Australian Broker Call

Morgans rates ACK as Hold (3) -

First half results were weaker than expected. Morgans lowers estimates for FY18 and FY19 by around -25-35%. The broker believes the business is at an inflection point where growth could be significantly ramped up.

The broker is also bullish on strong system growth in the non-superannuation investment sector over the next decade. Nevertheless, management needs to execute well to justify re-rating, in the broker's view, and a Hold rating is maintained. Target is reduced to $1.28 from $1.68.

Target price is $1.28 Current Price is $1.37 Difference: minus $0.09 (current price is over target).
If ACK meets the Morgans target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.0

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

Deutsche Bank rates ALL as Buy (1) -

Deutsche Bank considers the Big Fish result, contained in former owner Churchill Downs report, is a minor negative for Aristocrat.

The broker believes the main weakness was a -3% decline in casual gaming revenue and a 49% increase in marketing expense.

Buy rating. Target $32.90.

Target price is $32.90 Current Price is $23.81 Difference: $9.09
If ALL meets the Deutsche Bank target it will return approximately 38% (excluding dividends, fees and charges).

Current consensus price target is $27.39, suggesting upside of 15.0% (ex-dividends)

The company's fiscal year ends in September.

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

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

Former owner, Churchill Downs, reported December quarter operating earnings for Aristocrat's recently-acquired social gaming business, Big Fish, declined -13%. Morgan Stanley notes revenue increased 6%, a return to top-line growth after three quarters of declines.

The broker acknowledges Aristocrat may be a better operator but this remains to be seen and the weakness in Big Fish in the quarter highlights the volatility in that business.

Equal-weight rating. Target is $26.00. Industry view is Cautious.

Target price is $26.00 Current Price is $23.81 Difference: $2.19
If ALL meets the Morgan Stanley target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $27.39, suggesting upside of 15.0% (ex-dividends)

The company's fiscal year ends in September.

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

UBS rates AMA as Buy (1) -

First half results beat estimates. There was no update to guidance for FY18 operating earnings of over $48m.

UBS suggests the business is getting the benefits of activity from 6-12 months ago as it takes time to build earnings from acquisitions and greenfield projects.

The consolidation opportunity is large and the broker finds the valuation appealing, maintaining a Buy rating. Target is raised to $1.30 from $1.20.

Target price is $1.30 Current Price is $1.15 Difference: $0.15
If AMA meets the UBS target it will return approximately 13% (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

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

2017 results were weaker than expected but the headline loss included a non-cash write-down of low-grade stockpiles.

Citi upgrades to Buy/High Risk from Neutral/High Risk, as the share price has been slapped down and the Tucano upgrade is now funded, but stresses that debt and high operating expenditure makes the stock high risk. Target is reduced to 15c from 21c.

Target price is $0.15 Current Price is $0.09 Difference: $0.06
If BDR meets the Citi target it will return approximately 67% (excluding dividends, fees and charges).

Current consensus price target is $0.17, suggesting upside of 85.2% (ex-dividends)

The company's fiscal year ends in December.

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 BGA as Upgrade to Buy from Neutral (1) -

First half results were ahead of estimates. UBS found the market's reaction to the strong result was tempered by lower-than-expected guidance for FY18 earnings and commentary regarding margin pressure.

The broker believes this provides an attractive entry point and upgrades to Buy from Neutral. Target is reduced to $7.90 from $8.30.

Target price is $7.90 Current Price is $6.64 Difference: $1.26
If BGA meets the UBS target it will return approximately 19% (excluding dividends, fees and charges).

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

Citi rates BSL as Buy (1) -

US tariffs, announced by President Trump, are expected to lift Northstar steel-making spreads materially.

US hot rolled coil prices have already rallied 20% over recent weeks but Citi expects BlueScope will join US steel stocks and rally further on higher spread expectations.

Buy rating and $18.60 target maintained.

Target price is $18.60 Current Price is $16.30 Difference: $2.3
If BSL meets the Citi target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $17.43, suggesting upside of 7.0% (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

UBS rates BSL as Buy (1) -

UBS believes earnings volatility continues to reduce with increased diversification and this could lead to a re-rating over time.

The broker believes a re-rating could be spurred on by the company taking up the opportunity to create greater depth in the ASEAN business. Moreover, UBS suggests this could happen in 2018.

Management has indicated that the marketing budget in Vietnam has already increased by four times on 2013 levels. Buy rating and $18.10 target maintained.

Target price is $18.10 Current Price is $16.30 Difference: $1.8
If BSL meets the UBS target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $17.43, suggesting upside of 7.0% (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

Morgans rates CMW as Hold (3) -

First half results were weaker than the prior corresponding half because of three asset sales during the period. FY18 guidance is reiterated.

Morgans believes the company's active management style will deliver returns over the long-term, with the target being an 80/20 split between property and funds management earnings. Hold rating retained. Target rises to $1.06 from $1.05.

Target price is $1.06 Current Price is $1.00 Difference: $0.06
If CMW meets the Morgans target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $1.01, suggesting upside of 1.0% (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 DMP as Sell (5) -

Deutsche Bank's analysis throws up a query over the cost of the share buyback and its impact on first half net profit. Net profit growth adjusted for buyback costs is important as it forms the basis of FY18 guidance.

The adjustment provided by management suggests the buyback was dilutive to earnings per share in the first half and this will be closely scrutinsed at the full-year results.

The broker envisages downside risk to guidance and remains concerned that the company may be taking an unsustainable share of the profit pool.

Sell and $36 target retained.

Target price is $36.00 Current Price is $39.26 Difference: minus $3.26 (current price is over target).
If DMP 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 $48.44, suggesting upside of 23.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.0

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

Macquarie rates EHL as Outperform (1) -

The broker had forecast a small loss from Emeco but the result was a profit -- the first since FY13 -- leading to increased forecasts for FY18 and beyond.

The broker notes Emeco is well positioned to benefit from the resources sector recovery as the environment for utilisation and pricing improve. Synegies from recent acquisitions are beginning to be delivered. Outperform retained, target rises to 35c from 32c.

Target price is $0.35 Current Price is $0.29 Difference: $0.06
If EHL meets the Macquarie target it will return approximately 21% (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

Deutsche Bank rates FBU as Hold (3) -

Deutsche Bank analysts point out Fletcher Building has been granted a waiver by its USPP note holders for breach of covenants. While the waiver is subject to conditions, the company expects to satisfy these conditions within days.

This is, understandably, seen as a positive step, but the analysts suggest it is as yet unknown whether there are any penalties or amendments to funding terms.

Management is negotiating with both the bank syndicate and USPP note holders (three separate tranches) and negotiations must be completed by 31 March or an extension of both waivers will be required, the analysts add.

Deutsche Bank has a negative outlook for the operational side from FY20 onwards and also finds uncertainty elevated, with management's strategic review yet to be concluded. Hold. Target NZ$6.61.

Current Price is $6.17. Target price not assessed.

Current consensus price target is N/A

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

This company reports in NZD. 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 GTN as Outperform (1) -

GTN's result was below the broker's forecast although the broker notes the core businesses are ticking along and revenue momentum continued to build. The focus is nevertheless on the US, where the broker sees two possible outcomes.

The preferred option is for US optionality to remain in play, the other option is for GTN to exit the US. The broker notes the probability of a CBS deal restructure is skewed to the upside, providing GTN with time to scale and up-skill the sales network.

Outperform retained, target falls to $3.20 from $3.60.

Target price is $3.20 Current Price is $1.99 Difference: $1.21
If GTN meets the Macquarie target it will return approximately 61% (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

Deutsche Bank rates IPL as Buy (1) -

Deutsche Bank considers Central Petroleum's selection as the preferred bidder for the Queensland government's tender for acreage dedicated to the domestic market a positive for Incitec Pivot, as it provides a path to securing affordable gas for Gibson Island.

The company has an MoU with Central Petroleum which provides for a period of exclusivity relating to the negotiation of commercial arrangements for development of the acreage and will also pursue an interim gas contract to the end of 2019.

Deutsche Bank maintains a Buy rating and $4.30 target.

Target price is $4.30 Current Price is $3.73 Difference: $0.57
If IPL meets the Deutsche Bank target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $4.01, suggesting upside of 7.5% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.4

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

Macquarie rates IPL as Outperform (1) -

Incitec has signed an MOU with Central Petroleum providing a period of exclusive arrangement regarding developing acreage, with some of the gas used to supply the Gibson Island urea plant. This potentially keeps Gibson Island in the game, the broker suggests, pending finalisation of terms.

It would also prevent Incitec from having to pay closure costs on Gibson Island. Outperform and $4.04 target retained.

Target price is $4.04 Current Price is $3.73 Difference: $0.31
If IPL meets the Macquarie target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $4.01, suggesting upside of 7.5% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.4

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

Citi rates ORI as Sell (5) -

First half results are expected to be affected by operating problems and a further delay to the start up of Burrup as well as ongoing performance issues with the Minova business.

Citi believes consensus downgrades are likely and, while demand conditions are improving, explosives grade AN markets are in significant oversupply.

Target is reduced to $16.50 from $17.00. Sell maintained.

Target price is $16.50 Current Price is $17.81 Difference: minus $1.31 (current price is over target).
If ORI meets the Citi target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $18.39, suggesting upside of 3.3% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.0

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

Credit Suisse rates ORI as Neutral (3) -

Credit Suisse observes technical issues and unforeseen maintenance outages are detracting from the benefits of an improving external environment for Orica.

While the current focus is on downgrades to forecasts for the first half, the broker also observes a possibility that reliability issues at the plant extend into the second half. For Burrup to make a positive earnings contribution in FY19 there needs to be no more technical problems.

The broker retains a Neutral rating and lowers the target to $17.64 from $18.19.

Target price is $17.64 Current Price is $17.81 Difference: minus $0.17 (current price is over target).
If ORI meets the Credit Suisse target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $18.39, suggesting upside of 3.3% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.0

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

Deutsche Bank rates ORI as Hold (3) -

The company has continued to experience operating mishaps that Deutsche Bank observes are diminishing the leverage for the business. Operating earnings are now expected to decline by -4% in FY18 but increase by 16% in FY19.

The broker reduces forecasts by -5-9% to reflect the net impact of the shutdowns and delays as well as the weakness in North American and the Minova business. Hold rating maintained. Target drops to $18.50 from $19.40.

Target price is $18.50 Current Price is $17.81 Difference: $0.69
If ORI meets the Deutsche Bank target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $18.39, suggesting upside of 3.3% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.0

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

Macquarie rates ORI as Neutral (3) -

Unscheduled plant maintenance, operational issues and the weather have all led to a first half earnings downgrade from Orica, albeit one-off. The company expects a significantly strong second half performance and FY guidance is retained.

This will require a big skew, the broker notes. Neutral retained, with the broker suggesting there's still work to do. Target falls to $18.65 from $19.60.

Target price is $18.65 Current Price is $17.81 Difference: $0.84
If ORI meets the Macquarie target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $18.39, suggesting upside of 3.3% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.0

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

Morgan Stanley rates ORI as Overweight (1) -

Unplanned maintenance in Australia, adverse weather in North America and the ongoing underperformance of Minova will adversely affect first half earnings. Delays to Burrup construction mean the company expects the plant to be operating towards the end of this financial year.

Morgan Stanley still takes a positive stance, noting that management is increasingly optimistic about the underlying demand. The broker continues to believe that FY18 is likely to be an inflection point.

Overweight. Target is reduced to $20.70 from $21.20. Industry view is Cautious.

Target price is $20.70 Current Price is $17.81 Difference: $2.89
If ORI meets the Morgan Stanley target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $18.39, suggesting upside of 3.3% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.0

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

Morgans rates ORI as Hold (3) -

The company has identified operating challenges, construction issues at Burrup and unplanned plant maintenance which will impact earnings in the first half.

The performance is expected to improve in the second half but Morgans notes implied FY18 underlying EBIT guidance of $601m is down -5.4% on FY17. The broker reduces estimates by -8.6% as a result and expects the company to return to strong growth in FY19/20.

Hold rating retained. Target reduced to $18.60 from $18.90.

Target price is $18.60 Current Price is $17.81 Difference: $0.79
If ORI meets the Morgans target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $18.39, suggesting upside of 3.3% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.0

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

Ord Minnett rates ORI as Hold (3) -

One-off plant maintenance costs of $17m are expected in the first half and the company is taking a $300m impairment charge on the Minova business. Also, North American operations have been affected by extreme weather while there are delays at Burrup.

Ord Minnett believes the company is challenged and there is uncertainty around both the near-term profile of Burrup and the future of Bontang once Burrup production ramps up. Hold rating maintained. Target is reduced to $18.15 from $19.00.

Target price is $18.15 Current Price is $17.81 Difference: $0.34
If ORI meets the Ord Minnett target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $18.39, suggesting upside of 3.3% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.0

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

Morgans rates RAN as Downgrade to Reduce from Hold (5) -

2017 earnings were broadly in line. While management is working hard to reduce costs Morgans remains concerned about the cash burn, suspecting another capital raising may occur over the next 6-9 months.

For this to be successful, the broker suggests the company needs to allay concerns around sales execution and instability at board level.

Rating is downgraded to Reduce from Hold. Target is reduced to 3c from 7c.

Target price is $0.03 Current Price is $0.05 Difference: minus $0.02 (current price is over target).
If RAN meets the Morgans target it will return approximately minus 40% (excluding dividends, fees and charges - negative figures indicate an expected loss).

The company's fiscal year ends in December.

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

Morgans rates RAP as Hold (3) -

First half results were largely in line with forecasts. The focus is on the SMARTCOUGH-C-2  trial results in the September quarter.

Morgans maintains a Hold rating and continues to monitor progress on recruitment, with this being the main risk until the results. Target increases to 12c from 9c.

Target price is $0.12 Current Price is $0.11 Difference: $0.01
If RAP meets the Morgans target it will return approximately 9% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.0

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

Macquarie rates SIQ as Outperform (1) -

Smartgroup has completed a $75m institutional placement at $11.05, a -5.5% discount to the Feb 26 closing price. A share purchase plan is now underway with the goal of raising a further $15m. The proceeds will mostly be used to pay down debt, the broker notes.

Outperform and $11.53 target retained.

Target price is $11.53 Current Price is $11.12 Difference: $0.41
If SIQ meets the Macquarie target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $11.74, suggesting upside of 5.6% (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

Credit Suisse rates VAH as Neutral (3) -

The company's domestic operations produced a strong result in the first half, Credit Suisse observes. This was offset by a weak margin in the loyalty business.

The board has confirmed major shareholders are not seeking to privatise at this point but has announced a buyback of unmarketable parcels at $0.30 a share. Neutral rating and $0.25 target maintained.

Target price is $0.25 Current Price is $0.25 Difference: $0
If VAH meets the Credit Suisse target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $0.20, suggesting downside of -22.0% (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

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

Ord Minnett believes the biggest downside risk for the company is cash flow but the stock is looking more attractive on a valuation basis.

The broker suggests the stock price is not factoring in much growth and approximately 10% of estimated value comes from growth projects that are valued on a risk-weighted basis.

These include small near-term projects such as Senegal and Myanmar and larger longer-term projects such as Scarborough and Browse.

Ord Minnett upgrades to Hold from Lighten and raises the target to $29.70 from $29.00.

Target price is $29.70 Current Price is $28.71 Difference: $0.99
If WPL meets the Ord Minnett target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $30.54, suggesting upside of 6.4% (ex-dividends)

The company's fiscal year ends in December.

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: -0.1

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

Morgans rates WTP as Add (1) -

The company reported a first half underlying loss of -$1.4m. Morgans has been of the view that capital could be returned to shareholders over the medium term but, under potential Besix control, this is now uncertain.

Besix has made an offer to acquire a further 36% stake, or 50% of eligible shareholder shares, at $0.92 per share. Besix currently has 28%.

Morgans highlights uncertainty as to whether the scheme will be approved, given the voting power of the two significant shareholders. An Add rating is maintained. Target is raised to $0.88 from $0.80.

Target price is $0.88 Current Price is $0.78 Difference: $0.1
If WTP meets the Morgans target it will return approximately 13% (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