Australian Broker Call

Deutsche Bank rates ASL as Buy (1) -

Ausdrill has announced a three-year extension of the equipment hire contract with Peabody at $126m. Deutsche Bank suspects there was likely to be a marginal price increase to reflect tighter equipment availability and potentially better terms.

Buy rating and $2.04 target maintained.

Target price is $2.04 Current Price is $1.50 Difference: $0.54
If ASL meets the Deutsche Bank target it will return approximately 36% (excluding dividends, fees and charges).

Market Sentiment: 1.0

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

Credit Suisse rates BSL as Outperform (1) -

Credit Suisse US steel analysts have reduced hot rolled coil (HRC) and steel spread assumptions citing planned capacity additions, declining US steel tariff protection and the likely rise in scrap.

More HRC will enter the market in the second half of 2019 and the new capacity materially exceeds the most ambitious growth forecasts, in the broker's view.

This will force the closure of high-cost capacity. BlueScope's multiple geographic and end-market exposure as well as low steel production costs does reduce earnings volatility, the broker assesses.

Outperform and $16.50 target retained.

Target price is $16.50 Current Price is $11.38 Difference: $5.12
If BSL meets the Credit Suisse target it will return approximately 45% (excluding dividends, fees and charges).

Current consensus price target is $15.16, suggesting upside of 33.2% (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

UBS rates BSL as Downgrade to Neutral from Buy (3) -

The removal of Canadian & Mexican steel tariffs and high iron ore prices as well as softening demand for housing in Australia all conspire to put pressure on the business, UBS believes. Rating is downgraded to Neutral from Buy.

FY20 and FY21 estimates for earnings are cut by -36%. Despite weakening US spreads, the broker believes the company will still push ahead with the expansion of North Star as this is the right strategy for the long-term. Target is reduced to $13 from $16.

Target price is $13.00 Current Price is $11.38 Difference: $1.62
If BSL meets the UBS target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $15.16, suggesting upside of 33.2% (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

Macquarie rates COH as Underperform (5) -

A survey of 21 US-based audiologists, conducted by Macquarie, has highlighted favourable attributes of the company's product, albeit with Advanced Bionics recently taking share.

Macquarie believes increased uptake of cochlear implants amongst adults is the main opportunity. As current multiples are elevated and there is near-term earnings risk from increased competition, Macquarie retains an Underperform rating. Target is reduced to $166 from $170.

The broker estimates unit sales growth would need to increase to over 13% per annum over the next five years in order to justify the current share price.

Target price is $166.00 Current Price is $197.73 Difference: minus $31.73 (current price is over target).
If COH meets the Macquarie target it will return approximately minus 16% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $169.80, suggesting downside of -14.1% (ex-dividends)

The company's fiscal year ends in June.

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

Citi rates CSR as Downgrade to Sell from Neutral (5) -

Citi observes the shares have strongly outperformed this year, amid easing alumina cost concerns and the boost in housing market sentiment. The stock has now priced in the rally and the broker downgrades to Sell from Neutral. Target is $3.50.

The broker believes the recent court decision in Brazil to lift production restrictions at Alunorte should help improve supply but this may not be of help to CSR. CSR recently secured a new contract for half of its alumina requirements at around 18-18.5% linkage to the LME aluminium price.

Target price is $3.50 Current Price is $4.09 Difference: minus $0.59 (current price is over target).
If CSR meets the Citi target it will return approximately minus 14% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.41, suggesting downside of -16.7% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: -0.4

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

Morgans rates CTD as Add (1) -

Given global uncertainty, such as Brexit and the US/China trade conflict, Morgans believes it is appropriate to move forecasts in line with the company's FY19 guidance.

Data has recently suggested that demand for corporate travel is slowing locally and whether this recovers now the federal election has passed remains unclear. Still, the broker believes the company can report solid earnings growth as it wins new clients and experiences the benefits of its technology.

Morgans maintains an Add rating and reduces the target to $27.50 from $31.65.

Target price is $27.50 Current Price is $22.84 Difference: $4.66
If CTD meets the Morgans target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $30.15, suggesting upside of 32.0% (ex-dividends)

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

Ord Minnett rates EHE as Hold (3) -

The company has indicated that FY19 operating earnings (EBITDA) will be lower than previously anticipated, albeit up 2-4%.

Ord Minnett continues to believe funding to the sector will be increased following the Royal Commission but awaits the interim report, due in October. Occupancy levels, in the interim, are expected to be below par.

The broker maintains a Hold rating and raises the target to $2.70 from $2.50.

Target price is $2.70 Current Price is $2.81 Difference: minus $0.11 (current price is over target).
If EHE 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 $2.73, 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 EHE as Downgrade to Neutral from Buy (3) -

The company has downgraded underlying earnings guidance by -6% at the mid point for FY19, as occupancy deteriorates. The company now expects like-for-like EBITDA to be $86-88m.

UBS notes the share price has risen 27% since the beginning of 2019 despite the weakening outlook and pressure on staff costs.

With the possibility of a more favourable policy environment under a Labor government now removed, and meaningful sector reform unlikely until the final report from the Royal Commission is tabled, the broker believes the operating environment in the near term is challenging.

Rating is downgraded to Neutral from Buy and the target lowered to $2.85 from $3.00.

Target price is $2.85 Current Price is $2.81 Difference: $0.04
If EHE meets the UBS target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $2.73, 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

Morgans rates EPW as Add (1) -

The company has acquired the Smithfield Open Cycle Gas Turbine for up to $74m. Morgans lifts its estimated value of the Oakey power station to $140m to reflect a similar multiple.

Estimated value for Neerabup is also increased to $57m. Subsequently, the broker suggests there is more upside to the share price and raises the target to $2.05 from $1.86. Add maintained.

Target price is $2.05 Current Price is $1.83 Difference: $0.22
If EPW meets the Morgans target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $1.97, suggesting upside of 7.5% (ex-dividends)

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

UBS rates FNP as Buy (1) -

The company has made a fully underwritten equity raising of around $130m to support growth plans for its nutritionals business. Revenue guidance for FY19 has been downgraded to $480-490m from the lower end of $500-530m.

The company's expected annualised return on capital employed is considered conservative as UBS envisages material upside risk to lactoferrin prices.

The broker believes the stock screens attractively and maintains a Buy rating. Target is raised to $7.10 from $6.60.

Target price is $7.10 Current Price is $5.00 Difference: $2.1
If FNP meets the UBS target it will return approximately 42% (excluding dividends, fees and charges).

Current consensus price target is $6.06, suggesting upside of 21.3% (ex-dividends)

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

Ord Minnett rates KDR as Downgrade to Hold from Buy (3) -

Ord Minnett reduces forecasts for global supply of lithium by -8% in 2020 and -14% in 2021, although continued market surplus is still considered likely.

The broker lowers battery-grade price expectations for the next two years by -10%, to US$11,500-12,000/t of lithium carbonate equivalent, and concentrate pricing by -14% to US$550/t.

Rating is downgraded to Hold from Speculative Buy and the target reduced to $1.90 from $3.00.

Target price is $1.90 Current Price is $1.89 Difference: $0.01
If KDR meets the Ord Minnett target it will return approximately 1% (excluding dividends, fees and charges).

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

Macquarie rates MLX as Outperform (1) -

The company has upgraded the resource estimate at Renison by 22%, boosted by a material increase in grade. An updated reserve and life of mine plan are due in the first quarter of FY20 and present upside risk to Macquarie's base case.

The broker extends mine life assumptions by two years to reflect the large resource base. Target rises to $0.47 from $0.45. Outperform maintained.

Target price is $0.47 Current Price is $0.24 Difference: $0.23
If MLX meets the Macquarie target it will return approximately 96% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

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

Morgans rates OZL as Upgrade to Add from Hold (1) -

Morgans believes the stock's retreat of nearly -20% since early April is overdone. The broker suspects sentiment is the culprit because of ongoing US/China trade uncertainty.

The broker suspects marginal investors use OZ Minerals as a proxy for the outlook for both the copper market and global growth, given its status as the largest and most liquid ASX-listed pure copper play.

The broker marks down copper prices for 2019-21 and raises gold assumptions for 2019. Overall, earnings forecasts improve by 6% over 2019-20 but are -12% lower for 2021.

Rating is upgraded to Add from Hold, as the current valuation is a key buy trigger, Morgans suggests. Target is reduced to $11.27 from $11.40.

Target price is $11.27 Current Price is $9.26 Difference: $2.01
If OZL meets the Morgans target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $11.21, suggesting upside of 21.0% (ex-dividends)

The company's fiscal year ends in December.

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 PLS as Downgrade to Lighten from Hold (4) -

Ord Minnett reduces forecasts for global supply of lithium by -8% in 2020 and -14% in 2021, although continued market surplus is still considered likely.

The broker lowers battery-grade price expectations for the next two years by -10%, to US$11,500-12,000/t of lithium carbonate equivalent, and concentrate pricing by -14% to US$550/t.

Ord Minnett lowers its rating to Lighten from Hold. Target is unchanged at $0.65, as falling concession prices add pressure for improved operating rates in order to deliver positive cash flow.

Target price is $0.65 Current Price is $0.73 Difference: minus $0.08 (current price is over target).
If PLS meets the Ord Minnett target it will return approximately minus 11% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $0.90, suggesting upside of 23.3% (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

Credit Suisse rates QBE as Downgrade to Neutral from Outperform (3) -

The share price has outperformed the market over the past three months and moved close to the target. Credit Suisse reviews the earnings outlook and key drivers for the next leg up in the share price.

While the company is benefiting from favourable premium rates and early-stage expense efficiency, it also faces a slowdown in the important lender mortgage insurance division, as well as increased volatility from adverse weather claims.

Rating is downgraded to Neutral from Outperform. Target is steady at $13.

Target price is $13.00 Current Price is $12.31 Difference: $0.69
If QBE meets the Credit Suisse target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $13.11, suggesting upside of 6.5% (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

Macquarie rates SKI as Neutral (3) -

Macquarie updates its model to allow for the Bomen solar acquisition and draft  positions for the SA and Victorian power networks.

The broker assesses the acquisition of the Bomen solar farm is a minor contributor to 2020 and 2021 earnings in the order of $11m per annum.

Macquarie maintains a Neutral rating. Target is $2.28.

Target price is $2.28 Current Price is $2.33 Difference: minus $0.05 (current price is over target).
If SKI meets the Macquarie target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.25, suggesting downside of -3.5% (ex-dividends)

The company's fiscal year ends in December.

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

Credit Suisse rates SYR as Outperform (1) -

The company's AGM has confirmed 2019 guidance. The production target has been held at 250,000t, subject to demand.

Fines graphite remains in surplus, Credit Suisse observes, while the deficit in coarse graphite is likely to ease.

The company's cash drawdown is expected to decline significantly in the third quarter.

Outperform rating and $3.30 target maintained.

Target price is $3.30 Current Price is $1.15 Difference: $2.15
If SYR meets the Credit Suisse target it will return approximately 187% (excluding dividends, fees and charges).

Current consensus price target is $2.20, suggesting upside of 91.3% (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