Australian Broker Call

Citi rates AGL as Sell (5) -

Citi attributes the outperformance in the share price to the on-market buyback, which has constituted 14% of traded volume since August 2019. This is enough to have influenced the share price.

There is also an improvement in sentiment derived from reduced political pressure. However, the buybacks will end and renewed political pressure is entirely possible, the broker points out.

Hence, Citi is cautious about the earnings trajectory and considers the PE multiple too rich. Sell rating and $16.88 target maintained.

Target price is $16.88 Current Price is $20.57 Difference: minus $3.69 (current price is over target).
If AGL meets the Citi target it will return approximately minus 18% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $19.03, suggesting downside of -7.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: -0.6

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

Ord Minnett rates BPT as Downgrade to Hold from Accumulate (3) -

Ord Minnett is positive on the outlook for Beach Energy as it offers good production growth and strong cash flow.

However, the share price has outperformed in recent months and the broker downgrades to Hold from Accumulate. Target is raised to $2.65 from $2.60.

Target price is $2.65 Current Price is $2.75 Difference: minus $0.1 (current price is over target).
If BPT meets the Ord Minnett target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.39, suggesting downside of -13.0% (ex-dividends)

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

Credit Suisse rates CSL as Outperform (1) -

Credit Suisse updates assumptions and increases estimates for earnings per share by 2%. The broker believes current market dynamics, as well as the company's leading position in immunoglobulin, support 11% earnings growth in FY20 and management is likely to improve guidance at the first half results.

The broker retains an Outperform rating and raises the target to $320 from $305. Data from the US has indicated an early start to the northern hemisphere flu season with more earnings upside potential in FY21.

Target price is $320.00 Current Price is $300.81 Difference: $19.19
If CSL meets the Credit Suisse target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $281.84, suggesting downside of -6.3% (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

UBS rates DHG as Downgrade to Sell from Neutral (5) -

UBS believes new listings are now on track to return to positive growth in the second half. FY20 earnings forecasts are unchanged but FY21-22 are increased by 11-12% on higher assumed listings growth.

However, even on these expectations, the stock now trades above the broker's discounted cash flow valuation and the rating is downgraded to Sell from Neutral. Target is raised to $3.50 from $3.20.

Target price is $3.50 Current Price is $3.84 Difference: minus $0.34 (current price is over target).
If DHG meets the UBS target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.20, suggesting downside of -16.8% (ex-dividends)

The company's fiscal year ends in June.

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

UBS rates FXL as Upgrade to Buy from Neutral (1) -

UBS explores the merits of the company's refreshed strategy around 'buy now pay later' amid the launch of new products. The broker believes a simplified brand strategy makes sense and should help drive cost cutting.

The broker also considers the market is becoming more positive on the new strategy and assesses value is on offer, upgrading to Buy from Neutral. Target is raised to $2.30 from $1.90.

Target price is $2.30 Current Price is $2.17 Difference: $0.13
If FXL meets the UBS target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $2.14, suggesting downside of -1.6% (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 INR as Buy (1) -

Ord Minnett notes a strong start for lithium in 2020 with ASX-listed operators generally up 20%. The broker assesses equities are pricing in the bottom of the lithium market.

If the sector is re-rating Ioneer is due a catch-up, in the broker's view, with a number of catalysts for the near term including completing the DFS, offtake and a strategic partner arrangement.

A Speculative Buy rating is reiterated. Target is $0.40.

Target price is $0.40 Current Price is $0.19 Difference: $0.21
If INR meets the Ord Minnett target it will return approximately 111% (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 IPL as Upgrade to Equal-weight from Underweight (3) -

Morgan Stanley observes diammonium phosphate markets have demonstrated improved pricing and this is now coupled with more reasonable valuations.

This leaves the risks for the stock evenly balanced and the rating is upgraded to Equal-weight from Underweight. Cautious industry view. Target is steady at $3.20.

It appears the recent capacity curtailments may have prompted some upside to prices. Meanwhile, explosives markets remain relatively supportive, with robust volumes and stable supply and demand.

Target price is $3.20 Current Price is $3.35 Difference: minus $0.15 (current price is over target).
If IPL 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 $3.52, suggesting upside of 5.2% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.3

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

Citi rates NEA as Buy (1) -

Buy/High Risk rating and $4.05 price target retained as Citi analysts report bushfires across Australia are not expected to have any impact on Nearmap from a customer service perspective. It is not anticipated that capture costs will rise as a result either.

The analysts seem to have had a chat with company management from which these conclusions have been drawn. The analysts explain current customer service level agreements are not period specific, hence any misses can simply be done at a later stage.

Irrespectively, management has told Citi the company was able to complete its last Sydney capture in 2019 before conditions in Sydney became poor.

Target price is $4.05 Current Price is $2.71 Difference: $1.34
If NEA meets the Citi target it will return approximately 49% (excluding dividends, fees and charges).

Current consensus price target is $3.90, suggesting upside of 43.9% (ex-dividends)

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

Citi rates PPT as Neutral (3) -

Citi notes significant growth challenges for the company although, at present, the positive leverage to the equity market is proving attractive.

The broker lifts FY20 estimates for earnings per share by 1.3% and FY21 by 1.1%, reflecting the slightly better second quarter update.

Still, the investment performance remains sub-optimal and the broker retains a Neutral rating. Target is raised to $40.90 from $38.00.

Target price is $40.90 Current Price is $42.45 Difference: minus $1.55 (current price is over target).
If PPT 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 $38.89, suggesting downside of -8.4% (ex-dividends)

The company's fiscal year ends in June.

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 PPT as Neutral (3) -

Funds under management totalled $26.3bn at the end of December, up 1% during the quarter. This was ahead of Credit Suisse estimates and the company has reported its first positive quarter of flows in nearly three years.

However, the broker points out this will not necessarily translate into earnings upgrades. The improvement was driven by $1.1bn of inflow into lower margin cash/fixed income product.

Lower-margin fixed income funds under management increased 13% while higher-margin equities declined -5%. The broker retains a Neutral rating and $41 target.

Target price is $41.00 Current Price is $42.45 Difference: minus $1.45 (current price is over target).
If PPT 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 $38.89, suggesting downside of -8.4% (ex-dividends)

The company's fiscal year ends in June.

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

Ord Minnett rates PPT as Hold (3) -

Perpetual recorded positive flows in the December quarter of $300m. Higher-margin equities outflows were more than offset by lower-margin cash and fixed income strategies.

Ord Minnett notes the investor focus is on plans to grow the business via acquisition and, at this stage, it is difficult to assess growth plans and the potential success.

Hold rating maintained. Target rises to $40.00 from $38.50.

Target price is $40.00 Current Price is $42.45 Difference: minus $2.45 (current price is over target).
If PPT meets the Ord Minnett target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $38.89, suggesting downside of -8.4% (ex-dividends)

The company's fiscal year ends in June.

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

UBS rates PPT as Neutral (3) -

The company has enjoyed a return to positive flows in the second quarter with funds under management ahead of expectations. UBS notes this is the first positive quarter after 10 consecutive quarters of net outflows.

However, lower margin institutional cash and fixed income inflows masked growing intermediary net outflows across Australian equity funds. This is the area where UBS envisages elevated risks. Neutral rating maintained. Target rises to $40.60 from $37.90.

Target price is $40.60 Current Price is $42.45 Difference: minus $1.85 (current price is over target).
If PPT 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 $38.89, suggesting downside of -8.4% (ex-dividends)

The company's fiscal year ends in June.

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 QBE as Upgrade to Outperform from Neutral (1) -

Credit Suisse observes questions are being asked about the nature of the outlook statements for FY20. The broker concludes that the FY20 combined operating ratio guidance is achievable and should improve further in FY21.

The broker remains confident in the recovery potential of QBE's earnings as well as balance sheet strength and believes any reserving risk is manageable. Rating is upgraded to Outperform from Neutral and the target raised to $15.00 from $12.55.

Target price is $15.00 Current Price is $13.79 Difference: $1.21
If QBE meets the Credit Suisse target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $13.49, suggesting downside of -2.2% (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: 0.5

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

Morgans rates RIO as Hold (3) -

Morgans envisages potential for another strong quarter for the company's Pilbara iron ore operations. This would carry the full year result to the high end of guidance of 320-330mt.

In the production result the broker will also be keen to assess how the major copper operations are going after mixed performances recently.

Target is raised to $96.38 from $91.64. Hold maintained.

Target price is $96.38 Current Price is $103.30 Difference: minus $6.92 (current price is over target).
If RIO meets the Morgans target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $98.98, suggesting downside of -4.2% (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: 0.1

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

Citi rates RSG as Buy (1) -

The company will divest its high-cost Ravenswood mine for an initial $100m. This is no surprise to Citi and considered a good outcome, allowing Resolute Mining to deploy resources to core assets in West Africa and repay debt.

The broker welcomes a simplification of the portfolio. Buy/High Risk rating maintained. Target is $2.

Target price is $2.00 Current Price is $1.18 Difference: $0.82
If RSG meets the Citi target it will return approximately 69% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

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 RSG as Outperform (1) -

Resolute Mining will sell Ravenswood gold mine for $50m cash, a $50m promissory note and up to $200m in contingent payments. Macquarie values the deal at $150m.

While the deal provides balance sheet relief, the broker suggests that the ramp up of Syama and the refinancing of the Taurus facility remain the key catalysts.

Outperform rating maintained. Target is raised to $1.40 from $1.30.

Target price is $1.40 Current Price is $1.18 Difference: $0.22
If RSG meets the Macquarie target it will return approximately 19% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

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 SAR as Initiation of coverage with Accumulate (2) -

The portfolio has been upgraded by the addition of a large, long-life asset in the Super Pit which could help grow production to 800,000 ounces per annum by FY24.

Ord Minnett believes Saracen Mineral presents a strong investment case, modelling a 10-year mine life at both Carosue Dam and Thunderbox and 15 years of reserves at Super Pit.

The broker initiates coverage with an Accumulate rating and $4 target.

Target price is $4.00 Current Price is $3.65 Difference: $0.35
If SAR meets the Ord Minnett target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $4.03, suggesting upside of 10.5% (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

Morgans rates STO as Downgrade to Hold from Add (3) -

Having achieved the target, Morgans downgrades its rating on Santos to Hold from Add. Target is raised to $8.86 from $8.67.

Production growth, fuelled by development and acquisition, will remain a feature of the company's near-term operating results, in the broker's view. Morgans expects the low end of the guidance range of 73-77 mmboe to be achieved in 2019.

Target price is $8.86 Current Price is $8.86 Difference: $0
If STO meets the Morgans target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $8.69, suggesting downside of -1.9% (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

Ord Minnett rates SUL as Downgrade to Hold from Accumulate (3) -

Ord Minnett assesses there is downside risk to FY20 sales growth as the company is exposed to the Australian bushfires because of its focus on camping and outdoor goods.

The strong share price performance in 2019 has reduced the valuation support, although the broker acknowledges the PE multiple remains at a discount to peers.

Ord Minnett would become more constructive at a lower share price and downgrades to Hold from Accumulate. Target is steady at $10.

Target price is $10.00 Current Price is $9.80 Difference: $0.2
If SUL meets the Ord Minnett target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $9.86, suggesting upside of 0.7% (ex-dividends)

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.6

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

Macquarie rates TAH as Outperform (1) -

Macquarie reviews the stock ahead of the first half result on February 19. Wagering has challenges but the broker considers this division undervalued.

Hence, a re-rating opportunity exists, given lower expectations and the -50% discount that the stock is trading at compared with global peers.

The 5% dividend yield should also provide price support at current levels, in the broker's view. Outperform maintained. Target is raised to $5.25 from $5.10.

Target price is $5.25 Current Price is $4.71 Difference: $0.54
If TAH meets the Macquarie target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $4.94, suggesting upside of 5.0% (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

Credit Suisse rates TWE as Outperform (1) -

One of the most challenging issues for Treasury Wine, Credit Suisse believes, is the transition to normal growth from excessive growth in Asia.

If investors become comfortable with the company's Chinese strategy and believe it can deliver sustainable growth rates, the stock could recapture its PE premium, in the broker's view.

Yet, the stock is now trading at a discount to peers and the ASX Industrials ex financials. Credit Suisse lowers FY21 and FY22 estimates for earnings per share by -2-4% to reflect a more conservative level of growth in Asia. Around 13% growth in earnings ( EBITS) is modelled.

Outperform rating is maintained and the target raised to $20.30 from $19.30.

Target price is $20.30 Current Price is $17.47 Difference: $2.83
If TWE meets the Credit Suisse target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $19.14, suggesting upside of 9.6% (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