Australian Broker Call

Morgan Stanley rates AWC as Overweight (1) -

The Australian Tax Office has determined an additional tax payable of -$212m for Alcoa of Australia and compounded interest of -$707m.

The miner, 60% partner in the AWAC JV with Alumina Ltd owning the other 40%, will be contesting the ruling but in the meantime, has transferred -$107m to the tax authorities.

Morgan Stanley has updated its modeling for Alumina Ltd to include the transferred amount, which had led to its FY20 earnings estimate falling to US$0.03 from US$0.04.

The broker retains its Overweight rating with a target price of $2. Industry view: Attractive.

Target price is $2.00 Current Price is $1.60 Difference: $0.4
If AWC meets the Morgan Stanley target it will return approximately 25% (excluding dividends, fees and charges).

Current consensus price target is $1.71, suggesting upside of 2.9% (ex-dividends)

The company's fiscal year ends in December.

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: 0.2

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

Citi rates BWX as Buy (1) -

Regulations for selling cosmetics in China are about to change, allowing products to be sold offline without animal testing. Citi analysts see BWX as one of the beneficiaries.

Current management at the company has de-prioritised China, making up just 5% of sales in H1, but Citi still sees a long term opportunity emerging.

The analysts point out China is the second largest cosmetics market globally. Target $4.20. Buy.

Target price is $4.20 Current Price is $3.67 Difference: $0.53
If BWX meets the Citi target it will return approximately 14% (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

Macquarie rates GUD as Neutral (3) -

As the broader Australian automotive aftermarket has recovered strongly after the easing of lockdown measures, Macquarie revises forecasts higher, although acknowledges a reinstatement of lockdown in Victoria emphasises the risks.

The broker believes the automotive business is well-placed to perform strongly in the medium term, given its highly defensive characteristics.

The stock has rallied from its lows in March and appears fairly valued so the broker retains an Neutral rating, raising the target 21% to $11.50.

Target price is $11.50 Current Price is $11.77 Difference: minus $0.27 (current price is over target).
If GUD meets the Macquarie target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $10.44, suggesting downside of -9.1% (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 NEC as Outperform (1) -

Preliminary numbers for FY20 signal an EBITDA range of $390-410m. Credit Suisse considers this outcome reasonable. Net debt is also broadly consistent with expectations.

Credit Suisse believes the stock is undervalued at current levels. Assets outside of the interests in Domain Holdings ((DHG)) and Stan illustrate the value on offer and the broker believes these stand to benefit from any cyclical rebound in the advertising market.

Outperform maintained. Target is $2.

Target price is $2.00 Current Price is $1.37 Difference: $0.63
If NEC meets the Credit Suisse target it will return approximately 46% (excluding dividends, fees and charges).

Current consensus price target is $1.87, suggesting upside of 33.6% (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

Morgan Stanley rates NEC as Overweight (1) -

Morgan Stanley thinks Nine Entertainment’s higher than expected FY20 operating earnings were led by cost-led benefit from the NRL contract revision and/or upside from TV streaming services (where demand has been strong).

The broker feels such surprises will be rare in the upcoming media reporting season. There is no news on distribution in the second half.

Morgan Stanley maintains its Overweight rating with a target price of $1.90. Industry View: Attractive.

Target price is $1.90 Current Price is $1.37 Difference: $0.53
If NEC meets the Morgan Stanley target it will return approximately 39% (excluding dividends, fees and charges).

Current consensus price target is $1.87, suggesting upside of 33.6% (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

UBS rates NEC as Buy (1) -

FY20 guidance for EBITDA in a range of $390-410m is slightly better than UBS expected, with the difference likely to stem from Domain Holdings ((DHG)) as listings in the June quarter have been better than originally forecast.

Meanwhile, the CFO has resigned citing personal reasons. Buy rating and $1.70 target maintained.

Target price is $1.70 Current Price is $1.37 Difference: $0.33
If NEC meets the UBS target it will return approximately 24% (excluding dividends, fees and charges).

Current consensus price target is $1.87, suggesting upside of 33.6% (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 PTM as Sell (5) -

Citi observes further progress with moderating fund outflows and the first performance fees in two years, although the flagship strategy performance remains sub-optimal.

A resumption of material flows is considered some time away and, hence, the broker retains a Sell rating. Estimates are lifted 5-8% to mark to market amid modestly higher performance fee expectations.

The broker is encouraged that around 70% of annual distribution to unit holders is being reinvested back into Platinum Asset Management. Target is raised to $3.00 from $2.60.

Target price is $3.00 Current Price is $3.70 Difference: minus $0.7 (current price is over target).
If PTM meets the Citi target it will return approximately minus 19% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.03, suggesting downside of -24.2% (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

Credit Suisse rates PTM as Underperform (5) -

Platinum Asset Management reported funds under management of $21.4bn as of June 30 2020, slightly ahead of Credit Suisse forecasts.

Institutional flows appear to have been neutral in June and may even have attracted modest inflow.

The broker notes performance hurdles were generally not met and this will leave compensation pools at the discretion of the board.

Underperform reiterated as the broker envisages little value protection from ongoing outflows. Target is raised to $3.15 from $3.00.

Target price is $3.15 Current Price is $3.70 Difference: minus $0.55 (current price is over target).
If PTM meets the Credit Suisse target it will return approximately minus 15% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.03, suggesting downside of -24.2% (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 REA as Accumulate (2) -

Ord Minnett assesses new listings have improved with the lifting of restrictions across the country. Depth uptake in June has accelerated as well.

This continued growth in depth uptake during the pandemic will cushion some of the downturn in new listings, the broker suggests.

A shift up the tiers to Premiere is continuing, in line with management's goals. Accumulate rating and $100 target maintained.

Target price is $100.00 Current Price is $104.75 Difference: minus $4.75 (current price is over target).
If REA meets the Ord Minnett target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $98.39, suggesting downside of -6.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.4

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

Macquarie rates SLR as Neutral (3) -

The update for Deflector has lifted resources and reserves by 54% and 33%, respectively. Macquarie now expects Deflector to produce almost 140,000 ounces per annum from FY22.

Importantly, this is seen as a quality increase and, with the system remaining open to the south, more growth is expected in FY21.

Neutral maintained. Target is raised to $2.40 from $2.10.

Target price is $2.40 Current Price is $2.32 Difference: $0.08
If SLR meets the Macquarie target it will return approximately 3% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.0

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

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

Treasury Wine Estates’ had inventory worth $2bn on its books at the end of the first half and Morgan Stanley estimates its realisable value at circa $4bn, most of it from the luxury category. The broker expects the group to return to FY19 earnings in FY22.

Since the de-rating was triggered by headwinds within the US business, the broker believes a sustained re-rating will require more confidence in management’s ability to stabilise the US business.

The short-term outlook remains disrupted but downside risk is limited owing to the group’s asset backing.

Morgan Stanley upgrades its rating to Overweight from Equal-weight with the target price increasing to $13.50 from $12.50. Industry view: Cautious.

Target price is $13.50 Current Price is $10.52 Difference: $2.98
If TWE meets the Morgan Stanley target it will return approximately 28% (excluding dividends, fees and charges).

Current consensus price target is $11.39, suggesting upside of 4.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.0

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

Ord Minnett rates WSP as Downgrade to Hold from Buy (3) -

Ord Minnett downgrades to Hold from Buy as the share price has rallied almost 30% over a week with no obvious news or developments.

A strong result is expected in August and the broker is positive about the longer term but the current valuation offers little upside. Target is steady at $2.80.

Target price is $2.80 Current Price is $3.22 Difference: minus $0.42 (current price is over target).
If WSP meets the Ord Minnett target it will return approximately minus 13% (excluding dividends, fees and charges - negative figures indicate an expected loss).

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.0

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