Australian Broker Call

Ord Minnett rates AGL as Upgrade to Accumulate from Hold (2) -

Ord Minnett completes a comprehensive review of forecasts and believes the main risk associated with an investment in AGL Energy is the possibility and size of further earnings declines.

Earnings are expected to decline to around $660m by FY25. AGL has guided to an FY20 net profit of $780-860m.

Beyond the current year, Ord Minnett expects wholesale electricity prices to fall further and revert to a long-run wholesale electricity price forecasts of $75 per megawatt hour beyond FY25.

Rating is upgraded to Accumulate from Hold and the target raised to $24.10 from $19.10.

Target price is $24.10 Current Price is $20.55 Difference: $3.55
If AGL meets the Ord Minnett target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $19.03, suggesting downside of -7.4% (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

Morgans rates AQR as Add (1) -

The company has recently acquired a portfolio of 13 service station assets for $74.6m. This is partly funded via a placement and share purchase plan. The new assets are a mixture of operating assets, those being funded through to development and those under construction.

Morgans retains an Add rating and raises the target to $3.62 from $3.43. Near-term catalysts include further accretive acquisitions and asset re-rating.

Target price is $3.62 Current Price is $3.51 Difference: $0.11
If AQR meets the Morgans 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: 1.0

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

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

Morgan Stanley suspects the market is finding it difficult to recognise the inherent asset value in the stock. The broker assesses the stock is currently trading at a meaningful discount to both peers and its historical valuation range.

As recent speculation has centred on the possibility of a break-up, which could mean better value, Morgan Stanley analyses some hypothetical scenarios.

The broker envisages an opportunity to reduce gearing and realise value from assets that are non-core. However, the upside value an external party could extract would largely be negated by a traditional 25-30% takeover premium.

Morgan Stanley maintains an Equal-weight rating and target is raised to $5.00 from $4.50. Industry view is Cautious.

Target price is $5.00 Current Price is $5.13 Difference: minus $0.13 (current price is over target).
If BLD 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 $4.84, suggesting downside of -5.7% (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 BPT as Upgrade to Accumulate from Hold (2) -

Ord Minnett observes Beach Energy has significantly underperformed peers in recent weeks and now represents better value, while still offering strong growth in exposure to east coast gas markets.

Rating is upgraded to Accumulate from Hold and the target raised to $2.60 from $2.55.

Target price is $2.60 Current Price is $2.45 Difference: $0.15
If BPT meets the Ord Minnett target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $2.33, suggesting downside of -4.8% (ex-dividends)

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

Credit Suisse rates CCL as Neutral (3) -

Victoria's parliament has released a final report on the recycling and waste management inquiry. A recommendation to include a container deposit scheme was included.

Credit Suisse recalls that the NSW scheme affected Coca-Cola Amatil volume by -3.4% in 2018 and Queensland's scheme also reduced volume by -3.8% in the first half of FY19.

Western Australia is targeting a scheme by June 2020. The broker notes the company has used pricing from time to time to protect soft drink volumes as the schemes were implemented.

There is also a proposal before the NZ government. Credit Suisse retains a Neutral rating and $11 target.

Target price is $11.00 Current Price is $11.49 Difference: minus $0.49 (current price is over target).
If CCL meets the Credit Suisse target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $10.58, suggesting downside of -7.9% (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

Citi rates CSL as Neutral (3) -

Citi analysts increase their forecasts, which pushes up the price target to $282.50 (from $252.60) while retaining their Neutral rating as the share price has already responded to the latest uptick in operational momentum.

Taking guidance from the latest market briefing by Japanese competitor Takeda, combined with industry feedback, Citi suggests the risk remains to the upside because of favourable growth momentum for immunoglobulin (IG). This remains the case after this latest update.

Target price is $282.50 Current Price is $287.10 Difference: minus $4.6 (current price is over target).
If CSL meets the Citi target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $273.40, suggesting downside of -4.8% (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: 0.6

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

Citi rates FPH as Sell (5) -

Citi analysts found the interim report release in-line with their forecasts. They note management has left FY guidance unchanged at NZ$255-265m. Target price moves to NZ$17.75 from NZ$13.75, but Sell rating remains in place.

Longer term free cash flow generation has been lifted to 10% from 7% previously. Citi analysts are of the view that Optiflow can continue to expand through the hospital system from its relatively low market share. But they remain of the view the shares are way too expensive.

Current Price is $20.91. Target price not assessed.

Current consensus price target is N/A

Forecast for FY20:

Forecast for FY21:

This company reports in NZD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: -0.8

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

Morgan Stanley rates GMG as Overweight (1) -

Morgan Stanley undertakes a detailed appraisal of the US strategy and concludes that 73% of the company's locations are in strong areas of undersupply where average rental growth is twice that of "slowing" locations.

The US makes up 20% of the company's development expenditure. Supply may be outstripping demand but the broker assesses that the portfolio is robust.

Overweight rating and $16.05 target maintained. In-Line industry view.

Target price is $16.05 Current Price is $14.89 Difference: $1.16
If GMG meets the Morgan Stanley target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $15.35, suggesting upside of 3.1% (ex-dividends)

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 GOZ as Initiation of coverage with Neutral (3) -

Growthpoint Properties has a $4.0bn real estate portfolio weighted to office and industrial sectors across Australia. Credit Suisse notes active lease management is in focus and there is a redevelopment opportunity at Broadmeadows.

The company is guiding to FY20 earnings of at least 25.4c per security with a distribution of 23.8c. Credit Suisse initiates coverage with a Neutral rating and $4.13 target.

Target price is $4.13 Current Price is $4.38 Difference: minus $0.25 (current price is over target).
If GOZ meets the Credit Suisse target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.23, suggesting downside of -3.4% (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 IFN as Downgrade to Hold from Buy (3) -

Ord Minnett downgrades to Hold from Buy as the value gap has now closed and the stock price looks full. Target is raised to $0.70 from $0.69.

Target price is $0.70 Current Price is $0.63 Difference: $0.07
If IFN meets the Ord Minnett target it will return approximately 11% (excluding dividends, fees and charges).

Market Sentiment: 0.0

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

Ord Minnett rates ILU as Hold (3) -

Ord Minnett observes the Cataby operation is going well, although there are headwinds regarding the zircon price and the path forward for Sierra Rutile.

The broker was disappointed that the strategy briefing, which focused on the MAC royalty, did not provide more detail on medium-term plans for the mineral sands operations.

This would be key to valuing the stand-alone mineral sands business. The broker maintains a Hold rating and raises the target to $9.20 from $8.40.

Target price is $9.20 Current Price is $9.41 Difference: minus $0.21 (current price is over target).
If ILU meets the Ord Minnett target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $9.64, suggesting upside of 2.5% (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

Morgan Stanley rates JIN as Overweight (1) -

Morgan Stanley is pleased with the Gatherwell acquisition as it is a beachhead into the UK. The $9.1m deal was recently approved by the UK Gambling Commission and the company expects this to contribute seven months to its FY20 result.

Morgan Stanley assesses there is significant scope to penetrate the UK charity lottery and external lottery manager segments as well as the ability to extend the offer with the existing Powered by Jumbo product suite.

Target is $24. Overweight rating. Industry view is In-Line.

Target price is $24.00 Current Price is $19.71 Difference: $4.29
If JIN meets the Morgan Stanley target it will return approximately 22% (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

UBS rates LNK as Buy (1) -

Link Administration will lose MTAA Super as a client following the latter's merger with Tasplan. UBS notes this is the third time Link Administration has been on the wrong side of a potentially positive industry fund consolidation.

The loss will not affect the FY20 outlook but UBS estimates it could reduce group revenue by -1% and operating earnings (EBITDA) by -3% in October 2020.

The broker still considers the outlook attractive and retains a Buy rating. Target is reduced to $6.45 from $6.65.

Target price is $6.45 Current Price is $5.73 Difference: $0.72
If LNK meets the UBS target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $6.64, suggesting upside of 15.9% (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

Ord Minnett rates NST as Upgrade to Buy from Hold (1) -

The company has one of the better production growth profiles amongst the gold coverage and Ord Minnett expects growth options will be pursued in 2020.

Meanwhile, the focus is on progress at Pogo in Alaska and the broker expects further consolidation around Kalgoorlie. Rating is upgraded to Buy from Hold. Target is trimmed to $11.50 from $11.80.

Target price is $11.50 Current Price is $9.86 Difference: $1.64
If NST meets the Ord Minnett target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $11.77, suggesting upside of 19.3% (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 NWH as Buy (1) -

UBS believes there is a solid strategic rationale behind the BGC acquisition. The broker upgrades FY20-22 estimates for earnings per share by 27%, given the accretive nature of the acquisition.

While an acquisition of this scale is not without risk and further detail on existing contracts is required, the outlook for NRW Holdings appears skewed to the upside and UBS retains a Buy rating. Target is raised to $3.85 from $3.20.

Target price is $3.85 Current Price is $3.08 Difference: $0.77
If NWH meets the UBS target it will return approximately 25% (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 ORG as Upgrade to Accumulate from Hold (2) -

Origin Energy has been a strong performer, generating robust cash flow and Ord Minnett expects increased capital returns.

The broker upgrades to Accumulate from Hold and raises the target to $9.50 from $8.25.

Target price is $9.50 Current Price is $8.73 Difference: $0.77
If ORG meets the Ord Minnett target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $8.66, suggesting downside of -0.8% (ex-dividends)

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

Macquarie rates OSH as Outperform (1) -

Current PNG LNG operations are robust, Macquarie observes. The expansion is contingent on the Papua and the P'nyang gas agreements, with the latter to be signed by the end of the year. Total production in PNG LNG is expected to be 8.4-8.5mt for 2019.

While the share price continues to discount significant upside from the PNG LNG expansion and Papua LNG development, further de-risking should provide a catalyst for the re-rating, in the broker's view. Outperform maintained. Target is reduced -2% to $8.20.

Target price is $8.20 Current Price is $7.30 Difference: $0.9
If OSH meets the Macquarie target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $7.57, suggesting upside of 3.8% (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: 0.3

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

UBS rates SHV as Buy (1) -

FY19 results were ahead of UBS estimates at both the earnings (EBIT) and net profit level. Strong cash flow has allowed the company to pay down all debt and provides for a material future growth option.

The almond division was supported by yields above historical industry averages. Water prices remain a challenge and the broker suspects elevated costs will persist into FY20. Buy rating and $9.10 target maintained.

Target price is $9.10 Current Price is $8.16 Difference: $0.94
If SHV meets the UBS target it will return approximately 12% (excluding dividends, fees and charges).

The company's fiscal year ends in September.

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

Morgans rates VUK as Hold (3) -

FY19 underlying net profit was better than Morgans expected. This was largely the result of a significantly lower effective tax rate. The broker believes the risk of a PPI provision-induced capital raising has been reduced.

Also, while Brexit-related risks have also reduced recently there is still risk on this front and could be the key driver of the share price over December and January.

Hold rating maintained. Target rises to $3.08 from $2.11.

Target price is $3.08 Current Price is $2.69 Difference: $0.39
If VUK meets the Morgans target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $3.39

The company's fiscal year ends in September.

Forecast for FY20:

Forecast for FY21:

This company reports in GBP. 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

UBS rates Z1P as Buy (1) -

The company has announced a $60m capital raising. Proceeds will be used for expansion in the UK and investment in products and technology.

UBS suspects, if the Reserve Bank of Australia were to prevent By Now Pay Later services from imposing no-surcharging terms on merchants, it would be incrementally negative for Zip Co. However, it is hard to quantify the potential impact on forecasts.

The company is less exposed to these risks as well compared with Afterpay Touch ((APT)). UBS notes the stock is relatively early-stage and somewhat speculative but considers the current risk/reward favourable and maintains a Buy rating and $4.80 target.

Target price is $4.80 Current Price is $3.76 Difference: $1.04
If Z1P meets the UBS target it will return approximately 28% (excluding dividends, fees and charges).

Current consensus price target is $4.20, suggesting upside of 11.8% (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