Australian Broker Call *Extra* Edition – May 19, 2022

This story features ARISTOCRAT LEISURE LIMITED, and other companies. For more info SHARE ANALYSIS: ALL

An additional news report on the recommendation, valuation, forecast and opinion changes for ASX-listed equities.

In addition to The Australian Broker Call Report, which is published and updated daily (Mon-Fri), FNArena has now added The Australian Broker Call *Extra* Edition, featuring additional sources of research and insights on ASX-listed stocks, also enlarging the number of stocks that make up the FNArena universe.

One key difference is the *Extra* Edition will not be updated daily, but merely "regularly" depending on availability of suitable quality content. As such, the *Extra* Edition tries to build a bridge between daily updates via the Australian Broker Call Report and ad hoc news stories, that are not always timely for investors hungry for the next information update.

Investors using the *Extra* Edition as a source of input for their own share market research should thus take into account that information after publication may not be up to date, or yet awaiting another update by FNArena's team of journalists.

Similar to The Australian Broker Call Report, this *Extra* Edition includes concise but limited reviews of research recently published by Stockbrokers and other experts, which should be considered as information concerning likely market behaviour rather than advice on the securities mentioned. Do not act on the contents of this Report without first reading the important information included at the end of this Report.

The Australian Broker Call *Extra* Edition is a summary that has been prepared independently of the sources identified. Readers will check the full text of the recommendations and consult a Licenced Advisor before making any investment decision.

The copyright of this Report is owned by the publisher. Readers will not copy, forward or disseminate this Report to any other person. For more vital information about the sources included, see the bottom of this Report.

COMPANIES DISCUSSED IN THIS ISSUE

Click on a symbol for fast access.
The number next to the symbol represents the number of brokers covering it for this report -(if more than 1)

ALL   CBA   COH   CYC   EHL   JHX   MAH   MND   NWH   OFX   OPY   PDL   UMG (2)   XRO  

ALL    ARISTOCRAT LEISURE LIMITED

Gaming – Overnight Price: $31.60

Goldman Sachs rates ((ALL)) as Buy (1) –

Ahead of Aristocrat Leisure's first half results, Goldman Sachs notes it is expecting a solid result from the company, forecasting 16% revenue growth to $2,583m, 24% earnings growth to $760m, and 29% net profit growth to $531m.

The broker looks to the company's results for further detail on its expected strong recovery in North American on-premise business, as well as on current digital trends and management's plan for new underperforming games.

The Buy rating and target price of $43.00 are retained.

This report was published on May 13, 2022.

Target price is $43.00 Current Price is $31.60 Difference: $11.4
If ALL meets the Goldman Sachs target it will return approximately 36% (excluding dividends, fees and charges).
Current consensus price target is $46.25, suggesting upside of 46.4%(ex-dividends)
The company's fiscal year ends in September.

Forecast for FY22:

Goldman Sachs forecasts a full year FY22 dividend of 66.00 cents and EPS of 163.00 cents.
At the last closing share price the estimated dividend yield is 2.09%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 19.39.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 153.4, implying annual growth of 19.7%.
Current consensus DPS estimate is 58.8, implying a prospective dividend yield of 1.9%.
Current consensus EPS estimate suggests the PER is 20.6.

Forecast for FY23:

Goldman Sachs forecasts a full year FY23 dividend of 73.00 cents and EPS of 183.00 cents.
At the last closing share price the estimated dividend yield is 2.31%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 17.27.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 177.5, implying annual growth of 15.7%.
Current consensus DPS estimate is 70.3, implying a prospective dividend yield of 2.2%.
Current consensus EPS estimate suggests the PER is 17.8.

Market Sentiment: 0.9
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

CBA    COMMONWEALTH BANK OF AUSTRALIA

Banks – Overnight Price: $104.80

Goldman Sachs rates ((CBA)) as Sell (5) –

CommBank has demonstrated strong cost management in its third quarter, driving a beat on pre-provision operating profit and supporting the company to deliver flat cash earnings from continued operations of $2.4bn, ahead of Goldman Sachs' expectations.

Marking loan forecasts to market and accounting for higher net interest margins on the back of cash rate rises sees the brokers earnings per share estimates increase 1.6%, 4.7% and 2.8% through to FY24.

Despite retaining a strong balance sheet and operationally outperforming bank sector peers, the Sell rating is retained given the bank remains more exposed to sector headwinds. The target price increases to $89.86 from $82.94.

This report was published on May 12, 2022.

Target price is $89.86 Current Price is $104.80 Difference: minus $14.94 (current price is over target).
If CBA meets the Goldman Sachs target it will return approximately minus 14% (excluding dividends, fees and charges – negative figures indicate an expected loss).
Current consensus price target is $92.08, suggesting downside of -12.1%(ex-dividends)
The company's fiscal year ends in June.

Forecast for FY22:

Goldman Sachs forecasts a full year FY22 dividend of 375.00 cents and EPS of 519.00 cents.
At the last closing share price the estimated dividend yield is 3.58%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 20.19.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 527.8, implying annual growth of -8.2%.
Current consensus DPS estimate is 369.9, implying a prospective dividend yield of 3.5%.
Current consensus EPS estimate suggests the PER is 19.9.

Forecast for FY23:

Goldman Sachs forecasts a full year FY23 dividend of 395.00 cents and EPS of 544.00 cents.
At the last closing share price the estimated dividend yield is 3.77%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 19.26.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 557.1, implying annual growth of 5.6%.
Current consensus DPS estimate is 413.3, implying a prospective dividend yield of 3.9%.
Current consensus EPS estimate suggests the PER is 18.8.

Market Sentiment: -0.6
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

COH    COCHLEAR LIMITED

Medical Equipment & Devices – Overnight Price: $216.95

Wilsons rates ((COH)) as Upgrade to Overweight from Market Weight (1) –

Wilsons highlights Cochlear is proving it can withstand poor markets better than listed peers, noting signs of recovery for cochlear implant market primary referral volumes and sustained expectations of excess cash returns are both positives for the company's outlook.

The broker has also previewed the company's Nucleus 8 processor upgrade, noting a 40% improvement in productivity and anticipating the processor can support a 13% revenue compound annual growth rate for Services in its first four years.

The rating is upgraded to Overweight from Market Weight and the target price increases to $235.00 from $217.21.

This report was published on May 18, 2022.

Target price is $235.00 Current Price is $216.95 Difference: $18.05
If COH meets the Wilsons target it will return approximately 8% (excluding dividends, fees and charges).
Current consensus price target is $227.58, suggesting upside of 4.9%(ex-dividends)
The company's fiscal year ends in June.

Forecast for FY22:

Wilsons forecasts a full year FY22 dividend of 307.80 cents and EPS of 433.50 cents.
At the last closing share price the estimated dividend yield is 1.42%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 50.05.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 427.7, implying annual growth of -13.9%.
Current consensus DPS estimate is 290.0, implying a prospective dividend yield of 1.3%.
Current consensus EPS estimate suggests the PER is 50.7.

Forecast for FY23:

Wilsons forecasts a full year FY23 dividend of 340.00 cents and EPS of 485.80 cents.
At the last closing share price the estimated dividend yield is 1.57%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 44.66.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 479.0, implying annual growth of 12.0%.
Current consensus DPS estimate is 329.4, implying a prospective dividend yield of 1.5%.
Current consensus EPS estimate suggests the PER is 45.3.

Market Sentiment: 0.5
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

CYC    CYCLOPHARM LIMITED

Medical Equipment & Devices – Overnight Price: $1.36

Bell Potter rates ((CYC)) as Hold (3) –

Cyclopharm has updated its US launch plans for its Technegas system (which is used for functional lung imaging and diagnosis of pulmonary embolism in patients contra indicated for CT scan) at the annual shareholders meeting and no revenue or earnings guidance was provided.

The company expects to finalise its response to the FDA's Complete Response Letter in the September quarter and the FDA review process takes about six months, reaffirming a mid-2023 announcement.

Bell Potter says approval would place the company among Australia's medical elite but there are no guarantees and there is long road to hoe between here and there.

Management expects approval and is building about 200 Technegas flow generators in anticipation, and plans to use its rapid market entry plan of supplying zero-cost supply into US hospitals, expecting strong demand.

After launch, the company plans to convert 80% of the Technegas market within five years (based upon launches in other countries) – well ahead of Bell Potter's estimate.

The broker expects modest cash burn in 2022 but notes the company is well capitalised.

Hold rating retained. Target price falls to $1.48 from $1.60 to reflect growth stock de-rating.

This report was published on May 18, 2022.

Target price is $1.48 Current Price is $1.36 Difference: $0.12
If CYC meets the Bell Potter target it will return approximately 9% (excluding dividends, fees and charges).
The company's fiscal year ends in December.

Forecast for FY22:

Bell Potter forecasts a full year FY22 dividend of 1.00 cents and EPS of minus 4.10 cents.
At the last closing share price the estimated dividend yield is 0.74%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 33.17.

Forecast for FY23:

Bell Potter forecasts a full year FY23 dividend of 1.00 cents and EPS of minus 7.50 cents.
At the last closing share price the estimated dividend yield is 0.74%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 18.13.

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

EHL    EMECO HOLDINGS LIMITED

Mining Sector Contracting – Overnight Price: $0.80

Jarden rates ((EHL)) as Buy (1) –

Jarden believes the market is failing to capture higher forecast earnings growth for mining services companies relative to mining companies.

This higher growth means mining service stocks are trading at a price/earnings growth (PEG) multiple of only 1.6x, compared to 12.7x for mining stocks, explains the analyst.

The broker has a Buy rating on Emeco Holdings and sets a $1.50 price target.

This report was published on May 18, 2022.

Target price is $1.50 Current Price is $0.80 Difference: $0.7
If EHL meets the Jarden target it will return approximately 87% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Market Sentiment: 1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

JHX    JAMES HARDIE INDUSTRIES PLC

Building Products & Services – Overnight Price: $38.50

Jarden rates ((JHX)) as Overweight (2) –

Jarden assesses solid 4Q results for James Hardie Industries that were broadly in-line with the broker's forecasts and the consensus estimates. Adjusted profit increased as revenue grew 20% and the earnings (EBIT) margin improved.

Management maintained its profit and earnings margin guidance ranges, and slightly increased its North America sales growth target to 18-22% year-on-year versus 16-20% previously.

The share price may be weighed down in the short term by rising interest rates, feels the analyst, though the recent share price fall provides an attractive buying opportunity.

The Overweight rating is maintained, while the target price falls to $49.70 from $54.70.

This report was published on May 18, 2022.

Target price is $49.70 Current Price is $38.50 Difference: $11.2
If JHX meets the Jarden target it will return approximately 29% (excluding dividends, fees and charges).
Current consensus price target is $50.72, suggesting upside of 31.7%(ex-dividends)
The company's fiscal year ends in March.

Forecast for FY23:

Jarden forecasts a full year FY23 dividend of 141.84 cents and EPS of 231.86 cents.
At the last closing share price the estimated dividend yield is 3.68%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 16.60.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 245.2, implying annual growth of N/A.
Current consensus DPS estimate is 127.9, implying a prospective dividend yield of 3.3%.
Current consensus EPS estimate suggests the PER is 15.7.

Forecast for FY24:

Jarden forecasts a full year FY24 dividend of 156.85 cents and EPS of 257.77 cents.
At the last closing share price the estimated dividend yield is 4.07%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.94.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 271.6, implying annual growth of 10.8%.
Current consensus DPS estimate is 141.3, implying a prospective dividend yield of 3.7%.
Current consensus EPS estimate suggests the PER is 14.2.

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

MAH    MACMAHON HOLDINGS LIMITED

Mining Sector Contracting – Overnight Price: $0.16

Jarden rates ((MAH)) as Buy (1) –

Jarden believes the market is failing to capture higher forecast earnings growth for mining services companies relative to mining companies.

This higher growth means mining service stocks are trading at a price/earnings growth (PEG) multiple of only 1.6x, compared to 12.7x for mining stocks, explains the analyst.

The broker has a Buy rating on Macmahon and sets a $0.25 price target.

This report was published on May 18, 2022.

Target price is $0.25 Current Price is $0.16 Difference: $0.09
If MAH meets the Jarden target it will return approximately 56% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Market Sentiment: 1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

MND    MONADELPHOUS GROUP LIMITED

Mining Sector Contracting – Overnight Price: $10.53

Jarden rates ((MND)) as Neutral (3) –

Jarden believes the market is failing to capture higher forecast earnings growth for mining services companies relative to mining companies.

This higher growth means mining service stocks are trading at a price/earnings growth (PEG) multiple of only 1.6x, compared to 12.7x for mining stocks, explains the analyst.

The broker maintains its Neutral rating and $10.10 target price for Monadelphous Group.

This report was published on May 18, 2022.

Target price is $10.10 Current Price is $10.53 Difference: minus $0.43 (current price is over target).
If MND meets the Jarden target it will return approximately minus 4% (excluding dividends, fees and charges – negative figures indicate an expected loss).
Current consensus price target is $11.40, suggesting upside of 8.3%(ex-dividends)
The company's fiscal year ends in June.

Forecast for FY22:

Jarden forecasts a full year FY22 dividend of 49.90 cents and EPS of 50.30 cents.
At the last closing share price the estimated dividend yield is 4.74%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 20.93.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 51.6, implying annual growth of 3.8%.
Current consensus DPS estimate is 40.3, implying a prospective dividend yield of 3.8%.
Current consensus EPS estimate suggests the PER is 20.4.

Forecast for FY23:

Jarden forecasts a full year FY23 dividend of 63.30 cents and EPS of 54.40 cents.
At the last closing share price the estimated dividend yield is 6.01%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 19.36.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 59.8, implying annual growth of 15.9%.
Current consensus DPS estimate is 48.4, implying a prospective dividend yield of 4.6%.
Current consensus EPS estimate suggests the PER is 17.6.

Market Sentiment: 0.4
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

NWH    NRW HOLDINGS LIMITED

Mining Sector Contracting – Overnight Price: $1.96

Jarden rates ((NWH)) as Overweight (2) –

Jarden believes the market is failing to capture higher forecast earnings growth for mining services companies relative to mining companies.

This higher growth means mining service stocks are trading at a price/earnings growth (PEG) multiple of only 1.6x, compared to 12.7x for mining stocks, explains the analyst.

The broker has an Overweight rating on NRW Holdings and sets a $2.50 price target.

This report was published on May 18, 2022.

Target price is $2.50 Current Price is $1.96 Difference: $0.54
If NWH meets the Jarden target it will return approximately 28% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Market Sentiment: 1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

OFX    OFX GROUP LIMITED

Diversified Financials – Overnight Price: $2.60

Wilsons rates ((OFX)) as Overweight (1) –

Wilsons has found OFX Group's FY23 guidance conservative given the current backdrop of market volatility and the weak Australia dollar, with the broker forecasting net operating income of $209.2m, at the top end of the $200-212m guidance range, and earnings of $60.3m, above the $55-60m guidance range.

The broker notes OFX Group flagged that ongoing market volatility could provide scope to outperform guidance.

The company reported its highest ever quarterly turnover in the fourth quarter at $33.2bn, while net operating income and earnings were up 25% and 46% on the previous comparable period respectively. 

The Overweight rating is retained and the target price decreases to $3.06 from $3.14.

This report was published on May 18, 2022.

Target price is $3.06 Current Price is $2.60 Difference: $0.46
If OFX meets the Wilsons target it will return approximately 18% (excluding dividends, fees and charges).
The company's fiscal year ends in March.

Forecast for FY23:

Wilsons forecasts a full year FY23 dividend of 0.00 cents and EPS of 12.10 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 21.49.

Forecast for FY24:

Wilsons forecasts a full year FY24 dividend of 0.00 cents and EPS of 13.20 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 19.70.

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

OPY    OPENPAY GROUP LIMITED

Business & Consumer Credit – Overnight Price: $0.31

Shaw and Partners rates ((OPY)) as Buy (1) –

Openpay Group's fourth quarter update has demonstrated continuing strong growth from the company, with Shaw and Partners noting profitability is expected in Australia New Zealand by June 2023.

The broker likes that all key metrics for Australia New Zealand have shown positive momentum on the previous comparable period, with active customers up 22%, active merchants up 14%, active plans up 52% and total transaction value up 44%.

Positively, Shaw and Partners highlights given Openpay Group continues to grow in Australia it retains a higher net margin than its more established peers, which should better position the company to deal with tightening credit conditions driven by rising interest rates.

The Buy rating is retained and the target price decreases to $1.00 from $1.25.

This report was published on May 18, 2022.

Target price is $1.00 Current Price is $0.31 Difference: $0.69
If OPY meets the Shaw and Partners target it will return approximately 223% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY22:

Shaw and Partners forecasts a full year FY22 dividend of 0.00 cents and EPS of minus 41.80 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 0.74.

Forecast for FY23:

Shaw and Partners forecasts a full year FY23 dividend of 0.00 cents and EPS of minus 16.70 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 1.86.

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

PDL    PENDAL GROUP LIMITED

Wealth Management & Investments – Overnight Price: $5.21

Bell Potter rates ((PDL)) as Buy (1) –

Pendal Group's March first-half result outpaced Bell Potter's forecasts, thanks to a beat on fee revenue and performance fees.

This translated into a rise in operating margins to 42% from 37% year on year, and the compensation ratio fell to 42% from 47%.

Cost guidance was reduced to 3% to 5% of fixed costs from 6.8%, and margin guidance edged a couple of basis points higher.

Funds under management missed the broker's forecast and Bell Potter considers cost guidance to be overly optimistic given inflationary pressures. But the broker says the strong result gives management "breathing space" post the Perpetual bid. Earnings forecasts rise 11% in FY22; 3.1% in FY23 and 1.5% in FY24.

Buy rating retained. Target price edges up to $6.90 from $6.80.

This report was published on May 18, 2022.

Target price is $6.90 Current Price is $5.21 Difference: $1.69
If PDL meets the Bell Potter target it will return approximately 32% (excluding dividends, fees and charges).
Current consensus price target is $5.93, suggesting upside of 13.8%(ex-dividends)
The company's fiscal year ends in September.

Forecast for FY22:

Bell Potter forecasts a full year FY22 dividend of 46.00 cents and EPS of 50.40 cents.
At the last closing share price the estimated dividend yield is 8.83%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 10.34.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 52.5, implying annual growth of 1.0%.
Current consensus DPS estimate is 45.8, implying a prospective dividend yield of 8.8%.
Current consensus EPS estimate suggests the PER is 9.9.

Forecast for FY23:

Bell Potter forecasts a full year FY23 dividend of 57.00 cents and EPS of 47.60 cents.
At the last closing share price the estimated dividend yield is 10.94%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 10.95.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 46.1, implying annual growth of -12.2%.
Current consensus DPS estimate is 41.3, implying a prospective dividend yield of 7.9%.
Current consensus EPS estimate suggests the PER is 11.3.

Market Sentiment: 0.4
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

UMG    UNITED MALT GROUP LIMITED

Agriculture – Overnight Price: $3.98

Bell Potter rates ((UMG)) as Upgrade to Buy from Hold (1) –

United Malt's March first-half result met Bell Potter's forecasts, as strong revenue battled with rising costs.

The company reported lease-adjusted operating cash outflow of -$60m, which compares with a $17.4m inflow the previous March half. Net debt (ex-leases) stood at $341m, up from $230.9m.

Management guides to a recovery to above pre-covid volumes for the FY22 full-year; higher barley costs; lower gearing; and a higher tax rate.

Rating upgraded to Buy from Hold to reflect an expected normalisation in Canadian crop condition, a capital investment harvest, and stabilising malt/barley spreads, improved earnings and a moderating in capital expenditure. Target price rises to $4.55 from $4.35.

This report was published on May 18, 2022.

Target price is $4.55 Current Price is $3.98 Difference: $0.57
If UMG meets the Bell Potter target it will return approximately 14% (excluding dividends, fees and charges).
Current consensus price target is $4.61, suggesting upside of 15.8%(ex-dividends)
The company's fiscal year ends in September.

Forecast for FY22:

Bell Potter forecasts a full year FY22 dividend of 6.50 cents and EPS of 12.00 cents.
At the last closing share price the estimated dividend yield is 1.63%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 33.17.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 10.8, implying annual growth of 134.3%.
Current consensus DPS estimate is 7.5, implying a prospective dividend yield of 1.9%.
Current consensus EPS estimate suggests the PER is 36.9.

Forecast for FY23:

Bell Potter forecasts a full year FY23 dividend of 11.50 cents and EPS of 21.70 cents.
At the last closing share price the estimated dividend yield is 2.89%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 18.34.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 24.7, implying annual growth of 128.7%.
Current consensus DPS estimate is 15.5, implying a prospective dividend yield of 3.9%.
Current consensus EPS estimate suggests the PER is 16.1.

Market Sentiment: 0.8
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

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Wilsons rates ((UMG)) as Overweight (1) –

With United Malt delivering first half earnings in line with recent guidance, Wilsons notes the company retains a wide full year earnings range of $115-140m, accounting for uncertainty over the timing of sales deliveries and production costs.

Positively, the broker highlights the Warehouse and Distribution segment returned to growth in the period, while Processing was impacted by costs. 

Looking forward, Wilsons notes a capital expenditure peak in FY22 looks to support strong free cash flow ahead, and expects the company has substantial earnings improvement potential in its future.

The Overweight rating is retained and the target price decreases to $4.36 from $4.54.

This report was published on May 18, 2022.

Target price is $4.36 Current Price is $3.98 Difference: $0.38
If UMG meets the Wilsons target it will return approximately 10% (excluding dividends, fees and charges).
Current consensus price target is $4.61, suggesting upside of 15.8%(ex-dividends)
The company's fiscal year ends in September.

Forecast for FY22:

Wilsons forecasts a full year FY22 dividend of 4.00 cents and EPS of 10.90 cents.
At the last closing share price the estimated dividend yield is 1.01%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 36.51.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 10.8, implying annual growth of 134.3%.
Current consensus DPS estimate is 7.5, implying a prospective dividend yield of 1.9%.
Current consensus EPS estimate suggests the PER is 36.9.

Forecast for FY23:

Wilsons forecasts a full year FY23 dividend of 12.00 cents and EPS of 20.90 cents.
At the last closing share price the estimated dividend yield is 3.02%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 19.04.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 24.7, implying annual growth of 128.7%.
Current consensus DPS estimate is 15.5, implying a prospective dividend yield of 3.9%.
Current consensus EPS estimate suggests the PER is 16.1.

Market Sentiment: 0.8
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

XRO    XERO LIMITED

Accountancy – Overnight Price: $88.42

Wilsons rates ((XRO)) as Overweight (1) –

Wilsons notes Xero's full year results reflect a normalisation in the company's cost base, with operating costs reportedly 84% of sales and within the company's guidance range driven by covid-induced cost reduction measures.

The broker also notes while staffing costs and design and development investment increased meaningfully, this should be a positive for customer growth and price rises ahead.

The Overweight rating is retained and the target price decreases to $100.68 from $156.82, noting that Xero's 90% recurring revenue and more than 20% revenue growth are not currently reflected in the share price.

This report was published on May 13, 2022.

Target price is $100.68 Current Price is $88.42 Difference: $12.26
If XRO meets the Wilsons target it will return approximately 14% (excluding dividends, fees and charges).
Current consensus price target is $110.50, suggesting upside of 25.0%(ex-dividends)
The company's fiscal year ends in March.

Forecast for FY23:

Wilsons forecasts a full year FY23 dividend of 0.00 cents and EPS of 71.86 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 123.05.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 32.8, implying annual growth of N/A.
Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A.
Current consensus EPS estimate suggests the PER is 269.6.

Forecast for FY24:

Wilsons forecasts a full year FY24 dividend of 0.00 cents and EPS of 115.69 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 76.43.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 73.4, implying annual growth of 123.8%.
Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A.
Current consensus EPS estimate suggests the PER is 120.5.

This company reports in NZD. 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

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Disclaimer:
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As part of emerging new trends overseas, The Australian Broker Call *Extra* Edition also includes providers of sponsored research. Readers should bear in mind, sponsored research, while not necessarily of lower quality, has the embedded complication that the company that is the subject of the research has paid for this research. Providers of sponsored research that can potentially be included in this Report are Breakaway Research, Edison Investment Research, Independent Investment Research, NDF Research, Pitt Street Research, and TMT Analytics.

Decisions about inclusions in this Report are made independently of the providers of stock market research and at full discretion of the team of journalists responsible for content at FNArena. Inclusion does not equal endorsement, in any way, shape or form. This Report is provided for informational purposes only.

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