Australian Broker Call

Macquarie rates AMC as Outperform (1) -

Macquarie observes, as western Europe accounts for 33% of first half revenue, the improving value of the euro is shifting to a tailwind.

More broadly, the outlook for European economic activity is improving with the broker noting Nestle's comments that European consumer spending is resilient.

The broker continues to like the defensive nature of the business because of its broad geographical and business mix. Outperform retained. Target rises to $17.17 from $16.77.

Target price is $17.17 Current Price is $15.34 Difference: $1.83
If AMC meets the Macquarie target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $15.58, suggesting upside of 0.7% (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

UBS rates ANZ as Neutral (3) -

The broker still cannot reconcile what the banks believe they will lose on the levy and what the Treasurer believes he will gain. The broker's calculations concur with the banks own estimates of around a -$1.1bn net cost compared to the government's $1.5bn.

The broker has cut bank forecast earnings by -1-2% on the assumption the cost will be passed on to customers, mortgage brokers and staff while dividends will remain intact.

Neutral and $30.50 target retained for ANZ.

Target price is $30.50 Current Price is $28.01 Difference: $2.49
If ANZ meets the UBS target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $30.90, suggesting upside of 10.3% (ex-dividends)

The company's fiscal year ends in September.

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

UBS rates AVN as Neutral (3) -

Aventus has acquired two large format retail assets in Sydney which increase scale, improve average portfolio quality, and provide potential for increased leasing leverage and operational synergies, the broker suggests.

The dilution effect of the subsequent capital raising is offset to an extent by waiving the management fee. The broker retains Neutral, increasing its target to $2.52 from $2.46.

Target price is $2.52 Current Price is $2.38 Difference: $0.14
If AVN meets the UBS target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $2.53, suggesting upside of 6.5% (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

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

Ord Minnett envisages the company entering a period of robust earnings growth, underpinned by the consolidation of the acquisition of US-based Headwaters and the realisation of synergies from Meridian Bricks and the USG joint venture.

Nevertheless, the broker believes the growth profile is now factored into the share price. Rating is downgraded to Hold from Accumulate. Target is raised to $6.65 from $6.50.

Target price is $6.65 Current Price is $6.85 Difference: minus $0.2 (current price is over target).
If BLD meets the Ord Minnett target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $6.95, suggesting upside of 3.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.7

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

Macquarie rates BSL as Outperform (1) -

Ahead  of a  tour of US steel business, Macquarie updates its view and notes an improving US outlook.

Earnings per share momentum has slowed because of raw material price volatility but the broker envisages potential for upside in the company's North Star performance in FY18.

The stock remains a cheaper steel stock in a comparable global universe, the broker calculates. Outperform retained.Target is reduced to $14.30 from $14.95.

Target price is $14.30 Current Price is $11.50 Difference: $2.8
If BSL meets the Macquarie target it will return approximately 24% (excluding dividends, fees and charges).

Current consensus price target is $13.54, suggesting upside of 16.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.7

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

Macquarie rates BXB as Neutral (3) -

Macquarie believes the strength in the euro provides a potential tailwind for the company while North American weakness is set to continue because of inflation in the lumber price.

Given the restructure of the US business and elevated lumber prices, the broker expects conversion of whitewood customers will be limited.

Neutral rating retained. Target is $10.37.

Target price is $10.37 Current Price is $10.37 Difference: $0
If BXB meets the Macquarie target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $10.55, suggesting upside of 1.7% (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: 0.1

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

UBS rates CBA as Neutral (3) -

The broker still cannot reconcile what the banks believe they will lose on the levy and what the Treasurer believes he will gain. The broker's calculations concur with the banks own estimates of around a -$1.1bn net cost compared to the government's $1.5bn.

Th broker has cut bank forecast earnings by -1-2% on the assumption the cost will be passed on to customers, mortgage brokers and staff while dividends will remain intact.

Neutral rating and $83 target retained for CBA.

Target price is $83.00 Current Price is $79.65 Difference: $3.35
If CBA meets the UBS target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $80.73, suggesting upside of 1.3% (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

Morgan Stanley rates GMG as Overweight (1) -

The stock is up 18% for the year to date and trading at a premium to Morgan Stanley's net asset value and price target for the first time since initiating on the stock in 2010.

The broker agrees it is becoming harder to argue the shares are undervalued but continues to prefer the stock versus the rest of the sector.

The business has been the beneficiary of the structural trends of e-commerce and supply chain efficiencies and is in the frame to build the Amazon distribution centres in Australia.

The broker notes, whether or not the company gains that business, the project pipeline is managed carefully to avoid peaks and troughs and the impact on earnings or valuation will be minimal.

Overweight and $8.20 target retained. Industry view is Cautious.

Target price is $8.20 Current Price is $8.50 Difference: minus $0.3 (current price is over target).
If GMG 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 $7.91, suggesting downside of -6.9% (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 HSO as Buy (1) -

The broker retains a Buy rating and $3.00 target on Healthscope, noting recent industry data implies low structural risk for the company's $800m+ Mona Vale hospital project, which is ahead of schedule.

On opening, Healthscope will receive $40m in bullet payments from the closure of the Manly and Mona Vale public hospitals, the broker notes.

Target price is $3.00 Current Price is $2.02 Difference: $0.98
If HSO meets the UBS target it will return approximately 49% (excluding dividends, fees and charges).

Current consensus price target is $2.57, suggesting upside of 27.1% (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

Morgan Stanley rates HVN as Underweight (5) -

Morgan Stanley believes Australian Department stores are far more exposed to the entry of Amazon than the leading specialty retailers. The broker believes category killer retail formats will withstand the onslaught, as those stores in the US have competed successfully with Amazon.

Harvey Norman's Underweight rating retained. Target is reduced to $3.50 from $4.30. Industry view is move to Cautious from In-Line, as this broker believes the impact of Amazon will be broad-based.

Target price is $3.50 Current Price is $3.77 Difference: minus $0.27 (current price is over target).
If HVN meets the Morgan Stanley target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.42, suggesting upside of 17.4% (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

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

Morgan Stanley believes Australian department stores are far more exposed to the entry of Amazon than the leading specialty retailers. The broker believes category killer retail formats will withstand the onslaught, as those stores in the US have competed successfully with Amazon.

JB Hi-Fi operates with far higher sales density versus its peers and has a market leading position, enabling superior buying terms, the broker observes.

Equal-weight retained. Target is reduced to $27 from $30. Industry view is moved to Cautious from In-Line as the broker believes the impact of Amazon will be broad-based.

Target price is $27.00 Current Price is $23.12 Difference: $3.88
If JBH meets the Morgan Stanley target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $27.22, suggesting upside of 17.7% (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

Morgans rates JIN as Add (1) -

The company is forecasting total transaction value in FY17 of $142.2m, down -7.2% because of a lower number of jackpots. The board has set a new pay-out ratio at 85%.

Morgans believes there is scope for special dividends to be paid, given a surplus cash position and a franking credit balance.

The company has estimated a final dividend of 5.1c taking the full year to 8.6c. Add rating retained. Target is reduced to $3.17 from $3.19.

Target price is $3.17 Current Price is $2.67 Difference: $0.5
If JIN meets the Morgans target it will return approximately 19% (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

Macquarie rates MLX as Outperform (1) -

Macquarie visited Nifty mine and confirmed that the underground development work is proceeding as planned and the company will be in a position to start materially lifting production late this year.

Incorporating a slight change to the reserve drives a 2% upgrade to FY20 and FY21 estimates. Outperform rating and $1 target retained.

Target price is $1.00 Current Price is $0.78 Difference: $0.225
If MLX meets the Macquarie target it will return approximately 29% (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

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

Morgan Stanley believes Australian department stores are far more exposed to the entry of Amazon than leading specialty retailers. Australia is overbuilt with department stores versus other developed markets,  the broker observes.

Long leases for department stores mean stores cannot be closed as they become unprofitable and the online offer is weak. They also generate a disproportionate percentage of sales from apparel, a category where Amazon is successful.

Equal-weight rating retained. Target is lowered to $0.80 from $1.10.  Industry view is moved to Cautious from In-Line.

Target price is $0.80 Current Price is $0.87 Difference: minus $0.065 (current price is over target).
If MYR meets the Morgan Stanley target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $0.95, suggesting upside of 10.2% (ex-dividends)

The company's fiscal year ends in July.

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

UBS rates NAB as Sell (5) -

The broker still cannot reconcile what the banks believe they will lose on the levy and what the Treasurer believes he will gain. The broker's calculations concur with the banks own estimates of around a -$1.1bn net cost compared to the government's $1.5bn.

Th broker has cut bank forecast earnings by -1-2% on the assumption the cost will be passed on to customers, mortgage brokers and staff while dividends will remain intact.

Sell rating and $30 target retained for NAB.

Target price is $30.00 Current Price is $30.12 Difference: minus $0.12 (current price is over target).
If NAB meets the UBS target it will return approximately minus 0% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $31.80, suggesting upside of 5.6% (ex-dividends)

The company's fiscal year ends in September.

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

Citi rates PMV as Upgrade to Buy from Neutral (1) -

Citi believes investors are too bearish, arguing the current weakness in sales is transitory. The analysts do acknowledge there is downside to market consensus forecasts. Citi's advice to investors is: pick your moment.

Upgrade to Buy from Neutral. While the analysts also believe market concerns around discounting are being overplayed, their new target of $13.80 compares with $15.10 previously.

Target price is $13.80 Current Price is $12.41 Difference: $1.39
If PMV meets the Citi target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $15.52, suggesting upside of 25.0% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.8

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

Credit Suisse rates PRY as Underperform (5) -

From July 1 indexation returns for GP bulk billing incentive items but Credit Suisse believes this is immaterial for Primary Health Care's revenue and earnings.

The broker calculates an effective price increase for the company's GP business of around 1.4% in FY19 and around 2% from FY20 onwards.

The broker has already factored in a staggered price increase following the budget and believes current valuations and the slow turnaround in the GP business support the maintenance of an Underperform rating. Target is $3.40.

Target price is $3.40 Current Price is $3.68 Difference: minus $0.28 (current price is over target).
If PRY meets the Credit Suisse target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.54, suggesting downside of -3.7% (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

Citi rates QUB as Buy (1) -

As Qube announced an equity raising of $350m, it is Citi's view this capital raising occurs in response to increased confidence in the company's ability to fill the warehouse footprint and rail throughput, as well as pursue "additional inorganic growth options". Don't you love this analyst lingo? They're talking acquisitions.

With resource volumes having stabilised and Patrick apparently performing in-line with expectations, Citi analysts predict the share price will move up as new customers (both warehouse plus rail) are announced at Moorebank. Buy.

Target price is $3.01 Current Price is $2.64 Difference: $0.37
If QUB meets the Citi target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $2.65, suggesting upside of 0.4% (ex-dividends)

The company's fiscal year ends in June.

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

Macquarie rates QUB as Outperform (1) -

The company has announced a $350m equity raising to fund the new Moorebank warehousing, and further strategic growth initiatives. The raising comprises a 1-for-15 accelerated non-renounceable offer at $2.35 a share and a $122m placement.

Macquarie believes the announcement provides a level of certainty with regard to initial tenancy at Moorebank and should go some way to allay fears around the near-term prospects.

Medium-term growth options are attractive in the broker's opinion and an Outperform rating is maintained. Target is $2.81.

Target price is $2.81 Current Price is $2.64 Difference: $0.17
If QUB meets the Macquarie target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $2.65, suggesting upside of 0.4% (ex-dividends)

The company's fiscal year ends in June.

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 QUB as Buy (1) -

The announcement of a $350m capital raising was a surprise to Ord Minnett as the broker believed the logistics group could fund its foreseeable growth opportunities.

The timing, given that more than half the proceeds will be used to pay down debt, suggests to the broker that the company is positioning for an, as yet unspecified, opportunity.

The equity raising does not change the broker's view on Moorebank but has created some uncertainty about the use of proceeds, which could weigh on the share price in the short term. Buy rating retained. Target is reduced to $3.05 from $3.25.

Target price is $3.05 Current Price is $2.64 Difference: $0.41
If QUB meets the Ord Minnett target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $2.65, suggesting upside of 0.4% (ex-dividends)

The company's fiscal year ends in June.

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

Citi rates SFH as Upgrade to Buy from Neutral (1) -

Citi believes investors are too bearish, arguing the current weakness in sales is transitory. The analysts do acknowledge there is downside to market consensus forecasts. Citi's advice to investors is: pick your moment.

Upgrade to Buy/High Risk from Neutral. While the analysts also believe market concerns around discounting are being overplayed, their new target of $0.55 compares with $0.70 previously.

Target price is $0.55 Current Price is $0.40 Difference: $0.155
If SFH meets the Citi target it will return approximately 39% (excluding dividends, fees and charges).

Current consensus price target is $0.55, suggesting upside of 39.2% (ex-dividends)

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

Macquarie rates SFR as Outperform (1) -

Macquarie refines production forecasts for DeGrussa to incorporate higher mining rates at Monty and 100% of output under the ore purchase and sale agreement with Talisman Mining ((TLM)).

The higher mining rated at Monty is expected to mean group production rises to 85,000 tonnes in FY20. Outperform maintained. Target is $7.70.

Target price is $7.70 Current Price is $6.11 Difference: $1.59
If SFR meets the Macquarie target it will return approximately 26% (excluding dividends, fees and charges).

Current consensus price target is $6.86, suggesting upside of 12.2% (ex-dividends)

The company's fiscal year ends in June.

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

Macquarie rates SGM as Outperform (1) -

Ahead  of a  tour of US steel business, Macquarie updates its view and notes an improving US outlook.

Scrap metal continues to enjoy support from better prices and collector economics. The stock has enjoyed a strong run but the broker considers the medium term outlook is still attractive. Outperform retained. Target rises to $14.20 from $14.00.

Target price is $14.20 Current Price is $13.33 Difference: $0.87
If SGM meets the Macquarie target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $13.22, suggesting downside of -0.8% (ex-dividends)

The company's fiscal year ends in June.

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

Morgan Stanley rates SUL as Overweight (1) -

Morgan Stanley believes Australian department stores are far more exposed to the entry of Amazon than the leading specialty retailers. The broker believes category killer retail formats will withstand the onslaught, as those stores in the US have competed successfully with Amazon.

Super Retail operates market-leading businesses and its category exposure positions it favourably, in the broker's opinion. Target is reduced to $11 from $12. Overweight retained. Industry view is move to Cautious from In-Line, as this broker believes the impact of Amazon will be broad-based.

Target price is $11.00 Current Price is $7.70 Difference: $3.3
If SUL meets the Morgan Stanley target it will return approximately 43% (excluding dividends, fees and charges).

Current consensus price target is $10.32, suggesting upside of 34.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.6

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

UBS rates WBC as Neutral (3) -

The broker still cannot reconcile what the banks believe they will lose on the levy and what the Treasurer believes he will gain. The broker's calculations concur with the banks own estimates of around a -$1.1bn net cost compared to the government's $1.5bn.

Th broker has cut bank forecast earnings by -1-2% on the assumption the cost will be passed on to customers, mortgage brokers and staff while dividends will remain intact.

Neutral and $32.50 target retained for Westpac.

Target price is $32.50 Current Price is $30.50 Difference: $2
If WBC meets the UBS target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $33.34, suggesting upside of 9.3% (ex-dividends)

The company's fiscal year ends in September.

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 WES as Downgrade to Underweight from Equal-weight (5) -

Morgan Stanley believes the market is misconstruing the impact of Amazon's entry into Australia by selling category killers rather than conglomerate Wesfarmers.

The broker suspects that as Amazon rolls out its 1P business in Australia, especially apparel - a huge success in the US, earnings from Kmart will fall considerably. Bunnings should be relatively insulated, in the broker's opinion, while Kmart and Target are vulnerable.

The broker reduces valuations for the latter two and downgrades to Underweight from Equal-weight. Target is reduced to $36 from $41.  Industry view is moved to Cautious from In-line.

Target price is $36.00 Current Price is $42.70 Difference: minus $6.7 (current price is over target).
If WES 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 $41.87, suggesting downside of -2.0% (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