Australian Broker Call

Ord Minnett rates AGL as Downgrade to Hold from Accumulate (3) -

The share price appears to have caught up with higher wholesale forward prices and, while Ord Minnett does not believe AGL will risk upgrading full year guidance at the interim result, higher electricity prices should be positive for earnings.

The broker suspects an upgrade to full year guidance would risk even greater scrutiny from federal politicians.

Energy and electricity prices are expected to be the main focus for both political parties leading up to the may 2019 election and the broker believes it will be difficult for the share price to outperform throughout that period.

Rating is downgraded to Hold from Accumulate and the target is reduced to $23.20 from $23.40.

Target price is $23.20 Current Price is $20.70 Difference: $2.5
If AGL meets the Ord Minnett target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $20.72, suggesting upside of 0.1% (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 ALL as Buy (1) -

The US justice department has called for all forms of online gambling to be illegal, reversing a decision from 2011 that only prohibited sports betting. UBS believes this could make it easier to bring cases against online gambling companies.

The broker does not expect a direct impact on Aristocrat Leisure, although regulatory intervention in gambling tends to be a negative for the sector.

Additionally, the broker suspects the potential positive impact of play shifting to land-based casinos from online would be immaterial. Buy rating and $34 target maintained.

Target price is $34.00 Current Price is $23.53 Difference: $10.47
If ALL meets the UBS target it will return approximately 44% (excluding dividends, fees and charges).

Current consensus price target is $31.97, suggesting upside of 35.9% (ex-dividends)

The company's fiscal year ends in September.

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 ALX as Equal-weight (3) -

Morgan Stanley reduces its valuation for APRR, taking a conservative approach because of the "yellow vest" protester impact in Paris.

The broker expects a sharp slowdown in traffic on the route, incorporating a -7% fall in the December quarter and some rebound in 2019.

Equal-weight maintained. Target is reduced to $6.66 from $6.99. Industry view: Cautious.

Target price is $6.66 Current Price is $6.26 Difference: $0.4
If ALX meets the Morgan Stanley target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $7.09, suggesting upside of 13.2% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.8

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

Citi rates ASX as Sell (5) -

In response to the ASX H1 volume data update, Citi analysts have lifted forecasts, observing the ASX experienced a particularly strong period for both IPO raisings and cash market trading volumes.

Price target lifts to $59.80 from $58, but the analysts cannot look beyond the fact the share price trades at a higher level. On valuation the rating remains Sell, despite the analysts acknowledging the positive features such as defensive earnings and built-in leverage to share market turmoil.

Target price is $59.80 Current Price is $63.28 Difference: minus $3.48 (current price is over target).
If ASX meets the Citi target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $57.40, suggesting downside of -9.3% (ex-dividends)

The company's fiscal year ends in June.

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

UBS rates AVN as Neutral (3) -

UBS updates earnings and valuation to incorporate the internalisation and current macro outlook. The broker believes the business is a strong manager and internalisation improves the structure of the vehicle.

Upside exists if the company can illustrate competency as a fully integrated property manager and build out a third party capital business, in the broker's view. Neutral maintained. Target is reduced to $2.21 from $2.29.

Target price is $2.21 Current Price is $2.11 Difference: $0.1
If AVN meets the UBS target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $2.18, suggesting upside of 3.3% (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 BPT as Upgrade to Outperform from Neutral (1) -

Credit Suisse believes Beach Energy is uniquely situated as a domestic gas player, with the potential to capture east coast gas trading and consolidation. Potential acquisition candidates include Cooper Energy ((COE)) and Bass Strait interests.

Credit Suisse is also comfortable with Seven Group ((SVW)) increasing its stake in Beach Energy.

The broker upgrades to Outperform from Neutral, and expects price support over the next 18 months from continued cost reductions as well as modest production growth in the Cooper Basin. Target is raised to $1.75 from $1.25.

Target price is $1.75 Current Price is $1.66 Difference: $0.09
If BPT meets the Credit Suisse target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $1.86, suggesting upside of 12.0% (ex-dividends)

The company's fiscal year ends in June.

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

Credit Suisse rates CCL as Neutral (3) -

Credit Suisse observes the Queensland container deposit tax introduced recently appears to have had a more pronounced impact than the NSW scheme that was introduced a year ago.

This may have contributed to the cautious guidance that emanated from the company in late November, the broker suspects, where it expected 2019 would be another year of transition and net profit growth would be less than mid-single digits.

Credit Suisse believes FY18 20 should reflect a resumption of earnings growth in Australia and models for 3%.

The broker considers the stock uninspiring, albeit inexpensive, and retains a Neutral rating. Target is reduced to $8.90 from $9.80.

Target price is $8.90 Current Price is $8.21 Difference: $0.69
If CCL meets the Credit Suisse target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $8.40, suggesting upside of 2.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.4

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

Deutsche Bank rates CGF as Hold (3) -

Deutsche Bank expects the Hayne Royal Commission will have a negative effect on the retail advisor channel for all financial product manufacturers.

Retail sales account for 70-80% of total annuity sales and, hence, the broker believes the December half year is likely to reveal a slowdown in demand.

Hold rating retained. Target is $9.80.

Target price is $9.80 Current Price is $9.30 Difference: $0.5
If CGF meets the Deutsche Bank target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $11.26, suggesting upside of 21.1% (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

UBS rates CTD as Upgrade to Buy from Neutral (1) -

The stock has fallen -31% since its peak in September and UBS remains convinced of the growth opportunity. The broker asserts nothing is being priced in for future acquisitions.

Upside risk to earnings is considered likely, given the company's acquisition history, and the broker upgrades to Buy from Neutral. Target is reduced to $31.20 from $32.20.

Target price is $31.20 Current Price is $23.52 Difference: $7.68
If CTD meets the UBS target it will return approximately 33% (excluding dividends, fees and charges).

Current consensus price target is $27.94, suggesting upside of 18.8% (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 FMG as Overweight (1) -

Morgan Stanley notes an article from Platts has signalled that Fortescue Metals has narrowed near-term contract discounts for February.

Based on the broker's modelling, price realisation for traditional products could be around 70% and 74%, based on January and February numbers, respectively.

This is above the broker's forecast of 68% for the March quarter. Morgan Stanley's commodity team also considers the headline 62% iron ore price carries upside risk in 2019.

Overweight rating and $5.05 target maintained. Industry view is Attractive.

Target price is $5.05 Current Price is $4.55 Difference: $0.5
If FMG meets the Morgan Stanley target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $4.72, suggesting upside of 3.7% (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: 0.5

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

Citi rates JHG as Neutral (3) -

Marking-to-market, Citi analysts have reduced estimates by double digit percentages for FY19 and FY20. The analysts point out latest industry data suggest a sharp qoq deterioration for 4Q net fund outflows in both the US and Europe, plus the analysts think performance fees will be materially lower too.

Longer term, Citi remains of the view there is value up for grabs, but for now a patchy outlook dominates. Neutral rating retained, while the price target drops to US$22.75 (was US$25.90). For Australian investors, this translates to $31.60 from $36.35.

Target price is $31.60 Current Price is $30.00 Difference: $1.6
If JHG meets the Citi target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $37.03, suggesting upside of 23.4% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

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

Credit Suisse rates MHJ as Outperform (1) -

The company has reported revenue slowed -1.3% in the second quarter while same-store sales fell -2.9%. However, this result marked a notable improvement from a very weak first quarter, Credit Suisse points out.

Importantly trading has improved through the critical Christmas period, with same-store sales growth of 1.3%. Improved momentum is highlighted in all key markets.

The main negative the broker takes from the update is the flat retail gross margin. Credit Suisse maintains an Outperform rating and reduces the target to NZ$0.95 from NZ$1.01.

Current Price is $0.58. Target price not assessed.

Current consensus price target is $0.70, suggesting upside of 20.7% (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

Morgans rates MHJ as Upgrade to Hold from Reduce (3) -

The company's first half trading update has signalled 1.3% same-store sales growth over the key November/December months.

Morgans is now more confident, given the return to positive sales growth over the crucial Christmas period, although retains some concerns about the outlook for gross margin going forward.

Rating is upgraded to Hold from Reduce and the target raised to $0.62 from $0.60. The company did not provide its usual regional growth metrics but a strong performance is still envisaged for Canada.

Target price is $0.62 Current Price is $0.58 Difference: $0.04
If MHJ meets the Morgans target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $0.70, suggesting upside of 20.7% (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 MPL as Lighten (4) -

Ord Minnett reviews the stock ahead of its results and suspects a negative impact from recent rate increases and likely future premium rate caps as well as standardisation of cover and youth discount reforms.

The broker considers the prospects are not good for an industry that is losing members and facing significant margin challenges. Nib Holdings ((NHF)) is considered better value than Medibank Private.

Lighten rating maintained. Target is reduced to $2.23 from $2.53.

Target price is $2.23 Current Price is $2.64 Difference: minus $0.41 (current price is over target).
If MPL meets the Ord Minnett target it will return approximately minus 16% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.57, suggesting downside of -2.8% (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 NGI as Buy (1) -

Ord Minnett was disappointed with the recent update. The broker still envisages merit in the investment case, owing to the strong management team and recurring revenue.

There are good prospects for additional inflows envisaged from Asia and Europe, particularly over the next 12 months.

The broker considers the stock cheap from both a DCF and multiple standpoint and retains a Buy rating. Target is reduced to $4.00 from $5.50.

Target price is $4.00 Current Price is $2.89 Difference: $1.11
If NGI meets the Ord Minnett target it will return approximately 38% (excluding dividends, fees and charges).

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: 1.0

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

Ord Minnett rates NHF as Hold (3) -

Ord Minnett reviews the stock ahead of its results and suspects a negative impact from recent rate increases and likely future premium rate caps as well as standardisation of cover and youth discount reforms.

The broker expects around 50% of the anticipated gross margin pressures are likely to be passed on, and there will be some expense savings as well and Nib Holdings is expected to be in the better position to mitigate pressures than its peers.

Hold rating maintained. Target is reduced to $5.34 from $6.12.

Target price is $5.34 Current Price is $5.20 Difference: $0.14
If NHF meets the Ord Minnett target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $5.93, suggesting upside of 14.1% (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

Macquarie rates PAN as Outperform (1) -

Macquarie observes Panorama Resources is close to completing the ramping up of Savannah nickel project. Moreover, the forward book is calculated to be $10m in the money at spot prices, providing some protection in the event of a sustained trough in nickel pricing.

Hence, Macquarie suspects the company will perform better in a depressed nickel environment compared with its peers. Outperform rating and $0.70 target maintained.

Target price is $0.70 Current Price is $0.44 Difference: $0.26
If PAN meets the Macquarie target it will return approximately 59% (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

UBS rates RMD as Neutral (3) -

UBS has adjusted modelling assumptions and makes modest earnings changes, increasing estimates by 2-3% over FY19-21.

US DME feedback continues to suggest to the broker that patient referrals for CPAP, and growth in resupply, remain strong.

UBS retains a Neutral rating and raises the target to US$116 from US$111.

Current Price is $16.24. Target price not assessed.

Current consensus price target is $15.76, suggesting downside of -3.0% (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: 0.4

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

Ord Minnett rates SGR as Buy (1) -

Ord Minnett's observations of the Sydney gaming rooms suggests soft main floor table growth. Multi-terminal gaming machines remain strong after the refurbishment. Overall, the broker trims earnings estimates by -2.1% based on its observations from visiting the casinos.

The broker believes the company is delivering on initiatives to improve its domestic offering and hotel openings should boost main gaming revenue. Buy rating and $6.10 target maintained.

Target price is $6.10 Current Price is $4.34 Difference: $1.76
If SGR meets the Ord Minnett target it will return approximately 41% (excluding dividends, fees and charges).

Current consensus price target is $5.94, suggesting upside of 37.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.9

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

Macquarie rates SPL as Initiation of coverage with Outperform (1) -

Macquarie initiates coverage on Starpharma Holdings with an Outperform rating and $2.00 target. The company develops dendrimer products for various pharmaceutical applications.

The broker expects the launch of Vivagel in the EU and Australia in the second half of FY19 will provide near-term revenue, expecting $4m in the current year and around $17m in FY20.

With an implied shareholder return of around 82% and sufficient funding, the broker considers the risk/reward profile is attractive at current levels.

Target price is $2.00 Current Price is $1.12 Difference: $0.88
If SPL meets the Macquarie target it will return approximately 79% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Market Sentiment: 1.0

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