Australian Broker Call

Macquarie rates ASG as Downgrade to Neutral from Outperform (3) -

Ahead of the interim results report release next month, Macquarie is expecting to see ebida contracting by -11% from a year ago, predominantly because of weak market conditions.

The bad news is: the analysts see these conditions somewhat being entrenched. On this basis, the recommendation has been pulled back to Neutral from Outperform.

Estimates have been reduced by double digit percentages, with pronounced effect on DPS forecasts. Target price drops to $1 from $2.30. Stock is illiquid, which doesn't help, plus Macquarie sees risk as to the downside, still.

Target price is $1.00 Current Price is $0.94 Difference: $0.06
If ASG meets the Macquarie target it will return approximately 6% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.5

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

Citi rates BBN as Buy (1) -

Retail analysts at Citi have conducted a deep dive into Christmas period sales for retailers in Australia. Overall, their observation is that Christmas 2018 featured (for the first time in five years) divergent trading conditions for discretionary retailers.

Looking forward to the upcoming reporting season, Citi's assessment is for upside risk for Baby Bunting and Accent Group ((AX1)), but downside risks for Lovisa Holdings ((LOV)), Beacon Lighting ((BLX)), Micheal Hill ((MHJ)) and Myer ((MYR)).

Citi analysts expect 2H19 trading updates to reveal slowing momentum for all retailers under coverage in Australia, with the notable exception of Nick Scali ((NCK)).

Target price is $2.65 Current Price is $2.14 Difference: $0.51
If BBN meets the Citi target it will return approximately 24% (excluding dividends, fees and charges).

Current consensus price target is $2.67, suggesting upside of 24.8% (ex-dividends)

The company's fiscal year ends in July.

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

Macquarie rates BHP as Outperform (1) -

Macquarie analysts have scaled back total shipment projections for the final quarter of 2018, but the analysts also see how buoyant iron ore prices continue to drive positive earnings momentum for producers in Australia.

On this basis, the broker reiterates Outperform ratings for BHP, Rio Tinto ((RIO)), Fortescue Metals ((FMG)) and Mt Gibson ((MGX)). Target price remains at $40.

Macquarie analysts see "significant upside" to their base case valuations for both FMG and MGX at present spot prices.

Target price is $40.00 Current Price is $34.31 Difference: $5.69
If BHP meets the Macquarie target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $36.88, suggesting upside of 7.5% (ex-dividends)

The company's fiscal year ends in June.

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: 0.6

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

Morgan Stanley rates BOQ as Underweight (5) -

Bank of Queensland has announced it is repricing most mortgages by a range of 11-18bp, effective Jan 11, 2019. Morgan Stanley analysts note this is the first repricing by a listed bank since mid-late 2018.

On the analysts' assessment, this repricing boosts 2H19E NIM by circa 3.5bp and earnings by circa 3.5%, with a minor benefit in 1H19E, given the timing.

Having said this, the analysts also believe there remain plenty of headwinds to erode the financial benefits from the move. Underweight rating retained. Industry view is In-Line. Price target $9.50 (unchanged).

Target price is $9.50 Current Price is $10.18 Difference: minus $0.68 (current price is over target).
If BOQ meets the Morgan Stanley target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $10.64, suggesting upside of 4.5% (ex-dividends)

The company's fiscal year ends in August.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.0

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

Morgans rates CL1 as Downgrade to Hold from Add (3) -

Morgans has further lowered expectations for Class with the analysts suggesting the overall market dynamics are not easy for the company, as SMSF formation is likely slowing down, in particular if Labor wins the upcoming federal election.

In the short term, the broker believes the overall landscape remains highly competitive. Rating downgraded to Hold from Add. Target price falls to $1.48 from $2.65.

Current projections imply the company will defend its annual dividends for shareholders at 5c per annum.

Target price is $1.48 Current Price is $1.50 Difference: minus $0.02 (current price is over target).
If CL1 meets the Morgans target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.10, suggesting upside of 40.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.7

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

Citi rates DMP as Upgrade to Neutral from Sell (3) -

Citi has upgraded to Neutral from Sell post significant de-rating of the share price since November last year. The analysts declare they don't see any near-term upside earnings risks, but they retain the view this company has "significant" earnings growth prospects in Europe.

On Citi's projections, average EPS growth will be 16% over the next three years. On this basis, the target price is set at $43.40 (down from $45.20).

In terms of the upcoming reporting season, Citi believes top line is likely to be trending near the low end of the range, with Domino's chances for beating its own guidance not seen as high. The suggestion made is that when the share price were to fall below $39, Citi will be ready to upgrade to Buy (all else remaining equal).

Target price is $43.40 Current Price is $41.97 Difference: $1.43
If DMP meets the Citi target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $48.87, suggesting upside of 16.4% (ex-dividends)

The company's fiscal year ends in June.

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

Macquarie rates GUD as Outperform (1) -

Previewing the upcoming interim result, Macquarie highlights this remains a defensive, trade focused automotive aftermarket parts manufacturer and distributor, and CAGR EPS for FY18-FY21 is projected to come out at 15%, of which 8-10% will be organic.

No guessing as to why the analysts label the share price "attractive", also noting the current level represents some 5% in dividend yield. Outperform rating retained. Price target $15.50 (was $16).

Target price is $15.50 Current Price is $11.43 Difference: $4.07
If GUD meets the Macquarie target it will return approximately 36% (excluding dividends, fees and charges).

Current consensus price target is $14.70, suggesting upside of 28.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.4

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

Deutsche Bank rates HVN as Buy (1) -

Feedback received from retailers across Australia has been for the "worst Christmas in a number of years", report analysts at Deutsche Bank. They point out traffic and sales were generally "soft" but margins were a bigger issue, particularly for specialty apparel and accessory retailers.

Specifically regarding Harvey Norman, the analysts suggest weak consumer conditions rule here too, though they are leaving the Buy rating intact because of the property valuation backstop plus the fact international operations are performing well.

Target price is $4.60 Current Price is $3.22 Difference: $1.38
If HVN meets the Deutsche Bank target it will return approximately 43% (excluding dividends, fees and charges).

Current consensus price target is $3.64, suggesting upside of 13.2% (ex-dividends)

Forecast for FY19:

Forecast for FY20:

Market Sentiment: -0.1

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

Deutsche Bank rates JBH as Hold (3) -

Feedback received from retailers across Australia has been for the "worst Christmas in a number of years", report analysts at Deutsche Bank. They point out traffic and sales were generally "soft" but margins were a bigger issue, particularly for specialty apparel and accessory retailers.

For JB Hi-Fi specifically, the analysts highlight JBH was amongst the best of the retailers but in light of the challenging trading conditions generally, they must conclude there is no scope for the retailer to outperform, despite the depressed PE multiple.

Another observation made is that Myer ((MYR)) is likely to have outperformed David Jones this year.

Target price is $24.00 Current Price is $21.00 Difference: $3
If JBH meets the Deutsche Bank target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $25.62, suggesting upside of 22.0% (ex-dividends)

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.1

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

Credit Suisse rates MFG as Outperform (1) -

Credit Suisse analysts point out Magellan managed to increase Funds under Management (FUM) in the first half of FY19, this was achieved despite weak financial markets globally.

In addition, the analysts note fund performance over the period can only be described as "strong". There is one counter-observation: the Australian retail Airlie Fund launched mid-year has underperformed by circa 300bp over the past six months.

Estimates have been increased by 5%, predominantly to account for the increase in performance fees. Outperform rating retained. Target remains $29.

Target price is $29.00 Current Price is $27.00 Difference: $2
If MFG meets the Credit Suisse target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $28.65, suggesting upside of 6.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.7

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

Morgan Stanley rates MFG as Underweight (5) -

The latest trading update showed Magellan is still seeing inflows, on top of stronger performance fees. Morgan Stanley analysts highlight the key global equities fund performed circa 6% better than its benchmark over 6mths and circa 8.5% over 12mths.

The analysts see significant upside for short term forecasts, but also mild downside risk for H2 and FY20 given lower Funds under Management (FUM), unsurprising given weak global equity markets.

Underweight rating retained. Industry view is In-Line. Price target unchanged at $21.50.

Target price is $21.50 Current Price is $27.00 Difference: minus $5.5 (current price is over target).
If MFG meets the Morgan Stanley target it will return approximately minus 20% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $28.65, suggesting upside of 6.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.7

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

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

Morgans notes the strong performance by the Magellan funds, including the Infrastructure Fund. This, say the analysts, should bode well for funds flows in the months ahead.

Short term risk stems from volatile equity markets, but Morgans has nevertheless decided it's time to upgrade to Add from Hold. Target price lifts to $28.76 from $28.54.

Target price is $28.76 Current Price is $27.00 Difference: $1.76
If MFG meets the Morgans target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $28.65, suggesting upside of 6.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.7

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

Ord Minnett rates MFG as Buy (1) -

Ord Minnett observes Magellan has managed to navigate 2018 "better than most". A direct comparison with Platinum Asset Management ((PTM)) shows just how big the gap between winners and losers has been last year.

The underlying suggestion is that the share price is far from expensive, hence the Buy rating is retained, alongside a target price of $32.65 (was $32).

Target price is $32.65 Current Price is $27.00 Difference: $5.65
If MFG meets the Ord Minnett target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $28.65, suggesting upside of 6.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.7

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

Morgans rates NAN as Add (1) -

The company's market update revealed no surprises to analysts at Morgans. Nanosonics' guidance implies the installed base should reach over 21,000 globally, point out the analysts.

Morgans has made no changes, but does note for investors able to look through the volatility in the share price, while taking a twelve month view, today's share price does look attractive.

Add rating retained. Price target $3.32.

Target price is $3.32 Current Price is $2.94 Difference: $0.38
If NAN meets the Morgans target it will return approximately 13% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 1.0

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

Citi rates NCK as Neutral (3) -

Neutral rating retained as well as the $6.75 price target with Citi analysts expressing the view 2H19 trading updates will reveal slowing momentum for all retailers under coverage in Australia, with the notable exception of Nick Scali.

However, the analysts note Nick Scali's earnings should benefit from the ramp-up of nine new FY18 stores and continued sales momentum, they also think it is better to remain cautious given housing indicators suggest increasingly challenging conditions.

Target price is $6.75 Current Price is $4.98 Difference: $1.77
If NCK meets the Citi target it will return approximately 36% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.0

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

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

Morgan Stanley estimates Platinum suffered from further net outflows in December, albeit probably at a slower pace than in the two preceding months. The analysts suggest outflows can potentially deteriorate going forward, giving the overall context for investment markets in early 2019.

The analysts note both the International Fund and Asian Fund are currently underperforming their respective benchmarks. Equal-weight rating retained. Industry view is In-Line. Target price remains $6.

Target price is $6.00 Current Price is $4.71 Difference: $1.29
If PTM meets the Morgan Stanley target it will return approximately 27% (excluding dividends, fees and charges).

Current consensus price target is $5.12, suggesting upside of 8.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: -0.5

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

Ord Minnett rates PTM as Sell (5) -

Ord Minnett has used recent trading updates to compare Platinum Asset Management with Magellan Financial, and others. The preference on a "compare-the-pair" basis very much resides with the latter, who offers better performance at an attractive valuation.

The broker suggests investors should Buy Magellan and Sell Platinum. Target price falls to $4.66 from $4.77.

Target price is $4.66 Current Price is $4.71 Difference: minus $0.05 (current price is over target).
If PTM meets the Ord Minnett target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.12, suggesting upside of 8.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: -0.5

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

Credit Suisse rates SGM as Outperform (1) -

Credit Suisse observes the company's peer/competitor CMC has released a rather weak market update in the US. Another one, Schnitzer, has released equally weak performance numbers.

The analysts are toying with the idea that, maybe, Sims Metal Management might have benefited somewhat, but all-in-all, the conclusion seems to be that seasonally weak volumes will have impacted here too.

No changes made. Outperform. Target $14.45.

Target price is $14.45 Current Price is $10.17 Difference: $4.28
If SGM meets the Credit Suisse target it will return approximately 42% (excluding dividends, fees and charges).

Current consensus price target is $14.29, suggesting upside of 40.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.6

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

Ord Minnett rates SSM as Buy (1) -

The company has completed the acquisition of Comdain Infrastructure and Ord Minnett has updated its modeling. The new forecast is for 20% EPS growth in FY19, followed by 10% growth in FY20.

Target price lifts to $2.10 from $2. Given the share price sits a lot lower, the Buy rating is firmly retained.

Target price is $2.10 Current Price is $1.72 Difference: $0.38
If SSM meets the Ord Minnett target it will return approximately 22% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 1.0

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

Morgans rates STO as Upgrade to Hold from Reduce (3) -

Recent share price weakness has pushed Santos shares into "fair value" territory, on Morgans' assessment, hence why the rating has been upgraded to Hold from Reduce.

The broker has put through higher oil price forecasts in its model, while noting balance sheet pressure has been alleviated on the combination of significant cost-out initiatives and a recovery in the oil price.

Target price has fallen to $5.53 from $5.59. Upside risk remains with the PNG operations, suggest the analysts.

Target price is $5.53 Current Price is $5.80 Difference: minus $0.27 (current price is over target).
If STO meets the Morgans target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $7.01, suggesting upside of 20.9% (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: 0.5

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

Citi rates WOW as Buy (1) -

Retail analysts at Citi have conducted a deep dive into Christmas period sales for retailers in Australia. Overall, their observation is that Christmas 2018 featured (for the first time in five years) divergent trading conditions for discretionary retailers, with stock specific dynamics worthy of investors' attention.

Citi analysts report, ahead of the upcoming results season, strongest feedback received has been on Woolworths, Coles ((COL)) and Accent Group ((AX1)), while downside risk is seen for Lovisa Holdings ((LOV)) and Myer ((MYR)).

Target price is $33.00 Current Price is $29.80 Difference: $3.2
If WOW meets the Citi target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $29.30, suggesting downside of -1.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.0

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

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

Stockbroker Morgans has upgraded to Buy from Hold, observing Woodside Petroleum's ebitdax margin of 72% is nothing but "exceptional". The quality of earnings is supported by what the analysts deem are "low risk" operations.

Morgans has had difficulties to look beyond the company's lack of growth, but the analysts see fundamentals for LNG and crude oil operations improving, and this is likely to support the sanctioning of Browse, Scarborough and Kitimat LNG, suggest the analysts.

The updated modeling has also incorporated higher oil price forecasts. Estimates went up. The target price lifts to $37.83 (was $36.74). Noteworthy: DPS forecasts have been reduced.

Target price is $37.83 Current Price is $33.15 Difference: $4.68
If WPL meets the Morgans target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $37.51, suggesting upside of 13.2% (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: 0.6

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