Australian Broker Call

UBS rates ALL as Buy (1) -

August data for the company's social casino business revealed US revenue share was broadly flat on a sequential basis.

Australia was stronger, with share up 1%, largely driven by Lightning Link. UBS is unsure whether this was because of new features loaded onto the app.

The data implies second half social casino revenue is growing around 5% annualised. Buy rating and $34.10 target maintained.

Target price is $34.10 Current Price is $30.76 Difference: $3.34
If ALL meets the UBS target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $33.54, suggesting upside of 9.0% (ex-dividends)

The company's fiscal year ends in September.

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 AQG as Upgrade to Outperform from Underperform (1) -

Macquarie's commodity strategists have updated gold price forecasts. The revised forecasts envisage a correction early in FY20 and a peak in late FY20 of US$1650/oz. Long-term assumptions are upgraded 11% to US$1400/oz.

The new price deck drives material upgrades to earnings estimates for all gold stocks under coverage. Rating is upgraded to Outperform from Underperform. Target is raised to $7 from $6.

Target price is $7.00 Current Price is $5.68 Difference: $1.32
If AQG meets the Macquarie target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $6.87, suggesting upside of 20.9% (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: 1.0

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

Macquarie rates AZJ as Underperform (5) -

Coal volumes have commenced FY20 strongly in both NSW and Queensland. Macquarie adjusts earnings expectations to factor in a $20m per annum cost reduction and better revenue, with higher depreciation being the offset.

The broker maintains an Underperform rating and raises the target to $5.33 from $5.28.

Target price is $5.33 Current Price is $5.81 Difference: minus $0.48 (current price is over target).
If AZJ 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 $5.69, suggesting downside of -2.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.0

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

Macquarie rates EVN as Upgrade to Outperform from Underperform (1) -

Macquarie's commodity strategists have updated gold price forecasts. The revised forecasts envisage a correction early in FY20 and a peak in late FY20 of US$1650/oz. Long-term assumptions are upgraded 11% to US$1400/oz.

The new price deck drives material upgrades to earnings estimates for all gold stocks under coverage. Macquarie retains a preference for the greater leverage in growth but understands the attraction of the superior margins being offered by Evolution Mining.

Rating is upgraded to Outperform from Underperform and the target raised to $5.40 from $4.20.

Target price is $5.40 Current Price is $4.52 Difference: $0.88
If EVN meets the Macquarie target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $4.32, suggesting downside of -4.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: -0.1

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

Macquarie rates GOR as Upgrade to Outperform from Neutral (1) -

Macquarie's commodity strategists have updated gold price forecasts. The revised forecasts envisage a correction early in FY20 and a peak in late FY20 of US$1650/oz. Long-term assumptions are upgraded 11% to US$1400/oz.

The new price deck drives material upgrades to earnings estimates for all gold stocks under coverage. Rating is upgraded to Outperform from Neutral. Target is raised to $1.60 from $1.40.

Target price is $1.60 Current Price is $1.40 Difference: $0.2
If GOR meets the Macquarie target it will return approximately 14% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

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 NCM as Upgrade to Neutral from Underperform (3) -

Macquarie's commodity strategists have updated gold price forecasts. The revised forecasts envisage a correction early in FY20 and a peak in late FY20 of US$1650/oz. Long-term assumptions are upgraded 11% to US$1400/oz.

The new price deck drives material upgrades to earnings estimates for all gold stocks under coverage.

While upgrading to Neutral from Underperform, Newcrest is the broker's least preferred gold stock, because of declining production. Target is raised to $35 from $24.

Target price is $35.00 Current Price is $33.37 Difference: $1.63
If NCM meets the Macquarie target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $30.65, suggesting downside of -8.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

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

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

Back in late 2011 Citi stopped covering New Hope Corp, leaving with a Buy recommendation and $6.10 price target. Circumstances since have obviously changed a lot. Today, Citi re-appears with a Neutral rating and $2.55 price target.

The analysts' conviction is that FY19 marks the top of this cycle, otherwise known as "peak earnings". Currently market dynamics are "weak", point out the analysts, and their own view on the outlook for thermal coal is "bearish" (their own description).

The present valuation doesn't look demanding, but then if the future is for more weakness... today's multiples will only rise, point out the analysts. Citi's forecasts imply a sliding path forward, including for dividends.

Target price is $2.55 Current Price is $2.49 Difference: $0.06
If NHC meets the Citi target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $2.81, suggesting upside of 12.7% (ex-dividends)

The company's fiscal year ends in July.

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

Macquarie rates NST as Upgrade to Outperform from Underperform (1) -

Macquarie's commodity strategists have updated gold price forecasts. The revised forecasts envisage a correction early in FY20 and a peak in late FY20 of US$1650/oz. Long-term assumptions are upgraded 11% to US$1400/oz.

The new price deck drives material upgrades to earnings estimates for all gold stocks under coverage. The broker flags Northern Star as an "unashamed growth story". Rating is upgraded to Outperform from Underperform. Target is raised to $14.20 from $10.00.

Target price is $14.20 Current Price is $10.38 Difference: $3.82
If NST meets the Macquarie target it will return approximately 37% (excluding dividends, fees and charges).

Current consensus price target is $11.13, suggesting upside of 7.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.0

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

Macquarie rates PRU as Upgrade to Outperform from Neutral (1) -

Macquarie's commodity strategists have updated gold price forecasts. The revised forecasts envisage a correction early in FY20 and a peak in late FY20 of US$1650/oz. Long-term assumptions are upgraded 11% to US$1400/oz.

The new price deck drives material upgrades to earnings estimates for all gold stocks under coverage. Rating is upgraded to Outperform from Neutral. Target is raised to $0.90 from $0.80.

Target price is $0.90 Current Price is $0.72 Difference: $0.18
If PRU meets the Macquarie target it will return approximately 25% (excluding dividends, fees and charges).

Current consensus price target is $0.81, suggesting upside of 12.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.3

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

Credit Suisse rates QBE as Neutral (3) -

Coming off some profitable crop years, Credit Suisse suspects the current year, 2019, is at risk of not contributing to profit at all. The US crop insurance business contributes over 13% to group underwriting profit on normalised assumptions.

While it is still too early to write off 2019, the broker points out favourable conditions in September and October are required.

The broker is also concerned about the pressure on profit in coming years from the recent fall in bond yields. Neutral and $12.55 target retained.

Target price is $12.55 Current Price is $12.51 Difference: $0.04
If QBE meets the Credit Suisse target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $12.84, suggesting upside of 2.7% (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: 0.6

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

Credit Suisse rates RHC as Upgrade to Neutral from Underperform (3) -

Since the beginning of August the stock has underperformed the healthcare sector by -11% and the broader market by -9%, Credit Suisse observes.

While maintaining a negative stance on the Australian private hospital industry and assessing margins & returns to be diluted by recent offshore acquisitions, the broker suggests the current price reflects this and there is no longer a catalyst for a de-rating.

Rating is upgraded to Neutral from Underperform. Target is steady at $65.

Target price is $65.00 Current Price is $65.37 Difference: minus $0.37 (current price is over target).
If RHC meets the Credit Suisse target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $68.30, suggesting upside of 4.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.1

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

Macquarie rates RRL as Upgrade to Outperform from Underperform (1) -

Macquarie's commodity strategists have updated gold price forecasts. The revised forecasts envisage a correction early in FY20 and a peak in late FY20 of US$1650/oz. Long-term assumptions are upgraded 11% to US$1400/oz.

The new price deck drives material upgrades to earnings estimates for all gold stocks under coverage. Rating is upgraded to Outperform from Underperform. Target is raised to $5.60 from $5.10.

Target price is $5.60 Current Price is $4.52 Difference: $1.08
If RRL meets the Macquarie target it will return approximately 24% (excluding dividends, fees and charges).

Current consensus price target is $4.96, suggesting upside of 9.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.0

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

Macquarie rates SAR as Upgrade to Outperform from Underperform (1) -

Macquarie's commodity strategists have updated gold price forecasts. The revised forecasts envisage a correction early in FY20 and a peak in late FY20 of US$1650/oz. Long-term assumptions are upgraded 11% to US$1400/oz.

The new price deck drives material upgrades to earnings estimates for all gold stocks under coverage. Macquarie retains a preference for the greater leverage in growth and upgrades Saracen Mineral to Outperform from Underperform. Target is raised to $4.30 from $3.30.

Target price is $4.30 Current Price is $3.31 Difference: $0.99
If SAR meets the Macquarie target it will return approximately 30% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.5

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

Macquarie rates SBM as Upgrade to Outperform from Underperform (1) -

Macquarie's commodity strategists have updated gold price forecasts. The revised forecasts envisage a correction early in FY20 and a peak in late FY20 of US$1650/oz. Long-term assumptions are upgraded 11% to US$1400/oz.

The new price deck drives material upgrades to earnings estimates for all gold stocks under coverage. Rating is upgraded to Outperform from Underperform. Target is raised to $3.50 from $3.00.

Target price is $3.50 Current Price is $2.92 Difference: $0.58
If SBM meets the Macquarie target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $3.49, suggesting upside of 19.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.1

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

Morgans rates SEA as Speculative Buy (1) -

Sundance Energy has announced its intention to shift its listing from the ASX to the Nasdaq. The broker suggests a successful move would be materially positive, boosting the company's corporate appeal and attracting a higher US multiple.

However the timing is poor, Morgans believes, given Sundance is just about to reach its major objective of positive cash flow and investor sentiment remains fragile.

Thus a successful move is not guaranteed. Due to increased risk, the broker shifts its rating to Speculative Buy from Add, and risk-adjusts its target down to 64c from $1.28.

Target price is $0.64 Current Price is $0.20 Difference: $0.44
If SEA meets the Morgans target it will return approximately 220% (excluding dividends, fees and charges).

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: 1.0

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

Ord Minnett rates SHL as Accumulate (2) -

Ord Minnett observes a solid start to FY20 in key markets. After a challenging FY19, test volumes in Europe appear to have picked up as the industry cycles the drag from the German funding reforms and the summer heatwave.

Ord Minnett is also confident the company will announce another acquisition in coming months. Australian pathology data is encouraging, with increases of more than 5% in six of the past seven months. Accumulate rating and $32 target maintained.

Target price is $32.00 Current Price is $27.95 Difference: $4.05
If SHL meets the Ord Minnett target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $29.05, suggesting upside of 3.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.2

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

Credit Suisse rates SM1 as Underperform (5) -

FY19 results, overall, were slightly disappointing. Credit Suisse found the second half results for infant formula volumes were robust, up 21% on the prior corresponding half. Yet the stock is down -27% on a year ago as investors dwell on the issues affecting the outlook.

The broker's medium-term forecasts factor in a material reduction in margin. Credit Suisse finds the investment case perplexing, with a significant level of profitability largely attributable to one key customer, a2 Milk ((A2M)), which has, to date, traded margin for quality and certainty.

However, the company owns key manufacturing facilities and the strategic value of the asset could ultimately provide support against further disappointment. Underperform rating maintained. Target rises to NZ$8.50 from NZ$7.95.

Current Price is $8.40. Target price not assessed.

Current consensus price target is $8.79, suggesting upside of 4.6% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY20:

Forecast for FY21:

This company reports in NZD. 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 SM1 as Underperform (5) -

FY19 results missed Macquarie's estimates. The outlook for FY20 is for profit growth to be at least at a similar rate to FY19, supported by momentum in canned infant formula, and contributions from the second lactoferrin facility, liquid dairy and Pokeno.

The company has experienced improved throughput in its blending and canning facilities, the broker notes. Macquarie maintains an Underperform rating, although acknowledges the stock is getting close to valuation. Target is reduced to NZ$8.69 from NZ$9.15.

Current Price is $8.40. Target price not assessed.

Current consensus price target is $8.79, suggesting upside of 4.6% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY20:

Forecast for FY21:

This company reports in NZD. 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

Morgans rates SM1 as Hold (3) -

Synlait Milk's FY19 result missed expectations and FY20 guidance disappointed. It takes time for new growth projects to scale, the broker observes, to win new customers and optimise product mix.

The result reflected start-up issues at new facilities, margin pressure from the renegotiated a2 Milk ((A2M)) contract and increased overheads. The company's need to invest ahead of the curve will mean materially higher overheads, the broker warns, and D&A and interest unwinds. Hold retained, target falls to $8.79 from $9.60.

Target price is $8.79 Current Price is $8.40 Difference: $0.39
If SM1 meets the Morgans target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $8.79, suggesting upside of 4.6% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY20:

Forecast for FY21:

This company reports in NZD. 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

UBS rates SM1 as Neutral (3) -

Guidance for FY20 addresses UBS concerns regarding lower initial returns on the Pokeno factory and "Everyday Dairy" plant.

The broker envisages scope for the relationship between Synlait Milk and a2 Milk ((A2M)) to be restored as earnings growth picks up and operating risks moderate.

The main risk in the near term is for lower daigou sales via a2 Milk. Neutral rating. Target is reduced to NZ$9.60 from NZ$9.70.

Current Price is $8.40. Target price not assessed.

Current consensus price target is $8.79, suggesting upside of 4.6% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY20:

Forecast for FY21:

This company reports in NZD. 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

Citi rates WBC as Buy (1) -

Citi analysts have come to the conclusion that a -10% reduction in Westpac's dividend is the most likely outcome from further regulatory requirements (predominantly in New Zealand), combined with the arrival of a new CFO.

Having come to this conclusion, the analysts also believe this is already priced in. Buy rating retained. Price target $31.25.

For good measure: Citi's updated DPS forecasts assume 179c for the current financial year (down from 188c last year) and then 170c for the years (multiple) ahead.

Target price is $31.25 Current Price is $29.62 Difference: $1.63
If WBC meets the Citi target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $28.96, suggesting downside of -2.2% (ex-dividends)

The company's fiscal year ends in September.

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

Ord Minnett rates WHC as Lighten (4) -

Management has articulated the necessity for growth at its inaugural investor briefing as well as a market strategy for selling a premium spec thermal coal product.

Overall, Ord Minnett found the update positive. Noting the higher strip ratios guided for Maules Creek the broker suspects FY21 earnings may be slightly weaker. Lighten rating maintained on valuation concerns. Target is $3.

Target price is $3.00 Current Price is $3.32 Difference: minus $0.32 (current price is over target).
If WHC meets the Ord Minnett target it will return approximately minus 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.12, suggesting upside of 24.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.7

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