Australian Broker Call

Deutsche Bank rates ALL as Buy (1) -

Deutsche Bank has updated its FX projections, which has led to increased forecasts for Aristocrat Leisure. The price target has lifted by 6% to $41.10 in response.

In addition, the analysts note Jeff Karp, who has been appointed as MD and President of Big Fish Games, has had significant experience in building franchise games such as EA Sports, Words With Friends, Farmville, The Sims franchise, Bingo Bash, and GSN Casino. This is seen as yet another positive. Buy.

Target price is $41.10 Current Price is $30.43 Difference: $10.67
If ALL meets the Deutsche Bank target it will return approximately 35% (excluding dividends, fees and charges).

Current consensus price target is $34.45, suggesting upside of 13.2% (ex-dividends)

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.8

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

Credit Suisse rates ALX as Outperform (1) -

Credit Suisse has lifted Atlas Arteria's target price to $7 from $6.50 and pegs a blue-sky value of $8 per share on news the management contract with Macquarie ((MQG)) has been terminated. Outperform retained.

The removal of the risk of further performance fees is a plus and the fact that Macquarie opted to take a $95m dollar performance fee in newly issued shares in lieu of payment suggests the investment bank perceives value in the stock.

The broker expects dividends to rise 50% in the next year, thanks to the expiry of onerous interest rate swaps last month, and expects the dividend will hit 56c by 2022 as stronger distributions from APRR kick in and the cash-lockup with Dulles-Greenway ends in 2020..

Target price is $7.00 Current Price is $6.47 Difference: $0.53
If ALX meets the Credit Suisse target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $6.70, suggesting upside of 3.6% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.8

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

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

Atlas Arteria has paid its final performance fees to Macquarie Group ((MQG)) ahead of the end of the management agreement next year. The payment is funded by $25m in cash, of which the broker believes Arteria has ample, and $90m in new stock to Macquarie, representing around 2% of capital.

The fees are in line with expectation and the broker sees the issuance to Macquarie as a positive. Equal-weight and $6.36 target retained. Industry view: Cautious.

Target price is $6.36 Current Price is $6.47 Difference: minus $0.11 (current price is over target).
If ALX meets the Morgan Stanley target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $6.70, suggesting upside of 3.6% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.8

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

Morgans rates ALX as Upgrade to Add from Hold (1) -

Atlas Arteria, formerly Macquarie Atlas Roads, has made its final performance fee payments to Macquarie Group ((MQG)), from which it was originally spun off. Of the $115m paid, $90m was raised by issuing scrip to Macquarie at a 5% premium to yesterday's close, eliciting exclamation from Morgans. The balance was paid in cash.

Morgans has adjusted for the payment/raising and updated forex forecasts, noting particular exposure to the euro. Target rises to $6.76 from $6.53 and on a 10% plus forecast total shareholder return, the broker upgrades to Add from Hold.

Target price is $6.76 Current Price is $6.47 Difference: $0.29
If ALX meets the Morgans target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $6.70, suggesting upside of 3.6% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.8

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

Macquarie rates AOG as Downgrade to Neutral from Outperform (3) -

Macquarie downgrades retirement village company AVEO Group to Neutral from Outperform, in response to signs of mounting pressure on fundamentals.

The broker notes project completions are and will continue to outpace settlements and that this cash flow gap will exacerbate the risk arising from the weaker property market and compromise its capital position.

Earnings per share estimates are revised up 8%, 8% and 20% across FY18 to FY20 to account for higher completions. The target price falls to $2.65 from $4.15 and is set at a discount to the broker's valuation of $3.26 to reflect ongoing headwinds.

Target price is $2.65 Current Price is $2.45 Difference: $0.2
If AOG meets the Macquarie target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $3.23, suggesting upside of 31.8% (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

Citi rates CCL as Buy (1) -

Concerns that Coca-Cola Amatil's container deposit scheme would drag on returns have proved largely unfounded.

Coca-Cola will cut the container deposit scheme rate in NSW from 13.59c to 10.91c. Citi says the difference reflects lower return rates and may cost $20-$30m less than expected. Add to that the fact that the scheme may have enhanced the attractiveness of products (Amatil gaining market share), and the broker retains a positive outlook for FY18; a lower EBIT being countered by improved pricing in water and CSDs.

Target price steady at $9.70. Buy rating retained.

Target price is $9.70 Current Price is $9.38 Difference: $0.32
If CCL meets the Citi target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $8.86, suggesting downside of -5.6% (ex-dividends)

The company's fiscal year ends in December.

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

Deutsche Bank rates CCL as Hold (3) -

Indications are the drag from the Container Deposit Scheme (CDS) won't be as large as initially assumed. Hold rating and $8.50 price target retained with the analysts suggesting here might be a source for upside surprise for investors who own the shares.

Target price is $8.50 Current Price is $9.38 Difference: minus $0.88 (current price is over target).
If CCL meets the Deutsche Bank target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $8.86, suggesting downside of -5.6% (ex-dividends)

The company's fiscal year ends in December.

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

Credit Suisse rates CSL as Outperform (1) -

US data continue signalling double digit growth for IG demand and with no sign of a slow down, CS analysts think CSL is well placed relative to its peers to grow IG volumes slightly above market growth for the medium term.

On the combination of continued strength in IG demand and CSL's product mix shift to higher margin products, CS retains the Outperform rating, backed up by a $190 price target.

Target price is $190.00 Current Price is $197.39 Difference: minus $7.39 (current price is over target).
If CSL meets the Credit Suisse target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $190.25, suggesting downside of -3.6% (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: 0.5

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

UBS rates CSL as Buy (1) -

The latest US data show IG growth still up 10% and UBS analysts grab the opportunity to reiterate their view CSL remains well placed to benefit from "robust growth" in core plasma products.

The analysts point out that while US data only represent 55% of global IG, these data do provide an indication how the rest of the world is faring. Buy rating and $196 price target retained.

Target price is $196.00 Current Price is $197.39 Difference: minus $1.39 (current price is over target).
If CSL meets the UBS target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $190.25, suggesting downside of -3.6% (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: 0.5

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

Morgans rates DHG as Reduce (5) -

Domain has appointed the former managing director of Google A&NZ as new CEO. The broker expects the company's rate of innovation and product development may pick up as a result.

No change to Reduce rating and $2.66 target.

Target price is $2.66 Current Price is $3.18 Difference: minus $0.52 (current price is over target).
If DHG meets the Morgans target it will return approximately minus 16% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.30, 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

Credit Suisse rates IGO as Underperform (5) -

Independence Group will take a 70% managing interest in 16% shareholder Mark Creasy's 1,100sqkm tenement package near the Nova nickel mine and concentrator, filling a gap in IGO's Fraser Range position, at a cost of $21m.

The breakdown is $5.3m cash and $15.7m in Independence Group shares, and IGO gets to fund 100% of exploration expenditure.

Credit Suisse retains its Underperform rating. Target price $4.20.

Target price is $4.20 Current Price is $4.92 Difference: minus $0.72 (current price is over target).
If IGO meets the Credit Suisse target it will return approximately minus 15% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.76, suggesting downside of -3.3% (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

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

Citi has upgraded Iluka Resources to Buy from Neutral, citing higher production and sales, improved pricing and a weaker Australian dollar.

Estimates for earnings before interest tax depreciation and amortisaton per share rise 9% in 2018 and 24% in 2019.

Target price jumps to $13.70 from $10.72.

Target price is $13.70 Current Price is $11.14 Difference: $2.56
If ILU meets the Citi target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $11.67, suggesting upside of 4.7% (ex-dividends)

The company's fiscal year ends in December.

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

Morgan Stanley rates MFG as Downgrade to Underweight from Equal-weight (5) -

Morgan Stanley downgrades Magellan to Underweight from Equal-weight, contrary to consensus, on a persistent slowdown in retail funds flows. Inflows have slowed for the past months and risk turning negative, the broker suggests.

Magellan also charges above-peer fees, suggesting these may come under pressure. Given the fund manager is maturing as a business, there are fewer growth options than previously, the broker notes. Target unchanged at $27. Industry view: In-Line.

Target price is $27.00 Current Price is $22.10 Difference: $4.9
If MFG meets the Morgan Stanley target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $27.94, suggesting upside of 26.4% (ex-dividends)

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

UBS rates ORE as Buy (1) -

UBS has reduced its target price in response to an update on lithium production at the Olaroz mine. While production met UBS's forecasts, sales and pricing missed guidance. UBS is awaiting guidance this month.

The broker cuts earnings estimates -12% for FY18 and -6% for FY19. Buy rating retained and target price falls to $6.60 from $6.70 to reflect the lower net present value.

Target price is $6.70 Current Price is $5.26 Difference: $1.44
If ORE meets the UBS target it will return approximately 27% (excluding dividends, fees and charges).

Current consensus price target is $6.87, suggesting upside of 30.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.8

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

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

Several headwinds to performance late in the second half of the FY see the broker downgrading Platinum earnings forecasts, but the broker suggests these are already priced in. Retail funds flows have slowed, but by a lesser extent than those of Magellan Financial ((MFG)).

Platinum's new listed funds saw consistent demand through the half, highlighting the benefits of broader distribution, the broker suggests. Equal-weight retained, target falls to $6.00 from $7.00. Industry view: In-Line.

Target price is $6.00 Current Price is $5.38 Difference: $0.62
If PTM meets the Morgan Stanley target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $6.06, suggesting upside of 12.7% (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 REA as Lighten (4) -

Corelogic real estate data continues to indicate a weakening trend in new real estate listings. Ord Minnett observed eight straight weeks that indicated -6% or -7% decline year-on-year.

The analysts are worried this might negatively impact on revenues for REA Group, even with listings' longer duration. The analysts reiterate their $78 price target. Lighten rating retained.

Target price is $78.00 Current Price is $89.15 Difference: minus $11.15 (current price is over target).
If REA meets the Ord Minnett target it will return approximately minus 13% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $83.46, suggesting downside of -6.4% (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

Citi rates RSG as Buy (1) -

Citi retains its Buy rating following the release of Iluka's updated definitive feasibility study of Syama.

Higher automation and upgrades to power infrastructure to include solar have come at a capital expenditure cost but will reduce costs over time. Meanwhile, a 38% rise in reserve ounces has extended the mine life by four years.

Target price rises to $1.80 from $1.70.

Target price is $1.70 Current Price is $1.39 Difference: $0.31
If RSG meets the Citi target it will return approximately 22% (excluding dividends, fees and charges).

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

Macquarie rates RSG as Outperform (1) -

Resolute Mining has published an updated definitive feasibility study for Syama which shows a fall in operating costs, thanks to a ramp-up in automation, and an extension to mine life. Resolute also revealed expansion options for the project, which would result in higher production.

The automation was struck on a higher capital cost (an extra $US97m) that the broker says can be funded through cash flow.

The net result is a -2% cut in earnings per share estimates across FY19 to FY22. Target rises to $1.50 (up 7%) to reflect a longer mine life. Outperform rating retained.

Target price is $1.50 Current Price is $1.39 Difference: $0.11
If RSG meets the Macquarie target it will return approximately 8% (excluding dividends, fees and charges).

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

Credit Suisse rates SHL as Neutral (3) -

News that Sonic Healthcare has purchased Pathologie Trier in Germany for an undisclosed sum has triggered minor upward revisions of less than 1% to Credit Suisse's earnings per share estimates.

The purchase, funded from existing debt facilities, will be accretive and help offset the reimbursement issues in Germany.

The target price is steady at $24 and a Neutral rating is retained.

Target price is $24.00 Current Price is $24.88 Difference: minus $0.88 (current price is over target).
If SHL meets the Credit Suisse target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $25.17, suggesting upside of 1.2% (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

Deutsche Bank rates SHL as Buy (1) -

Deutsche Bank believes the latest acquisition is only minimally accretive, but Pathologie Trier in Germany is nevertheless considered a good bolt-on providing cost and revenue synergies as well as expanding the breadth of services at Sonic Healthcare's existing German operations.

Buy rating retained, with the price target lifting to $27.63 from $26.90. Deutsche Bank nevertheless highlights the key risks remain higher than expected cost increases from pathology collection centres and adverse Government fee changes.

Target price is $27.63 Current Price is $24.88 Difference: $2.75
If SHL meets the Deutsche Bank target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $25.17, suggesting upside of 1.2% (ex-dividends)

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 SHL as Neutral (3) -

Sonic Healthcare has purchased Pathologie Trier, a German-based pathology business, triggering an accretive 1% adjustment in the broker's earnings per share estimates.

Macquarie notes the financial details are scant and the purchase price undisclosed. The acquisition will be funded through existing debt facilities and the initial return on investment capital is expected to outpace the cost of capital.

Target price inches up to $26.30 from $26.20. Neutral rating retained, the stock trading at a price-earnings multiple in line with peers.

Target price is $26.30 Current Price is $24.88 Difference: $1.42
If SHL meets the Macquarie target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $25.17, suggesting upside of 1.2% (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 SHL as Hold (3) -

The company has announced the acquisition of Germany’s Pathologie Trier for EUR50m and Ord Minnett points out the implied multiple is a lot more modest compared with recent acquisitions. It is also a relatively small transaction.

Funding challenges in two of Sonic's major markets remain, plus the shares are seen as fairly valued. Ord Minnett retains Hold with a slightly higher price target of $24.30 instead of $24.

Target price is $24.30 Current Price is $24.88 Difference: minus $0.58 (current price is over target).
If SHL meets the Ord Minnett target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $25.17, suggesting upside of 1.2% (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 SHL as Neutral (3) -

Sonic Healthcare has acquired Germany's Pathologie Trier for an undisclosed sum prompting UBS to adjust earnings-per-share estimates slightly to account for the accretion.

The purchase will be funded by existing debt and management has said return on interest and capital will exceed the cost of capital. UBS believes the deal is a good strategic fit and will ameliorate the reimbursement headwinds in Germany.

Target price raised to $24 from $23.50. Neutral rating retained.

Target price is $24.00 Current Price is $24.88 Difference: minus $0.88 (current price is over target).
If SHL meets the UBS target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $25.17, suggesting upside of 1.2% (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