Australian Broker Call

Morgans rates ADH as Add (1) -

The company has confirmed its second half will not be materially different to the guidance provided at the first half result. Morgans observes headwinds for the industry continue, but the stock's relatively cheap valuation accounts for this.

As trading conditions are more difficult, the broker suspects the company may cut its pay-out ratio, now forecasting a final dividend of 1.5c per share.

The broker believes paying down debt with the residual is the best course of action. Add  rating maintained. Target is reduced to $1.20 from $1.46.

Target price is $1.20 Current Price is $0.82 Difference: $0.385
If ADH meets the Morgans target it will return approximately 47% (excluding dividends, fees and charges).

The company's fiscal year ends in July.

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

Macquarie rates AFG as Outperform (1) -

The company's home loans business continues to drive earnings growth and FY17 net profit estimates have been upgraded.

Macquarie believes there are a number of drivers for long-term growth in the mortgage broking industry such as population growth, the number and value of loans outstanding, mortgage broker penetration rates and commission rates.

Outperform retained. Target rises to $2.00 from $1.78.

Target price is $2.00 Current Price is $1.23 Difference: $0.77
If AFG meets the Macquarie target it will return approximately 63% (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

UBS rates AGI as Downgrade to Sell from Neutral (5) -

Ainsworth has outperformed the ASX300 by 42% in the past six weeks, driven by hype around new game releases and particularly the highly anticipated Pac-Man offering, UBS notes. While the stock has been neglected and was due a bounce, the broker believes the market is factoring in a too ambitious broad game improvement.

Data and anecdotal feedback are not supporting such strength. With currency acting as a headwind and a forward PE now at 18x, UBS downgrades to Sell. Target unchanged at $1.77.

Target price is $1.77 Current Price is $2.37 Difference: minus $0.6 (current price is over target).
If AGI meets the UBS target it will return approximately minus 25% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $1.91, suggesting downside of -19.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.0

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

Macquarie rates AJM as Upgrade to Neutral from Underperform (3) -

Macquarie upgrades lithium price forecasts by 19% for 2020-21. The broker also upgrades cobalt forecasts.

As a result, Macquarie upgrades Altura's rating to Neutral from Underperform. Target price is lifted by 14% to $0.16.

Target price is $0.16 Current Price is $0.14 Difference: $0.025
If AJM meets the Macquarie target it will return approximately 19% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY16:

Forecast for FY17:

Market Sentiment: 0.0

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

UBS rates AWE as Buy (1) -

Investment company Dawney and Co, holder of 885,000 AWE shares, is looking to write a call over its holding by offering shareholders up to 19.99% of the company at 56cps. In recent months Dawney has written to the AWE board and shareholders, the broker notes, querying the board's rejection of the Lone Star takeover bid and the lack of board member shareholdings.

AWE is yet to review the offer and shareholders do not need to do anything right away, the broker notes. Buy and 60c target retained,

Target price is $0.60 Current Price is $0.48 Difference: $0.125
If AWE meets the UBS target it will return approximately 26% (excluding dividends, fees and charges).

Current consensus price target is $0.55, suggesting upside of 14.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.2

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

Macquarie rates AYS as Outperform (1) -

Competition in the mobile market has picked up recently and to reflect this Macquarie pares back its growth assumptions for the market in FY18 to 1% from 3%.

Amaysim is envisaged to have more leverage to pressure on average revenue per unit and the broker expects it to introduce more aggressively-priced plans shortly.

Downgrades to earnings estimates of -2-3% are made for FY18-19. Macquarie reduces the target to $2.35 from $2.50. Outperform maintained.

Target price is $2.35 Current Price is $1.86 Difference: $0.495
If AYS meets the Macquarie target it will return approximately 27% (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

Macquarie rates CLQ as Outperform (1) -

Macquarie upgrades lithium price forecasts by 19% for 2020-21. The broker also upgrades cobalt forecasts and, as a result, increases the company's target to $1.10 from $1.00. Outperform retained.

Target price is $1.10 Current Price is $0.83 Difference: $0.27
If CLQ meets the Macquarie target it will return approximately 33% (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

Morgan Stanley rates DMP as Overweight (1) -

Several concerns over wage under-payment, franchisee profitability and soft Australasian trading have led the stock to de-rate, Morgan Stanley observes.

The broker believes the issues are temporary and the stock remains its top consumer pick. Morgan Stanley continues to expect the company is well-placed to capitalise on the shift towards eating out and delivered food.

Price target is $80. Overweight. Sector view is Cautious.

Target price is $80.00 Current Price is $55.17 Difference: $24.83
If DMP meets the Morgan Stanley target it will return approximately 45% (excluding dividends, fees and charges).

Current consensus price target is $67.60, suggesting upside of 22.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.5

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

UBS rates EVN as Buy (1) -

Evolution is the broker's key pick in the gold sector. The stock has recently outperformed Oz gold heavyweight Newcrest Mining but UBS suggests this is mostly a reflection of Newcrest weakness following the specific seismic event at Cadia.

The broker nevertheless believes Evolution can re-rate towards Newcrest's valuation, all thing being equal.

It will take time, nonetheless, for foreign investors to familiarise themselves with the stock and for local fund managers to overcome their Newcrest fixation, the broker suggests. Buy retained. Target rises to $2.70 from $2.59.

Target price is $2.70 Current Price is $2.41 Difference: $0.29
If EVN meets the UBS target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $2.59, suggesting upside of 9.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.9

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

Ord Minnett rates GMG as Lighten (4) -

The company's annual investor briefing included an EUR300m equity raising for its European managed fund and a US$750m raising for a new partnership in Brazil.

Ord Minnett believes the company is in good shape and a beneficiary of global growth in e-commerce, while domestically it continues to benefit from strong urban renewal opportunities.

The broker maintains a Lighten rating, noting the stock is trading at elevated levels relative to its historical trading metrics. $7.80 target.

Target price is $7.80 Current Price is $8.71 Difference: minus $0.91 (current price is over target).
If GMG 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 $8.06, suggesting downside of -5.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.1

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

Morgan Stanley rates GPT as Downgrade to Underweight from Overweight (5) -

In-depth research into prospects and changing dynamics for owners of shopping malls have led Morgan Stanley analysts to take a more sombre view on the outlook for Net Operating Income (NOI) for the sector in Australia.

The rating for GPT has been double-whammy downgraded as a direct result; to Underweight from Overweight. Target price loses 20c to $4.80.

It is Morgan Stanley's view that retail landlords are now facing a combination of a severe cyclical consumer slowdown and the structural pressure from e-commerce. This is expected to accelerate the pressure on retailer margins, and reduce demand for physical space. Updated forecasts assume NOI growth will halve from FY17 levels, while risk remains to the downside, in the analysts' view.

Target price is $4.80 Current Price is $5.31 Difference: minus $0.51 (current price is over target).
If GPT meets the Morgan Stanley target it will return approximately minus 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.11, suggesting downside of -1.7% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.0

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

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

Macquarie upgrades lithium price forecasts by 19% for 2020-21. The broker also upgrades cobalt forecasts. Galaxy's rating is upgraded to Outperform from Neutral.

Given a preference for hard rock projects over brine developments, Macquarie increases its discount for the company's Sal De Vida project, which results in an -8% reduction in the target to $2.10.

Target price is $2.10 Current Price is $1.67 Difference: $0.435
If GXY meets the Macquarie target it will return approximately 26% (excluding dividends, fees and charges).

Current consensus price target is $2.20, suggesting upside of 27.2% (ex-dividends)

The company's fiscal year ends in December.

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

Macquarie rates LLC as Outperform (1) -

Macquarie is encouraged that the company's recent briefing on the outlook for its global operations did not include an asset sale, which had been a feature of the last three years. The drag from offshore business has been attributed to accelerated investment in operating expenditure ahead of future profit.

The focus remains on Australian infrastructure and residential business and, given the relatively immaterial contributions from offshore,  the broker believes the performance of the share price will be more linked to domestic apartment settlements and wins on infrastructure. Outperform retained. Target is $17.18.

Target price is $17.18 Current Price is $16.68 Difference: $0.5
If LLC meets the Macquarie target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $16.81, suggesting upside of 1.3% (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

Macquarie rates MQA as Outperform (1) -

New French President, Emmanuel Macron, has been provided with an absolute majority, providing a platform for the adoption of his election promise, Macquarie observes.

The election of his party provides a path towards implementing a EUR50bn stimulus package and APRR should benefit from this improving economic activity.

The broker upgrades the Macquarie Atlas target to $6.07 from $5.65, noting significant option value is present with potential government changes in tax rates along with development of the French road infrastructure. Outperform retained.

Target price is $6.07 Current Price is $6.07 Difference: $0
If MQA meets the Macquarie target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $5.72, suggesting downside of -5.6% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.3

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

UBS rates NCM as Sell (5) -

The market historically values Newcrest with a -5% discount (mining risk) but the broker believes -10% is more appropriate given longer term concerns at Lihir. The broker suggests -10% is conservative, but -5% is too generous. If the broker assumed -5%, its valuation would rise to meet the current share price.

The broker thus retains Sell, despite Newcrest being Australia's "go-to" gold name. Aside from Lihir issues, Cadia is still out. The broker prefers Evolution Mining. Newcrest's target rises to $12.98 from $12.68.

Target price is $12.98 Current Price is $21.57 Difference: minus $8.59 (current price is over target).
If NCM meets the UBS target it will return approximately minus 40% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $19.71, suggesting downside of -6.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: -0.5

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

UBS rates NST as Sell (5) -

Mine life is the key to Northern Star's valuation, the broker suggests. The market is pricing in too ambitious a resource conversion, the broker believes, based on the company's track record, and underestimating likely capex required to underpin future conversion. 

And the market is overlooking declining underground grades. Sell and $4.64 target retained.

Target price is $4.64 Current Price is $4.83 Difference: minus $0.19 (current price is over target).
If NST meets the UBS target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.43, suggesting downside of -6.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.2

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

Ord Minnett rates PAC as Buy (1) -

The company has completed its final step in the simplification process, raising $33m and strengthening the balance sheet.

Ord Minnett observes the stock now offers a simpler growth story and trades on FY18 price/earnings ratio of 13.4 with a 3.7% yield and valuing the relationship with the growth boutique GQG means the target of $7.57 is more fully supported. Buy rating retained.

Target price is $7.57 Current Price is $6.54 Difference: $1.03
If PAC meets the Ord Minnett target it will return approximately 16% (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

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

Macquarie upgrades lithium price forecasts by 19% for 2020-21. The broker also upgrades cobalt forecasts.

While more bullish price forecasts are a driver of improved earnings expectations, the broker observes the company has significantly de-risked funding and technical delivery of its project.

Rating is upgraded to Outperform from Underperform. Target is raised to $0.50 from $0.38.

Target price is $0.50 Current Price is $0.37 Difference: $0.13
If PLS meets the Macquarie target it will return approximately 35% (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

Macquarie rates QAN as Outperform (1) -

Despite the recent outperformance, Macquarie observes Qantas trades at a discount to both global peers and its own historical trading range and is a fundamentally better business today than it was historically.

The broker continues to envisage significant upside and the FY17 result likely to be the next catalyst. Outperform rating retained. Target is raised to $6.50 from $4.90.

Target price is $6.50 Current Price is $5.51 Difference: $0.99
If QAN meets the Macquarie target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $5.29, suggesting downside of -3.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.9

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

Morgan Stanley rates SCG as Downgrade to Underweight from Overweight (5) -

In-depth research into prospects and changing dynamics for owners of shopping malls have led Morgan Stanley analysts to take a more sombre view on the outlook for Net Operating Income (NOI) for the sector in Australia.

The rating for Scentre Group has been double-whammy downgraded as a direct result; to Underweight from Overweight. Price target dives to $3.90 from $4.70.

It is Morgan Stanley's view that retail landlords are now facing a combination of a severe cyclical consumer slowdown and the structural pressure from e-commerce. This is expected to accelerate the pressure on retailer margins, and reduce demand for physical space. Updated forecasts assume NOI growth will halve from FY17 levels, while risk remains to the downside, in the analysts' view.

Target price is $3.90 Current Price is $4.40 Difference: minus $0.5 (current price is over target).
If SCG meets the Morgan Stanley target it will return approximately minus 11% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.59, suggesting upside of 7.2% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: -0.1

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

Citi rates SFR as Neutral (3) -

The company has negotiated an agreement with Thundelarra ((THX)) over the, potentially significant, Red Bore copper project. The broker believes the deal is a positive but the results of exploration, as expected, are unknown.

Sandfire has a chance to add value by exploring at greater depth. Neutral/High Risk rating retained. Target is $6.80.

Target price is $6.80 Current Price is $5.77 Difference: $1.03
If SFR meets the Citi target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $6.79, suggesting upside of 17.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.3

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

Ord Minnett rates SGP as Accumulate (2) -

Stockland held its annual investor briefing in Queensland, which represents 24% of its assets.. Ord Minnett believes the strong residential volumes will drive better margins, and growth of around 5-7% per annum in funds from operations out to FY19.

The broker retains an Accumulate rating and raises the target to $5.30 from $5.20.

Target price is $5.30 Current Price is $4.87 Difference: $0.43
If SGP meets the Ord Minnett target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $4.84, suggesting upside of 0.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.1

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

Citi rates STO as Buy (1) -

Citi observes the stock has underperformed its peers by more than -25% over the last six months, struggling with investor confidence, and this was not helped by the raising of equity last December.

The broker expects more certainty over the government's gas security mechanism in coming weeks, and what this means for GLNG, which should allow investors to re-focus on the cost reduction process.

The broker retains a Buy rating and lowers the target to $5.15 from $5.39.

Target price is $5.15 Current Price is $3.04 Difference: $2.11
If STO meets the Citi target it will return approximately 69% (excluding dividends, fees and charges).

Current consensus price target is $4.22, suggesting upside of 41.0% (ex-dividends)

The company's fiscal year ends in December.

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: 0.6

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

Macquarie rates TLS as Neutral (3) -

Competition in the mobile market has picked up recently and to reflect this Macquarie pares back its growth assumptions for the market in FY18 to 1% from 3%. This has a direct impact for Telstra and increases the risks heading into FY18.

The broker downgrades forecasts for FY18 earnings per share by -1.4%. Target is reduced to $4.45 from $4.50. Neutral retained.

Target price is $4.45 Current Price is $4.41 Difference: $0.04
If TLS meets the Macquarie target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $4.41, suggesting upside of 0.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: -0.1

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

Macquarie rates WSA as Upgrade to Neutral from Underperform (3) -

The company has upgraded the resource base at Cosmos, with massive sulphides up 311%, which Macquarie believes has materially improved the economics of the project.

The increase in the high-grade massive sulphide has caused the broker to upgrade estimates for an internal rate of return to 25% from 18%. Cosmos still needs higher nickel prices before development is likely to progress, the broker acknowledges.

As the stock has fallen over -13% this month, and incorporating the improved economics, Macquarie upgrades to Neutral from Underperform. Target rises to $2.15 from $2.00.

Target price is $2.15 Current Price is $1.90 Difference: $0.25
If WSA meets the Macquarie target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $2.29, suggesting upside of 11.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: -0.3

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