Australian Broker Call
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January 16, 2018
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COMPANIES DISCUSSED IN THIS ISSUE
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The number next to the symbol represents the number of brokers covering it for this report -(if more than 1)
THIS REPORT WILL BE UPDATED SHORTLY
Last Updated: 10:33 AM
Your daily news report on the latest recommendation, valuation, forecast and opinion changes.
This report includes concise but limited reviews of research recently published by Stockbrokers, which should be considered as information concerning likely market behaviour rather than advice on the securities mentioned. Do not act on the contents of this Report without first reading the important information included at the end.
For more info about the different terms used by stockbrokers, as well as the different methodologies behind similar sounding ratings, download our guide HERE
Today's Upgrades and Downgrades
| IGO - | INDEPENDENCE GROUP | Downgrade to Sell from Hold | Deutsche Bank |
| OGC - | OCEANAGOLD | Upgrade to Buy from Hold | Deutsche Bank |
| PPT - | PERPETUAL | Upgrade to Neutral from Sell | Citi |
| SBM - | ST BARBARA | Downgrade to Hold from Buy | Deutsche Bank |
| TLS - | TELSTRA CORP | Downgrade to Neutral from Outperform | Macquarie |
| VOC - | VOCUS COMMUNICATIONS | Downgrade to Underperform from Neutral | Macquarie |
Overnight Price: $2.72
Ord Minnett rates AOG as Accumulate (2) -
Ord Minnett updates its model to incorporate the sale of Gasworks Plaza for $248.4m. The broker estimates the sale will boost net tangible assets by $0.11.
The broker removes a $50m buyback assumption for 2018, now expecting the company to retain the capital and maintain low gearing.
Accumulate rating maintained. Target is $3.60.
This stock is not covered in-house by Ord Minnett. Instead, the broker whitelabels research by JP Morgan.
Target price is $3.60 Current Price is $2.72 Difference: $0.88
If AOG meets the Ord Minnett target it will return approximately 32% (excluding dividends, fees and charges).
Current consensus price target is $3.70, suggesting upside of 36.1% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Ord Minnett forecasts a full year FY18 dividend of 10.00 cents and EPS of 20.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 20.1, implying annual growth of -54.5%. Current consensus DPS estimate is 10.1, implying a prospective dividend yield of 3.7%. Current consensus EPS estimate suggests the PER is 13.5. |
Forecast for FY19:
Ord Minnett forecasts a full year FY19 dividend of 11.00 cents and EPS of 19.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 20.4, implying annual growth of 1.5%. Current consensus DPS estimate is 10.5, implying a prospective dividend yield of 3.9%. Current consensus EPS estimate suggests the PER is 13.3. |
Market Sentiment: 0.9
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $12.75
Macquarie rates AUB as Outperform (1) -
Macquarie has reviewed the premium rate environment and concludes that current market conditions supports the earnings outlook for the company. The broker forecasts 9.1% growth in earnings per share in FY18.
Macquarie maintains an Outperform rating and $13.44 target.
Target price is $13.44 Current Price is $12.75 Difference: $0.69
If AUB meets the Macquarie target it will return approximately 5% (excluding dividends, fees and charges).
The company's fiscal year ends in June.
Forecast for FY18:
Macquarie forecasts a full year FY18 dividend of 46.00 cents and EPS of 69.10 cents. |
Forecast for FY19:
Macquarie forecasts a full year FY19 dividend of 50.00 cents and EPS of 75.70 cents. |
Market Sentiment: 1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $2.00
Macquarie rates AYS as Outperform (1) -
Macquarie finds the outlook mixed. Prospects for growth in the telco segment appear limited and the risk is that this segment goes into decline over the next few years as competition increases.
In contrast, the outlook for the energy business is robust and there is value if the company can prove its cross selling model works.
The broker retains Outperform rating and a $2.35 target.
Target price is $2.35 Current Price is $2.00 Difference: $0.35
If AYS meets the Macquarie target it will return approximately 18% (excluding dividends, fees and charges).
The company's fiscal year ends in June.
Forecast for FY18:
Macquarie forecasts a full year FY18 dividend of 13.10 cents and EPS of 17.50 cents. |
Forecast for FY19:
Macquarie forecasts a full year FY19 dividend of 15.60 cents and EPS of 20.80 cents. |
Market Sentiment: 1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $31.90
Deutsche Bank rates BHP as Buy (1) -
Deutsche Bank notes commodities are trading well above historical real averages and marginal cost. Yet, global demand should continue to improve despite a softening in the Chinese property market.
Deutsche Bank finds base metals more attractive than the bulk miners. BHP remains a top pick. Target is raised to $34.50 from $29.50. Buy rating retained.
Target price is $34.50 Current Price is $31.90 Difference: $2.6
If BHP meets the Deutsche Bank target it will return approximately 8% (excluding dividends, fees and charges).
Current consensus price target is $31.34, suggesting downside of -1.7% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Deutsche Bank forecasts a full year FY18 dividend of 106.69 cents and EPS of 219.88 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 201.6, implying annual growth of N/A. Current consensus DPS estimate is 112.0, implying a prospective dividend yield of 3.5%. Current consensus EPS estimate suggests the PER is 15.8. |
Forecast for FY19:
Deutsche Bank forecasts a full year FY19 dividend of 115.80 cents and EPS of 226.39 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 176.1, implying annual growth of -12.6%. Current consensus DPS estimate is 100.0, implying a prospective dividend yield of 3.1%. Current consensus EPS estimate suggests the PER is 18.1. |
This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.
Market Sentiment: 0.8
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
BRG BREVILLE GROUP LIMITED
Household & Personal Products
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Overnight Price: $12.20
UBS rates BRG as Neutral (3) -
Neutral rating retained while the price target moves to $11.95 from $10.60 as earnings estimates have been lifted in response to ongoing favourable dynamics.
Having said so, UBS also believes the stock is trading on elevated multiples. Cuts to the US tax rate further support the lift in forecasts.
Target price is $11.95 Current Price is $12.20 Difference: minus $0.25 (current price is over target).
If BRG 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 $11.23, suggesting downside of -8.0% (ex-dividends)
Forecast for FY18:
Current consensus EPS estimate is 45.5, implying annual growth of 9.9%. Current consensus DPS estimate is 33.5, implying a prospective dividend yield of 2.7%. Current consensus EPS estimate suggests the PER is 26.8. |
Forecast for FY19:
Current consensus EPS estimate is 51.1, implying annual growth of 12.3%. Current consensus DPS estimate is 37.7, implying a prospective dividend yield of 3.1%. Current consensus EPS estimate suggests the PER is 23.9. |
Market Sentiment: 0.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
DMP DOMINO'S PIZZA ENTERPRISES LIMITED
Food, Beverages & Tobacco
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Overnight Price: $44.69
Morgan Stanley rates DMP as Overweight (1) -
Morgan Stanley believes the recent de-rating in the stock has created an attractive entry point. The broker considers the threat from aggregators is overplayed, given rapid market growth and Domino's pre-eminent positioning.
Overweight rating and Cautious industry view. Target is raised to $60 from $53.
Target price is $60.00 Current Price is $44.69 Difference: $15.31
If DMP meets the Morgan Stanley target it will return approximately 34% (excluding dividends, fees and charges).
Current consensus price target is $48.10, suggesting upside of 7.6% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Morgan Stanley forecasts a full year FY18 dividend of 121.00 cents and EPS of 165.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 163.5, implying annual growth of 40.9%. Current consensus DPS estimate is 112.6, implying a prospective dividend yield of 2.5%. Current consensus EPS estimate suggests the PER is 27.3. |
Forecast for FY19:
Morgan Stanley forecasts a full year FY19 dividend of 146.00 cents and EPS of 210.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 201.3, implying annual growth of 23.1%. Current consensus DPS estimate is 138.0, implying a prospective dividend yield of 3.1%. Current consensus EPS estimate suggests the PER is 22.2. |
Market Sentiment: 0.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $4.99
Deutsche Bank rates IGO as Downgrade to Sell from Hold (5) -
Deutsche Bank notes commodities are trading well above historical real averages and marginal cost. Yet, global demand should continue to improve despite a softening in the Chinese property market. Deutsche Bank finds base metals more attractive than the bulk miners.
Deutsche Bank downgrades Independence Group to Sell from Hold on valuation. Target is raised to $3.90 from $3.70.
Target price is $3.90 Current Price is $4.99 Difference: minus $1.09 (current price is over target).
If IGO meets the Deutsche Bank target it will return approximately minus 22% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $4.21, suggesting downside of -15.7% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Deutsche Bank forecasts a full year FY18 dividend of 5.00 cents and EPS of 21.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 22.4, implying annual growth of 664.5%. Current consensus DPS estimate is 8.4, implying a prospective dividend yield of 1.7%. Current consensus EPS estimate suggests the PER is 22.3. |
Forecast for FY19:
Deutsche Bank forecasts a full year FY19 dividend of 10.00 cents and EPS of 36.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 36.1, implying annual growth of 61.2%. Current consensus DPS estimate is 10.6, implying a prospective dividend yield of 2.1%. Current consensus EPS estimate suggests the PER is 13.8. |
Market Sentiment: -0.2
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $1.24
Morgans rates MHJ as Hold (3) -
The latest market update by Michael Hill implies same stores sales growth was a negative -2.4%, point out analysts at Morgans. They have in response reduced forecasts.
Morgans highlights all regions saw growth decline incrementally, but Australia and Canada were both negative stand-outs. They flag the risk for write-downs regarding the E&R brand review.
Hold rating maintained, while the price target falls to $1.23 from $1.28. The company is scheduled to report its interim result on 22 February.
Target price is $1.23 Current Price is $1.24 Difference: minus $0.01 (current price is over target).
If MHJ 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 $1.46, suggesting upside of 17.5% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Morgans forecasts a full year FY18 dividend of 4.90 cents and EPS of 8.10 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 8.3, implying annual growth of -1.9%. Current consensus DPS estimate is 5.1, implying a prospective dividend yield of 4.1%. Current consensus EPS estimate suggests the PER is 14.9. |
Forecast for FY19:
Morgans forecasts a full year FY19 dividend of 5.30 cents and EPS of 8.80 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 9.6, implying annual growth of 15.7%. Current consensus DPS estimate is 5.4, implying a prospective dividend yield of 4.4%. Current consensus EPS estimate suggests the PER is 12.9. |
Market Sentiment: 0.8
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $20.94
Deutsche Bank rates MIN as Hold (3) -
The company is moving downstream at its Wodgina lithium mine. Deutsche Bank already includes three spodumene plants in its model and now includes a carbonate plant as well.
The move downstream is a first for the company and there are risks, Deutsche Bank points out. The broker believes gas from AWE ((AWE)) would improve the carbonate economics. The stocks valuation has increased by 36%.
Hold rating. Target is raised to $20 from $15.
Target price is $20.00 Current Price is $20.94 Difference: minus $0.94 (current price is over target).
If MIN meets the Deutsche Bank target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $21.10, suggesting upside of 0.8% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Deutsche Bank forecasts a full year FY18 dividend of 81.00 cents and EPS of 161.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 145.5, implying annual growth of 35.1%. Current consensus DPS estimate is 74.7, implying a prospective dividend yield of 3.6%. Current consensus EPS estimate suggests the PER is 14.4. |
Forecast for FY19:
Deutsche Bank forecasts a full year FY19 dividend of 119.00 cents and EPS of 237.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 230.9, implying annual growth of 58.7%. Current consensus DPS estimate is 113.3, implying a prospective dividend yield of 5.4%. Current consensus EPS estimate suggests the PER is 9.1. |
Market Sentiment: 0.7
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
MMS MCMILLAN SHAKESPEARE LIMITED
Vehicle Leasing & Salary Packaging
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Overnight Price: $16.60
Credit Suisse rates MMS as Neutral (3) -
Credit Suisse considered the earnings outlook positive but the valuation is only fair and, given the inherent risk, a Neutral rating is maintained. Target rises to $17.30 from $15.75.
Guidance points to around 8% growth in earnings per share in FY18 which appears achievable, in the broker's opinion. Catalysts include acquisitions while risk pertain to regulatory change and contract renewals.
While McMillan Shakespeare has slightly better valuation support the broker believes SmartGroup ((SIQ)) has greater scope for upgrade.
Target price is $17.30 Current Price is $16.60 Difference: $0.7
If MMS meets the Credit Suisse target it will return approximately 4% (excluding dividends, fees and charges).
Current consensus price target is $16.65, suggesting upside of 0.3% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Credit Suisse forecasts a full year FY18 dividend of 69.00 cents and EPS of 113.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 110.7, implying annual growth of 5.6%. Current consensus DPS estimate is 68.0, implying a prospective dividend yield of 4.1%. Current consensus EPS estimate suggests the PER is 15.0. |
Forecast for FY19:
Credit Suisse forecasts a full year FY19 dividend of 75.30 cents and EPS of 124.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 119.6, implying annual growth of 8.0%. Current consensus DPS estimate is 71.6, implying a prospective dividend yield of 4.3%. Current consensus EPS estimate suggests the PER is 13.9. |
Market Sentiment: 0.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $3.33
Deutsche Bank rates OGC as Upgrade to Buy from Hold (1) -
Deutsche Bank notes commodities are trading well above historical real averages and marginal cost. Yet, global demand should continue to improve despite a softening in the Chinese property market. Deutsche Bank finds base metals more attractive than the bulk miners.
Upgraded gold and copper price forecasts have benefited OceanaGold for 2018/19. Deutsche Bank upgrades to Buy from Hold on valuation and the stock remains a top pick. Target is $3.70.
Target price is $3.70 Current Price is $3.33 Difference: $0.37
If OGC meets the Deutsche Bank target it will return approximately 11% (excluding dividends, fees and charges).
Current consensus price target is $4.46, suggesting upside of 33.9% (ex-dividends)
The company's fiscal year ends in December.
Forecast for FY17:
Deutsche Bank forecasts a full year FY17 dividend of 2.60 cents and EPS of 27.32 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 29.2, implying annual growth of N/A. Current consensus DPS estimate is 2.9, implying a prospective dividend yield of 0.9%. Current consensus EPS estimate suggests the PER is 11.4. |
Forecast for FY18:
Deutsche Bank forecasts a full year FY18 dividend of 3.90 cents and EPS of 37.73 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 34.3, implying annual growth of 17.5%. Current consensus DPS estimate is 3.6, implying a prospective dividend yield of 1.1%. Current consensus EPS estimate suggests the PER is 9.7. |
This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.
Market Sentiment: 0.8
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
PPT PERPETUAL LIMITED
Wealth Management & Investments
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Overnight Price: $51.05
Citi rates PPT as Upgrade to Neutral from Sell (3) -
Funds under management rose 5.5% in the December quarter, mostly driven by market movements, Citi observes. Net outflows remain negative, although the broker notes the chunky institutional outflows were absent this time around after being in evidence in previous quarters, and this provides some cause for optimism for future flows.
Citi notes the stock is near where it was after the last quarterly update, while over the same time the market has rallied around 4%. Hence, Citi lifts its rating to Neutral from Sell. Target is raised to $51.80 from $50.25.
Target price is $51.80 Current Price is $51.05 Difference: $0.75
If PPT meets the Citi target it will return approximately 1% (excluding dividends, fees and charges).
Current consensus price target is $51.44, suggesting upside of 0.8% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Citi forecasts a full year FY18 dividend of 270.00 cents and EPS of 299.80 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 297.5, implying annual growth of -0.8%. Current consensus DPS estimate is 270.9, implying a prospective dividend yield of 5.3%. Current consensus EPS estimate suggests the PER is 17.2. |
Forecast for FY19:
Citi forecasts a full year FY19 dividend of 290.00 cents and EPS of 324.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 317.5, implying annual growth of 6.7%. Current consensus DPS estimate is 291.4, implying a prospective dividend yield of 5.7%. Current consensus EPS estimate suggests the PER is 16.1. |
Market Sentiment: -0.1
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Credit Suisse rates PPT as Outperform (1) -
The company reported funds under management for the December quarter of $32.8bn, driven by strong market movements that were partially offset by modest outflows.
The continued outflows, while disappointing, are well acknowledged by the market, in the broker's opinion. In contrast, Credit Suisse believes the benefits of disciplined cost management and the company's strategies may be under appreciated.
Outperform. Target is $56.00.
Target price is $56.00 Current Price is $51.05 Difference: $4.95
If PPT meets the Credit Suisse target it will return approximately 10% (excluding dividends, fees and charges).
Current consensus price target is $51.44, suggesting upside of 0.8% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Credit Suisse forecasts a full year FY18 dividend of 285.00 cents and EPS of 312.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 297.5, implying annual growth of -0.8%. Current consensus DPS estimate is 270.9, implying a prospective dividend yield of 5.3%. Current consensus EPS estimate suggests the PER is 17.2. |
Forecast for FY19:
Credit Suisse forecasts a full year FY19 dividend of 310.00 cents and EPS of 343.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 317.5, implying annual growth of 6.7%. Current consensus DPS estimate is 291.4, implying a prospective dividend yield of 5.7%. Current consensus EPS estimate suggests the PER is 16.1. |
Market Sentiment: -0.1
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Morgan Stanley rates PPT as Equal-weight (3) -
Outflows of $200m in the December quarter were driven by planner-advised retail, Morgan Stanley observes. This is slightly below forecasts and is the fifth consecutive quarter of outflows from Australian equities.
The broker now envisages around -1% downside risk to FY18 earnings forecasts. The broker retains an Equal-weight rating. Target is $51.00. Industry view: In-line.
Target price is $51.00 Current Price is $51.05 Difference: minus $0.05 (current price is over target).
If PPT meets the Morgan Stanley target it will return approximately minus 0% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $51.44, suggesting upside of 0.8% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Morgan Stanley forecasts a full year FY18 dividend of 272.00 cents and EPS of 285.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 297.5, implying annual growth of -0.8%. Current consensus DPS estimate is 270.9, implying a prospective dividend yield of 5.3%. Current consensus EPS estimate suggests the PER is 17.2. |
Forecast for FY19:
Morgan Stanley forecasts a full year FY19 dividend of 298.00 cents and EPS of 307.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 317.5, implying annual growth of 6.7%. Current consensus DPS estimate is 291.4, implying a prospective dividend yield of 5.7%. Current consensus EPS estimate suggests the PER is 16.1. |
Market Sentiment: -0.1
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Ord Minnett rates PPT as Lighten (4) -
Ord Minnett observes the share price has recovered in the past few weeks along with the recent strength in markets, even though flows remain sparse and a new CEO is yet to be announced.
December quarter funds under management showed negative net flows of -$200m, primarily in Australian equities in the intermediary channel.
In the near term the broker expects the share price to remain supported by strong equity markets and the dividend, particularly given the large retail shareholder base. However, with no sign of meaningful flows in the near term, earnings remain largely in the lap of markets.
Lighten retained. Target is raised to $49.50 from $48.00.
This stock is not covered in-house by Ord Minnett. Instead, the broker whitelabels research by JP Morgan.
Target price is $49.50 Current Price is $51.05 Difference: minus $1.55 (current price is over target).
If PPT 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 $51.44, suggesting upside of 0.8% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Ord Minnett forecasts a full year FY18 dividend of 270.00 cents and EPS of 309.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 297.5, implying annual growth of -0.8%. Current consensus DPS estimate is 270.9, implying a prospective dividend yield of 5.3%. Current consensus EPS estimate suggests the PER is 17.2. |
Forecast for FY19:
Ord Minnett forecasts a full year FY19 dividend of 295.00 cents and EPS of 333.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 317.5, implying annual growth of 6.7%. Current consensus DPS estimate is 291.4, implying a prospective dividend yield of 5.7%. Current consensus EPS estimate suggests the PER is 16.1. |
Market Sentiment: -0.1
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
QAN QANTAS AIRWAYS LIMITED
Transportation & Logistics
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Overnight Price: $5.18
UBS rates QAN as Buy (1) -
Qantas shares have underperformed since late October and UBS suggests two key factors are to blame for it: the strong rise in the oil price and the removal of Qantas shares from the MSCI.
The analysts believe this now sets the stock up for a surprise to the upside. UBS suggests Qantas could return into MSCI as early as May, plus the broker sees an attractive earnings outlook, complemented by circa $1bn of capital management per annnum and significant flexibility in the balance sheet.
Buy rating retained. Valuation/price target remains $6.70.
Target price is $6.70 Current Price is $5.18 Difference: $1.52
If QAN meets the UBS target it will return approximately 29% (excluding dividends, fees and charges).
Current consensus price target is $6.55, suggesting upside of 26.4% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
UBS forecasts a full year FY18 dividend of 25.00 cents and EPS of 61.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 58.6, implying annual growth of 27.4%. Current consensus DPS estimate is 21.6, implying a prospective dividend yield of 4.2%. Current consensus EPS estimate suggests the PER is 8.8. |
Forecast for FY19:
UBS forecasts a full year FY19 dividend of 25.00 cents and EPS of 67.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 64.6, implying annual growth of 10.2%. Current consensus DPS estimate is 23.8, implying a prospective dividend yield of 4.6%. Current consensus EPS estimate suggests the PER is 8.0. |
Market Sentiment: 0.6
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
RCR RCR TOMLINSON LIMITED
Mining Sector Contracting
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Overnight Price: $3.90
Ord Minnett rates RCR as Buy (1) -
The company has been awarded a $70m contract by Metro Trains Melbourne for upgrades to three stations on the underground rail. Ord Minnett believes the company's rail exposure offers a large opportunity that is not well understood by the market.
The broker expects strong revenue growth in the first half, although earnings are expected to be below the prior half, with margins down -30 basis points to 2.6%. Ord Minnett increases estimates for FY19 by 1% and raises the target to $5.25 from $5.17. Buy rating maintained.
This stock is not covered in-house by Ord Minnett. Instead, the broker whitelabels research by JP Morgan.
Target price is $5.25 Current Price is $3.90 Difference: $1.35
If RCR meets the Ord Minnett target it will return approximately 35% (excluding dividends, fees and charges).
Current consensus price target is $4.88, suggesting upside of 25.1% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Ord Minnett forecasts a full year FY18 dividend of 8.00 cents and EPS of 25.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 24.9, implying annual growth of 36.1%. Current consensus DPS estimate is 8.8, implying a prospective dividend yield of 2.3%. Current consensus EPS estimate suggests the PER is 15.7. |
Forecast for FY19:
Ord Minnett forecasts a full year FY19 dividend of 14.00 cents and EPS of 36.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 34.1, implying annual growth of 36.9%. Current consensus DPS estimate is 13.0, implying a prospective dividend yield of 3.3%. Current consensus EPS estimate suggests the PER is 11.4. |
Market Sentiment: 1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $3.88
Deutsche Bank rates SBM as Downgrade to Hold from Buy (3) -
Deutsche Bank notes commodities are trading well above historical real averages and marginal cost. Yet, global demand should continue to improve despite a softening in the Chinese property market. Deutsche Bank finds base metals more attractive than the bulk miners.
Deutsche Bank raises the target to $3.40 from $3.20 and downgrades St Barbara to Hold from Buy on valuation.
Target price is $3.40 Current Price is $3.88 Difference: minus $0.48 (current price is over target).
If SBM meets the Deutsche Bank target it will return approximately minus 12% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $3.41, suggesting downside of -12.1% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Deutsche Bank forecasts a full year FY18 dividend of 10.00 cents and EPS of 37.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 35.3, implying annual growth of 11.4%. Current consensus DPS estimate is 8.5, implying a prospective dividend yield of 2.2%. Current consensus EPS estimate suggests the PER is 11.0. |
Forecast for FY19:
Deutsche Bank forecasts a full year FY19 dividend of 10.00 cents and EPS of 29.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 99.6, implying annual growth of 182.2%. Current consensus DPS estimate is 8.0, implying a prospective dividend yield of 2.1%. Current consensus EPS estimate suggests the PER is 3.9. |
Market Sentiment: 0.2
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $2.76
Macquarie rates SDF as No Rating (-1) -
Macquarie has reviewed the premium rate environment and concludes that current market conditions are consistent with assumptions incorporated into the company's FY18 earnings forecasts.
Macquarie is currently on research restrictions and cannot advise a rating or target.
Current Price is $2.76. Target price not assessed.
Current consensus price target is $3.03, suggesting upside of 9.6% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Macquarie forecasts a full year FY18 dividend of 7.40 cents and EPS of 12.60 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 11.9, implying annual growth of 33.7%. Current consensus DPS estimate is 7.1, implying a prospective dividend yield of 2.6%. Current consensus EPS estimate suggests the PER is 23.2. |
Forecast for FY19:
Macquarie forecasts a full year FY19 dividend of 8.30 cents and EPS of 14.20 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 13.4, implying annual growth of 12.6%. Current consensus DPS estimate is 8.4, implying a prospective dividend yield of 3.0%. Current consensus EPS estimate suggests the PER is 20.6. |
Market Sentiment: 0.8
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
SIQ SMARTGROUP CORPORATION LTD
Vehicle Leasing & Salary Packaging
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Overnight Price: $11.42
Credit Suisse rates SIQ as Neutral (3) -
Credit Suisse observes the continuation of acquisition-led synergies and organic growth are positive for the company. Having established a reputation for consolidation, it appears likely to the broker that M&A will remain on the agenda.
The broker believes the company could beat expectations for another 6-12 months. However, taking account of the risks inherent in the business model the valuation is regarded as fair. Neutral maintained. Target rises to $11.60 from $8.00.
Target price is $11.60 Current Price is $11.42 Difference: $0.18
If SIQ meets the Credit Suisse target it will return approximately 2% (excluding dividends, fees and charges).
Current consensus price target is $10.66, suggesting downside of -6.7% (ex-dividends)
The company's fiscal year ends in December.
Forecast for FY17:
Credit Suisse forecasts a full year FY17 dividend of 334.04 cents and EPS of 51.70 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 47.7, implying annual growth of 60.1%. Current consensus DPS estimate is 83.9, implying a prospective dividend yield of 7.3%. Current consensus EPS estimate suggests the PER is 23.9. |
Forecast for FY18:
Credit Suisse forecasts a full year FY18 dividend of 41.38 cents and EPS of 63.57 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 57.7, implying annual growth of 21.0%. Current consensus DPS estimate is 40.0, implying a prospective dividend yield of 3.5%. Current consensus EPS estimate suggests the PER is 19.8. |
Market Sentiment: 0.6
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
TLS TELSTRA CORPORATION LIMITED
Telecommunication
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Overnight Price: $3.71
Macquarie rates TLS as Downgrade to Neutral from Outperform (3) -
Macquarie expects competition to remain intense across mobile and fixed telecoms.
Competitive headwinds and the NBN roll-out continue to affect Telstra's earnings growth and create a challenging operating environment, along with the impending entry of TPG ((TPM)) into the mobile market.
Following the recent rally, the broker downgrades to Neutral from Outperform. Target is $3.70.
Target price is $3.70 Current Price is $3.71 Difference: minus $0.01 (current price is over target).
If TLS 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 $3.74, suggesting upside of 0.9% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Macquarie forecasts a full year FY18 dividend of 22.00 cents and EPS of 23.40 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 28.5, implying annual growth of -12.3%. Current consensus DPS estimate is 22.0, implying a prospective dividend yield of 5.9%. Current consensus EPS estimate suggests the PER is 13.0. |
Forecast for FY19:
Macquarie forecasts a full year FY19 dividend of 22.00 cents and EPS of 22.50 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 30.9, implying annual growth of 8.4%. Current consensus DPS estimate is 22.1, implying a prospective dividend yield of 6.0%. Current consensus EPS estimate suggests the PER is 12.0. |
Market Sentiment: 0.1
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $6.47
Macquarie rates TPM as Neutral (3) -
Macquarie lifts earnings numbers to reflect delays in the NBN roll-out and changes to the NBN pricing as well as making other modelling adjustments which boost earnings estimates by 2-4% over the longer term.
Neutral retained. Target is raise to $6.50 from $6.15.
Target price is $6.50 Current Price is $6.47 Difference: $0.03
If TPM meets the Macquarie target it will return approximately 0% (excluding dividends, fees and charges).
Current consensus price target is $5.78, suggesting downside of -10.6% (ex-dividends)
The company's fiscal year ends in July.
Forecast for FY18:
Macquarie forecasts a full year FY18 dividend of 4.00 cents and EPS of 42.10 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 39.7, implying annual growth of -17.1%. Current consensus DPS estimate is 5.0, implying a prospective dividend yield of 0.8%. Current consensus EPS estimate suggests the PER is 16.3. |
Forecast for FY19:
Macquarie forecasts a full year FY19 dividend of 4.00 cents and EPS of 33.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 27.5, implying annual growth of -30.7%. Current consensus DPS estimate is 3.8, implying a prospective dividend yield of 0.6%. Current consensus EPS estimate suggests the PER is 23.5. |
Market Sentiment: -0.1
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
VOC VOCUS COMMUNICATIONS LIMITED
Telecommunication
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Overnight Price: $3.24
Macquarie rates VOC as Downgrade to Underperform from Neutral (5) -
Macquarie expects competition to remain intense across mobile and fixed telecoms. The broker observes the company has stabilised some parts of its operations but continues to operate in a highly competitive and capital intensive market and this presents ongoing challenges.
Rating is downgraded to Underperform from Neutral. Target is lifted to $3.05 from $2.95.
Target price is $3.05 Current Price is $3.24 Difference: minus $0.19 (current price is over target).
If VOC 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 $2.87, suggesting downside of -11.5% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Macquarie forecasts a full year FY18 dividend of 0.00 cents and EPS of 22.30 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 21.9, implying annual growth of N/A. Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A. Current consensus EPS estimate suggests the PER is 14.8. |
Forecast for FY19:
Macquarie forecasts a full year FY19 dividend of 11.00 cents and EPS of 21.90 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 21.9, implying annual growth of N/A. Current consensus DPS estimate is 2.7, implying a prospective dividend yield of 0.8%. Current consensus EPS estimate suggests the PER is 14.8. |
Market Sentiment: -0.1
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Summaries
| AOG | AVEO | Accumulate - Ord Minnett | Overnight Price $2.72 |
| AUB | AUB GROUP | Outperform - Macquarie | Overnight Price $12.75 |
| AYS | AMAYSIM AUSTRALIA | Outperform - Macquarie | Overnight Price $2.00 |
| BHP | BHP BILLITON | Buy - Deutsche Bank | Overnight Price $31.90 |
| BRG | BREVILLE GROUP | Neutral - UBS | Overnight Price $12.20 |
| DMP | DOMINO'S PIZZA | Overweight - Morgan Stanley | Overnight Price $44.69 |
| IGO | INDEPENDENCE GROUP | Downgrade to Sell from Hold - Deutsche Bank | Overnight Price $4.99 |
| MHJ | MICHAEL HILL | Hold - Morgans | Overnight Price $1.24 |
| MIN | MINERAL RESOURCES | Hold - Deutsche Bank | Overnight Price $20.94 |
| MMS | MCMILLAN SHAKESPEARE | Neutral - Credit Suisse | Overnight Price $16.60 |
| OGC | OCEANAGOLD | Upgrade to Buy from Hold - Deutsche Bank | Overnight Price $3.33 |
| PPT | PERPETUAL | Upgrade to Neutral from Sell - Citi | Overnight Price $51.05 |
| Outperform - Credit Suisse | Overnight Price $51.05 | ||
| Equal-weight - Morgan Stanley | Overnight Price $51.05 | ||
| Lighten - Ord Minnett | Overnight Price $51.05 | ||
| QAN | QANTAS AIRWAYS | Buy - UBS | Overnight Price $5.18 |
| RCR | RCR TOMLINSON | Buy - Ord Minnett | Overnight Price $3.90 |
| SBM | ST BARBARA | Downgrade to Hold from Buy - Deutsche Bank | Overnight Price $3.88 |
| SDF | STEADFAST GROUP | No Rating - Macquarie | Overnight Price $2.76 |
| SIQ | SMARTGROUP | Neutral - Credit Suisse | Overnight Price $11.42 |
| TLS | TELSTRA CORP | Downgrade to Neutral from Outperform - Macquarie | Overnight Price $3.71 |
| TPM | TPG TELECOM | Neutral - Macquarie | Overnight Price $6.47 |
| VOC | VOCUS COMMUNICATIONS | Downgrade to Underperform from Neutral - Macquarie | Overnight Price $3.24 |
RATING SUMMARY
| Rating | No. Of Recommendations |
| 1. Buy | 8 |
| 2. Accumulate | 1 |
| 3. Hold | 10 |
| 4. Reduce | 1 |
| 5. Sell | 2 |
Tuesday 16 January 2018
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Disclaimer:
The content of this information does in no way reflect the opinions of
FNArena, or of its journalists. In fact we don't have any opinion about
the stock market, its value, future direction or individual shares. FNArena solely reports about what the main experts in the market note, believe
and comment on. By doing so we believe we provide intelligent investors
with a valuable tool that helps them in making up their own minds, reading
market trends and getting a feel for what is happening beneath the surface.
This document is provided for informational purposes only. It does not
constitute an offer to sell or a solicitation to buy any security or other
financial instrument. FNArena employs very experienced journalists who
base their work on information believed to be reliable and accurate, though
no guarantee is given that the daily report is accurate or complete. Investors
should contact their personal adviser before making any investment decision.
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