Australian Broker Call
September 18, 2017
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COMPANIES DISCUSSED IN THIS ISSUE
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The number next to the symbol represents the number of brokers covering it for this report -(if more than 1)
Last Updated: 10:22 AM
Your daily news report on the latest recommendation, valuation, forecast and opinion changes.
This report includes concise but limited reviews of research recently published by Stockbrokers, which should be considered as information concerning likely market behaviour rather than advice on the securities mentioned. Do not act on the contents of this Report without first reading the important information included at the end.
For more info about the different terms used by stockbrokers, as well as the different methodologies behind similar sounding ratings, download our guide HERE
Today's Upgrades and Downgrades
| DMP - | DOMINO'S PIZZA | Upgrade to Add from Hold | Morgans |
| FPH - | FISHER & PAYKEL HEALTHCARE | Downgrade to Sell from Neutral | UBS |
| IAG - | INSURANCE AUSTRALIA | Upgrade to Neutral from Underperform | Macquarie |
| MQA - | MACQUARIE ATLAS ROADS | Upgrade to Add from Hold | Morgans |
Credit Suisse rates CSL as Outperform (1) -
The company has announced the receipt of US FDA approval for Privigen use in patients with chronic inflammatory demyelinating polyneuropathy (CIDP).
While approval is positive for CSL, Credit Suisse assumes only modest market share in FY18. The strategic benefit is that it allows CSL to market directly to neurologists for the CIDP indication.
Target of $133 and Outperform retained.
Target price is $133.00 Current Price is $130.96 Difference: $2.04
If CSL meets the Credit Suisse target it will return approximately 2% (excluding dividends, fees and charges).
Current consensus price target is $134.90, suggesting upside of 3.0% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Credit Suisse forecasts a full year FY18 dividend of 198.53 cents and EPS of 454.90 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 433.3, implying annual growth of N/A. Current consensus DPS estimate is 186.6, implying a prospective dividend yield of 1.4%. Current consensus EPS estimate suggests the PER is 30.2. |
Forecast for FY19:
Credit Suisse forecasts a full year FY19 dividend of 221.81 cents and EPS of 512.28 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 496.9, implying annual growth of 14.7%. Current consensus DPS estimate is 208.8, implying a prospective dividend yield of 1.6%. Current consensus EPS estimate suggests the PER is 26.4. |
This company reports in USD. 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
Morgans rates DMP as Upgrade to Add from Hold (1) -
Morgans suspects the AGM trading update and first half results will show softer growth in Australasia, given the exceptionally strong base being cycled, but Europe should be accelerating.
Morgans takes a more positive view based on a re-jigging of the valuation rather than any specific upcoming catalysts.
Rating is upgraded to Add from Hold. Target is $47.21.
Target price is $47.21 Current Price is $43.05 Difference: $4.16
If DMP meets the Morgans target it will return approximately 10% (excluding dividends, fees and charges).
Current consensus price target is $46.83, suggesting upside of 8.8% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Morgans forecasts a full year FY18 dividend of 117.00 cents and EPS of 169.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 158.5, implying annual growth of 36.6%. Current consensus DPS estimate is 112.8, implying a prospective dividend yield of 2.6%. Current consensus EPS estimate suggests the PER is 27.2. |
Forecast for FY19:
Morgans forecasts a full year FY19 dividend of 144.00 cents and EPS of 205.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 194.6, implying annual growth of 22.8%. Current consensus DPS estimate is 138.0, implying a prospective dividend yield of 3.2%. Current consensus EPS estimate suggests the PER is 22.1. |
Market Sentiment: 0.1
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Ord Minnett rates FMG as Accumulate (2) -
Chief executive Nev Power will retire in February 2018. The company is yet to announce a replacement.
Ord Minnett believes his departure will be a loss for the company. The most likely internal successor is considered to be Greg Lilleyman, currently director of operations.
Target is $7.00. Accumulate rating retained.
This stock is not covered in-house by Ord Minnett. Instead, the broker whitelabels research by JP Morgan.
Target price is $7.00 Current Price is $5.55 Difference: $1.45
If FMG meets the Ord Minnett target it will return approximately 26% (excluding dividends, fees and charges).
Current consensus price target is $6.16, suggesting upside of 10.9% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Ord Minnett forecasts a full year FY18 dividend of 47.51 cents and EPS of 68.63 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 60.2, implying annual growth of N/A. Current consensus DPS estimate is 37.5, implying a prospective dividend yield of 6.8%. Current consensus EPS estimate suggests the PER is 9.2. |
Forecast for FY19:
Ord Minnett forecasts a full year FY19 dividend of 55.22 cents and EPS of 84.14 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 54.8, implying annual growth of -9.0%. Current consensus DPS estimate is 35.8, implying a prospective dividend yield of 6.5%. Current consensus EPS estimate suggests the PER is 10.1. |
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
FPH FISHER & PAYKEL HEALTHCARE CORPORATION LIMITED
Medical Equipment & Devices
Overnight Price: $11.59
UBS rates FPH as Downgrade to Sell from Neutral (5) -
UBS observes the share price is up 30% since the FY17 result in May. The broker suggests that the risk is skewed to the downside, especially if OSA patent disputes or NAFTA negotiations do not go to plan and growth slows.
Accordingly, UBS lowers the rating to Sell from Neutral. The broker's market model points to a slowing in global revenue growth in OSA markets to around 7% and 6% in 2017 and 2018 respectively, from around 8% in 2016.
Target is raised to NZ$11.35 from NZ$9.85.
Current Price is $11.59. Target price not assessed.
Current consensus price target is N/A
The company's fiscal year ends in March.
Forecast for FY18:
UBS forecasts a full year FY18 dividend of 20.20 cents and EPS of 30.72 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 30.5, implying annual growth of N/A. Current consensus DPS estimate is 21.1, implying a prospective dividend yield of 1.8%. Current consensus EPS estimate suggests the PER is 38.0. |
Forecast for FY19:
UBS forecasts a full year FY19 dividend of 23.01 cents and EPS of 35.13 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 35.5, implying annual growth of 16.4%. Current consensus DPS estimate is 25.4, implying a prospective dividend yield of 2.2%. Current consensus EPS estimate suggests the PER is 32.6. |
This company reports in NZD. All estimates have been converted into AUD by FNArena at present FX values.
Market Sentiment: 0.2
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Macquarie rates GMG as Outperform (1) -
Macquarie observes Asia has been a material driver of group profit in the last decade. Goodman Asia represents around 32% of total external assets under management. This is split 80:20 between China:Japan.
Macquarie expects the proportionate contribution from the Asian business will decline in the near-term as the Americas grow more rapidly. Outperform retained. Target is $8.49.
Target price is $8.49 Current Price is $8.34 Difference: $0.15
If GMG meets the Macquarie target it will return approximately 2% (excluding dividends, fees and charges).
Current consensus price target is $8.25, suggesting downside of -1.0% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Macquarie forecasts a full year FY18 dividend of 27.60 cents and EPS of 46.10 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 46.2, implying annual growth of 6.2%. Current consensus DPS estimate is 27.8, implying a prospective dividend yield of 3.3%. Current consensus EPS estimate suggests the PER is 18.1. |
Forecast for FY19:
Macquarie forecasts a full year FY19 dividend of 29.60 cents and EPS of 49.30 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 49.0, implying annual growth of 6.1%. Current consensus DPS estimate is 29.4, implying a prospective dividend yield of 3.5%. Current consensus EPS estimate suggests the PER is 17.0. |
Market Sentiment: 0.4
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Macquarie rates IAG as Upgrade to Neutral from Underperform (3) -
Macquarie upgrades to Neutral from Underperform as management has signalled an intention to participate in further quota share reinsurance deals.
Macquarie notes, being more of a distributor means that, while earnings per share may decrease slightly, this should be more than offset by any multiple re-rating and thus deliver value to investors. Target increases to $5.90 from $5.50.
Target price is $5.90 Current Price is $6.23 Difference: minus $0.33 (current price is over target).
If IAG meets the Macquarie target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $6.32, suggesting upside of 1.5% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Macquarie forecasts a full year FY18 dividend of 34.00 cents and EPS of 36.90 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 36.9, implying annual growth of -5.5%. Current consensus DPS estimate is 29.1, implying a prospective dividend yield of 4.7%. Current consensus EPS estimate suggests the PER is 16.9. |
Forecast for FY19:
Macquarie forecasts a full year FY19 dividend of 35.00 cents and EPS of 39.90 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 39.3, implying annual growth of 6.5%. Current consensus DPS estimate is 31.3, implying a prospective dividend yield of 5.0%. Current consensus EPS estimate suggests the PER is 15.9. |
Market Sentiment: 0.3
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Ord Minnett rates JHX as Hold (3) -
Management has confirmed there was minor damage to its facility from Hurricane Irma. The plant is now up and running.
James Hardie estimates the affected area from hurricanes represents 15% of its North American volumes but considers it too early to provide guidance on the financial impact.
Ord Minnett believes, with capacity now at a sufficient level, the near-term challenge will be to win back business that was lost during the period of constraints.
Hold rating maintained. Target is $18.00.
This stock is not covered in-house by Ord Minnett. Instead, the broker whitelabels research by JP Morgan.
Target price is $18.00 Current Price is $17.20 Difference: $0.8
If JHX meets the Ord Minnett target it will return approximately 5% (excluding dividends, fees and charges).
Current consensus price target is $19.65, suggesting upside of 14.3% (ex-dividends)
The company's fiscal year ends in March.
Forecast for FY18:
Ord Minnett forecasts a full year FY18 dividend of 52.84 cents and EPS of 79.26 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 76.2, implying annual growth of N/A. Current consensus DPS estimate is 51.9, implying a prospective dividend yield of 3.0%. Current consensus EPS estimate suggests the PER is 22.6. |
Forecast for FY19:
Ord Minnett forecasts a full year FY19 dividend of 60.77 cents and EPS of 96.43 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 88.3, implying annual growth of 15.9%. Current consensus DPS estimate is 57.0, implying a prospective dividend yield of 3.3%. Current consensus EPS estimate suggests the PER is 19.5. |
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
Morgan Stanley rates MNF as Overweight (1) -
Morgan Stanley considers global messaging a large market that is shifting to be more B2C, more contextual and more application-based. This is playing to the company's strengths, although the scope of current operations in revenue is very small.
Nevertheless the broker considers the company has advantage in product and price with no legacy earnings streams in messaging to defend.
Overweight rating. Target price is $6.15. In-Line sector view.
Target price is $6.15 Current Price is $4.92 Difference: $1.23
If MNF meets the Morgan Stanley target it will return approximately 25% (excluding dividends, fees and charges).
The company's fiscal year ends in June.
Forecast for FY17:
Morgan Stanley forecasts a full year FY17 dividend of 11.00 cents and EPS of 25.00 cents. |
Forecast for FY18:
Morgan Stanley forecasts a full year FY18 dividend of 13.00 cents and EPS of 29.00 cents. |
Market Sentiment: 1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Macquarie rates MQA as No Rating (-1) -
The company will increase its interest in MAF2 to 50.01% and in APRR to 25%. To fund the acquisition the company has raised EUR150m of holding company debt along with $450m of new equity.
A reduction in base management fees to 0.85% from 1% has also been announced. Macquarie Atlas is lifting the 2018 dividend guidance to 23.5c from 22.5c.
Macquarie is restricted from rating and target at present.
Current Price is $5.47. Target price not assessed.
Current consensus price target is $5.49, suggesting upside of 0.4% (ex-dividends)
The company's fiscal year ends in December.
Forecast for FY17:
Macquarie forecasts a full year FY17 dividend of 20.00 cents and EPS of 61.70 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 63.3, implying annual growth of 223.3%. Current consensus DPS estimate is 20.0, implying a prospective dividend yield of 3.7%. Current consensus EPS estimate suggests the PER is 8.6. |
Forecast for FY18:
Macquarie forecasts a full year FY18 dividend of 23.50 cents and EPS of 65.80 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 33.6, implying annual growth of -46.9%. Current consensus DPS estimate is 23.3, implying a prospective dividend yield of 4.3%. Current consensus EPS estimate suggests the PER is 16.3. |
Market Sentiment: 0.2
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Morgans rates MQA as Upgrade to Add from Hold (1) -
Morgans considers the EUR440m price paid for an additional 44.86% interest in APRR is reasonable but suspects the market may continue to view the stock as cum capital raising.
The broker believes it's worth taking up the non-renounceable entitlement offer of 1-for-6.62 at $5.12 per security. The FY18 distribution guidance of 23.5c implies 4.6% cash yield on this offer price.
Morgans upgrades to Add from Hold and reduces the target to $5.76 from $5.96.
Target price is $5.76 Current Price is $5.47 Difference: $0.29
If MQA meets the Morgans target it will return approximately 5% (excluding dividends, fees and charges).
Current consensus price target is $5.49, suggesting upside of 0.4% (ex-dividends)
The company's fiscal year ends in December.
Forecast for FY17:
Morgans forecasts a full year FY17 dividend of 20.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 63.3, implying annual growth of 223.3%. Current consensus DPS estimate is 20.0, implying a prospective dividend yield of 3.7%. Current consensus EPS estimate suggests the PER is 8.6. |
Forecast for FY18:
Morgans forecasts a full year FY18 dividend of 23.50 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 33.6, implying annual growth of -46.9%. Current consensus DPS estimate is 23.3, implying a prospective dividend yield of 4.3%. Current consensus EPS estimate suggests the PER is 16.3. |
Market Sentiment: 0.2
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Morgan Stanley rates QBE as Overweight (1) -
Morgan Stanley believes fears of a substantial downgrade are overplayed as the company has US$2.05bn of capacity to absorb catastrophe losses.
Moreover a more encouraging pricing outlook, capital returns and a focus on driving a recovery in returns are attractive.
Overweight reiterated. Target is $13.40. Industry view: In-Line.
Target price is $13.40 Current Price is $10.47 Difference: $2.93
If QBE meets the Morgan Stanley target it will return approximately 28% (excluding dividends, fees and charges).
Current consensus price target is $11.64, suggesting upside of 11.2% (ex-dividends)
The company's fiscal year ends in December.
Forecast for FY17:
Morgan Stanley forecasts a full year FY17 dividend of 68.99 cents and EPS of 79.61 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 68.5, implying annual growth of N/A. Current consensus DPS estimate is 59.7, implying a prospective dividend yield of 5.7%. Current consensus EPS estimate suggests the PER is 15.3. |
Forecast for FY18:
Morgan Stanley forecasts a full year FY18 dividend of 87.13 cents and EPS of 101.65 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 85.5, implying annual growth of 24.8%. Current consensus DPS estimate is 66.9, implying a prospective dividend yield of 6.4%. Current consensus EPS estimate suggests the PER is 12.2. |
This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.
Market Sentiment: 0.1
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
UBS rates S32 as Buy (1) -
The company has indicated it will not hold onto excess cash and is "not afraid of paying an unfranked dividend". UBS suggests this points to a material lift in returns over the next year.
The company has been looking at M&A options but finds no value. Buy rating and $3.00 target retained.
Target price is $3.00 Current Price is $3.11 Difference: minus $0.11 (current price is over target).
If S32 meets the UBS target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $3.10, suggesting downside of -0.2% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
UBS forecasts a full year FY18 dividend of 13.15 cents and EPS of 26.23 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 21.0, implying annual growth of N/A. Current consensus DPS estimate is 10.6, implying a prospective dividend yield of 3.4%. Current consensus EPS estimate suggests the PER is 14.8. |
Forecast for FY19:
UBS forecasts a full year FY19 dividend of 13.15 cents and EPS of 27.35 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 20.9, implying annual growth of -0.5%. Current consensus DPS estimate is 11.3, implying a prospective dividend yield of 3.6%. Current consensus EPS estimate suggests the PER is 14.9. |
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
Summaries
| CSL - | CSL | Outperform - Credit Suisse | Overnight Price $130.96 |
| DMP - | DOMINO'S PIZZA | Upgrade to Add from Hold - Morgans | Overnight Price $43.05 |
| FMG - | FORTESCUE | Accumulate - Ord Minnett | Overnight Price $5.55 |
| FPH - | FISHER & PAYKEL HEALTHCARE | Downgrade to Sell from Neutral - UBS | Overnight Price $11.59 |
| GMG - | GOODMAN GRP | Outperform - Macquarie | Overnight Price $8.34 |
| IAG - | INSURANCE AUSTRALIA | Upgrade to Neutral from Underperform - Macquarie | Overnight Price $6.23 |
| JHX - | JAMES HARDIE | Hold - Ord Minnett | Overnight Price $17.20 |
| MNF - | MNF GROUP | Overweight - Morgan Stanley | Overnight Price $4.92 |
| MQA - | MACQUARIE ATLAS ROADS | No Rating - Macquarie | Overnight Price $5.47 |
| Upgrade to Add from Hold - Morgans | Overnight Price $5.47 | ||
| QBE - | QBE INSURANCE | Overweight - Morgan Stanley | Overnight Price $10.47 |
| S32 - | SOUTH32 | Buy - UBS | Overnight Price $3.11 |
RATING SUMMARY
| Rating | No. Of Recommendations |
| 1. Buy | 7 |
| 2. Accumulate | 1 |
| 3. Hold | 2 |
| 5. Sell | 1 |
Monday 18 September 2017
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