Australian Broker Call

Ord Minnett rates ALL as Accumulate (2) -

The company's ability to acquire business and invest for increased returns is well illustrated over the past five years and Ord Minnett is increasingly confident that the strategy can be replicated with Big Fish and Plarium.

The broker upgrades earnings estimates by 2.6% for FY18 and 2.8% for FY19. The broker estimates digital gaming accounts for 28% of earnings in the current year, up from 13% in FY17, and should continue to grow. Accumulate rating maintained. Target is raised to $33.50 from $32.00.

Target price is $33.50 Current Price is $28.21 Difference: $5.29
If ALL meets the Ord Minnett target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $34.84, suggesting upside of 23.5% (ex-dividends)

The company's fiscal year ends in September.

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

Deutsche Bank rates BKW as Buy (1) -

FY18 underlying net profit was ahead of expectations. Management has indicated residential activity is likely to decline in major east coast markets while energy prices will significantly affect earnings. A solid contribution from land and development is expected.

Deutsche Bank maintains a Buy rating and $18.40 target.

Target price is $18.40 Current Price is $16.39 Difference: $2.01
If BKW meets the Deutsche Bank target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $16.56, suggesting upside of 1.1% (ex-dividends)

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 BPT as Underperform (5) -

Macquarie believes the market is underestimating the amount of capital expenditure required to sustain and grow production and expects the upcoming investor briefing to shed more light on commitments.

The broker is positive on the free cash flow to be generated over the next four years but considers the share price expensive at current levels.

Underperform rating and $1.75 target maintained.

Target price is $1.75 Current Price is $1.96 Difference: minus $0.21 (current price is over target).
If BPT meets the Macquarie target it will return approximately minus 11% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $1.68, suggesting downside of -14.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: -0.2

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

Morgan Stanley rates CBA as Underweight (5) -

Morgan Stanley envisages downside potential to the banks as investors review profitability and growth prospects after the Hayne Royal Commission interim report is handed down by the end of September.

Uncertainty and debate centre around the conclusions of the report and the recommendations, amid expectations of a focus on more responsible lending, higher compliance expenditure and removal of excess fees as well as modest fines/remediation. Underweight rating and $65 target maintained. Industry view: In-Line.

Target price is $65.00 Current Price is $71.29 Difference: minus $6.29 (current price is over target).
If CBA 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 $74.06, suggesting upside of 3.9% (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

Ord Minnett rates CLV as Buy (1) -

Net profit in FY18 more than doubled and was in line with expectations. Volume growth among existing clients was strong and traction is being obtained with new clients. Gross margin rose to 30.4% in the second half, from 27.5% in the first half.

China has published draft legislation which the broker understands recommends a minimum of 15mg of DHA per 100,000cal of infant formula. While the implications are positive, quantum and timing are unknown and the broker counts this as a "free option". Ord Minnett reiterates a Buy rating and increases the target to $1.70 from $1.40.

Target price is $1.70 Current Price is $1.57 Difference: $0.13
If CLV meets the Ord Minnett target it will return approximately 8% (excluding dividends, fees and charges).

The company's fiscal year ends in July.

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

Deutsche Bank rates JHX as Buy (1) -

Deutsche Bank is pleased the incoming CEO has reiterated the key growth ambitions, including the 35%/90% target in product/share and a 20-25% US fibre cement earnings margin target.

Deutsche Bank expects the company to consistently achieve its 6% primary demand growth expectations by FY21. Buy rating and $23.60 target maintained.

Target price is $23.60 Current Price is $20.88 Difference: $2.72
If JHX meets the Deutsche Bank target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $24.43, suggesting upside of 17.0% (ex-dividends)

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: 0.8

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

Macquarie rates KAR as Outperform (1) -

The company will book a -$140m non-cash impairment resulting from the evaluation of the Kangaroo field and a re-assessment of its 2C resource. Macquarie envisages upside through the FPSO, which is available earlier than previously modelled, targeting first production in early 2020, as well as potential M&A.

The force majeure has been lifted on block Z-38 in Peru after changes to laws. The company announced a farm-out of a 35% interest to Tullow Oil earlier this year. Outperform rating maintained. Target is raised to $1.40 from $1.30.

Target price is $1.40 Current Price is $1.17 Difference: $0.23
If KAR meets the Macquarie target it will return approximately 20% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.5

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

Citi rates NUF as Buy (1) -

Ahead of the FY18 results, Citi suggests the risk of a potential equity issue will continue to overhang the stock. The stock is trading well below historical valuation and, with Omega 3 approvals likely by early 2019, the risk/reward is considered attractive. The broker maintains a Buy rating and $9.00 target.

Target price is $9.00 Current Price is $6.70 Difference: $2.3
If NUF meets the Citi target it will return approximately 34% (excluding dividends, fees and charges).

Current consensus price target is $8.96, suggesting upside of 33.7% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.7

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

Morgan Stanley rates ORE as Upgrade to Equal-weight from Underweight (3) -

Morgan Stanley updates its model to allow for the temporary changes to the Argentinian export tax, applying it to all exports out to 2020 at an assumed rate of 8%.

Given the disparity in the Chinese and Chilean lithium carbonate price forecasts the broker now uses an average of the two until the end of 2019. As a result earnings estimates for FY19 and FY20 are reduced slightly.

Morgan Stanley upgrades to Equal-weight from Underweight. In-Line industry view and $4.20 target maintained.

Target price is $4.20 Current Price is $4.34 Difference: minus $0.14 (current price is over target).
If ORE meets the Morgan Stanley target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.81, suggesting upside of 33.9% (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

Morgans rates REA as Add (1) -

Despite a slowing residential property market, Morgans has calculated that the company is continuing to grow volume in paid depth ads. The broker expects REA Group to sail through the current slump in residential property markets and meet expectations for the first half.

Add rating and $95.21 target maintained.

Target price is $95.21 Current Price is $85.46 Difference: $9.75
If REA meets the Morgans target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $87.90, suggesting upside of 2.9% (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 RMD as Hold (3) -

ResMed has gained significant market share since the launch of its AirSolutions range in 2014, Ord Minnett observes, because of the benefits offered for durable medical equipment providers. The company is seeking to expand its offering to help manage associated chronic conditions.

The broker considers the investment in technology a clear competitive advantage, positioning the company well for the future. Hold rating and $14 target maintained.

Target price is $14.00 Current Price is $15.66 Difference: minus $1.66 (current price is over target).
If RMD meets the Ord Minnett target it will return approximately minus 11% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $14.50, suggesting downside of -7.4% (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: 0.3

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

Deutsche Bank rates RRL as Hold (3) -

Regis Resources has confirmed discussions with Capricorn Metals ((CMM)) have taken place with an indicative and incomplete proposal being made. Before a binding offer can be announced, the company requires the board of Capricorn Metals to recommend the proposal and obtain the support of the major shareholder.

If support is not obtained before the ASX open on October 3, Regis Resources reserves the right to terminate discussions. The implied valuation for Capricorn Metals is $85m. Deutsche Bank maintains a Hold rating and $4.00 target.

Target price is $4.00 Current Price is $3.86 Difference: $0.14
If RRL meets the Deutsche Bank target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $4.13, suggesting upside of 6.9% (ex-dividends)

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 SGM as Upgrade to Outperform from Neutral (1) -

Sims has downgraded first quarter earnings guidance due to a weaker performance form its Sims Adams recycling JV, a result of lower volumes and challenges in selling low-grade "zorba" (unseparated mix of non-ferrous metal scrap). It is not clear whether this is due to competition or weaker scrap prices, Credit Suisse notes.

The JV will now look to install new zorba processing equipment to lift grades. Credit Suisse suggests the downgrade is a hit to management's credibility given recent assurance that selling zorba would not be a problem.

Target falls to $14.45 from $14.80 but rating upgraded to Outperform with no explanation, most likely given yesterday's share price fall.

Target price is $14.45 Current Price is $11.79 Difference: $2.66
If SGM meets the Credit Suisse target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $14.48, suggesting upside of 22.8% (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

Macquarie rates SGM as Outperform (1) -

The company has downgraded earnings guidance for the first quarter to $58-63m, from around $75m. This is largely because of lower intake at the SA Recycling joint venture, as a result of suppliers stockpiling material in expectation of higher prices.

Macquarie reduces FY19 and FY20 estimates by -7% and -3% respectively. The broker suggests visibility may have been more challenged than management pointed out in August/early September, but considers the challenges more than discounted in the current valuation. Outperform rating maintained. Target is reduced to $16.60 from $17.40.

Target price is $16.60 Current Price is $11.79 Difference: $4.81
If SGM meets the Macquarie target it will return approximately 41% (excluding dividends, fees and charges).

Current consensus price target is $14.48, suggesting upside of 22.8% (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 SGM as Buy (1) -

The company has downgraded its first quarter guidance because of weaker-than-expected sales at Zorba in the company's SA recycling joint venture. Ord Minnett notes the tariff issues in Turkey do not appear to to be having a negative impact.

Fundamentally, Ord Minnett considers the stock cheap but sentiment appears to be bearish. Buy rating is maintained. Target is reduced to $16.70 from $16.70.

Target price is $16.00 Current Price is $11.79 Difference: $4.21
If SGM meets the Ord Minnett target it will return approximately 36% (excluding dividends, fees and charges).

Current consensus price target is $14.48, suggesting upside of 22.8% (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

UBS rates SGM as Neutral (3) -

The company has downgraded first quarter earnings guidance by -20%, attributed to the SA Recycling joint venture which has been affected by lower sales volumes.

UBS had expected that the heavy investment in upgrading plants over recent years would have extended into the SA JV, but it appears this is not the case and the business has been under-invested. Upgrades are expected to be completed by the end of 2018.

Neutral rating is maintained. Target is reduced $12.50 from $13.85.

Target price is $12.50 Current Price is $11.79 Difference: $0.71
If SGM meets the UBS target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $14.48, suggesting upside of 22.8% (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

Deutsche Bank rates SHL as Buy (1) -

Deutsche Bank considers the US District Court decision in Columbia a negative for Sonic Healthcare as it sets back any potential revisions to funding cuts, or at the least delays any possible improvement in funding.

The court has dismissed the American Clinical Laboratory Association's lawsuit to halt the implementation of cuts to reimbursement for laboratory testing. Deutsche Bank maintains a Buy rating and $28.10 target.

Target price is $28.10 Current Price is $25.28 Difference: $2.82
If SHL meets the Deutsche Bank target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $26.49, suggesting upside of 4.8% (ex-dividends)

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 SYR as Equal-weight (3) -

Morgan Stanley believes the stock now has significant upside to its price target but retains its Equal-weight rating, reflecting continued risk through the ramp up phase and the lack of visibility on the metrics as the Balama project is yet to be declared commercial.

Target is reduced to $2.65 from $3.05. Industry view is In-Line.

Target price is $2.65 Current Price is $2.40 Difference: $0.25
If SYR meets the Morgan Stanley target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $3.63, suggesting upside of 51.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.6

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

Morgan Stanley rates TCL as Resume Coverage with Equal-weight (3) -

Morgan Stanley suspects rising bond yields, and the pivot to growth versus yield, may ease the near-term appeal of the stock. Still, the broker finds the company's strategy compelling.

The main concerns for investors centre on near-term distributions, medium-term traffic performance and longer-term growth prospects. All these aspects add uncertainty to the investment case. Morgan Stanley could become more bullish over time if cash cover improves and construction projects reach completion.

The broker resumes coverage with an Equal-weight rating and Cautious industry view. Target is $12.43.

Target price is $12.43 Current Price is $11.21 Difference: $1.22
If TCL meets the Morgan Stanley target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $12.35, suggesting upside of 10.1% (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