Australian Broker Call

Citi rates ALL as Buy (1) -

Citi finds the US Court of Appeals ruling on Big Fish Casino, which Aristocrat now owns, hard to fathom. This is because Big Fish Casino is a free-to-play service and virtual credits need not be purchased to play, while credits have no value outside of the game.

The ruling signals the casino could be considered illegal online gambling and upholding the ruling could have broader ramifications for the social gaming industry, the broker suggests. However, at this stage it is largely an issue for Washington state and Citi suspects the ruling has a good chance of being overturned.

Buy rating and $32.20 target maintained.

Target price is $32.20 Current Price is $23.54 Difference: $8.66
If ALL meets the Citi target it will return approximately 37% (excluding dividends, fees and charges).

Current consensus price target is $27.96, suggesting upside of 18.8% (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

Credit Suisse rates AMP as Outperform (1) -

Credit Suisse adjusts earnings forecasts to allow for investment market movements in the March quarter. Overall, the broker decreases FY18 underlying profit estimates by -1.4% and outer years by -1.7%. The profit estimate for FY18 is revised down -5.5%.

Rating is Outperform.Target is reduced to $5.45 from $5.60.

Target price is $5.45 Current Price is $4.90 Difference: $0.55
If AMP meets the Credit Suisse target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $5.60, suggesting upside of 14.2% (ex-dividends)

The company's fiscal year ends in December.

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 ANZ as Upgrade to Buy from Neutral (1) -

The share price has declined around -6% in the year to date and Citi upgrades to Buy from Neutral. The broker believes ANZ, in particular, will be able to shift its dividend pay-out higher, to 80% by the second half of 2020 from the current 65%.

The CET1 ratio is forecast to remain above the 10.5% target despite around $7bn in share buybacks. Target is steady at $30.

Target price is $30.00 Current Price is $26.81 Difference: $3.19
If ANZ meets the Citi target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $30.13, suggesting upside of 12.4% (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

Morgan Stanley rates APE as Upgrade to Equal-weight from Underweight (3) -

New car sales growth has improved and regulatory headwinds have been factored into the stock but the valuation holds Morgan Stanley back from being more positive on AP Eagers.

There is upside relative to FY17 on the removal of trading losses at sold dealerships, while the impact from regulatory changes has largely passed.

Rating is upgraded to Equal-weight from Underweight. In-Line industry view. Target is raised to $8.50 from $6.85.

Target price is $8.50 Current Price is $8.60 Difference: minus $0.1 (current price is over target).
If APE meets the Morgan Stanley target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $8.61, suggesting upside of 0.1% (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

Morgans rates APT as Initiation of coverage with Hold (3) -

Morgans considers the company's business model attractive, given scalability and capital efficiency. A short-term repayment cycle helps reduce risks.

The broker expects operating leverage to rise substantially in future. However, regulatory risks are hard to fully dismiss, with an uptick in the bad debts cycle potentially a longer-term headwind. The broker initiates coverage with a Hold rating and $6.34 target.

Target price is $6.34 Current Price is $5.80 Difference: $0.54
If APT meets the Morgans target it will return approximately 9% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

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

Morgan Stanley rates BAP as Overweight (1) -

The company has announced the sale of TBS, which was acquired as part of the Hellaby group. The sale is for NZ$35m on a cash free and debt free basis.

This is the final non-core business to be sold and proceeds from the sales now total NZ$99m, at the upper end of Morgan Stanley's expectations.

Overweight rating retained. Target is $7.00. Industry view: In-line.

Target price is $7.00 Current Price is $5.59 Difference: $1.41
If BAP meets the Morgan Stanley target it will return approximately 25% (excluding dividends, fees and charges).

Current consensus price target is $6.62, suggesting upside of 18.3% (ex-dividends)

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

Macquarie rates CYB as Upgrade to Outperform from Neutral (1) -

Macquarie's investment thesis for CYBG is underpinned by expectations of improving profitability through efficiencies, market share gains, capital returns and, eventually, higher interest rates. While some factors will take time and indeed benefit all UK banks, the broker sees CYBG as a greater net beneficiary.

Given an undemanding valuation, Macquarie upgrades to Outperform from Neutral. Target rises to $6.50 from $5.27.

Target price is $6.50 Current Price is $5.38 Difference: $1.12
If CYB meets the Macquarie target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $5.86, suggesting upside of 9.0% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY18:

Forecast for FY19:

This company reports in GBP. 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

Credit Suisse rates IAG as Neutral (3) -

Credit Suisse adjusts earnings forecasts to allow for unfavourable investment market movements in the March quarter. The broker decreases FY18 net profit estimates by -5.2%.

Neutral. Target is $7.50.

Target price is $7.50 Current Price is $7.58 Difference: minus $0.08 (current price is over target).
If IAG 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 $7.42, suggesting downside of -2.2% (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

Morgans rates NAN as Add (1) -

New guidelines published by the German Society of Ultrasound in Medicine should help the uptake of Trophon in this market, Morgans suggests.

The broker make some downward revisions to near-term forecasts to reflect the transition to a more direct sales channel. Near-term net profit forecasts are reduced by -47% for FY18 and -26% for FY19. Add rating maintained. Target reduced to $3.13 from $3.22.

Target price is $3.13 Current Price is $2.57 Difference: $0.56
If NAN meets the Morgans target it will return approximately 22% (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

UBS rates NHF as Initiation of coverage with Sell (5) -

UBS initiates coverage with a Sell rating and $5.70 target, believing the risks are not fully priced into the stock. The broker believes the stock remains expensive and is being valued on cyclically high private health insurance margins.

While there is potential to continue delivering above-system growth UBS believes nib will be unable to sustain net margins of 5-6% out to FY21. Moreover, the broker believes the cost of sizing the equity correctly in its capital mix is not well understood.

Target price is $5.70 Current Price is $6.30 Difference: minus $0.6 (current price is over target).
If NHF meets the UBS target it will return approximately minus 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $6.30, suggesting upside of 0.1% (ex-dividends)

The company's fiscal year ends in June.

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 NVT as Neutral (3) -

Navitas' guidance on FY18 university partnership enrolments is weaker than the broker had forecast, led by fewer A&NZ enrolments -- half of earnings -- offsetting greater US/UK enrolments -- 38% of earnings. The broker nevertheless sees FY18 as an earnings rebase year under new management.

FY19 should thus see improvement as headwinds are cycled, depending on to what extent Navitas can deliver on improving industry trends. Few catalysts are seen ahead of the FY18 result, hence Neutral retained. Target falls to $4.60 from $4.80.

Target price is $4.60 Current Price is $4.74 Difference: minus $0.14 (current price is over target).
If NVT meets the Macquarie target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.55, suggesting downside of -4.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.2

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

UBS rates NVT as Neutral (3) -

UBS believes the growth in Canada and the UK in semester one enrolments for the university programs is potentially unsustainable. While partially offsetting a slowdown in Australian growth this increases the risk around the company's short-medium term target of 5% growth.

Enrolments in the adult migrant English program continued to moderate and Navitas has re-affirmed that operating earnings will likely fall -$14m in FY18. Neutral rating maintained. Target reduced to $4.65 from $4.75.

Target price is $4.65 Current Price is $4.74 Difference: minus $0.09 (current price is over target).
If NVT meets the UBS target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.55, suggesting downside of -4.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.2

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

Citi rates ORE as Buy (1) -

The company has disappointed Citi with its March quarter production, which fell -29%. Evaporation rates were -24% below those of 2017.

Citi maintains a Buy rating, driven by strong margins and despite higher costs from lower production, as the stock is already factoring in long-term lithium prices that are less than half the spot price. Target is reduced to $7.60 from $8.00.

Target price is $7.60 Current Price is $4.74 Difference: $2.86
If ORE meets the Citi target it will return approximately 60% (excluding dividends, fees and charges).

Current consensus price target is $7.14, suggesting upside of 50.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.7

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

Macquarie rates ORE as Outperform (1) -

Above-average rainfall and cloud cover at Olaroz, impacting evaporation rates of lithium-containing brine, have led Orocobre to downgrade production guidance and upgrades costs. The impact on sales could linger into FY19, the broker suggests, but not longer term.

The broker has cut earnings forecasts and lowered its target to $6.70 from $6.80, noting its base case valuation includes a discount for weather risk. Outperform retained on the longer term view.

Target price is $6.70 Current Price is $4.74 Difference: $1.96
If ORE meets the Macquarie target it will return approximately 41% (excluding dividends, fees and charges).

Current consensus price target is $7.14, suggesting upside of 50.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.7

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

Morgan Stanley rates ORE as Underweight (5) -

March quarter production has signalled a downgrade to FY18 in the order of -10%. Adverse weather caused the concentration in harvest ponds to be lower than forecast.

Despite continuing to expect nameplate production from FY20 Morgan Stanley finds the stock lacks valuation support and, along with the recently encountered production problems, this this underpins its Underweight rating. Target reduced to $4.35 from $4.55. Industry View: Attractive.

Target price is $4.35 Current Price is $4.74 Difference: minus $0.39 (current price is over target).
If ORE meets the Morgan Stanley target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $7.14, suggesting upside of 50.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.7

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

Credit Suisse rates QBE as Neutral (3) -

Credit Suisse adjusts earnings forecasts to allow for investment market movements in the March quarter. Global bond yields have increased over the quarter, leading to a US$60m discount rate gain for QBE, on the broker's calculations.

This will be offset by weakness in equity markets and credit spread expansion so the underlying investment yield is unchanged at 2.75%. FY18 net profit estimates a decrease by -8.5%.

Neutral rating. Target is $10.20.

Target price is $10.20 Current Price is $9.65 Difference: $0.55
If QBE meets the Credit Suisse target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $10.89, suggesting upside of 12.9% (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: 0.3

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

Citi rates SCG as Neutral (3) -

The company has announced an on-market buyback of up to $700m. Citi had previously flagged Scentre Group as a buyback candidate and considers the move a positive one.

This is particularly so if the group executes actively and if it is ultimately funded via asset sales. Neutral rating and $4.19 target maintained.

Target price is $4.19 Current Price is $3.92 Difference: $0.27
If SCG meets the Citi target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $4.50, suggesting upside of 14.8% (ex-dividends)

The company's fiscal year ends in December.

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

Credit Suisse rates SCG as Outperform (1) -

Credit Suisse considers the $700m buyback makes a lot of sense. If executed at current levels pricing will be -7% below stated NTA and -26% below the broker's calculation of fair value.

Credit Suisse believes, ultimately, if capital management does not help bridge the disconnect between public and private market pricing for the stock then privatisation would be a realistic scenario.

Outperform and $5.30 target retained.

Target price is $5.30 Current Price is $3.92 Difference: $1.38
If SCG meets the Credit Suisse target it will return approximately 35% (excluding dividends, fees and charges).

Current consensus price target is $4.50, suggesting upside of 14.8% (ex-dividends)

The company's fiscal year ends in December.

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

Macquarie rates SCG as Outperform (1) -

At its AGM, Scentre announced a $700m buyback, or around 3.4% of shares. The broker notes the stock is trading at around an -8% discount to last reported net tangible asset value and thus is not surprised.

The broker is surprised the buyback will by funded by debt, but notes it will be earnings accretive given the debt to dividend yield spread. On a forecast total shareholder return of 20%, the broker retains Outperform. Target falls to $4.43 from $4.56.

Target price is $4.43 Current Price is $3.92 Difference: $0.51
If SCG meets the Macquarie target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $4.50, suggesting upside of 14.8% (ex-dividends)

The company's fiscal year ends in December.

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

Credit Suisse rates SUN as Outperform (1) -

Credit Suisse adjusts earnings forecasts to allow for unfavourable investment market movements in the March quarter. The broker decreases FY18 net profit estimates by -3.4%.

Outperform. $14.50 target.

Target price is $14.50 Current Price is $13.37 Difference: $1.13
If SUN meets the Credit Suisse target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $14.18, suggesting upside of 6.0% (ex-dividends)

The company's fiscal year ends in June.

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

Macquarie rates SUN as Underperform (5) -

The broker has reviewed Suncorp's new Marketplace strategy, calculated the potential return on investment and compared the strategy to international case studies.

Th wash-up is the broker concedes earnings upside risk but believes execution risk is elevated, hence proof of delivery is required before earnings forecasts can be raised. Underperform retained. Target falls to $13.15 from $13.25.

Target price is $13.15 Current Price is $13.37 Difference: minus $0.22 (current price is over target).
If SUN meets the Macquarie target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $14.18, suggesting upside of 6.0% (ex-dividends)

The company's fiscal year ends in June.

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