Australian Broker Call

Credit Suisse rates AHY as Outperform (1) -

Credit Suisse believes the company is gathering momentum and this supports a 2% top-line growth assumption for 2020. The company recently secured improved shelf positioning in Woolworths, as it came off every-day low pricing.

A step change in marketing has also encouraged retailers to restore eye-level shelving for the Libra brand. Credit Suisse considers the stock is good value and maintains an Outperform rating and $1.10 target.

Target price is $1.10 Current Price is $0.99 Difference: $0.11
If AHY meets the Credit Suisse target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $1.07, suggesting upside of 8.1% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.7

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

Credit Suisse rates ALX as Neutral (3) -

The company has acquired an additional 6.14% stake in APRR. From a strategic perspective Credit Suisse considers the deal attractive, as Atlas Arteria has better governance rights, and the management fee drain to Macquarie Group ((MQG)) is terminated along with the risk of the Eiffage call option.

However, the broker considers a full price has been paid at EUR654.2m. Neutral rating maintained. Target is reduced to $7.40 from $8.10.

Target price is $7.40 Current Price is $7.64 Difference: minus $0.24 (current price is over target).
If ALX 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 $7.80, suggesting upside of 2.1% (ex-dividends)

The company's fiscal year ends in December.

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 ALX as Neutral (3) -

Atlas Arteria has acquired an additional 6.14% stake in APRR through the sale of the MEIF2 interest, terminated future management fees to Macquarie Group ((MQG)) and extinguished Eiffage pre-emptive rights. All of the above has been funded by a raising of $1.35bn.

Atlas Arteria has now internalised, the broker notes, providing for a simpler structure and improved governance, and there are no more poison pills requiring of a valuation discount. The broker considers dividend guidance of 34cps to be very conservative. The cost of the above and dilution from the raising means target falls to $8.06 from $8.25. Neutral retained.

Target price is $8.06 Current Price is $7.64 Difference: $0.42
If ALX meets the Macquarie target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $7.80, suggesting upside of 2.1% (ex-dividends)

The company's fiscal year ends in December.

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 AVG as Hold (3) -

FY20 guidance suggests growth in net profit of around 25%, although this is weaker than previously expected. Morgans lowers forecasts, given the likelihood that sustained input cost pressures and solid demand for wine will put upward pressure on grape prices.

The broker expects the company will look to combat this through production efficiencies and improvements in its mix. Hold rating maintained. Target is reduced to $0.49 from $0.52.

Target price is $0.49 Current Price is $0.51 Difference: minus $0.02 (current price is over target).
If AVG meets the Morgans target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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

Citi rates BSL as Buy (1) -

The update at the AGM was better than Citi feared. The company has stated that demand in major markets remains stable and there has been a modest recovery in Australian domestic volumes.

As FY20 forecasts appear safe on Citi's estimates, underpinned by firming steel prices and softening Chinese steel production into winter, a Buy rating and $15 target are retained.

Target price is $15.00 Current Price is $14.62 Difference: $0.38
If BSL meets the Citi target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $14.20, suggesting downside of -2.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.2

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

Credit Suisse rates BSL as Outperform (1) -

BlueScope Steel has confirmed first half guidance for earnings (EBIT) around $275m. Earnings drivers, including US and Asian steel spreads, are in line with assumptions provided in the original guidance.

Credit Suisse welcomes the update as it brings clarity to some key areas of risk. Outperform rating and $15.30 target maintained.

Target price is $15.30 Current Price is $14.62 Difference: $0.68
If BSL meets the Credit Suisse target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $14.20, suggesting downside of -2.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.2

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

Macquarie rates BSL as Neutral (3) -

BlueScope Steel's AGM reaffirmed a -45% earnings decline in the first half FY20. This is good news, the broker suggests, but the market environment remains mixed. Trade optimism and expectations of improvement in the global economy have driven a re-rating in recent weeks but risks remain.

While the broker has downgraded earnings forecasts on a mark to market, it has increased its enterprise value assumptions for ASP and North Star as an earnings trough approaches and peers re-rate. This leads to a target increase to $14.00 from $10.80. Neutral retained.

Target price is $14.00 Current Price is $14.62 Difference: minus $0.62 (current price is over target).
If BSL meets the Macquarie target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $14.20, suggesting downside of -2.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.2

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

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

The company has reiterated first half guidance at the AGM and noted domestic volumes have been slightly better than expected. The North Star business has benefited from better raw material costs and higher selling prices, while manufacturing issues are expected to contribute to a softer result in engineered building solutions.

There was no commentary regarding the second half, and Morgan Stanley continues to expect analyst revisions will result in consensus downgrades on the back of lower spreads. Equal-weight maintained. Target is $13.50. Industry view: Cautious.

Target price is $13.50 Current Price is $14.62 Difference: minus $1.12 (current price is over target).
If BSL meets the Morgan Stanley target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $14.20, suggesting downside of -2.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.2

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

Ord Minnett rates BSL as Hold (3) -

The company has reiterated first half earnings (EBIT) guidance of $275m. At its AGM BlueScope Steel also provided commentary on trading conditions, noting better prices and costs for North Star and modestly better steel spreads.

While suspecting there are more negatives than positives in the update, Ord Minnett assesses the potential upside at North Star is likely to offset the drag from other divisions. Hold rating maintained. Target rises to $15 from $14.

Target price is $15.00 Current Price is $14.62 Difference: $0.38
If BSL meets the Ord Minnett target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $14.20, suggesting downside of -2.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.2

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

UBS rates BSL as Sell (5) -

Despite weakening spreads and challenging conditions, BlueScope Steel has reiterated first half earnings (EBIT) guidance, defying forecasts. To UBS, this signals strength in timing and execution, enabling the company to beat estimates of steel spreads.

The broker remains cautious, however, as soft Australian detached housing activity means lower volumes of Colorbond sales, which could lead to an increase in low-margin exports. Sell rating maintained. Target rises to $12.40 from $11.94.

Target price is $12.40 Current Price is $14.62 Difference: minus $2.22 (current price is over target).
If BSL 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 $14.20, suggesting downside of -2.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.2

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

UBS rates CRN as Neutral (3) -

Coronado Global Resources is faced with a declining benchmark metallurgical coal price, affected by tariffs, increasing mine inventory and import quotas at some Chinese ports.

As a result, costs have been revised towards the top end of guidance of US$51-52/t. 2019 EBITDA is now expected to be below the previous guidance range of US$687-737m.

UBS maintains a Neutral rating and reduces the target to $2.18 from $2.40.

Target price is $2.18 Current Price is $2.06 Difference: $0.12
If CRN meets the UBS target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $3.04, suggesting upside of 47.7% (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: 0.7

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

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

As licensing issues and the ANZ P&I transaction are moving from centre stage Morgan Stanley assesses the company's strategy is now back on track.

The broker believes this staged migration to an employed distribution model should be positive for earnings in the medium term. The main uncertainty is the capacity for sustained growth beyond acquiring registers, as well as the ability to capture recurring revenue.

Equal-weight rating maintained. Target is raised to $7.70 from $4.95. Industry view: In Line.

Target price is $7.70 Current Price is $8.00 Difference: minus $0.3 (current price is over target).
If IFL 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 $7.36, suggesting downside of -8.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.2

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

Citi rates LLC as Buy (1) -

Citi believes Lendlease has potential for a multi-year re-rating as it evolves into a global real estate developer and fund manager. Critical to this is the sale of the engineering & services business.

The broker notes an $80bn urbanisation pipeline provides a five-year period of increased development activity and funds under management are likely to exceed $60bn in 2025 from an increase in recurring earnings.

Citi maintains a Buy rating and raises the target to $24.72 from $19.30.

Target price is $24.72 Current Price is $19.60 Difference: $5.12
If LLC meets the Citi target it will return approximately 26% (excluding dividends, fees and charges).

Current consensus price target is $21.27, suggesting upside of 8.5% (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

Morgan Stanley rates MQG as Overweight (1) -

The company is receiving a termination payment of $100m for exiting a management agreement with Atlas Arteria ((ALX)) on the APRR toll road. For this gain on sale Macquarie Group will forego EUR 7.4m in revenue.

Morgan Stanley also notes MEIF2, which is selling its stake, is a step closer to selling down all its assets. The broker maintains an Overweight rating and In-Line industry view. Target is $143.

Target price is $143.00 Current Price is $134.93 Difference: $8.07
If MQG meets the Morgan Stanley target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $134.65, suggesting downside of -0.2% (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

Macquarie rates NHC as Underperform (5) -

New Hope's quarterly update featured production ahead of the broker's forecast driven by Bengalla, which offset declining production at New Acland. The recent court decision improves the chances of New Acland stage 3 being approved but likelihood and timing remain unknown, the broker notes.

An increase in the Bengalla stake to 80% is a long term positive but while New Acland remains up in the air, Underperform retained. Target falls to $2.00 from $2.10.

Target price is $2.00 Current Price is $2.13 Difference: minus $0.13 (current price is over target).
If NHC meets the Macquarie target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.56, suggesting upside of 20.3% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.3

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

UBS rates NWS as Buy (1) -

UBS updates forecasts to account for the first quarter. First quarter operating earnings (EBITDA) fell -38% to $221m, well below forecasts. The company highlighted a particularly sluggish Australian economy and property market.

News Corp has recently announced a content partnership with Facebook which is expected to have a positive impact on financials from the second half of FY20.

UBS maintains a Buy rating and $23.75 target.

Target price is $23.75 Current Price is $19.10 Difference: $4.65
If NWS meets the UBS target it will return approximately 24% (excluding dividends, fees and charges).

Current consensus price target is $23.71, suggesting upside of 24.1% (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 ORG as Upgrade to Add from Hold (1) -

APLNG is expected to deliver stronger cash flows for Origin Energy vs what Morgans previously anticipated. This is driven by higher production output and better LNG pricing.

While underlying operating earnings will be higher by $80m in FY20 the broker points out this is driven by accounting standards rather than a change in business conditions.

Rating is upgraded to Add from Hold. Origin Energy expects to pay dividends at the higher end of its policy range of 30-50%. Target is raised to $8.62 from $8.19.

Target price is $8.62 Current Price is $8.48 Difference: $0.14
If ORG meets the Morgans target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $8.48, suggesting upside of 0.0% (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

Macquarie rates PGL as Outperform (1) -

The broker has reviewed Prospa's origination guidance, which implies flat growth to June 2020. While the broker believes guidance is conservative, it is cutting earnings forecasts to reflect the uncertainty.

In the wake of the profit warning, less than six months after the IPO, the broker concludes it will take time for confidence to be restored. Target falls to $3.00 from $3.20. Outperform retained.

Target price is $3.00 Current Price is $2.19 Difference: $0.81
If PGL meets the Macquarie target it will return approximately 37% (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

Morgan Stanley rates PSQ as Overweight (1) -

Operating earnings growth in FY20 is upgraded to 8-14%, implying margin stabilisation and potential operating leverage. The opening of new dental centres is unchanged, at 7-10 expected for FY20. FY20 patient fee guidance is also unchanged at high single-digit growth.

The company will trial small store formats in the second half and has identified two locations. The purpose is to expand its footprint and accessibility to dentists, and the economics are unclear to Morgan Stanley at this point.

Overweight rating, In-Line industry view. Target is $1.90.

Target price is $1.90 Current Price is $1.75 Difference: $0.15
If PSQ meets the Morgan Stanley target it will return approximately 9% (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

Ord Minnett rates RHP as Accumulate (2) -

The company has reaffirmed FY20 guidance at its AGM. Gross sales in the first quarter were ahead of Ord Minnett's forecasts, with the company well-positioned for the adoption of Microsoft's software-as-a-service and cloud solutions product.

This positive outlook was offset somewhat by some margin pressures and continued cost investment in new regions. Japan is considered a significant opportunity in the medium term. Accumulate rating and $3 target maintained.

Target price is $3.00 Current Price is $2.50 Difference: $0.5
If RHP meets the Ord Minnett target it will return approximately 20% (excluding dividends, fees and charges).

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

Macquarie rates S32 as Underperform (5) -

The broker has not made changes to forecasts for South32 but notes with recent falls in the prices of manganese, alumina and coking coal the gap from the broker's price assumptions down to spot is widening, with spot implying -25-30% lower earnings in FY20-22.

Underperform and $2.40 target retained.

Target price is $2.40 Current Price is $2.64 Difference: minus $0.24 (current price is over target).
If S32 meets the Macquarie target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.04, suggesting upside of 15.0% (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: 0.4

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

Citi rates WBC as Neutral (3) -

Citi observes the share price has fallen more than -10% in the past month after a weak result, a capital raising and now significant allegations regarding breaching the anti-money laundering and terrorism funding law.

Examining previous banking crises suggests to Citi a period of underperformance in the share price is likely to ensue. How management and the board deal with the consequences is expected to drive the near-term performance.

The broker retains a Neutral rating, noting the bank has pre-funded a potential fine and a -15% cut to the dividend leaves the balance sheet in good shape. Target is $27.25.

Target price is $27.25 Current Price is $24.77 Difference: $2.48
If WBC meets the Citi target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $27.05, suggesting upside of 9.2% (ex-dividends)

The company's fiscal year ends in September.

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 WBC as Neutral (3) -

It is difficult to forecast just what Westpac's AUSTRAC-related fine will be, but the broker has raised its assumption to -$700m from a prior -$150m. Earnings and dividend forecasts are lowered accordingly.

With the bank now trading at a -5% net discount to peers and specifically a -20% discount to Commonwealth Bank ((CBA)), the broker does not expect further de-rating but can't see any reason for a re-rating. Target falls to $26.00 from $26.50, Neutral retained.

Target price is $26.00 Current Price is $24.77 Difference: $1.23
If WBC meets the Macquarie target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $27.05, suggesting upside of 9.2% (ex-dividends)

The company's fiscal year ends in September.

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 WBC as Add (1) -

AUSTRAC has alleged over 23m contraventions of the anti-money laundering and counter-terrorism financing law. While the timing and quantum of the potential civil penalty for Westpac is highly uncertain, at this stage Morgan suspects it will not exceed -$2bn.

To the extent that multiple alleged contraventions stem from a single course of conduct the broker suspects Westpac may argue that this constitutes one contravention. From this perspective the sell-off in the stock appears overdone.

Morgans now assumes a -$1bn civil penalty for Westpac in FY20. Add rating maintained. Target is reduced to $30.50 from $31.50.

Target price is $30.50 Current Price is $24.77 Difference: $5.73
If WBC meets the Morgans target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $27.05, suggesting upside of 9.2% (ex-dividends)

The company's fiscal year ends in September.

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