Australian Broker Call

Macquarie rates AGL as Neutral (3) -

The latest data suggest electricity churn continues to decline in the wake of regulated default pricing, which goes some way to offsetting the impact of lower prices, the broker notes. In the wider picture, retail prices are falling as coal/gas prices are rising and renewable energy credits are decreasing.

The headwinds are thus blowing at the retail and wholesale level for AGL Energy, but under-gearing suggests capital management is not out of the question, the broker notes. Neutral retained, target rises to $21.00 from $20.58.

Target price is $21.00 Current Price is $20.49 Difference: $0.51
If AGL meets the Macquarie target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $19.27, suggesting downside of -6.0% (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

Citi rates AMP as Sell (5) -

With little transparency on the earnings impact from the collapse of the sale of AMP Life, Citi decides to lower FY19 estimates by -7%.

The removal of any interim dividend apparently leaves the company with sufficient capital to meet its target surplus but the broker suspects this is not enough to fund any new strategy.

Given the heightened risk of a capital raising, the broker retains a Sell/High Risk call and reduces the target to $1.70 from $1.90.

Target price is $1.70 Current Price is $1.78 Difference: minus $0.08 (current price is over target).
If AMP meets the Citi target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $1.97, suggesting upside of 10.8% (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

Macquarie rates AMP as Neutral (3) -

In the wake of the RBNZ knocking back AMP's Life sale, the broker sees a binary outcome. Either the sale has to proceed in a way that appeases the RBNZ, implying a lower price, or AMP is forced to hang on to the business.

The broker sees risk as skewed to the downside and a capital raising as a possibility. With the turnaround story now further delayed, the broker returns from restriction with a Neutral rating. Target is $2.00.

Target price is $2.00 Current Price is $1.78 Difference: $0.22
If AMP meets the Macquarie target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $1.97, suggesting upside of 10.8% (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

Morgan Stanley rates AMP as Underweight (5) -

Morgan Stanley believes the sale of the life business was critical to re-building an agile, simpler AMP. Retaining the business, while executing on the strategic overhaul to reshape the wealth division, will probably demand capital.

To salvage the sale, parties need to re-negotiate new terms, which are likely to be less favourable to AMP, in the broker's view. Morgan Stanley downgrades FY20/21 earnings for life business by more than -50%.

There is also a risk that an equity raising will be needed to fund the new strategy. Underweight maintained. Target is reduced to $1.50 from $1.80. Industry view is In-Line.

Target price is $1.50 Current Price is $1.78 Difference: minus $0.28 (current price is over target).
If AMP meets the Morgan Stanley target it will return approximately minus 16% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $1.97, suggesting upside of 10.8% (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

Ord Minnett rates AMP as Hold (3) -

The sale of the life business to Resolution Life is now unlikely to proceed at current terms because of challenges in meeting requirements for approval by the Reserve Bank of New Zealand.

Ord Minnett believes the original deal was poor value for AMP shareholders anyway. However, AMP is now left capital constrained and in need of investment. The broker maintains a Hold rating and trims the target to $2.10 from $2.17.

Target price is $2.10 Current Price is $1.78 Difference: $0.32
If AMP meets the Ord Minnett target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $1.97, suggesting upside of 10.8% (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

UBS rates AMP as Neutral (3) -

Resolution Life has informed AMP that the sale of AMP Life is highly unlikely to proceed in its current form. This reflects indications from the Reserve Bank of New Zealand that it has concerns about the deal.

Regardless, UBS notes AMP has indicated the value of the business has declined over the past year. While regaining franking credits could offset much of the reduction in value, the broker notes a softer economic backdrop, falling yields and pending legislation add further pressure to the stock.

With limited clarity on the issues, UBS maintains a Neutral rating ahead of the results. Target is reduced to $1.90 from $2.15.

Target price is $1.90 Current Price is $1.78 Difference: $0.12
If AMP meets the UBS target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $1.97, suggesting upside of 10.8% (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

Morgans rates AMS as Upgrade to Add from Hold (1) -

Following increased working capital flexibility and factoring in the recent launch of the Neon range, Morgans upgrades revenue estimates by 5% across FY20/21.

The broker believes the recent momentum in the company's products and the relatively fixed cost base should mean there is upside to forecasts upon successful execution. Given the returns on offer the rating is upgraded to Add from Hold.

The broker suggests additional partnerships can move the dial in terms of revenue/earnings uplift. Target is raised to $1.63 from $1.42.

Target price is $1.63 Current Price is $1.38 Difference: $0.25
If AMS meets the Morgans target it will return approximately 18% (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

Morgan Stanley rates ANN as Overweight (1) -

Morgan Stanley now has better visibility on the earnings drivers for FY19. FY20 FX headwinds are expected to be offset by lower raw material prices.

However, the global economic picture appears to be softening and the broker expects the lower end of the company's growth range for FY20 will be achieved.

The company does have exposure to non-cyclical industries which may offset some economic weakness.

Overweight rating and $29.44 target. Industry view is In-Line.

Target price is $29.44 Current Price is $27.03 Difference: $2.41
If ANN meets the Morgan Stanley target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $27.33, suggesting upside of 1.1% (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: 0.4

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

Morgans rates CIP as Hold (3) -

The company has completed a $70m placement at $3.05 per security and funds will be used to acquire three new industrial assets in Victoria and Queensland. The results are due on August 6 and guidance for earnings per share in FY19 is 18.8c with distributions of 18.4c.

Key near-term catalysts relate to M&A activity, in Morgans' view. The stock remains one of the few listed A-REITs offering pure exposure to Australian industrial property. Morgans maintains a Hold rating and raises the target to $2.97 from $2.77.

Target price is $2.97 Current Price is $3.17 Difference: minus $0.2 (current price is over target).
If CIP meets the Morgans 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: 0.0

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

Morgans rates DMP as Hold (3) -

Morgans reviews assumptions ahead of the results on August 21. Revenue growth of 12% and operating earnings (EBITDA) growth of 10% are expected. The broker still envisages risks to guidance based on store roll-out and margins.

The company will move away from providing formal earnings growth targets from FY20 and the broker expects it to reiterate the 3-5 year annual footprint and same-store sales growth.

Hold rating maintained. Target is reduced to $44.89 from $47.27.

Target price is $44.89 Current Price is $38.58 Difference: $6.31
If DMP meets the Morgans target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $42.88, suggesting upside of 11.2% (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

Morgans rates GDF as Hold (3) -

The company has acquired four industrial assets in Brisbane for $31m. This has been funded via new debt, a $6m placement and proceeds from the divestment of the Murarrie asset. There is no impact on FY19 guidance. Results are due on August 23.

Incorporating the acquisitions and divestment, Morgans estimates the portfolio is currently valued at around $360m. Hold rating maintained. Target is raised to $1.45 from $1.40.

Target price is $1.45 Current Price is $1.44 Difference: $0.01
If GDF meets the Morgans target it will return approximately 1% (excluding dividends, fees and charges).

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 MGX as Sell (5) -

June quarter production numbers were in line with Citi's expectations. Pricing was strong, with Koolan fines at US$106/dmt.

Lower shipments in the quarter and a higher cash costs, however, cause Citi to downgrade FY19 estimates by -33%. FY20/21 estimates are upgraded by 26/19% amid higher iron ore price realisation and the inclusion of rail access credits.

Sell/High Risk maintained. Target is steady at $0.85.

Target price is $0.85 Current Price is $0.95 Difference: minus $0.1 (current price is over target).
If MGX meets the Citi target it will return approximately minus 11% (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

Macquarie rates MGX as Outperform (1) -

Mt Gibson's June Q sales were impacted by two deferred shipments. The company will now commence the sale of low-grade stockpiles while the broker notes high-grade premiums are being depressed at lofty iron ore prices.

The broker nevertheless sees Koolan Island sales ramping up in a strong price environment and the company retains a solid cash balance. Outperform retained, target falls to $1.10 from $1.20.

Target price is $1.10 Current Price is $0.95 Difference: $0.15
If MGX meets the Macquarie target it will return approximately 16% (excluding dividends, fees and charges).

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 MYX as Neutral (3) -

Credit Suisse reviews script volume trends for the company's key generic and specialty brands. With limited improvement in the final six weeks of FY19 the broker envisages downside risk to consensus forecasts.

The broker also suspects Mayne Pharma will record an impairment of the carrying value of generic assets at the results. Despite forecasting a decline in generics revenue and gross profit in FY20, Credit Suisse expects a 12% increase in group operating earnings (EBITDA) in FY20.

Neutral rating maintained. Target is reduced to 58c from 64c.

Target price is $0.58 Current Price is $0.49 Difference: $0.09
If MYX meets the Credit Suisse target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $0.58, suggesting upside of 18.9% (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

Citi rates NHF as Downgrade to Sell from Neutral (5) -

Citi marks to market forecasts to allow for strong equity markets in the second half and the fall in bond yields. The broker now allows for 2.85% rate increases for the next two years but also for a slower reduction in net margins.

The broker continues to expect a solid FY19 result but wonders whether the relief rally following the election result has gone too far. Rating is downgraded to Sell from Neutral and the target increased to $7.05 from $5.85.

Target price is $7.05 Current Price is $7.65 Difference: minus $0.6 (current price is over target).
If NHF meets the Citi target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $6.04, suggesting downside of -21.0% (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

Morgans rates NWL as Hold (3) -

Morgans expects FY19 underlying net profit of $35.1m, up 21%. The primary focus of the results is expected to be around revenue margins, including the company's ability to manage compression or offset declining cash balances if further reductions to official rates are experienced.

The outlook for funds under management growth remains strong, assisted by the ANZ Private transition. Morgans remains cautious and retains a Hold rating and $8.86 target.

Target price is $8.86 Current Price is $7.80 Difference: $1.06
If NWL meets the Morgans target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $8.10, suggesting upside of 3.8% (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 OZL as Hold (3) -

Ord Minnett observes there is still significant development risk in Brazil around approvals, the CentroGold injunction and the use of tailings dams. The broker suspects the portfolio will consume a disproportionate share of management time, given the complexities.

The company has recently updated, with significant downward revisions to resource estimates. Ord Minnett lowers forecasts and reduces the target to $10.30 from $10.50. Hold maintained.

Target price is $10.30 Current Price is $9.67 Difference: $0.63
If OZL meets the Ord Minnett target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $10.99, suggesting upside of 13.6% (ex-dividends)

The company's fiscal year ends in December.

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

Citi rates PPT as Neutral (3) -

Citi lifts FY19 estimates for earnings per share by 2%, mainly from unrealised gains on financial assets in the second half. FY20 estimates are reduced by -3.5%.

The new growth strategy makes strategic sense to the broker, but more tangible milestones are awaited from the new CEO. Neutral rating maintained. Target is reduced to $39.50 from $41.00.

Target price is $39.50 Current Price is $39.41 Difference: $0.09
If PPT meets the Citi target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $39.63, suggesting upside of 0.6% (ex-dividends)

The company's fiscal year ends in June.

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

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

The company has announced -$1.1bn in net outflows for the June quarter. By channel, underlying outflows came from the direct & advised retail as well as institutional.

Morgan Stanley calculates higher margin retail channels have now had persistent outflows for the past seven quarters.

The broker believes this strengthens the case for seeking growth opportunities via acquisitions and refreshing the distribution efforts. Equal-weight rating. Target is $38. Industry view: In-line.

Target price is $38.00 Current Price is $39.41 Difference: minus $1.41 (current price is over target).
If PPT meets the Morgan Stanley target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $39.63, suggesting upside of 0.6% (ex-dividends)

The company's fiscal year ends in June.

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