Australian Broker Call
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January 04, 2019
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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).
Last Updated: 05:00 PM
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
ANN ANSELL LIMITED
Commercial Services & Supplies
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Overnight Price: $21.51
Morgan Stanley rates ANN as Overweight (1) -
In a preview to the upcoming February reporting season, analysts at Morgan Stanley see no near-term fundamental disruption to the EPS growth trajectories of Australia's major healthcare stalwarts, ResMed, Cochlear and CSL. This supports the view that "rich valuations" are here to stay for the foreseeable future.
The analysts are a lot less enthusiastic about hospitals and Ansell, with key challenges for the latter company seen in compensating for higher input prices, as well as the impact from US import tariffs. Price target falls to $25.39 from $28.56. Nevertheless, Overweight rating retained, alongside an In-Line assessment for the sector overall.
Target price is $25.39 Current Price is $21.51 Difference: $3.88
If ANN meets the Morgan Stanley target it will return approximately 18% (excluding dividends, fees and charges).
Current consensus price target is $25.74, suggesting upside of 19.7% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY19:
Morgan Stanley forecasts a full year FY19 dividend of 65.59 cents and EPS of 141.03 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 152.8, implying annual growth of N/A. Current consensus DPS estimate is 66.3, implying a prospective dividend yield of 3.1%. Current consensus EPS estimate suggests the PER is 14.1. |
Forecast for FY20:
Morgan Stanley forecasts a full year FY20 EPS of 151.68 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 165.9, implying annual growth of 8.6%. Current consensus DPS estimate is 74.0, implying a prospective dividend yield of 3.4%. Current consensus EPS estimate suggests the PER is 13.0. |
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
Overnight Price: $2.75
Morgan Stanley rates HLS as Equal-weight (3) -
Shareholder Jangho has finally shown its colours and launched an unsollicited and non-binding and highly conditional offer for all shares it currently does not own in the company formerly known as Primary Health Care.
The broker's valuation for the stock is $2.80, well below the $3.25 implied by the offer, with the analysts explaining their valuation discount stems from industry challenges for doctor recruitment. Equal-weight rating retained, alongside an In-Line sector view.
Target price is $2.80 Current Price is $2.75 Difference: $0.05
If HLS meets the Morgan Stanley target it will return approximately 2% (excluding dividends, fees and charges).
The company's fiscal year ends in June.
Forecast for FY19:
Morgan Stanley forecasts a full year FY19 EPS of 16.00 cents. |
Forecast for FY20:
Morgan Stanley forecasts a full year FY20 EPS of 19.00 cents. |
Market Sentiment: -0.3
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Morgans rates HLS as Hold (3) -
This is the company formerly known as Primary Health Care, mostly remembered by most investors for issuing profit warnings. Shareholder Jangho has now officially offered $3.25 to help long suffering shareholders out of their misery.
Stockbroker Morgans highlights the offer is highly conditional and on top of this, it is viewed as being both opportunistic and antagonistic. Hold rating and $2.90 price target retained.
Target price is $2.90 Current Price is $2.75 Difference: $0.15
If HLS meets the Morgans target it will return approximately 5% (excluding dividends, fees and charges).
The company's fiscal year ends in June.
Forecast for FY19:
Morgans forecasts a full year FY19 dividend of 9.00 cents and EPS of 16.50 cents. |
Forecast for FY20:
Morgans forecasts a full year FY20 dividend of 10.00 cents and EPS of 16.30 cents. |
Market Sentiment: -0.3
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
KMD KATHMANDU HOLDINGS LIMITED
Sports & Recreation
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Overnight Price: $2.22
Morgan Stanley rates KMD as Equal-weight (3) -
Kathmandu did what bricks & mortar retailers do best in Australia these days; it issued a profit warning. Christmas trading has failed to live up to expectations. Comparable sales in Australia have now turned negative, point out the analysts.
Contrary to previous years, it appears management has tried to protect margins at the expense of sales, suggest the analysts. Because valuation seems undemanding, Equal-weight rating retained, alongside In-Line sector view. Price target remains at $3.
Target price is $3.00 Current Price is $2.22 Difference: $0.78
If KMD meets the Morgan Stanley target it will return approximately 35% (excluding dividends, fees and charges).
Current consensus price target is $3.07, suggesting upside of 38.1% (ex-dividends)
The company's fiscal year ends in July.
Forecast for FY19:
Morgan Stanley forecasts a full year FY19 dividend of 15.53 cents and EPS of 24.81 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 24.1, implying annual growth of N/A. Current consensus DPS estimate is 15.1, implying a prospective dividend yield of 6.8%. Current consensus EPS estimate suggests the PER is 9.2. |
Forecast for FY20:
Morgan Stanley forecasts a full year FY20 dividend of 16.49 cents and EPS of 25.94 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 25.2, implying annual growth of 4.6%. Current consensus DPS estimate is 16.4, implying a prospective dividend yield of 7.4%. Current consensus EPS estimate suggests the PER is 8.8. |
This company reports in NZD. 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
Overnight Price: $1.01
Morgan Stanley rates MVF as Overweight (1) -
In a preview to the upcoming February reporting season, analysts at Morgan Stanley see no near-term fundamental disruption to the EPS growth trajectories of Australia's major healthcare stalwarts, ResMed, Cochlear and CSL. This supports the view that "rich valuations" are here to stay for the foreseeable future.
The analysts are a lot less enthusiastic about hospitals and Ansell, as well as regarding many of the smaller cap stocks in the sector, including Virtus Health and competitor Monash IVF. Price target falls to $1.34 from $1.70. Nevertheless, Overweight rating retained, alongside an In-Line assessment for the sector overall.
Target price is $1.34 Current Price is $1.01 Difference: $0.33
If MVF meets the Morgan Stanley target it will return approximately 33% (excluding dividends, fees and charges).
The company's fiscal year ends in June.
Forecast for FY19:
Morgan Stanley forecasts a full year FY19 dividend of 6.10 cents and EPS of 9.00 cents. |
Forecast for FY20:
Morgan Stanley forecasts a full year FY20 dividend of 6.90 cents and EPS of 10.00 cents. |
Market Sentiment: 0.5
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
RAP RESAPP HEALTH LIMITED
Medical Equipment & Devices
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Overnight Price: $0.11
Morgans rates RAP as Add (1) -
Following confirmation that the company has submitted its CE Mark technical file to enable commercial sales to commence, Morgans highlights it expects two significant milestones to be announced this quarter; one is the outcome of the clinical adjudication for croup, the second is the outcome of the adult respiratory study in Australia.
This makes this company a target for investors who focus on catalyst driven stocks, say the analysts. No changes made at this stage. The stockbroker emphasises this stock should not be on investors' radar unless they have a higher appetite for risk. Add. Target $0.24.
Target price is $0.24 Current Price is $0.11 Difference: $0.13
If RAP meets the Morgans target it will return approximately 118% (excluding dividends, fees and charges).
The company's fiscal year ends in June.
Forecast for FY19:
Morgans forecasts a full year FY19 dividend of 0.00 cents and EPS of minus 1.00 cents. |
Forecast for FY20:
Morgans forecasts a full year FY20 dividend of 0.00 cents and EPS of 0.10 cents. |
Market Sentiment: 1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $15.32
Morgan Stanley rates RMD as Overweight (1) -
In a preview to the upcoming February reporting season, analysts at Morgan Stanley see no near-term fundamental disruption to the EPS growth trajectories of Australia's major healthcare stalwarts, ResMed, Cochlear ((COH)) and CSL ((CSL)). This supports the view that "rich valuations" are here to stay for the foreseeable future.
Updating forecasts and projections has led to an increased price target, to US$126 from US$119. For the ASX-listed shares this translates into $17.70 instead of $16.80. Overweight rating retained, alongside an In-Line assessment for the sector overall. ResMed is most preferred.
Target price is $17.70 Current Price is $15.32 Difference: $2.38
If RMD meets the Morgan Stanley target it will return approximately 16% (excluding dividends, fees and charges).
Current consensus price target is $15.76, suggesting upside of 2.8% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY19:
Morgan Stanley forecasts a full year FY19 dividend of 19.59 cents and EPS of 49.64 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 52.7, implying annual growth of N/A. Current consensus DPS estimate is 21.3, implying a prospective dividend yield of 1.4%. Current consensus EPS estimate suggests the PER is 29.1. |
Forecast for FY20:
Morgan Stanley forecasts a full year FY20 dividend of 19.59 cents and EPS of 57.18 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 59.5, implying annual growth of 12.9%. Current consensus DPS estimate is 23.1, implying a prospective dividend yield of 1.5%. Current consensus EPS estimate suggests the PER is 25.7. |
This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.
Market Sentiment: 0.4
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $4.30
Morgan Stanley rates VRT as Overweight (1) -
In a preview to the upcoming February reporting season, analysts at Morgan Stanley see no near-term fundamental disruption to the EPS growth trajectories of Australia's major healthcare stalwarts, ResMed, Cochlear and CSL. This supports the view that "rich valuations" are here to stay for the foreseeable future.
The analysts are a lot less enthusiastic about hospitals and Ansell, as well as regarding many of the smaller cap stocks in the sector, including Virtus Health and competitor Monash IVF. Price target falls to $5.97 from $7.60. Nevertheless, Overweight rating retained, alongside an In-Line assessment for the sector overall.
Target price is $5.97 Current Price is $4.30 Difference: $1.67
If VRT meets the Morgan Stanley target it will return approximately 39% (excluding dividends, fees and charges).
Current consensus price target is $5.26, suggesting upside of 22.2% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY19:
Morgan Stanley forecasts a full year FY19 dividend of 27.80 cents and EPS of 41.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 39.0, implying annual growth of 1.9%. Current consensus DPS estimate is 26.6, implying a prospective dividend yield of 6.2%. Current consensus EPS estimate suggests the PER is 11.0. |
Forecast for FY20:
Morgan Stanley forecasts a full year FY20 dividend of 30.30 cents and EPS of 44.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 42.0, implying annual growth of 7.7%. Current consensus DPS estimate is 28.1, implying a prospective dividend yield of 6.5%. Current consensus EPS estimate suggests the PER is 10.2. |
Market Sentiment: 0.3
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Today's Price Target Changes
| Company | Broker | New Target | Prev Target | Change | |
| ANN | ANSELL | Morgan Stanley | 25.39 | 28.56 | -11.10% |
| HLS | HEALIUS | Morgan Stanley | 2.80 | 3.20 | -12.50% |
| MVF | MONASH IVF | Morgan Stanley | 1.34 | 1.70 | -21.18% |
| RMD | RESMED | Morgan Stanley | 17.70 | 16.80 | 5.36% |
| VRT | VIRTUS HEALTH | Morgan Stanley | 5.97 | 7.60 | -21.45% |
Summaries
| ANN | ANSELL | Overweight - Morgan Stanley | Overnight Price $21.51 |
| HLS | HEALIUS | Equal-weight - Morgan Stanley | Overnight Price $2.75 |
| Hold - Morgans | Overnight Price $2.75 | ||
| KMD | KATHMANDU | Equal-weight - Morgan Stanley | Overnight Price $2.22 |
| MVF | MONASH IVF | Overweight - Morgan Stanley | Overnight Price $1.01 |
| RAP | RESAPP HEALTH | Add - Morgans | Overnight Price $0.11 |
| RMD | RESMED | Overweight - Morgan Stanley | Overnight Price $15.32 |
| VRT | VIRTUS HEALTH | Overweight - Morgan Stanley | Overnight Price $4.30 |
RATING SUMMARY
| Rating | No. Of Recommendations |
| 1. Buy | 5 |
| 3. Hold | 3 |
Friday 04 January 2019
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base their work on information believed to be reliable and accurate, though
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should contact their personal adviser before making any investment decision.
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