Australian Broker Call

Macquarie rates ALX as Outperform (1) -

Yellow vest protests in France will impact Dec Q traffic growth, likely turning it negative year on year when the broker had previously forecast 1% growth. The wider implication is for a slower 2019. The broker also notes the Eiffage acquisition of 5% of Getlink delays the restructure of the MAF2/Eiffage relationship.

Otherwise the broker suggests fundamentals remain strong and dividend yield is growing. Outperform and $7.49 target retained.

Target price is $7.49 Current Price is $6.34 Difference: $1.15
If ALX meets the Macquarie target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $7.17, suggesting upside of 13.1% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.7

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

Morgans rates BUB as Hold (3) -

Bubs' Sep Q cah flow was materially higher than the broker expected. That said, as sales growth accelerates in the Dec Q, cash outflow is set to increase, hecne the broker has lowered forecasts.

The broker likes Bubs' point of differentiation story and management is doing a good job of positioning the company, but ths stock will remain High Risk until Chinese approval is achieved. Hold retained, target falls to 44c from 60c.

Target price is $0.44 Current Price is $0.45 Difference: minus $0.01 (current price is over target).
If BUB meets the Morgans target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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

Citi rates CAR as Buy (1) -

The broker sees strong growth in core (used) classifieds and international businesses, but weakness in Stratton and display (new). Display is a cyclical issue, the broker believes, but Stratton is structural, due to regulatory changes. Carsales has announced an impairment on Stratton but it's immaterial.

Forecast earnings trimmed and target falls to $16.00 from $16.65. Buy retained.

Target price is $16.00 Current Price is $11.24 Difference: $4.76
If CAR meets the Citi target it will return approximately 42% (excluding dividends, fees and charges).

Current consensus price target is $15.09, suggesting upside of 34.2% (ex-dividends)

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

Ord Minnett rates CAR as Buy (1) -

Carsales has taken an impairment on Stratton given ongoing softness in car financing and additional regulatory attention. Restructuring benefits are yet to come through, the broker notes.

Target falls to $14.40 from $14.84 but Buy retained on a solid core business and international opportunity.

Target price is $14.40 Current Price is $11.24 Difference: $3.16
If CAR meets the Ord Minnett target it will return approximately 28% (excluding dividends, fees and charges).

Current consensus price target is $15.09, suggesting upside of 34.2% (ex-dividends)

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

UBS rates CAR as Buy (1) -

Stratton has underperformed Carsales' expectations, leading to a -$48m impairment. The impact on earnings is immaterial but the broker lowers by -4% to reflect weaker display growth and higher D&A charges.

Despite near term headwinds the broker still expects Carsales to deliver high single digit earnings growth through the cycle and a 20x FY19 price/earnings keeps the broker on Buy with an unchanged $13.50 target.

Target price is $13.50 Current Price is $11.24 Difference: $2.26
If CAR meets the UBS target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $15.09, suggesting upside of 34.2% (ex-dividends)

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

Ord Minnett rates CQR as Hold (3) -

Charter Hall Retail has acquired Campbellfield Plaza in Melbourne, funded from previous divestments. The acquisition is mildly accretive, the broker notes, and recent share price strength has led management to reinstate the DRP.

Hold retained, target rises to $4.30 from $4.20.

Target price is $4.30 Current Price is $4.60 Difference: minus $0.3 (current price is over target).
If CQR 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 $4.09, suggesting downside of -11.0% (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

Credit Suisse rates CTX as Outperform (1) -

While Caltex' updated 2018 profit guidance is in line with the broker, the severity of the refiner margin decline was the main story. While acknowledging the company faces margin uncertainty and volatility, the broker believes that risk is in the share price.

Convenience is one of the few structural growth stories in retail, and Caltex offers increasing exposure, the broker notes, along with a long term contract with Woolworths ((WOW)) and international distribution is a growing market. Outperform retained, target falls to $32.79 from $33.07.

Target price is $32.79 Current Price is $25.46 Difference: $7.33
If CTX meets the Credit Suisse target it will return approximately 29% (excluding dividends, fees and charges).

Current consensus price target is $31.15, suggesting upside of 22.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.6

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

Ord Minnett rates CTX as Buy (1) -

Caltex' profit guidance update is in line with the broker although weaker Lytton refiner margins were offset by improved fuels & infrastructure. Earnings forecasts trimmed and target falls to $30.00 from $33.50.

The broker expects margins will improve and suggests while the transition from franchise to corporate operating model is a challenge but costs have been well flagged and it is an enabler of the convenience strategy. Buy retained.

Target price is $30.00 Current Price is $25.46 Difference: $4.54
If CTX meets the Ord Minnett target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $31.15, suggesting upside of 22.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.6

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

UBS rates CTX as Buy (1) -

Updated 2018 profit guidance from Caltex suggests a -15% reduction year on year to -7% below the broker's forecast, driven by lower refining margins and weakness in convenience. 

Refiner margins were weaker due to costs while convenience weakness was due to renegotiating terms with Woolworths ((WOW)) and costs associated with the new convenience strategy. The broker still sees convenience as a key drive of upside, believes the market is not appreciating this, and retains Buy on longer term value. Target falls to $33.15 from $35.90.

Target price is $33.15 Current Price is $25.46 Difference: $7.69
If CTX meets the UBS target it will return approximately 30% (excluding dividends, fees and charges).

Current consensus price target is $31.15, suggesting upside of 22.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.6

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

Macquarie rates CVN as Outperform (1) -

The recent discovery of the Dorado oil field, the third largest in the North West Shelf, provides a path for Carnarvon to become the next major Australian oil producer. Given limited exploration in the investment downturn, E&P peers could potentially target Dorado as their own fields decline, the broker suggests.

The broker "initiates" coverage with an Outperform rating and 40c target, but was covering the stock back in 2016 with a then Outperform and 12c target.

Target price is $0.40 Current Price is $0.32 Difference: $0.08
If CVN meets the Macquarie target it will return approximately 25% (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

Macquarie rates DCN as Outperform (1) -

Updated reserves sees Mt Morgans total ounces rising 16% thanks to growth in Westralia and a maiden reserve at Cameron Well. Dacian plans to rapidly develop Cameron Well.

The broker thus assumes reduced production in FY20-22 but growth thereafter, and incorporates updated reserves. Outperform retained, target falls to $3.00 from $3.10.

Target price is $3.00 Current Price is $2.22 Difference: $0.78
If DCN meets the Macquarie target it will return approximately 35% (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

Citi rates FBU as Neutral (3) -

Fletcher's sale of Formica Group completes a stated strategy of exiting non-core businesses, restores the balance sheet and raises the likelihood of capital management, the broker believes. The backdrop nevertheless remains challenging, given Australian and NZ housing markets past their peak.

Neutral and NZ$5.40 target retained.

Current Price is $4.62. Target price not assessed.

Current consensus price target is $5.66, suggesting upside of 22.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

This company reports in NZD. 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

Macquarie rates FBU as No Rating (-1) -

Fletcher Building has announced the divestment of Formica Group for close to book value and reinstated its dividend.

The broker is advising thus is current on research restriction.

Current Price is $4.62. Target price not assessed.

Current consensus price target is $5.66, suggesting upside of 22.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

This company reports in NZD. 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

UBS rates FBU as Neutral (3) -

Fletcher has agreed to sell Formica Group for a better price than the broker had valued. The dividend has been reinstated but there remains capacity for bolt-ons and/or capital management after FY20, the broker suggests, as debt declines.

Good price aside, the broker sees the divestment as simplifying the company by reducing uncertainty around earnings and capital allocation. Neutral and NZ$6.60 target retained.

Current Price is $4.62. Target price not assessed.

Current consensus price target is $5.66, suggesting upside of 22.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

This company reports in NZD. 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

Macquarie rates MYX as Underperform (5) -

Mayne has announced it will assume control of the US rights for SUBA itraconazole following a licence revision. While this will provide the company with higher potential earnings it will also mean additional R&D expenses, regulatory risk and a delayed launch compared to previous assumptions, the broker notes, giving a competitor the jump.

Underperform retained, target falls to 93c from $1.03.

Target price is $0.93 Current Price is $0.80 Difference: $0.13
If MYX meets the Macquarie target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $1.13, suggesting upside of 40.8% (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

Ord Minnett rates ORG as Buy (1) -

The broker has made minor adjustments to its Origin valuation to account for higher deprecation expense, a higher contribution from gas retailing and LNG hedges.

Earnings forecasts trimmed, Buy and $8.85 target retained.

Target price is $8.85 Current Price is $6.45 Difference: $2.4
If ORG meets the Ord Minnett target it will return approximately 37% (excluding dividends, fees and charges).

Current consensus price target is $8.85, suggesting upside of 37.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.9

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

Morgans rates PAR as Upgrade to Hold from Reduce (3) -

Paradigm Biopharmaceutical is a clinical stage company focused on the treatment of orthopaedic and viral arthritis through its re-purposed drug, pentosane polysulphate sodium. Phase 2b trials of the drug have left Morgans with more questions than answers. Positive results were only seen in patients with mild to moderate pain.

A partner is required to move to Phase 3 and potential commercialisation but deeper analysis will be required, the broker suggests. The positive results see the broker increase its risk-weighted valuation to 78% from 38% which leads to a target increase to $1.67 from 89c.

Rating upgraded to Hold but the broker warns this is one for the riskier investor.

Target price is $1.67 Current Price is $1.20 Difference: $0.47
If PAR meets the Morgans target it will return approximately 39% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Market Sentiment: 0.0

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

Ord Minnett rates RDC as Initiation of coverage with Buy (1) -

Redcape Hotel Group owns 32 pubs across NSW/Qld with 31 as freehold. The group has consistently demonstrated an ability to deliver high returns on investment, the broker notes, and derives 63% of revenue from gaming. 23 pubs are located in high growth areas of Western Sydney which should benefit from unprecedented levels of infrastructure investment.

The broker initiates coverage with a Buy rating and $1.18 target.

Target price is $1.18 Current Price is $1.03 Difference: $0.15
If RDC meets the Ord Minnett target it will return approximately 15% (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