Australian Broker Call

Macquarie rates AST as No Rating (-1) -

It appears the released interim result, at first glance by Macquarie, was much better than expected. The analysts offer a number of explanations, but also find it "curious" the DRP now has a discount of -2%. This, say the analysts, will assist with remediating the balance sheet.

The stockbroker has placed its rating "Under Review". Price target $1.74.

Target price is $1.74 Current Price is $1.69 Difference: $0.05
If AST meets the Macquarie target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $1.68, suggesting downside of -0.4% (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

Ord Minnett rates BRG as Buy (1) -

As well as rolling out new products, Breville is now intent on entering new European markets, including Portugal, Spain, France and Italy from 2019.

Ord Minnett believes the company is setting itself up well to deliver multiple years of double-digital earnings growth and this should support its premium PE multiple.

The broker maintains a Buy rating and $15.16 target.

Target price is $15.16 Current Price is $11.51 Difference: $3.65
If BRG meets the Ord Minnett target it will return approximately 32% (excluding dividends, fees and charges).

Current consensus price target is $13.81, suggesting upside of 20.0% (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

Macquarie rates DLX as Neutral (3) -

At first glance, Macquarie observes released FY18 financials are "in-line", with the analysts noting continued resilience in the maintenance and home improvement sector. Neutral rating and $8.50 price target retained.

Target price is $8.50 Current Price is $7.38 Difference: $1.12
If DLX meets the Macquarie target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $7.24, suggesting downside of -1.9% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.4

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

Citi rates IPL as Neutral (3) -

Despite the severe drought and contract losses in WA, Citi believes the FY18 results were solid. The broker expects strong leverage to a cyclical upturn in fertilisers. While the valuation is considered fair, the catalysts are lacking and the broker considers the stock in fair value territory.

No specific quantitative guidance was provided for FY19 but the company does expect modest earnings growth in Dyno Nobel Americas, although warns that domestic oversupply of ammonium nitrate will keep prices and margins under pressure. Neutral rating and $4.10 target maintained.

Target price is $4.10 Current Price is $4.05 Difference: $0.05
If IPL meets the Citi target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $4.25, suggesting upside of 5.0% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.6

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

Credit Suisse rates IPL as Outperform (1) -

Credit Suisse believes there should be enough upside in the FY19 outlook to maintain investor interest. Results missed forecasts in FY18, largely because of the impact of weather and pricing, although structurally the environment has improved, with tightness in the ammonium nitrate market on the Australian east coast.

The company is also expected to recover costs at Phosphate Hill from a new gas contract, which should offset an additional cost at Gibson Island. Outperform rating maintained. Target is reduced to $4.30 from $4.33.

Target price is $4.30 Current Price is $4.05 Difference: $0.25
If IPL meets the Credit Suisse target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $4.25, suggesting upside of 5.0% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.6

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

Deutsche Bank rates IPL as Buy (1) -

Deutsche Bank was a little disappointed with the FY18 result but believes the company is well placed to benefit from higher fertiliser prices and a lower AUD. The miss to expectations is largely explained by unplanned outages, the drought and plant turnarounds.

The company has $90m remaining under its buyback which will be completed in the first half. Deutsche Bank maintains a Buy rating and $4.60 target.

Target price is $4.60 Current Price is $4.05 Difference: $0.55
If IPL meets the Deutsche Bank target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $4.25, suggesting upside of 5.0% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.6

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

Macquarie rates IPL as Outperform (1) -

FY18 net profit was slightly better than Macquarie estimated. Operating earnings (EBIT) of $37m was well ahead of the broker's forecasts. Macquarie increases FY19 and FY20 estimates for earnings per share by 4% and 3% respectively because of higher ammonia price forecasts.

The broker notes recent peer results point to positive fertiliser prices, supported by tightening demand/supply and limited new additions. Macquarie retains an Outperform rating and raises the target to $4.41 from $4.16.

Target price is $4.41 Current Price is $4.05 Difference: $0.36
If IPL meets the Macquarie target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $4.25, suggesting upside of 5.0% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.6

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

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

FY18 results were slightly ahead of Morgan Stanley's estimates. The broker expects the removal of manufacturing issues should clear the path to leverage improved commodity prices.

Guidance, while not specific, has indicated moderate growth in North American explosives and strong volumes in Asia Pacific, while the fertiliser business will be dependent on the outlook for pricing. Phosphate Hill production is expected to return to 1mt.

Morgan Stanley notes fertiliser prices have benefited from demand, delayed expansions and reductions in Chinese exports and further upside to spot pricing is envisaged.

Equal-weight rating, Cautious industry view and target is raised to $4.20 from $3.90.

Target price is $4.20 Current Price is $4.05 Difference: $0.15
If IPL meets the Morgan Stanley target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $4.25, suggesting upside of 5.0% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.6

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

Morgans rates IPL as Hold (3) -

FY18 results were largely in line with forecasts although the composition disappointed Morgans. The contribution from WALA was well below expectations. The company did not enjoy the earnings leverage it typically obtains from materially higher fertiliser prices because of unfavourable weather, manufacturing issues and other one-off costs.

However, Morgans accepts the tone of the outlook commentary is relatively upbeat, albeit headwinds prevail around rising gas prices and the drought in Australia. The broker considers the stock fairly valued and retains a Hold rating. Target is raised to $3.95 from $3.90.

Target price is $3.95 Current Price is $4.05 Difference: minus $0.1 (current price is over target).
If IPL meets the Morgans target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.25, suggesting upside of 5.0% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.6

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

Ord Minnett rates IPL as Buy (1) -

Full year results were below Ord Minnett's forecasts. Softer fertiliser earnings were the main reason for the shortfall, while earnings from the explosives unit were higher than the broker expected.

The broker believes the company is at a key point in improving its operating performance and ensuring subsequent earnings growth. Demand for explosives is strong although volatile fertiliser pricing and the currency remain headwinds.

Ord Minnett maintains a Buy rating and lowers the target to $4.20 from $4.25.

Target price is $4.20 Current Price is $4.05 Difference: $0.15
If IPL meets the Ord Minnett target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $4.25, suggesting upside of 5.0% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.6

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

Ord Minnett rates LLC as Upgrade to Accumulate from Hold (2) -

Ord Minnett has assumed a worst-case scenario for Lend Lease, including another material impairment and the engineering & services business being subjected to an orderly winding down. In such a scenario the broker believes the company can return to a comfortable gearing position and avoid issuing dilutive equity.

The broker forecasts Lend Lease will release $1.65bn in capital by divesting $550m of fund co-investments at the Barangaroo International towers and bring in a joint venture partner to One Sydney Harbour, its largest development project over the next five years.

Ord Minnett upgrades to Accumulate from Hold and reduces the target to $15 from $16.

Target price is $15.00 Current Price is $12.78 Difference: $2.22
If LLC meets the Ord Minnett target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $15.75, suggesting upside of 23.2% (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

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

Northern Star has made a $150m cash offer to acquire the 49% interest in East Kundana it does not already own. Macquarie believes consolidating the venture is a compelling option, and the offer represents a discount to its valuation of the company's 51% stake.

The broker believes Northern Star is well-positioned to drive through a deal. Should the offer be successful, Northern Star will assume financial benefit from January 1 2019.

Rating is upgraded to Outperform from Neutral. Target is steady at $9.80.

Target price is $9.80 Current Price is $8.20 Difference: $1.6
If NST meets the Macquarie target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $8.13, suggesting downside of -0.9% (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

Macquarie rates NVT as Neutral (3) -

Management has updated on the medium-term growth outlook. With earnings re-based, the company appears confident an inflection point has been reached. Macquarie considers the new targets lofty, implying operating earnings of $165m in FY20, forecast to increase to around $200m in FY21 and over $250m by FY23.

The company has reiterated the FY19 outlook and remains comfortable with consensus expectations. Macquarie maintains a Neutral rating and $5.50 target.

Target price is $5.50 Current Price is $5.12 Difference: $0.38
If NVT meets the Macquarie target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $4.98, suggesting downside of -2.8% (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 NVT as Neutral (3) -

Navitas has rejected a further proposal from the BGH consortium. The $5.50 offer and terms are essentially the same as a proposal received in October.

Management has released new three-year and five-year operating earnings (EBITDA) targets of $200m in FY21 and over $250m by FY23.

UBS believes the FY21 target reflects a significant lift to that provided at the investor briefing in September. Neutral maintained. Target is $4.35.

Target price is $4.35 Current Price is $5.12 Difference: minus $0.77 (current price is over target).
If NVT meets the UBS target it will return approximately minus 15% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.98, suggesting downside of -2.8% (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 NWS as Neutral (3) -

First quarter results were better-than-expected, with each segment in line or ahead of UBS estimates. The broker upgrades forecasts for FY19 operating earnings by 5.2% and FY20 by 1.6%. The broker still envisages value in the 'stub', ex REA Group ((REA)) and Foxtel.

UBS continues to expect lower costs for Foxtel from FY20 as key sporting rights are locked in and there is potential upside from savings stemming from the Fox Sports/Foxtel merger.

UBS maintains a Neutral rating and raises the target to $20.50 from $20.10.

Target price is $20.50 Current Price is $19.24 Difference: $1.26
If NWS meets the UBS target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $22.68, suggesting upside of 17.9% (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: 0.2

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

Macquarie rates SCG as Neutral (3) -

Macquarie expects soft leasing conditions in the Perth market over the next three years. The broker has toured the Westfield Carousel property, which is 3% of the company's portfolio. The development opened in August and is yet to stabilise.

Many vacancies are still to resolve and the company has referred to a stabilisation period of around 12-24 months for this development, given its size.

Macquarie suspects the retail market in Perth could become oversupplied and this will place downward pressure on leasing outcomes at both developments and existing assets. The broker retains a Neutral rating and $4.12 target.

Target price is $4.12 Current Price is $3.98 Difference: $0.14
If SCG meets the Macquarie target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $4.40, suggesting upside of 10.5% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.1

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

Macquarie rates SKI as Neutral (3) -

Core themes were unchanged at the investor briefing and the dividend is expected to grow at the rate of the CPI through to 2020. Management emphasised regulatory uncertainty, potential tax payments and some capital expenditure requirements for Transgrid.

Macquarie suspects the regulated asset base earnings growth is slowing to 2.5-3.5% and, combined with a tightening cost of capital, there is some pressure on both earnings and the dividend outlook.

On the other hand, asset leverage at VPN has scope over the next five years to maintain yield. Neutral rating maintained. Target is reduced to $2.39 from $2.55.

Target price is $2.39 Current Price is $2.32 Difference: $0.07
If SKI meets the Macquarie target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $2.42, suggesting upside of 4.2% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.1

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

Ord Minnett rates SKI as Accumulate (2) -

Ord Minnett observes growth opportunities exist for connecting new renewable power plants to the grid, although the government is determined to reduce retail power prices and may not allow significant capital to be spent on necessary grid augmentation.

This puts Spark Infrastructure at an interesting juncture, in the broker's view, given the substantial growth opportunities, particularly within Transgrid. How the company and its entities pay for growth is also unknown.

Regardless of the challenges, the broker maintains an Accumulate rating, although lowers the target to $2.55 from $2.70 after moderating the longer-dated distribution outlook.

Target price is $2.55 Current Price is $2.32 Difference: $0.23
If SKI meets the Ord Minnett target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $2.42, suggesting upside of 4.2% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.1

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

Deutsche Bank rates TWE as Hold (3) -

Wine export data for October indicates that volume and value of Australian wine exports to China continue to decline, although the rate has moderated.

The data implies average price per case growth of 17.2%, with a considerable turnaround in volumes of wine in the $8-12/case price point. Notably, Deutsche Bank points out, wine over $12 per litre is still declining sharply.

The broker is pleased exports to the Americas have return to growth on both volume and value basis.

Hold rating and $18 target maintained.

Target price is $18.00 Current Price is $14.53 Difference: $3.47
If TWE meets the Deutsche Bank target it will return approximately 24% (excluding dividends, fees and charges).

Current consensus price target is $18.40, suggesting upside of 26.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.4

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

Ord Minnett rates Z1P as Accumulate (2) -

Ord Minnett observes the recent update has demonstrated continuing penetration among a broad consumer base. The broker highlights significant wins with merchants including Virgin Australia ((VAH)), Super Retail ((SUL)), Target and Officeworks (WES)), underpinning near-term growth.

Ord Minnett maintains an Accumulate rating and $1 price target. The broker believes the company is well set up for the seasonally stronger December quarter.

Target price is $1.00 Current Price is $0.95 Difference: $0.05
If Z1P meets the Ord Minnett target it will return approximately 5% (excluding dividends, fees and charges).

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