Australian Broker Call

Macquarie rates ALD as No Rating (-1) -

Macquarie is still under research restriction on Ampol but the broker has grabbed the opportunity to highlight how management at the firm is reinventing Ampol through increased leverage and exposure to electric vehicles.

As growth in EVs is projected to accelerate, certainly after a change in government in Canberra, Macquarie sees a need for hundreds of thousands extra public charging points.

Ampol's 6500 petrol stations can be part of the answer, though some of those stations will be culled, suspects the broker, as they will prove less compatible with the EV transition that is occurring.

Current Price is $34.00. Target price not assessed.

Current consensus price target is $36.95, suggesting upside of 7.5% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.8

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

UBS rates APM as Buy (1) -

APM Human Services International has refinanced its debt with a $810m loan facility, and UBS notes anticipated interest savings of $15m per annum are a positive with the move driving a 5% increase to the broker's earnings per share forecasts in FY23.

Given labour absenteeism across the sector, the broker also notes a lack of commentary from the company suggests no material change to company guidance and should help de-risk the stock.

The Buy rating is retained and the target price increases to $3.60 from $3.50.

Target price is $3.60 Current Price is $3.23 Difference: $0.37
If APM meets the UBS target it will return approximately 11% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 1.0

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

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

Austal has been awarded a contract worth up to US$3.3bn for detailed design & construction of up to 11 Offshore Patrol Cutters for the US Coast Guard and Macquarie comments this contract de-risks the company's outlook.

There will be more tender opportunities for the company over the year ahead and Macquarie upgrades to Outperform from Buy.

Earnings estimates have received a boost, putting a rocket underneath the price target; to $2.65 from $1.91 prior.

Target price is $2.65 Current Price is $2.38 Difference: $0.27
If ASB meets the Macquarie target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $2.57, suggesting upside of 7.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.8

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

Morgans rates AUA as Speculative Buy (1) -

Morgans increases its target price for Audeara to $0.29 from $0.22 after incorporating into forecasts a recent strategic investor placement and an uplift to bear-case international clinic numbers.

These changes follow the announcement of a global distribution agreement with Amplifon, the world’s largest audiology retailer. The broker notes the agreement will expand clinical reach into a further 25 countries.

The Speculative Buy rating is unchanged.

Target price is $0.29 Current Price is $0.12 Difference: $0.17
If AUA meets the Morgans target it will return approximately 142% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 1.0

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

Morgans rates BBT as Add (1) -

As part of a preview of FY22 results for five gaming stocks under coverage that report in August, Morgans expects the best earnings growth from those primarily exposed to lotteries. These are represented by Jumbo Interactive and Lottery Corp.

For BlueBet Holdings, the broker forecasts an earnings (EBITDA) loss of -$1.2m in FY22 with an underlying net loss of -$1.0m. Upside is  expected from increased share of the Australian online wagering market, and penetration of the US sports betting market.

The Add rating is unchanged and the target falls to $1.40 from $1.60.

Target price is $1.40 Current Price is $0.56 Difference: $0.84
If BBT meets the Morgans target it will return approximately 150% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 1.0

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

Morgan Stanley rates CBA as Underweight (5) -

Morgan Stanley estimates an -85% year-on-year reduction in the value of Klarna, suggested by media reports, would imply a write-down of around -$2bn in the value of CommBank's stake.

A write-down of this magnitude would not impact capital, notes the analyst, but it would reduce book value per share by circa -2.5%. This outcome has not been incorporated into the broker's forecast.

Separately, the broker points out that over the last decade, the CommBank's share price has moved in the same direction as house prices, which have fallen in the last two months.

The Underweight rating and $79 target are unchanged. Industry view: Attractive.

Target price is $79.00 Current Price is $91.45 Difference: minus $12.45 (current price is over target).
If CBA meets the Morgan Stanley target it will return approximately minus 14% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $88.05, suggesting downside of -3.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: -0.6

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

Ord Minnett rates DMP as Buy (1) -

In a significant step to underpin profitability for franchisees, according to Ord Minnett, Domino's Pizza Enterprises has introduced a 6% service fee in Australia on delivered orders to help offset cost pressures.

The broker points out the service fee doesn't affect value messaging through value bundles and is highly transparent at the point of checkout.

As a result, the analyst believes the value positioning relative to pizza competitors and the broader quick service restaurant (QSR) market is unchanged. The Buy rating and $99 target price are maintained.

Target price is $99.00 Current Price is $69.21 Difference: $29.79
If DMP meets the Ord Minnett target it will return approximately 43% (excluding dividends, fees and charges).

Current consensus price target is $91.90, suggesting upside of 31.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.7

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

UBS rates DMP as Buy (1) -

Domino's Pizza Enterprises has implemented a 6% delivery service fee, which UBS notes will assist in offsetting the cost pressures facing the company. The broker notes the increasing cost of food and fuel, and the minimum wage increase to take effect from July, are all weighing on the company.

The broker anticipates the company's food inflation may be in the mid-to-high single digits, but remains positive on Domino's, finding it better positioned to manage inflationary pressures than some peers. 

The Buy rating and target price of $90.00 are retained.

Target price is $90.00 Current Price is $69.21 Difference: $20.79
If DMP meets the UBS target it will return approximately 30% (excluding dividends, fees and charges).

Current consensus price target is $91.90, suggesting upside of 31.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.7

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

Macquarie rates HAS as Outperform (1) -

Hastings Technology Metals announced early-stage discussions have commenced that could result in the company establishing rare earth oxide separation and potentially rare earth magnet production facilities in Europe.

Macquarie sees potential for more positive news flow with the broker's base case valuation to receive a boost were Hastings to establish such facilities in Europe.

Target of $6.40 maintained. Outperform rating unchanged.

Target price is $6.40 Current Price is $4.30 Difference: $2.1
If HAS meets the Macquarie target it will return approximately 49% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 1.0

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

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

May Medicare data show Morgan Stanley that pathology is still beneffitting from covid-19 testing and diagnostic imaging is showing early signs of a recovery.

The Equal-weight rating and $3.75 target are retained for Healius. Industry view In-Line.

Target price is $3.75 Current Price is $3.73 Difference: $0.02
If HLS meets the Morgan Stanley target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $4.36, suggesting upside of 17.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.6

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

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

May Medicare data show Morgan Stanley that diagnostic imaging is showing early signs of a recovery.

The Equal-weight rating and $3.51 target are retained for Integral Diagnostics. Industry view In-Line.

Target price is $3.51 Current Price is $3.05 Difference: $0.46
If IDX meets the Morgan Stanley target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $4.26, suggesting upside of 42.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.4

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

UBS rates IVC as Neutral (3) -

Analysis by UBS suggests death rates have remained strong in 2022 year to date, but the broker notes labour constraints may be impacting on InvoCare's ability to leverage covid-related deaths in the second quarter. 

While the broker expects InvoCare is well place to pass on costs relative to other industries, staff shortages present a bigger risk than costs at this point.

Industry indicators appear positive moving forward, with death rates remaining significantly elevated according to the Australian Bureau of Statistics. The Neutral rating and target price of $12.40 are retained.

Target price is $12.40 Current Price is $10.67 Difference: $1.73
If IVC meets the UBS target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $12.70, suggesting upside of 19.9% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.0

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

Morgans rates JIN as Add (1) -

As part of a preview of FY22 results for five gaming stocks under coverage that report in August, Morgans expects the best earnings growth from those primarily exposed to lotteries. These are represented by Jumbo Interactive and Lottery Corp.

For Jumbo Interactive, the broker increases its FY22 earnings (EBITDA) estimate by 3% to $55m, with the SaaS division driving most of the growth. 

The Add rating and $18.30 target price are maintained.

Target price is $18.30 Current Price is $14.51 Difference: $3.79
If JIN meets the Morgans target it will return approximately 26% (excluding dividends, fees and charges).

Current consensus price target is $20.45, suggesting upside of 40.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.8

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

Macquarie rates MGX as Outperform (1) -

Mount Gibson Iron's Q4 update disappointed the broker, while it also fell short of the company's guidance. Macquarie retains its Outperform rating as well as the target of $0.70 on the expectation that growth in grade and volumes will occur in FY23 and beyond.

The broker simply cannot get past the observation that on the present spot-price, earnings increase by some 22% while the free cash flow yield lifts to over 50%.

The focus is now on the full production report, to be released in late July, and the FY22 result release in August, when management should also update the market on forward guidance, the broker suggests.

Target price is $0.70 Current Price is $0.52 Difference: $0.18
If MGX meets the Macquarie target it will return approximately 35% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 1.0

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

Morgan Stanley rates MVF as Overweight (1) -

May Medicare data show Morgan Stanley that IVF cycle growth fell, but was still above long-term averages.

The Overweight rating and $1.20 target are retained for Monash IVF. Industry view In-Line.

Target price is $1.20 Current Price is $0.98 Difference: $0.22
If MVF meets the Morgan Stanley target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $1.22, suggesting upside of 24.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 1.0

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

Macquarie rates NWH as Neutral (3) -

NRW Holdings won $78m in contracts with Lynas Rare Earths ((LYC)) and Rio Tinto ((RIO)) on top of an $800m five-and-a-half-year contract extension at the Baralaba North Mine.

Arguing that a renewed cycle of spend in iron ore in the Pilbara is a key catalyst for NRW, Macquarie retains its Neutral rating with an unchanged target price of $1.80.

So what is holding the broker back from slapping an Outperform rating on the stock? Cost pressures. They remain a key headwind, today's update suggests.

Target price is $1.80 Current Price is $1.74 Difference: $0.06
If NWH meets the Macquarie target it will return approximately 3% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.5

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

Morgans rates SGR as Downgrade to Hold from Add (3) -

As part of a preview of FY22 results for five gaming stocks under coverage that report in August, Morgans expects the best earnings growth from those primarily exposed to lotteries. These are represented by Jumbo Interactive and Lottery Corp.

For Star Entertainment, the broker lowers its FY22 earnings (EBITDA) forecast (to align with consensus) by -28% to $220m to take account of higher operating costs. The rating falls to Hold from Add while the findings of the Bell Review (due August 31) are awaited.

The target price falls to $3.10 from $4.00.

Target price is $3.10 Current Price is $2.83 Difference: $0.27
If SGR meets the Morgans target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $3.68, suggesting upside of 30.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.5

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

Morgan Stanley rates SHL as Overweight (1) -

May Medicare data show Morgan Stanley that pathology is still beneffitting from covid-19 testing and diagnostic imaging is showing early signs of a recovery.

According to the broker, Sonic Healthcare offers a superior valuation relative to other large-cap ASX healt care stocks. The Overweight rating and $36.35 target are retained. Industry view: In-Line.

Target price is $36.35 Current Price is $33.37 Difference: $2.98
If SHL meets the Morgan Stanley target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $38.29, suggesting upside of 14.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.4

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

Morgan Stanley rates SUN as Underweight (5) -

While the cost of cover has increased significantly, Morgan Stanley views positively certain aspects of Suncorp Group's renewed reinsurance program.

The maximum CAT event retention of $250m has been maintained, while the upper limit was increased to $6.8bn from $6.5bn in FY22. However, it's thought an increased CAT budget is still too low.

The Underweight rating and $10.25 target are maintained. Industry view: In-Line.

Target price is $10.25 Current Price is $11.02 Difference: minus $0.77 (current price is over target).
If SUN meets the Morgan Stanley target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $13.49, suggesting upside of 25.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.7

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

Ord Minnett rates SUN as Buy (1) -

Ord Minnett estimates costs from reinsurance for Suncorp Group will be much higher than previously expected.

The group announced expectations for natural perils into FY23, as well as changes to its reinsurance program and the anticipated impact on margins.

The broker estimates a -2% drag on margins from an increase in the FY23 natural perils allowance to $1.16bn from the original $960m figure for FY22. Also, the increase to $6.8bn from $6.5bn for the upper limit of catastrophe cover was highlighted.

The Buy rating and $14 target price are maintained.

Target price is $14.00 Current Price is $11.02 Difference: $2.98
If SUN meets the Ord Minnett target it will return approximately 27% (excluding dividends, fees and charges).

Current consensus price target is $13.49, suggesting upside of 25.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.7

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

UBS rates SUN as Buy (1) -

Suncorp Group has successfully renewed its catastrophe reinsurance cover, and while the cost is as yet undisclosed UBS notes it could be up by more than 20%.

The broker notes the upper coverage limit was lifted to $6.8bn from $3.0bn, and the company has subsequently set its catastrophe budget at $1,160m for FY23, up from $980m in FY22, which UBS finds on the light side if elevated weather events persist. 

The broker expects successful renewal of reinsurance will be supportive of investor sentiment. The Buy rating and target price of $14.40 are retained.

Target price is $14.40 Current Price is $11.02 Difference: $3.38
If SUN meets the UBS target it will return approximately 31% (excluding dividends, fees and charges).

Current consensus price target is $13.49, suggesting upside of 25.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.7

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

Morgans rates TAH as Hold (3) -

As part of a preview of FY22 results for five gaming stocks under coverage that report in August, Morgans expects the best earnings growth from those primarily exposed to lotteries. These are represented by Jumbo Interactive and Lottery Corp.

For Tabcorp Holdings, the broker forecasts revenue in FY22 of $2.36bn, 1.7% above the consensus estimate.

The Hold rating is unchanged, while the target increases to $1.15 from $0.95.

Target price is $1.15 Current Price is $1.07 Difference: $0.08
If TAH meets the Morgans target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $1.16, suggesting upside of 8.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.4

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

Morgans rates TLC as Add (1) -

As part of a preview of FY22 results for five gaming stocks under coverage that report in August, Morgans expects the best earnings growth from those primarily exposed to lotteries. These are represented by Jumbo Interactive and Lottery Corp.

For Lottery Corp, the broker forecasts pro forma earnings (EBITDA) of $691m in FY22, compared to the consensus estimate of $696m.

The Add rating is unchanged and the target increases to $5.50 from $5.40.

Target price is $5.50 Current Price is $4.57 Difference: $0.93
If TLC meets the Morgans target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $5.22, suggesting upside of 13.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 1.0

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