Australian Broker Call

Credit Suisse rates AWC as Downgrade to Underperform from Neutral (5) -

Credit Suisse observes the share price has been on an uptrend recently and the analysts believe market speculation about potential take-over interest from South32 (S32) is one key reason as to why.

The analysts are very skeptical. Not only is the share price above their fair value estimate, but present alumina prices are not sustainable in their view. One third suggestion is that further concentration in alumina assets is poised to attract attention from the ACCC.

Having said all of the above, alumina prices have upward momentum and CS analysts have lifted their target price to $1.65 from $1.55. Downgrade to Underperform from Neutral. No changes have been made to forecasts.

Target price is $1.65 Current Price is $1.82 Difference: minus $0.17 (current price is over target).
If AWC meets the Credit Suisse target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $1.62, suggesting downside of -9.2% (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: -0.5

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

Macquarie rates BHP as Outperform (1) -

Samarco has announced that Vale has reached an agreement with BHP to provide the mined out Timbopeba pit as a tailings storage solution.

Macquarie considers this agreement may provide up to 10 years of tailings storage combined with other nearby pits.The broker believes the main hurdles for a re-start at Samarco are securing a plan with debt holders and resolving much of the current litigation risk.

The broker expects a re-start in 2018  but assumes no cash dividends will be paid back to BHP. Outperform rating and $31 target retained.

Target price is $31.00 Current Price is $25.16 Difference: $5.84
If BHP meets the Macquarie target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $26.47, suggesting upside of 7.1% (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 CTX as Buy (1) -

Caltex will buy Gull New Zealand which owns the largest import terminal In NZ, 77 retail sites and commercial supply agreements.

The use of debt and the strong growth profile of Gull mean the deal is 4% accretive to earnings per share in 2018. The acquisition is envisaged as just one of many growth options, as management is confident it will be able to replace forgone profits if it loses the Woolworths ((WOW)) supply agreement.

The risk to Citi's recommendation is the timing around the news flow regarding the Woolworths fuels business, with a deal  expected to be finalised by the end of 2016 but before Caltex delivers earnings growth  through 2017.

Buy rating retained. Target slips to $36.33 from $36.36.

Target price is $36.33 Current Price is $30.32 Difference: $6.01
If CTX meets the Citi target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $33.99, suggesting upside of 11.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY16:

Forecast for FY17:

Market Sentiment: 0.4

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

Credit Suisse rates CTX as Outperform (1) -

Caltex has moved into the New Zealand market by announcing the acquisition of Gull New Zealand for NZ$340m. As the deal is being debt funded, CS analysts expect it to be EPS accretive to the tune of 1.5%.

The analysts also believe Caltex seems to be moving away from a potential purchase of the Woolworths ((WOW)) petrol operations. They would be worried if they were walking in Woolworths' shoes.

Credit Suisses sees additional avenues to grow in New Zealand. Gull only represents 5% of the NZ market. Target $40. Outperform rating retained. Both DPS and EPS estimates have increased.

Target price is $40.00 Current Price is $30.32 Difference: $9.68
If CTX meets the Credit Suisse target it will return approximately 32% (excluding dividends, fees and charges).

Current consensus price target is $33.99, suggesting upside of 11.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY16:

Forecast for FY17:

Market Sentiment: 0.4

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

Deutsche Bank rates CTX as Hold (3) -

The company will purchase Gull New Zealand for NZ$340m, which has 77 retail outlets, the majority being in the northern half of North Island.

The acquisition is expected to be accretive in the first full year of ownership. Deutsche Bank believes this will diversify sales for Caltex by providing a low-risk entry into a new market. Hold rating and $33.50 target retained.

Target price is $33.50 Current Price is $30.32 Difference: $3.18
If CTX meets the Deutsche Bank target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $33.99, suggesting upside of 11.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY16:

Forecast for FY17:

Market Sentiment: 0.4

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

Macquarie rates CTX as Outperform (1) -

The company will purchase Gull New Zealand for NZ$340m. The acquisition is in line with the company's strategy of optimising its infrastructure position and building on trading and shipping capabilities.

Gull is a challenger brand with 77 retail sites and provides fuel to a number of commercial customers.The acquisition is expected to be accretive in the first full year of ownership.

Macquarie upgrades 2017 estimates by 1.7% and 2018 by 3.7%. Outperform retained. Target rises to $33.50 from $32.97.

Target price is $33.50 Current Price is $30.32 Difference: $3.18
If CTX meets the Macquarie target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $33.99, suggesting upside of 11.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY16:

Forecast for FY17:

Market Sentiment: 0.4

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

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

The company has acquired Gull New Zealand, to be debt funded. This is the second transaction in two months, Morgan Stanley observes and there is now reduced debt capacity for further large acquisitions.

Gull is a retail and wholesale fuel distribution business on the North Island and has 55 retail sites and 22 supply sites. The acquisition makes sense to the broker as Caltex has a dominant position in Australia, where volume growth appears to be moderating.

The acquisition provides the opportunity for the company to grow in a new market and the broker considers this important.

Equal-weight rating retained. In-Line industry view. Target is $32.60.

Target price is $32.60 Current Price is $30.32 Difference: $2.28
If CTX meets the Morgan Stanley target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $33.99, suggesting upside of 11.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY16:

Forecast for FY17:

Market Sentiment: 0.4

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

UBS rates CTX as Buy (1) -

The company will purchase Gull New Zealand for NZ$340m, acquiring the Mount Maunganui import terminal and retail assets.

Gull NZ is active on the North Island with around 5% market share. UBS updates forecasts to include the impact of the acquisition but now excludes a $260m buy-back from its forecasts.

As a result, while calculating the deal is around 2.1% accretive to earnings in 2017 estimates for earnings per share are adjusted downwards by 1.4%. Buy rating retained. Target is lifted to $34.50 from $34.25.

Target price is $34.50 Current Price is $30.32 Difference: $4.18
If CTX meets the UBS target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $33.99, suggesting upside of 11.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY16:

Forecast for FY17:

Market Sentiment: 0.4

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

UBS rates ING as Initiation of coverage with Buy (1) -

UBS considers the stock an attractive investment, as it has a leading market position in a rational industry with high barriers to entry. The company is Australasia's largest integrated poultry producer, with a combined market share of around 39%.

The broker notes the business has transformed over the past three years under private equity ownership - which retains around 47% post listing - from a family operation to a corporatised business.

UBS initiates coverage with a Buy rating and $3.60 target.

Target price is $3.60 Current Price is $3.20 Difference: $0.4
If ING meets the UBS target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $3.64, suggesting upside of 13.4% (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

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

Management has provided half-year guidance that is well above consensus. There has been a substantial improvement in performance with like-for-like sales growth trending at around 10% and gross margins at 77%.

Morgan Stanley upgrades forecasts but maintains an Equal-weight rating, as strong momentum is believed to be reflected in the share price. In-Line industry view maintained. Target is raised to $3.55 from $2.90.

Target price is $3.55 Current Price is $3.80 Difference: minus $0.25 (current price is over target).
If LOV meets the Morgan Stanley target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.08, suggesting upside of 7.7% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.7

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

Morgans rates LVH as Add (1) -

Morgans upgrades forecasts as the company has updated on the status of its current tenders. Forecasting assumptions have been upgraded to reflect fewer account wins but bigger wins in terms of size.

Add recommendation is retained. The stock is considered high risk and to be avoided by those with low risk profiles. Morgans raises the target to $0.55 from $0.34.

Target price is $0.55 Current Price is $0.37 Difference: $0.18
If LVH meets the Morgans target it will return approximately 49% (excluding dividends, fees and charges).

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 STO as Buy (1) -

Citi adjusts its estimates and valuation to reflect the sale of the companies 50% interest in the Mereeni oil and gas field.

Buy retained. Target rises to $5.05 from $5.02.

Target price is $5.05 Current Price is $3.92 Difference: $1.13
If STO meets the Citi target it will return approximately 29% (excluding dividends, fees and charges).

Current consensus price target is $4.81, suggesting upside of 21.8% (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: 0.5

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