Australian Broker Call

Morgans rates ACK as Initiation of coverage with Add (1) -

The company has delivered average investment bond sales growth of 19% per annum since 2008. The profit trajectory  continues to improve, with Morgans noting profits increased 34% in FY16.

The broker believes this success validates the company's focus on the investment bond market and future growth prospects are solid. Also, regulatory changes limiting contributions to superannuation will appear to be a tailwind for the company.

Morgans initiates coverage with an Add rating and 55c target.

Target price is $0.55 Current Price is $0.46 Difference: $0.09
If ACK meets the Morgans target it will return approximately 20% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 1.0

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

Citi rates ALL as Buy (1) -

Bottom line: Aristocrat is positioned for a comfortable beat of its own guidance for FY16, point out analysts at Citi. It is their view the upcoming results release is likely to be a positive catalyst for the stock.

Citi's FY16 NPATA estimate of $391m is 7% above guidance of $366m and 2% above market consensus of $382m, point out the analysts. Their forecast for FY17 is for 20% growth, 7% above consensus. Buy. Target $18.75.

Target price is $18.75 Current Price is $14.49 Difference: $4.26
If ALL meets the Citi target it will return approximately 29% (excluding dividends, fees and charges).

Current consensus price target is $16.88, suggesting upside of 19.2% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY16:

Forecast for FY17:

Market Sentiment: 0.8

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

Morgan Stanley rates APA as Downgrade to Underweight from Overweight (5) -

Morgan Stanley anticipates regulated utilities will outperform contracted utilities, expecting a continued rotation away from bond proxies. The broker estimates a large opportunity for Australian energy infrastructure.

While expecting the final outcome of this year's gas market reviews will be benign for APA, the broker believes changes to the coverage test could take around 12 months to implement and this is unhelpful for share price sentiment and growth prospects in the near term.

The broker downgrades to Underweight from an Overweight rating. Cautious industry view retained. Target drops to $7.26 from $9.70.

Target price is $7.26 Current Price is $7.39 Difference: minus $0.13 (current price is over target).
If APA meets the Morgan Stanley target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $8.89, suggesting upside of 21.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: -0.1

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

Morgan Stanley rates AST as Upgrade to Overweight from Underweight (1) -

Morgan Stanley anticipates regulated utilities will outperform contracted utilities, expecting a continued rotation away from bond proxies. The broker estimates a large opportunity for Australian energy infrastructure.

The broker expects more detail on the efficiency and growth targets when the company reports on November 18.

Morgan Stanley upgrades to Overweight from Underweight on relative valuation. Cautious industry view. Target is reduced to $1.55 from $1.63.

Target price is $1.55 Current Price is $1.45 Difference: $0.1
If AST meets the Morgan Stanley target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $1.65, suggesting upside of 14.3% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.4

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

Ord Minnett rates BKL as Accumulate (2) -

 The company has launched its Singles Day Flash Sale on its website. Items actively promoted were key products it sells into China. Ord Minnett  believes the long-term outlook is very positive.

The broker expects volatility in the share price will continue in the near term as the industry adjusts to regulatory changes but the longer-term thematic of foreign consumer demand for Australian products will continue.

The broker maintains an Accumulate rating and $120 price target.

Target price is $120.00 Current Price is $116.75 Difference: $3.25
If BKL meets the Ord Minnett target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $118.33, suggesting upside of 1.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.5

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

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

Morgans expects the first half result will be affected by soft like-for-like sales growth because of the aggressive clearance activity by Masters as it exits the market.

It will also be affected by lower gross margin in response to the lower Australian dollar/hedge rate and lower operating cost leverage.

This should be partially offset by the acquisition of three franchise stores in the first half. With the stock trading within 10% of the broker's new target, the rating is downgraded to Hold from Add. Target is reduced to $1.66 from $1.78..

Target price is $1.66 Current Price is $1.53 Difference: $0.135
If BLX meets the Morgans target it will return approximately 9% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.0

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

Deutsche Bank rates BXB as Buy (1) -

With nearly 50% of its revenue generated in the Americas, Deutsche Bank expects that Brambles should be well placed to benefit from any GDP growth post the US election.

This should be aided by the company's planned investment program. Buy rating and $14.40 target retained.

Target price is $14.40 Current Price is $11.60 Difference: $2.8
If BXB meets the Deutsche Bank target it will return approximately 24% (excluding dividends, fees and charges).

Current consensus price target is $13.31, suggesting upside of 14.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

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

Morgan Stanley rates DUE as Downgrade to Equal-weight from Overweight (3) -

Morgan Stanley anticipates regulated utilities will outperform contracted utilities, expecting a continued rotation away from bond proxies. The broker estimates a large opportunity for Australian energy infrastructure.

The stock remains the highest-yielding under coverage which the broker believes rewards investors for the manageable merchant and refinancing risk.

The broker downgrades to Equal-weight from Overweight as the downside risk is envisaged deepening with the valuation headwind. Target is lowered to $2.32 from $2.62 and Cautious industry view retained.

Target price is $2.32 Current Price is $2.21 Difference: $0.11
If DUE meets the Morgan Stanley target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $2.44, suggesting upside of 12.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.0

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

Morgan Stanley rates EVN as Overweight (1) -

A site tour of Cowal mine, 30% of the company's production, confirmed to Morgan Stanley this mine offers further opportunity to add value over time.

The broker believes the pull back in the shares is an opportunity to accumulate. Morgan Stanley retains an Overweight rating. Industry view: Attractive. Target is $2.90.

Target price is $2.90 Current Price is $2.28 Difference: $0.62
If EVN meets the Morgan Stanley target it will return approximately 27% (excluding dividends, fees and charges).

Current consensus price target is $2.60, suggesting upside of 21.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.9

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

Morgans rates MPL as Hold (3) -

The commentary at the AGM points to a softening top line in the first quarter. The company still expects some normalisation in claims trends from favourable FY16 level.

Morgans maintains a Hold rating and reduces its target to $2.47 from $2.51. FY17 forecast are unchanged while FY18 is lowered by 2%.

Target price is $2.47 Current Price is $2.47 Difference: $0
If MPL meets the Morgans target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $2.67, suggesting upside of 8.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.1

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

Credit Suisse rates OZL as Downgrade to Underperform from Neutral (5) -

Credit Suisse found the cost accounting for the Carrapateena pre-feasibility study did not add up. Management has now reconciled some of the modelling.

The broker is still sceptical regarding some of the numbers but revises earnings and valuation to reflect the implementation of a revised model now that substantial differences have been explained.

There remain several unresolved risk factors regarding the project and Credit Suisse downgrades to Underperform from Neutral. Target is raised to $6.35 from $5.80.

Target price is $6.35 Current Price is $7.90 Difference: minus $1.55 (current price is over target).
If OZL meets the Credit Suisse target it will return approximately minus 20% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $6.38, suggesting downside of -16.9% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY16:

Forecast for FY17:

Market Sentiment: -0.1

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

Credit Suisse rates QUB as Neutral (3) -

A third Melbourne terminal operator will increase competition, Credit Suisse believes. Patrick (50% owned by Qube) held 48.3% market share across its four container terminals in FY16. The new competitor is a fully automated terminal which will start operations into 2017.

Credit Suisse suspects price competition will hit margins and expects the market share of Patrick will decline to 39% by 2021. Nevertheless, the broker envisages upside in the ports & bulks segment as Qube's resource customers benefit from more favourable market conditions.

Credit Suisse retains a Neutral rating and $2.30 target.

Target price is $2.30 Current Price is $2.24 Difference: $0.06
If QUB meets the Credit Suisse target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $2.63, suggesting upside of 17.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.5

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

Morgan Stanley rates SKI as Upgrade to Overweight from Equal-weight (1) -

Morgan Stanley anticipates regulated utilities will outperform contracted utilities, expecting a continued rotation away from bond proxies. The broker estimates a large opportunity for Australian energy infrastructure.

Spark Infra provides a good simple yield, in the broker's opinion, underpinned by high quality regulated assets. Rating is upgraded to Overweight from Equal-weight. Target is reduced to $2.21 from $2.50. Industry view is Cautious.

Target price is $2.21 Current Price is $2.02 Difference: $0.19
If SKI meets the Morgan Stanley target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $2.51, suggesting upside of 23.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY16:

Forecast for FY17:

Market Sentiment: 0.7

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

UBS rates STO as Buy (1) -

Santos has advised that Hony Capital has acquired a 2.25% stake in November, now owning 3.2%. The Chinese private equity firm is rebuilding its position after selling an 11.7% stake to ENN Ecological in March.

UBS finds it difficult to ascertain what to make of Hony's move, other than it sends a clear signal that Chinese private equity envisages value in Santos at current levels.The broker observes the company's high net debt means the equity value is highly leveraged to the oil price.

Buy rating and $4.50 target retained.

Target price is $4.50 Current Price is $3.81 Difference: $0.69
If STO meets the UBS target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $4.93, suggesting upside of 31.2% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY16:

Forecast for FY17:

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 TAH as Overweight (1) -

Proprietary survey data signals to Morgan Stanley that strong competition continues in online wagering, capping expectations for the first half results.

Attractive benefits for the longer term are expected from regulatory changes and a merger with Tatts ((TTS)) and little of this is factored into the price in the broker's view. Hence, Morgan Stanley retains an Overweight rating and In-Line industry view. Target is $5.00.

Target price is $5.00 Current Price is $4.58 Difference: $0.42
If TAH meets the Morgan Stanley target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $4.86, suggesting upside of 6.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.1

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

UBS rates TFC as Buy (1) -

The company's shareholders have approved changing the name to Quintis Ltd. The name change marks the end of its formative stage, having built an Indian sandalwood plantation  that is now beginning to be harvested in material volumes.

The company has forward sold the majority of its production over the next five years and recently refinanced its notes to 2023, substantially de-risking the investment in the broker's view.

UBS maintains a Buy rating and $3.20 target.

Target price is $3.20 Current Price is $1.40 Difference: $1.805
If TFC meets the UBS target it will return approximately 129% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 1.0

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

Morgans rates TOX as Reduce (5) -

The company will acquire the Daniels businesses and assets for $186m.  Daniels provides medical waste solutions. Morgans considers the multiple being paid is full, but acceptable if the growth rate is maintained in FY18/19.

While management considers the transaction to be 16% accretive, the broker believes that, while it will contribute positively, the acquisition is not significant to earnings.

The company is now guiding for EBITDA to be at the lower end of its 5-10% growth range. Morgans suspects the core business is going backwards and awaits clarity on the Chevron contract.

At this stage the risks outweigh the rewards and the broker maintains a Reduce rating. Target  is lowered to $2.02 from $2.14.

Target price is $2.02 Current Price is $2.30 Difference: minus $0.28 (current price is over target).
If TOX meets the Morgans target it will return approximately minus 12% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.50, suggesting upside of 8.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: -0.2

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

Morgans rates VRT as Hold (3) -

The company has noted softer IVF cycle numbers in particular in NSW and Queensland. The company has lost market share in Victoria. Morgans maintains a cautious stance.

The main downside risk to the broker's target is the continuing low growth in cycle numbers in the eastern states. More normal long-term growth estimates are envisaged around 3%. Hold rating retained. Target is reduced to $6.83 from $7.50

Target price is $6.83 Current Price is $6.10 Difference: $0.73
If VRT meets the Morgans target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $7.70, suggesting upside of 25.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.3

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

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

The company will sell the Zuji business in Hong Kong  and Singapore  for $56m. This compares with the purchase price of $30m. UBS notes the incoming cash for the deal will offset $36m cash upload for the recent Thomas Cook tie up.

The broker notes trading to date has been strong for FY17 and guidance for EBITDA from continuing operations is $60m. UBS upgrades forecasts by 1-2% for FY17-19.

The broker upgrades to Buy from Neutral. Target is raised to $10.72 from $9.85.

Target price is $10.72 Current Price is $9.92 Difference: $0.8
If WEB meets the UBS target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $10.57, suggesting upside of 4.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.5

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