Australian Broker Call

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

Ord Minnett believes the building materials backdrop has turned more challenging, as residential construction in Australia has pulled back and the US housing market has softened. Moreover, activity in New Zealand appears set to moderate.

Given the underperformance of the sector as a whole the broker upgrades Adelaide Brighton to Hold from Lighten, maintaining a $4.50 target. The broker remains cautious about the stock, nevertheless, because of its exposure to the Australasian housing market.

Target price is $4.50 Current Price is $4.63 Difference: minus $0.13 (current price is over target).
If ABC meets the Ord Minnett target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.89, suggesting upside of 5.7% (ex-dividends)

The company's fiscal year ends in December.

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 AGL as Neutral (3) -

The broker notes AGL's first half electricity generation was broadly in line with expectation. The value of large scale generation certificates (LREC) has nevertheless collapsed to $40/MWh from $70 which will impact on FY19-20 profits, while spot coal prices have risen.

That combination sees the broker lower FY19 earnings forecasts by -2% and FY20 by -11%. Target falls to $21.70 from $22.10. Neutral retained.

Target price is $21.70 Current Price is $21.42 Difference: $0.28
If AGL meets the Macquarie target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $20.67, suggesting downside of -3.5% (ex-dividends)

The company's fiscal year ends in June.

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

UBS rates AIZ as Neutral (3) -

UBS observes mixed operating trends during the early part of the peak season and expects a tough first half. A more subdued revenue environment contrasts with lower fuel cost headwinds.

Without upgrades to earnings, the broker believes the airline is stuck between weak FY19 earnings and strong free cash flow from FY20 as the fleet modernisation program finishes.

UBS maintains a Neutral rating and NZ$3.00 target.

Current Price is $3.11. Target price not assessed.

Current consensus price target is N/A

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

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

Citi rates AMP as Buy (1) -

Citi marks to market, reducing 2018 and 2019 earnings-per-share estimates by -3%. While continuing to acknowledge the significant risks, the broker envisages value in AMP and retains a Buy/High Risk rating and $2.85 target.

The main risk from the final report of the Hayne Royal Commission, due to be handed to the government by February 1, is the banning of vertical integration.

The broker considers this unlikely. Nevertheless, conflicts that existed in the business model in the past are unlikely to be allowed going forward.

Target price is $2.85 Current Price is $2.53 Difference: $0.32
If AMP meets the Citi target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $2.85, suggesting upside of 12.8% (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

Ord Minnett rates APE as Hold (3) -

2018 pre-tax profit guidance has been increased to $133.7m, 4.5% above the mid point of previous guidance.

The stronger result, Ord Minnett observes, is driven by both operating divisions posting a record December, and bucking negative industry trends in new vehicle sales.

The broker remains cautious about the near-term outlook for the sector, nonetheless, although appreciates the business is well placed to capitalise on industry consolidation over the next 12 months.

Hold rating maintained with a $7.00 target.

Target price is $7.00 Current Price is $6.60 Difference: $0.4
If APE meets the Ord Minnett target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $7.55, suggesting upside of 14.4% (ex-dividends)

The company's fiscal year ends in December.

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 API as Underperform (5) -

Credit Suisse downgrades estimates for earnings per share by around -8% after the AGM trading update. The company has guided to 5% growth in operating earnings (EBIT) for the first half.

In addition, higher financing costs have been flagged because of the stake in Sigma ((SIG)). The company remains in discussions with Sigma over the proposed merger, intending to commence due diligence shortly.

Credit Suisse remains of the view there is a high risk the ACCC will oppose the merger. Underperform rating maintained. Target is reduced to $1.42 from $1.55.

Target price is $1.42 Current Price is $1.46 Difference: minus $0.04 (current price is over target).
If API meets the Credit Suisse target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

The company's fiscal year ends in August.

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

Credit Suisse rates AQG as Outperform (1) -

2019 production guidance is in line with Credit Suisse forecasts. The sulphide plant is progressing to plan and guidance appears conservative to Credit Suisse, allowing for plant shutdowns for inspection during the ramp up.

Preliminary results suggest 2018 guidance will be bettered (report is due February 5) and the broker maintains an Outperform rating. Target is $5.05.

Target price is $5.05 Current Price is $3.05 Difference: $2
If AQG meets the Credit Suisse target it will return approximately 66% (excluding dividends, fees and charges).

Current consensus price target is $4.29, suggesting upside of 40.6% (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: 1.0

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

UBS rates AQG as Buy (1) -

2019 production guidance of 320-380,000 ounces is stronger than UBS expected. This suggests management is becoming more confident in the success of the sulphide project.

UBS observes the project is being rapidly de-risked and the share price has begun to re-rate, although more is expected. The broker maintains a Buy rating and raises the target to $4.00 from $3.70.

Target price is $4.00 Current Price is $3.05 Difference: $0.95
If AQG meets the UBS target it will return approximately 31% (excluding dividends, fees and charges).

Current consensus price target is $4.29, suggesting upside of 40.6% (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: 1.0

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

Morgans rates BHP as Add (1) -

December quarter production was weaker than Morgans expected. Lower iron ore and copper volumes meant unit costs rose above guidance, although this is expected to moderate as FY19 progresses.

Petroleum was the highlight for Morgans, outpacing estimates. The broker believes the investment case is supported by robust fundamentals.

Add rating maintained. Target is reduced to $40.54 from $40.66.

Target price is $40.54 Current Price is $32.65 Difference: $7.89
If BHP meets the Morgans target it will return approximately 24% (excluding dividends, fees and charges).

Current consensus price target is $35.51, suggesting upside of 8.7% (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: 0.5

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

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

Bingo Industries makes money by providing waste collection and processing services, with a focus on recycling. Morgans notes the share price has been volatile since it reached its high in 2018.

Broad market weakness only partially explains the decline and the broker identifies three other factors. These include a heightened risk the ACCC will block the proposed acquisition of Dial-A-Dump, investor concerns over weakening residential construction activity and, thirdly, the Queensland government's announcement it will apply a $75/t landfill levy.

Morgans initiates coverage with a target of $2.37 and an Add rating.

Target price is $2.37 Current Price is $2.14 Difference: $0.23
If BIN meets the Morgans target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $2.86, suggesting upside of 33.5% (ex-dividends)

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 CGF as Downgrade to Neutral from Buy (3) -

The company has downgraded FY19 normalised earnings estimates. Citi lowers core estimates for earnings per share by -48% for FY19 and -8% for FY20.

The broker still expects the upcoming means test changes to be positive for the company's annuities. Uncertainty in the meantime, as well as the need for a new CEO to build market confidence, may not be enough to propel the stock forward.

There are also risks around the longer-term return-on-equity target. Rating is downgraded to Neutral from Buy. Target is reduced to $8.40 from $13.10.

Target price is $8.40 Current Price is $7.42 Difference: $0.98
If CGF meets the Citi target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $9.32, suggesting upside of 25.6% (ex-dividends)

The company's fiscal year ends in June.

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 CGF as Neutral (3) -

The company has provided normalised net profit guidance for the first half which is below expectations. FY19 guidance has been downgraded by -8%, and the implied downgrade to the second half surprises Credit Suisse as many of the drivers appeared to be more one-off.

Either the company has been particularly conservative in the second half or the broker wonders whether there is something structurally wrong with the company's COE margin.

Credit Suisse reduces estimates for earnings per share by -8-21% over FY19-23 to reflect lower book growth and a lower margin. Target is reduced to $7.55 from $12.00 and a Neutral rating is maintained.

Target price is $7.55 Current Price is $7.42 Difference: $0.13
If CGF meets the Credit Suisse target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $9.32, suggesting upside of 25.6% (ex-dividends)

The company's fiscal year ends in June.

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 CGF as Hold (3) -

First half results are due on February 12 and Challenger has guided to net profit of $200m. Earnings are being affected by increased market volatility, resulting in lower cash distributions in the life absolute return portfolio, amid lower funds management performance fees.

Deutsche Bank maintains a Hold rating. Target is $9.80.

Target price is $9.80 Current Price is $7.42 Difference: $2.38
If CGF meets the Deutsche Bank target it will return approximately 32% (excluding dividends, fees and charges).

Current consensus price target is $9.32, suggesting upside of 25.6% (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

Macquarie rates CGF as Outperform (1) -

Challenger has pre-released its first half profit result and updated FY19 guidance. New guidance is -8% below the prior range and blamed on market volatility, which the broker finds disappointing given consensus was already set at the low end. Guidance may prove conservative nonetheless, given the new CEO has just started.

The broker cuts FY19-20 earnings forecasts by -11-13% and its target to $10.60 from $12.50. With Challenger trading at a -13% discount to its five-year average PE, the broker retains Outperform.

Target price is $10.60 Current Price is $7.42 Difference: $3.18
If CGF meets the Macquarie target it will return approximately 43% (excluding dividends, fees and charges).

Current consensus price target is $9.32, suggesting upside of 25.6% (ex-dividends)

The company's fiscal year ends in June.

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

Morgan Stanley rates CGF as Underweight (5) -

Morgan Stanley believes the company's downgrade to first half guidance dispels some misconceptions surrounding the defensive nature of the stock.

Equity holder returns are considered highly geared to investment markets and the broker estimates real FY19 returns now fall to 6%, versus the cost of equity at 11%.

Further risks to the outlook include a softening in volumes in Japan and delay in MyRetirement until FY23.

Underweight rating. Target is $10.50. Industry view: In-line.

Target price is $10.50 Current Price is $7.42 Difference: $3.08
If CGF meets the Morgan Stanley target it will return approximately 42% (excluding dividends, fees and charges).

Current consensus price target is $9.32, suggesting upside of 25.6% (ex-dividends)

The company's fiscal year ends in June.

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

Morgans rates CGF as Hold (3) -

Morgans downgrades estimates for FY19 and FY20 by -8% to reflect the company's guidance update and makes more conservative future margin assumptions.

The broker was surprised by the extent of the downgrade and retains some concern regarding the more volatile items that are affecting life cash operating earnings.

The broker maintains a Hold rating and, while acknowledging material upside to valuation, prefers to await details at the upcoming results. Target is reduced to $9.20 from $12.74.

Target price is $9.20 Current Price is $7.42 Difference: $1.78
If CGF meets the Morgans target it will return approximately 24% (excluding dividends, fees and charges).

Current consensus price target is $9.32, suggesting upside of 25.6% (ex-dividends)

The company's fiscal year ends in June.

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

Ord Minnett rates CGF as Lighten (4) -

Guidance has been revised down, with the company expecting normalised pre-tax profit in FY19 of $545-565m. Ord Minnett lowers forecast by -6% for FY19 and -11% for FY20-21 as a result.

The broker supports management's efforts to de-risk the business but is looking for a shift towards better margins/return on equity that would put it on a more sustainable basis. The broker maintains a Lighten rating and reduces the target to $6.85 from $7.80.

Target price is $6.85 Current Price is $7.42 Difference: minus $0.57 (current price is over target).
If CGF meets the Ord Minnett target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $9.32, suggesting upside of 25.6% (ex-dividends)

The company's fiscal year ends in June.

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

UBS rates CGF as Neutral (3) -

The company has lowered first half normalised pre-tax profit guidance to $270m, -9% below UBS estimates. The shortfall is driven by lower absolute fund distributions and fund management performance fees.

UBS is surprised by the degree of volatility in the distributions and finds it unclear whether the revised guidance is overly conservative or just more realistic.

Neutral rating maintained. Target is $11.65.

Target price is $11.65 Current Price is $7.42 Difference: $4.23
If CGF meets the UBS target it will return approximately 57% (excluding dividends, fees and charges).

Current consensus price target is $9.32, suggesting upside of 25.6% (ex-dividends)

The company's fiscal year ends in June.

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

Macquarie rates COE as Outperform (1) -

Cooper Energy missed Dec Q production expectations due to longer than anticipated down-time at Casino/Henry. Despite this, the broker still expects FY19 production guidance to be met.

A number of major de-risking opportunities are on offer in the second half, the broker notes, including financing for Sole, drilling at Elanora and accessing PRRT credits from Manta. The broker retains Outperform with a 55c target but sees 75c if everything falls into place.

Target price is $0.55 Current Price is $0.46 Difference: $0.09
If COE meets the Macquarie target it will return approximately 20% (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 COE as Add (1) -

December quarter production was lower-than-expected, with planned maintenance at Casino Henry having a larger impact versus Morgans' estimates.

The capital expenditure budget has increased to $244.8m because of timing changes. The Sole gas project is now 86% complete and on track for first sales in July.

Cooper Energy remains one of the brokers most preferred small-energy exposures and an Add rating is maintained. Target is reduced to $0.59 from $0.61.

Target price is $0.59 Current Price is $0.46 Difference: $0.13
If COE meets the Morgans target it will return approximately 28% (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

Credit Suisse rates CRN as Outperform (1) -

The company's maiden quarterly production report missed prospectus guidance but a catch up in 2019 is expected.

Credit Suisse observes plenty of catalysts ahead in 2019, most notably the new mine plan at Curragh while longwall moves at Buchanan mid year are expected to improve recoveries.

Outperform rating and $4.10 target maintained.

Target price is $4.10 Current Price is $2.91 Difference: $1.19
If CRN meets the Credit Suisse target it will return approximately 41% (excluding dividends, fees and charges).

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 CRN as Add (1) -

Morgans was slightly disappointed with the operating issues in the company's maiden quarterly production report. Second half issues in Queensland, largely beyond control of the company, affected sales, although this was offset by higher-than-expected coking coal pricing.

Most of the delayed Curragh sales are expected to be recovered in early 2019. Morgans considers the stock a price-leverage story, more than a play on production growth or cost reductions.

Add rating maintained. Target is reduced to $3.97 from $4.05.

Target price is $3.97 Current Price is $2.91 Difference: $1.06
If CRN meets the Morgans target it will return approximately 36% (excluding dividends, fees and charges).

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

Ord Minnett rates DLX as Lighten (4) -

Ord Minnett believes the building materials backdrop has turned more challenging, as residential construction in Australia has pulled back and the US housing market has softened. Moreover, activity in New Zealand appears set to moderate.

The broker remains cautious about Dulux yet, following significant share price weakness, upgrades to Hold from Lighten. Target is raised to $6.80 from $6.70.

Target price is $6.80 Current Price is $6.73 Difference: $0.07
If DLX meets the Ord Minnett target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $7.15, suggesting upside of 6.3% (ex-dividends)

The company's fiscal year ends in September.

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 GXY as Neutral (3) -

The updated reserve and resource for Mount Cattlin is positive, Credit Suisse observes, with an additional 1.5-2 years of additional reserve life. This provides visibility to mining beyond 2023. Reserve grades are also a higher 1.15% lithium oxide.

Permission has also been secured for an expansion of the processing limit to 2mtpa from the current 1.6mtpa. Credit Suisse maintains a Neutral rating and $3.15 target.

Target price is $3.15 Current Price is $2.10 Difference: $1.05
If GXY meets the Credit Suisse target it will return approximately 50% (excluding dividends, fees and charges).

Current consensus price target is $3.37, suggesting upside of 60.5% (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: 0.8

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

Morgan Stanley rates GXY as Overweight (1) -

Resource and reserve estimates have been updated for Mount Cattlin. The upgrade includes an additional 1.5 years to estimated mine life, which Morgan Stanley finds positive for the base case valuation.

The focus is now on lithium contract terms and pricing for 2019. Overweight rating and $2.95 target maintained. Industry View: Attractive.

Target price is $2.95 Current Price is $2.10 Difference: $0.85
If GXY meets the Morgan Stanley target it will return approximately 40% (excluding dividends, fees and charges).

Current consensus price target is $3.37, suggesting upside of 60.5% (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: 0.8

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

Macquarie rates LNK as Outperform (1) -

The broker is back from restriction following Link's PEXA acquisition and returns with an Outperform rating and $8.90 target, noting the stock is the broker's preferred pick in the diversified financials space.

While the company's AGM was disappointing, the broker now sees regulatory headwinds domestically abating. LAS remains beholden to Brexit uncertainty. Link's PEXA stake has risen to 44.2% from 19.8% and provides $1.30ps of the broker's valuation.

Target price is $8.90 Current Price is $7.16 Difference: $1.74
If LNK meets the Macquarie target it will return approximately 24% (excluding dividends, fees and charges).

Current consensus price target is $8.50, suggesting upside of 18.6% (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

Macquarie rates MGX as Outperform (1) -

Mt Gibson's mid-west operating performance was solid, the broker notes, with realised prices and volumes both above expectation.

But all hangs on first production at Koolan Island, which is expected by the end of the March Q. The broker retains Outperform, noting material upside to valuation if spot iron ore prices are assumed. Target rises to 67c from 66c.

Target price is $0.67 Current Price is $0.58 Difference: $0.09
If MGX meets the Macquarie target it will return approximately 16% (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

Macquarie rates MLX as Outperform (1) -

Metals X had already pre-released a soft Dec Q production report. Production at Nifty has started to improve, the broker notes, but not as quickly as hoped, while the ore sorter at Renison has so far failed to deliver the uplift expected. The broker has cut forecasts for both copper and tin production.

Ongoing improvements at Nifty over FY19 remain the key catalyst, the broker suggests. Outperform retained, target falls to 70c from 80c.

Target price is $0.70 Current Price is $0.39 Difference: $0.31
If MLX meets the Macquarie target it will return approximately 79% (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

Macquarie rates MYX as Underperform (5) -

The broker notes trend growth in Mayne's generic products was generally weaker in the first half, showing moderation in specialty products. Positive momentum in Specialty Brands is still expected, albeit at a slower pace, and contributions from key pipeline products are anticipated over the medium-longer term.

However the broker sees scope from new competitive product launches and retains Underperform. Target falls to 86c from 93c.

Target price is $0.86 Current Price is $0.84 Difference: $0.02
If MYX meets the Macquarie target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $0.99, suggesting upside of 17.3% (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

Citi rates NST as Neutral (3) -

The December quarter disappointed Citi as unit costs guidance has increased for FY19. Production guidance for FY19 is steady at 850-900,000 ounces.

However, the broker notes the apparent lift in costs is partly because the company is chasing higher-cost ounces in Western Australia while the Australian dollar price for gold allows.

Citi maintains a Neutral rating and reduces the target to $9.10 from $9.25.

Target price is $9.10 Current Price is $8.22 Difference: $0.88
If NST meets the Citi target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $8.08, suggesting downside of -1.7% (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

Credit Suisse rates NST as Underperform (5) -

December quarter production disappointed Credit Suisse. Underperform rating and $6.10 target maintained.

Management has attributed the weaker quarter to a deliberate opportunistic strategy to produce less gold by mining lower grades because of stronger gold prices, which the broker finds "unusual".

Target price is $6.10 Current Price is $8.22 Difference: minus $2.12 (current price is over target).
If NST meets the Credit Suisse target it will return approximately minus 26% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $8.08, suggesting downside of -1.7% (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

Deutsche Bank rates NST as Sell (5) -

December quarter production was below Deutsche Bank's expectations because of lower grades and weather. Costs were 11% higher in the quarter. Production guidance is unchanged although cost guidance has increased to $1125-1225/oz.

The broker downgrades production estimates for FY19 resulting in a -15% drop in FY19 estimates for earnings per share. Sell retained on valuation and the target is $7.25.

Target price is $7.25 Current Price is $8.22 Difference: minus $0.97 (current price is over target).
If NST meets the Deutsche Bank target it will return approximately minus 12% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $8.08, suggesting downside of -1.7% (ex-dividends)

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 NST as Outperform (1) -

Northern Star's Dec Q production missed expectations due to lower grades, with all three operations reporting lower output. The ramp-up of Pogo is expected in coming weeks.

The company has retained FY19 production guidance while lifting cost guidance only slightly. Outperform retained, target falls to $10.00 from $10.90.

Target price is $10.00 Current Price is $8.22 Difference: $1.78
If NST meets the Macquarie target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $8.08, suggesting downside of -1.7% (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

Morgan Stanley rates NST as Underweight (5) -

Morgan Stanley observes costs have increased for FY19, with guidance raised for Pogo as well - now US$950-1025/oz from US$880/oz.

Gold production in the December quarter missed the broker's forecasts, with the biggest decline at Kalgoorlie as weather-related disruptions reduced milled tonnage.

Underweight rating. Industry view is Attractive. Target is $6.60.

Target price is $6.60 Current Price is $8.22 Difference: minus $1.62 (current price is over target).
If NST 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 $8.08, suggesting downside of -1.7% (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

Ord Minnett rates NST as Hold (3) -

Ord Minnett found the December quarter production report contentious, as production and costs missed forecasts because of a change in mine plan.

The company focused on extracting lower grades at Kalgoorlie, in response to higher Australian dollar gold prices, amid accelerated capital expenditure at Pogo.

The broker maintains a Hold rating and lowers the target to $8.50 from $9.00.

Target price is $8.50 Current Price is $8.22 Difference: $0.28
If NST meets the Ord Minnett target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $8.08, suggesting downside of -1.7% (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

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

December quarter production was -19% lower than UBS expected. The company has capitalised on higher Australian dollar gold prices to opportunistically mine lower grade and more marginal ore. This extends mine life but also lifts unit costs.

Unchanged guidance of 250-260,000 ounces in FY19 now appears to be a stretch. UBS believes the share price is factoring in positive momentum and the risk/return is now more balanced.

Rating is downgraded to Neutral from Buy on the back of the share price performance. Target is steady at $9.00.

Target price is $9.00 Current Price is $8.22 Difference: $0.78
If NST meets the UBS target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $8.08, suggesting downside of -1.7% (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 ORG as Outperform (1) -

Origin's first half generation was slightly better than expected with coal-fired and renewables offsetting weakness in gas.  The value of large scale generation certificates (LREC) has nevertheless collapsed to $40/MWh from $70 which will impact on FY19-20 profits.

Energy companies are facing significant headwinds of upcoming quasi-regulation, likely change in government and technology shift to solar/batteries, the broker notes. Origin is better placed to manage a change in government given its weighting in gas. Outperform retained.

Target falls to $8.53 from $9.20.

Target price is $8.53 Current Price is $7.21 Difference: $1.32
If ORG meets the Macquarie target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $8.66, suggesting upside of 20.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.9

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

Ord Minnett rates PNI as Buy (1) -

Ord Minnett observes some of the gloss has come off the stock in the market rout but the business remains well positioned. Absolute performance suffered in the December quarter, with the LIC market temporarily closing.

The company has guided to a net profit result for the first half of $10.1m, up 25%. Ord Minnett reduces net profit estimates for FY19 by -7% and FY20 by -10%.

The broker maintains a Buy rating and reduces the target to $6.55 from $6.78.

Target price is $6.55 Current Price is $4.42 Difference: $2.13
If PNI meets the Ord Minnett target it will return approximately 48% (excluding dividends, fees and charges).

Current consensus price target is $6.44, suggesting upside of 45.7% (ex-dividends)

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 QBE as Buy (1) -

Reflecting the fall in bond yields and poor equity market returns at the end of the second half, Citi reduces estimates for earnings per share in 2018.

The broker expects the changes to be largely overlooked by the market as the focus is on the underlying performance.

2019 guidance is expected to show modest improvement, as the strong rate increases in 2018 are cycled and the first round of cost savings flow through.

Citi maintains a Buy rating and $12.80 target.

Target price is $12.80 Current Price is $10.84 Difference: $1.96
If QBE meets the Citi target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $12.25, suggesting upside of 13.0% (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: 0.8

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

Macquarie rates RMD as Underperform (5) -

Ahead of ResMed's upcoming result release, the broker believes the stock is overvalued. Let us count the ways.

A forward PE of 30x represents a 59% premium to the ASX200 ex financials & resources and more than two standard deviations over its five-year average. The stock is expensive compared to domestic peers on a PE to growth basis, and is trading at a 35% premium to a basket of medical device peers, above the five-year average. 

The broker suggests the market is expecting more of the same from ResMed, which assumes no competitive response or technology advancement. Underperform retained. Target rises to $14.15 from $13.50.

Target price is $14.15 Current Price is $16.44 Difference: minus $2.29 (current price is over target).
If RMD meets the Macquarie target it will return approximately minus 14% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $15.93, suggesting downside of -3.1% (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: 0.3

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

Citi rates RRL as Neutral (3) -

Citi observes production was "typically consistent" in the December quarter. Downside risk exists from delays at McPhillamys but there is upside from growth in the resource at the Duketon underground.

The company plans to complete the portal at Rosemont in the current quarter and first ore is expected in the December quarter.

Citi maintains a Neutral rating and raises the target to $4.70 from $4.25.

Target price is $4.70 Current Price is $4.82 Difference: minus $0.12 (current price is over target).
If RRL 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 $4.46, suggesting downside of -7.5% (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

Credit Suisse rates RRL as Downgrade to Underperform from Outperform (5) -

The company is reporting strong exploration results from the Rosemont underground central zone and the Garden Well depth extension underground.

Credit Suisse notes the McPhillamys project has been pushed out further, to around 2022. The broker notes new management has continued with the old strategy which has served the company well.

Rating is downgraded to Underperform from Outperform, purely on valuation because of the recent strength in the share price. Target is $4.45.

Target price is $4.45 Current Price is $4.82 Difference: minus $0.37 (current price is over target).
If RRL meets the Credit Suisse target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.46, suggesting downside of -7.5% (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

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

The company expects FY19 gold production to be in the mid to upper end of its 340-370,000 ounces guidance range and costs to be at the mid to lower end of guidance.

Ord Minnett is mostly concerned about the McPhillamys operation amid further delays. Completion of the definitive feasibility study is now expected for the June or September quarter.

The broker struggles to justify the valuation and downgrades to Lighten from Hold. Target is reduced to $4.30 from $4.40.

Target price is $4.30 Current Price is $4.82 Difference: minus $0.52 (current price is over target).
If RRL meets the Ord Minnett target it will return approximately minus 11% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.46, suggesting downside of -7.5% (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

UBS rates RRL as Neutral (3) -

December quarter production was in line with expectations, although costs were -10% below UBS estimates. Management has indicated that production in FY19 is likely to be at the top end of guidance.

UBS upgrades valuation to reflect the potential of exploration around existing open pits. The key to a higher valuation, however, is more successful exploration.

The broker maintains a Neutral rating and raises the target to $5.00 from $4.20.

Target price is $5.00 Current Price is $4.82 Difference: $0.18
If RRL meets the UBS target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $4.46, suggesting downside of -7.5% (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

Credit Suisse rates SBM as Underperform (5) -

The company has raised FY19 guidance to 365-385,000 ounces and tightened the guidance range on costs to $1045-1100/oz.

Credit Suisse is encouraged by the exploration results to date in the Gwalia extension project, which remains on track.

Underperform rating and $3.90 target maintained.

Target price is $3.90 Current Price is $4.46 Difference: minus $0.56 (current price is over target).
If SBM meets the Credit Suisse target it will return approximately minus 13% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.42, suggesting downside of -0.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.2

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

Macquarie rates SBM as Outperform (1) -

St Barbara's Dec Q report showed a 3% beat on production expectations but also higher costs, the broker notes. Strength at Simberi served to offset the impact of extension work at Gwalia.

Simberi has led to increased FY19 production guidance while the Gwalia Mass Extraction feasibility study is due to be released in March, which should refresh the company's longer term outlook, the broker suggests. Outperform retained, target falls to $4.80 from $4.90.

Target price is $4.80 Current Price is $4.46 Difference: $0.34
If SBM meets the Macquarie target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $4.42, suggesting downside of -0.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.2

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

Ord Minnett rates SBM as Hold (3) -

Lower production at the Gwalia mine was offset by stronger quarter at Simberi, Ord Minnett observes. The major catalyst for the stock, the broker envisages, is completing the Gwalia mass extraction pre-feasibility study.

The business is well-positioned in terms of the balance sheet and strong operating cash flow, but the broker awaits the final outcome of the study before becoming more positive.

Hold rating maintained. Target is reduced to $4.60 from $4.70.

Target price is $4.60 Current Price is $4.46 Difference: $0.14
If SBM meets the Ord Minnett target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $4.42, suggesting downside of -0.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.2

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

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

Morgan Stanley suggests the company's cash return target of over 10% is now a stretch. The company needs to address the recurring adjustments and the aggressive catastrophe budget, the broker believes.

In other business, low credit losses are likely to help offset weak bank volumes and net interest margin headwinds. General insurance underlying margins are expected to show improvement and the broker targets a first half underlying margin of 12.5%.

Equal-weight. Target is reduced to $14.00 from $14.50. In-Line sector view.

Target price is $14.00 Current Price is $12.97 Difference: $1.03
If SUN meets the Morgan Stanley target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $14.62, suggesting upside of 12.7% (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

UBS rates SUN as Buy (1) -

UBS suspects the company will have several quality issues in the first half, albeit manageable. Too much attention has been placed on the weather and the messy first half, without adequate recognition of the full-year trends, the broker adds.

Hence, a favourable view is maintained and UBS continues to believe Suncorp is the best way to play the positive cyclical backdrop in general insurance. Buy rating and $15.80 target maintained.

Target price is $15.80 Current Price is $12.97 Difference: $2.83
If SUN meets the UBS target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $14.62, suggesting upside of 12.7% (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

Credit Suisse rates WSA as Outperform (1) -

December quarter production was in line with Credit Suisse estimates. Additional development capital expenditure has been allocated to shaft haulage, a larger mill & paste fill plant and rehabilitation for AM5.

AM5 is a planned future ore source that is not captured in the current valuation which, together with AM6 and massive sulphides, could materially extend the initial 10-year life.

Credit Suisse maintains an Outperform rating and $2.65 target.

Target price is $2.65 Current Price is $2.12 Difference: $0.53
If WSA meets the Credit Suisse target it will return approximately 25% (excluding dividends, fees and charges).

Current consensus price target is $2.64, suggesting upside of 24.3% (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

Macquarie rates WSA as Outperform (1) -

Western Areas had a mixed Dec Q, the broker notes, with production in  line but costs higher than expected, which leads to an earnings forecast cut. Development on Cosmos has commenced and the mine offers significant leverage the broker's bullish base case for nickel, with a ten-year life.

However if nickel prices do not recover the broker expects the company to slow capital spending on the project as an acceptable return requires higher nickel prices. Outperform retained, target falls to $2.60 from $2.70.

Target price is $2.60 Current Price is $2.12 Difference: $0.48
If WSA meets the Macquarie target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $2.64, suggesting upside of 24.3% (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 WSA as Buy (1) -

Ord Minnett believes the impact of higher costs on FY19 operating earnings forecasts is negligible but is increasingly concerned about Forrestania.

The broker estimates Flying Fox has around four years of mine life left, timed for the business shift towards the Odysseus deposit.

Meanwhile, the value of the assets remains highly leveraged to the nickel price. The broker maintains a Speculative Buy rating and lowers the target to $2.60 from $2.80.

Target price is $2.60 Current Price is $2.12 Difference: $0.48
If WSA meets the Ord Minnett target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $2.64, suggesting upside of 24.3% (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

UBS rates WSA as Neutral (3) -

Production was consistent in the December quarter, although UBS notes Western Areas is the most leveraged operation in its ASX nickel coverage, because of its cost position.

A decline in spot nickel, amid concerns about global growth, is a risk to earnings and cash flow forecasts, the broker adds.

The broker maintains a Neutral rating and reduces the target to $2.30 from $2.45.

Target price is $2.30 Current Price is $2.12 Difference: $0.18
If WSA meets the UBS target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $2.64, suggesting upside of 24.3% (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