Australian Broker Call

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

Astro Japan has confirmed that Lone Star Real Estate made a proposal to acquire its assets at book value and this proposal was reiterated on February 28. The board has rejected the proposal on both occasions.

Ord Minnett envisages a scenario where the company can maintain the status quo but considers this less likely now. The latest news is considered to be a probable catalyst for Astro Japan to pursue a sale, either with Lone Star or another party.

Rating is downgraded to Hold from Accumulate and target is reduced to $6.75 from $7.50.

Target price is $6.75 Current Price is $6.29 Difference: $0.46
If AJA meets the Ord Minnett target it will return approximately 7% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.0

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

UBS rates CSL as Buy (1) -

UBS observes it is almost 2 months since US Medicare made reimbursement changes and the company's Hizentra product is holding its ground.

This product is among a handful of profitable IG products and the broker expects some rotation of existing patients to Hizentra.

Buy and $122 target retained.

Target price is $122.00 Current Price is $122.49 Difference: minus $0.49 (current price is over target).
If CSL meets the UBS target it will return approximately minus 0% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $123.53, suggesting upside of 0.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

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

Market Sentiment: 0.8

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

Citi rates DOW as Neutral (3) -

Citi estimates Downer EDI's latest acquisition costs around $75m and will lift the contribution of New Zealand to group revenues to circa 20%.

The analysts describe the NZ non-residential construction sector as "robust" and welcome the added exposure. FY18 and FY19 profit forecasts have been increased by 4%. Neutral. Target rises to $7.70 from $7.30.

Target price is $7.70 Current Price is $7.22 Difference: $0.48
If DOW meets the Citi target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $6.20, suggesting downside of -13.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.2

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

Deutsche Bank rates DOW as Hold (3) -

The company has acquired Hawkins, a NZ  construction, infrastructure and project manager. The transaction will be funded from existing facilities. Deutsche Bank calculates the acquisition will be around 2% accretive to earnings per share in FY18-19.

The broker finds the medium-term outlook positive for non-residential construction activity in New Zealand but remains cautious over the longer term, given current activity is being supported by the re-building of Christchurch.

The acquisition does counteract the roll off of resources construction revenue. Deutsche Bank retains a Hold rating and reduces the target to $6.47 from $6.59.

Target price is $6.47 Current Price is $7.22 Difference: minus $0.75 (current price is over target).
If DOW meets the Deutsche Bank target it will return approximately minus 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $6.20, suggesting downside of -13.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.2

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

Macquarie rates DOW as Outperform (1) -

The company will acquire the Hawkins business, a NZ construction, infrastructure and project management company. The deal will be internally funded and is expected to be earnings accretive in the first year.

The acquisition is a typical bolt-on, in Macquarie's opinion, and Hawkins is a well-regarded private company. It will make Downer  the clear number two integrated construction player in New Zealand, say the analysts.

The broker envisages plenty more room for further acquisitions. Macquarie retains an Outperform rating and raises the target to $7.60 from $7.45.

Target price is $7.60 Current Price is $7.22 Difference: $0.38
If DOW meets the Macquarie target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $6.20, suggesting downside of -13.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.2

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

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

The company has acquired the NZ Hawkins construction, infrastructure and project management business. Morgan Stanley expects the deal will provide a small uplift to FY18 earnings and have minimal impact on gearing.

Nevertheless, the broker questions the strategic attractiveness of the operations in vertical construction, given the company has historically moved away from this exposure. The broker also queries the small size of the acquisition and the limited ability to generate synergies with the existing NZ business.

Morgan Stanley retains a Equal-weight rating and $4.01 target. Industry view is Cautious.

Target price is $4.01 Current Price is $7.22 Difference: minus $3.21 (current price is over target).
If DOW meets the Morgan Stanley target it will return approximately minus 44% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $6.20, suggesting downside of -13.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.2

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

Ord Minnett rates MYR as Hold (3) -

Ahead of the first half result Ord Minnett acknowledges the opportunity for the business to be re-shaped after a number of poor years. However, the broker believes the retailer still faces a challenging outlook and industry.

Ord Minnett observes a lack of focus on "discount value" customers, which make up around 40% of sales, and the tougher competition in the "high value" customer segment. The broker expects first half net profit to be up 6%. Hold rating retained. Target is $1.50.

Target price is $1.50 Current Price is $1.16 Difference: $0.34
If MYR meets the Ord Minnett target it will return approximately 29% (excluding dividends, fees and charges).

Current consensus price target is $1.29, suggesting upside of 12.8% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.3

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

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

Macquarie believes improved early-season ratings set a good platform for monetisation, offsetting headwinds in the industry.

The broker expects underlying cash conversion will be weak over the next few years but this is offset by other working capital adjustments and the sale of Willoughby.

A high percentage of earnings is still expected to be distributed to shareholders via dividends. Rating is upgraded to Outperform from Neutral. Target rises to $1.25 from $1.10.

Target price is $1.25 Current Price is $1.00 Difference: $0.245
If NEC meets the Macquarie target it will return approximately 24% (excluding dividends, fees and charges).

Current consensus price target is $1.08, suggesting upside of 6.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.2

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

UBS rates QUB as Buy (1) -

UBS believes competitor DP World's decision to impose an infrastructure surcharge per container at its Sydney and Melbourne terminals presents a material upside opportunity for Qube's Patrick joint venture.

The broker estimates the surcharge could raise an additional $25m in revenue for Patrick. Patrick is yet to decide on its course of action but the broker finds it hard to envisage a scenario where it would not follow suit.

UBS retains a Buy rating and $2.80 target.

Target price is $2.80 Current Price is $2.36 Difference: $0.44
If QUB meets the UBS target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $2.60, suggesting upside of 7.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.6

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

UBS rates VOC as Buy (1) -

UBS considers the first half as a low watermark for the company, affected by provisioning issues, higher churn and legacy voice decline.

Headwinds are expected to begin abating in the second half. Core corporate assets are observed to be performing strongly.

Yet, on balance, UBS envisages downside risk to FY18 forecasts. The broker estimates the company needs to deliver around 6% organic EBITDA growth in FY18 just to hold flat versus FY17.

Upside risks to forecasts appear to hinge on the potential new contract wins that have been called in the first half. Buy rating retained. Target is reduced to $5 from $6.

Target price is $5.00 Current Price is $4.46 Difference: $0.54
If VOC meets the UBS target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $5.27, suggesting upside of 18.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.6

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