Australian Broker Call

Macquarie rates CBA as Downgrade to Underperform from Neutral (5) -

Following a broader market re-rating, Macquarie finds the bank sector looking increasingly attractive on a relative basis. The sector is offering healthy dividend yields and supportive relative valuations.

Nevertheless, the broker continues to find the current fundamental outlook challenging and retains forecasts that are below consensus.

Macquarie finds it difficult to have a more constructive view until external conditions improve. The broker downgrades Commonwealth Bank to Underperform from Neutral on a relative valuation basis. Target is $69.

Target price is $69.00 Current Price is $71.70 Difference: minus $2.7 (current price is over target).
If CBA 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 $70.21, suggesting downside of -2.1% (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

Morgans rates ELD as Upgrade to Hold from Reduce (3) -

The impact of the prolonged drought, low wool volumes and increased costs have meant a weak first half result is likely and Elders has downgraded FY19 guidance to underlying EBIT of $72-75m.

This is not a surprise to Morgans, given the severity of the drought and the impact of Queensland's floods, and a steep fall in cattle prices has been noted.

In light of the adverse conditions, if guidance is achieved, this will be a reasonable outcome, in the broker's view. Tough trading conditions are somewhat factored into the stock and the broker upgrades to Hold from Reduce. Target is reduced to $6.30 from $7.80.

Should the Nutrien takeover bid for Ruralco ((RHL)) proceed, Elders will be competing with a much larger peer group and this, potentially, removes the corporate appeal that was previously attached to the valuation, in the broker's view.

Morgans reduces FY19 and FY20 forecasts by -12.2% and -11.9% respectively.

Target price is $6.30 Current Price is $5.95 Difference: $0.35
If ELD meets the Morgans target it will return approximately 6% (excluding dividends, fees and charges).

The company's fiscal year ends in September.

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 LLC as Outperform (1) -

Macquarie suspects the share price may remain soft until a solution for the engineering & services business is achieved. The broker believes current pricing already reflects materially negative outcomes.

Meanwhile, the core business is in reasonable shape, in the broker's view, and offering a 25% shareholder return. Macquarie considers Lendlease is offering the best value in its A-REIT coverage.

Outperform rating maintained. Target is $15.03.

Target price is $15.03 Current Price is $12.50 Difference: $2.53
If LLC meets the Macquarie target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $15.30, suggesting upside of 22.4% (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

Morgan Stanley rates MQG as Overweight (1) -

Broker Call Report already reported on Friday Morgan Stanley analysts have increased their confidence regarding Macquarie's growth outlook, and the result has been a shift in their price target to $140 from $133.

Overweight rating retained. Stronger asset management and commodities revenues forecasts have pushed up estimates by some 2%. The extra confidence stems from in-depth research into the future of asset managers worldwide and the conclusion drawn that Macquarie remains well-placed to bend global disruption in its favour.

Target price is $140.00 Current Price is $128.90 Difference: $11.1
If MQG meets the Morgan Stanley target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $129.31, suggesting upside of 0.3% (ex-dividends)

The company's fiscal year ends in March.

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

Citi rates MYO as Neutral (3) -

The Federal Court of Australia has approved convening of a meeting of MYOB shareholders to vote on the proposed acquisition by KKR. Citi expects the takeover to be implemented by May 8.

The broker retains a Neutral rating and raises the target to $3.40, in line with the formal bid price, from $3.32.

Target price is $3.40 Current Price is $3.36 Difference: $0.04
If MYO meets the Citi target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $3.25, suggesting downside of -3.3% (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

Citi rates NUF as Buy (1) -

Citi has been disappointed with the trading in Nufarm, as it has underperformed the broader market. The broker suspects the deteriorating near-term outlook for the winter crop has provoked concerns the company will be forced to lower FY19 guidance.

The broker suspects the issues have been overstated. Under normalised earnings, and with little value attributed to omega-3, Citi believes Nufarm offers compelling value.

The broker reduces FY19 operating earnings (EBITDA) forecasts by -8%. Buy rating maintained. Target is reduced to $7.20 from $8.00.

Target price is $7.20 Current Price is $5.43 Difference: $1.77
If NUF meets the Citi target it will return approximately 33% (excluding dividends, fees and charges).

Current consensus price target is $7.47, suggesting upside of 37.5% (ex-dividends)

The company's fiscal year ends in July.

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

Credit Suisse rates NUF as Outperform (1) -

Credit Suisse expects first half results will be weak because of dry summer conditions and has downgraded estimates for the second half in anticipation of dry weather continuing to affect the 2019 winter crop in eastern Australia.

The better news is favourable conditions in Western Australia and an improved season in Europe. The broker also points out, with several glyphosate open related lawsuits underway, it will be important for investors to consider litigation and regulatory risk as separate issues.

The broker continues to believe there is a compelling story in the company's omega-3 canola oil. Outperform rating maintained. Target is reduced to $9.53 from $10.16.

Target price is $9.53 Current Price is $5.43 Difference: $4.1
If NUF meets the Credit Suisse target it will return approximately 76% (excluding dividends, fees and charges).

Current consensus price target is $7.47, suggesting upside of 37.5% (ex-dividends)

The company's fiscal year ends in July.

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

Macquarie rates QAN as Resume Coverage with Outperform (1) -

Macquarie observes Australian domestic profitability is at record levels and, while cautious on fuel costs and the local economy, believes capacity management is supporting elevated profits.

The broker resumes coverage with an Outperform rating and $6.25 target, given Qantas is trading at a -25% discount to comparable peers.

Macquarie expects a rational market will continue, also noting that the Australian market is not affected by the Boeing 737 MAX grounding.

Target price is $6.25 Current Price is $5.64 Difference: $0.61
If QAN meets the Macquarie target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $6.08, suggesting upside of 7.8% (ex-dividends)

The company's fiscal year ends in June.

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

Credit Suisse rates RHC as Underperform (5) -

Credit Suisse considers the outlook has improved in Europe after attending the company's investor briefings.

The broker assesses the reimbursement structure of the Sweden Primary Care restricts the level of organic growth for Capio to low single digits. However, the fragmented market presents opportunities for bolt-on acquisitions.

The broker considers the company's UK strategy sound, as Ramsay Health Care is increasing its day surgery capacity, but remains concerned about an excess of overnight capacity in the system. Underperform rating and $54.80 target.

Target price is $54.80 Current Price is $65.85 Difference: minus $11.05 (current price is over target).
If RHC meets the Credit Suisse target it will return approximately minus 17% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $63.02, suggesting downside of -4.3% (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

UBS rates RHC as Neutral (3) -

UBS believes a moderately improved tariff outlook in the UK/France and a modest contribution to earnings per share from Capio over 2-3 years should result in a reasonable recovery in the company's earnings growth in Europe and the UK over FY19-21.

Still, operating conditions in Australia are crucial to overall performance and one unknown variable is price, as volume growth is seen holding at 2.5-3%.

UBS factors in a 1.75% price increase in Australia from FY20. UBS maintains a Neutral rating and $63.80 target.

Target price is $63.80 Current Price is $65.85 Difference: minus $2.05 (current price is over target).
If RHC meets the UBS target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $63.02, suggesting downside of -4.3% (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

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

In light of the Nutrien takeover bid for Ruralco, Morgans downgrades to Hold from Add and raises the target in line with the offer price of $4.40, from $3.60.

Ruralco has entered into a scheme of arrangement with Nutrien, a global agribusiness, the parent company of Landmark and the largest player in Australia's rural services industry.

Based on Morgans' forecasts the offer price implies an FY19 enterprise value/EBITDA multiple of around 8.8x. Ruralco will report its first half result on May 14 and has guided to a flat outcome.

Target price is $4.40 Current Price is $4.41 Difference: minus $0.01 (current price is over target).
If RHL meets the Morgans target it will return approximately minus 0% (excluding dividends, fees and charges - negative figures indicate an expected loss).

The company's fiscal year ends in September.

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

Credit Suisse rates SYR as Outperform (1) -

Syrah Resources has downgraded its March quarter graphite price to US$460-470/t from prior guidance of US$500-600/t provided in January.

The lower price realisation is attributed to mix and a faster-than-expected close of lower-priced historical 2018 contracts.

Credit Suisse maintains an Outperform rating and reduces the target to $3.50 from $4.05.

Target price is $3.50 Current Price is $1.07 Difference: $2.43
If SYR meets the Credit Suisse target it will return approximately 227% (excluding dividends, fees and charges).

Current consensus price target is $2.52, suggesting upside of 135.5% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

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

Market Sentiment: 0.6

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