Australian Broker Call

Deutsche Bank rates ALQ as Downgrade to Hold from Buy (3) -

Deutsche Bank considers the outlook for the sector is mixed, with growth in infrastructure expenditure, declining Australian LNG construction and some signs of recovery in global oil & gas capital expenditure.

The broker assesses these stocks are trading at the upper end of historical ranges and there are minimal buying opportunities.

Deutsche Bank still likes the company's exposure to the recovering minerals exploration market and structural growth in life sciences but believes this is now fully reflected in the share price. Rating is downgraded to Hold from Buy on valuation. Target is $7.41.

Target price is $7.41 Current Price is $7.31 Difference: $0.1
If ALQ meets the Deutsche Bank target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $6.87, suggesting downside of -4.6% (ex-dividends)

The company's fiscal year ends in March.

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 GNC as Neutral (3) -

New growth initiatives have been announced for the next 6-12 months and Macquarie believes these are clear drivers for the share price, although the near-term catalyst of beating the top end of net profit guidance has largely diminished.

The broker expects the stock to be range bound heading into the September result in the absence of this potential to beat guidance. Longer term, Macquarie expects contributions from strategic initiatives will cushion the business against seasonal adversity. Neutral rating and $10 target retained.

Target price is $10.00 Current Price is $8.94 Difference: $1.06
If GNC meets the Macquarie target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $9.90, suggesting upside of 9.8% (ex-dividends)

The company's fiscal year ends in September.

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

Ord Minnett rates HFA as Buy (1) -

Ord Minnett observes the investment case is robust owing to 99% recurring revenue, a strong management team and track record of growth in assets under management.

The broker believes the stock is cheap from both the discounted cash flow and multiple standpoints. Buy rating retained. Target is reduced to $2.80 from $2.85.

Target price is $2.80 Current Price is $2.49 Difference: $0.31
If HFA meets the Ord Minnett target it will return approximately 12% (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

Morgans rates MP1 as Add (1) -

Megaport has completed a $27.8m placement of new shares with Digital Realty taking a 4.9% stake. The company will end FY17 with around 165 data centres and has guided to 220 by end-FY18 and the broker believes Megaport now operates the biggest Digital connectivity platform in the world.

It now comes down to sales execution, the broker suggests. Growth has been underpinned by increased traffic with major cloud service providers such as Amazon, Microsoft and Google. Add retained, target rises to $2.88 from $2.76.

Target price is $2.88 Current Price is $2.20 Difference: $0.68
If MP1 meets the Morgans target it will return approximately 31% (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 PRG as Neutral (3) -

Credit Suisse believes the proposal from PERSOL is sensible on several fronts and the premium and implied multiple are attractive.

The board has approved the offer and the broker suspects shareholders will form a similar view as the business is symptomatic of a variable domestic economy and pricing pressure is an ongoing headwind.

Neutral rating retained. Target is raised to $3.02 from $1.90.

Target price is $3.02 Current Price is $2.98 Difference: $0.04
If PRG meets the Credit Suisse target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $3.04, suggesting upside of 2.2% (ex-dividends)

The company's fiscal year ends in March.

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

Deutsche Bank rates PRG as Buy (1) -

The company's board has unanimously recommended the takeover offer from PERSOL Holdings at $3.02 per share.

Deutsche Bank calculates the offer reflects an enterprise value of $992m. The broker increases the price target in line with the offer, reflecting a view that the offer is highly likely to be successful.

The broker believes the strong bid reflects well on management's approach to consolidating the sector through the 2015 merger with Skilled. Buy rating retained.

Target price is $3.02 Current Price is $2.98 Difference: $0.04
If PRG meets the Deutsche Bank target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $3.04, suggesting upside of 2.2% (ex-dividends)

The company's fiscal year ends in March.

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 PRG as No Rating (-1) -

PERSOL has made a cash offer for the company at $3.02 and the board has unanimously recommended the proposal. The proposal represents a 68% premium to the last closing price of the company shares.

Macquarie is restricted on rating and target at present.

Current Price is $2.98. Target price not assessed.

Current consensus price target is $3.04, suggesting upside of 2.2% (ex-dividends)

The company's fiscal year ends in March.

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

Ord Minnett rates PRG as Downgrade to Hold from Accumulate (3) -

Persol Holdings has made a cash offer of $3.02 for the company by way of a scheme of arrangement. Ord Minnett observes the offer represents an FY17 enterprise value to operating earnings multiple of 10.3x.

The broker envisages a higher competing offer is unlikely, given some structural concerns in the staffing division, although other companies might be interested in the company's maintenance contracts.

There is now just 4% potential upside to the broker's estimates so the rating is downgraded to Hold from Accumulate. Target is raised to $3.08 from $2.07, which reflects the additional upside from franking credits on top of the cash offer.

Target price is $3.08 Current Price is $2.98 Difference: $0.1
If PRG meets the Ord Minnett target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $3.04, suggesting upside of 2.2% (ex-dividends)

The company's fiscal year ends in March.

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

Credit Suisse rates RRL as Underperform (5) -

The company has updated the reserves at Duketon. The update represents 3% increase in contained ounces after accounting for depletions to March 31. This excludes McPhillamys where a maiden reserve is due in the upcoming quarter.

Underperform rating and $3.35 target retained.

Target price is $3.35 Current Price is $3.66 Difference: minus $0.31 (current price is over target).
If RRL meets the Credit Suisse target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.33, suggesting downside of -8.6% (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

Morgans rates RVA as Add (1) -

Reva is transitioning from R&D to commercial operation with the EU approval of its Fantom bioresorbable scaffold for the treatment of coronary artery disease, the broker notes.

Given safety concerns, major competitor Abbott's product and a fairly modest data set the broker believes the medical community will be cautious ahead of sufficient proof of success.

Reva recently completed US$47.1m in convertible note financing which should provide enough cash through 2018, the broker suggests, but would not support a US trial. Add and $1.15 target retained.

Target price is $1.15 Current Price is $0.82 Difference: $0.33
If RVA meets the Morgans target it will return approximately 40% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

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 WHC as Underperform (5) -

FY17 production came in below guidance, with higher costs, and the company has eased expectations for FY18. The miss had a small impact on Macquarie's estimates but highlights broader concerns for the next year. 

Commentary regarding switching to thermal coal at Maules Creek, which even with a 9% premium still receives a lower realised price than the metallurgical price, implies to the broker that semi-soft sales may not achieve the pricing in volume expectations in the future. Underperform rating and $2.70 target retained.

Target price is $2.70 Current Price is $2.88 Difference: minus $0.18 (current price is over target).
If WHC 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 $3.16, suggesting upside of 6.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.4

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

Morgan Stanley rates WHC as Overweight (1) -

The company missed its production target in FY17 but Morgan Stanley does not envisage any structural issues that will carry forward. The primary drivers of the broker's positive view remain intact.

Volume expansion, an improving sales mix and better realisation on thermal prices underpin the broker's estimate for $1.5bn in free cash flow over three years. Overweight retained. Target rises to $3.60 from $3.55. Industry view: Attractive.

Target price is $3.60 Current Price is $2.88 Difference: $0.72
If WHC meets the Morgan Stanley target it will return approximately 25% (excluding dividends, fees and charges).

Current consensus price target is $3.16, suggesting upside of 6.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.4

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

Morgans rates WHC as Hold (3) -

Whitehaven's June Q production fell short of expectation due to issues out of the company's control but high inventories suggest sales can be recovered, the broker notes. Price realisation again disappointed.

The broker has trimmed forecasts and its target to $3.01 from $3.07 and retains Hold, considering the stock to be trading at fair value. De-gearing in FY17 opens up the possibility of capital management in FY18, the broker suggests.

Target price is $3.01 Current Price is $2.88 Difference: $0.13
If WHC meets the Morgans target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $3.16, suggesting upside of 6.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.4

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