Australian Broker Call

Credit Suisse rates CGF as Neutral (3) -

Regulation may be creating a large opportunity for the company as the government is targeting legislation for retirement income products by July 2019. Credit Suisse suggests the industry could experience around $65bn in flows into lifetime annuities over the five years from implementation of policy.

Challenger is well-placed to capture some of these flows because of its first-mover advantage, a leading brand and established distribution. The broker suspects the growth opportunity will require almost $5bn in capital.

The proportion of the annuity book that is long-term has increased to 35% in FY18 from around 10% in FY17. Despite this, there is little impact Credit Suisse observes on capital intensity. Neutral rating and $12 target maintained.

Target price is $12.00 Current Price is $10.99 Difference: $1.01
If CGF meets the Credit Suisse target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $11.64, suggesting upside of 5.9% (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

Ord Minnett rates CSL as Hold (3) -

Ord Minnett has discussed the threat to the company's Haegarda from the impending launch of an new therapy from Shire, Takhzyro, with an industry expert. The expert expressed clear preference for Haegarda because of its long safety record and, to a lesser degree, expectations that the competing therapy will be priced at a premium to Haegarda.

Ord Minnett is encouraged by the remarks, as they signal potential upside to earnings estimates, but continues to believe the more convenient dosing regimen offered by Takhzyro will work in its favour in the medium term. Hold rating and $202 target maintained.

Target price is $202.00 Current Price is $203.27 Difference: minus $1.27 (current price is over target).
If CSL 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 $216.70, suggesting upside of 6.6% (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 NUF as Buy (1) -

Citi considers the FY18 performance commendable, excluding the impact of the drought in Australia, and highlights the market share gains in North and Latin America. The decision to raise new capital restores the balance sheet and removes a persistent overhang, in the broker's view.

FY19 guidance is in line with expectations. Citi considers the stock substantially undervalued and reiterates a Buy rating. Target is reduced to $8 from $9.

Target price is $8.00 Current Price is $6.80 Difference: $1.2
If NUF meets the Citi target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $8.04, suggesting upside of 20.0% (ex-dividends)

The company's fiscal year ends in July.

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

Credit Suisse rates NUF as Outperform (1) -

Credit Suisse observes there is not much to be deduced from the downgrade to FY19 guidance other than the severe drought in Australia. The circa $300m capital raising secures near-term funding and appears to the broker to be a concession to pursuing growth in the face of drought likely extending into FY19.

Meanwhile, regulatory approvals for Omega 3 canola appear to be proceeding. Outperform rating maintained. Target is reduced to $8.96 from $9.12.

Target price is $8.96 Current Price is $6.80 Difference: $2.16
If NUF meets the Credit Suisse target it will return approximately 32% (excluding dividends, fees and charges).

Current consensus price target is $8.04, suggesting upside of 20.0% (ex-dividends)

The company's fiscal year ends in July.

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

Deutsche Bank rates NUF as Sell (5) -

FY18 results were weaker than expected. Deutsche Bank believes there are several risks going forward including ongoing drought in Australia, Brexit, higher raw material costs, volatility in Brazil and US tariffs.

Moreover, with Sumitomo once again not taking up its entitlement in the $303m equity raising this could create a share overhang, in the broker's opinion.

Sell rating maintained. Target is lowered to $6.10 from $6.40.

Target price is $6.10 Current Price is $6.80 Difference: minus $0.7 (current price is over target).
If NUF meets the Deutsche Bank target it will return approximately minus 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $8.04, suggesting upside of 20.0% (ex-dividends)

The company's fiscal year ends in July.

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 NUF as No Rating (-1) -

FY18 results were in line with prior guidance. The company has guided to first half operating earnings being in line with the prior corresponding half based on increased costs from European acquisitions, plant maintenance in Europe and drought in Australia.

The company has announced a $303m fully underwritten 3-for-19 accelerated renounceable entitlement offer at $5.85, an -11.9% discount to the last close, dividend adjusted. Because of research restrictions Macquarie cannot advise a rating and target at present.

Current Price is $6.80. Target price not assessed.

Current consensus price target is $8.04, suggesting upside of 20.0% (ex-dividends)

The company's fiscal year ends in July.

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 NUF as Overweight (1) -

FY18 results were in line with expectations but Morgan Stanley was surprised by the equity raising. Despite the dilution the broker envisages ample upside. Looking to FY19 the broker's forecasts are at the top of the guidance range, acknowledging the usual second half skew.

The company has announced a $303m entitlement offer which it considers prudent in the light of recent market uncertainty. Morgan Stanley lowers FY19 and FY20 forecasts by -23% and -20% respectively, largely driven by the dilution associated with the equity raising.

Overweight rating. Price target reduced to $8.70 from $10.65. Industry view: Cautious.

Target price is $8.70 Current Price is $6.80 Difference: $1.9
If NUF meets the Morgan Stanley target it will return approximately 28% (excluding dividends, fees and charges).

Current consensus price target is $8.04, suggesting upside of 20.0% (ex-dividends)

The company's fiscal year ends in July.

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 NUF as Buy (1) -

FY18 earnings were ahead of Ord Minnett's forecasts. The company has also announced a $303m fully underwritten renounceable offer to manage the short-term risk on the balance sheet and support its growth strategy in the light of market uncertainty.

Addressing the deteriorating capital position makes sense to Ord Minnett. While  Sumitomo, the largest shareholder, will not participate in the offer, it remains committed to the relationship.

The broker's investment thesis remains intact, with strong sales momentum in core geographies. Buy rating maintained. Target is lowered to $7.50 from $9.00 as earnings forecasts are downgraded by -29% for FY19 and -24% for FY20.

Target price is $7.50 Current Price is $6.80 Difference: $0.7
If NUF meets the Ord Minnett target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $8.04, suggesting upside of 20.0% (ex-dividends)

The company's fiscal year ends in July.

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 SHL as Neutral (3) -

UBS updates modelling assumptions, noting some risk to German health insurance-funded volumes and US pricing headwinds for Medicare reimbursements. However, this should be mitigated by more stable conditions in Australian diagnostics.

UBS considers the stock fairly valued and delivery on operating leverage is required to justify the relative price/earnings premium.

Neutral rating maintained. Target is $26.

Target price is $26.00 Current Price is $25.34 Difference: $0.66
If SHL meets the UBS target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $26.49, suggesting upside of 4.6% (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 STO as No Rating (-1) -

Santos has provided a production growth target of 100mmboe by 2025. Citi suggests this indicates the company is confident enough on execution to be able to provide such a number.

Santos did not list all opportunities that could be developed within the timeframe but, Citi points out, capital expenditure guidance is US$300m for the next two years in the Cooper Basin, and suggests Santos is either being conservative in its guidance, productivity is declining, or there is a preference to grow resources and reserves via exploration and appraisal.

Meanwhile the GLNG production outlook infers a slow ramp up. Citi is currently restricted on rating and target.

Current Price is $7.30. Target price not assessed.

Current consensus price target is $6.63, suggesting downside of -9.2% (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: -0.2

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

Macquarie rates STO as No Rating (-1) -

The company is targeting production of over 100mmboe by 2025. The acquisition of Quadrant is expected to deliver a significant portion of the growth, with incremental increases from GLNG, the Cooper Basin, Barossa and PNG LNG.

The company has maintained guidance for achieving 6mtpa from GLNG by the end of 2019. Santos is also targeting 17-19mmboe of Cooper Basin production by 2025, which is 14-28% above Macquarie's previous expectations.

Due to research restrictions the broker cannot supply a recommendation or target.

Current Price is $7.30. Target price not assessed.

Current consensus price target is $6.63, suggesting downside of -9.2% (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: -0.2

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

Morgan Stanley rates STO as Overweight (1) -

The company has outlined a plan to raise production to 100mmboe by 2025. Morgan Stanley considers the target achievable and suspects the market will focus on the de-leveraging profile.

The broker also suggests the recent Quadrant deal lowers break-even for free cash levels and arguably makes the business more defensive. A further re-rating of the stock is expected should oil prices stay near current levels.

Overweight rating retained. Industry view Attractive. Price target is raised to $8.30 from $7.00.

Target price is $8.30 Current Price is $7.30 Difference: $1
If STO meets the Morgan Stanley target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $6.63, suggesting downside of -9.2% (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: -0.2

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

Ord Minnett rates STO as Hold (3) -

Santos is targeting 100mmboe by 2025, implying growth of more than 75% over six years. Almost half of the growth is expected to come from the Quadrant acquisition, including the Dorado oilfield, although management also expects increased output from the Cooper Basin.

The company has indicated that the target does not include other growth projects such as Narrabri, McArthur, Petrel and Greater Bedout. Ord Minnett maintains a Hold rating and raises the target to $7.20 from $6.85.

Target price is $7.20 Current Price is $7.30 Difference: minus $0.1 (current price is over target).
If STO 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 $6.63, suggesting downside of -9.2% (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: -0.2

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

UBS rates STO as Sell (5) -

Santos has set a target of 100mmboe by 2025. Its 2017 base production, ex Asia, is estimated to be around 54mmboe. Growth is largely within the company's control, UBS suggests, given around 70% of the target is driven by the proposed acquisition of Quadrant and a further 10% related to the ramping up of the Cooper Basin and GLNG equity fields.

The broker believes management is doing a good job managing declines in the cost base and now a plan to deliver growth. However, UBS suggests that, at the current share price, the market may not be factoring in all the risks associated with growth. Sell rating and $5.70 target maintained.

Target price is $5.70 Current Price is $7.30 Difference: minus $1.6 (current price is over target).
If STO meets the UBS target it will return approximately minus 22% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $6.63, suggesting downside of -9.2% (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: -0.2

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

Credit Suisse rates SYR as Outperform (1) -

The company has announced another disruption to production at Balama, reducing the expected output in September. September quarter production guidance is now 39-40,000t. The cause was a lack of spare filter cloths, a routine but critical consumable.

Credit Suisse considers the impact immaterial in terms of earnings and value and is more concerned about the way it reflects on expertise and operations at the site in the context of the challenges of operating in Africa.

Outperform rating and $5.50 target maintained.

Target price is $5.50 Current Price is $2.21 Difference: $3.29
If SYR meets the Credit Suisse target it will return approximately 149% (excluding dividends, fees and charges).

Current consensus price target is $3.63, suggesting upside of 64.3% (ex-dividends)

The company's fiscal year ends in December.

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

Deutsche Bank rates SYR as Hold (3) -

Syrah Resources has advised that production at Balama in September has been affected by a delay in sourcing consumable items. The company has guided to September quarter production of 39-40,000t, in line with expectations.

Deutsche Bank does not find the delay affects valuation but it does highlight a continuing risk for the ramping up of operations, and full year guidance may be missed. Hold rating and $2.70 target maintained.

Target price is $2.70 Current Price is $2.21 Difference: $0.49
If SYR meets the Deutsche Bank target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $3.63, suggesting upside of 64.3% (ex-dividends)

The company's fiscal year ends in December.

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 SYR as Outperform (1) -

Syrah Resources has announced production in September will be lower because of delays in the procurement of filter cloths. While further slippages in production are disappointing Macquarie believes procurement of consumables will be an easy fix for the company.

Production metrics at the mine continue to improve despite a softer outlook for the September quarter. Maintaining the momentum of the Balama project is critical to securing a first-mover advantage, in Macquarie's opinion. Outperform rating and $3.90 target maintained.

Target price is $3.90 Current Price is $2.21 Difference: $1.69
If SYR meets the Macquarie target it will return approximately 76% (excluding dividends, fees and charges).

Current consensus price target is $3.63, suggesting upside of 64.3% (ex-dividends)

The company's fiscal year ends in December.

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

Deutsche Bank rates TWE as Hold (3) -

Deutsche Bank notes the ACCC will conduct a market study of the wine grape industry in Australia to review and identify any market failures or trade practice issues that may be preventing the functioning of competitive markets and adversely affecting grape growers. A draft report is expected in March next year.

Hold rating and $18 target maintained.

Target price is $18.00 Current Price is $17.70 Difference: $0.3
If TWE meets the Deutsche Bank target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $18.32, suggesting upside 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

Macquarie rates WAF as Outperform (1) -

The FY18 loss was larger than Macquarie expected. The company is continuing optimisation work on the Sanbrado project, with extensions to the high-grade M1S underground reserve.

The company has indicated that tendering for debt has produced 14 non-binding offers, with the aim of locking down terms by the end of the year. This is a key de-risking event for the business, Macquarie suggests. Outperform rating and $0.50 target maintained.

Target price is $0.50 Current Price is $0.28 Difference: $0.22
If WAF 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