Australian Broker Call

UBS rates ANZ as Buy (1) -

After Australian banks have seen consensus earnings upgrades for the first time since 2015, UBS poses the question: Will banks see EPS upgrades with the February results?

The broker believes results are likely to be a catalyst for consensus to reduce expected credit impairment charges and risk-weighted assets (RWA) procyclicality. This is expected to flow through to stronger EPS, dividends and capital forecasts.

The cyclical environment for the banks is improving which should provide attractive dividends and buy-backs through 2021, explain the analysts. It's considered expectations for a rise in inflation and eventually interest rates could drive a further re-rating in the banks.

The ANZ Bank quarterly trading update is due on Thursday, February 18.

UBS expects stronger performance across most of its businesses with solid growth in mortgages over the quarter and margin improvement in Institutional and a reasonable performance in New Zealand.

Buy and $21 target retained.

Target price is $21.00 Current Price is $24.35 Difference: minus $3.35 (current price is over target).
If ANZ meets the UBS target it will return approximately minus 14% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $25.70, suggesting upside of 3.5% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.9

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

Macquarie rates APA as Outperform (1) -

Macquarie assesses Orbost is the swing factor for earnings in FY21. The broker expects the transition agreement will run for another 12 months and APA Group will take additional risk to cover shortages from the minimum delivery requirement.

Gas demand over the short term should mean the company meets or exceeds its capital expenditure target and longer term solutions like green gas and hydrogen provide new investment opportunities.

The broker assesses the downside risk lays with the step change into renewables at a large price premium. Outperform retained. Target is reduced to $10.58 from $12.15, reflecting higher bond rates.

Target price is $10.58 Current Price is $9.79 Difference: $0.79
If APA meets the Macquarie target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $11.19, suggesting upside of 13.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.6

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

Macquarie rates APT as Neutral (3) -

Based on the faster growth in the US business, Macquarie lowers earnings and profit forecasts to reflect the company's emphasis on gaining market share as competition in the US BNPL market ramps up.

The broker estimates Afterpay has increased its US market share to 12% in 2020 from 7% in 2019 and will achieve 21% share over 2021. This will come at a cost, weighing on earnings margins in the short term.

With coverage transferred to a new analyst, Macquarie retains a Neutral rating and increases the target to $140.00 from $97.50.

Target price is $140.00 Current Price is $146.62 Difference: minus $6.62 (current price is over target).
If APT meets the Macquarie target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $110.09, suggesting downside of -23.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.3

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

Credit Suisse rates BHP as Downgrade to Neutral from Outperform (3) -

Credit Suisse prefers Rio Tinto ((RIO)) over BHP Group given there is more optimism surrounding iron ore in the broker's commodity deck and Rio has a higher earnings exposure to iron ore.

Looking at better supply/demand fundamentals, the broker raises its iron ore price forecasts by circa 45% over the next three years, driving material earnings upgrades with operating income forecasts for BHP lifting 25-40% over the next three years.

Credit Suisse downgrades its rating to Neutral from Outperform with the target rising to $42 from $40 target.

Target price is $42.00 Current Price is $45.10 Difference: minus $3.1 (current price is over target).
If BHP 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 $46.36, suggesting upside of 4.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

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

Citi rates BSL as Neutral (3) -

Citi upgrades earnings (EBIT) estimates for FY21-22 by 14% and 20%, respectively, after internal strategists updated modelling for the US steel sector.

The estimated balance sheet net cash position of $521m in FY21 increases by around $500m per year over the forecast period to the end of FY25, calculates the analyst. This is considered to result in around 9-10% free cash flow (FCF) yield.

The analyst concludes this implies substantial capital management capacity.

Neutral rating retained. Target rises to $19.50 from $19.20.

Target price is $19.50 Current Price is $16.95 Difference: $2.55
If BSL meets the Citi target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $20.56, suggesting upside of 20.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.4

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

UBS rates CBA as Neutral (3) -

After Australian banks have seen consensus earnings upgrades for the first time since 2015, UBS poses the question: Will banks see EPS upgrades with the February results?

The broker believes results are likely to be a catalyst for consensus to reduce expected credit impairment charges and risk-weighted assets (RWA) procyclicality. This is expected to flow through to stronger EPS, dividends and capital forecasts.

The cyclical environment for the banks is improving which should provide attractive dividends and buy-backs through 2021, explain the analysts. It's considered expectations for a rise in inflation and eventually interest rates could drive a further re-rating in the banks.

The Commonwealth Bank result is due on Wednesday, February 10.

UBS expects the net interest margin (NIM) is likely to be under pressure as highlighted in the first quarter update. It's considered there may be some disappointment with costs given ongoing investment spend and higher covid-19 costs

The bank has flagged it will likely provide an update on future investment spend, rising from current levels of $5bn over four years.

Buy rating is retained with a target of $72.

Target price is $72.00 Current Price is $86.59 Difference: minus $14.59 (current price is over target).
If CBA meets the UBS target it will return approximately minus 17% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $76.51, suggesting downside of -13.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: -0.4

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

Macquarie rates CCP as Outperform (1) -

First half results support the company's competitive position in the Australasian debt buying market as well as the US debt buying opportunity and potential in the Australasian consumer lending segment, in Macquarie's view.

The broker notes consumer lending stabilised in the December quarter with activity in December back to 86% of the previous corresponding period. Tighter underwriting is expected to remain in place for the second half.

The broker upgrades FY21 estimates for earnings per share by 13% and raises the target to $34.80 from $33.80. Outperform.

Target price is $34.80 Current Price is $32.06 Difference: $2.74
If CCP meets the Macquarie target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $33.45, suggesting downside of -0.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.3

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

Morgans rates CCP as Hold (3) -

Credit Corp reported first half profit (NPAT) of $42.3m, 7% ahead of Morgans forecast. 

The broker explains earnings sensitivity depends largely on the ability to ramp up purchased debt ledgers (PDL) investment in the US.

The company upgraded all guidance metrics and stated they expect lending revenue and profit to return to growth in the second half.

The Hold rating is unchanged. The price target has increased to $34.05 from $31.10.

Target price is $34.05 Current Price is $32.06 Difference: $1.99
If CCP meets the Morgans target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $33.45, suggesting downside of -0.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.3

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

Ord Minnett rates CCP as Hold (3) -

First half results were strong and helped by a lower-than-expected amortisation charge. Ord Minnett assesses Credit Corp is in a favourable market position with respect to the Australian purchased debt ledger (PDL) market.

The recent re-rating of the stock has meant the broker maintains its Hold rating and raises the target to $31.50 from $30.00.

Ord Minnett believes the acquisition of Collection House's ((CLH)) PDL book at the end of December was "impeccably timed" given the lack of supply in the market and a consumer lending business that is only now seeing volumes re-emerge.

Target price is $31.50 Current Price is $32.06 Difference: minus $0.56 (current price is over target).
If CCP meets the Ord Minnett target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $33.45, suggesting downside of -0.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.3

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

Credit Suisse rates CIP as Neutral (3) -

The first half result was in line with Credit Suisse's expectations with funds from operations (FFO) falling -11% versus last year to 8.8c. FY21 FFO guidance has been upgraded to at least 17.6c from 17.5c driven by acquisitions in the second half and a lower cost of debt.

More upside could come from favourable leasing outcomes at upcoming vacancies and less-than-expected covid provisions, suggests the analyst.

Neutral rating with a target of $3.24.

Target price is $3.24 Current Price is $3.06 Difference: $0.18
If CIP meets the Credit Suisse target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $3.45, suggesting upside of 10.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.5

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

Morgan Stanley rates CIP as No Rating (-1) -

Centuria Industrial REIT has lifted its FY21 funds from operations guidance to at least 17.6c from 17.5c.

Driven by covid provisioning, the half-yearly result was a slight miss versus the broker's forecast. The good news is the net tangible assets were lifted to $2.99, up 6.4% versus the $2.81 disclosed in November. 

The target price is $3.50 and the rating is Overweight.

Target price is $3.50 Current Price is $3.06 Difference: $0.44
If CIP meets the Morgan Stanley target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $3.45, suggesting upside of 10.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.5

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

Morgans rates CIP as Hold (3) -

Centuria Industrial REIT reported first half funds from operations (FFO) of $42.8m. Morgans explains the uplift was driven by new acquisitions and 3.1% growth in like-for-like property income.

Revaluations during the first half saw the portfolio weighted average capitalisation rate (WACR) move to 5.42% from 6.05%.

FFO guidance has been upgraded to be no less than 17.6 cents from at least 17.5 cents, which equates to a forecast yield of 5.6%, calculates the broker.

The Hold rating is unchanged and the price target is increased to $3.27 from $3.16. 

Target price is $3.27 Current Price is $3.06 Difference: $0.21
If CIP meets the Morgans target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $3.45, suggesting upside of 10.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.5

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

Ord Minnett rates CIP as Buy (1) -

First half results were robust and Ord Minnett notes industrial assets have performed well. Funds from operations increased 43%. Valuations have increased 6.5%.

The broker expects capital growth to remain strong for industrial assets and maintains a Buy rating while reducing the target to $3.90 from $4.10. Centuria Industrial has guided to free funds from operations per share of no less than 17.6c for FY21.

Target price is $3.90 Current Price is $3.06 Difference: $0.84
If CIP meets the Ord Minnett target it will return approximately 27% (excluding dividends, fees and charges).

Current consensus price target is $3.45, suggesting upside of 10.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.5

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

UBS rates CIP as Buy (1) -

The first half result for Centuria Industrial REIT was broadly in-line with the expectations of UBS.

A highlight for the broker was the leasing renewal success in NSW at Warnervale, tenated by Woolworths ((WOW)) and Warwick Farm (Visy) significantly de-risking expiries out to FY22.

Going forward, the analyst believes investors can reasonably expect debt funded accretive acquisitions together with further material cap rate compression, as strength in the broader transactional market flows through to asset values.

Buy rating and target of $3.38 are unchanged.

Target price is $3.38 Current Price is $3.06 Difference: $0.32
If CIP meets the UBS target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $3.45, suggesting upside of 10.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.5

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

Credit Suisse rates CRN as Outperform (1) -

While Credit Suisse expects the ban on Australian coal imports to China to remain in the foreseeable future, the broker also notes the sharp recovery in met coal prices to over US$150/t over the past three weeks.

Backed by a better met coal pricing environment, the broker expects Coronado Global Resources to return to free cash flow positive territory. Operating income forecasts are expected to lift by 7% and 1% in 2021-22.

Outperform rating and $1.60 target maintained.

Target price is $1.60 Current Price is $1.30 Difference: $0.3
If CRN meets the Credit Suisse target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $1.49, suggesting upside of 16.2% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Forecast for FY21:

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

Citi rates CSL as Neutral (3) -

Global immunology company Argenx has announced the expansion of a trial, the outcome of which is potentially negative for CSL, warns Citi.

The products, if successful, have the potential to disrupt the existing IG suppliers’ sales for neurology, as materially lower IG revenue would have a disproportionate impact on the “last litre” economics of the industry, explains the broker.

Due to the vagaries of the targeted disease in the trial and the limitations of the trial itself, Citi makes no changes to forecasts, while  maintaining a watching brief.

The Neutral rating and $320 target are unchanged.

Target price is $320.00 Current Price is $274.33 Difference: $45.67
If CSL meets the Citi target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $307.63, suggesting upside of 9.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

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

UBS rates CSL as Buy (1) -

After the release of data from the plasma protein therapeutics association (PPTA), UBS concludes there may be partial mitigation of covid-induced collection pressures. It's considered CSL appears to be well on track to reach the FY21 target of 20-30 new collection centres. 

Of the 115 plasma collection centres opened over the last 12 mths, 40 (around ~35%) were owned by CSL. In January, CSL opened no new centres although 21 centres opened since July 2020.

The Buy rating and target price of $346 are unchanged.

Target price is $346.00 Current Price is $274.33 Difference: $71.67
If CSL meets the UBS target it will return approximately 26% (excluding dividends, fees and charges).

Current consensus price target is $307.63, suggesting upside of 9.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

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 CTD as Upgrade to Buy from Accumulate (1) -

Ord Minnett observes stocks within the travel agency segment have declined materially since December, largely because of valuation concerns.

The broker now assesses valuations have become more reasonable and believes it is time to revisit those stocks that have strong fundamentals.

Corporate Travel fits the bill and the rating is upgraded to Buy from Accumulate. Target is raised to $22.11 from $21.93.

Target price is $22.11 Current Price is $17.39 Difference: $4.72
If CTD meets the Ord Minnett target it will return approximately 27% (excluding dividends, fees and charges).

Current consensus price target is $20.49, suggesting upside of 10.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 1.0

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

Ord Minnett rates CWN as Hold (3) -

Ord Minnett assumes the Barangaroo licence will be withheld temporarily, and notes FY21 expectations appear optimistic for a Melbourne recovery and a Sydney opening.

The broker assesses consensus earnings regarding Barangaroo are too high and this is compounded by the slow ramp up of the Melbourne property. Barangaroo gaming operations are not expected to open until late 2021.

Hold maintained. Target is raised to $8.80 from $8.10.

Target price is $8.80 Current Price is $9.75 Difference: minus $0.95 (current price is over target).
If CWN 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 $10.09, suggesting upside of 1.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.5

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

Credit Suisse rates DRR as Upgrade to Outperform from Neutral (1) -

Since listing in October 2020, Deterra Royalties has underperformed the AUD iron ore price by circa -28% and is down almost -10% year to date.

Even so, the broker takes a constructive house view on iron ore pricing and the South Flank ramp up, upgrading its rating to Outperform from Neutral. Target price moves to $4.80 from $4.40.

Target price is $4.80 Current Price is $4.39 Difference: $0.41
If DRR meets the Credit Suisse target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $4.99, suggesting upside of 12.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.5

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

Macquarie rates FLT as Neutral (3) -

Macquarie pulls forward the earnings recovery forecast by 6-9 months as the roll-out of vaccines gets underway. The stock remains highly sensitive to any positive news regarding the global travel outlook although it remains clouded.

There is still little knowledge as to when international travel will resume and the business is still loss-making, the broker acknowledges.

That said, Macquarie considers there is upside of 10-20% from current levels, setting aside the lack of visibility over the short term. Neutral maintained. Target rises to $15.30 from $13.50.

Target price is $15.30 Current Price is $14.48 Difference: $0.82
If FLT meets the Macquarie target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $15.01, suggesting downside of -1.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.1

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

Credit Suisse rates FMG as Upgrade to Outperform from Neutral (1) -

Led by a more bullish view around iron ore pricing, Credit Suisse lifts its Fortescue Metals Group target to $23.50 from $16.50. Rating is upgraded to Outperform from Neutral.

With only US$0.1bn in net debt, Eliwana ramping up to plan along with a strong dividend outlook, the broker has enough reasons to justify the upgrade ahead of what is expected to be a strong result in February. 

Target price is $23.50 Current Price is $22.71 Difference: $0.79
If FMG meets the Credit Suisse target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $22.98, suggesting upside of 1.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

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

Market Sentiment: 0.4

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

Morgan Stanley rates GPT as Underweight (5) -

Morgan Stanley asserts GPT Group may be in for a flat period in 2021.

With vacancy in the Sydney and Melbourne office markets reported at around 12-13%, the broker believes the group's office assets are likely in trouble. The group's retail exposure is also expected to suffer from lower vacancy over the next 6-12 months.

Underweight rating with the target falling to $4.37 from $4.40. Industry view is In-Line.

Target price is $4.37 Current Price is $4.30 Difference: $0.07
If GPT meets the Morgan Stanley target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $4.64, suggesting upside of 5.7% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.1

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

Ord Minnett rates HSN as Buy (1) -

Ord Minnett considers Hansen Technologies a high-quality, low-risk investment proposition.

Following a change of analyst and ahead of the first half result on February 26, the broker reviews the outlook, assessing the earnings stream is stable and largely defensive.

A Buy rating is maintained and the target raised to $5.40 from $4.15.

Target price is $5.40 Current Price is $3.94 Difference: $1.46
If HSN meets the Ord Minnett target it will return approximately 37% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 1.0

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

Morgan Stanley rates JHG as Equal-weight (3) -

Janus Henderson Group's December earnings are estimated at US$135.9m, or US$0.74c. While retail improved in December, Morgan Stanley is cautious on INTECH.

While not expensive, the stock needs durable inflows in order to re-rate, suggests the broker. 

Morgan Stanley reaffirms its Equal-weight rating with the target rising to $42.10 from $40.10. Industry view is In-line.

Target price is $42.10 Current Price is $42.09 Difference: $0.01
If JHG meets the Morgan Stanley target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $41.10, suggesting downside of -1.6% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Forecast for FY21:

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

Morgans rates MTO as Hold (3) -

Motorcycle Holdings has upgraded first half earnings (EBITDA) guidance. Morgans notes strong margins remain the key driver of growth, while volumes remain robust. New brands, dealerships and the Finance joint venture are also considered to have contributed.

While the broker believes some of the current tailwinds (and therefore earnings) will ease in time, an enduring benefit will be a materially improved balance sheet.

The company stated margins are expected to trend towards more normalised levels as stock positions improve.

The Hold rating is unchanged and the target is increased to $2.81 from $2.67, after Morgans lifts EPS forecast by 7.8% in FY21.

Target price is $2.81 Current Price is $2.54 Difference: $0.27
If MTO meets the Morgans target it will return approximately 11% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.0

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

UBS rates NAB as Buy (1) -

After Australian banks have seen consensus earnings upgrades for the first time since 2015, UBS poses the question: Will banks see EPS upgrades with the February results?

The broker believes results are likely to be a catalyst for consensus to reduce expected credit impairment charges and risk-weighted assets (RWA) procyclicality. This is expected to flow through to stronger EPS, dividends and capital forecasts.

The cyclical environment for the banks is improving which should provide attractive dividends and buy-backs through 2021, explain the analysts. It's considered expectations for a rise in inflation and eventually interest rates could drive a further re-rating in the banks.

National Australia Bank reports its Q1 trading update on Tuesday, 16 February.

UBS expects revenue headwinds will continue and evidence of cost management will likely be required. The bank is expected to provide an update on its loan deferral customers which are already much lower than at the peak.

Buy retained. Target is $25.

Target price is $25.00 Current Price is $24.24 Difference: $0.76
If NAB meets the UBS target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $24.68, suggesting downside of -0.4% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.4

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

Credit Suisse rates NHC as Neutral (3) -

Credit Suisse has upgraded its near term thermal coal price forecasts to incorporate higher demand from a La Nina driven cold winter in the northern hemisphere.

Although expecting prices to soften out post-winter, the broker concedes given the recovery of industrial activities ex-China and a higher LNG price, the thermal coal price may remain at US$70/t in the second half.

With a December quarter mark to market and upgraded near-term prices, New Hope Corp's operating income forecasts for FY21-22 are lifted by 32-57%. 

No visible catalysts. Neutral rating is retained with a target of $1.30.

Target price is $1.30 Current Price is $1.35 Difference: minus $0.05 (current price is over target).
If NHC meets the Credit Suisse target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $1.40, suggesting upside of 4.9% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.0

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

Morgan Stanley rates PDL as Overweight (1) -

Pendal Group is launching ESG strategies via the Regnan brand globally and winning ESG mandates with Australian super funds.

Morgan Stanley notes JOHCM funds saw a strong performance recovery in late 2020 and less uncertainty in the UK will help the flows in FY21.

Overweight rating retained with the target rising to $7.70 from $7.30. Industry view: In-line.

Target price is $7.70 Current Price is $6.28 Difference: $1.42
If PDL meets the Morgan Stanley target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $7.09, suggesting upside of 7.4% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.6

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

Morgan Stanley rates PPT as Overweight (1) -

Morgan Stanley believes Perpetual is establishing a global platform with building blocks in ESG and a US presence. While December saw outflows, the broker thinks 2021 will see progress on flows given the investment in distribution.

Overweight rating with the target falling to $39 from $42.50. Industry view: In-line.

Target price is $39.00 Current Price is $32.59 Difference: $6.41
If PPT meets the Morgan Stanley target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $35.51, suggesting upside of 6.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.3

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

Morgan Stanley rates PTM as Underweight (5) -

Morgan Stanley thinks Platinum Asset Management is too expensive given the ongoing outflows from the business despite better performance.

The company is thinking of expanding offshore which, the broker thinks, could support flows. 

Underweight rating. Target rises to $3.20 from 2.80. Industry view is In-Line.

Target price is $3.20 Current Price is $4.34 Difference: minus $1.14 (current price is over target).
If PTM meets the Morgan Stanley target it will return approximately minus 26% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.65, suggesting downside of -16.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: -0.4

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

Credit Suisse rates RIO as Neutral (3) -

Credit Suisse prefers Rio Tinto over BHP Group ((BHP)) given there is more optimism surrounding iron ore in the broker's commodity deck and Rio has a higher earnings exposure to iron ore.

Looking at better supply/demand fundamentals, the broker raises its iron ore price forecasts by circa 45% over the next three years, driving material earnings upgrades with operating income forecasts for Rio Tinto lifting 40-60% over the next three years.

Credit Suisse upgrades its rating to Outperform from Neutral with the target rising to $125 from $95 target.

Target price is $125.00 Current Price is $115.03 Difference: $9.97
If RIO meets the Credit Suisse target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $123.50, suggesting upside of 8.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Forecast for FY21:

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

Market Sentiment: 0.4

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

Credit Suisse rates SFR as Outperform (1) -

Credit Suisse maintains its Outperform rating with a target price of $6.50.

The December quarter was strong, observes Credit Suisse, with copper production at 16.4kt and gold at 9.7koz.

The outlook for FY21 remains unchanged but the broker thinks the upper end of the production guidance for copper and gold can be achieved at bottom range costs. March quarter is expected to be similar to the December quarter.

Target price is $6.50 Current Price is $4.84 Difference: $1.66
If SFR meets the Credit Suisse target it will return approximately 34% (excluding dividends, fees and charges).

Current consensus price target is $5.91, suggesting upside of 20.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.4

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

Ord Minnett rates SGR as Upgrade to Accumulate from Hold (2) -

Star Entertainment shares are at an attractive buying level, Ord Minnett assesses, given cost management, margin expansion and likely suspension of the Barangaroo licence of rival Crown Resorts ((CWN)).

The broker assumes the Barangaroo licence will be withheld temporarily, and notes FY21 expectations for Crown Resorts appear optimistic for a Melbourne recovery and a Sydney opening.

Ord Minnett notes the merger discussions between the two persist but considers this an unlikely tie-up at this stage, unless Crown's licence is revoked. Star Entertainment's rating is upgraded to Accumulate from Hold and the target raised to $4.10 from $3.50.

Target price is $4.10 Current Price is $3.57 Difference: $0.53
If SGR meets the Ord Minnett target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $3.84, suggesting upside of 3.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.5

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

Citi rates TAH as Neutral (3) -

Tabcorp is considering multiple bids and proposals around the wagering division. Citi believes this is an opportune time to consider a demerger or sale of the division, given the new chairman and soon-to-be-apponted CEO.

The broker feels a stand-alone lotteries business would be considered amongst the highest quality defensive businesses in Australia. This is not considered to have been reflected in the share price, which has lagged peer defensives since the Tatts merger.

The Neutral rating and $4.40 target are unchanged. 

Target price is $4.40 Current Price is $4.46 Difference: minus $0.06 (current price is over target).
If TAH meets the Citi target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.04, suggesting downside of -11.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.0

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

Credit Suisse rates TAH as Downgrade to Neutral from Outperform (3) -

Tabcorp Holdings has received a number of M&A proposals related to its wagering and media business.

Credit Suisse thinks of this as a near-term profit-taking opportunity. The broker believes the new board will be more willing to engage in corporate discussion but also thinks any transaction will likely be a lengthy process.

Rating is downgraded to Neutral from Outperform, the target rising to $4.50 from $4.40.

Target price is $4.50 Current Price is $4.46 Difference: $0.04
If TAH meets the Credit Suisse target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $4.04, suggesting downside of -11.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.0

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

Macquarie rates TPW as Neutral (3) -

First half revenue and earnings were slightly lower than Macquarie estimated. Still, the result is considered strong, with revenue benefiting from broader consumer trends and increasing online penetration.

The broker assesses a long-term opportunity driven by category expansion, customers moving online and investment. Revenue growth is expected to taper off as 2021 progresses although operating leverage continues to fund new initiatives.

Neutral maintained. Target rises to $10.90 from $10.60.

Target price is $10.90 Current Price is $10.53 Difference: $0.37
If TPW meets the Macquarie target it will return approximately 4% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.0

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

Morgans rates VHT as Add (1) -

Volpara Health Technologies has completed a strategic acquisition of CRA Health, a Boston based breast cancer risk assessment company.

The cost is US$22m (US$18m up front and US$4m in earn-out) and the multiple paid was 5.5 times annual recurring revenue (ARR), which is attractive in Morgans view. The acquisition is being funded from existing cash reserves.

The broker believes the acquisition continues to broaden the company's reach, with now around 30% (was 27%) of women having a mammogram in the US using one or more of the company's products.

The add rating is maintained and the target price is increased to $1.92 from $1.70.

Target price is $1.92 Current Price is $1.54 Difference: $0.38
If VHT meets the Morgans target it will return approximately 25% (excluding dividends, fees and charges).

The company's fiscal year ends in March.

Forecast for FY21:

Forecast for FY22:

This company reports in NZD. 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

Ord Minnett rates VHT as Downgrade to Lighten from Hold (4) -

Volpara Health has acquired CRA Health, a breast cancer risk assessment platform based in the US. The acquisition has cost US$18m with a further US$4m payable upon a satisfactory performance and retention hurdles.

Ord Minnett is still looking for an acceleration in organic growth but expects the enhanced business generated by the acquisition should drive better growth in FY22.

As the cash balance has fallen, the impact on the valuation is to the downside and the broker downgrades to Lighten from Hold. Target is reduced $1.24 from $1.45.

Target price is $1.24 Current Price is $1.54 Difference: minus $0.3 (current price is over target).
If VHT meets the Ord Minnett target it will return approximately minus 19% (excluding dividends, fees and charges - negative figures indicate an expected loss).

The company's fiscal year ends in March.

Forecast for FY21:

Forecast for FY22:

This company reports in NZD. 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

Macquarie rates VUK as Neutral (3) -

The company's quarterly trading update was broadly in line with Macquarie's expectations although the impairment charge of just 10 basis points was well below forecasts. This leaves scope for earnings upgrades.

Conditions in the UK remain challenging but with the vaccination program well underway and an expected renewal of interest in discounted UK bank stocks the broker finds the outlook more promising. Neutral rating and $2.70 target retained.

Target price is $2.70 Current Price is $2.46 Difference: $0.24
If VUK meets the Macquarie target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $2.35, suggesting downside of -16.7% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY21:

Forecast for FY22:

This company reports in GBP. 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

UBS rates WBC as Buy (1) -

After Australian banks have seen consensus earnings upgrades for the first time since 2015, UBS poses the question: Will banks see EPS upgrades with the February results?

The broker believes results are likely to be a catalyst for consensus to reduce expected credit impairment charges and risk-weighted assets (RWA) procyclicality. This is expected to flow through to stronger EPS, dividends and capital forecasts.

The cyclical environment for the banks is improving which should provide attractive dividends and buy-backs through 2021, explain the analysts. It's considered expectations for a rise in inflation and eventually interest rates could drive a further re-rating in the banks.

The Westpac Bank Q1 trading update is due on Wednesday, February 17.

UBS believes the market would like further details on how the bank will stabilise lending market share (there were early signs of some recovery during December).

The broker considers credit impairment charges are likely to normalise this half to 25 basis points as credit risk migration continues.

Buy rating is maintained with a target price of $22.

Target price is $22.00 Current Price is $21.42 Difference: $0.58
If WBC meets the UBS target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $23.43, suggesting upside of 7.5% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.9

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

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

Stocks within the travel agency segment have declined materially since early December, largely because of valuation concerns.

Ord Minnett believes valuations have returned to more reasonable levels and, as Webjet retains sound fundamentals, upgrades the rating to Buy from Hold.

The B2C business is expected to have benefited from the gradual opening of domestic borders in the first half. Target is raised to $5.65 from $5.52.

Target price is $5.65 Current Price is $5.04 Difference: $0.61
If WEB meets the Ord Minnett target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $4.62, suggesting downside of -10.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.6

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

Credit Suisse rates WHC as Outperform (1) -

Credit Suisse has upgraded its near term thermal coal price forecasts to incorporate higher demand from a La Nina driven cold winter in the northern hemisphere.

Although expecting prices to soften out post-winter, the broker concedes given the recovery of industrial activities ex-China and a higher LNG price, the thermal coal price may remain at US$70/t in the second half.

As a result, Whitehaven Coal's operating income forecasts for FY21-22 have been upgraded by 29-41%. The broker expects the company to pay dividends from FY22.

The Outperform and $1.95 target price are unchanged.

Target price is $1.95 Current Price is $1.55 Difference: $0.4
If WHC meets the Credit Suisse target it will return approximately 26% (excluding dividends, fees and charges).

Current consensus price target is $2.02, suggesting upside of 32.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.8

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

Macquarie rates WPL as Outperform (1) -

Macquarie reduces earnings forecast for 2020 amid weaker LNG trading, noting reduced disclosure on LNG sales since the commencement of the onerous Cheniere Corpus Christi contract, which makes trading gains/losses more difficult to assess.

Estimates for earnings per share in 2020 are lowered by -12%, although 2021 and 2022 are raised by 10% and 8% respectively amid lower operating costs estimates at Australian LNG and oil assets.

Outperform retained. Target is $28.30. The 2020 results are expected on February 18.

Target price is $28.30 Current Price is $25.08 Difference: $3.22
If WPL meets the Macquarie target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $26.75, suggesting upside of 5.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Forecast for FY21:

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

Market Sentiment: 0.4

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

Credit Suisse rates WSA as Downgrade to Neutral from Outperform (3) -

Rating is downgraded to Neutral from Outperform with a target of $2.50.

December quarter nickel production was below September quarter numbers, with the first half production equal to 41% of Western Areas' FY21 guidance.

Ore access was a major issue at the Flying Fox operation. Credit Suisse expects a reversion to more normalised extraction rates in the second half. Grade at the Spotted Quoll operation was also lower than targeted, expected to persist into the second half.

The company expects production to be at the lower end its guidance range with higher costs. 

Target price is $2.50 Current Price is $2.54 Difference: minus $0.04 (current price is over target).
If WSA meets the Credit Suisse target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.71, suggesting upside of 8.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.4

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