Australian Broker Call

UBS rates AGI as Sell (5) -

The company has announced a material downgrade to FY20 earnings guidance, now expecting a first-half pre-tax loss of -$4m which compares with UBS expectations for a $13m profit. Guidance suggests that the second half will show a sequential improvement.

The company has signalled a strong performance in North America. The broker reduces forecasts in line with the guidance and assumes broad-based declines in all operating divisions as a result of the announcement, with the exception of North America which is expected to be flat.

Sell rating maintained. Target is reduced to $0.46 from $0.50.

Target price is $0.46 Current Price is $0.70 Difference: minus $0.24 (current price is over target).
If AGI meets the UBS target it will return approximately minus 34% (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: -1.0

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

Macquarie rates BKW as Neutral (3) -

At its AGM, Brickworks noted it expects a short down-cycle for building products locally, with order intake improving in the first half next year. Property should perform well in FY20 from further development completions.

There have also been early gains from recent US acquisitions, with another brick company in the sights for February.

Macquarie sees all of the above as positive, and lifts its target to $18.50 from $17.05. But despite the stock trading well below its relative PE average, key uncertainties in the company's investment portfolio keep the broker on Neutral.

Target price is $18.50 Current Price is $18.27 Difference: $0.23
If BKW meets the Macquarie target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $18.05, suggesting downside of -1.2% (ex-dividends)

The company's fiscal year ends in July.

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

Credit Suisse rates BPT as Neutral (3) -

Beach Energy provided no changes to FY20 guidance at the AGM, expecting $1.25-1.4bn in underlying operating earnings (EBITDA) and 27-29 mmboe of production. Credit Suisse observes the focus on growth means there is limited scope to increase the dividend until at least 2022.

The broker remains positive on the stock and believes it could surprise to the upside over the coming 12 months, with momentum possibly driving the share price towards $3. Neutral rating maintained. Target is raised to $2.37 from $2.34.

Target price is $2.37 Current Price is $2.32 Difference: $0.05
If BPT meets the Credit Suisse target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $2.33, suggesting upside of 0.2% (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

Morgans rates BPT as Re-instate coverage with Hold (3) -

Morgans reinstates coverage of Beach Energy with a Hold rating and $2.29 target. The company has long had oil exposure from the Western Flank operations and other Cooper Basin assets and the acquisition of Lattice has greatly expanded exposure to the domestic gas market.

Morgans believes the growth profile on a five-year outlook is credible, although the company will need to work hard to deepen its resource base and replace reserves. There is also little value at the current share price, in the broker's view.

Target price is $2.29 Current Price is $2.32 Difference: minus $0.03 (current price is over target).
If BPT meets the Morgans target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.33, suggesting upside of 0.2% (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

Ord Minnett rates CLW as Buy (1) -

Ord Minnett's Asian research counterparts expect Charter Hall Long WALE REIT to be admitted to the FTSE EPRA NAREIT Global Real Estate Index at the next re-balance on December 4, taking affect on December 20.

The outcome is uncertain, the broker notes, but should this be the case Ord Minnett estimates it will result in US$31m of buying from index funds, equivalent to 5.5 days trading volume and this excludes long-only funds.

The main risk in the portfolio is the over-renting of around 20% in three of the properties, comprising 10% of total assets. Ord Minnett maintains a Buy rating and $5.75 target.

Target price is $5.75 Current Price is $5.64 Difference: $0.11
If CLW meets the Ord Minnett target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $5.49, suggesting downside of -2.6% (ex-dividends)

The company's fiscal year ends in June.

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

Ord Minnett rates CQE as Hold (3) -

Ord Minnett is surprised by the news that CEO Nick Anagnostou will leave the company, given this comes just 15 months after the acquisition of the Folkestone platform.

The broker considers this news a slight negative, as Mr Anagnostou has been instrumental in growing the portfolio to $920m from $140m 14 years ago. The company has reiterated FY20 guidance for earnings growth of 3-4% and distribution of 16.7c per unit.

The broker believes the key opportunity remains the ability to leverage the Charter Hall platform to pursue growth, consistent with the expanded social infrastructure mandate. Hold rating and $3.65 target maintained.

Target price is $3.65 Current Price is $3.50 Difference: $0.15
If CQE meets the Ord Minnett target it will return approximately 4% (excluding dividends, fees and charges).

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

Credit Suisse rates CSR as Underperform (5) -

Credit Suisse incorporates a lower aluminium forecast into its numbers for 2020 and beyond. A surprise at the first half result was the high realised price compared with estimates and the broker believes the premium is likely to unwind, at least partially.

Underperform maintained. Target is $3.10.

Target price is $3.10 Current Price is $4.70 Difference: minus $1.6 (current price is over target).
If CSR meets the Credit Suisse target it will return approximately minus 34% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.78, suggesting downside of -19.7% (ex-dividends)

The company's fiscal year ends in March.

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 CTX as Buy (1) -

Caltex Australia has announced a conditional takeover bid has been received from Alimentation Couche-Tard at $34.50 a share. The offer also includes the potential for a special dividend, although the exact amount is missing.

Citi believes the value of the company's franking credits, worth $830m, needs to be considered as part of a potential special dividend.

In addition, the potential for a convenience roll-out and fuel & infrastructure plans need to be considered, details of which should be provided on December 5. Citi retains a Buy rating and $30.50 target.

Target price is $30.50 Current Price is $34.51 Difference: minus $4.01 (current price is over target).
If CTX meets the Citi target it will return approximately minus 12% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $31.31, suggesting downside of -9.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.5

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

Credit Suisse rates CTX as Neutral (3) -

Caltex Australia has received a conditional proposal from Alimentation Couche-Tard. The proposal permits Caltex to pay a special dividend, neutralising the attractiveness of alternative strategies further distributing franking credits, Credit Suisse observes.

The broker suspects the probability of a transaction rests primarily with the willingness of Caltex to engage. The proposal is at $34.50 a share and values Caltex at $10.8bn. Neutral rating maintained. Target rises to $34.50 from $28.11.

Target price is $34.50 Current Price is $34.51 Difference: minus $0.01 (current price is over target).
If CTX 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 $31.31, suggesting downside of -9.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.5

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

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

Canada based convenience retailer Alimentation Couche-Tard has made a conditional non-binding bid for Caltex Australia at $34.50 a share. This follows an earlier proposal of $32.00 per share that was rejected by Caltex Australia.

Ord Minnett suspects Foreign Investment Review Board approval may not be easy, given the nature of the infrastructure and terminal assets. Caltex Australia is yet to engage on the deal. Ord Minnett downgrades to Hold from Accumulate and retains a $32 target.

Target price is $32.00 Current Price is $34.51 Difference: minus $2.51 (current price is over target).
If CTX 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 $31.31, suggesting downside of -9.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.5

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

Morgan Stanley rates ELO as Overweight (1) -

The company has reiterated FY20 guidance for revenue of $53-55m and an operating loss of -$1-3m.

Morgan Stanley was not surprised and considers reiteration of the outlook a positive, given a softer macro environment.

Overweight rating. In-Line industry view. Target is $9.

Target price is $9.00 Current Price is $6.94 Difference: $2.06
If ELO meets the Morgan Stanley target it will return approximately 30% (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 EVN as Upgrade to Buy from Neutral (1) -

Evolution Mining will acquire Red Lake in Canada from Newmont for US$375m. Citi notes the company intends to deliver the same re-capitalisation that was performed on previous acquisitions.

While the deal fits, Citi cautions that this is a different mine, operationally, to past deals. The broker considers the earnings value is modest for the near term, pending the three-year operational turnaround.

Rating is upgraded to Buy from Neutral on the pullback in the share price. Target is steady at $4.60.

Target price is $4.60 Current Price is $4.13 Difference: $0.47
If EVN meets the Citi target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $4.52, suggesting upside of 9.3% (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

Credit Suisse rates EVN as Underperform (5) -

The company will acquire Red Lake from Newmont for US$375m. Credit Suisse observes Evolution Mining is paying for what it expects, not the current performance, confident that when the underground development and exploration deficit is overcome via a three-year recapitalisation the operation can be restored to produce over 200,000 ounces per annum.

The broker envisages this as a small-risk acquisition that offers significant upside. Underperform rating and $4.30 target maintained.

Target price is $4.30 Current Price is $4.13 Difference: $0.17
If EVN meets the Credit Suisse target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $4.52, suggesting upside of 9.3% (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

Macquarie rates EVN as Outperform (1) -

Evolution Mining will purchase the Red Lake gold mine in Canada from Newmont in a deal the broker sees as accretive in terms of production and reserves/resource, and well within the company's balance sheet capacity. The cost target of US$1000/oz suggests Evolution is willing to sacrifice some margin to increase group production capacity, the broker notes.

Some margin claw-back could nevertheless be achieved by shedding production at a couple of the company's higher cost/lower life assets, the broker suggests. Outperform retained, target rises to $5.60 from $5.40.

Target price is $5.60 Current Price is $4.13 Difference: $1.47
If EVN meets the Macquarie target it will return approximately 36% (excluding dividends, fees and charges).

Current consensus price target is $4.52, suggesting upside of 9.3% (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 EVN as Underweight (5) -

Evolution Mining will acquire Red Lake from Newmont for US$375m plus a contingent consideration of up to US$100m.

Morgan Stanley considers the value of the project lies with exploration potential through resource to reserve conversion.

Underweight maintained. Industry view is Attractive. Target is $4.

Target price is $4.00 Current Price is $4.13 Difference: minus $0.13 (current price is over target).
If EVN meets the Morgan Stanley target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.52, suggesting upside of 9.3% (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

Ord Minnett rates EVN as Hold (3) -

Evolution Mining has acquired the Red Lake mine in Canada for US$375m plus contingent payments and will fund the acquisition with a $600m debt facility.

Ord Minnett considers this the company's riskiest deal to date as it requires substantial reinvestment over the next three years with no cash flow in the interim.

The broker maintains a Hold rating and reduces the target to $4.00 from $4.40.

Target price is $4.00 Current Price is $4.13 Difference: minus $0.13 (current price is over target).
If EVN meets the Ord Minnett target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.52, suggesting upside of 9.3% (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

UBS rates EVN as Neutral (3) -

Evolution Mining will buy the Red Lake mine in Canada for US$375m. Current production is 150-160,000 ounces per annum with costs of US$1600/oz, implying the mine is currently making a loss.

The asset requires significant investment but management believes it can lift production back to over 200,000 ounces per annum at a cost of less than US$1000/oz.

UBS believes it will take 2-3 years to judge the merits of the acquisition while capital is deployed on mine development and exploration. Neutral rating and $4.60 target maintained.

Target price is $4.60 Current Price is $4.13 Difference: $0.47
If EVN meets the UBS target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $4.52, suggesting upside of 9.3% (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

Macquarie rates MLX as Neutral (3) -

Metals X will shut down Nifty and place it in care & maintenance. Not surprising given operational issues, Macquarie suggests, but disappointing. The closure materially reduces the miner's earnings outlook.

The broker expects focus to now turn to Renison, with Nifty likely to be sold. The broker does not ascribe any sale value in its new target of 11c, down from 19c. Neutral retained.

Target price is $0.11 Current Price is $0.11 Difference: $0
If MLX meets the Macquarie target it will return approximately 0% (excluding dividends, fees and charges).

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

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

Credit Suisse observes the company is still struggling to find a tailwind, noting market conditions were described as "challenging" at the recent AGM. Novated lease volumes have been hampered by weak car sales in recent months and yields negatively affected by credit availability.

While the broker believes group remuneration services will generate a modest increase in novated lease volumes and salary packaging, this will mostly be offset by yield pressures and higher expenditure from the Beyond 2020 program.

Rating is downgraded to Neutral from Outperform and the target reduced to $16.10 from $16.55.

Target price is $16.10 Current Price is $15.09 Difference: $1.01
If MMS meets the Credit Suisse target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $16.32, suggesting upside of 8.1% (ex-dividends)

The company's fiscal year ends in June.

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

Credit Suisse rates OZL as Underperform (5) -

Reflecting downgrades to copper price forecasts, Credit Suisse reduces estimates for earnings per share by -8% and -20% for 2019 and 2020 respectively.

Underperform rating maintained. Target is reduced to $8.00 from $8.50.

Target price is $8.00 Current Price is $10.58 Difference: minus $2.58 (current price is over target).
If OZL meets the Credit Suisse target it will return approximately minus 24% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $10.71, suggesting upside of 1.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.1

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

Macquarie rates PAN as Downgrade to Neutral from Outperform (3) -

Panoramic Resources has slashed its FY20 production guidance for all of nickel, copper and cobalt at its Savannah operation, opening up funding gap of some -30%. The miner has secured short-term financing ahead of a likely rights issue.

The size of the downgrade and the funding gap have surprised Macquarie, leading to material forecast earnings reductions.

The broker downgrades to Neutral  from Outperform and cuts its target to 40c from 50c, balanced by Independence Group's ((IGO)) conditional takeover offer at 46c.

Target price is $0.40 Current Price is $0.39 Difference: $0.01
If PAN meets the Macquarie target it will return approximately 3% (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

Credit Suisse rates SEK as Neutral (3) -

The company has affirmed guidance at the AGM, including revenue growth of 15-18% and operating earnings growth of 8-11%. Guidance was maintained despite the persistence of weak macro conditions in key markets.

The FY20 revenue growth guidance remains ambitious, in Credit Suisse's view, and will be primarily driven by off-line revenue from Zhaopin and the Early Stage division. Neutral rating and $19.60 target maintained.

Target price is $19.60 Current Price is $22.70 Difference: minus $3.1 (current price is over target).
If SEK meets the Credit Suisse target it will return approximately minus 14% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $21.95, suggesting downside of -3.3% (ex-dividends)

The company's fiscal year ends in June.

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 SEK as Neutral (3) -

With execution on what UBS deems as favourable long-term scenarios priced into most online classifieds, Seek becomes the sector preference. For Seek there is still an upside scenario, in the broker's view, that delivers share price appreciation.

However, given execution risks, this is not the base case, Seek merely carries greater option value vs its peers. Neutral rating maintained. Target rises to $22.75 from $19.50.

Target price is $22.75 Current Price is $22.70 Difference: $0.05
If SEK meets the UBS target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $21.95, suggesting downside of -3.3% (ex-dividends)

The company's fiscal year ends in June.

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

Credit Suisse rates SFR as Outperform (1) -

Reflecting changes to copper price forecasts, Credit Suisse downgrades estimates for earnings per share by -16% and -7% for FY19 and FY20 respectively.

Outperform rating maintained. Target is reduced to $6.30 from $6.75.

Target price is $6.30 Current Price is $5.65 Difference: $0.65
If SFR meets the Credit Suisse target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $6.51, suggesting upside of 15.3% (ex-dividends)

The company's fiscal year ends in June.

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

Credit Suisse rates SIQ as Outperform (1) -

The stock has declined around -16% since the announcement that CEO Deven Billimoria will resign at the end of February. Credit Suisse believes the reaction to the announcement was exacerbated by the proximity to the recent sell-down by Smart Packages of its residual 25% stake.

However, the broker does not believe the CEO's departure implies a pending earnings decline and considers this an overreaction. Outperform rating maintained. Target is raised to $10.10 from $9.80.

Target price is $10.10 Current Price is $9.39 Difference: $0.71
If SIQ meets the Credit Suisse target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $10.95, suggesting upside of 16.6% (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

Macquarie rates SLR as Initiation of coverage with Outperform (3) -

Macquarie "initiates" coverage of Silver Lake Resources (last covered 2015) with an Outperform rating and $1.40 target.

The broker believes extensions at Deflector are likely due to drilling success while mine life at Mt Monger is supported by prospects such as Tank South.

Target price is $1.40 Current Price is $1.14 Difference: $0.26
If SLR meets the Macquarie target it will return approximately 23% (excluding dividends, fees and charges).

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

Morgans rates SYD as Downgrade to Hold from Add (3) -

Morgans downgrades to Hold from Add, given the strength in the share price has compressed the total return potential.

The share price has surged 14% since early October, which the broker believes has been on the back of a retreat in government bond rates amid the market appetite for high-quality businesses with yield and defensive growth.

Short-term weakness in traffic growth appears to have been disregarded. Target is raised to $8.75 from $8.71.

Target price is $8.75 Current Price is $9.20 Difference: minus $0.45 (current price is over target).
If SYD meets the Morgans target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $8.23, suggesting downside of -10.5% (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

UBS rates SYR as Neutral (3) -

UBS notes increasing domestic production in China has meant an accumulation of stockpiles that is likely to be sufficient to satisfy demand through to the New Year.

Battery demand growth remains positive, with Japan and South Korea set to increase orders, but this is likely to be serviced by an increased number of Chinese suppliers.

UBS also notes, with prices continuing to fall, the majority of customers are hesitant to commit to new volumes.

The move by the company to reduce production is designed to support a market that has been overwhelmed by new supply, but the broker considers this is unsustainable in the long-term for a plant designed to run at much higher rates.

Neutral rating maintained. Target is reduced to $0.44 from $0.59.

Target price is $0.44 Current Price is $0.37 Difference: $0.07
If SYR meets the UBS target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $0.66, suggesting upside of 78.4% (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: 0.0

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

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

Westpac has announced that Brian Hartzer will step down as CEO and current CFO, Peter King, will be acting CEO. Chairman Lindsay Maxsted will also retire in the first half of 2020 and non-executive director Ewen Crouch will not seek re-election.

Mr King's immediate priorities are to implement the Westpac response plan and continue to execute on the broader strategy. Morgan Stanley believes Westpac faces a period of leadership uncertainty which will make it more challenging to restore operating momentum.

However, the latest decision should allow investors to focus on the response plan and potential financial implications of the AUSTRAC allegations.

Equal-weight rating maintained. Target is $25.50. Industry view: In Line.

Target price is $25.50 Current Price is $24.76 Difference: $0.74
If WBC meets the Morgan Stanley target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $26.69, suggesting upside of 7.8% (ex-dividends)

The company's fiscal year ends in September.

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

Ord Minnett rates WBC as Hold (3) -

Ord Minnett reduces estimates for earnings per share by around -1% to allow for higher costs and the potential for modest revenue consequences from the recent developments.

The broker finds the current scenario for changes at the top are comparable to the situation faced by National Australia Bank in the wake of the Hayne Royal Commission.

Ord Minnett suggests less board continuity is likely to be the case for Westpac, particularly as interim CEO/CFO Peter King had already announced his retirement from September 2020, which increases the risks of instability, while both banks face a risk of re-basing earnings with new CEOs.

Ord Minnett maintains a Hold rating and reduces the target to $25.30 from $26.70.

Target price is $25.30 Current Price is $24.76 Difference: $0.54
If WBC meets the Ord Minnett target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $26.69, suggesting upside of 7.8% (ex-dividends)

The company's fiscal year ends in September.

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 WBC as Upgrade to Neutral from Sell (3) -

Westpac has announced CEO Brian Hartzer will step down, making this the third CEO of a major bank to have resigned in the last two years. Peter King, the current CFO, has been appointed acting CEO.

Chairman Lindsay Maxsted will also bring forward his retirement. While UBS has a limited basis on which to estimate the extent of the likely fine from AUSTRAC it maintains a -$1bn estimate for the first half of FY20. However, the fine could be significantly higher, or lower.

The broker believes Westpac may need to spend a significant amount of money to address compliance issues. The share price has fallen sharply and UBS upgrades to Neutral from Sell, given it is approaching the price target.

Target price is $24.50 Current Price is $24.76 Difference: minus $0.26 (current price is over target).
If WBC meets the UBS target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $26.69, suggesting upside of 7.8% (ex-dividends)

The company's fiscal year ends in September.

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