Australian Broker Call

Macquarie rates AGL as Downgrade to Underperform from Neutral (5) -

Back in May, AGL flagged several headwinds that would impact on the company in FY20. Yet Macquarie points out consensus estimates have barely changed. Cash generation is strong and the balance sheet under-geared but the broker believes AGL has now entered a multi-year earnings reduction cycle, forecasting a -30% drop by 2023.

Further downside risk is added as 60-70% of earnings are coal related, and under threat from state-based policies, technology and any change in government. Macquarie cuts its target to $19.50 from $21.00 and downgrades to Underperform.

Target price is $19.50 Current Price is $20.99 Difference: minus $1.49 (current price is over target).
If AGL meets the Macquarie target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $19.06, suggesting downside of -9.2% (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 BXB as Neutral (3) -

The broker has reassessed its valuation model for Brambles post IFCO sale to better account for cash flow and debt maturity profile, along with improvements in CHEP Americas, the buyback and an expected special dividend. Target rises to $12.25 from $$11.20.

On a 22x forward PE valuation, the broker considers the stock fairly priced. Neutral retained.

Target price is $12.25 Current Price is $13.13 Difference: minus $0.88 (current price is over target).
If BXB meets the Macquarie target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $12.94, suggesting downside of -1.4% (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

Macquarie rates CYB as Outperform (1) -

In the wake of CYBG's June Q earnings report, the broker expects margins to remain under pressure given competition and a low rate environment. The report reflected challenging UK conditions which are not expected to improve any time soon.

Thus despite the stock offering longer term fundamental value, which underpins the broker's Outperform rating, earnings forecasts have been cut and target falls to $4.10 from $5.30, which includes a discount for Brexit risk.

Target price is $4.10 Current Price is $3.10 Difference: $1
If CYB meets the Macquarie target it will return approximately 32% (excluding dividends, fees and charges).

Current consensus price target is $3.63, suggesting upside of 17.1% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY19:

Forecast for FY20:

This company reports in GBP. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: 0.7

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

Morgans rates CYB as Hold (3) -

The trading update disappointed Morgans in terms of loan growth and the net interest margin. Underlying estimates for earnings per share are reduced by -13% for FY20 and FY21.

The broker was disappointed the mortgage book contracted by -0.2% over the third quarter. Morgans understands the significant volume of redemptions being experienced will continue into the fourth quarter. Business lending growth was also disappointing.

The broker maintains a Hold rating and reduces the target to $3.16 from $3.57.

Target price is $3.16 Current Price is $3.10 Difference: $0.06
If CYB meets the Morgans target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $3.63, suggesting upside of 17.1% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY19:

Forecast for FY20:

This company reports in GBP. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: 0.7

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

Morgan Stanley rates LNK as Overweight (1) -

Morgan Stanley believes, while stock screens cheaply, a re-rating requires a resolution of the Woodford issue as well as more clarity regarding the recent trading update.

The broker hopes the results on August 29 will clarify how much of the recent earnings downgrade came from Brexit-related weakness in corporate activity.

Overweight rating retained. Target is reduced to $7.75 from $8.20. Industry view is In-Line.

Target price is $7.75 Current Price is $5.10 Difference: $2.65
If LNK meets the Morgan Stanley target it will return approximately 52% (excluding dividends, fees and charges).

Current consensus price target is $6.73, suggesting upside of 32.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.8

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

Citi rates LVT as Buy (1) -

Citi was pleased with the cash flow in the fourth quarter. The broker lowers FY20-21 operating earnings (EBITDA) estimates by -$1-2m to reflect a more conservative cost base.

The broker expects FY20 will be a seminal year for the company with the N3 sales force hitting full momentum, the inclusion of a 7.5 months contribution from the Wizdom acquisition and increasing prominence of Hyperfish.

Buy/High Risk rating reiterated. Target is raised to $1.05 from $0.94.

Target price is $1.05 Current Price is $0.50 Difference: $0.55
If LVT meets the Citi target it will return approximately 110% (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

Citi rates NST as Neutral (3) -

Gold production was a record in the June quarter although sales guidance missed expectations. Citi maintains a Neutral rating pending the release of FY20 guidance on August 1.

Current Price is $13.05. Target price not assessed.

Current consensus price target is $9.01, suggesting downside of -31.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: -0.7

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

Credit Suisse rates NST as Underperform (5) -

Credit Suisse found the June quarter production very solid, demonstrating the capacity of operations yet this missed guidance and expectations.

The broker points out sustaining elevated grades for more than a single quarter has been a challenge for the company.

Credit Suisse maintains an Underperform rating and $6.10 target.

Target price is $6.10 Current Price is $13.05 Difference: minus $6.95 (current price is over target).
If NST meets the Credit Suisse target it will return approximately minus 53% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $9.01, suggesting downside of -31.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: -0.7

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

Macquarie rates NST as Downgrade to Underperform from Neutral (5) -

Northern Stars June Q production missed Macquarie's forecast by 7% and costs were 8% higher, reflecting weakness at Pogo and Kalgoorlie offsetting strength at Jundee. Pogo has nevertheless shown signs of gradual operational improvement.

The company will provide FY20 guidance tomorrow ahead of its strategy day on Saturday. In the meantime, Macquarie downgrades to Underperform from Neutral. Target falls to $11.00 from $11.60.

Target price is $11.00 Current Price is $13.05 Difference: minus $2.05 (current price is over target).
If NST meets the Macquarie target it will return approximately minus 16% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $9.01, suggesting downside of -31.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: -0.7

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

Morgan Stanley rates NST as Underweight (5) -

Although strong, the June quarter production missed guidance on expectations. Morgan Stanley suspects guidance, in the first place, was too high.

The company is positive about FY20 but has not provided guidance as yet (expected on August 1).

Underweight rating. Industry view is Attractive. Target is $7.15.

Target price is $7.15 Current Price is $13.05 Difference: minus $5.9 (current price is over target).
If NST meets the Morgan Stanley target it will return approximately minus 45% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $9.01, suggesting downside of -31.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: -0.7

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

UBS rates NST as Sell (5) -

The June quarter was weaker than UBS expected with production of 226,000 ounces below guidance issued in March. The turnaround at Pogo is taking longer than UBS anticipated, in part because of the late arrival of new equipment.

UBS believes the exposure to record gold prices and sector-leading production growth is more than priced into the stock. Sell rating maintained. Target is reduced to $10.00 from $10.60.

Target price is $10.00 Current Price is $13.05 Difference: minus $3.05 (current price is over target).
If NST meets the UBS target it will return approximately minus 23% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $9.01, suggesting downside of -31.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: -0.7

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

Citi rates ORI as Neutral (3) -

Citi believes, with the transformation of the core business gaining momentum, earnings growth over the next couple of years is well supported. High-technology products are expected to deliver the next leg of growth.

The company has reaffirmed earnings (EBIT) guidance for FY19.

The broker raises the target to $21.50 from $20.00 and retains a Neutral rating as the stock is considered fairly valued.

Target price is $21.50 Current Price is $21.89 Difference: minus $0.39 (current price is over target).
If ORI meets the Citi target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $20.29, suggesting downside of -7.3% (ex-dividends)

The company's fiscal year ends in September.

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 ORI as Neutral (3) -

Credit Suisse found the increasing evidence of the uptake of technology and improved manufacturing reliability were favourable highlights of the company's strategy update.

Demand growth and tighter supply are also underpinning Orica. Credit Suisse is more confident in the supply/demand and product mix, lifting margin assumptions through FY22-25.

Neutral maintained. Target is raised to $21.22 from $19.24.

Target price is $21.22 Current Price is $21.89 Difference: minus $0.67 (current price is over target).
If ORI 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 $20.29, suggesting downside of -7.3% (ex-dividends)

The company's fiscal year ends in September.

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

Macquarie rates ORI as Neutral (3) -

Orica's investor day provided an upbeat tone with regard a positive demand outlook, improved manufacturing and earnings growth in Services and technology, the broker notes. Technology was the major focus. There was no more bad news on Burrup, but still plenty of work to do.

Target rises to $20.85 from $19.40 to reflect a higher market multiple and lower risk free rate assumption. Forecast compound annual earnings growth of 8% should support the stock but the current price is fair, the broker suggests. Neutral retained.

Target price is $20.85 Current Price is $21.89 Difference: minus $1.04 (current price is over target).
If ORI 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 $20.29, suggesting downside of -7.3% (ex-dividends)

The company's fiscal year ends in September.

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 ORI as Equal-weight (3) -

Morgan Stanley found the investor briefing positive and is now more confident that the company can break its five-year earnings range (EBIT) of $600-700m in FY20.

Management commentary has indicated incremental upside in Latin America, Minova and GroundProbe. Nevertheless, the broker assesses, without further earnings upside, the current share price is fair value.

Equal-weight maintained. Target is raised to $21 from $20. Industry view is Cautious.

Target price is $21.00 Current Price is $21.89 Difference: minus $0.89 (current price is over target).
If ORI 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 $20.29, suggesting downside of -7.3% (ex-dividends)

The company's fiscal year ends in September.

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

Morgans rates ORI as Hold (3) -

Morgans found the investor briefing particularly upbeat regarding the company's technology. FY19 guidance was reiterated. The broker expects the company to benefit not only from market growth but also an improved manufacturing performance.

However, the stock appears to reflect an earnings recovery over coming years and the broker maintains a Hold rating. Target is raised to $20.00 from $18.05.

Target price is $20.00 Current Price is $21.89 Difference: minus $1.89 (current price is over target).
If ORI meets the Morgans target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $20.29, suggesting downside of -7.3% (ex-dividends)

The company's fiscal year ends in September.

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

Ord Minnett rates ORI as Lighten (4) -

While management highlighted the the company's leading technology at the investor briefing, Ord Minnett suggests an incomplete business case was presented for the size and adoption rates for the WebGen wireless electronic blasting system or the unwinding of competitive pressures affecting price deflation.

Ord Minnett continues to believe the primary driver of weaker profits in FY20 will be the shifting of volumes from the Yarwun facility to account for any shortfall at Burrup. The broker maintains a Lighten rating and $16.20 target.

Target price is $16.20 Current Price is $21.89 Difference: minus $5.69 (current price is over target).
If ORI meets the Ord Minnett target it will return approximately minus 26% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $20.29, suggesting downside of -7.3% (ex-dividends)

The company's fiscal year ends in September.

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

UBS rates ORI as Neutral (3) -

The company has reiterated its FY19 outlook and provided brokers with an overview of its technology-led growth platform. UBS observes the market appears to be tightening, with ammonium nitrate prices increasing around 10% over the past 12 months.

Orica considers the east coast market currently in balance with Yarwun able to ramp up in line with Queensland demand. Burrup rectification works will begin in the next week. UBS maintains a Neutral rating and raises the target to $21.25 from $20.65.

Target price is $21.25 Current Price is $21.89 Difference: minus $0.64 (current price is over target).
If ORI meets the UBS target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $20.29, suggesting downside of -7.3% (ex-dividends)

The company's fiscal year ends in September.

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

Macquarie rates PAN as Outperform (1) -

Panoramic Resources had pre-released June Q production data thus yesterday's report held no surprises. FY20 guidance nevertheless suggests nickel/copper/cobalt production 34/9/48% above the broker's prior forecasts, which appear to reflect an earlier than anticipated ramp-up of Savannah North.

Progress on the underground development has nevertheless been slower than expected, which is key to both the broker's and management's forecasts. Outperform retained, target rises to 46c from 45c.

Target price is $0.46 Current Price is $0.35 Difference: $0.11
If PAN meets the Macquarie target it will return approximately 31% (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

Macquarie rates PMV as Downgrade to Neutral from Outperform (3) -

Smiggles' UK transition is in its early stages, but cyclical and structural headwinds are persisting, Macquarie notes, and increasing competition is now making its mark. Apparel has been doing the "heavy lifting" but will now begin to cycle tougher comparables.

Cost improvement has nonetheless surprised and should provide somewhat of a buffer, but with the risks now more evenly balanced the broker downgrades to Neutral from Outperform. Target falls to $17.20 from $19.20.

Target price is $17.20 Current Price is $15.78 Difference: $1.42
If PMV meets the Macquarie target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $18.02, suggesting upside of 14.2% (ex-dividends)

The company's fiscal year ends in July.

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

Morgans rates RBL as Upgrade to Hold from Reduce (3) -

Morgans was surprised by the strength in the fourth quarter, particularly in margins, noting the company is looking at a secondary listing of shares in the US.

Forecasts are upgraded to reflect the lower marketing and overhead costs seen in the fourth quarter. Morgans upgrades to Hold from Reduce and raises the target to $1.51 from $0.67.

Risks are expected to diminish greatly if the company can prove cash flow self-sufficiency in FY20.

Target price is $1.51 Current Price is $1.40 Difference: $0.11
If RBL meets the Morgans target it will return approximately 8% (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

Morgans rates RMD as Add (1) -

FY19 earnings were ahead of Morgans' estimates, supported by double-digit sales growth. The broker believes the company is well-positioned, with solid growth across the core business and new products providing "exciting" potential.

Add rating maintained. Target rises to $21.27 from $17.34.

Target price is $21.27 Current Price is $19.05 Difference: $2.22
If RMD meets the Morgans target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $18.60, suggesting downside of -2.3% (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

Ord Minnett rates SDF as Hold (3) -

Ord Minnett updates earnings forecasts to reflect the proposed acquisition of the professional services fees of the company's network of brokers.

Ord Minnett assumes 50% of the brokers take up this offer and that the acquisition cost is funded by scrip and expensed in the same year. Hold rating maintained. Target rises to $3.75 from $3.15.

Target price is $3.75 Current Price is $3.80 Difference: minus $0.05 (current price is over target).
If SDF meets the Ord Minnett target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.75, suggesting downside of -1.3% (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

Morgans rates VHT as Move to Speculative Buy from Add (1) -

First quarter results were solid, in Morgans' view. The integration of the recent acquisition of MRS is on track.

The broker maintains a positive recommendation for investors with higher risk profiles and moves to a Speculative Buy rating from Add. Target is $1.97.

Target price is $1.97 Current Price is $1.62 Difference: $0.35
If VHT meets the Morgans target it will return approximately 22% (excluding dividends, fees and charges).

The company's fiscal year ends in March.

Forecast for FY19:

Forecast for FY20:

This company reports in NZD. 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