Australian Broker Call

Citi rates A2M as Neutral (3) -

The company's revenue growth rates over FY18 represent strong demand and Citi believes they are also assisted by the cycling of stock shortage in the prior year. The company has reported 30% operating earnings margins and guided to a similar amount in FY19.

Citi suggests the multi-year margin expansion is over in the short term, as the company has flagged increasing marketing investment in China and the US. Neutral rating maintained. Target is reduced to $10.90 from $11.00.

Target price is $10.90 Current Price is $10.35 Difference: $0.55
If A2M meets the Citi target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $11.72, suggesting upside of 13.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

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

Market Sentiment: 0.7

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

Macquarie rates A2M as Outperform (1) -

A2 Milk has suggested that FY18 sales will total NZ$922m, up 68% and higher than May guidance. The FY19 outlook is for further revenue growth although costs will be higher.

Macquarie continues to envisage longer-term value in the stock given it is building a business in a disruptive and growing category. Outperform rating and $12.40 target maintained.

Target price is $12.40 Current Price is $10.35 Difference: $2.05
If A2M meets the Macquarie target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $11.72, suggesting upside of 13.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

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

Market Sentiment: 0.7

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

Morgans rates A2M as Add (1) -

Unaudited revenue for FY18 was slightly ahead of guidance. The company expects an earnings margin of 30% for FY18. Morgans anticipates strong cash flow conversion will feature and some form of capital management announcement.

Expectations for FY19 have softened because of investment across the business and Morgans downgrades FY19 and FY20 net profit forecasts by -6.9%. Add rating maintained. Target is reduced to $11.85 from $12.48.

Target price is $11.85 Current Price is $10.35 Difference: $1.5
If A2M meets the Morgans target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $11.72, suggesting upside of 13.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

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

Market Sentiment: 0.7

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

UBS rates A2M as Neutral (3) -

The company has guided to FY18 unaudited revenue of NZ$922m, up 68%, and operating earnings (EBITDA) of NZ$277m, around 3% ahead of UBS estimates.

A2 milk has guided to flat earnings margins of around 30% in FY19 with easing US losses to be offset by higher marketing costs.

Neutral rating retained. Target is NZ$11.20.

Current Price is $10.35. Target price not assessed.

Current consensus price target is $11.72, suggesting upside of 13.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

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

Market Sentiment: 0.7

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

Ord Minnett rates APE as Hold (3) -

Ord Minnett remains cautious, given many headwinds facing the industry. Having said so, the broker also maintains AP Eagers remains well-placed to capitalise on further sector consolidation.

Earnings estimates have been lifted. Price target has moved to $8.40 from $8.20. Hold rating retained.

Target price is $8.20 Current Price is $8.50 Difference: minus $0.3 (current price is over target).
If APE meets the Ord Minnett target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $8.60, suggesting upside of 1.2% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.3

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

Macquarie rates AST as Outperform (1) -

The Australian Energy Regulator has released its draft guidelines while the ACCC has also released its electricity report. The AER draft is a worst-case scenario, in Macquarie's opinion, while the ACCC recommendations have a mixture of positives and negatives.

The broker believes the company is entering a new growth phase, driven by Snowy 2.0 and emerging wind and solar zones. This should provide scope for capital investment as a primary driver of the regulated asset base. Outperform maintained. Target is reduced to $1.74 from $1.91.

Target price is $1.74 Current Price is $1.57 Difference: $0.17
If AST meets the Macquarie target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $1.71, suggesting upside of 9.0% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.2

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

Ord Minnett rates CWY as Hold (3) -

The company has entered into a joint venture with ResourceCo Holdings to acquire a 50% interest in a new resource facility located at Wetherill Park in western Sydney and Ord Minnett analysts believe the price paid seems high.

Having said so, the analysts also believe returns on such assets are currently high, plus there should be additional benefits for Cleanaway. Hold rating retained, target price moves to $1.62 from $1.55.

Target price is $1.62 Current Price is $1.80 Difference: minus $0.18 (current price is over target).
If CWY 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 $1.74, suggesting downside of -3.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.5

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

Citi rates FNP as Buy (1) -

While the company's trading update disappointed many, judging by the share price response, Citi analysts see positives supporting their Buy rating. They've lifted the price target to $6.90 from $6.70.

The long term investment thesis remains intact and Citi analysts expect infant formula will compensate for growth reductions elsewhere. Estimates have fallen between -4-6% for FY18-19.

Target price is $6.90 Current Price is $6.03 Difference: $0.87
If FNP meets the Citi target it will return approximately 14% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.5

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

Morgans rates GDF as Add (1) -

The company has recently revalued the portfolio, now $327m, and the weighted average cap rate is 7.12%. Morgans observes the company offers exposure to east coast office and industrial property at an attractive distribution yield.

Morgans forecasts an FY19 distribution of 9c per share and retains an Add rating. Target is raised to $1.30 from $1.26.

Target price is $1.30 Current Price is $1.22 Difference: $0.08
If GDF meets the Morgans target it will return approximately 7% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 1.0

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

Morgans rates NBL as Add (1) -

The company's FY18 trading update signalled expectations for operating earnings of $37m, up 61.5%. Morgans is increasingly confident, given the successful turnaround of the Pretty Girl acquisition.

The company is also embarking on the turnaround of the recently-acquired Specialty Fashion brands. This should mean earnings double from FY18-20.

Add rating maintained. Target is raised to $3.83 from $3.50.

Target price is $3.83 Current Price is $3.25 Difference: $0.58
If NBL meets the Morgans target it will return approximately 18% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 1.0

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

Citi rates NUF as Buy (1) -

Nufarm shares have fallen -13% from their recent highs, underperforming the broader market as dry conditions predominate in Australia and Brazil.

FY18 guidance of earnings growth of 5% may now be out of reach but Citi considers the sell-off in the stock overdone. At current levels, the broker believes investors are getting the company's Omega 3 business for free. Buy rating and $10 target maintained.

Target price is $10.00 Current Price is $8.16 Difference: $1.84
If NUF meets the Citi target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $9.87, suggesting upside of 21.0% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.7

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

UBS rates OGC as Buy (1) -

OceanaGold continues to incrementally improve production against guidance and UBS believes the stock is offering good value versus the rest of the sector.

The key catalyst is the permits for Haile in order to access the high grade underground. The broker is watching the process closely as any delay could add risk to the long-term upside. Buy rating and $4.20 target maintained.

Target price is $4.20 Current Price is $3.91 Difference: $0.29
If OGC meets the UBS target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $4.60, suggesting upside of 17.6% (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: 0.9

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

Citi rates ORG as Upgrade to Buy from Neutral (1) -

Citi adjusts its estimates, marking to market for oil and FX in the June quarter and reflecting pipeline flow and LNG cargo data in production forecasts. The broker also makes adjustments to the debt schedule leading to lower interest expense.

As a result, near-term earnings for FY18-20 are raised by up to 6%. Rating is upgraded to Buy from Neutral and the broker continues to prefer Origin Energy over AGL ((AGL)), given it has less exposure to lower wholesale prices. Target is raised to $11.02 from $10.38.

Target price is $11.02 Current Price is $9.56 Difference: $1.46
If ORG meets the Citi target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $10.23, suggesting upside of 7.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.7

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

Macquarie rates RIO as Outperform (1) -

The company has reached an agreement to sell its interest in Grasberg for US$3.5bn. The sale of Grasberg, combined with the exit from Australian coal and some aluminium smelters, suggests the company will raise US$8.5bn in asset sales in 2018.

Given low debt levels Macquarie suggests proceeds from the Grasberg sale will boost ongoing capital management programs.

Target price of $94 and Outperform rating maintained.

Target price is $94.00 Current Price is $80.53 Difference: $13.47
If RIO meets the Macquarie target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $89.31, suggesting upside of 10.9% (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: 0.8

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

Morgan Stanley rates RMD as Overweight (1) -

The US Centres for Medicare and Medicaid Services have proposed changes to the durable medical equipment schedule and competitive bidding process.

From 2019 Morgan Stanley envisages broader access to Medicare beneficiaries which will support volume growth and an improved pricing outlook.

Overweight rating reiterated. Target is US$112. Industry view: In Line.

Current Price is $14.73. Target price not assessed.

Current consensus price target is $13.59, suggesting downside of -7.7% (ex-dividends)

The company's fiscal year ends in June.

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: 0.3

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

UBS rates RMD as Neutral (3) -

 US Medicare and Medicaid services have released a new competitive bidding rule that will set the process and reimbursement rates for durable medical equipment providers in 2019 and beyond.

UBS considers the changes will be beneficial for these providers, and indirectly for ResMed, with maximum bids and lead pricing resulting in a simpler and potentially higher reimbursement framework.

The broker retains a Neutral rating and raises the target to US$106 from US$104.

Current Price is $14.73. Target price not assessed.

Current consensus price target is $13.59, suggesting downside of -7.7% (ex-dividends)

The company's fiscal year ends in June.

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: 0.3

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

Macquarie rates RSG as Outperform (1) -

The company has preliminary FY18 production results which are strongly ahead of Macquarie's expectations. The broker adjusts FY19 assumptions slightly upwards.

The company's recently updated outlook for Ravenswood further extends its average mine life while strengthening the production base and the broker believes this could be boosted by development of Bibiani. Outperform rating and $1.60 target maintained.

Target price is $1.60 Current Price is $1.33 Difference: $0.27
If RSG meets the Macquarie target it will return approximately 20% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 1.0

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

Ord Minnett rates SCG as Accumulate (2) -

Accumulate rating retained as Scentre Group acquired a 50% interest in Westfield Eastgardens for $720m, based on a cap rate of 4.25%. The analysts do concede it appears a full price has been paid but given Scentre already manages the asset, it should know what it is doing, right?

The analysts point out this still is the owner of the best-quality portfolio of retail assets in Australia. Given the many threats and disruptions impacting on the sector, Ord Minnett believes quality is becoming increasingly important. Target price has gained 10c to $4.90.

Target price is $4.90 Current Price is $4.48 Difference: $0.42
If SCG meets the Ord Minnett target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $4.50, suggesting upside of 0.5% (ex-dividends)

The company's fiscal year ends in December.

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

Morgan Stanley rates SHL as Overweight (1) -

Morgan Stanley envisages high single digit earnings growth over the next three years for Sonic Healthcare. This is likely to be supplemented by exercising the balance sheet through consolidating core markets.

Morgan Stanley remains confident about the long duration volume growth, although the timing and magnitude of occasional fee reductions in the future are less visible.

Overweight. Target is raised to $29.00 from $27.10. Industry view is In-Line.

Target price is $29.00 Current Price is $26.54 Difference: $2.46
If SHL meets the Morgan Stanley target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $26.02, suggesting downside of -2.0% (ex-dividends)

The company's fiscal year ends in June.

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

Macquarie rates SKI as Neutral (3) -

The Australian Energy Regulator has released its draft guidelines while the ACCC has also released its electricity report. The AER draft is a worst-case scenario, in Macquarie's opinion, while the ACCC recommendations have a mixture of positives and negatives.

Macquarie lowers the target to $2.51 from $2.64 to reflect the draft AER decision. Upside remains centred on the transmission investment in NSW and organic population growth in Victoria. Neutral rating maintained.

Target price is $2.51 Current Price is $2.21 Difference: $0.3
If SKI meets the Macquarie target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $2.50, suggesting upside of 13.2% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.2

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