difference: minus $4.52 (current price is over target).
If DMP meets the Citi target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $49.25, suggesting downside of -0.9% (ex-dividends)

The company's fiscal year ends in June.

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 DMP as Underperform (5) -

Same-store sales growth slowed to 2.9% over the first 17 weeks of FY19, implying a run rate below the lower end of the 3-6% guidance, Credit Suisse notes. Store openings are also running behind the rate needed to achieve the forecast 225-250 for FY19.

The broker downgrades same-store sales for Europe in the first half to zero growth. The European region has a volatile history, Credit Suisse acknowledges, but there is not enough evidence that franchisee profitability in France and Germany can be lifted sufficiently to incentivise new store openings commensurate with targets.

The broker maintains an Underperform rating, raising the target to $36.04 from $35.93.

Target price is $36.04 Current Price is $49.72 Difference: minus $13.68 (current price is over target).
If DMP meets the Credit Suisse target it will return approximately minus 28% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $49.25, suggesting downside of -0.9% (ex-dividends)

The company's fiscal year ends in June.

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

Deutsche Bank rates DMP as Sell (5) -

The company has disclosed group same-store sales for the first 17 weeks of FY19. Deutsche Bank calculates growth was just 2.3% over the last 12 weeks of the period.

Japan was disclosed separately and slowed to 5.0%, implying around 2.1% growth in the last 12 weeks. The broker questions why, in a departure from the trend of several years, no separate disclosure was provided for Australasia and Europe.

Sell rating and $36 target maintained.

Target price is $36.00 Current Price is $49.72 Difference: minus $13.72 (current price is over target).
If DMP meets the Deutsche Bank target it will return approximately minus 28% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $49.25, suggesting downside of -0.9% (ex-dividends)

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 DMP as Outperform (1) -

Sales growth for the first 17 weeks of FY19 of 2.91% was in line with Macquarie's expectations. FY19 operating earnings guidance of $227-247m is reiterated and the broker believes the range is conservative.

Macquarie considers further accretive acquisitions possible and retains an Outperform rating. Target is steady at $61.

Target price is $61.00 Current Price is $49.72 Difference: $11.28
If DMP meets the Macquarie target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $49.25, suggesting downside of -0.9% (ex-dividends)

The company's fiscal year ends in June.

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 DMP as Overweight (1) -

Like-for-like sales growth for the first 17 weeks of FY19 was 2.91% and Morgan Stanley estimates growth slowed from 4.4% in the first five weeks to 2.3% in the subsequent 12 weeks.

The broker suggests the warmer period in the European summer slowed down trading. The company has also indicated that higher food costs from the Australian drought will affect the second half.

Full year guidance has been reiterated. Overweight rating retained. Cautious industry view. Target is $65.

Target price is $65.00 Current Price is $49.72 Difference: $15.28
If DMP meets the Morgan Stanley target it will return approximately 31% (excluding dividends, fees and charges).

Current consensus price target is $49.25, suggesting downside of -0.9% (ex-dividends)

The company's fiscal year ends in June.

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

Ord Minnett rates DMP as Lighten (4) -

Ord Minnett observes the company's business in Japan has started the year well while same-store sales growth in Europe remains weak. As a result, the broker suspects first half FY19 earnings growth may not be as strong as many expect.

FY19 guidance has been reiterated and the company remains confident in achieving its target of 4,650 stores by 2025. Ord Minnett maintains a Lighten rating and $42.50 target.

Target price is $42.50 Current Price is $49.72 Difference: minus $7.22 (current price is over target).
If DMP meets the Ord Minnett target it will return approximately minus 15% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $49.25, suggesting downside of -0.9% (ex-dividends)

The company's fiscal year ends in June.

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 DMP as Downgrade to Neutral from Buy (3) -

At its AGM, Domino's reiterated FY19 earnings guidance and planned store openings, albeit the latter comes with a greater skew to the second half. UBS has trimmed its first half earnings forecast slightly.

The broker is a fan of the company but having outperformed the ASX200 Industrials by 24% year to date, valuation is now fair and the broker thus pulls back to Neutral from Buy. Target unchanged at $57.

Target price is $57.00 Current Price is $49.72 Difference: $7.28
If DMP meets the UBS target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $49.25, suggesting downside of -0.9% (ex-dividends)

The company's fiscal year ends in June.

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 DXS as Outperform (1) -

The company's investor briefing in Perth has indicated conditions remain challenging albeit an improvement on a year ago. The update was consistent with Macquarie's expectations, with limited new supply noted. The St George's Terrace building is now 62% pre-committed.

The valuation is attractive and, with potential upside from the buyback amid a better-than-expected office environment in Sydney/Melbourne, Macquarie reiterates an Outperform rating. Target is $11.

Target price is $11.00 Current Price is $9.98 Difference: $1.02
If DXS meets the Macquarie target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $10.62, suggesting upside of 6.4% (ex-dividends)

The company's fiscal year ends in June.

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 FNP as Buy (1) -

The company has established a strategic partnership with Chinese business Theland to distribute the Arnold's Farm range of cereals and snacks and a new a2 protein UHT milk product.

Citi believes a partnership is another example of the company's sensible strategy to leverage local Chinese partners and drive scale. The broker expects the JV to become material to the business in China over time.

No capacity constraints are expected at the Leeton factory where the cereal and snack products are manufactured. Buy rating and $7.70 target maintained.

Target price is $7.70 Current Price is $5.52 Difference: $2.18
If FNP meets the Citi target it will return approximately 39% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

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 MFG as Outperform (1) -

Funds under management in October of $73bn were down -2.1%. Credit Suisse considers this a favourable outcome considering global equity markets fell around -5% in the month.

The broker believes there is opportunity for a PE re-rating in the short term, as well as upside to consensus estimates, and maintains an Outperform rating.

Credit Suisse believes the concerns over the longer-term growth prospects are overstated. While flows will build at a slower rate, there are still large opportunities in the domestic retail and institutional markets. Target is reduced to $30 from $31.

Target price is $30.00 Current Price is $27.44 Difference: $2.56
If MFG meets the Credit Suisse target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $28.69, suggesting upside of 4.6% (ex-dividends)

The company's fiscal year ends in June.

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 MFG as Buy (1) -

Magellan enjoyed net positive inflows over the volatile month of October which puts it way ahead of other listed wealth managers, the broker notes. Assets under management were weaker on valuation but the Global Fund continued to outperform, boosting performance fee prospects.

The broker has responded with an upgrade to earnings forecasts but leaves its target unchanged at $30, Buy retained.

Target price is $30.00 Current Price is $27.44 Difference: $2.56
If MFG meets the UBS target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $28.69, suggesting upside of 4.6% (ex-dividends)

The company's fiscal year ends in June.

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 NSR as Accumulate (2) -

Following a tour of several key assets in Perth Ord Minnett concludes that the portfolio has strong potential for earnings growth from a reversion in occupancy rates. Estimates for stabilised earnings are increased by 2-4%.

The occupancy level in the company's Perth portfolio is growing relatively quickly, and several newly completed developments are now 40% occupied. The portfolio has a relatively high return on capital.

Accumulate rating maintained. Target is raised to $1.95 from $1.85.

Target price is $1.95 Current Price is $1.72 Difference: $0.23
If NSR meets the Ord Minnett target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $1.66, suggesting downside of -3.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.1

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

Morgans rates OTW as Add (1) -

The company has settled the acquisitions of Comlinx and Access Digital. The deals are in keeping with the company's strategy and Morgans considers them strategically significant as well as a strong cultural fit.

Despite fully funding the acquisitions and earn-out through the issue of $29m in new capital the new business is still accretive to earnings and generating a cash return.

Morgans maintains an Add rating and raises the target to $5.77 from $4.64. The broker upgrades operating earnings forecasts by around 35%.

Target price is $5.77 Current Price is $5.29 Difference: $0.48
If OTW meets the Morgans target it will return approximately 9% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

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

Ord Minnett rates PPH as Buy (1) -

Second quarter revenue was at the upper end of guidance. While continuing to be attracted to the broader fundamentals, Ord Minnett finds the company's delivery versus expectations the main challenge.

Overhead costs were lower-than-expected and the company expects to be in a position to deliver a positive operating profit in FY19. Ord Minnett maintains a Buy rating and reduces the target to $3.89 from $4.03.

Target price is $3.89 Current Price is $3.20 Difference: $0.69
If PPH meets the Ord Minnett target it will return approximately 22% (excluding dividends, fees and charges).

The company's fiscal year ends in March.

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

Deutsche Bank rates SCG as Hold (3) -

Management has reaffirmed FY18 guidance for 2% growth in distributions. There was also an improvement in specialty sales numbers during the September quarter.

Despite occupancy levels above 99.5%, Deutsche Bank remains cautious on the retail sector, suspecting a much tougher leasing environment.

Hold rating and $4.27 target maintained.

Target price is $4.27 Current Price is $4.01 Difference: $0.26
If SCG meets the Deutsche Bank target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $4.40, suggesting upside of 9.7% (ex-dividends)

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

Ord Minnett rates SCG as Accumulate (2) -

The company has reiterated guidance for 4% growth in funds from operations in 2018. Ord Minnett is encouraged by the comparable retail sales growth in the third quarter, which improved 50 basis points to 1.6%.

Active developments are progressing as planned. The focus is now on the selling down of a 50% stake in two or three assets to provide more financial flexibility.

Accumulate rating and $4.70 target maintained.

Target price is $4.70 Current Price is $4.01 Difference: $0.69
If SCG meets the Ord Minnett target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $4.40, suggesting upside of 9.7% (ex-dividends)

The company's fiscal year ends in December.

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

UBS rates SCG as Buy (1) -

Scentre Group reaffirmed distribution guidance at its Sep Q update and noted the completion of $1bn in developments. The broker is assuming retail activity into year end will not be as weak as feared, and Scentre's second half operating metrics will not be as soft as feared.

Buy and $4.58 target retained.

Target price is $4.58 Current Price is $4.01 Difference: $0.57
If SCG meets the UBS target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $4.40, suggesting upside of 9.7% (ex-dividends)

The company's fiscal year ends in December.

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

Credit Suisse rates SUN as Neutral (3) -

The company's banking business showed a continuation of low growth, with lending up 0.5% over the September quarter. While overall lending growth was slightly weaker than Credit Suisse expected so too were bad debts.

The home lending portfolio increased by 0.8%, with the company noting a competitive and slowing mortgage market. The CET1 ratio decreased to 8.9% following the payment of the final dividend and remains at the upper end of the company's target ratio of 8.5-9.0%.

Credit Suisse maintains a Neutral rating and $14.70 target.

Target price is $14.70 Current Price is $13.99 Difference: $0.71
If SUN meets the Credit Suisse target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $15.26, suggesting upside of 9.1% (ex-dividends)

The company's fiscal year ends in June.

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

Deutsche Bank rates SUN as Buy (1) -

In the quarterly update, Deutsche Bank observes subdued loan growth and tighter margins offset benign bad debt charges. Loan growth was 0.5%, below forecasts.

The broker retains a Buy rating on the back of increasing capital returns. Target is $15.10.

Target price is $15.10 Current Price is $13.99 Difference: $1.11
If SUN meets the Deutsche Bank target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $15.26, suggesting upside of 9.1% (ex-dividends)

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 SUN as Underperform (5) -

Macquarie believes the increased competition and additional verification requirements for lending are slowing down industry growth. The performance of Suncorp's bank division in the first quarter was supported by impairment losses that were materially below expectations, which the broker considers are unsustainable.

With uncertainty around the recommendations from the Hayne Royal Commission Macquarie maintains an Underperform rating. Target is reduced to $14.30 from $14.65.

Target price is $14.30 Current Price is $13.99 Difference: $0.31
If SUN meets the Macquarie target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $15.26, suggesting upside of 9.1% (ex-dividends)

The company's fiscal year ends in June.

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

Ord Minnett rates SUN as Hold (3) -

The first quarter update revealed weak loan growth and the net interest margin in FY19 appears flat. Ord Minnett notes impairment trends remain benign and there was little to suggest Suncorp will hit its 10% return on equity target.

The broker remains concerned about the volatility in underlying margins in general insurance. The main positive driver for the stock is the prospect of capital returns from the life insurance sale as well as premium rate increases in commercial business.

Hold rating and $15 target maintained.

Target price is $15.00 Current Price is $13.99 Difference: $1.01
If SUN meets the Ord Minnett target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $15.26, suggesting upside of 9.1% (ex-dividends)

The company's fiscal year ends in June.

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 SUN as Buy (1) -

Suncorp's Sep Q bank division update indicated slowing revenue momentum but minimal impairment losses, the broker notes. The bank is performing as the broker expected, with net interest margin guidance reiterated.

The broker sees broadly stable earnings for the division over the next twelve months, with upside risks to general insurance premiums over FY19-20 underpinning group valuation. Buy and $16.50 target retained.

Target price is $16.50 Current Price is $13.99 Difference: $2.51
If SUN meets the UBS target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $15.26, suggesting upside of 9.1% (ex-dividends)

The company's fiscal year ends in June.

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 SYD as Buy (1) -

Citi believes regulatory risks are on the rise, as evidenced by the royal commissions in banking and aged care, the Productivity Commission review and the inquiry into electricity pricing, as well as the potential for a change in government at the federal election.

The broker's analysis suggests the cash flow impact of tighter regulation could be as much as -8-13% on the company's regulated asset base. The question Citi poses is whether the market has already priced in the scenario.

Still, this is not the only headwind facing the business and the broker lowers 2018-20 forecasts by -1-5% to reflect lower international passenger growth and the risk of capacity reductions in response to higher oil prices.

Buy rating maintained. Target is reduced to $7.74 from $7.93.

Target price is $7.74 Current Price is $6.59 Difference: $1.15
If SYD meets the Citi target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $7.49, suggesting upside of 13.7% (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 XF1 as Buy (1) -

Ord Minnett observes one of the best quarters on record for the company, with credit sales up 100%, credit usage of 86% and cash receipts are 99%. Additional capital has been sourced to allow for growth investments offshore.

Ord Minnett welcomes this in the light of the accretive customer acquisition model. With the business set to invest in both domestic and offshore sales resources the broker pares back forecasts for the near term.

Buy rating maintained. Target is $0.90.

Target price is $0.90 Current Price is $0.50 Difference: $0.4
If XF1 meets the Ord Minnett target it will return approximately 80% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

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