In Case You Missed It – BC Extra Upgrades & Downgrades – 29-09-23

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            [3] => ((CVN))
            [4] => ((STO))
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This story features CHALLENGER LIMITED, and other companies.
For more info SHARE ANALYSIS: CGF
The company is included in ASX100, ASX200, ASX300 and ALL-ORDS

Broker Rating Changes (Post Thursday Last Week)

By Rudi Filapek-Vandyck

Upgrade

CHALLENGER LIMITED ((CGF)) Upgrade to Buy from Neutral by Goldman Sachs.B/H/S: 0/0/0

Goldman Sachs upgrades Challenger to Buy from Neutral, raising the target to $6.89 from $6.50. The broker expects meaningful book growth into FY24 as the company pushes to diversify sales and extend the tenor of the life book.

The capital position is also strong and the broker assesses a lower dividend payout ratio should also support growth alongside other sources of capital.

Normalised pre-tax returns on equity are expected to remain below target, yet Goldman Sachs believes this will improve, primarily stemming from yield/improved mix.

KAROON ENERGY LIMITED ((KAR)) Upgrade to Buy from Overweight by Jarden.B/H/S: 0/0/0

Recent action by OPEC-Plus to cut production has achieved the objectives of bringing supply/demand into balance and increasing prices to above US$90/bbl. Jarden increases Brent oil price forecasts which are partially offset by -4% reduction in forecast LNG prices.

Karoon Energy is the key beneficiary on the local bourse of the recent spike in oil prices as it coincides with higher oil production. Jarden upgrades to Buy from Overweight and lifts the target to $3.00 from $2.50.

Downgrade

BANK OF QUEENSLAND LIMITED ((BOQ)) Downgrade to Sell from Neutral by Goldman Sachs.B/H/S: 0/0/0

Goldman Sachs downgrades Bank of Queensland to Sell from Neutral, reducing the target to $5.60 from $6.09. The broker assesses, while the transformation program is the right strategy in order to deliver a stronger and simpler operation, it exposes the bank to inflation in non-staffing costs.

Management is prepared to announce details of productivity initiatives at the FY23 result, yet Goldman Sachs is concerned about the operating risks and cost pressures involved. Volume momentum remains weak.

CARNARVON ENERGY LIMITED ((CVN)) Downgrade to Overweight from Buy by Jarden.B/H/S: 0/0/0

Recent action by OPEC-Plus to cut production has achieved the objectives of bringing supply/demand into balance and increasing prices to above US$90/bbl. Jarden increases Brent oil price forecasts which are partially offset by -4% reduction in forecast LNG prices.

Jarden continues to believe Carnarvon Energy is materially undervalued but suspects Dorado's final investment decision will slip beyond 2024 and the lack of positive catalysts in the near term may mean the valuation gap could take longer to close.

This underpins a reduction in the rating to Overweight from Buy. Target edges up to $0.25 from $0.24.

SANTOS LIMITED ((STO)) Downgrade to Neutral from Overweight by Jarden.B/H/S: 0/0/0

Recent action by OPEC-Plus to cut production has achieved the objectives of bringing supply/demand into balance and increasing prices to above US$90/bbl. Jarden increases Brent oil price forecasts which are partially offset by -4% reduction in forecast LNG prices.

While higher oil prices are good for Santos, Jarden downgrades to Neutral from Overweight on concerns around the progress on Barossa LNG as well as costs.

The drilling environmental plan for Barossa LNG was cancelled in 2022 and a revised plan has been submitted, with the broker noting there is "little wriggle room left" if further slippage in approvals is incurred. Target is steady at $8.05.

Price Target Changes (Post Thursday Last Week)

More Highlights

ANZ    ANZ GROUP HOLDINGS LIMITED

Banks – Overnight Price: $25.09

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

Goldman Sachs undertakes a full review of the banking sector, noting system housing credit growth is now likely to trough at 3.7%, compared with around 1% in its previous forecasts. The broker forecasts business credit growth to trough at less than 4%, roughly similar to previous forecasts.

While there has been some relief in mortgage competition, Goldman Sachs does not expect this to be sustained over the remainder of 2023 and into 2024 and with ongoing deposit pressures now forecasts FY24/25 net interest margins to be down -8/6 basis points.

Bad debts are expected to be more benign compared with previously. ANZ Bank is the preferred stock among the major banks and the broker reiterates a Buy rating. Target is reduced to $27.25 from $27.55.

This report was published on September 26, 2023.

Target price is $27.25 Current Price is $25.09 Difference: $2.16
If ANZ meets the Goldman Sachs target it will return approximately 9% (excluding dividends, fees and charges).
Current consensus price target is $26.47, suggesting upside of 5.4%(ex-dividends)
The company's fiscal year ends in September.

Forecast for FY23:

Goldman Sachs forecasts a full year FY23 dividend of 162.00 cents and EPS of 246.70 cents.
At the last closing share price the estimated dividend yield is 6.46%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 10.17.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 236.9, implying annual growth of -5.2%.
Current consensus DPS estimate is 162.5, implying a prospective dividend yield of 6.5%.
Current consensus EPS estimate suggests the PER is 10.6.

Forecast for FY24:

Goldman Sachs forecasts a full year FY24 dividend of 162.00 cents and EPS of 221.90 cents.
At the last closing share price the estimated dividend yield is 6.46%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 11.31.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 223.7, implying annual growth of -5.6%.
Current consensus DPS estimate is 163.0, implying a prospective dividend yield of 6.5%.
Current consensus EPS estimate suggests the PER is 11.2.

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

BMN    BANNERMAN ENERGY LIMITED

Uranium – Overnight Price: $2.80

Canaccord Genuity rates ((BMN)) as Speculative Buy (1) –

Canaccord Genuity remains "fundamentally bullish" on the uranium sector, noting the market is in structural deficit and secondary supplies are on the decline, while inventory levels are near recent lows.

Uranium equities are up 16% as price momentum continues with the spot price currently at US$70/lb, a 12-year high. The broker increases demand forecasts and envisages risks in bringing new supply on line at targeted rates given ongoing supply chain issues and labour constraints.

Speculative Buy rating retained for Bannerman Energy and the target is raised to $3.59 from $3.33.

This report was published on September 25, 2023.

Target price is $3.59 Current Price is $2.80 Difference: $0.79
If BMN meets the Canaccord Genuity target it will return approximately 28% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY23:

Canaccord Genuity forecasts a full year FY23 dividend of 0.00 cents and EPS of minus 7.06 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 39.64.

Forecast for FY24:

Canaccord Genuity forecasts a full year FY24 dividend of 0.00 cents and EPS of minus 6.61 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 42.34.

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

FPH    FISHER & PAYKEL HEALTHCARE CORPORATION LIMITED

Medical Equipment & Devices – Overnight Price: $20.19

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

Goldman Sachs assesses the GLP-1 drugs that initially targeted Type II diabetes and have demonstrated efficacy in weight management and cardiovascular indications have potentially significant implications for the Obstructive Sleep Apnoea market in which Fisher & Paykel Healthcare engages.

The broker expects continued adoption and success of this class of drug will reduce the OSA population addressable by CPAP therapy. OSA directly contributes just 30% of Fisher & Paykel Healthcare's revenue. Buy rating retained. Target is reduced by -4% to $24.

This report was published on September 26, 2023.

Target price is $24.00 Current Price is $20.19 Difference: $3.81
If FPH meets the Goldman Sachs target it will return approximately 19% (excluding dividends, fees and charges).
Current consensus price target is $21.00, suggesting upside of 3.6%(ex-dividends)
The company's fiscal year ends in March.

Forecast for FY24:

Goldman Sachs forecasts a full year FY24 EPS of 42.39 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 47.63.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 40.2, implying annual growth of N/A.
Current consensus DPS estimate is 35.0, implying a prospective dividend yield of 1.7%.
Current consensus EPS estimate suggests the PER is 50.4.

Forecast for FY25:

Goldman Sachs forecasts a full year FY25 EPS of 52.53 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 38.44.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 50.9, implying annual growth of 26.6%.
Current consensus DPS estimate is 37.5, implying a prospective dividend yield of 1.8%.
Current consensus EPS estimate suggests the PER is 39.8.

This company reports in NZD. 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

KAR    KAROON ENERGY LIMITED

Crude Oil – Overnight Price: $2.50

Jarden rates ((KAR)) as Upgrade to Buy from Overweight (1) –

Recent action by OPEC-Plus to cut production has achieved the objectives of bringing supply/demand into balance and increasing prices to above US$90/bbl. Jarden increases Brent oil price forecasts which are partially offset by -4% reduction in forecast LNG prices.

Karoon Energy is the key beneficiary on the local bourse of the recent spike in oil prices as it coincides with higher oil production. Jarden upgrades to Buy from Overweight and lifts the target to $3.00 from $2.50.

This report was published on September 21, 2023.

Target price is $3.00 Current Price is $2.50 Difference: $0.5
If KAR meets the Jarden target it will return approximately 20% (excluding dividends, fees and charges).
Current consensus price target is $2.87, suggesting upside of 16.5%(ex-dividends)
The company's fiscal year ends in June.

Forecast for FY24:

Jarden forecasts a full year FY24 dividend of 10.00 cents and EPS of 49.40 cents.
At the last closing share price the estimated dividend yield is 4.00%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 5.06.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 77.0, 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 3.2.

Forecast for FY25:

Jarden forecasts a full year FY25 dividend of 8.00 cents and EPS of 38.00 cents.
At the last closing share price the estimated dividend yield is 3.20%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 6.58.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 60.3, implying annual growth of -21.7%.
Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A.
Current consensus EPS estimate suggests the PER is 4.1.

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

RMD    RESMED INC

Medical Equipment & Devices – Overnight Price: $21.44

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

Goldman Sachs assesses the GLP-1 drugs that initially targeted Type II diabetes and have demonstrated efficacy in weight management and cardiovascular indications have potentially significant implications for the Obstructive Sleep Apnoea market in which ResMed engages.

The broker expects continued adoption and success of this class of drug will reduce the OSA population addressable by CPAP therapy yet believes the perceived downside risk has been "over capitalised" in the current valuation of ResMed.

The broker reiterates a Buy rating while reducing the target to $33.00 from $38.40.

This report was published on September 26, 2023.

Target price is $33.00 Current Price is $21.44 Difference: $11.56
If RMD meets the Goldman Sachs target it will return approximately 54% (excluding dividends, fees and charges).
Current consensus price target is $35.05, suggesting upside of 61.4%(ex-dividends)
The company's fiscal year ends in June.

Forecast for FY24:

Goldman Sachs forecasts a full year FY24 EPS of 107.97 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 19.86.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 113.6, implying annual growth of N/A.
Current consensus DPS estimate is 30.6, implying a prospective dividend yield of 1.4%.
Current consensus EPS estimate suggests the PER is 19.1.

Forecast for FY25:

Goldman Sachs forecasts a full year FY25 EPS of 117.44 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 18.26.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 127.4, implying annual growth of 12.1%.
Current consensus DPS estimate is 33.7, implying a prospective dividend yield of 1.6%.
Current consensus EPS estimate suggests the PER is 17.0.

This company reports in USD. 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

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