Australian Broker Call

Citi rates ALQ as Buy (1) -

Citi reiterates its Buy rating and continues to be attracted to the cyclical recovery in the company's commodities division as well as the growth potential in life sciences.

While life sciences underperformed expectations in FY18 the broker believes the business can deliver 17% earnings growth in FY19. EBIT margins are expected to improve by around 90 basis points to 14.8% in FY19.

The broker expects the company to increasingly pursue acquisitions in the food and pharmaceutical sector. Target is reduced to $8.45 from $9.20.

Target price is $8.45 Current Price is $7.29 Difference: $1.16
If ALQ meets the Citi target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $7.51, suggesting upside of 3.0% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.0

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

Macquarie rates ALQ as Outperform (1) -

The company reported FY18 net profit of $142m, within guidance. Macquarie believes a strong performance in commodities should be well received as there are pricing and mix improvements to come.

While life sciences once again struggled for growth, cost reductions should improve the FY19 result, in the broker's opinion. Outperform rating maintained. Target is reduced to $8.10 from $8.20.

Target price is $8.10 Current Price is $7.29 Difference: $0.81
If ALQ meets the Macquarie target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $7.51, suggesting upside of 3.0% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.0

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

Morgans rates ALQ as Hold (3) -

Morgans updates forecasts following the company's briefing. Competitive pressure in life sciences has been reflected in the easing of medium-term operating earnings margins to 17-18%.

The commodity division is enjoying strong momentum, meanwhile. Morgans lifts forecasts slightly and valuation improves. Target is raised to $7.23 from $7.13. Hold maintained.

Target price is $7.23 Current Price is $7.29 Difference: minus $0.06 (current price is over target).
If ALQ meets the Morgans target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $7.51, suggesting upside of 3.0% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.0

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

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

The Productivity Commission has published a draft report assessing the superannuation system and recommending a radical overhaul.

On balance, the broker believes the report's major proposals pose a threat to the retail sector, to both corporate super and fees on choice products.

The practical detail of what is proposed will be difficult to achieve, the broker suggests, and the politics are also unclear.

This leads the broker to downgrade its recommendation to Hold from Accumulate. Target is reduced to $4.20 from $4.84.

Target price is $4.20 Current Price is $3.86 Difference: $0.34
If AMP meets the Ord Minnett target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $4.29, suggesting upside of 11.1% (ex-dividends)

The company's fiscal year ends in December.

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

Macquarie rates APA as Upgrade to Outperform from Neutral (1) -

Macquarie upgrades earnings estimates for FY18 by 1.8% and FY19 by 2.8%. The broker believes the drag from the regulatory threat has run its course.

The regulator risk discount is removed and the broker believes the US is emerging as an attractive growth option. Rating is upgraded to Outperform from Neutral. Target is raised 11% to $8.67.

Target price is $8.67 Current Price is $8.65 Difference: $0.02
If APA meets the Macquarie target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $8.74, suggesting upside of 1.0% (ex-dividends)

The company's fiscal year ends in June.

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

Credit Suisse rates AZJ as Outperform (1) -

Aurizon has applied for a judicial review of what seemed a particularly harsh UT5 draft decision on the grounds of bias of the Queensland regulator's chairman, given the next day that person was appointed chairman of the Port of Newcastle, NSW's competitor to Queensland coal. The broker believes Aurizon has a strong case.

The case will at least delay UT5 such that Aurizon can collect higher tariffs for a further 18 months. The broker has increased forecast earnings by 8%. Outperform and $4.85 target retained.

Target price is $4.85 Current Price is $4.30 Difference: $0.55
If AZJ meets the Credit Suisse target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $4.46, suggesting upside of 3.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.1

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

Ord Minnett rates CLH as Lighten (4) -

The company is increasing its FY18 purchased debt ledger guidance to $80-84m from $70-75m. Ord Minnett finds the upgrade interesting, given much of the uplift appears to have been driven by the acquisition of existing performing arrangement books rather than forward flows of debt.

While the company has announced upgrades to PDL acquisitions and guidance over the past 12 months, the broker suggests these dynamics are yet to play out in the accounts and the key operating metrics indicate negative trends.

Lighten rating and $1.25 target maintained.

Target price is $1.25 Current Price is $1.61 Difference: minus $0.36 (current price is over target).
If CLH meets the Ord Minnett target it will return approximately minus 22% (excluding dividends, fees and charges - negative figures indicate an expected loss).

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.5

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

Ord Minnett rates EPW as Hold (3) -

The significant sell-off in the stock since it downgraded guidance in the US means it is now more appealing to Ord Minnett. However, until the market gains more confidence in the outlook the broker retains a Hold rating with a $1.69 target.

At the company's investor briefing management focused on the Australian retail business and did not provide further updates on the US following last week's announcement. Australian retail represents more than 90% of the broker's net present value.

Target price is $1.69 Current Price is $1.58 Difference: $0.11
If EPW meets the Ord Minnett target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $1.57, suggesting downside of -0.4% (ex-dividends)

The company's fiscal year ends in June.

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

Macquarie rates FMG as Outperform (1) -

The company has approved the development of Eliwana mine with a capital cost of US$1.28bn. Macquarie believes this should enable Fortescue to improve its product mix over time, although to what level remains uncertain.

Macquarie had already incorporated Eliwana into forecasts and makes only modest adjustment to its outlook. Outperform retained. Target is raised to $5.50 from $5.40.

Target price is $5.50 Current Price is $4.54 Difference: $0.96
If FMG meets the Macquarie target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $5.21, suggesting upside of 14.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: 0.4

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

Morgans rates FNP as Hold (3) -

Morgans updates forecasts to account for the recent $200m equity raising. Funds will accelerate the company's capital expenditure program and provide for new acquisitions.

Morgans observes the company has a strong earnings growth profile but remains a capital intensive business. The broker believes the trading multiple is more than fair given the margins and returns are below the sector average.

Hold rating maintained. Target is raised to $5.90 from $5.05.

Target price is $5.90 Current Price is $5.64 Difference: $0.26
If FNP meets the Morgans target it will return approximately 5% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

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 Buy (1) -

Galaxy will sell the northern tenements of Sal de Vida to POSCO for US$280m. The tenements represent around 28% of the total resources of the project. Proceeds will support the development of Sal de Vida.

The company has signaled it is still looking for a strategic partner to develop and de-risk the project further. Citi considers the deal a good outcome as it allows the company to largely fund the project without compromising on the intrinsic value. Buy/High Risk rating maintained. Target is $4.30.

Target price is $4.30 Current Price is $3.35 Difference: $0.95
If GXY meets the Citi target it will return approximately 28% (excluding dividends, fees and charges).

Current consensus price target is $3.34, suggesting downside of -0.4% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.0

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

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

The company is selling the northern part of its Sal de Vida tenement to POSCO for US$280m to provide funding.

Morgan Stanley considers this move positive but retains some concerns, the main one being extra lithium supply. POSCO will operate independently and run a project in parallel.

Equal-weight. Target is $2.95. Industry View: Attractive.

Target price is $2.95 Current Price is $3.35 Difference: minus $0.4 (current price is over target).
If GXY meets the Morgan Stanley target it will return approximately minus 12% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.34, suggesting downside of -0.4% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.0

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

Ord Minnett rates GXY as No Rating (-1) -

The company intends to sell the northern tenements of Sal de Vida for US$280m to POSCO. The company will use the proceeds to fund development of the southern tenements.

The northern tenements do not include any of the 1.1mt lithium reserve but host 1.6mt of contained lithium in measured and indicated resources.

Ord Minnett is currently restricted on research and cannot provide a rating of target.

Current Price is $3.35. Target price not assessed.

Current consensus price target is $3.34, suggesting downside of -0.4% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.0

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

Credit Suisse rates IDX as Outperform (1) -

The company has acquired 4 radiology clinics in NZ in a move the broker believes makes sense, given the similarities of the NZ market and a more challenging M&A environment in Australia. The broker estimates the deal is 16% earnings accretive and raises forecast accordingly.

Resultant elevated gearing should not be an issue, the broker suggests, given solid volume growth and supportive regulation. Target rises to $3.05 from $2.70, Outperform retained.

Target price is $3.05 Current Price is $2.80 Difference: $0.25
If IDX meets the Credit Suisse target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $2.73, suggesting downside of -2.5% (ex-dividends)

The company's fiscal year ends in June.

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

Ord Minnett rates IDX as Buy (1) -

The company has acquired several NZ-based diagnostic imaging practices for $97.65m. The transaction is expected to offer 20% accretion to earnings per share in FY19.

Meanwhile, other value-adding activities are ramping in Australia, including cost reductions and new sub-specialty centres. Ord Minnett maintains a Buy rating and raises the target to $2.89 from $2.39.

Target price is $2.89 Current Price is $2.80 Difference: $0.09
If IDX meets the Ord Minnett target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $2.73, suggesting downside of -2.5% (ex-dividends)

The company's fiscal year ends in June.

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

Macquarie rates IGO as Underperform (5) -

The company will sell the Jaguar zinc/copper mine for $73.2m in cash. This is not a surprise to Macquarie although the sale price is well above its valuation.

The source of cash flow now centres on two operating mines, Nova and Tropicana. Macquarie incorporates the sale of Jaguar and reduces FY18 and FY19 earnings estimates by -9%. Underperform rating and $4.60 target maintained.

Target price is $4.60 Current Price is $4.60 Difference: $0
If IGO meets the Macquarie target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $4.72, suggesting upside of 2.5% (ex-dividends)

The company's fiscal year ends in June.

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

UBS rates IGO as Neutral (3) -

UBS believes nickel is the next commodity to benefit from a tighter market and higher prices. The company is ideally placed with its Nova mine which has a 10-year life and low costs.

The company has announced the sale of Jaguar for $73m and, while speculation surrounds the potential sale of Tropicana, has specifically stated that this is a core asset.

The broker has a positive outlook on the stock but finds valuation a problem and maintains a Neutral rating. Target is $5.10.

Target price is $5.10 Current Price is $4.60 Difference: $0.5
If IGO meets the UBS target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $4.72, suggesting upside of 2.5% (ex-dividends)

The company's fiscal year ends in June.

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

Macquarie rates IOF as No Rating (-1) -

Investa Office has received an unsolicited non-binding proposal from Blackstone at $5.25 a share. The transaction is supported by the manager in the absence of a superior proposal and Blackstone has not made a decision about the future management of Investa Office.

Macquarie is on research restrictions and cannot advise on a rating or target at present.

Current Price is $5.14. Target price not assessed.

Current consensus price target is $4.66, suggesting downside of -9.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.0

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

Credit Suisse rates NHC as Neutral (3) -

New Hope's Q3 production exceeded the broker's forecast while sales were lower, due to maintenance outages and the rail embargo in place during the Commonwealth Games. The broker sees FY guidance as achievable.

There was no update on New Acland Stage 3 approval as the matter has been referred back to the Land Court. Neutral and $2.25 target retained.

Target price is $2.25 Current Price is $2.33 Difference: minus $0.08 (current price is over target).
If NHC meets the Credit Suisse target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.47, suggesting upside of 6.0% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.7

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

Macquarie rates NXT as Neutral (3) -

Macquarie reviews the company's proposed M3, S3 and P2 data centre plans. The broker believes the company is well-positioned to benefit from the high demand for data centre capacity with its planned expansion to around 300MW.

Nevertheless, the broker considers the near-term multiple stretched and the long-term value implied in the valuation carries significant risk, given the company is only billing around 10% of its planned capacity at the moment.

Neutral rating maintained. Target is raised to $7.47 from $6.32.

Target price is $7.47 Current Price is $7.29 Difference: $0.18
If NXT meets the Macquarie target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $7.94, suggesting upside of 8.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.6

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

Macquarie rates REA as Downgrade to Underperform from Neutral (5) -

Macquarie considers the valuation stretched at current levels and downgrades to Underperform from Neutral. While operating momentum is strong the broker envisages a risk that future growth in earnings will be absorbed by a relative de-rating.

Listing volumes are down moderately, the broker observes, but price/mix remain the key drivers of the stock. Target is raised to $86 from $74 after the rolling forward of valuation.

Target price is $86.00 Current Price is $87.80 Difference: minus $1.8 (current price is over target).
If REA 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 $83.46, suggesting downside of -4.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.0

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

Citi rates S32 as Neutral (3) -

The company has a conditional agreement to acquire 50% of Eagle Downs metallurgical coal project from Aquila Resources. Total payment is US$133m. Previous work done on the mine indicates potential to produce 4.5mtpa of coal from one longwall over the first 10 years.

Citi believes the transaction provides much-needed growth for the company and a channel to deploy some of its cash. The broker maintains a Neutral rating and $3.80 target.

Target price is $3.80 Current Price is $3.64 Difference: $0.16
If S32 meets the Citi target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $3.72, suggesting upside of 2.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

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

Ord Minnett rates S32 as Hold (3) -

The company has reached a conditional agreement to acquire a 50% interest in Eagle Downs metallurgical coal project, Queensland. Ord Minnett suggests the acquisition will provide a foothold in the Bowen Basin for a relatively modest outlay of US$133m plus royalty.

It allows South32 to leverage its existing expertise in underground longwall mining. The broker maintains a Hold rating and $3.60 target.

Target price is $3.60 Current Price is $3.64 Difference: minus $0.04 (current price is over target).
If S32 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 $3.72, suggesting upside of 2.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

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 S32 as Neutral (3) -

The company has signed a conditional agreement to acquire a 50% stake in Eagle Downs, Queensland. Payment comprises two stages, US$106m upon completion of the acquisition and US$27m three years after completion.

Eagle Downs is a partially developed metallurgical coal project, placed under care and maintenance in late 2015 after the collapse of a key contractor. First coal is expected in 3-4 years. The next step is the compilation of a feasibility study that will review the 2016 DFS.

UBS maintains a Neutral rating and $3.70 target.

Target price is $3.70 Current Price is $3.64 Difference: $0.06
If S32 meets the UBS target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $3.72, suggesting upside of 2.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

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 SGP as Downgrade to Sell from Neutral (5) -

UBS expects house prices will fall by -5% or more in 2019 as lending standards tighten and higher living expenses limit borrowing capacity. The broker downgrades Stockland FY20 and FY21 earnings estimates by -3% and -8% respectively on lower residential settlements.

UBS does not believe the company is able to achieve the operating profit margin of 23% that is required to deliver 4% growth in earnings. Rating is downgraded to Sell from Neutral. Target is reduced to $4.08 from $4.20.

Target price is $4.08 Current Price is $4.18 Difference: minus $0.1 (current price is over target).
If SGP meets the UBS target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.48, suggesting upside of 7.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.4

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

Deutsche Bank rates SGR as Buy (1) -

Further to the company's investor briefing Deutsche Bank makes slight reductions to FY18 and FY19 earnings forecasts.

The broker expects growth will be achieved via recovery in VIP turnover, the new hotel tower and expanding facilities on the Gold Coast.

The broker maintains a Buy rating. Target is trimmed to $5.90 from $6.10.

Target price is $5.90 Current Price is $5.05 Difference: $0.85
If SGR meets the Deutsche Bank target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $6.11, suggesting upside of 20.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 1.0

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

Morgans rates SGR as Add (1) -

The company's investor briefing signalled VIP trading was particularly strong and is expected to return a record result. Domestic gambling revenue was weaker than forecast, affected by lower table hold rates.

The company has flagged the positive fundamentals of the south-east Queensland market. Morgans retains an Add rating and reduces the target to $6.19 from $6.21.

Target price is $6.19 Current Price is $5.05 Difference: $1.14
If SGR meets the Morgans target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $6.11, suggesting upside of 20.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 1.0

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

Ord Minnett rates SGR as Buy (1) -

After the company's trading update Ord Minnett adjusts its models to allow for increased capital expenditure forecasts for FY18-21 and increased VIP turnover in FY19.

The broker incorporates reduced operating expenditure for Star Sydney in FY18 and beyond and adjusts dividends to reflect a 70% pay-out ratio.

A Buy rating is maintained. Target is reduced to $6.10 from $6.20.

Target price is $6.10 Current Price is $5.05 Difference: $1.05
If SGR meets the Ord Minnett target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $6.11, suggesting upside of 20.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 1.0

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

Morgans rates SHV as Hold (3) -

Morgans believes the company should achieve at least the top end of its pool price estimate of $8.10-8.50/kg, reflecting positive industry fundamentals and a falling Australian dollar. Morgans upgrades forecasts, given the company's strong operating leverage to rising almond prices.

The broker believes the upgrade is already factored into the share price and maintains a Hold rating. Target is raised to $6.85 from $5.50.

Target price is $6.85 Current Price is $6.93 Difference: minus $0.08 (current price is over target).
If SHV meets the Morgans target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.0

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

Morgan Stanley rates SPK as Overweight (1) -

Morgan Stanley believes investors should consider Spark NZ as an alternative telco yield play. The broker likes the company's management plan to bring forward NZ$25-30m in one-off costs into FY18.

Morgan Stanley notes the telco market in New Zealand is more stable than in Australia yet similarly mature and competitive. The broker also believes the current dividend is sustainable over the medium term. Overweight rating. Industry view is In-Line. Price target is raised to NZ$3.90 from NZ$3.80.

Current Price is $3.41. Target price not assessed.

Current consensus price target is N/A

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

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

Citi rates TLS as Sell (5) -

Sell rating and $2.70 price target retained with Citi analysts taking yet another closer look into the (un)sustainability of Telstra's 22c dividend. On Citi's calculation, only half of that dividend is currently supported by genuine operational cash flows.

As a result, the analysts expect the dividend could be cut as early as the investor day in June. The analysts note the stock seems friendless at the moment, with negative EPS growth on the horizon, a falling DPS, growing competition plus an inadequate strategy for the future.

Target price is $2.70 Current Price is $2.78 Difference: minus $0.08 (current price is over target).
If TLS meets the Citi target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.38, suggesting upside of 21.6% (ex-dividends)

The company's fiscal year ends in June.

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

Morgans rates VHT as Add (1) -

Volpara's FY18 results were in line with expectations. FY19 guidance of NZ $9m has been reiterated. Morgans makes no changes to forecasts and maintains an Add rating and $0.93 target.

Target price is $0.93 Current Price is $0.87 Difference: $0.06
If VHT meets the Morgans target it will return approximately 7% (excluding dividends, fees and charges).

The company's fiscal year ends in March.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 1.0

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