Australian Broker Call

Macquarie rates ALQ as Outperform (1) -

The company is evaluating the options for its asset care business. This reflects some interest in the business which may lead to divestments. Macquarie notes the asset care business earned $140m in revenue and $18m in operating earnings in FY17, around 7% of group EBITDA.

The broker believes the stock has had a good run and has closed up the gap to its global peers. Macquarie suspects ALS is moving to an earnings upgrade phase, which is likely to support elevated multiples and options on the balance sheet as asset sales are achieved.

Outperform maintained. Target rises to $7.28 from $6.62.

Target price is $7.28 Current Price is $6.94 Difference: $0.34
If ALQ meets the Macquarie target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $6.48, suggesting downside of -8.0% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.3

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

Citi rates ANZ as Neutral (3) -

Citi analysts have updated their modeling and this has led to a reduction in EPS estimates by -2.3% and -3.5% in FY17 and FY18/19. The analysts explain the move is to reflect normalising markets revenues on top of continued revenue headwinds. Neutral rating and $31 target retained.

Target price is $31.00 Current Price is $28.00 Difference: $3
If ANZ meets the Citi target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $30.56, suggesting upside of 8.1% (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

Morgans rates BAL as Hold (3) -

The company will acquire its own canning facility, Camperdown Powder, in Victoria for $28.5m and a 90% interest. Morgans believes the acquisition provides several strategic benefits, with the most important being a path to CFDA registration of its Chinese labelled products.

The company will raise $60.4m from a fully underwritten entitlement offer and $27.5m of the funds will be used to make a one-off payment to Fonterra to re-set the supply agreement.

Morgans believes the turnaround will take time and there are still risks but, as the near-term multiples appear fair, a Hold rating is maintained. Target rises to $6.00 from $4.75.

Target price is $6.00 Current Price is $6.50 Difference: minus $0.5 (current price is over target).
If BAL meets the Morgans target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.16, suggesting downside of -19.3% (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

Citi rates CBA as Sell (5) -

Citi analysts have updated their modeling. As it is their belief mortgage competition will not abate alongside weak lending growth, for CBA the likely prospect remains for weaker revenue growth in FY18/19.

Today's update has triggered only marginal changes to estimates. Sell rating and $75 price target have been retained.

Target price is $75.00 Current Price is $81.70 Difference: minus $6.7 (current price is over target).
If CBA 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 $80.35, 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

Morgans rates CSL as Downgrade to Hold from Add (3) -

The company has acquired an 80% equity stake in a Chinese plasma fractionator for US$352m. The market is significant, Morgans observes, with demand for immunoglobulin estimated to outstrip supply over the next 10 years.

Expanding its market-leading footprint in China should allow CSL to better exploit the projected growth in demand, the broker adds. While confident in the future growth trajectory the broker believes consensus expectations are high for FY18 and valuation is stretched.

The broker downgrades to Hold from Add. Target is raised to $140.20 from $133.30.

Target price is $140.20 Current Price is $139.45 Difference: $0.75
If CSL meets the Morgans target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $138.70, suggesting downside of -0.8% (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: 0.6

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

Morgan Stanley rates CTD as Overweight (1) -

The company has reiterated FY17 guidance of $97m in EBITDA and provided a more constructive commentary regarding Australasia, Europe and Asia.

The company was more measured in its comments in on the US, highlighting that near-term political uncertainty has put a break on current activity despite bullish sentiment amongst clients.

Morgan Stanley retains an Overweight rating, In-Line industry view and $23.50 target.

Target price is $23.50 Current Price is $23.72 Difference: minus $0.22 (current price is over target).
If CTD meets the Morgan Stanley target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $20.45, suggesting downside of -14.4% (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 GTY as Downgrade to Neutral from Outperform (3) -

The company has provided an update on FY17 guidance, which implies better pricing but delays with higher margin sales. Macquarie reduces FY17 forecasts for earnings per share by -10.4% and FY18 by -0.4%.

Macquarie envisages long-term growth in the sector on the back of positive trends such as an ageing population, financial pressure on retirees and housing affordability.

Nevertheless, the broker does not believe the share price will outperform until the market is confident that earnings have found a bottom. Rating is downgraded to Neutral from Outperform. Target is $2.19.

Target price is $2.19 Current Price is $2.04 Difference: $0.15
If GTY meets the Macquarie target it will return approximately 7% (excluding dividends, fees and charges).

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

UBS rates GTY as Buy (1) -

UBS notes the company's guidance suggests home settlements will now come in around 240 in FY17 versus prior estimates of  260-290.  The main feature has been slower construction because of weather-related delays at key projects.

The broker believes the volatility in settlements will affect near-term earnings but the one-off nature of home sales means little impact on the valuation of the development business.

The broker remains positive on the affordable retirement theme and maintains a Buy rating on the stock. Target is reduced to $2.18 from $2.25.

Target price is $2.18 Current Price is $2.04 Difference: $0.14
If GTY meets the UBS target it will return approximately 7% (excluding dividends, fees and charges).

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

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

A previously cautious Citi has upgraded to Buy/High Risk from Neutral/High Risk. The analysts believe the -30% decline in the share price doesn't seem justified, despite market concerns about lithium over-supply next year.

It is Citi's view that the current build up in direct shipping ore (DSO, unprocessed product) will prove unsustainable, hence so too will be current market concerns. In addition, Galaxy is going to miss its own production guidance for the year, on the analysts' calculations.

Price target has been reduced by 5c to $2.70. Given Galaxy's current cash flow profile and solid project pipeline, namely James Bay/Sal de Vida, Citi analysts see an attractive entry point post share market sell-off.

Target price is $2.70 Current Price is $1.55 Difference: $1.15
If GXY meets the Citi target it will return approximately 74% (excluding dividends, fees and charges).

Current consensus price target is $2.27, suggesting upside of 33.3% (ex-dividends)

The company's fiscal year ends in December.

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 GXY as Initiation of coverage with Neutral (3) -

UBS initiates coverage on lithium stocks, noting Galaxy operates hard rock lithium assets, Mount Cattlin, and has a development option in the Sal de Vida brine project.

Mount Cattlin is one of the few producing hard rock lithium mines globally and, although this presents a near-term opportunity, UBS anticipates prices will normalise over the next three years as new entrants add supply to the market.

The broker takes up coverage with a Neutral rating and $1.80 target.

Target price is $1.80 Current Price is $1.55 Difference: $0.25
If GXY meets the UBS target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $2.27, suggesting upside of 33.3% (ex-dividends)

The company's fiscal year ends in December.

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

Morgans rates IDR as Hold (3) -

The company has declared an 8c second half distribution, bringing the full year distribution to 16c and in line with guidance. The company will move to paying distributions quarterly from FY18.

The company has also flagged draft valuations for five properties which indicate a $30m increase, largely from leasing transactions being executed at the two assets at Rhodes.

Morgans retains a Hold rating as the total shareholder return is forecast to be below 10%. Target is raised to $2.28 from $2.16.

Target price is $2.28 Current Price is $2.35 Difference: minus $0.07 (current price is over target).
If IDR meets the Morgans target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.17, suggesting downside of -7.9% (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

Deutsche Bank rates MGR as Downgrade to Hold from Buy (3) -

Deutsche Bank has adopted a more grim outlook for housing starts in Australia in the coming years, now forecasting a drop in the order of -20% by 2019. The analysts point out, multi-family housing starts represent circa 50% of Mirvac's Residential portfolio.

In addition, the share price is close to the broker's price target. Price target drops to $2.32 from $2.39.

Target price is $2.32 Current Price is $2.30 Difference: $0.02
If MGR meets the Deutsche Bank target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $2.33, suggesting upside of 0.3% (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 NAB as Sell (5) -

Further updating the modeling has triggered small upgrades to EPS estimates. Citi analysts report they added 1% and 3% to estimates for FY17/18 and FY19 respectively.

Target price remains unchanged at $30.50, as well as the Sell rating. Noted: on updated projections, NAB shareholders should expect a minor upgrade to their FY18 dividends; 200c instead of 198c.

Target price is $30.50 Current Price is $29.68 Difference: $0.82
If NAB meets the Citi target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $31.56, suggesting upside of 5.4% (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

UBS rates ORE as Initiation of coverage with Buy (1) -

The company offers operating exposure to the brine lithium carbonate market, demand for which is expected to expand significantly.

The broker notes execution on Olaroz has not been without incident yet, despite the operating risks, the company is one of the few new entrants to the market with a producing asset.

UBS initiates coverage with a Buy rating and $5.00 target.

Target price is $5.00 Current Price is $3.50 Difference: $1.5
If ORE meets the UBS target it will return approximately 43% (excluding dividends, fees and charges).

Current consensus price target is $4.35, suggesting upside of 21.1% (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

Ord Minnett rates RHC as Accumulate (2) -

Ord Minnett reviews the incoming French president's health policy statements and concludes that there is reason to be encouraged by the reformist agenda. The broker notes positive statements with regard to the role of private hospitals and apparent criticism of past tariff reductions.

Overall, Ord Minnett believes reimbursement should at least stabilise in France, allowing the company's operations to return to growth by FY19.

In Australia, hospitals and pharmacies support the growth outlook, despite the somewhat quiet domestic conditions. Double-digit growth in operating earnings is expected in FY18. Accumulate rating retained. Target is $80.

Target price is $80.00 Current Price is $70.94 Difference: $9.06
If RHC meets the Ord Minnett target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $75.37, suggesting upside of 5.4% (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

Deutsche Bank rates RWC as Downgrade to Sell from Hold (5) -

Deutsche Bank has adopted a more grim outlook for housing starts in Australia in the coming years, now forecasting a drop in the order of -20% by 2019. Reliance Worldwide has been downgraded to Sell from Hold, but the move is inspired by what looks like a lofty valuation supported by elevated market expectations.

Target price has increased to $3.06 from $3.00.

Target price is $3.06 Current Price is $3.63 Difference: minus $0.57 (current price is over target).
If RWC meets the Deutsche Bank target it will return approximately minus 16% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.46, suggesting downside of -0.3% (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

Credit Suisse rates SDF as Outperform (1) -

The company hosted an investor briefing focused on its technology strategy. Credit Suisse cannot fault the continuously expanding strategy but does not have the confidence to forecasts bankable earnings from growth opportunities.

At this point premium rates are working in the company's favour and an Outperform rating is maintained. The earnings growth opportunity is in FY19/20, in the broker's opinion.

A recovery in commercial lines premium rates in recent months will assist to offset some of the pressure from expenses. Target is $3.10.

Target price is $3.10 Current Price is $2.81 Difference: $0.29
If SDF meets the Credit Suisse target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $2.77, suggesting downside of -1.7% (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 SGP as Neutral (3) -

The company's investor briefing underpinned Macquarie's belief that the company is being conservative in its recognition of better-than-expected price gains or cost performance in residential projects.

The company has indicated its specialty tenant lease book has been re-mixed to include a greater share of retail services and food retailing.

The theme of the briefing, which was in Queensland, was expected improvements in the Queensland economy and further price growth for residential property, driven by interstate migration from New South Wales and Victoria.

Neutral rating retained. Target is $4.53.

Target price is $4.53 Current Price is $4.81 Difference: minus $0.28 (current price is over target).
If SGP meets the Macquarie target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.82, suggesting downside of -0.9% (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

UBS rates SYR as Initiation of coverage with Buy (1) -

The company offers exposure to the graphite market through its Balama natural flake graphite project in Mozambique. The project represents the largest and most advanced new supply to enter the graphite sector globally.

UBS believes the market is yet to fully appreciate the value that can be derived from the asset and initiates coverage on the stock with a Buy rating and $3.80 target.

Target price is $3.80 Current Price is $2.67 Difference: $1.13
If SYR meets the UBS target it will return approximately 42% (excluding dividends, fees and charges).

Current consensus price target is $4.70, suggesting upside of 73.4% (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

Citi rates WBC as Sell (5) -

A revision of Citi's expectations for the years ahead has led to weaker revenue projections, but slightly increased EPS estimates. Helping the Westpac bottom line is the fact BDD expenses are expected to be lower as, the analysts believe, asset quality remains good.

Target price remains unchanged at $30.50, alongside a Sell rating (also unchanged). DPS estimates have remained unchanged too.

Target price is $30.50 Current Price is $30.49 Difference: $0.01
If WBC meets the Citi target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $33.08, suggesting upside of 7.5% (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