Australian Broker Call

UBS rates ALL as Buy (1) -

An unexpected acceleration in the second half, where net profit grew 27% vs 18% in the first half, signals to UBS that momentum is strong and could surprise on the upside.

Australian ship share remains at 60% while US ship share has increased to 28%, equal to the share that IGT and Sci Games reported in FY19.

Buy rating and $39.60 target maintained.

Target price is $39.60 Current Price is $33.40 Difference: $6.2
If ALL meets the UBS target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $37.29, suggesting upside of 11.6% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.9

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

Credit Suisse rates APE as Outperform (1) -

Credit Suisse notes the stock has fallen -30% from recent peaks and ascribes this to softer-than-expected new car sales and a negative trading update which revealed a very weak contribution from Automotive Holdings.

The broker believes a reduced share price captures a lower 2019 base, and notes synergies are progressing well as is the sale of the refrigerated logistics business.

The outlook for 2020 remains positive and the broker maintains an Outperform rating. Target is reduced to $11.25 from $13.00.

Target price is $11.25 Current Price is $9.78 Difference: $1.47
If APE meets the Credit Suisse target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $12.45, suggesting upside of 27.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.8

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

UBS rates CSL as Buy (1) -

UBS suspects the recent approval of competing subcutaneous Ig therapy for primary immunodeficiency will have some impact on Hizentra's market share. However, with US penetration currently at around 35% and likely to increase over time this provides an offset.

The benefits of the therapy are well documented and as younger patients enter the cohort the broker expects the percentage using this therapy will increase. Buy rating and $295 target maintained.

Target price is $295.00 Current Price is $277.84 Difference: $17.16
If CSL meets the UBS target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $273.40, suggesting downside of -1.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

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

Market Sentiment: 0.6

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

Morgan Stanley rates ELO as Overweight (1) -

ELMO Software has announced a $1.18m investment for a 50% stake in Hero Brands. Morgan Stanley considers this a small incremental opportunity that will secure greater control of a low-cost offshore development capability.

Little change is expected to near-term financials. Overweight rating. In-Line industry view. Target is $9.

Target price is $9.00 Current Price is $6.80 Difference: $2.2
If ELO meets the Morgan Stanley target it will return approximately 32% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 1.0

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

UBS rates FBU as Neutral (3) -

The company has released guidance for FY20 earnings (EBIT) of NZ$515-565m. UBS was disappointed, as it suggests Fletcher Building is not expecting any recovery within the steel and concrete divisions, both of which have experienced an earnings margin decline of -7% over the last three years.

It also appears that the company is expecting the NZ$15m in cost savings in Australia to be partly offset by increased depreciation charges. Neutral rating maintained. Target is raised to NZ$5.05 from NZ$4.95.

Current Price is $4.93. Target price not assessed.

Current consensus price target is N/A

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

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

Market Sentiment: 0.0

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

Ord Minnett rates FLT as Buy (1) -

Ord Minnett updates earnings assumptions, given revised guidance for FY20. Estimates for earnings per share have been downgraded by -5% for FY20 and -4% for FY21.

The broker is conscious the stock has underperformed over the last 12 months and generally agrees confidence is being tested.

The broker will be looking for evidence of how the company plans to improve the performance of the Australian leisure division over the medium term as this is the necessary catalyst for a re-rating.

Buy rating maintained. Target is reduced to $46.09 from $46.68.

Target price is $46.09 Current Price is $42.78 Difference: $3.31
If FLT meets the Ord Minnett target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $44.23, suggesting upside of 3.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.6

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

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

Citi expects the market will increasingly focus on the growth potential beyond FY20 and, dependent on the commercial insurance cycle, it is plausible Insurance Australia Group could achieve 4-6% growth in earnings per share for FY22 and beyond.

This could be supplemented by further capital initiatives. The broker upgrades to Buy from Neutral and raises the target to $8.75 from $8.60.

Target price is $8.75 Current Price is $7.68 Difference: $1.07
If IAG meets the Citi target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $7.63, suggesting downside of -0.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.0

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

Morgans rates IRE as Add (1) -

Morgans observes mergers between major industry superannuation funds continue to work in favour of the company's Acurity administration system. Moreover, the proposed Tasplan-MTAA merger will be modestly accretive for revenue and earnings.

It will increase total funds administered on the Acurity platform to more than $250bn. Morgans maintains an Add rating and raises the target to $15.42 from $15.33.

Target price is $15.42 Current Price is $12.94 Difference: $2.48
If IRE meets the Morgans target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $13.90, suggesting upside of 7.4% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.3

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

Credit Suisse rates NCM as Neutral (3) -

The results from Havieron continue to confirm the presence of gold-copper mineralisation over a growing footprint. The latest drilling extends the mineralisation 100m north of the known mineralised zone.

Credit Suisse notes it is too early to determine a mining strategy but the depth, and distance from Telfer, will require an elevated cut-off grade to justify establishment capital, and this should determine the mining approach when sufficient drilling has been completed.

Neutral rating and $31.80 target maintained.

Target price is $31.80 Current Price is $29.29 Difference: $2.51
If NCM meets the Credit Suisse target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $29.71, suggesting upside of 1.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

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

Market Sentiment: -0.6

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

UBS rates OSH as Neutral (3) -

UBS notes the negotiations over the P'nyang gas agreement are close to finalisation and fiscal terms are expected to mirror the Papua LNG agreement.

Planned maintenance is likely to negatively impact on 2020 and 2021 production of LNG by -5%. Increased oil production is expected in 2020 from new wells and work-overs performed in 2019.

UBS maintains a Neutral rating and raises the target to $7.60 from $7.40.

Target price is $7.60 Current Price is $7.07 Difference: $0.53
If OSH meets the UBS target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $7.60, suggesting upside of 7.5% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY19:

Forecast for FY20:

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

Market Sentiment: 0.3

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

Macquarie rates PNV as Outperform (1) -

Macquarie believes Polynovo is well placed to increase its share in current markets based on a differentiated product offering, and expansion to new geographies represents additional upside.

There are also potential additional applications for the NovoSorb technology. Outperform rating maintained. Target rises to $2.30 from $2.00.

Target price is $2.30 Current Price is $1.76 Difference: $0.54
If PNV meets the Macquarie target it will return approximately 31% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 1.0

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

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

Morgans upgrades forecasts modestly to reflect recent trends in cost management and after taking a less pessimistic view on customer acquisition costs over time.

The broker suspects the quarterly report for the December quarter may act as a catalyst to re-shape the market's view of how much cash the company can produce as it gains scale.

Rating is upgraded to Add from Hold and the target raised to $2.28 from $1.99.

Target price is $2.28 Current Price is $1.93 Difference: $0.35
If RBL meets the Morgans target it will return approximately 18% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 1.0

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

Ord Minnett rates SDF as Accumulate (2) -

Steadfast Group now estimates 70% of its broker network have accepted its offer to acquire professional services fee rebates. Management has previously assumed 33% of the network would take up the offer.

Based on a 70% acceptance rate and a slight downwardly revised estimate for rebates, an earnings (EBITA) contribution of $8.4m is anticipated.

The acquisition is being funded partially by issuing shares at $3.28 each. Ord Minnett adjusts its model accordingly and remains positive on the stock, noting scope for additional accretive acquisitions.

Accumulate maintained. Target rises to $3.97 from $3.95.

Target price is $3.97 Current Price is $3.50 Difference: $0.47
If SDF meets the Ord Minnett target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $4.06, suggesting upside of 15.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.8

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

Citi rates STO as Neutral (3) -

Citi estimates that GLNG annualised production since October has been around 6.3mtpa. It appears production is higher from Roma and the Scotia ramp up versus prior expectations. Guidance is for sustainable GLNG production of 6.0mtpa.

Citi suspects GLNG 2P reserves may still grow as a result of the fields outperforming. A production guidance upgrade at Dorado is also expected at the upcoming strategy briefing. Neutral rating and $8.47 target maintained.

Target price is $8.47 Current Price is $8.06 Difference: $0.41
If STO meets the Citi target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $8.42, suggesting upside of 4.5% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY19:

Forecast for FY20:

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

Market Sentiment: 0.3

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

Ord Minnett rates SZL as Buy (1) -

The company has announced an expanded receivables financing facility of up to US$100m. This is well ahead of Ord Minnett's expectations and the message appears to be that the business is doing well, with significant underlying merchant sales volumes being processed.

While the pricing of the facility has not been disclosed, the company indicated it is on superior terms vs the previous facility. Buy rating and $3.40 target maintained.

Target price is $3.40 Current Price is $2.46 Difference: $0.94
If SZL meets the Ord Minnett target it will return approximately 38% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

Forecast for FY19:

Forecast for FY20:

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

Ord Minnett rates VOL as Buy (1) -

Victory Offices has announced a further five new locations, including one in each of Adelaide and Canberra. This takes the total number of new locations in 2019 to 11. Locations are expected to open in various stages in FY20.

The opening of previously-announced sites in Sydney and Brisbane have been pushed back alongside similar timetables. The combined impact is a delay to revenue and a cost for the short term to the bottom line, which pushes out earnings growth to FY21.

Ord Minnett notes conditions across commercial office markets remain supportive and maintains a Buy rating, reducing the target to $2.51 from $2.87.

Target price is $2.51 Current Price is $2.16 Difference: $0.35
If VOL meets the Ord Minnett target it will return approximately 16% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 1.0

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

Ord Minnett rates VVA as Buy (1) -

The company will acquire 13 Fit N Fast health clubs across NSW, ACT and Victoria. The acquisition price is $13.5m. Ord Minnett observes the company now has club networks across the eastern seaboard.

Viva Leisure has raised $20m to fund the equity portion of the investment and to provide support for a ramped-up greenfield pipeline.

Ord Minnett reduces FY20 estimates for earnings per share by -1% and upgrades FY21 and FY22 by 18%. Buy rating maintained. Target rises to $3.65 from $2.83.

Target price is $3.65 Current Price is $2.79 Difference: $0.86
If VVA meets the Ord Minnett target it will return approximately 31% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 1.0

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

Credit Suisse rates WOW as Underperform (5) -

Credit Suisse assesses a de-merger of Endeavour Drinks would enable a reinvestment strategy independent of Woolworths. Hotels & liquor retail generate lower returns on capital than the supermarket business.

The parts of the business appear to be worth slightly more than the current combined group, in the broker's assessment.

Credit Suisse makes an increase to the target, to $35.63 from $31.83, to reflect the likelihood of a de-merger proceeding. Underperform maintained.

Target price is $35.63 Current Price is $38.39 Difference: minus $2.76 (current price is over target).
If WOW meets the Credit Suisse target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $34.66, suggesting downside of -9.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: -0.4

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

Morgans rates WPL as Add (1) -

Morgans has reviewed assumptions following the investor briefing. The main issue is whether the balance sheet is strong enough to fund both significant growth and support a high dividend pay-out.

A binding tolling agreement at Scarborough is expected in early 2020 followed by a final investment decision during the first half.

As Scarborough progresses, Woodside Petroleum now expects the Browse development will gather pace and a processing agreement is likely around the end of 2020.

Morgans maintains an Add rating and raises the target to $38.77 from $34.81.

Target price is $38.77 Current Price is $33.62 Difference: $5.15
If WPL meets the Morgans target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $35.50, suggesting upside of 5.6% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY19:

Forecast for FY20:

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

Market Sentiment: 0.2

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

Morgans rates WSA as Initiation of coverage with Add (1) -

Morgans is positive about the nickel market, as stainless steel and battery manufacturing have attractive growth prospects. High-grade reserves provide the company with an attractive base case valuation.

Morgans initiates coverage with an Add rating and $3.39 target. Currently all the nickel is being produced from the Forrestania region but the broker finds the second production hub, Cosmos, an exciting proposition.

Target price is $3.39 Current Price is $2.83 Difference: $0.56
If WSA meets the Morgans target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $3.21, suggesting upside of 13.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.3

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

Morgans rates Z1P as Hold (3) -

The company has announced a $60m capital raising involving a $50m placement and $10m share purchase plan. The funds will be used for growth, investment in products and technology and to strengthen the balance sheet.

While supportive of the growth plans, Morgans notes the current capital raising significantly adds to the dilution that's occurred throughout 2019 and needs to be justified by execution.

As the stock has re-rated strongly, the broker considers the valuation fair and retains a Hold rating. Target is reduced to $3.74 from $3.86.

Target price is $3.74 Current Price is $3.72 Difference: $0.02
If Z1P meets the Morgans target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $4.16, suggesting upside of 11.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.5

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