Australian Broker Call

Credit Suisse rates ANN as Neutral (3) -

Ansell has guided to FY20 underlying earnings per share of US$1.12-1.22. Credit Suisse expects guidance to be updated at the AGM on November 14 and there is a risk this shifts towards the lower end of the range.

Given there is no sign of improved macro conditions in Europe and there is continued softness in the US, the broker suspects the company will miss its organic sales growth forecast in FY20. Neutral rating and $28 target maintained.

Target price is $28.00 Current Price is $29.01 Difference: minus $1.01 (current price is over target).
If ANN meets the Credit Suisse target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $28.31, suggesting downside of -2.4% (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: 0.3

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

Ord Minnett rates ANN as Hold (3) -

Ord Minnett reviews expectations ahead of the AGM on November 14. The broker finds few reasons to lift conservative growth estimates amid subdued economic conditions in key economies.

However, Ansell is considered the best positioned in the healthcare sector to benefit from the rotation away from defensive & momentum stocks to value & cyclical stocks.

This is particularly the case if the transition is supported by the resolution of trade tensions and a resultant lift in economic activity. Hold rating and $27 target maintained.

Target price is $27.00 Current Price is $29.01 Difference: minus $2.01 (current price is over target).
If ANN meets the Ord Minnett target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $28.31, suggesting downside of -2.4% (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: 0.3

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

Morgan Stanley rates API as Underweight (5) -

Earnings pressure continues, given challenging industry conditions. FY19 results were in line although, adjusting for one-off items, the underlying result missed Morgan Stanley's estimates.

Price deflation and rising input costs continue to affect returns in pharmacy. The company has reiterated a view there is strategic logic with regard to a merger with Sigma Healthcare ((SIG)) and Morgan Stanley assumes the company will continue to hold this position going forward.

Underweight retained. Industry view: In Line. Target is raised to $1.35 from $1.32.

Target price is $1.35 Current Price is $1.42 Difference: minus $0.07 (current price is over target).
If API meets the Morgan Stanley target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $1.42, suggesting downside of -0.2% (ex-dividends)

The company's fiscal year ends in August.

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

Citi rates ASX as Sell (5) -

Citi lifts estimates for earnings per share by 1% based on solid volumes over the year to date. The broker believes ASX has many qualities, including a strong competitive position, commitment to a stable pay-out and positive leverage to higher market volatility.

However, valuation is an obstacle and a Sell rating is maintained. ASX has the third highest PE across key global exchanges, the broker assesses, yet only offers earnings growth in the low mid-single digit range.

The revenue base, at present, also appears less diversified than some of its global peers. Target is raised to $70.10 from $69.10.

Target price is $70.10 Current Price is $80.47 Difference: minus $10.37 (current price is over target).
If ASX meets the Citi target it will return approximately minus 13% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $70.99, suggesting downside of -11.8% (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

Credit Suisse rates BHP as Neutral (3) -

The investor briefing on the petroleum division provided a compelling case for growth, although Credit Suisse believes, of the 150mmboe opportunity outlined, there is some "blue sky" which requires for capital approval and capabilities being developed.

Even in a bear case scenario, the company does not envisage peak oil demand until the mid 2020s. The broker found little to move the dial in regard to Scarborough and Bass Strait.

Credit Suisse assesses the extra detail reinforces the view that the petroleum business is a worthy differentiator for BHP Group. Neutral rating and $37 target maintained.

Target price is $37.00 Current Price is $37.07 Difference: minus $0.07 (current price is over target).
If BHP meets the Credit Suisse target it will return approximately minus 0% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $37.30, suggesting upside of 0.6% (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: 0.1

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

Ord Minnett rates BHP as Hold (3) -

Ord Minnett notes, following the briefing on the petroleum division, that the US$5bn Trion project, along with the expansion of the Trinidad and Tobago operations could support around 20% higher production by FY30 vs FY19.

While these two projects will help maintain petroleum exposure in the long term the division is not a material contributor to group earnings in the medium term. In the near term the division faces steeper volume declines than previously expected.

Ord Minnett maintains a Hold rating and $37 target.

Target price is $37.00 Current Price is $37.07 Difference: minus $0.07 (current price is over target).
If BHP meets the Ord Minnett target it will return approximately minus 0% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $37.30, suggesting upside of 0.6% (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: 0.1

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

Ord Minnett rates CTD as Buy (1) -

Corporate Travel has responded to recent market scrutiny by confirming guidance at the AGM. Ord Minnett assesses the business has some hurdles to overcome but has the tools to do the job.

The main issue for the broker is the ability of the company to prove it can deliver sustainable long-term growth in the US.

While the technology and clients are evident, Ord Minnett would like this to translate into tangible earnings growth. Buy rating and $27.40 target maintained.

Target price is $27.40 Current Price is $19.51 Difference: $7.89
If CTD meets the Ord Minnett target it will return approximately 40% (excluding dividends, fees and charges).

Current consensus price target is $26.65, suggesting upside of 36.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.8

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

Credit Suisse rates DHG as Underperform (5) -

The AGM update flagged weakness in residential listing volumes with underlying revenue down -12% and digital revenue down -8% in the first four months of FY20.

Some offset has been provided by an increased focus on cost reductions. A new pricing structure was also confirmed, expected to drive a weighted average price increase of 5-7% into 2020.

Credit Suisse maintains an Underperform rating and raises the target to $2.40 from $2.35.

Target price is $2.40 Current Price is $3.40 Difference: minus $1 (current price is over target).
If DHG meets the Credit Suisse target it will return approximately minus 29% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.16, suggesting downside of -7.0% (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 DHG as Upgrade to Outperform from Neutral (1) -

Macquarie observes cost management has offered more protection than previously expected against the headwinds to volume. Trading was slightly weaker than expected in July to October but offset by strong cost-cutting.

While some of the costs will return, the broker assesses the business has significant operating leverage. Trends are expected to improve in December.

Rating is upgraded to Outperform from Neutral. Target is raised to $3.60 from $3.20.

Target price is $3.60 Current Price is $3.40 Difference: $0.2
If DHG meets the Macquarie target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $3.16, suggesting downside of -7.0% (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

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

FY20 trading was stronger than Ord Minnett expected and a new pricing structure to be rolled out on January 1 should help improve yields and depth penetration.

Ord Minnett expects a recovery in the real estate listings environment in the second half of FY20 and prefers Domain to REA Group ((REA)) , as the former is more leveraged to improvements in Sydney and Melbourne.

Rating is upgraded to Accumulate from Hold and the target raised to $3.65 from $3.15.

Target price is $3.65 Current Price is $3.40 Difference: $0.25
If DHG meets the Ord Minnett target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $3.16, suggesting downside of -7.0% (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

UBS rates DHG as Neutral (3) -

Domain's trading update was softer than feared, with revenues down -12% year on year in the first four month's of FY20. The broker notes this includes some deferrals, and that the company is cycling tough comparables, but beyond that, a -7% reduction in costs means the broker's earnings forecasts are little changed.

The broker acknowledges the acquisition of the Real Time Agent platform, but provides no qualification. Neutral retained, target rises to $3.20 from $3.00.

Target price is $3.20 Current Price is $3.40 Difference: minus $0.2 (current price is over target).
If DHG meets the UBS target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.16, suggesting downside of -7.0% (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 ELD as Add (1) -

Morgans found the FY19 result commendable, given the challenging operating environment. No formal FY20 guidance was provided but the company expects a below-average summer cropping season.

As a result, Morgans reduces FY20 forecasts for net profit by -3.6%. Relative to peers, the broker considers Elders best placed to withstand the current environment.

The business is also highly leveraged to a rising cattle price, which will occur once it rains and farmers need to re-stock. Add rating maintained. Target is reduced to $7.10 from $7.30.

Target price is $7.10 Current Price is $6.54 Difference: $0.56
If ELD meets the Morgans target it will return approximately 9% (excluding dividends, fees and charges).

The company's fiscal year ends in September.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 1.0

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

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

The company has completed the acquisition of Imaging Queensland for consideration up front of $104m. Morgan Stanley already includes the associated capital raising in forecasts and now includes the earnings associated with the acquisition.

Target is raised to $3.40 from $3.12. Equal-weight rating maintained as the PE multiple looks full.  Industry view: In-Line.

The broker suspects the market will continue to pay a premium for the stock given the upside risk associated with reduced balance sheet leverage and a track record of accretive acquisitions.

Target price is $3.40 Current Price is $3.55 Difference: minus $0.15 (current price is over target).
If IDX meets the Morgan Stanley target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.40, suggesting downside of -4.1% (ex-dividends)

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

UBS rates ILU as Neutral (3) -

Following a review due early next year, it is possible Iluka Resources will separate its MAC royalty stream from its mineral sands business. The market is debating whether Mining Area C royalties make an overweight contribution relative to mineral sands given BHP Group's ((BHP)) South Flank project in the area and current iron ore prices.

On the possibility of separation, the broker has moved to a sum of the parts valuation model from a discounted cash flow model. This results in a target price increase to $10.00 from $8.10. Neutral retained.

Target price is $10.00 Current Price is $9.01 Difference: $0.99
If ILU meets the UBS target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $9.51, suggesting upside of 5.5% (ex-dividends)

The company's fiscal year ends in December.

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

Citi rates MGR as Buy (1) -

Citi suspects the concerns over an earnings hole in FY21 could be overdone. The perception is largely because of a reduction in forecast residential and commercial development profits.

However, the broker believes Mirvac could grow in FY21, supported by an 11% increase in office income, 50% growth in MPC settlements and a potential 50% sell down of locomotive.

Buy rating maintained. Target is raised to $3.60 from $3.50.

Target price is $3.60 Current Price is $3.21 Difference: $0.39
If MGR meets the Citi target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $3.27, suggesting upside of 1.7% (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

Morgan Stanley rates NUF as Overweight (1) -

Morgan Stanley notes, in the case of Omega-3 patented infringements, the judge has made a royalty determination. Remedies relate to Group A patents which expire in 2025.

The court found an appropriate royalty to be a lump sum of US$3.7m plus 3.5% of ongoing sales. The broker expects the royalty will be shared by Nufarm, CSIRO and Grains Research and Development Corp.

Overweight rating and Cautious industry view. Target is $7.20.

Target price is $7.20 Current Price is $6.24 Difference: $0.96
If NUF meets the Morgan Stanley target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $6.58, suggesting upside of 5.4% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.6

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

Macquarie rates NWS as Outperform (1) -

First quarter revenue was down -7%. Macquarie notes a combination of structural, cyclical and one-off headwinds. Momentum is expected to improve in the second half as the company undergoes a simplification of its News and Information Services division.

This division is also expected to benefit from the recent deal with Facebook. An improvement in the trend at REA Group ((REA)) is also envisaged on the assumption market volumes return to growth. Outperform rating maintained. Target is $25.37.

Target price is $25.37 Current Price is $19.58 Difference: $5.79
If NWS meets the Macquarie target it will return approximately 30% (excluding dividends, fees and charges).

Current consensus price target is $23.71, suggesting upside of 21.1% (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

Morgans rates PAN as Speculative Buy (1) -

Morgans observes higher nickel prices have helped cushion the dilutive and disappointing impact of the recent capital raisings. The hostile takeover offer by Independence Group ((IGO)) endorses the company's potential, but the broker suspects the bid has limited chance of proceeding in its current form.

Morgans now believes the stock warrants a Speculative Buy rating, as opposed to Add, because of the ongoing risks in ramping up Savannah. The December quarter is expected to mark an important inflection point. Target is reduced to $0.51 from $0.70.

Target price is $0.51 Current Price is $0.44 Difference: $0.07
If PAN meets the Morgans target it will return approximately 16% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 1.0

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

Citi rates QBE as Downgrade to Neutral from Buy (3) -

Citi downgrades to Neutral from Buy, maintaining a $13.45 target. The broker now believes it highly likely that US crop insurance will endure an adverse outcome in 2019. Both Chubb and Zurich have hinted at adverse outcomes.

The broker also notes a significant second half vs first half headwind for QBE's claims ratio. Potential volatility is envisaged in the stock price as the market assesses the issues, which Citi suspects may lead to a better opportunity.

Target price is $13.45 Current Price is $12.73 Difference: $0.72
If QBE meets the Citi target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $13.16, suggesting upside of 3.4% (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: 0.5

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

Macquarie rates QBE as Neutral (3) -

Macquarie notes the company's peers are resigned to worse-than-average US crop earnings over 2019. While the pricing outlook continues to improve, casualty losses in the US are a major concern.

Macquarie maintains a Neutral rating and $13 target.

Target price is $13.00 Current Price is $12.73 Difference: $0.27
If QBE meets the Macquarie target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $13.16, suggesting upside of 3.4% (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: 0.5

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