Australian Broker Call

Ord Minnett rates CSR as Hold (3) -

Ord Minnett updates its modelling following the recent update to guidance and share buyback announcement. The broker forecasts underlying FY19 net profit of $182.5m and factors in a $100m buyback.

FY20 forecasts for earnings per share fall -18% and the broker expects earnings to trough in FY21. Hold rating maintained. Target is raised to $3.20 from $3.15.

Target price is $3.20 Current Price is $3.28 Difference: minus $0.08 (current price is over target).
If CSR meets the Ord Minnett target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.36, suggesting upside of 2.6% (ex-dividends)

The company's fiscal year ends in March.

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

Macquarie rates DXS as Neutral (3) -

Dexus and DWPF have exercised their rights to acquire the remainder of MLC tower, taking ownership to 50% each.

Macquarie believes the transaction has turned out better than expected for Dexus unit holders as this is a prime Sydney CBD asset that has been acquired at book value amid favourable funding terms.

The broker believes Dexus remains a market performer and office conditions should stay favourable. Neutral rating maintained. Target is raised to $11.36 from $11.31.

Target price is $11.36 Current Price is $12.41 Difference: minus $1.05 (current price is over target).
If DXS meets the Macquarie target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $11.26, suggesting downside of -9.3% (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

Macquarie rates GPT as Neutral (3) -

GPT has sold its 50% stake in the MLC office tower to Dexus ((DXS)) and DWPF for $800m. Macquarie estimates the sale is neutral to earnings, given the passing yield is commensurate with cost of debt.

Gearing now declines to around 22%. Over time the broker expects funds to be redeployed into developments including retail, industrial and office segments. Neutral rating and $5.99 target maintained.

Target price is $5.99 Current Price is $6.25 Difference: minus $0.26 (current price is over target).
If GPT meets the Macquarie target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.68, suggesting downside of -9.1% (ex-dividends)

The company's fiscal year ends in December.

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

Deutsche Bank rates IPH as Hold (3) -

IPH has announced a proposal to acquire listed competitor Xenith IP ((XIP)) with a scrip and cash offer. This offer values the business at $1.97 per share and under the proposal shareholders will receive $1.28 in cash and 0.1056 IPH shares for every Xenith share.

IPH already has a 19.9% stake which it acquired in February. Deutsche Bank has a Hold rating and $5.70 target.

Target price is $5.70 Current Price is $6.63 Difference: minus $0.93 (current price is over target).
If IPH meets the Deutsche Bank target it will return approximately minus 14% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $6.38, suggesting downside of -3.8% (ex-dividends)

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.7

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

Macquarie rates MLX as Outperform (1) -

A power outage has driven a reduction to quarterly production expectations. The company now expects production of 4,000-4,200t of copper in concentrate. Metals X is working towards a new life-of-mine plan and remains on track to announce this in April.

Macquarie is disappointed with the power outage, as this has driven a -30% reduction to production forecasts for the quarter. Delivering on a life-of-mine plan is a key catalyst, in the broker's view.

Outperform rating maintained. Target is reduced to $0.60 from $0.65.

Target price is $0.60 Current Price is $0.26 Difference: $0.34
If MLX meets the Macquarie target it will return approximately 131% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

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

Credit Suisse rates NCM as Underperform (5) -

Newcrest will acquire 70% of the Red Chris open pit mine. Credit Suisse believes the company is taking a medium-term view, assessing that the scant deep drilling has already defined a high-grade zone within the broader lower-grade porphyry.

The broker notes the poor recoveries, and suspects financial distress had prevented the owners from attracting technical expertise.

Newcrest believes its recently-demonstrated technology could deliver better recoveries and that a higher grade underground block cave could be implemented.

Underperform and $20.30 target retained.

Target price is $20.30 Current Price is $25.21 Difference: minus $4.91 (current price is over target).
If NCM meets the Credit Suisse target it will return approximately minus 19% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $23.56, suggesting downside of -6.5% (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: -0.4

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

Morgan Stanley rates NEC as Overweight (1) -

Morgan Stanley assesses the weak advertising market is presenting challenges but is increasingly convinced the company has opportunities to create value. This should mean its shares outperform over the next 1-2 years.

The broker believes the Stan business - subscription video on demand - is fast-growing and now has the scale to cover fixed costs. The broker lifts the base case value for Stan.

Overweight. Target is $2.30. Industry view: Attractive.

Target price is $2.30 Current Price is $1.66 Difference: $0.64
If NEC meets the Morgan Stanley target it will return approximately 39% (excluding dividends, fees and charges).

Current consensus price target is $2.06, suggesting upside of 24.1% (ex-dividends)

The company's fiscal year ends in June.

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

Macquarie rates OFX as Neutral (3) -

Macquarie reviews the outlook ahead of the March 20 investor briefing, noting prior FY19 earnings guidance implies second half growth of 10.7-19.9%.

The broker expects a positive investor briefing and delivery on expectations at the FY19 results in May should support the share price, but a sustained re-rating requires active client growth and delivery on operating leverage.

Capital expenditure plans and the $4m in non-recurring costs may also affect investor views. Macquarie retains a Neutral rating and $1.87 target.

Target price is $1.87 Current Price is $1.84 Difference: $0.03
If OFX meets the Macquarie target it will return approximately 2% (excluding dividends, fees and charges).

The company's fiscal year ends in March.

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

UBS rates ORG as Buy (1) -

UBS reduces its valuation, primarily because of lower forecast cash distributions emanating from a revised oil price outlook.

The broker believes the market will increasingly attribute a premium to the company's energy market division, relative to AGL Energy ((AGL)), given a strong position in gas and a generation fleet that is better positioned for increasing renewable generation capacity.

The company is on track to achieve its leverage target and the focus is now on capital management, in the broker's view. UBS currently forecasts dividends to be between 30-35% of free cash flow.

FY19-21 estimates for earnings per share are reduced by -1.7-4.8%. Buy rating maintained. Target is lowered to $8.75 from $9.05.

Target price is $8.75 Current Price is $7.15 Difference: $1.6
If ORG meets the UBS target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $8.29, suggesting upside of 16.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.8

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

UBS rates OSH as Neutral (3) -

UBS recognises the current share price does not reflect the full upside to the company's growth outlook, but suggests risks exist for further delays to the PNG expansion.

The broker finds a number of catalyst for the company in 2019, including FEED entry for PNG expansion and updates on Alaska.

However, these catalysts are considered to be factored into the share price and a Neutral rating is maintained. Target is reduced to $8.00 from $8.50.

Target price is $8.00 Current Price is $7.85 Difference: $0.15
If OSH meets the UBS target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $8.59, suggesting upside of 9.4% (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: 0.5

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

Ord Minnett rates OZL as Hold (3) -

Ord Minnett has reviewed the company's proposal for the block cave expansion at Carrapateena. The broker considers the expansion project essentially neutral to value.

The drawbacks include a lower internal rate of return, as the block caving method has a high capital intensity. The positives include an 80% uplift in free cash flow and operating earnings (EBITDA) from full production after 2029.

Ord Minnett will include the Carrapateena project in its modelling as details around the scope and capital expenditure are made clearer ahead of the 2021 investment decision.

Target is $10.30 and a Hold rating is retained.

Target price is $10.30 Current Price is $9.86 Difference: $0.44
If OZL meets the Ord Minnett target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $11.21, suggesting upside of 13.7% (ex-dividends)

The company's fiscal year ends in December.

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

UBS rates STO as Downgrade to Neutral from Buy (3) -

As the stock is up 24% in the year to date, UBS downgrades to Neutral from Buy. The fact the company operates around 80% of its forecast production growth provides confidence that it will achieve a target of over 100mmboe by the end of 2025.

However, the broker believes the risk/return profile is now largely reflected in the current price. Estimates for earnings per share through 2019-21 are reduced to reflect a lower oil price outlook. Target is reduced to $7.00 from $7.20.

Target price is $7.00 Current Price is $6.85 Difference: $0.15
If STO meets the UBS target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $6.90, suggesting upside of 0.7% (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: 0.4

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

Ord Minnett rates TPM as Hold (3) -

Ord Minnett estimates first half FY19 revenue of $1.26bn and underlying operating earnings (EBITDA) of $412.1m. The company will report its first half results on March 20.

The broker reiterates a Hold rating, given the uncertainty around the regulatory approval of the proposed merger with Vodafone Hutchison Australia, and maintains a target of $6.50.

Target price is $6.50 Current Price is $6.85 Difference: minus $0.35 (current price is over target).
If TPM meets the Ord Minnett target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $6.51, suggesting downside of -5.0% (ex-dividends)

The company's fiscal year ends in July.

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

UBS rates WPL as Downgrade to Neutral from Buy (3) -

UBS downgrades Woodside to Neutral from Buy, believing growth in a more subdued oil price environment is now factored into the share price.

The broker forecasts oil prices to remain at US$70/bbl to the end of 2024.

The broker reduces net asset valuation by -5% to reflect fewer growth opportunities and lower cash flow associated with producing assets. Target is lowered to $35.25 from $37.30.

Target price is $35.25 Current Price is $34.50 Difference: $0.75
If WPL meets the UBS target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $36.11, suggesting upside of 4.7% (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: 0.4

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