Australian Broker Call

UBS rates AMA as Buy (1) -

The company intends to sell its panel business to Blackstone for $508m. Shareholders will be given the option to receive either all-cash or a mix of cash and shares in Queen TopCo, a company formed by Blackstone.

The board has also recommended that the remaining automotive component, accessory and procurement business be de-merged into a separate ASX-listed company. The de-merger is expected to be completed in September.

Management's forecast of $55.5m in FY18 EBITDA for the base business is well ahead of previous guidance and UBS estimates. The broker maintains a Buy rating and $1.30 target.

Target price is $1.30 Current Price is $1.01 Difference: $0.29
If AMA meets the UBS target it will return approximately 29% (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

Credit Suisse rates ANN as Underperform (5) -

Credit Suisse reviews activity trends over the March quarter, noting positive trends in industrial production. US distributors have reported pricing inflation from manufacturers, which suggests the company has been able to pass on price increases to offset higher raw material costs.

Credit Suisse raises the target to $23.60 from $21.75 and maintains an Underperform rating on valuation terms.

Target price is $23.60 Current Price is $25.37 Difference: minus $1.77 (current price is over target).
If ANN meets the Credit Suisse target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $25.60, suggesting upside of 0.9% (ex-dividends)

The company's fiscal year ends in June.

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

Ord Minnett rates AZJ as Sell (5) -

Cliffs, the company's largest iron ore customer, has notified service providers it will close operations one year ahead of prior advice and 3.5 years ahead of contract expiry.

Meanwhile, based on the past decisions, Ord Minnett would be surprised if the final UT5 decision resulted in a substantial increase in maximum allowable revenue.

Hence, further underperformance in the share price appears likely and the broker's Sell rating is retained. Target is reduced to $4.00 from $4.15.

Target price is $4.00 Current Price is $4.43 Difference: minus $0.43 (current price is over target).
If AZJ meets the Ord Minnett target it will return approximately minus 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.61, suggesting upside of 4.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.0

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

Credit Suisse rates CAJ as Re-instate Coverage with Outperform (1) -

Credit Suisse reinstates coverage with an Outperform rating and $0.35 target. The broker believes the company has been sensible in walking away from the Integral Diagnostics ((IDX)) proposal to recalibrate a more conservative strategy.

The broker considers the revenue environment sound and regulatory risks negligible. Guidance of $129-132m for FY18 revenue implies around 3.5-6% organic growth rate for the Victorian business and Credit Suisse estimates are at the mid point of the range.

Target price is $0.35 Current Price is $0.26 Difference: $0.09
If CAJ meets the Credit Suisse target it will return approximately 35% (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

Ord Minnett rates CIM as Hold (3) -

Ord Minnett received positive feedback after the AGM but awaits the first quarter results before recalibrating its outlook.

The broker will be particularly focused on the levels of revenue growth in the quarter, forecasting consolidated revenue of $3.2bn and net profit growth at 11%. Hold rating and $50.13 target maintained.

Target price is $50.13 Current Price is $44.20 Difference: $5.93
If CIM meets the Ord Minnett target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $44.68, suggesting upside of 1.1% (ex-dividends)

The company's fiscal year ends in December.

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

Ord Minnett rates CSR as Hold (3) -

Ord Minnett raises earnings projections but expects FY18 to be the peak in profitability for the building products division. Moreover, capacity additions from peers in glass and plasterboard could provide a challenge to increasing prices and the company's market share.

The broker factors in revised aluminium price assumptions. Hold retained. Target is raised to $4.90 from $4.45.

Target price is $4.90 Current Price is $5.42 Difference: minus $0.52 (current price is over target).
If CSR meets the Ord Minnett target it will return approximately minus 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.81, suggesting downside of -11.3% (ex-dividends)

The company's fiscal year ends in March.

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 FBU as Buy (1) -

Wesfarmers ((WES)) has reportedly acquired a 3-4% stake in Fletcher Building. UBS points out Wesfarmers, currently de-merging Coles, will have increased acquisition capacity and this is not the first speculation about the company's potential to acquire.

The broker also notes Wesfarmers has typically targeted businesses that have a dominant market position and believes Fletcher's distribution business would complement Bunnings, although NZ competition issues could arise.

Buy rating. Target is NZ$7.60.

Current Price is $6.02. Target price not assessed.

Current consensus price target is N/A

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

This company reports in NZD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: 0.3

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

UBS rates FPH as Sell (5) -

UBS observes the share price has fallen -11% from its peak in late 2017, although the stock still trades on a PE well above global medical device peers.

The broker envisages scope for consensus downgrades, given a lack of new obstructive sleep apnoea products, NZ dollar strength and potential US import tariffs.

Target is raised to NZ$11.65 from NZ$11.55. Sell rating retained.

Current Price is $12.08. Target price not assessed.

Current consensus price target is N/A

The company's fiscal year ends in March.

Forecast for FY18:

Forecast for FY19:

This company reports in NZD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: -0.6

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

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

Generation Development Group has announced its funds update for the March quarter. Investment bond sales were up 84%. Morgans likes the long-term story and, subsequent to recent changes to superannuation rules, expects alternative low-tax investment options like investment bonds will experience significant structural growth.

The business is profitable and the company is at an inflection point where performance can be significantly ramped up. The broker upgrades to Add from Hold and raises the target to $1.33 from $1.28.

Target price is $1.33 Current Price is $1.10 Difference: $0.23
If GDG meets the Morgans target it will return approximately 21% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 1.0

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

Credit Suisse rates IDX as Re-instate Coverage with Outperform (1) -

Capital Health's ((CAJ)) proposal to merge has lapsed and is unlikely to be revived. Meanwhile, the broker points to solid top-line momentum, a favourable regulatory backdrop and bolt-on capacity.

Despite a strong run on a 12-month view, the broker notes the stock is still trading at a -10% discount to the market. Credit Suisse reinstates coverage with an Outperform rating and $2.70 target.

Target price is $2.70 Current Price is $2.34 Difference: $0.36
If IDX meets the Credit Suisse target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $2.45, suggesting upside of 4.6% (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

Credit Suisse rates IPL as Neutral (3) -

Credit Suisse maintains a Neutral rating because of a cautious view of fertilisers, issues regarding gas costs, as well as risks that the explosives business will become more prominent.

While DAP forecasts have been upgraded for 2018, the broker notes supply increases are still to occur in the second half. Emulsion and services contracts with BHP Billiton ((BHP)) remain uncertain, given WA contract losses announced in the first half. Target is raised to $3.85 from $3.67.

Target price is $3.85 Current Price is $3.59 Difference: $0.26
If IPL meets the Credit Suisse target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $4.07, suggesting upside of 13.4% (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

Ord Minnett rates NWL as Upgrade to Buy from Hold (1) -

Ord Minnett believes the pullback in the March quarter funds update is a buying opportunity after the company share of net flows accelerated to 26% in the preceding quarter.

The broker notes industry trends driving advisers towards independent platforms underpin the business. Rating is upgraded to Buy from Hold. Target is reduced to $6.40 from $6.48.

Target price is $6.40 Current Price is $5.96 Difference: $0.44
If NWL meets the Ord Minnett target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $6.17, suggesting upside of 3.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.0

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

UBS rates NWL as Sell (5) -

The business continues to enjoy strong net fund flows, although UBS notes funds under administration as of March were -1.3% below estimates because of softer net investment returns.

The business remains well-positioned to sustain flows and funds growth but UBS believes revenue margin risks are not priced into the stock.

Sell rating maintained. Target is $5.60.

Target price is $5.60 Current Price is $5.96 Difference: minus $0.36 (current price is over target).
If NWL meets the UBS target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $6.17, suggesting upside of 3.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.0

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

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

Origin's position as a firm provider of +3GW of electricity is increasingly attractive, Macquarie suggests, as grid-grade wind and solar farms emerge to meet renewables targets. A mild summer, and the increasing growth of household solar, saw a drop in demand, but surplus gas can be redirected to exports, the broker notes.

Stronger oil prices are supporting APLNG cash flows, while cost initiatives provide for further upside. Put it together and Macquarie has upgraded to Outperform from Neutral. Target rises to $9.89 from $9.21.

Target price is $9.89 Current Price is $9.03 Difference: $0.86
If ORG meets the Macquarie target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $9.76, suggesting upside of 8.1% (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

UBS rates SWM as Neutral (3) -

Seven West Media will pay around $75m per annum to broadcast simulcast cricket test matches and Big Bash with Foxtel. UBS believes the combination of cricket and tennis in FY19 could act as a catalyst for the Seven network and reverse underlying share declines.

UBS expects modest earnings growth from TV will be offset by print declines in FY19, with EBIT of around $235m. The broker maintains a Neutral rating and reduces the target to $0.60 from $0.70.

Target price is $0.60 Current Price is $0.58 Difference: $0.02
If SWM meets the UBS target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $0.61, suggesting upside of 4.3% (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

Morgan Stanley rates WES as Underweight (5) -

The company has reportedly acquired a 3-4% stake in Fletcher Building ((FPU)). Morgan Stanley believes Wesfarmers has the means to acquire this business and Fletcher Building fits its existing acquisition framework.

There is considerable overlap between the two in the NZ home improvement market, and the NZ regulator may require Wesfarmers to sell Fletcher's Placemaker if a takeover is proposed, given it competes directly with Bunnings.

Underweight rating retained. Industry view is Cautious. Target is $39.

Target price is $39.00 Current Price is $41.04 Difference: minus $2.04 (current price is over target).
If WES meets the Morgan Stanley target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $42.93, suggesting upside of 4.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.1

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

UBS rates WFD as Buy (1) -

The independent expert report and booklet for the Unibail-Rodamco acquisition has been distributed. UBS was disappointed the accretion of the transaction to Unibail-Rodamco shareholders was not quantified.

The independent expert values Westfield at US$7.15-7.59 and the transaction is considered in the best interest of security holders.

Buy retained. Target is $9.77.

Target price is $9.77 Current Price is $8.68 Difference: $1.09
If WFD meets the UBS target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $9.58, suggesting upside of 10.4% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: 0.5

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

Morgan Stanley rates WPL as Overweight (1) -

Morgan Stanley envisages a number of catalysts over coming months and believes its growth thesis for the business is slowly playing out.

Catalysts include Wheatstone production rising over 2018 and becoming evident in quarterly reports, a number of exploration wells, which could lower development costs for late-life Pluto gas, and a number of international oil exploration wells.

The broker also believes emerging similarities between Woodside and the super majors, such as Shell, in relation to paying a large dividend mean investor focus on the dividend profile is likely to intensify over time.

Target is $36. Overweight rating and In-Line industry view retained.

Target price is $36.00 Current Price is $30.32 Difference: $5.68
If WPL meets the Morgan Stanley target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $30.78, suggesting upside of 1.5% (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: 0.0

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