Australian Broker Call

Credit Suisse rates A2M as Neutral (3) -

Credit Suisse believes there are grounds for optimism in the near term. The news flow has been supportive, with strong exports to Hong Kong and China in February.

In the longer term the broker is focused on the growth of market share in China and extended distribution in the US. The broker also ponders recent comments from the company's CEO, ruling out capital returns any time soon.

This prompts the broker to remove dividends from FY20 forecasts. Neutral rating maintained. Target is raised to NZ$14.00 from NZ$13.60.

Current Price is $14.10. Target price not assessed.

Current consensus price target is $13.63, suggesting downside of -3.4% (ex-dividends)

The company's fiscal year ends in June.

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: 0.1

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

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

UBS believes investors will increasingly turn their focus to the potential for earnings to recover and generate strong cash flow from FY20. The broker's conviction is lifted by the recent announcement of a cost reduction program, more conservative network growth and the re-timing of fleet orders.

The broker lifts forecasts for FY19 by 2% in FY20 by 17%. Rating is upgraded to Buy from Neutral. Target is raised to NZ$2.90 from NZ$2.55.

Current Price is $2.55. Target price not assessed.

Current consensus price target is N/A

The company's fiscal year ends in June.

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: 0.0

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

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

Morgan Stanley believes the earnings outlook has improved, following the launch of the company's new formula, but the valuation now prices in the stronger outlook. The main catalysts will be updates on the new formulation and further product developments. The shares have rallied 42% since January as the market became more confident in the earnings outlook.

Morgan Stanley downgrades to Equal-weight from Overweight, assessing the first half of FY20 will provide the acid test for the success of the new formula. Target is $10. Cautious industry view.

Target price is $10.00 Current Price is $10.85 Difference: minus $0.85 (current price is over target).
If BAL 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 $9.53, suggesting downside of -12.1% (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

Macquarie rates BHP as Outperform (1) -

The company has indicated flooding after Cyclone Veronica as limited rail movements, reducing shipments for FY19 by -6-8mt. Macquarie already expected BHP Group would miss FY19 guidance and lowers forecasts further, to 268mt.

Despite this, the company remains a net beneficiary from the disruptions in global iron ore supply. Hence, the broker envisages a strong upside risk to earnings. Outperform and $41 target retained.

Target price is $41.00 Current Price is $39.87 Difference: $1.13
If BHP meets the Macquarie target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $37.01, suggesting downside of -7.2% (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: 0.3

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

Morgan Stanley rates FLT as Overweight (1) -

Morgan Stanley considers the concerns about the Australian leisure division are overstated and the growing corporate business is under appreciated. The broker believes the stock's valuation is too cheap in light of the transitory nature of the issues.

The broker argues that Flight Centre should trade at a premium to its long-term one-year forward multiple, given that a higher percentage of earnings are being generated from corporate business.

Morgan Stanley maintains an Overweight rating and $51 target. Industry view: Cautious.

Target price is $51.00 Current Price is $42.89 Difference: $8.11
If FLT meets the Morgan Stanley target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $49.43, suggesting upside of 15.2% (ex-dividends)

The company's fiscal year ends in June.

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

Citi rates FMG as Neutral (3) -

Along with its partners Fortescue Metals has approved the US$2.6bn Iron Bridge magnetite project. The company will fund its share through a combination of project debt and operating cash flow.

Citi assesses the returns are modest but the project does provide broader blending opportunities for Fortescue Metals.

While the shares have had a spectacular run in 2019, Citi believes valuation levels are reasonable in the context of a possible US$60/t long-term iron ore price.

Neutral rating maintained. Target rises to $7.20 from $6.50.

Target price is $7.20 Current Price is $7.81 Difference: minus $0.61 (current price is over target).
If FMG meets the Citi target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $6.84, suggesting downside of -12.5% (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: 0.0

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

Credit Suisse rates FMG as Neutral (3) -

Fortescue Metals and partners have sanctioned the Iron Bridge project which will commence production in 2022. On its numbers, Credit Suisse calculates the project requires around US$80/t in realised iron ore prices to generate a positive net present value.

The main issue, which will not be determined for more than five years, is whether the lower capital intensity can achieve the required recoveries, at the stated costs, when up-scaled from the current pilot.

Credit Suisse suspects the real prize may be the blending opportunity. The broker maintains a Neutral rating and $6.40 target.

Target price is $6.40 Current Price is $7.81 Difference: minus $1.41 (current price is over target).
If FMG meets the Credit Suisse target it will return approximately minus 18% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $6.84, suggesting downside of -12.5% (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: 0.0

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

Macquarie rates FMG as Outperform (1) -

The company has approved the development of the Iron Bridge magnetite project at a cost of US$2.6bn. Macquarie incorporates the development, which boosts earnings estimates post FY23 by 6%.

The metrics are better than the broker expected, with a lower capital cost and higher production rate. Blending of the high-grade magnetite product could upgrade the company's overall realised price over time.

Macquarie maintains an Outperform rating and raises the target to $8.30 from $8.00.

Target price is $8.30 Current Price is $7.81 Difference: $0.49
If FMG meets the Macquarie target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $6.84, suggesting downside of -12.5% (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: 0.0

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

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

The company will proceed with Iron Bridge stage 2, allowing for growth in higher-grade production, which is expected to lift the majority of Fortescue Metals' product grade to over 60%.

Morgan Stanley believes the current balance sheet can comfortably fund the company's share of the project and group debt remains manageable.

Equal-weight maintained. Target is $6.70. Industry view is Attractive.

Target price is $6.70 Current Price is $7.81 Difference: minus $1.11 (current price is over target).
If FMG meets the Morgan Stanley target it will return approximately minus 14% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $6.84, suggesting downside of -12.5% (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: 0.0

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

Credit Suisse rates IGO as Neutral (3) -

The pre-feasibility study on the nickel sulphate option has been extended to the December quarter in order to "optimise the study". Credit Suisse suspects the company is likely buying time for nickel sulphide concentrate offtake agreements to be negotiated and replace expiring contracts.

The risk in the technology is a material factor that the broker believes should be considered, particularly when new technology is scaled up from the lab test work. Neutral rating and $4.10 target maintained.

Target price is $4.10 Current Price is $4.91 Difference: minus $0.81 (current price is over target).
If IGO meets the Credit Suisse target it will return approximately minus 16% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.64, suggesting downside of -5.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.2

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

Macquarie rates IGO as Upgrade to Neutral from Underperform (3) -

The company has provided an update on the nickel sulphate pre-feasibility study. No capital or operating expenditure estimates were provided.

Macquarie upgrades payability assumptions to reflect the company's improved negotiating position in talks with offtake partners. As a result, rating is upgraded to Neutral from Underperform. Target has risen to $4.90 from $4.00.

Target price is $4.90 Current Price is $4.91 Difference: minus $0.01 (current price is over target).
If IGO meets the Macquarie target it will return approximately minus 0% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.64, suggesting downside of -5.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.2

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

Citi rates IPL as Neutral (3) -

The company has flagged an additional negative impact from ongoing drought and another unplanned outage at the ammonia plant in Louisiana. Cumulatively, the losses to earnings (EBIT) from these outages or weather-related factors now total -$200m. Citi expects a strong earnings rebound in FY20.

While the broker believes there is valuation support, a Neutral rating is maintained, given uncertainty regarding the east coast explosives contract renewals and the future of Gibson Island. Target is reduced to $3.45 from $3.65.

Target price is $3.45 Current Price is $3.20 Difference: $0.25
If IPL meets the Citi target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $3.80, suggesting upside of 18.8% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.5

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

Credit Suisse rates IPL as Outperform (1) -

The company's trading update is broadly in line with Credit Suisse's expectations. Company-specific issues, such as plant outages, and extreme weather, such as drought, are expected to provide challenges in the first half result.

Credit Suisse acknowledges the absence of a specific note on the impact from re-contracting at Moranbah and the impact of US weather on ammonium nitrate sales is marginally positive.

The broker maintains an Outperform rating and reduces the target to $4.23 from $4.33

Target price is $4.23 Current Price is $3.20 Difference: $1.03
If IPL meets the Credit Suisse target it will return approximately 32% (excluding dividends, fees and charges).

Current consensus price target is $3.80, suggesting upside of 18.8% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.5

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

Deutsche Bank rates IPL as Buy (1) -

The company has experienced another outage at Louisiana and has pointed out earnings will also be affected by the drought on Australia's east coast and the closure of the Portland plant.

Deutsche Bank notes, on the positive side, Incitec Pivot has been able to mitigate the impact of the Mount Isa rail flooding and has also pushed out the planned turnaround at Louisiana by 12 months.

The broker acknowledges lower global fertiliser prices are not helping sentiment but retains a Buy rating and considers the majority of the events largely one-off in nature. $4.70 target maintained.

Target price is $4.70 Current Price is $3.20 Difference: $1.5
If IPL meets the Deutsche Bank target it will return approximately 47% (excluding dividends, fees and charges).

Current consensus price target is $3.80, suggesting upside of 18.8% (ex-dividends)

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.5

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

Macquarie rates IPL as Outperform (1) -

Incitec Pivot has flagged seasonal weakness from the drought across the east coast and a further outage in Louisiana. Macquarie believes FY19 represents a seasonal and cyclical low point for the company and production should improve subsequently.

Global fertiliser prices have been negatively affected by poor weather in North America, which has delayed spring fertiliser demand. The broker maintains an Outperform rating and reduces the target to $3.75 from $3.96.

Target price is $3.75 Current Price is $3.20 Difference: $0.55
If IPL meets the Macquarie target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $3.80, suggesting upside of 18.8% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.5

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

Ord Minnett rates IPL as Buy (1) -

As a result of the company's update on the issues affecting its FY19 financials, Ord Minnett reduces forecast by -14.7%.

The broker believes the recent performance in the share price is unjustified and, as the stock has valuation support and is trading at a significant discount to Orica ((ORI)), maintains a Buy rating. Target is lowered to $3.90 from $4.00.

The broker expects strength at the Louisiana plant will continue to support earnings growth despite the issues. Headwinds confronting the company are fertiliser and ammonia prices, while explosives demand in Australia is expected to be flat to slightly negative.

Target price is $3.90 Current Price is $3.20 Difference: $0.7
If IPL meets the Ord Minnett target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $3.80, suggesting upside of 18.8% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.5

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

UBS rates IPL as Neutral (3) -

The company has provided more clarity regarding the financial impact of outages from the Mount Isa rail line flooding and manufacturing issues in Louisiana. Additionally, distribution volumes are lower in Australian fertiliser because of the drought.

UBS downgrades FY19 forecasts to reflect this. The broker envisages positive explosives volumes but expect an oversupply and near-term contract re-pricing will weigh on earnings growth and operating leverage.

Neutral rating maintained. Target is reduced to $3.30 from $3.46.

Target price is $3.30 Current Price is $3.20 Difference: $0.1
If IPL meets the UBS target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $3.80, suggesting upside of 18.8% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.5

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

UBS rates JHG as Buy (1) -

UBS believes, with offshore markets slightly outpacing the ASX200, sector-wide assets under management and earnings upgrades have generally favoured the more globally-focused asset managers.

Janus Henderson is the broker's top pick in wealth management, supported by improved earnings momentum amid rising markets and moderating retail flows. UBS maintains a Buy rating and raises the target to US$30.90 from US$29.60.

Current Price is $35.60. Target price not assessed.

Current consensus price target is $32.70, suggesting downside of -8.1% (ex-dividends)

The company's fiscal year ends in December.

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: 0.2

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

UBS rates XRO as Neutral (3) -

UBS notes a high correlation between Google search trends and the company's net subscriber growth. The broker suggests, therefore, revenue guidance reiterated at the first half result in November is light.

This is based on the annualised monthly revenue run rate without factoring in subscriber growth. UBS expects Xero will achieve break-even in free cash flow during the second half, ex M&A.

UBS maintains a Neutral rating and $47 target.

Target price is $47.00 Current Price is $50.73 Difference: minus $3.73 (current price is over target).
If XRO 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 $44.93, suggesting downside of -11.4% (ex-dividends)

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: 0.2

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