Australian Broker Call

Citi rates AAD as Sell (5) -

Ardent Leisure is slowing down the roll out of new Main Event centres. Citi welcomes the decision, as the analysts previously thought roll out plans looked too ambitious.

While the decision weighs upon earnings estimates in the short term, the analysts are of the view the company's growth pace is likely to be more sustainable. Elsewhere, the analysts point out theme park attendance in March was negatively impacted by significant rainfall in the Gold Coast. This was not included in the trading update.

Target price falls by -6% to $1.45. Sell rating retained.

Target price is $1.45 Current Price is $1.97 Difference: minus $0.515 (current price is over target).
If AAD meets the Citi target it will return approximately minus 26% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $1.88, suggesting downside of -2.8% (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 AAD as Outperform (1) -

The company has slowed down its rolling out of new Main Event centres, citing a need to execute better on existing sites.

This has predictable implication for forecasts, Credit Suisse suggests, although the benefits to management resourcing and the probability of successful execution are significant.

While competition in US casual dining is fierce, the broker notes the trend in sales has materially improved in March.

Outperform rating retained. Target is reduced to $2.20 from $2.25. The reduced roll-out profile means -7-16% reductions to earnings per share estimates in FY18 and FY19.

Target price is $2.20 Current Price is $1.97 Difference: $0.235
If AAD meets the Credit Suisse target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $1.88, suggesting downside of -2.8% (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 AAD as Neutral (3) -

The company's trading update suggests to Macquarie that Main Event sales are moving in the right direction. Like-for-like sales were down -2.5% for the quarter.

While it is too early to call two months as a step change for sales, the broker does find momentum is improving and that is a positive sign. Moreover, potential corporate activity, following the substantial shareholding lodged by Ariadne ((ARA)) on March 29, should underpin the share price if Main Event remains weak.

Neutral rating retained. Target is raised to $2.14 from $1.78.

Target price is $2.14 Current Price is $1.97 Difference: $0.175
If AAD meets the Macquarie target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $1.88, suggesting downside of -2.8% (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 AAD as Hold (3) -

While the performance of Main Event centres on a like-for-like basis was negative in the quarter, Morgans notes the sequential improvement, as March actually produced growth.

The broker notes the result of a sustained period of no growth has been to downgrade the roll-out target for FY18 to eight from 11.

While refurbishing the remaining eight of nine legacy centres will consume significant management time, the broker suspects it will also deliver improved performance.

Morgans retains a Hold rating and reduces the target to $1.82 from $1.84.

Target price is $1.82 Current Price is $1.97 Difference: minus $0.145 (current price is over target).
If AAD 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 $1.88, suggesting downside of -2.8% (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 AAD as Downgrade to Sell from Neutral (5) -

Third quarter sales were broadly in line with UBS' expectations. Main Event revenues were down -2.5%.

UBS takes a more conservative approach  to the opening of new centres, meaning Main Event is not expected to reach its 200 target until around FY32. Free cash flow is not expected until FY27.

The broker downgrades to Sell from Neutral. Target is reduced to $1.75 from $1.80.

Target price is $1.75 Current Price is $1.97 Difference: minus $0.215 (current price is over target).
If AAD meets the UBS target it will return approximately minus 11% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $1.88, suggesting downside of -2.8% (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

Citi rates AGL as Downgrade to Sell from Buy (5) -

Upon further research, Citi analysts have come to the conclusion that high electricity prices will ultimately command a solution, and thus electricity prices will come down, just not as yet.

In the short term, estimates go up on higher electricity prices, but on the expectation that in twelve months time we should start seeing solutions kicking in to pull down elevated electricity prices, the rating is being downgraded to Sell from Buy.

Target price pushes up by 5% to $26.87.

Target price is $26.87 Current Price is $28.44 Difference: minus $1.57 (current price is over target).
If AGL meets the Citi target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $26.99, suggesting downside of -4.2% (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

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

Credit Suisse observes the company is still making year-on-year declines but sales have stabilised and, importantly, the trend is not worsening.

The broker observes that Kimberly Clarke is avoiding deep discounting in personal care products which had forced Asaleo Care to cut prices to protect its market share. For now, the downward pressure seems to have abated.

Guidance of low single digit growth remains achievable, in the broker's view. Nevertheless, stability has been largely priced into the stock and the rating is downgraded to Neutral from Outperform. Target is $1.75.

Target price is $1.75 Current Price is $1.79 Difference: minus $0.035 (current price is over target).
If AHY meets the Credit Suisse target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $1.65, suggesting upside of 0.3% (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

Citi rates BHP as Neutral (3) -

BHP finds itself the target of an activist hedge fund from the USA, urging it to unlock shareholder value through selling off petroleum assets and abandoning the double listings in Sydney and London, in favour of Australia.

The company has already responded with a firm "njet".

Citi analysts think the US onshore business is non-core. Moreover, they say, BHP’s historical strategy of just running tier 1, long life and low cost assets will not necessarily create long term value for shareholders.

No consequences though, with price target stable at $28.50 and the rating unchanged on Neutral.

Target price is $28.50 Current Price is $25.73 Difference: $2.77
If BHP meets the Citi target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $27.84, suggesting upside of 9.5% (ex-dividends)

The company's fiscal year ends in June.

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: 0.4

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

Macquarie rates BHP as Outperform (1) -

The company has received a proposal from activist shareholder, Elliott Associates, to restructure the company. The proposal involves de-merging and listing the petroleum business on the NYSE, collapsing the dual-listed structure, and returning cash to shareholders by increasing off-market buy-backs and unlocking the large franking credit balance.

Macquarie believes the plan raises some questions worth considering. There is a risk in the broker's view that a combined single listed entity could trade towards UK multiples rather than maintain Australian multiples. A de-merger of the US petroleum assets could unlock value but the broker believes this is highly dependent on the level of debt ascribed to the business.

Outperform rating and $30 target retained.

Target price is $30.00 Current Price is $25.73 Difference: $4.27
If BHP meets the Macquarie target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $27.84, suggesting upside of 9.5% (ex-dividends)

The company's fiscal year ends in June.

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: 0.4

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

Morgan Stanley rates BHP as Overweight (1) -

The company has received a proposal from Elliott Associates, which has a 4.1% stake, to restructure the company. The proposal involves de-merging and listing the petroleum business on the NYSE, collapsing the dual-listed structure, and returning cash to shareholders by increasing off-market buy-backs and unlocking the large franking credit balance.

Morgan Stanley agrees the shares are relatively attractive but believes the potential uplift form such actions may be modest. The company has also stated that the costs and risk of the proposal would significantly outweigh the potential benefits.

Overweight rating, Attractive sector view and $31.50 target retained.

Target price is $31.50 Current Price is $25.73 Difference: $5.77
If BHP meets the Morgan Stanley target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $27.84, suggesting upside of 9.5% (ex-dividends)

The company's fiscal year ends in June.

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: 0.4

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

Ord Minnett rates BHP as Hold (3) -

The company has received a proposal from shareholder, Elliott Advisors, to restructure the company. The proposal involves de-merging and listing the petroleum business on the NYSE, collapsing the dual-listed structure, and returning cash to shareholders by increasing off-market buy-backs and unlocking the large franking credit balance.

Ord Minnett observes the proposal could help the company deploy its US$9.7bn franking balance and release value to shareholders, but notes the tax and cost consequences of closing the dual listed structure are unknown. The broker retains a Hold rating and $26 target.

Target price is $26.00 Current Price is $25.73 Difference: $0.27
If BHP meets the Ord Minnett target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $27.84, suggesting upside of 9.5% (ex-dividends)

The company's fiscal year ends in June.

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: 0.4

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

Citi rates BLX as Neutral (3) -

Citi only initiated coverage less than two weeks ago. The analysts have updated their modeling. No changes made to either Neutral rating or price target at $1.75.

Target price is $1.75 Current Price is $1.76 Difference: minus $0.01 (current price is over target).
If BLX meets the Citi target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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

Credit Suisse rates BTT as Neutral (3) -

Funds under management were up 4.8% over the March quarter and modestly ahead of Credit Suisse expectations. Growth was driven by fund inflows and positive market movements, slightly offset by FX.

The broker upgrades estimates for FY17 by 1%. Neutral retained. Target is $10.

Target price is $10.00 Current Price is $10.76 Difference: minus $0.76 (current price is over target).
If BTT meets the Credit Suisse target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $10.65, suggesting downside of -5.1% (ex-dividends)

The company's fiscal year ends in September.

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

Macquarie rates BTT as Outperform (1) -

Fund flows continued at a rate above Macquarie's 5% benchmark in the March quarter. The company has achieved over $7.5bn in net inflows on a rolling 12-month basis.

The broker believes the company's success reflects a combination of attractive investment strategies and distribution. Outperform rating retained. Target rises to $11.92 from $11.08.

Target price is $11.92 Current Price is $10.76 Difference: $1.16
If BTT meets the Macquarie target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $10.65, suggesting downside of -5.1% (ex-dividends)

The company's fiscal year ends in September.

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

Morgan Stanley rates BTT as Overweight (1) -

Inflows in the March quarter were ahead of Morgan Stanley's forecasts. The broker believes the diversity of the company's growth options remains attractive.

JO Hambro is attracting solid inflows in the UK and Europe  and the US expansion is ramping up, which supports higher margins.

Overweight rating and $11.30 target retained. Industry view: In-line.

Target price is $11.30 Current Price is $10.76 Difference: $0.54
If BTT meets the Morgan Stanley target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $10.65, suggesting downside of -5.1% (ex-dividends)

The company's fiscal year ends in September.

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

Credit Suisse rates DOW as Upgrade to Neutral from Underperform (3) -

Credit Suisse adjusted numbers to reflect the full $1bn capital raising and minor changes in FY17 guidance. The broker upgrades to Neutral from Underperform.

Credit Suisse continues to struggle to find the rationale in the deal for Spotless ((SPO)), particularly the premium and lack of due diligence.

Whilst the company appears wedded to exposure to Spotless, one way or the other, the broker continues to exclude Spotless earnings  from estimates for the time being. Target is $5.90.

Target price is $5.90 Current Price is $5.54 Difference: $0.36
If DOW meets the Credit Suisse target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $6.20, suggesting upside of 10.2% (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

Morgans rates MHJ as Add (1) -

Sales growth in the nine months to March was 5.5%. Morgans observes the top line remains challenging but acknowledges management's note that a good footprint across Queensland and NSW has been established.

Morgans downgrades forecast earnings per share by -2.6% and -3.5% for FY17 and FY18 respectively. The broker continues to be attracted to the long-term store roll-out and the resulting margin expansion from scale benefits.

Add rating retained. Target is reduced to $1.53 from $1.65.

Target price is $1.53 Current Price is $1.36 Difference: $0.175
If MHJ meets the Morgans target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $1.59, suggesting upside of 22.4% (ex-dividends)

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 ORG as Upgrade to Neutral from Sell (3) -

It is Citi's view current high electricity prices are partly a function of limited gas supply reducing competitive pressure within the electricity market. This, the analysts point out, gives Origin the choice between monetising its gas within electricity markets or gas markets.

In the analysts' opinion, with the current gas price arbitrage between domestic prices and an LNG netback starting to close, today represents the sweet spot for the company's gas book, as well as for the value of its gas peaking power stations.

In Citi's view, the medium term outlook remains difficult given the house prediction for US$65/bbl long term oil price and expectation for spot LNG prices to materially weaken by mid-year. Upgrade to Neutral. Price target jumps by 10% to $7.58.

Target price is $7.58 Current Price is $7.45 Difference: $0.13
If ORG meets the Citi target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $7.33, suggesting downside of -2.1% (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 PTM as Neutral (3) -

Funds under management in the March quarter were up 1.2%, affected by  -$200m in net outflows.

The key Platinum International Fund, around 45% of funds under management, performed at 130 basis points above benchmark in March. The Platinum Asia Fund underperformed the benchmark over a one, three and 12-month and three-year time period.

Macquarie retains a Neutral rating. Target is raised to $4.93 from $4.90.

Target price is $4.93 Current Price is $4.91 Difference: $0.02
If PTM meets the Macquarie target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $4.82, suggesting downside of -3.8% (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 RWC as Outperform (1) -

Macquarie has surveyed US plumbers, confirming the strength of the company's franchise. The broker's analysis underpins medium-term upgrades to earnings per share.

Macquarie continues to like the investment case and has identified the strength in the Sharkbite franchise and the ongoing opportunity for market penetration that exists.

FY18 estimates are raised by 1.3%. Target is raised to $3.60 from $3.50. Outperform retained.

Target price is $3.60 Current Price is $2.94 Difference: $0.66
If RWC meets the Macquarie target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $3.22, suggesting upside of 8.9% (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

Citi rates SFR as Neutral (3) -

Citi analysts encountered no surprises in the Monty feasibility study and maiden ore reserve release. While the target price falls 80c to $6.70, the rating remains Neutral.

The analysts point out Monty is managed and 70% owned by Sandfire, with Talisman ((TLM)) owning the remaining 30%. As such, Sandfire will pay 70% of capex and opex.

Updating the model for updated commodity prices forecasts and FX has resulted in lower estimates.

Target price is $6.70 Current Price is $6.53 Difference: $0.17
If SFR meets the Citi target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $6.93, suggesting upside of 6.1% (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

Morgans rates TGR as Hold (3) -

The company recently raised $84.4m via a placement and share purchase plan. The funds will be used to increase fish performance, survival and feed conversion rates as well as acquire new lease sites.

Morgans increases net profit forecasts but notes the capital raising is dilutive to earnings per share over the forecast period. The broker believes some of the expenditure has been brought forward because of adverse conditions at  Macquarie Harbour.

Hold rating retained. Target is reduced to $4.80 from $5.10.

Target price is $4.80 Current Price is $4.36 Difference: $0.44
If TGR meets the Morgans target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $5.03, suggesting upside of 16.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.8

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