Australian Broker Call

Ord Minnett rates ABC as Upgrade to Hold from Lighten (3) -

The company's share price has underperformed the market since it reached its all-time high back on August 1, 2016.

Ord Minnett believes the correction has been driven by a recognition of the difficulty in achieving realised cement price increases amid tepid underlying demand.

Both these dynamics are expected to improve in 2017. The broker upgrades to Hold from Lighten and raises the target to $4.90 from $4.60.

Target price is $4.90 Current Price is $5.14 Difference: minus $0.24 (current price is over target).
If ABC meets the Ord Minnett target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.23, suggesting upside of 1.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY16:

Forecast for FY17:

Market Sentiment: 0.0

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

Citi rates ANN as Sell (5) -

Citi analysts are worried about Ansell being forced to pay significantly more for input materials, latex and butadiene in particular. They highlight an important feature will now be to what extent these higher costs can be passed on to customers?

On Citi's estimates, raw materials accounted for 37% of costs of goods sold (COGS) in FY16. Citi's index of raw material prices used by Ansell has decreased by circa -4% y/y for the period covering 1H17 but the index has surged by 76% y/y in the first 4 months of the period covering 2H17.

In addition, the analysts suggest the market has already priced in a successful sale of the sexual wellness division, and this is far from a done deal as yet. Estimates have been reduced. Target $22. Sell rating retained.

Target price is $22.00 Current Price is $22.43 Difference: minus $0.43 (current price is over target).
If ANN meets the Citi target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $23.37, suggesting upside of 7.5% (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: -0.1

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

Ord Minnett rates CSR as Downgrade to Lighten from Hold (4) -

Transport restrictions in China have led to tight supply for aluminium in recent months. As this unwinds in the first quarter of 2017, Ord Minnett expects the underlying commodity price to retrace.

 In addition, a shift in the global supply/demand balance to an oversupplied position presents another risk. The broker downgrades to Lighten from Hold  and raises the target to $3.80 from $3.75.

Target price is $3.80 Current Price is $4.44 Difference: minus $0.64 (current price is over target).
If CSR meets the Ord Minnett target it will return approximately minus 14% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.90, suggesting downside of -10.4% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: -0.3

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

Morgans rates CYB as Reduce (5) -

FY17 guidance has been reaffirmed as part of the first quarter trading update.

The company has said it is on track to deliver its planned reduction in underlying costs but Morgans will wait until the first half result to check if there are any cost surprises below the line.

At present, the broker believes the stock is overvalued. Reduce rating is retained. Target is unchanged at $4.17.

Target price is $4.17 Current Price is $4.57 Difference: minus $0.4 (current price is over target).
If CYB meets the Morgans target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.56, suggesting downside of -0.6% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: -0.5

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

Morgan Stanley rates FLT as Underweight (5) -

Morgan Stanley's airline pricing data survey is showing an -8-20% decline in international airline prices in January for economy class bookings made one, four, and eight weeks out.

Given Flight Centre's guidance requires a stabilisation of airline prices, the broker envisages more risk to current guidance. Underweight retained. Target is $25. Industry view is In-Line.

Target price is $25.00 Current Price is $29.93 Difference: minus $4.93 (current price is over target).
If FLT meets the Morgan Stanley target it will return approximately minus 16% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $32.17, suggesting upside of 9.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: -0.1

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

Deutsche Bank rates GBT as Buy (1) -

First half earnings were below expectations and the company has issued a very weak outlook for FY17. This was attributed to four UK deferrals in wealth management projects and one cancellation, across three clients.

Given the company's fixed cost leverage is compounded by its current elevated expenditure on R&D, the lack of services work has had a material impact on second-half profitability, Deutsche Bank observes.

The broker expects momentum will improve materially in FY18. Buy rating retained. Target is lowered to $4.40 from $5.00.

Target price is $4.40 Current Price is $3.20 Difference: $1.2
If GBT meets the Deutsche Bank target it will return approximately 38% (excluding dividends, fees and charges).

Current consensus price target is $3.85, suggesting upside of 26.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.7

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

Morgans rates GBT as Add (1) -

Some major project deferrals by UK customers have forced the company to downgrade market earnings expectations for FY17. One wealth management services contract has been cancelled and five others deferred.

Morgans reduces forecast to reflect new guidance for EBITDA of $12m, a 35% downgrade to the broker's former estimates. Morgans considers the problems temporary and expect services revenue will re-build as customers regain confidence.

Add recommendation retained.Target is reduced to $3.76 from $4.72.

Target price is $3.76 Current Price is $3.20 Difference: $0.56
If GBT meets the Morgans target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $3.85, suggesting upside of 26.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.7

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

UBS rates GBT as Downgrade to Neutral from Buy (3) -

GBST has issued a profit warning ahead of its result, cutting FY17 earnings guidance to 33% below UBS' prior forecast. Project delays, deferred spending on major projects in the UK, and the weak GBP are all to blame.

While the risks are not new, the broker is concerned about the size of the downgrade. Improvement in FY18 is dependent on a recovery in services work and/or new contract wins. Elevated R&D costs will remain a significant drag over FY17, the broker notes.

UBS has cut earnings forecasts and lowered its target to $3.40 from $4.35. Downgrade to Neutral.

Target price is $3.40 Current Price is $3.20 Difference: $0.2
If GBT meets the UBS target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $3.85, suggesting upside of 26.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.7

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

Deutsche Bank rates GNC as Hold (3) -

Deutsche Bank considers the sale of the Allied Mills investment for $190m a positive for the company, as it allows it to realise value of a non-core asset and reduce gearing.

Deutsche Bank revises earning forecasts up by 2%. Target is raised to $10.20 from $9.80. Hold rating retained, with the stock trading at a 7% discount to the broker's revised valuation.

Target price is $10.20 Current Price is $9.45 Difference: $0.75
If GNC meets the Deutsche Bank target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $9.86, suggesting upside of 4.2% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.5

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

Citi rates GUD as Neutral (3) -

Another market update, another mixed outcome. The usual scenario of a strong performance from the Auto division, and problems elsewhere, has yet again been repeated. Citi analysts continue to see a future that is successfully focused on Auto, if not predominantly, then possibly exclusively, they suggest.

Estimates have been lifted, slightly. Price target moves to $10.45 from $10.01. Neutral rating retained. Adverse weather and the closure of Masters had a negative impact during the period, the analysts highlight.

Target price is $10.45 Current Price is $10.08 Difference: $0.37
If GUD meets the Citi target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $10.27, suggesting upside of 2.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.0

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

Credit Suisse rates GUD as Neutral (3) -

The company's first half result was in line with expectations, with weakness in Oates and Davey driving a slight miss at the  EBIT level.

The main question for Credit Suisse is how much more business gets divested, and what further steps are taken to bulk up automotive earnings. If successfully executed, this could drive a re-rating for the stock in the broker's opinion.

Credit Suisse retains a Neutral rating. Target is raised to $10.45 from $9.65.

Target price is $10.45 Current Price is $10.08 Difference: $0.37
If GUD meets the Credit Suisse target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $10.27, suggesting upside of 2.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.0

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

Macquarie rates GUD as Neutral (3) -

The first half result was largely in line with Macquarie. Strong growth in the automotive businesses and a narrowing of losses in Dexion were partially offset by softer results from Davey and Oates.

There is no change to guidance for underlying FY17 EBIT around $85m, which implies a stronger second half. Macquarie retains a Neutral rating.

Given the re-rating in the past 12 months the broker believes the market is already applying a premium to the automotive business. Target  is $10.40.

Target price is $10.40 Current Price is $10.08 Difference: $0.32
If GUD meets the Macquarie target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $10.27, suggesting upside of 2.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.0

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

Ord Minnett rates GUD as Hold (3) -

The company's first half underlying earnings were below Ord Minnett's forecasts.  A strong performance in the automotive business was reported, while other divisions struggled.

The broker believes the strong automotive division and the possibility of a divestment of Dexion provide some share price support. Hold retained. Target is $9.90.

Target price is $9.90 Current Price is $10.08 Difference: minus $0.18 (current price is over target).
If GUD 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 $10.27, suggesting upside of 2.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.0

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

UBS rates GUD as Neutral (3) -

GUD's sales and underlying earnings results fell short of the broker's forecasts, while a number of one-offs led to a messy profit number. It was a familiar story of Auto performing well and Dexion posting another loss.

Oates and Davey also had tough halves as GUD's consumer divisions continue to hold back Auto success. The good news is these divisions now represent a lower proportion of revenues. Auto remains the focus, and a divestment of Dexion would free up capital to pursue growth in this space, the broker notes. 

Neutral retained. Target rises to $10.15 from $9.73.

Target price is $10.15 Current Price is $10.08 Difference: $0.07
If GUD meets the UBS target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $10.27, suggesting upside of 2.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.0

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

Credit Suisse rates ILU as Neutral (3) -

The company is guiding to a net loss after tax of -$220-230m, which includes an impairment charge of  $201m pre-tax, predominantly related to idled and surplus equipment in the Murray Basin.

Proved and probable ore reserves, excluding Sierra Rutile, are reduced by -27%, which relates only to assets not expected to re-commence production.

Credit Suisse is disappointed the company has reduced 2017 production guidance for Sierra Rutile, on lower grades, noting this is not a good start for an acquisition.

Credit Suisse retains a Neutral rating and $7.00 target.

Target price is $7.00 Current Price is $7.21 Difference: minus $0.21 (current price is over target).
If ILU 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 $7.11, suggesting downside of -2.5% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY16:

Forecast for FY17:

Market Sentiment: 0.1

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

Morgans rates LNK as Initiation of coverage with Hold (3) -

Morgans initiates coverage with a Hold rating and $8.38 target.

The broker considers the company's business model is highly resilient, with numerous areas of strength  including significant levels of recurring revenue and a dominant market position in superannuation administration in Australia.

While the broker envisages some value will re-emerge in the stock, the growth profile appears more challenged than when it first listed.

Target price is $8.38 Current Price is $7.68 Difference: $0.7
If LNK meets the Morgans target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $8.41, suggesting upside of 11.2% (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

Morgans rates MDL as Add (1) -

Grande Cote reported its first full year of positive free cash flow after a second successive positive quarter.

The issue for Morgans is the terms under which Mineral Deposits can support  the obligations of owner TiZir (50% owned by MDL) to its bond holders.

An Add rating is maintained. Target is 92c.

Target price is $0.92 Current Price is $0.57 Difference: $0.35
If MDL meets the Morgans target it will return approximately 61% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

Forecast for FY16:

Forecast for FY17:

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

Market Sentiment: 1.0

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

Deutsche Bank rates MIN as Hold (3) -

The company produced 3.5m tonnes of iron ore during the December quarter. Shipments were down -8% from the record September quarter, but still 5% ahead of guidance.

Deutsche Bank now expects first half EBITDA of $222m. The broker retains a Hold rating on valuation. Target is reduced to $11.40 from $11.50.

Target price is $11.40 Current Price is $12.44 Difference: minus $1.04 (current price is over target).
If MIN meets the Deutsche Bank target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $12.78, suggesting upside of 2.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.5

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

Macquarie rates OFX as Outperform (1) -

The company has revised FY17 guidance and appointed a new CEO, effective immediately. Macquarie notes three downgrades in 18 months highlight execution issues, which suggests the reason the board has decided to change CEOs.

FY17 pre-tax earnings are expected to be $27.5-28.5m and statutory net profit at least $19m, suggesting a downgrade of around 10% on previous  expectations.

Macquarie does not believe the business is broken but that there is a lot of work to do to get it back on track and, if current management cannot execute,  then other trade and financial buyers are likely to try. Outperform retained and the target is reduced to $1.65  from $1.80.

Target price is $1.65 Current Price is $1.27 Difference: $0.38
If OFX meets the Macquarie target it will return approximately 30% (excluding dividends, fees and charges).

The company's fiscal year ends in March.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 1.0

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

Citi rates SXY as Neutral (3) -

Citi analysts had their Justin Timberlake moment, declaring the latest share placement, that has introduced EIG Global Energy Partners as a major shareholder, is bringing sexy back to Senex (in reference to its ASX company code, one must add).

The analysts await more details from the company and, in the meantime, think the shares are reasonably fairly valued. Neutral. Target lifts to 31c from 30c.

Target price is $0.31 Current Price is $0.30 Difference: $0.01
If SXY meets the Citi target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $0.31, suggesting upside of 3.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.5

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

Credit Suisse rates SXY as Outperform (1) -

The company has confirmed specialist investor, EIG Global Energy Partners, has bought a $55m placement which, together with the 2.7%  bought on market, takes that company's stake to around 12%. A share purchase plan is also being offered to raise up to another $40m.

The Western Surat project is now fully funded and, Credit Suisse believes, the investment by EIG Global is an endorsement based on what they have probably scanned in the data room.

The broker maintains an Outperform rating and 30c target.

Target price is $0.30 Current Price is $0.30 Difference: $0
If SXY meets the Credit Suisse target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $0.31, suggesting upside of 3.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.5

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

Deutsche Bank rates SXY as Hold (3) -

The company has completed a $55m placement to EIG Global Energy Partners.  Funds will be used to accelerate the development of the Western Surat CSG project.

While the entry of a well-established energy investor provides further credibility for the company's development plans, Deutsche Bank awaits further visibility on project parameters.

Hold retained. Target rises to $0.30 from $0.25.

Target price is $0.30 Current Price is $0.30 Difference: $0
If SXY meets the Deutsche Bank target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $0.31, suggesting upside of 3.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.5

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

Macquarie rates SXY as Outperform (1) -

The company has made a $55m placement and will offer up to $40m in the share purchase plan to existing shareholders. Funds raised will be put towards accelerating the company's Western Surat gas project.

Macquarie includes the value of this project in its core valuation  following the company's move to accelerate development this year. This adds $0.10 per share to the target which is raised to $0.40. Outperform retained.

Target price is $0.40 Current Price is $0.30 Difference: $0.1
If SXY meets the Macquarie target it will return approximately 33% (excluding dividends, fees and charges).

Current consensus price target is $0.31, suggesting upside of 3.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.5

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

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

The company has raised $55m via a placement to EIG Global Energy  Partners. A share purchase plan will be offered to eligible shareholders.

The transaction provides funding for the company's Western Surat project and Morgan Stanley views the entry of EIG Global to the register as a  positive, as it provides another independent verification of the project.

The broker retains an Equal-weight rating and In-Line industry view. Target is 25c.

Target price is $0.25 Current Price is $0.30 Difference: minus $0.05 (current price is over target).
If SXY meets the Morgan Stanley target it will return approximately minus 17% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $0.31, suggesting upside of 3.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.5

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

Macquarie rates VOC as Initiation of coverage with Outperform (1) -

The company has undertaken a lot in the last 18 months, Macquarie observes, including mergers and acquisitions of Amcom, CallPlus, M2 and NextGen. This is occurred against the backdrop of a rapidly evolving Australian fixed line market  due to the roll out of the NBN.

Macquarie initiates coverage with an Outperform rating and $5.30 target, and will be looking for confirmation that the outlook has not deteriorated since the AGM and that Vocus remains on track to achieve its synergy targets.

Target price is $5.30 Current Price is $3.97 Difference: $1.33
If VOC meets the Macquarie target it will return approximately 34% (excluding dividends, fees and charges).

Current consensus price target is $5.97, suggesting upside of 43.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.7

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

Morgan Stanley rates VRT as Overweight (1) -

Medicare data reflects low industry growth, albeit from a high base, Morgan Stanley observes.

This does not yet spoil the broker's long-term view but, in the short term, Virtus Health's ongoing loss of market share continues to support a preference for Monash IVF ((MVF)).

Morgan Stanley retains an Overweight rating. Target is reduced to $8.10 from $8.50. Industry view is In-Line.

Target price is $8.10 Current Price is $5.37 Difference: $2.73
If VRT meets the Morgan Stanley target it will return approximately 51% (excluding dividends, fees and charges).

Current consensus price target is $6.63, suggesting upside of 26.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.3

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