Australian Broker Call

Citi rates ALG as Buy (1) -

Citi has increasingly turned more positive on the turnaround potential at Ardent Leisure. The broker's optimism includes a more positive outlook for the Main Event operations.

On the back of increased forecasts, Citi's target price lifts to $1.60 from $1.52. Buy rating retained.

Target price is $1.60 Current Price is $1.42 Difference: $0.18
If ALG meets the Citi target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $1.34, suggesting downside of -5.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.3

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

Citi rates DCG as Downgrade to Neutral from Buy (3) -

Citi has downgraded to Neutral/High Risk from Buy despite company management's confidence problems with two of the company's largest contracts can be resolved over the months ahead. The analysts see potential for a drawn-out process.

Making things a little tricky for current shareholders is the fact Citi analysts suggest the company may need to raise extra capital in order to deliver on its FY21 growth targets. Earnings estimates have been slashed, which weighs down the price target by -47% to $0.63.

The price target decline has been partially impacted by the analysts' decision to now apply a -25% discount to valuation.

Target price is $0.63 Current Price is $0.50 Difference: $0.13
If DCG meets the Citi target it will return approximately 26% (excluding dividends, fees and charges).

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.0

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

Credit Suisse rates FXL as Outperform (1) -

The analysts have engaged in a positives versus negatives type of analysis, pointing out Flexigroup's share price might well benefit from ongoing Buy Now, Pay Later growth, but at the same time there are legacy businesses and product fees that are poised to act as headwinds.

All in all, Credit Suisse believes the growth from BNPL will outweigh the negatives. Combined with a "supportive valuation" the analysts seem happy to rate the stock Outperform, alongside a price target of $2.05, up from $1.80.

Minor changes, predominantly in composition, have left FY20 estimates largely unchanged which should leave the company with the prospect of a flat performance overall. But FY21-FY22 are expected to see strong growth on Credit Suisse's forecasts.

Target price is $2.05 Current Price is $1.96 Difference: $0.09
If FXL meets the Credit Suisse target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $2.04, suggesting upside of 3.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.5

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

Ord Minnett rates GXY as Accumulate (2) -

Ord Minnett believes Galaxy Resources released a "solid" December quarter production report. Produced volumes of 43,200 tonnes of spodumene ore at Mt Cattlin exceeded the broker's estimate by 4%.

However, sales of 29,800 tonnes missed expectation by -15% and the lithium market in general remains weak, the analysts note. Ord Minnett retains an Accumulate rating with a price target of $1.60, unchanged.

Target price is $1.60 Current Price is $1.17 Difference: $0.43
If GXY meets the Ord Minnett target it will return approximately 37% (excluding dividends, fees and charges).

Current consensus price target is $1.19, suggesting upside of 1.9% (ex-dividends)

The company's fiscal year ends in December.

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: 0.1

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

Morgan Stanley rates KAR as Overweight (1) -

Karoon Energy had been selected as one key mid-cap pick in the energy sector in Australia for 2020 and this decision hasn't changed. The analysts note exploration drilling is about to commence in Peru (last week of January).

This project remains high risk, but if successful it will open up a new frontier for the company, according to Morgan Stanley. Overweight rating retained. Industry view is In-Line. Price target $1.60.

Target price is $1.60 Current Price is $1.39 Difference: $0.21
If KAR meets the Morgan Stanley target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $2.00, suggesting upside of 43.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 1.0

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

Morgans rates KAR as Initiation of coverage with Add (1) -

Once upon a time, we're talking 2015, Morgans did cover Karoon (at that time still named Karoon Gas) but that was then, and there has been no appetite to research this midcap energy company since.

Until today that is. Morgans initiates coverage with an Add rating and $2.40 price target, probably signalling the company is making a come-back having spent a few years in the share market wilderness.

It's related to that pivotal transaction, the pending acquisition of Petrobras' Bauna operations for some US$665m which brings along 19,000 barrels of oil per day (as the starting point). Morgans explains this translates into in excess of $300m in ebitda per annum for Karoon.

The deal is expected to be finalised in Q1 2020.

Target price is $2.40 Current Price is $1.39 Difference: $1.01
If KAR meets the Morgans target it will return approximately 73% (excluding dividends, fees and charges).

Current consensus price target is $2.00, suggesting upside of 43.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 1.0

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 does not anticipate a formal guidance upgrade at the operational briefing scheduled for February 11, but the analysts do highlight trading conditions remain "strong" for Macquarie Group. As such, they consider any weakening in the share price as an opportunity to buy.

One of the factors supporting the positive view stems from perceived upside risk from performance fees.The broker maintains an Overweight rating and In-Line industry view. Target is $143.

Target price is $143.00 Current Price is $140.58 Difference: $2.42
If MQG meets the Morgan Stanley target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $134.65, suggesting downside of -4.2% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.4

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

Credit Suisse rates PTM as Underperform (5) -

Bottom line: Platinum funds continue to suffer from outflows with continued underperformance against benchmarks not helping the cause. The analysts do observe outflows started to ease towards the end of calendar 2019.

Given the soft performance statistics for the flagship fund, Credit Suisse suspects continued outflows should be expected. The analysts have penciled in a further -$0.8bn of outflows in 2H20 followed by -$1.1bn of outflows in FY21.

Believe it or not, but the recent market update proved a little better than expected and the analysts have increased their estimates slightly as a result. Underperform rating retained. Target price steady at $4.05.

Target price is $4.05 Current Price is $4.75 Difference: minus $0.7 (current price is over target).
If PTM 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 $3.78, suggesting downside of -20.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: -0.8

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

Credit Suisse rates SUN as Underperform (5) -

No changes made to $12.75 price target or the Underperform rating now that the company has updated for the recent bushfires and natural hazard claims. The analysts point out Suncorp is still protected for H2 FY20, also because the insurer previously put in place some very comprehensive reinsurance protection (for which it was criticised at the time).

Credit Suisse believes the key risk for Suncorp is now an aggregation of small natural hazard events. Its calculations suggest remaining headroom is just under $350m in small hazard claims in H2, which would be the worst half on record if it were to materialise.

Those not so happy will be the reinsurers, says Credit Suisse. The broker suggests Suncorp might not find them as prepared to take on further risk, or be forced to pay more for reinsurance. The analysts see -5-10% downside to consensus forecasts for FY21.

Target price is $12.75 Current Price is $13.30 Difference: minus $0.55 (current price is over target).
If SUN meets the Credit Suisse target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $13.38, suggesting upside of 0.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.0

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

Morgan Stanley rates SUN as Underweight (5) -

Morgan Stanley analysts report it appears Suncorp's cover for catastrophe damage claims looks to be sufficient for FY20, also helped by reinsurance and several other items.

Claims are ongoing, of course, and it is likely the $250m maximum event retention from a first event will be triggered, the analysts add.

At this point in time no changes have been made. Underweight rating maintained. In-Line sector view. Price target $12.10.

Target price is $12.10 Current Price is $13.30 Difference: minus $1.2 (current price is over target).
If SUN 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 $13.38, suggesting upside of 0.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.0

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

Ord Minnett rates SUN as Hold (3) -

According to the insurer's own market update, total natural hazard costs for H1 FY20 have now risen to -$519m, exceeding total allowances by -$109m. However, reinsurance protection should help minimise the actual impact on the bottom line, note the analysts.

Ord Minnett analysts have incorporated the update into their forecasts. They retain a cautious approach given trends in underlying margins in an environment of lower interest rates, higher reinsurance costs, higher perils allowances and efforts to correct poor volume trends.

Ord Minnett maintains a Hold rating in combination with an unchanged price target of $13.12.

Target price is $13.12 Current Price is $13.30 Difference: minus $0.18 (current price is over target).
If SUN meets the Ord Minnett target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $13.38, suggesting upside of 0.6% (ex-dividends)

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.0

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