Australian Broker Call

Deutsche Bank rates AHG as Buy (1) -

New car sales return to growth in May, posting a 6.4% increase following a poor start to 2017. Deutsche Bank also observes cold logistics appears to be stabilising.

The company has guided to double-digit margins in FY18, presenting significant upside if this is delivered, in the broker's opinion.  The broker continues to believe the stock represents reasonable value and retains a Buy rating and $4.30 target.

Target price is $4.30 Current Price is $3.02 Difference: $1.28
If AHG meets the Deutsche Bank target it will return approximately 42% (excluding dividends, fees and charges).

Current consensus price target is $3.56, suggesting upside of 14.7% (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 AQG as Upgrade to Buy from Hold (1) -

Despite gold being Ord Minnett's least preferred exposure, with valuations screening more expensive than peers, Alacer Gold is upgraded to Speculative Buy from Hold.

The broker recognises that cheap valuations are not a catalyst for the stock to re-rate but believes sentiment is likely to move back in the direction of risk-on over the medium term. Target remains unchanged at $2.70.

Target price is $2.70 Current Price is $2.03 Difference: $0.67
If AQG meets the Ord Minnett target it will return approximately 33% (excluding dividends, fees and charges).

Current consensus price target is $3.90, suggesting upside of 94.0% (ex-dividends)

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: 1.0

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

Credit Suisse rates ASX as Underperform (5) -

Credit Suisse reviews forecasts for activity levels to reflect weaker-than-expected trends among corporate markets. Several price increases for listing fees have been incorporated, which will offset the weaker activity.

The stock continues to trade at around a 35% premium to the market which the broker considers excessive in light of the low growth outlook.

Underperform rating. Target is $49.

Target price is $49.00 Current Price is $51.98 Difference: minus $2.98 (current price is over target).
If ASX meets the Credit Suisse target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $48.55, suggesting downside of -5.1% (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

Deutsche Bank rates ASX as Hold (3) -

Deutsche Bank reduces forecasts by around -3% for FY17 and FY18. This reflects ongoing weakness in new capital raisings.

While external conditions are very supportive of equity raising the broker ponders whether the weakness could be blamed on overly ambitious valuations by vendors or caution regarding the high valuations among buyers.

Regardless of the reasons, the broker anticipates equity raisings will recover over the medium term but not in time to save FY17. Target is reduced to $51.00 from $51.40. Hold retained.

Target price is $51.00 Current Price is $51.98 Difference: minus $0.98 (current price is over target).
If ASX meets the Deutsche Bank target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $48.55, suggesting downside of -5.1% (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

Deutsche Bank rates BEN as Sell (5) -

The bank's new treatment of accounting for Homesafe removes the cash earnings volatility. While investors would welcome this, the fact that it coincides with fears of a downturn in house prices may raise questions, Deutsche Bank asserts.

The broker suspects questions regarding the treatment of Homesafe are likely to continue, given the high growth rate assumptions that underpin book values and the generous risk weighting.

The stock has significantly underperformed the sector but the broker envisages modest downside and retains a Sell rating. Target is reduced to $10.40 from $11.00.

Target price is $10.40 Current Price is $10.70 Difference: minus $0.3 (current price is over target).
If BEN meets the Deutsche Bank target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $11.01, suggesting upside of 5.7% (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

Macquarie rates BEN as Underperform (5) -

The bank has changed its Homesafe methodology, which Macquarie suggests is opportune, given the outlook for property prices has deteriorated.

The changes bring the cash pay-out ratio to 78% versus 71% previously, which is at the top of the target pay-out range of 60-80%. Macquarie continues to believe this ratio is difficult to sustain even under the new methodology and the bank will need to cut its dividend  or continue to dilute earnings through reinvestment plans.

Target is reduced to $11.00 from $11.50. Underperform retained.

Target price is $11.00 Current Price is $10.70 Difference: $0.3
If BEN meets the Macquarie target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $11.01, suggesting upside of 5.7% (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

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

The bank is re-jigging its Homesafe business and removing unrealised property gains from its cash earnings. Morgan Stanley believes this signals expectations for more subdued house price growth.

The broker reduces its target by -6% to reflect lower cash earnings, down to $11.00 from $11.70.  Equal-wait rating retained. Industry view is In-Line.

Target price is $11.00 Current Price is $10.70 Difference: $0.3
If BEN meets the Morgan Stanley target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $11.01, suggesting upside of 5.7% (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

UBS rates BEN as Sell (5) -

The bank is changing the treatment of cash earnings to exclude any unrealised gains or losses from its investment in Homesafe. UBS believes this accounting change is appropriate but the timing is unusual.

The bank has been booking substantial Homesafe mark-to-market gains through cash earnings since 2007. It is now only as Sydney and Melbourne prices are in bubble territory and house prices have begun to slip in recent weeks that the bank has changed its policy.

UBS retains a Sell rating and $10 target. The broker believes any economic slowdown or increase in arrears may lead to the dividend being cut.

Target price is $10.00 Current Price is $10.70 Difference: minus $0.7 (current price is over target).
If BEN meets the UBS target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $11.01, suggesting upside of 5.7% (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

Morgan Stanley rates FLT as Underweight (5) -

Morgan Stanley observes the Australian consumer environment has weakened, yet the market appears more constructive on the company's earnings outlook.

Given the structural pressures and the recent history of earnings downgrades, as well as exposure to a weaker consumer cycle, Morgan Stanley considers the trading multiple is rich.

Underweight retained. Target is $25. Industry view is Cautious.

Target price is $25.00 Current Price is $37.51 Difference: minus $12.51 (current price is over target).
If FLT meets the Morgan Stanley target it will return approximately minus 33% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $30.74, suggesting downside of -15.5% (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

Credit Suisse rates HVN as Upgrade to Neutral from Underperform (3) -

Credit Suisse reduces earnings and valuation estimates for the company, assuming the market becomes increasingly competitive.

Electrical retail faces increasing challenges from delivery economics at scale and downward pressure on delivery fees, as well as higher promotional expenditure and stranded costs as the electrical market moves increasingly online.

While there has been considerable discussion about the consolidation of franchisee accounts, the broker believes a materially adverse outcome is unlikely. Rating is upgraded to Neutral from Underperform because of the significant underperformance of the share price. Target is reduced to $4.08 from $5.12.

Target price is $4.08 Current Price is $3.77 Difference: $0.31
If HVN meets the Credit Suisse target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $4.28, suggesting upside of 14.9% (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 JBH as Underperform (5) -

Credit Suisse reduces earnings and valuation estimates, assuming the market becomes increasingly competitive. Electrical retail faces challenges from delivery economics at scale, downward pressure on delivery fees, higher promotional expenses and stranded costs as the market moves increasingly online.

Underperform rating retained. Target is reduced to $18.68 from $26.49. The broker assumes no further net store openings for the brand in the belief that the company begins to close less strongly-positioned stores.

Target price is $18.68 Current Price is $23.05 Difference: minus $4.37 (current price is over target).
If JBH meets the Credit Suisse target it will return approximately minus 19% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $26.24, suggesting upside of 17.3% (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

Macquarie rates LNK as Outperform (1) -

Macquarie reviews the financial status for members of funds that are outsourcing their administration services. The broker believes outsourcing makes a compelling case, particularly for sub-scale superannuation funds.

The broker believes regulatory pressure to lower fees, improve services and product to members will mean more funds merge. Link is considered well-positioned to be a net beneficiary. Target rises to $9.20 from $8.30. Outperform retained.

Target price is $9.20 Current Price is $8.11 Difference: $1.09
If LNK meets the Macquarie target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $8.48, suggesting upside of 6.2% (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

Credit Suisse rates MFG as Outperform (1) -

Credit Suisse upgrades earnings forecasts by 10% in FY17 and 2-3% for FY18-19, primarily from higher assumptions for funds under management and higher FY17 performance fee estimates.

While the last 12 months has witnessed weaker fund performance over one and three-year time horizons the broker expects that, as some of the weak quarters roll off, performance will improve.

Outperform retained. Target rises to $27.50 from $26.50.

Target price is $27.50 Current Price is $25.81 Difference: $1.69
If MFG meets the Credit Suisse target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $26.63, suggesting upside of 1.5% (ex-dividends)

The company's fiscal year ends in June.

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

Macquarie rates MFG as Outperform (1) -

The company had $52.2bn in funds under management as of May, up 3.6%. Macquarie observes the business is on track for around $41m in performance fees in the first half.

This should, subject to June's performance, support second half earnings. Outperform retained. Target rises to $26.63 from $26.40.

Target price is $26.63 Current Price is $25.81 Difference: $0.82
If MFG meets the Macquarie target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $26.63, suggesting upside of 1.5% (ex-dividends)

The company's fiscal year ends in June.

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

Ord Minnett rates OGC as Hold (3) -

Gold remains Ord Minnett's least-preferred exposure, with valuations continuing to screen more expensive than peers and the commodity team tactically bearish for the near term.

The broker recognises that cheap valuations are not a catalyst for a stock to re-rate but believes sentiment is likely to move back in the direction of risk-on over the medium term as positive macro data continues.

Hold rating retained. Target rises to $4.60 from $4.50.

Target price is $4.60 Current Price is $4.66 Difference: minus $0.06 (current price is over target).
If OGC 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 $4.70, suggesting upside of 1.3% (ex-dividends)

The company's fiscal year ends in December.

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: 0.5

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

Deutsche Bank rates ORA as Hold (3) -

While Deutsche Bank believes the company will be a minor beneficiary of the recent increase in US linerboard prices in FY17 this is likely to be more than offset by higher old corrugated container and electricity costs in FY18.

The broker believes the company will struggle to recover cost increases as contractual clauses tend to be linked to the CPI. Hold rating maintained. Target falls to $2.80 from $2.95.

Target price is $2.80 Current Price is $2.88 Difference: minus $0.08 (current price is over target).
If ORA meets the Deutsche Bank target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.18, suggesting upside of 13.2% (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

Morgans rates PWH as Add (1) -

Morgans reviews the growth opportunities in motor sports, US aftermarket and OEM contracts. The broker's sensitivity analysis suggests a 1p fall in the AUD/GBP increases revenue by 1% and lifts EBITDA by 3%.

Should the AUD/GBP continue to weaken this will provide strong upside to earnings forecasts. The broker retains an Add rating and $3.00 target and continues to view the stock as a high-quality growth business.

Target price is $3.00 Current Price is $2.26 Difference: $0.74
If PWH meets the Morgans target it will return approximately 33% (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

Ord Minnett rates SFR as Accumulate (2) -

Gold remains Ord Minnett's least-preferred exposure, with valuations continuing to screen more expensive than peers and the commodity team tactically bearish for the near term.

The broker recognises that cheap valuations are not a catalyst for a stock to re-rate but believes sentiment is likely to move back in the direction of risk-on over the medium term as positive macro data continues.

Accumulate rating retained. Target falls to $6.80 from $7.30.

Target price is $6.80 Current Price is $6.14 Difference: $0.66
If SFR meets the Ord Minnett target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $6.79, suggesting upside of 13.7% (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

Credit Suisse rates SYR as Outperform (1) -

Mozambique mining laws have been changed, with agreement to revoke the higher tax rate under the new act. This appears to remove a risk that the delay to the signing of a mining agreement for Syrah was related to grandfathered rights under the old mining act.

Credit Suisse believes the super profits tax was the most contentious aspect of the new act, but did not apply to Syrah in any case, and this latest development may mean the long-awaited agreement is delivered.

Target is $7.45. Outperform retained.

Target price is $7.45 Current Price is $2.67 Difference: $4.78
If SYR meets the Credit Suisse target it will return approximately 179% (excluding dividends, fees and charges).

Current consensus price target is $4.93, suggesting upside of 93.1% (ex-dividends)

The company's fiscal year ends in June.

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