Australian Broker Call

Deutsche Bank rates AHG as Buy (1) -

Deutsche Bank expects minimal impact from the ASIC decision to disallow flex commissions from September 1 2018.

The main risk to assumptions is a failure by Automotive Holdings to negotiate alternative commission structures that preserve its level of finance income. Yet the broker considers this a low probability.

Buy rating and $4.60 target retained.

Target price is $4.60 Current Price is $3.97 Difference: $0.63
If AHG meets the Deutsche Bank target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $4.35, suggesting upside of 9.5% (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

Macquarie rates AWC as Outperform (1) -

Press reports suggest the Chinese government is looking to impose winter curtailments on alumina and aluminium production. The broker believes current consensus forecasts for the alumina price are too bearish and not accounting for this possibility.

Noting a strong leverage to the alumina price, the broker retains Outperform on Alumina Ltd and maintains earnings forecasts well above consensus. Target unchanged at $2.20.

Target price is $2.20 Current Price is $1.94 Difference: $0.265
If AWC meets the Macquarie target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $1.84, suggesting downside of -4.2% (ex-dividends)

The company's fiscal year ends in December.

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: -0.5

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

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

Ord Minnett perceives a broad view that approvals and commencements activity has peaked. Nevertheless, with a full pipeline of work, the eventual impact on building products and heavy construction materials demand may not be seen until the end of the year, particularly in the eastern states.

The broker expects Boral to be a key beneficiary of the market dynamics, in addition to continued growth in the US residential sector. Hence, rating is upgraded to Accumulate from Hold. Target is $6.50.

Target price is $6.50 Current Price is $5.93 Difference: $0.57
If BLD meets the Ord Minnett target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $6.46, suggesting upside of 7.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.6

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

Deutsche Bank rates IAG as Hold (3) -

The company has updated the market on the impact of the recent hail storms in Sydney. The hail storm is expected to have cost IAG $160m. The company has stated it can absorb a further $130m of natural peril losses for the remainder of FY17 and stay within guidance.

Deutsche Bank reduces FY17 forecasts by -3% to reflect the impact of the hail damage and an over-run for the remaining period. Hold rating retained. Target is $5.80.

Target price is $5.80 Current Price is $6.14 Difference: minus $0.34 (current price is over target).
If IAG meets the Deutsche Bank target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $6.00, suggesting downside of -2.2% (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

Macquarie rates IAG as Underperform (5) -

In the wake of result season the broker retains its preference for Suncorp over Insurance Australia Group in the space, noting Suncorp gained market share in the period while IAG lost market share.

An Outperform rating is maintained for Suncorp and Underperform for IAG. IAG target unchanged at $5.70.

Target price is $5.70 Current Price is $6.14 Difference: minus $0.44 (current price is over target).
If IAG meets the Macquarie target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $6.00, suggesting downside of -2.2% (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

Morgans rates IAG as Hold (3) -

The company has disclosed net claims costs of around $160m from the recent Sydney hail storm. Morgans maintains forecasts, as the company has $130m of peril allowances remaining for FY17.

The broker retains a Hold rating and $5.72 target.

Target price is $5.72 Current Price is $6.14 Difference: minus $0.42 (current price is over target).
If IAG meets the Morgans target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $6.00, suggesting downside of -2.2% (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

UBS rates IAG as Neutral (3) -

The company has quantified the likely impact from the Sydney hailstorms at around $160m. UBS expects, while natural peril costs are only $30m shy of the company's FY17 budget, there is a further $96m of reinsurance cover left for FY17.

Neutral rating and $6 target retained.

Target price is $6.00 Current Price is $6.14 Difference: minus $0.14 (current price is over target).
If IAG meets the UBS target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $6.00, suggesting downside of -2.2% (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

Credit Suisse rates NVT as Downgrade to Underperform from Neutral (5) -

The company has sustained another contract loss, announcing its Adult English Migrant Program for the Department of Education & Training will not be renewed in most regions upon expiry. This will result in a permanent reduction in EBITDA of $12-14m from FY18.

Credit Suisse was surprised at the news as, although the tendering process had been flagged at the first half result, no changes were expected to be material at a group level. Growth expectations had been raised, with the rolling off of the loss of the university program contract with Macquarie University.

A return to growth now appears unlikely in FY18. Credit Suisse downgrades to Underperform from Neutral. Target is reduced to $4.00 from $4.40.

Target price is $4.00 Current Price is $4.22 Difference: minus $0.22 (current price is over target).
If NVT meets the Credit Suisse target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.73, suggesting upside of 17.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.2

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

Macquarie rates NVT as Outperform (1) -

Navitas had previously foreshadowed some Adult Migration English Program contract losses but the earnings impact of the announced losses is greater than the broker had assumed. The broker is quick to point out that the losses reflect the government's desire to diversify providers rather any indictment of Navitas.

The broker believes the stock has been sold off too far given upside from the University Pathway business, in which, feedback suggests, Navitas is held in high regard. Outperform retained, target falls to $4.85 from $5.25.

Target price is $4.85 Current Price is $4.22 Difference: $0.63
If NVT meets the Macquarie target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $4.73, suggesting upside of 17.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.2

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

UBS rates NVT as Buy (1) -

The company will deliver a reduced number of contracts to regions under the Adult Migrant English Program from July 1, 2017. The company estimates the reduction in delivery centres will decrease  EBITDA by $12-14m in FY18 and beyond.

UBS reduces FY18-19 forecasts for earnings per share by around -10%.The broker believes the company can still grow core earnings at around 9% compound over FY18-21 and this, combined with other attractive attributes, should mean it finds  valuation support at current levels.

Buy rating retained. Target falls to $4.50 from $5.18.

Target price is $4.50 Current Price is $4.22 Difference: $0.28
If NVT meets the UBS target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $4.73, suggesting upside of 17.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.2

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

Citi rates QUB as Buy (1) -

Qube's Patrick should be looking forward towards margin pressure relief, suggest analysts at Citi. They've bumped up estimates, and the price target to $3.01 from $2.84 in response.

Relief should follow now that competitor DP World Australia is introducing a new Infrastructure Surcharge for full containers in Port Botany and Port Melbourne from 3 April 2017 onwards.

Citi assumes Patrick will follow these surcharges from 1 July 2017. Buy. Forecasts have lifted by 6.0% and 5.5% in FY18 and FY19 respectively.

Target price is $3.01 Current Price is $2.30 Difference: $0.71
If QUB meets the Citi target it will return approximately 31% (excluding dividends, fees and charges).

Current consensus price target is $2.60, suggesting upside of 13.7% (ex-dividends)

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.6

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

Credit Suisse rates RHC as Neutral (3) -

After a site visit Credit Suisse believes the UK is a favourable region for the company, despite tariff pressures and the increased reliance on higher-cost agency nursing.

Private hospitals now play greater role in relieving pressure off the UK's NHS system, and the provision of this type of case mix suits the company's UK facilities.

Neutral retained. Target is $75.

Target price is $75.00 Current Price is $68.41 Difference: $6.59
If RHC meets the Credit Suisse target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $76.17, suggesting upside of 12.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.2

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

UBS rates RHC as Neutral (3) -

Site visits to the UK and France suggest to UBS the company is leaving nothing to chance in its quest for top-line growth, including unlocking new revenue sources. Costs are also in focus, with the company concentrating services for scale.

The broker considers the initiatives are necessary to simply offset the fiscal pressures. UBS does not envisage a medium-term catalyst for higher earnings growth. Neutral rating and $79 target retained.

Target price is $79.00 Current Price is $68.41 Difference: $10.59
If RHC meets the UBS target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $76.17, suggesting upside of 12.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.2

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

Ord Minnett rates SFR as Upgrade to Buy from Hold (1) -

Ord Minnett's commodities team has raised its near-term base metal prices on the back of positive sentiment, supply disruptions and strong growth in demand.

The most meaningful changes are increases of 15% and 26% for copper prices in 2017 and 2018 respectively, as well as increases in aluminium pricing of 21% and 15% for the same respective periods.

The broker raises its rating for Sandfire Resources to Speculative Buy from Hold and the target to $7.30 from $6.80.

Target price is $7.30 Current Price is $6.29 Difference: $1.01
If SFR meets the Ord Minnett target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $6.88, suggesting upside of 7.6% (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 SGP as Buy (1) -

The Victorian government has announced a number of initiatives in housing, including abolishing stamp duty for any first home buyer up to $600,000. UBS observes first home buyers represent around 50% of net deposits each quarter for the company and Victoria represents around 30-40%.

The broker remains confident that the initiatives will support land sales and price growth. The broker retains a Buy rating, reflecting a conviction around elongated residential earnings growth. Target is $4.76.

Target price is $4.76 Current Price is $4.69 Difference: $0.07
If SGP meets the UBS target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $4.78, suggesting upside of 2.1% (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 SSM as Buy (1) -

The company has proposed the $20m acquisition of TechSafe, the largest independent electrical inspection company in Australia. Ord Minnett expects the transaction to be 6.3% accretive in FY18.

The broker believes any conflicts in terms of related party involvement have been well managed and actually de-risk the transaction for shareholders. Buy rating and $1.25 target retained.

Target price is $1.25 Current Price is $1.18 Difference: $0.07
If SSM meets the Ord Minnett target it will return approximately 6% (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 SUN as Neutral (3) -

Another year and yet another (likely) fail for Suncorp's hazard allowances. Reading in between the lines, one can sense the annoyance among Citi analysts about Suncorp management consistently having to top up whenever disaster strikes.

This time around the culprit is the recent northern Sydney hailstorm. Citi analysts seem genuinely surprised by how quickly Suncorp's allowance has been shrinking.

Citi analysts have now increased their natural hazard loss forecast by $70m, leading to a -4% EPS downgrade for FY17. Neutral rating retained.

Target price is $13.35 Current Price is $13.40 Difference: minus $0.05 (current price is over target).
If SUN meets the Citi target it will return approximately minus 0% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $13.74, suggesting upside of 3.7% (ex-dividends)

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

Deutsche Bank rates SUN as Buy (1) -

The company has updated the market on the impact of the recent hail storms in Sydney. The hail storm is expected to have cost $150-170m.

The company is protected against further deterioration from natural hazard events because of its aggregate cover which provides $300m in reinsurance protection once natural hazard losses exceed $460m.  As a result  Deutsche Bank believes it should be protected from further deterioration at this point.

Deutsche Bank reduces FY17 forecasts by -1.2%. Buy rating and $14 target retained.

Target price is $14.00 Current Price is $13.40 Difference: $0.6
If SUN meets the Deutsche Bank target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $13.74, suggesting upside of 3.7% (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 SUN as Outperform (1) -

In the wake of result season the broker retains its preference for Suncorp over Insurance Australia Group in the space, noting Suncorp gained market share in the period while IAG lost market share.

An Outperform rating is maintained for Suncorp and Underperform for IAG. Suncorp target rises to $14.33 from $14.24.

Target price is $14.33 Current Price is $13.40 Difference: $0.93
If SUN meets the Macquarie target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $13.74, suggesting upside of 3.7% (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

Morgans rates SUN as Hold (3) -

The company has disclosed net claims costs of around $150-170m from the recent Sydney hail storm.

Morgans now expects the company to exceed its second half perils allowances by around $50m, despite its FY17 aggregate reinsurance protection. Earnings-per-share estimates are downgraded for FY17 by -5%.

Hold and $13.50 target retained.

Target price is $13.50 Current Price is $13.40 Difference: $0.1
If SUN meets the Morgans target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $13.74, suggesting upside of 3.7% (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 SUN as Accumulate (2) -

Ord Minnett updates  to reflect the company's clarification of the financial impact of the recent Sydney hailstorms, which are expected to cost $150-170m.

The broker believes that, because of seasonality, the company would allocate around 20% of its perils allowance for the last quarter of the financial year. Hence, the broker believes  there should be greater reinsurance protection for the remainder of the period.

Accumulate rating retained. Target slips to $14.11 from $14.14.

Target price is $14.11 Current Price is $13.40 Difference: $0.71
If SUN meets the Ord Minnett target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $13.74, suggesting upside of 3.7% (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 SUN as Buy (1) -

The company has quantified the likely impact from the Sydney hailstorms at around $160m. UBS notes natural peril costs are already in line with the company's FY17 budget.

The broker reduces FY17 earnings per share by -3.3%.  The broker also suspects that upcoming reinsurance renewals may be less beneficial  than in recent years.

A Buy rating is maintained. Target is $14.45.

Target price is $14.45 Current Price is $13.40 Difference: $1.05
If SUN meets the UBS target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $13.74, suggesting upside of 3.7% (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

Morgans rates VHT as Add (1) -

The company has updated on its sales, noting that nine customers have now signed up to VolparaEnterprise as software-as-a--service contracts.

The next catalyst for Morgans is the launch of this service in Europe and participation in a major breast conference in the US and Australia.

Although short-term forecasts are reduced, longer-term profitability expectations are increased. The broker believes share price weakness, in part driven by poor sentiment in the sector, has created an opportunity to add to current positions or enter the stock at attractive levels for those with a higher risk profile.

The broker maintains an Add rating and $0.87 target.

Target price is $0.87 Current Price is $0.45 Difference: $0.425
If VHT meets the Morgans target it will return approximately 96% (excluding dividends, fees and charges).

The company's fiscal year ends in March.

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

Credit Suisse rates WFD as Downgrade to Neutral from Outperform (3) -

Credit Suisse notes its recent history with the stock has been characterised by frequent disappointments as asset disposals, invasive developments, intensive retailer re-mixing and technology spending have all conspired to dampen earnings growth.

The stock may be cheap but the broker expects it to stay that way, and further asset disposals are likely to drive another year of soft growth.The broker also has concerns that the company's small stake in Hammerson will ultimately lead  to dilutive - in the case of earnings - M&A activity.

Rating is downgraded  to Neutral from Outperform. Target is reduced to $9.25 from $10.25.

Target price is $9.25 Current Price is $8.81 Difference: $0.44
If WFD meets the Credit Suisse target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $9.78, suggesting upside of 12.4% (ex-dividends)

The company's fiscal year ends in December.

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

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

Ord Minnett's commodities team has raised its near-term base metal prices on the back of positive sentiment, supply disruptions and strong growth in demand.

The most meaningful changes are increases of 15% and 26% for copper prices in 2017 and 2018 respectively, as well as increases in aluminium pricing of 21% and 15% for the same respective periods.

The broker raises the target to Hold from Lighten. Target is $2.40.

Target price is $2.40 Current Price is $2.34 Difference: $0.06
If WSA meets the Ord Minnett target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $2.49, suggesting upside of 6.9% (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