Australian Broker Call

UBS rates CSL as Buy (1) -

UBS has reviewed the risks to IVIg therapy from products in development. There are questions regarding whether IVIg and FcRn inhibitors are directly able to be substituted, and what risks exist from prolonged use of FcRn inhibitors.

The broker also notes that CSL has exposure to an alternative technology that could prove beneficial as well, although this is behind in clinical trial development. The broker makes minor changes to operating assumptions and reduces the target to $216 from $220. Buy rating maintained.

Target price is $216.00 Current Price is $182.11 Difference: $33.89
If CSL meets the UBS target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $213.33, suggesting upside of 17.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

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

Macquarie rates CWY as Outperform (1) -

At the investor briefing the company provided no further update on its outlook. Macquarie believes there is solid earnings visibility and clear long-term growth options, while management execution is a key ingredient.

The broker considers the stock an attractive investment proposition and the Outperform rating and $2.40 target are retained.

Target price is $2.40 Current Price is $1.71 Difference: $0.69
If CWY meets the Macquarie target it will return approximately 40% (excluding dividends, fees and charges).

Current consensus price target is $2.01, suggesting upside of 17.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.7

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

Citi rates CYB as Neutral (3) -

Citi analysts suggest CYBG's interim report, underlying, was in-line with market consensus, but the CET1 ratio is worse off and the outlook revolves around a weaker Net Interim Margin (NIM), as per updated guidance.

The analysts fully acknowledge industry trends remain negative, but they also believe a rising dividend in combination with a strong capital position means the bulls can be patient. Neutral. Target price GBP2.88.

Current Price is $3.42. Target price not assessed.

Current consensus price target is $5.60, suggesting upside of 63.6% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY19:

Forecast for FY20:

This company reports in GBP. 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

Credit Suisse rates EVN as Neutral (3) -

Evolution Mining has brought forward the phase 1 expansion of Cowal by 12 months, increasing production by 20,000 ounces by FY22.

Credit Suisse is more excited by phase 2, which is based on the planned drill out of the Dalwhinnie high-grade underground discovery. Step out drilling continues to deliver consistently high grades.

Nevertheless, the broker suspects the staged expansion might fall short of modelled assumptions. Neutral rating and $2.65 target maintained.

Target price is $2.65 Current Price is $3.13 Difference: minus $0.48 (current price is over target).
If EVN meets the Credit Suisse target it will return approximately minus 15% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.06, suggesting downside of -2.2% (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 EVN as Neutral (3) -

The company will begin construction of its expansion at Cowal in the March quarter with commissioning expected 12 months later. UBS had included the expansion in its forecasts, but the schedule has been brought forward 12-18 months.

The company has also announced high-grade drilling intercepts which indicate the underground potential is growing. The exploration success increases the broker's confidence in the source of ore and the overall mine life of Cowal.

Neutral rating maintained. Target is raised to $3.30 from $3.05.

Target price is $3.30 Current Price is $3.13 Difference: $0.17
If EVN meets the UBS target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $3.06, suggesting downside of -2.2% (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 MIN as Upgrade to Buy from Hold (1) -

Albemarle will pay US$1.15bn to buy a 50% stake in a joint venture in the Wodgina hard rock lithium mine. Deutsche Bank notes Mineral Resources initially wanted to sell just 49% in order to have control of the asset.

Albemarle has stated it aims to produce at least 100,000tpa which suggests it may desire to replicate the design of its Kemerton facility. Either way, Deutsche Bank believes the company's experience in the industry will help develop and market the product.

The broker takes a conservative stance on the downstream asset potential, which is new for Australia, and believes there are implications for spodumene, hydroxide and the lithium market structure with this deal. Rating is upgraded to Buy from Hold. Target is $18.50.

Target price is $18.50 Current Price is $15.48 Difference: $3.02
If MIN meets the Deutsche Bank target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $19.83, suggesting upside of 28.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.8

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

Morgan Stanley rates MIN as Overweight (1) -

Morgan Stanley suggests investors should look past the clarification on earnings, which implies a downgrade, and focus on the Wodgina deal, which is a significant positive surprise.

The company provided further detail on operating earnings (EBITDA) guidance. Overall guidance is $280-320m and the mining services business component is $ 240-260m. The broker had interpreted the former figure as the mining services guidance.

Albemarle has offered an enterprise value equating to around $17 a share for Wodgina in the deal, the broker calculates. Even on a fully unrisked basis, the value offered is around 90% of valuation. Morgan Stanley believes the deal enhances the status of Wodgina as a world-relevant lithium orebody.

Morgan Stanley retains an Overweight rating, In-Line industry view and $20 target.

Target price is $20.00 Current Price is $15.48 Difference: $4.52
If MIN meets the Morgan Stanley target it will return approximately 29% (excluding dividends, fees and charges).

Current consensus price target is $19.83, suggesting upside of 28.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.8

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

Credit Suisse rates MPL as Neutral (3) -

Medibank Private's current contract with the Australian Defence Force via Garrison Health Services will expire at the end of FY19. Credit Suisse does not believe the loss will have any risk of contagion for other accounts the company services.

The broker decreases estimates for net profit by -0.8% in FY19 to account for exit costs and downgrades outer years by -5.0% for the loss of the contract.

The broker considers the operating environment favourable, while management is demonstrating an ability to turn around negative trends. Neutral rating maintained. Target is reduced to $2.70 from $3.10.

Target price is $2.70 Current Price is $2.51 Difference: $0.19
If MPL meets the Credit Suisse target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $2.66, suggesting upside of 6.0% (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 MQG as Overweight (1) -

Morgan Stanley envisages limited downside risk in the near term, given the company's unrealised gains. Macquarie Group recently upgraded guidance to 15% growth in FY19 earnings.

While guidance is typically conservative, and the company has not missed guidance since 2012, the broker believes there is little incentive to grow earnings above this rate.

Morgan Stanley suspects further upgrades to guidance are unlikely before the first half FY20 result, given that an upgrade typically requires more than 10% growth.

Overweight rating and $133 target maintained. Industry view is In-Line.

Target price is $133.00 Current Price is $114.53 Difference: $18.47
If MQG meets the Morgan Stanley target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $128.17, suggesting upside of 11.9% (ex-dividends)

The company's fiscal year ends in March.

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

Morgans rates NBL as Add (1) -

The company's cost savings have been achieved well ahead of schedule and Noni B continues to expect improvements in gross profit in FY20, amid benefits from supply chain/scale.

Morgans is comfortable with the company's strategy of banking higher margin sales in the current environment. The current trading multiple is considered undemanding, particular given the strong growth being delivered and the upside risk.

Add rating maintained. Target rises to $3.99 from $3.94.

Target price is $3.99 Current Price is $2.95 Difference: $1.04
If NBL meets the Morgans target it will return approximately 35% (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

Credit Suisse rates PRY as Underperform (5) -

The company has reaffirmed FY19 guidance but does assume industry growth is normalised in the second half to long-term rates. A stronger second half is expected for all divisions.

Credit Suisse envisages risks to this guidance, suspecting pathology volumes will not offset rising consumable costs as well as increased labour costs.

Underperform rating maintained. Target is reduced to $2.45 from $2.95.

Target price is $2.45 Current Price is $2.52 Difference: minus $0.07 (current price is over target).
If PRY meets the Credit Suisse target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.94, suggesting upside of 16.7% (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 PRY as Hold (3) -

Management has stated the performance in the year to date has been in line with expectations and FY19 guidance is reaffirmed for underlying net profit of or above $100m. All divisions are expected to have stronger second half earnings.

Deutsche Bank maintains a hold rating and $3.08 target.

Target price is $3.08 Current Price is $2.52 Difference: $0.56
If PRY meets the Deutsche Bank target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $2.94, suggesting upside of 16.7% (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 PRY as Equal-weight (3) -

Guidance was reiterated at the AGM. Primary Health Care continues to expect net profit of $100m or higher. This includes the Monserrat acquisition.

GP recruitment is ahead of FY18 but below Morgan Stanley's estimates. The broker assumes the company recruits 250 new doctors in FY19 to keep up with targets.

Equal-weight. Target is $3.20. Industry view: In Line.

Target price is $3.20 Current Price is $2.52 Difference: $0.68
If PRY meets the Morgan Stanley target it will return approximately 27% (excluding dividends, fees and charges).

Current consensus price target is $2.94, suggesting upside of 16.7% (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 QUB as Sell (5) -

Qube's guidance was left unchanged at its AGM from its August result. The only difference the broker spotted was that the BOMC offshore venture is experiencing weather-related delays. Otherwise, early FY19 is running ahead of expectations, management suggested, although it is unclear what those expectations are.

The broker expects solid earnings in the near term boosted by strong volumes for Patricks and the Operating Division. Moorebank customer sign-ups are critical in the longer term but these will take time. The market is pricing Moorebank "for perfection", the broker suggests, hence Sell and $2.40 target retained.

Target price is $2.40 Current Price is $2.66 Difference: minus $0.26 (current price is over target).
If QUB meets the Citi target it will return approximately minus 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.69, suggesting upside of 1.0% (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 QUB as Buy (1) -

Ord Minnett is comfortable with the trading update from the AGM. First quarter results were slightly ahead of the company's expectations. Importantly, management confirmed Patrick was benefiting from strong market growth.

Buy rating and $3.10 target maintained.

Target price is $3.10 Current Price is $2.66 Difference: $0.44
If QUB meets the Ord Minnett target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $2.69, suggesting upside of 1.0% (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 SHL as Upgrade to Neutral from Underperform (3) -

Credit Suisse observes, since the FY18 result, the stock has underperformed the market. Guidance has been reaffirmed for 3-5% growth in operating earnings, weighted to the second half.

While remaining cautious on the operating environment, particularly given softer Australian pathology volumes and regulatory headwinds in the US and Germany, the broker believes risks are now factored in.

Rating is upgraded to Neutral from Underperform. Target is reduced to $23.00 from $23.50.

Target price is $23.00 Current Price is $22.91 Difference: $0.09
If SHL meets the Credit Suisse target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $26.13, suggesting upside of 14.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.4

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

Morgans rates SIL as Add (1) -

Management, at the AGM, has  signalled its disappointment with the performance to date, having been slow to react to significant problems in a number of the acquired practices. FY19 guidance has been lowered to underlying net profit of $5m, from $6m.

Guidance assumes no contribution from acquisitions, while Morgans expects acquisitions will occur, noting that at the AGM the company announced the acquisition of three practices.

Add rating maintained. Target is reduced to $1.01 from $1.10.

Target price is $1.01 Current Price is $0.40 Difference: $0.61
If SIL meets the Morgans target it will return approximately 153% (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

Citi rates WES as Downgrade to Sell from Neutral (5) -

In the wake of the Coles ((COL)) de-merger and the prior divestment of loss-making and/or capital intensive businesses, Wesfarmers is now around 60% exposed to Australian housing, via Bunnings and Kmart, Citi notes. There is little in the way of organic growth in the offing so the challenge will be to use the now well-stuffed balance sheet for diversification acquisitions.

If none present, a capital return might be the option. Until more is clear, Citi prefers the two supermarkets. Downgrade to Sell from Neutral. Target falls to $29.20 from $45.30 ex-Coles.

Target price is $29.20 Current Price is $31.89 Difference: minus $2.69 (current price is over target).
If WES meets the Citi target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $40.88, suggesting upside of 28.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.0

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

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

Credit Suisse is well aware of the slowdown in housing-related demand but believes the market is underestimating the opportunity for of value creation in the company's industrials business.

The recent contract between Woodside ((WPL)) and Perdaman highlights WA gas pricing is at a level where domestic downstream investment can be supported. Given existing infrastructure at Kwinana and a site at Burrup, Credit Suisse is surprised Wesfarmers was not party to that deal.

As for Bunnings, the broker expects growth from expanded ranges and online penetration and there is some buffer given the high exposure to the do-it-yourself market.

The broker also sticks its neck out, suggesting that over the next two years there will be significant expansion of Wesfarmers' ammonia manufacturing, while Blackwood's earnings should double over the next five years.

Rating is upgraded to Outperform from Neutral. Target is reduced to $34.07 from $49.47.

Target price is $34.07 Current Price is $31.89 Difference: $2.18
If WES meets the Credit Suisse target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $40.88, suggesting upside of 28.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.0

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