Australian Broker Call

Morgans rates AHG as Hold (3) -

Auto sales in WA, to which Auto Holdings is 35% exposed, are down -9% year to date. The NSW market has also now suffered two months of negative growth.

Cost-outs for the company's Cold Logistics are tracking to plan, the broker notes, but for the first time in a long while, a weak second half auto result is expected.

The broker expects cost-outs in auto as well but has cut forecast earnings and lowered its target to $4.10 from $4.21. Hold retained.

Target price is $4.10 Current Price is $3.90 Difference: $0.2
If AHG meets the Morgans target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $4.19, suggesting upside of 7.9% (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

Morgans rates AMP as Add (1) -

The broker has marked its insurance company valuations to market. AMP forecast earnings rise 1-2%.

Target rises to $5.95 from $5.86. Add retained.

Target price is $5.95 Current Price is $5.21 Difference: $0.74
If AMP meets the Morgans target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $5.58, suggesting upside of 5.8% (ex-dividends)

The company's fiscal year ends in December.

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 APE as Hold (3) -

Qld new car sales continue to decline, down another -6.4% in the March Q. While the broker acknowledges AP Eagers has a track record of outperforming peers and the broader market, a 46% exposure to Qld will weigh on revenues and margins.

The broker expects cost cuts to follow but downgrades forecast earnings and lowers its target to $9.83 from $10.49. Hold retained.

Target price is $9.83 Current Price is $8.39 Difference: $1.44
If APE meets the Morgans target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $9.81, suggesting upside of 16.8% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.0

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

Ord Minnett rates AWC as Accumulate (2) -

Broadly in-line, say the analysts about partner Alcoa's trading update in the USA. Accumulate rating and $2.20 price target retained.

Target price is $2.20 Current Price is $1.81 Difference: $0.395
If AWC meets the Ord Minnett target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $1.84, suggesting downside of -1.7% (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

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

Morgan Stanley believes regional banks are relatively well placed to navigate the changing mortgage market, given more leverage to re-pricing, falling capital and less impact from lower loan growth.

This is most positive for Bendigo & Adelaide and the broker upgrades to Equal-weight  from Underweight. The stock is now the broker's preferred regional bank. Target is raised to $11.40 from $10.30. Industry view is In-Line.

The bank still needs to improve its return on equity, improve on costs, and de-risk via a partial sale of Homesafe, Morgan Stanley believes.

Target price is $11.40 Current Price is $12.03 Difference: minus $0.63 (current price is over target).
If BEN meets the Morgan Stanley target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $11.19, suggesting downside of -9.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: -0.9

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

Morgans rates CUA as Hold (3) -

An independent board committee has recommended Centuria Urban unitholders vote in favour of the proposed merger with Centuria Metropolitan REIT ((CMA)) in the absence of a superior offer and assuming the Independent Expert gives the deal the thumbs up.

The broker retains Hold and lowers its target to the implicit merger price of $2.27 from a prior $2.30.

Target price is $2.27 Current Price is $2.24 Difference: $0.03
If CUA meets the Morgans target it will return approximately 1% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.0

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

Macquarie rates GHC as Neutral (3) -

Canadian-listed NorthWest Healthcare has announced an all-cash takeover offer for Generation Healthcare at $2.24 a share. NorthWest owns the manager and is the largest unit holder in the company, with a 22.73% interest.

Macquarie observes the offer provides value for unit holders but, in a market short of assets, an additional control premium may be required to secure an established portfolio. Neutral  retained. Target is raised to $2.24 from $1.91.

Target price is $2.24 Current Price is $2.27 Difference: minus $0.03 (current price is over target).
If GHC meets the Macquarie 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: 0.0

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

Morgans rates IAG as Hold (3) -

The broker has marked its insurance company valuations to market. IAG forecast earnings rise 1%.

Target unchanged at $5.56. Hold retained.

Target price is $5.56 Current Price is $6.08 Difference: minus $0.52 (current price is over target).
If IAG meets the Morgans target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $6.08, suggesting downside of -0.7% (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 KGL as Add (1) -

Since late 2015, drilling at Rockface has good copper grades and the broker expects this will increase to an increased resource and increased grade. The Jervois pre-feasibility study indicated a robust copper-silver project.

KGL has raised $2.5m at 27cps. The broker lifts its target to 51c from 35c to incorporate resource and exploration upside, and a longer term move to a discounted cash flow valuation. Add retained.

Target price is $0.51 Current Price is $0.38 Difference: $0.13
If KGL meets the Morgans target it will return approximately 34% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

Forecast for FY16:

Forecast for FY17:

Market Sentiment: 1.0

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

Morgans rates MTO as Add (1) -

New motorcycle sales fell -13% in the march Q, a stark reversal of the strong trend evident in the second half FY16, the broker notes. Motorcycle Holdings nevertheless has a strong track record of outperforming the broader market.

The company has also acquired three new dealerships, which should be accretive from FY18. Target falls to $4.35 from $4.67 and Add retained.

Target price is $4.35 Current Price is $3.78 Difference: $0.57
If MTO meets the Morgans target it will return approximately 15% (excluding dividends, fees and charges).

The company's fiscal year ends in July.

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

Morgan Stanley rates NAB as Underweight (5) -

Ahead of the first half result on May 4, Morgan Stanley observes the bank needs to deliver a positive revenue and capital surprise to support the current share price.

The bank grew below system for much of 2016 but in 2017-18, the broker believes it should be less affected by the latest macro prudential measures versus other major banks, although competition in its priority segment of home owners is likely to pick up.

Underweight rating and $28.50 target retained. Industry view is: In-Line.

Target price is $28.50 Current Price is $33.37 Difference: minus $4.87 (current price is over target).
If NAB meets the Morgan Stanley target it will return approximately minus 15% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $31.99, suggesting downside of -4.9% (ex-dividends)

The company's fiscal year ends in September.

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 ORG as No Rating (-1) -

The Australian Energy Market Commission has started a review of five-minute pricing versus 30-minute pricing. A draft decision is due in July and a final decision in September.

Origin Energy is a potential loser from this change, Macquarie believes, although there are many moving parts making it difficult to quantify.

 The broker observes multiple reviews across the energy sector continue to create uncertainty for investors.

Macquarie is restricted on rating and target at this stage.

Current Price is $7.47. Target price not assessed.

Current consensus price target is $7.46, suggesting downside of -1.0% (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

Morgan Stanley rates QBE as Overweight (1) -

Morgan Stanley observes the challenging global cycle has been a headwind to turning the company around and a bottom may be forming in the cycle as the global economy is entering a phase of synchronous recovery for the first time since 2010.

This, in turn, is positive for sums insured and premium growth. Morgan Stanley remains cautiously optimistic on the global pricing outlook. Overweight retained. Target is $13.90. In-Line industry view.

Target price is $13.90 Current Price is $12.62 Difference: $1.28
If QBE meets the Morgan Stanley target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $13.22, suggesting upside of 1.4% (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: 0.3

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

Morgans rates QBE as Hold (3) -

The broker has marked its insurance company valuations to market. While this would otherwise have resulted in only a small forecast increase for QBE, a more detailed review has led the broker to believe its valuation has been too conservative.

Lower reinsurance, cost-out benefits and the likelihood of further reserve releases see the broker lift FY17 forecast earnings by 20%. Target rises to $13.47 from $13.06. Hold retained.

Target price is $13.47 Current Price is $12.62 Difference: $0.85
If QBE meets the Morgans target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $13.22, suggesting upside of 1.4% (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: 0.3

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

Ord Minnett rates RRL as Accumulate (2) -

Lower throughput disappointed in the March quarter, but higher grades at Duketon North surprised and Ord Minnett analysts seem confident about improvement in the final quarter of FY17.

Pointing at the company’s strong free cash flow and dividend yields plus the solid production growth profile, the stockbroker maintains its Accumulate rating, as well as the $3.80 price target.

Regis Resources remains Ord Minnett's preferred ASX gold exposure. Estimates have been lowered.

Target price is $3.80 Current Price is $3.39 Difference: $0.41
If RRL meets the Ord Minnett target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $3.17, suggesting downside of -0.1% (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 SPO as Underperform (5) -

The company has advised shareholders to reject the $1.15 per share bid from Downer EDI ((DOW)) on medium to long-term valuation grounds. The rejection is not a surprise to Macquarie, given prior commentary.

The company's discussions with another potential acquirer have now ended and this removes one of its main forms of defence, in the broker's opinion.

Underperform rating and $1.10 target retained. Macquarie continues to recommend investors sell into the bid as the update confirms there is a low risk of another bid emerging.

Target price is $1.10 Current Price is $1.11 Difference: minus $0.005 (current price is over target).
If SPO meets the Macquarie target it will return approximately minus 0% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $0.89, suggesting downside of -18.1% (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 SRX as Hold (3) -

It did not surprise the broker that Sirtex' phase 3 SARAH study failed to show a survival advantage from SIR-spheres over Sorafinib in advanced liver cancer. The analyst in question is clearly of a medical background, as one would need a masters in biology to understand the rest of the report.

Suffice to say the broker had anticipated the SARAH result so makes no forecast changes. But with the probability of success for SIRveNIB now lower, the broker cuts its target to $15.60 from $16.20. Hold retained.

Target price is $15.60 Current Price is $14.80 Difference: $0.8
If SRX meets the Morgans target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $25.65, suggesting upside of 70.8% (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

UBS rates SRX as Buy (1) -

The  SARAH study failed to meet its primary end point,  UBS observes, offering two months less in terms of life expectancy versus the standard drug in all trial patients. Still, where the study protocol was followed life expectancy was the same, with better quality.

Hence, referencing precedent trials where protocol population was the accepted data set, the company is convinced it can begin marketing and this is made more compelling by the quality-of-life data versus the significant adverse effects of the standard therapy (Sorafenib).

UBS has not taken a view on the outcome. Target is $30.30. Buy retained.

Target price is $30.30 Current Price is $14.80 Difference: $15.5
If SRX meets the UBS target it will return approximately 105% (excluding dividends, fees and charges).

Current consensus price target is $25.65, suggesting upside of 70.8% (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

Morgans rates SUN as Hold (3) -

The broker has marked its insurance company valuations to market. Suncorp forecast earnings rise 1%.

Target rises to $13.71 from $13.37. Hold retained.

Target price is $13.71 Current Price is $13.56 Difference: $0.15
If SUN meets the Morgans target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $13.68, suggesting downside of -0.6% (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

Deutsche Bank rates TTS as Buy (1) -

Pacific Consortium has amended its revised proposal to allow the company to pay dividends, and not result in a reduction to the consideration of $4.21 a share.

The board is undertaking an assessment of the two proposals and will make an announcement when this is complete. In the interim, the board believes the proposed merger with Tabcorp ((TAH)) is in the best interests of shareholders, report the analysts.

Deutsche Bank retains a Buy rating and $4.67 target.

Target price is $4.67 Current Price is $4.45 Difference: $0.22
If TTS meets the Deutsche Bank target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $4.27, suggesting downside of -4.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.0

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

Ord Minnett rates VCX as Accumulate (2) -

Management has indicated it is largely done with the planned asset sale program but Ord Minnett analysts beg to differ. They believe selling more assets, and lifting overall quality at the same time, would make Vicinity Centres a more attractive option for investors.

Ord Minnett has identified a further 21 assets – valued at $2.05bn or around 14% of the portfolio – that in the analysts' view should be divested. Doing so, say the analysts, would leave the group’s portfolio rivalling GPT ((GPT)) and pushing it closer to Scentre Group ((SCG)) from a quality perspective.

It would also leave Vicinity less exposed to the retail industry's threats from Amazon’s entry, in Ord Minnett's view. Accumulate. Target $3.30.

Target price is $3.20 Current Price is $2.92 Difference: $0.28
If VCX meets the Ord Minnett target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $3.06, suggesting upside of 4.7% (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 VMY as Add (1) -

Further work has commenced at Mulga Rock following federal government environmental approval. A definitive feasibility study is expected mid this year. The new WA government has indicated it won't oppose uranium mining.

Add retained on Vimy, target reduced to 42c from 47c to account for the recent placement at 26cps.

Target price is $0.42 Current Price is $0.23 Difference: $0.19
If VMY meets the Morgans target it will return approximately 83% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY16:

Forecast for FY17:

Market Sentiment: 1.0

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

Citi rates VRL as Neutral (3) -

Australians are less and less queuing up to visit theme parks on the Gold Coast and management has finally succumbed to market pressure about the company's debt, announcing it is investigating asset sales to lighten up the balance sheet.

Citi analysts are concerned that after Australian visitors, the next disappointment might come from international visitors. Gold Coast Hotel occupancy has now declined for the last six months, point out the analysts.

Management is now under pressure to execute asset sales, find the analysts, adding increased disclosure around bank covenants is now needed to lift investor confidence. Estimates have been sharply reduced, but price target only declines by -1% to $3.60. Neutral rating left untouched.

Target price is $3.60 Current Price is $3.75 Difference: minus $0.15 (current price is over target).
If VRL meets the Citi target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.83, suggesting upside of 3.2% (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

Deutsche Bank rates VRL as Hold (3) -

The company has issued a trading update for its theme parks, noting a significant impact from the tragedy at rival park Dreamworld, as well as unfavourable weather in March and April.

FY17 EBITDA guidance for theme parks of $55-65m is -27% below Deutsche Bank's estimates. The broker reduces earnings forecasts for FY17  and FY18 by  -14% and -5% respectively.

Target is reduced to $3.70 from $4.20. Hold retained.

Target price is $3.70 Current Price is $3.75 Difference: minus $0.05 (current price is over target).
If VRL meets the Deutsche Bank target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.83, suggesting upside of 3.2% (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

Macquarie rates VRL as Neutral (3) -

The company has updated on its theme parks division, noting attendance continues to be affected by the tragedy at rival Dreamworld. Attendance at the company's Gold Coast parks, for the nine months to March, was down -9.4%.

The company also noted cyclonic weather in March and April affected attendance. Sydney Wet'n'Wild is also underperforming.

Macquarie does not consider valuation alone as a catalyst to buy the stock and retains a Neutral rating. The broker believes the company needs to deliver at its first half result, with its focus on reducing gearing an overdue positive. Target is reduced to $3.38 from $3.43.

Target price is $3.38 Current Price is $3.75 Difference: minus $0.37 (current price is over target).
If VRL meets the Macquarie target it will return approximately minus 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.83, suggesting upside of 3.2% (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