Australian Broker Call

Citi rates ALQ as Sell (5) -

ALS is scheduled to report interim results on Tuesday 29 November. Citi analysts are forecasting a -16% fall in underlying net profits to $52m. They note company guidance is $50-55m.

Current forecasts are for FY18 and FY19 profit increases by 9% and 7% respectively. Sell.

Target price is $4.00 Current Price is $6.57 Difference: minus $2.57 (current price is over target).
If ALQ meets the Citi target it will return approximately minus 39% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.30, suggesting downside of -18.5% (ex-dividends)

The company's fiscal year ends in March.

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

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

Credit Suisse downgrades to Neutral form Outperform because of changing macro conditions. The company's defensive revenue streams suggest it will be unlikely that the stock will outperform as investors seek growth.

The US dollar appreciation against the euro has induced downgrades to earnings per share forecasts of about 5%. First half EBIT is likely to be flat, in the broker's opinion, affected by the acquisition of Alusa. Target is reduced to $15.10 from $16.90.

Target price is $15.10 Current Price is $14.98 Difference: $0.12
If AMC meets the Credit Suisse target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $16.07, suggesting upside of 11.6% (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: 0.3

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

Citi rates CAR as Buy (Re-initiation of coverage) (1) -

It is officially being presented as an initiation of coverage, but Citi did cover the stock in 2015, so let's call it a re-initiation of coverage. The Buy rating from back then has nevertheless made a come-back. Target $12.10.

Carsales is now Citi's top pick among online media companies in Australia. The analysts like the underlying solid structural core earnings story and think there is value at current price level.

Citi analysts continue to see upside potential from new product development opportunities.

Target price is $12.10 Current Price is $10.70 Difference: $1.4
If CAR meets the Citi target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $11.94, suggesting upside of 10.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.6

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

Deutsche Bank rates DCN as Buy (1) -

The company has released the Mount Morgan pre-feasibility study and a maiden reserve of 1.2m ozs. The main points include higher up-front capital and an underground reserve grade at Westralia of 4.6 g/t, 20% below the resource rate.

The lower reserve grade is driven by more conservative dilution estimates, but the broker expects this broader mining method will also mean lower costs.

Deutsche Bank's valuation falls by 40c, with the target reduced to $3.60 from $4.00. Buy rating maintained.

Target price is $3.60 Current Price is $2.77 Difference: $0.83
If DCN meets the Deutsche Bank target it will return approximately 30% (excluding dividends, fees and charges).

Current consensus price target is $4.05, suggesting upside of 43.6% (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 FXJ as Sell (Re-initiation of coverage) (5) -

Citi ceased coverage in 2015 and has now returned with a Sell rating, preferring Carsales in the online media space, while also re-initiating REA Group with a Buy rating.

The most telling aspect of today's report is that the analysts value Domain at 80c but the rest of the Fairfax media operations a negative -10c. Note the analysts: the $150m cost of shutting down the newspaper business would exceed future earnings.

Target price is $0.70 Current Price is $0.85 Difference: minus $0.15 (current price is over target).
If FXJ meets the Citi target it will return approximately minus 18% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $0.94, suggesting upside of 12.1% (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

Deutsche Bank rates MYO as Buy (1) -

Management has reiterated its prior guidance at its investor briefing. Management has emphasised the importance of accountants in influencing small to medium enterprises in decision making around purchasing accounting software.

The company is also continuing to focus on bigger businesses, emphasising the increased functionality available in its cloud-based Advanced product.

Deutsche Bank considers the valuation attractive relative to both domestic and international peers. Buy rating and $4.40 target maintained.

Target price is $4.40 Current Price is $3.47 Difference: $0.93
If MYO meets the Deutsche Bank target it will return approximately 27% (excluding dividends, fees and charges).

Current consensus price target is $3.92, suggesting upside of 11.7% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY16:

Forecast for FY17:

Market Sentiment: 0.3

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

Macquarie rates NHC as Outperform (1) -

November has been a challenging month for the company, with a delay in the approval for New Acland stage three and cyclonic weather affecting export facilities.

Macquarie believes the Queensland legislation merely delays the stage three approval and will not stop it entirely.The damage to the export facility is far more serious as this will affect the ship loader and reduce shipments for almost a month.

The broker still envisages the company generating around $134m in profit in FY17 and a free cash flow of 19%. The broker retained a Outperform rating and target is lowered to $1.90 from $2.10.

Target price is $1.90 Current Price is $1.62 Difference: $0.28
If NHC meets the Macquarie target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $1.75, suggesting upside of 7.0% (ex-dividends)

The company's fiscal year ends in July.

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

Citi rates NWS as Neutral (Re-initiation of coverage) (3) -

It had been a long wait since 2015, but Citi has resumed coverage with a Neutral rating and $17.30 target. Similar as with Fairfax, the analysts are not in favour of owning traditional print media, but very much in favour of market leading online platforms.

It is Citi's view when it comes to generating growth for News Corp, it is really only Digital Real Estate that is able to. So why buy News Corp shares when an investor can simply buy REA Group direct?

Target price is $17.30 Current Price is $16.47 Difference: $0.83
If NWS meets the Citi target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $18.41, suggesting upside of 12.3% (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

Citi rates OSH as Sell (5) -

Citi analysts have taken the view that Oil Search's lack of diversification has now become an investment risk. They very much prefer Woodside Petroleum ((WPL)) for that reason in the sector.

Longer-term risk is seen attached to the news flow regarding LNG expansion. Given the  weak LNG environment, the analysts see risks to project schedules, financing and marketing efforts.  In addition, they also caution the market may be double-counting capex synergies.

Core EPS estimates for 2016-18 have been adjusted by 7%, -4%, and 4%, respectively. Sell. Target $6.85.

Target price is $6.85 Current Price is $6.94 Difference: minus $0.09 (current price is over target).
If OSH meets the Citi target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $7.80, suggesting upside of 15.6% (ex-dividends)

Forecast for FY16:

Forecast for FY17:

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

Morgan Stanley rates OSH as Equal-weight (3) -

Morgan Stanley observes the long-term growth story is intact, although nearer term there are a number of issues which have the potential to slow progress in PNG.

The broker envisages a number of catalyst over the next few months. Muruk-1 and Antelope-7 are both currently drilling and should be finished in the next two months. The stock continues to trade at a premium, yet the broker notes uncertainty with respect to the timing of expansion and final investment decision.

Equal-weight rating, In-Line sector view and $8.68 target retained.

Target price is $8.68 Current Price is $6.94 Difference: $1.74
If OSH meets the Morgan Stanley target it will return approximately 25% (excluding dividends, fees and charges).

Current consensus price target is $7.80, suggesting upside of 15.6% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY16:

Forecast for FY17:

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

Ord Minnett rates QAN as Buy (1) -

The airline's freight division will apply more than 50,000 litres of fresh milk a week to Ningbo, China. Ord Minnett considers this a small but positive development.

While not considered quite a "cash cow", it could generate annual revenue of around $12m. The service will be an exclusive airfreight partner to carry Van Dairy's Tasmanian milk exports to the second largest city in Zhejiang province.

A noticeable improvement in Qantas' domestic passenger growth and yields in September, and what appears to be a more disciplined approach to international airfares to and from Australia, leads Ord Minnett to retain a Buy rating. Target is $4.50.

Target price is $4.50 Current Price is $3.22 Difference: $1.28
If QAN meets the Ord Minnett target it will return approximately 40% (excluding dividends, fees and charges).

Current consensus price target is $4.28, suggesting upside of 33.3% (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

Morgans rates QUB as Hold (3) -

There was no material change to the outlook provided at the AGM. Morgans makes a number of updates to forecasts which causes downgrades to cash flow estimates across FY18-20.

The acquisition of 50% of Patrick provides an initial step up in earnings, although the broker assumes these earnings will be under intense competitive pressure. Moorebank will provide a meaningful contribution from the start of the next decade.

A Hold rating is retained.Target is reduced to $2.53 from $2.58.

Target price is $2.53 Current Price is $2.41 Difference: $0.12
If QUB meets the Morgans target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $2.64, suggesting upside of 10.3% (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

Citi rates RCG as Neutral (3) -

Citi analysts cannot get excited post trading update. The shares are trading at a significant premium vis-a-vis peers, yet its sales numbers suggest a slowing pace of sales growth, like-for-like, which will be compensated for by rolling out more stores.

The analysts have trimmed their expectations by -4%. Neutral.

Target price is $1.64 Current Price is $1.48 Difference: $0.165
If RCG meets the Citi target it will return approximately 11% (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

Morgans rates RCG as Downgrade to Hold from Add (3) -

Like-for-like sales were reasonably subdued in the year to date, with the exception of Accent. The company has announced a material increase to the roll out of stores and a stronger-than-expected margin performance for Accent.

Morgans makes slight upgrades to forecasts of earnings per share and moves to a 50-50 PE/DCF weighting. As a result, valuation falls to $1.62 from $1.94. Rating downgraded to Hold from Add.

Target price is $1.62 Current Price is $1.48 Difference: $0.145
If RCG meets the Morgans target it will return approximately 10% (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

Citi rates REA as Buy (Re-initiation of coverage) (1) -

Citi stopped covering REA Group in 2015 but is now back with a Buy rating and $68 value/price target. The analysts do note the "current subdued state of property market turnover". They prefer Carsales in the sector.

Citi analysts forecast a 3-year EPS CAGR of 18%, with potential for significant upgrades. The stock does look expensive when compared to peers, but Citi thinks it's justified.

The analysts continue to forecast a "normalisation" in activity levels in the Australian property markets and from this point of view they note REA Group is leveraged to a recovery in the domestic property cycle.

Target price is $68.00 Current Price is $52.06 Difference: $15.94
If REA meets the Citi target it will return approximately 31% (excluding dividends, fees and charges).

Current consensus price target is $57.54, suggesting upside of 8.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.6

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

Morgans rates RHP as Hold (3) -

Morgans reviews its revenue treatment in this update, lowering revenue forecasts by 12% for FY17, but retaining prior EBITDA and forecasts for earnings per share.

Hold rating and $0.86 target retained.

Target price is $0.86 Current Price is $0.75 Difference: $0.11
If RHP meets the Morgans target it will return approximately 15% (excluding dividends, fees and charges).

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

Citi rates SEK as Neutral (Re-initiation of coverage) (3) -

Citi hadn't covered Seek since 2015, but has now returned with a Neutral rating and $15.25 target. The analysts retain a positive view longer term, but see some pressures nearer term.

Citi analysts expect a 13% 3-year EPS CAGR, but also see a valuation that looks "full" against these numbers.

They also believe Seek is well ahead of peers Carsales and REA Group in terms of new product development, while acknowledging this had become a necessity due to intensifying competition from the likes of LinkedIn and Indeed.

Target price is $15.25 Current Price is $15.00 Difference: $0.25
If SEK meets the Citi target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $15.88, suggesting upside of 5.8% (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

Morgans rates SHV as Hold (3) -

2017 crop estimates have been upgraded to 15,500-16,000t from 15,200t. This implies 10-12.5% growth on FY16. Morgans observes the company is clearly witnessing the benefits of its new horticultural programs.

The broker upgrades FY17 net profit forecast by 4.2%. Morgans notes market leading brands and the company's leverage to healthy eating trends. Yet the stock is considered fairly valued and a Hold rating is retained. Target rises to $6.90 from $6.40.

Target price is $6.90 Current Price is $7.01 Difference: minus $0.11 (current price is over target).
If SHV meets the Morgans target it will return approximately minus 2% (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

UBS rates SHV as Neutral (3) -

The company has made some small adjustments to its expectations for FY17. Almond production guidance is 15,500-16,000 tonnes, marginally lower than UBS forecasts, and recent pricing is $7.50-8.00/kg.

There are minor delays to the value adding facility and a nine-month delay to the commissioning of the biomass electricity co-generation plant. Neither of these delays are expected to materially affect earnings.

UBS does not find any reason to adjust operating assumptions at this stage. Neutral rating retained with a $6.65 target.

Target price is $6.65 Current Price is $7.01 Difference: minus $0.36 (current price is over target).
If SHV meets the UBS target it will return approximately minus 5% (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

Citi rates TME as Neutral (Re-initiation of coverage) (3) -

Having abandoned coverage in 2015, Citi has now returned with a Neutral rating and $4.55 price target. Not to like is the fact the company has just closed off the third consecutive year of cost growth well in excess of revenues, with margins declining from 75% to 65%.

Citi analysts acknowledge solid growth potential for both Jobs and property classifieds, but they also believe competition is likely to hold both back from reaching full growth potential at Trade me. Motors remains dominant, but here Citi predicts growth rates are likely to slow to high single digits.

Target price is $4.55 Current Price is $4.61 Difference: minus $0.06 (current price is over target).
If TME meets the Citi target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.55, suggesting downside of -2.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

This company reports in NZD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: 0.0

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

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

Credit Suisse downgrades to Neutral from Outperform as the shares have rallied after Tabcorp ((TAH)) acquired a 10% equity stake via an equity swap. The broker envisages little chance of another suitor emerging.

At this stage, the broker believes Tabcorp offers a more compelling way to play the merger. The target is reduced to $4.50 from $4.85.

Target price is $4.50 Current Price is $4.21 Difference: $0.29
If TTS meets the Credit Suisse target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $4.39, suggesting upside of 3.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.6

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

Deutsche Bank rates UGL as Hold (3) -

Cimic ((CIM)) has received acceptances equating to a relevant interest of 50.67%. The UGL board unanimously now recommends shareholders accept the offer, in the absence of a superior proposal.

Deutsche Bank does not envisage much current overlap between the companies' competencies, but UGL has previously acted as a sub contractor to Cimic in electrical and signalling work. Therefore, cost savings will be likely.

Buy rating and $2.40 target retained.

Target price is $2.40 Current Price is $3.16 Difference: minus $0.755 (current price is over target).
If UGL meets the Deutsche Bank target it will return approximately minus 24% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.39, suggesting downside of -24.4% (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

Morgan Stanley rates WOR as Overweight (1) -

Morgan Stanley believes the market misunderstands the operating laverage, which may create a significant opportunity. The broker believes the translation of revenue growth into margin expansion should be a feature at the turning point of the cycle.

Therefore, even after an 85% rally in the stock since the beginning of the year, the broker believes it can still materially re-rate as this leverage becomes clear.

Overweight rating and Cautious industry view are retained. Target is raised to $11.94 from $6.35.

Target price is $11.94 Current Price is $9.20 Difference: $2.74
If WOR meets the Morgan Stanley target it will return approximately 30% (excluding dividends, fees and charges).

Current consensus price target is $9.08, suggesting downside of -0.3% (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