Australian Broker Call

Macquarie rates AJM as Underperform (5) -

Macquarie has taken a positive view following the announcement made by Pilbara Minerals ((PLS)), indicating strong demand from potential customers for hard rock lithium miners.

The exception is Altura Mining. Macquarie has pulled back the price target to 16c from 20c prior while retaining its Underperform rating.

Earnings estimates have suffered from reduced projections for near-term cash flow generation. Earlier projections for profitability have been pushed out until FY21.

Target price is $0.16 Current Price is $0.17 Difference: minus $0.01 (current price is over target).
If AJM meets the Macquarie target it will return approximately minus 6% (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: -1.0

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

Credit Suisse rates AST as Neutral (3) -

The Australian Energy Regulator released its final reports reviewing the rate of return, and its approach to regulatory tax allowances on 17 December last year. Credit Suisse analysts are playing catchup with a general update for the sector.

For AusNet Services, estimates have been slightly reduced (but not DPS), with no changes made to the Neutral rating and $1.60 price target.

Target price is $1.60 Current Price is $1.57 Difference: $0.03
If AST meets the Credit Suisse target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $1.69, suggesting upside of 7.6% (ex-dividends)

The company's fiscal year ends in March.

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

Credit Suisse rates ASX as Underperform (5) -

While acknowledging overall activity levels were (slightly) higher than expected throughout the final three months of 2018, the analysts nevertheless stick with their Underperform rating as EPS growth was strong last year, and is now expected to slow.

Hence, despite the upgrade to forecasts, Credit Suisse finds the valuation is too "full". Target price/valuation remains unchanged at $55.

Target price is $55.00 Current Price is $61.93 Difference: minus $6.93 (current price is over target).
If ASX meets the Credit Suisse target it will return approximately minus 11% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $56.91, suggesting downside of -8.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: -0.6

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

Macquarie rates BHP as Outperform (1) -

Macquarie expects China's move to Level-2 stimulus to have a positive impact on market sentiment for the diversified majors. Using the input from current spot prices, the broker retains a positive outlook for BHP Group, Rio Tinto ((RIO)) and South32 ((S32)) with BHP most preferred, ahead of the other two. 

Outperform maintained. Target is steady at $40.

Target price is $40.00 Current Price is $34.52 Difference: $5.48
If BHP meets the Macquarie target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $36.88, suggesting upside of 6.8% (ex-dividends)

The company's fiscal year ends in June.

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: 0.6

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

Ord Minnett rates BLD as Accumulate (2) -

Ord Minnett notes Boral shares have significantly underperformed in 2018. The broker agrees with the market's assessment that guidance for the year looks optimistic.

Plus the company may need to raise equity so it can afford to buy out its partner in the USG Boral Plasterboard JV. The analysts suggest maybe the latter can be financed through debt?

Accumulate rating maintained alongside a target of $7.40. Broadly taken, the broker maintains growth prospects for the company remain "robust".

Target price is $7.40 Current Price is $5.10 Difference: $2.3
If BLD meets the Ord Minnett target it will return approximately 45% (excluding dividends, fees and charges).

Current consensus price target is $7.11, suggesting upside of 39.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.6

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

Credit Suisse rates CGF as Neutral (3) -

Marking to market, Credit Suisse analysts have reduced estimates for asset managers and operators of financial platforms. More so for the former (-6% on average versus -1% on average).

The analysts highlight while share prices have de-rated noticeably, many asset managers are also experiencing fund outflows, and this can potentially still accelerate on continued risk off sentiment.

For Challenger, only small reductions have ensued, with the analysts also questioning the sustainability of the COE margin. Neutral rating retained. Price target $12.

Target price is $12.00 Current Price is $9.50 Difference: $2.5
If CGF meets the Credit Suisse target it will return approximately 26% (excluding dividends, fees and charges).

Current consensus price target is $11.48, suggesting upside of 20.8% (ex-dividends)

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

Credit Suisse rates GWA as Outperform (1) -

Credit Suisse is catching up on the announcement GWA Group intends to fully acquire NZ-listed Methven. The analysts label the price to be paid "okay", but they don't see much potential in terms of diversification and/or transformation under new ownership.

There are synergies, and these are deemed sufficient to justify the price for the acquisition. The analysts suggest these benefits risk being offset by potentially cannibalising the group's existing sales.

Outperform rating retained with the analysts believing GWA will continue increasing market share "through the cycle". An accelerating decline in the Australian residential market is seen as a potential downside risk. Target unchanged at $3.75.

Target price is $3.75 Current Price is $2.86 Difference: $0.89
If GWA meets the Credit Suisse target it will return approximately 31% (excluding dividends, fees and charges).

Current consensus price target is $3.47, suggesting upside of 21.2% (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

Macquarie rates GXY as Upgrade to Outperform from Neutral (1) -

Macquarie has taken a positive view following the announcement made by Pilbara Minerals ((PLS)), indicating strong demand from potential customers for hard rock lithium miners.

Pilbara Minerals remains the broker's top pick in the sector, with ongoing cautious view for Altura Mining. Galaxy Resources' rating is hereby upgraded to Outperform from Neutral.

Concerning the latter, Macquarie has pushed back the development assumption for Sal de Vida by circa 6 months with first production now expected in late-2022. Target price declines to $2.70 from $3.

Target price is $2.70 Current Price is $2.29 Difference: $0.41
If GXY meets the Macquarie target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $3.37, suggesting upside of 47.2% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

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 HIG as Downgrade to Hold from Add (3) -

Morgans advises shareholders to take no action with Cobalt 27 Corp having agreed to acquire all outstanding shares at 10.5c per unit.

The analysts point out, part of the process will be a shareholders’ meeting to approve the scheme of arrangement, which will require the approval of 75% of non-conflicted shareholders.

Downgrade to Hold from Add. Target price falls to 11c from 33c

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

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

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

Citi rates HLS as Neutral (3) -

The board has now officially rejected the proposal from suitor Jangho. Citi analysts reiterate that in their opinion the company formerly known as Primary Health Care is under pressure due to slower macro environment and additional operating costs.

Citi earlier expressed the view that FIRB will likely hold the key to a successful acquisition of the company. The arrival of another suitor cannot be excluded, say the analysts. Neutral rating retained. Target $2.90.

Target price is $2.90 Current Price is $2.63 Difference: $0.27
If HLS meets the Citi target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $2.89, suggesting upside of 9.9% (ex-dividends)

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

Credit Suisse rates HUB as Neutral (3) -

Marking to market, Credit Suisse analysts have reduced estimates for asset managers and operators of financial platforms. More so for the former (-6% on average versus -1% on average).

The analysts highlight while share prices have de-rated noticeably, many asset managers are also experiencing fund outflows, and this can potentially still accelerate on continued risk off sentiment.

Hub24's forecasts have only been reduced in minor fashion. Margin assumptions have been lowered. Stock seen as fairly priced, hence Neutral rating retained. Price target $13.20 (unchanged).

Target price is $13.20 Current Price is $12.45 Difference: $0.75
If HUB meets the Credit Suisse target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $13.84, suggesting upside of 11.2% (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

Credit Suisse rates IFL as Neutral (3) -

Marking to market, Credit Suisse analysts have reduced estimates for asset managers and operators of financial platforms. More so for the former (-6% on average versus -1% on average).

The analysts highlight while share prices have de-rated noticeably, many asset managers are also experiencing fund outflows, and this can potentially still accelerate on continued risk off sentiment.

With estimates already reduced in December, today's update offers a mix in adjustments for the years ahead. Neutral rating retained. Price target $4.60 (unchanged).

Target price is $4.60 Current Price is $5.37 Difference: minus $0.77 (current price is over target).
If IFL 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 $4.75, suggesting downside of -11.5% (ex-dividends)

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

Credit Suisse rates MFG as Outperform (1) -

Marking to market, Credit Suisse analysts have reduced estimates for asset managers and operators of financial platforms. More so for the former (-6% on average versus -1% on average).

The analysts highlight while share prices have de-rated noticeably, many asset managers are also experiencing fund outflows, and this can potentially still accelerate on continued risk off sentiment.

Earnings estimates have been culled including for lower performance fees. Target price reduces to $29 from $30. Outperform rating retained.

Target price is $29.00 Current Price is $24.49 Difference: $4.51
If MFG meets the Credit Suisse target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $28.51, suggesting upside of 16.4% (ex-dividends)

The company's fiscal year ends in June.

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

Citi rates NAB as Buy (1) -

After carefully putting pros and cons against each other, Citi's banking sector analysts have come to the conclusion that banking shares in Australia have been oversold, providing investors with an opportunity in 2019.

The analysts' preferred strategy is through favouritism towards "restructuring" and "commercial banking", which leads to Citi putting National Australia Bank forward as the sector favourite, ahead of (in order of preference) ANZ Bank ((ANZ)), Westpac ((WBC)) and CommBank ((CBA)).

Noteworthy: Citi thinks investors should not fear the potential for a Labor government later this year.

Target price is $31.00 Current Price is $24.54 Difference: $6.46
If NAB meets the Citi target it will return approximately 26% (excluding dividends, fees and charges).

Current consensus price target is $28.85, suggesting upside of 17.6% (ex-dividends)

The company's fiscal year ends in September.

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

Credit Suisse rates NWL as Upgrade to Neutral from Underperform (3) -

Marking to market, Credit Suisse analysts have reduced estimates for asset managers and operators of financial platforms. More so for the former (-6% on average versus -1% on average).

The analysts highlight while share prices have de-rated noticeably, many asset managers are also experiencing fund outflows, and this can potentially still accelerate on continued risk off sentiment.

As net flows have improved on the back of new partnerships, post the present year earnings estimates have slightly increased. Upgrade to Neutral from Underperform. Target price remains $7.75.

Target price is $7.75 Current Price is $7.43 Difference: $0.32
If NWL meets the Credit Suisse target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $7.90, suggesting upside of 6.3% (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

Macquarie rates OZL as Outperform (1) -

Base metals analysts at Macquarie expect China's move to Level-2 stimulus to have a positive impact on sentiment for Australian base metal miners. It is the analysts' view pure play copper stocks look "cheap" using spot prices while nickel stocks are factoring in a recovery in nickel prices.

In a general sense, Macquarie sees downside risks from weaker base metals prices for earnings estimates. The broker does see "significant value" among copper miners in OZ Minerals, Sandfire Resources ((SFR)), as well as in Metals X ((MLX)). A positive view for Panoramic Resources ((PAN)) and Western Areas ((WSA)) is based upon a positive outlook for nickel.

OZ Minerals is the favourite for copper exposure. Outperform and $11.90 price target retained.

Target price is $11.90 Current Price is $9.02 Difference: $2.88
If OZL meets the Macquarie target it will return approximately 32% (excluding dividends, fees and charges).

Current consensus price target is $10.46, suggesting upside of 15.9% (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

Credit Suisse rates PDL as Underperform (5) -

Marking to market, Credit Suisse analysts have reduced estimates for asset managers and operators of financial platforms. More so for the former (-6% on average versus -1% on average).

The analysts highlight while share prices have de-rated noticeably, many asset managers are also experiencing fund outflows, and this can potentially still accelerate on continued risk off sentiment.

With fees from JO Hambro virtually having disappeared, earnings estimates have been lowered by -6-8%. Target price falls to $7.10 from $7.40. Underperform rating retained.

Target price is $7.10 Current Price is $7.78 Difference: minus $0.68 (current price is over target).
If PDL meets the Credit Suisse target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $9.21, suggesting upside of 18.4% (ex-dividends)

The company's fiscal year ends in September.

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

Credit Suisse rates PPT as Neutral (3) -

Marking to market, Credit Suisse analysts have reduced estimates for asset managers and operators of financial platforms. More so for the former (-6% on average versus -1% on average).

The analysts highlight while share prices have de-rated noticeably, many asset managers are also experiencing fund outflows, and this can potentially still accelerate on continued risk off sentiment.

Multiple projections for Perpetual's operations have been adjusted negatively, with noticeable consequences for future dividends. Target price falls to $33 from $41. Neutral rating retained.

Target price is $33.00 Current Price is $33.04 Difference: minus $0.04 (current price is over target).
If PPT 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 $39.40, suggesting upside of 19.2% (ex-dividends)

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

Credit Suisse rates PTM as Underperform (5) -

Marking to market, Credit Suisse analysts have reduced estimates for asset managers and operators of financial platforms. More so for the former (-6% on average versus -1% on average).

The analysts highlight while share prices have de-rated noticeably, many asset managers are also experiencing fund outflows, and this can potentially still accelerate on continued risk off sentiment.

Reductions to estimates are quite pronounced (this year's reduction is -13%), pulling back the price target to $4.70 from $5. Underperform rating retained.

Target price is $4.70 Current Price is $4.87 Difference: minus $0.17 (current price is over target).
If PTM meets the Credit Suisse target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.14, suggesting upside of 5.6% (ex-dividends)

The company's fiscal year ends in June.

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

Morgans rates REA as Add (1) -

The analysts have reduced forecasts on the back of more downside to come from the national apartment construction cycle, which pushes down the price target to $89.55 from $92.02.

This, however, doesn't change the fact they continue to believe REA Group shares are too cheap. Hence why the Add rating has been retained.

Taking a broader view, Morgans highlights this company should be able to deliver several more years of double-digit earnings growth on top of high levels of free cash generation, enabling strong growth in dividends.

Target price is $89.55 Current Price is $73.92 Difference: $15.63
If REA meets the Morgans target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $88.15, suggesting upside of 19.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.6

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

Credit Suisse rates SKI as Underperform (5) -

The Australian Energy Regulator released its final reports reviewing the rate of return, and its approach to regulatory tax allowances on 17 December last year. Credit Suisse analysts are playing catchup with a general update for the sector.

Estimates for Spark Infra have reduced, also taking into account further capex reductions. Target price decreases to $2.15 from $2.25. Underperform rating retained.

Target price is $2.15 Current Price is $2.31 Difference: minus $0.16 (current price is over target).
If SKI meets the Credit Suisse target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.40, suggesting upside of 3.9% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.1

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

Morgans rates VHT as Add (1) -

Stockbroker Morgans welcomes the deal (MOU) with US-based ScreenPoint Medical. It is the broker's assessment this deal should improve Volpara's average revenue per user (ARPU).

Morgans is advising investors to look out for an expected strong third cashflow report due late January plus amendments from the FDA due shortly which, in its view, will modernise the regulation around breast density reporting to patients. Both are seen as positive catalysts for the share price.

Add rating retained, as well as the $1.61 price target. Morgans considers Volpara the best pick among emerging healthcare stocks in Australia.

Target price is $1.61 Current Price is $1.25 Difference: $0.36
If VHT meets the Morgans target it will return approximately 29% (excluding dividends, fees and charges).

The company's fiscal year ends in March.

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

Macquarie rates WPL as Upgrade to Neutral from Underperform (3) -

Macquarie sees oil prices strengthening in the first half of calendar 2019. On this basis, the rating for Woodside Petroleum has been lifted to Neutral from Underperform.

Sector preference remains (in order) Oil Search ((OSH)), then Santos ((STO)), with Woodside last among large caps "due to certainty and timing around catalysts for the first two".

Macquarie believes Woodside is facing a challenging year ahead, though it is seen as a candidate to announce a buyback or special dividend. Target price falls to $33.30 from $34.70.

Target price is $33.30 Current Price is $32.50 Difference: $0.8
If WPL meets the Macquarie target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $37.36, suggesting upside of 14.9% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

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