Australian Broker Call

Macquarie rates AWC as Underperform (5) -

Gas shortages in WA continue to plague the Kwinana refinery and Macquarie points out similar headwinds are starting to emerge for the Pinjarra operation.

Both operations recently switched from gas to diesel as a short-term solution, the broker highlights. Macquarie's adjustments to forecasts predominantly hit 2023 numbers, also including lower production volumes.

The Underperform rating and target price of $1.00 are retained. The broker points out the shares are trading with implied dividend yields of 5% and 2% for 2022 and 2023, respectively.

Target price is $1.00 Current Price is $1.58 Difference: minus $0.58 (current price is over target).
If AWC meets the Macquarie target it will return approximately minus 37% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $1.52, suggesting downside of -4.4% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

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

Ord Minnett rates BSL as Downgrade to Lighten from Buy (4) -

Ord Minnett has downgraded BlueScope Steel to Lighten from Buy (two steps down on the broker's ladder) as renewed analysis is suggesting steel prices had previously been artificially pushed to unsustainable levels, and spreads are expected to fall "markedly" in 2023.

It is the broker's view that steelmaking spreads will revert towards midcycle assumptions consistent with historical levels in nominal terms.

Target price cut to $13 from $20. Judging by the layout of today's report, the research stems from Morningstar. BlueScope Steel is also still awaiting the size of a penalty after a court found it guilty of cartel behaviour late last year.

Today's research update is suggesting a fine of $10m will be awarded.

Target price is $13.00 Current Price is $17.57 Difference: minus $4.57 (current price is over target).
If BSL meets the Ord Minnett target it will return approximately minus 26% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $18.68, suggesting upside of 5.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.3

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

Macquarie rates CCX as Neutral (3) -

City Chic Collective's trading conditions up until December 18 missed Macquarie's forecasts. The broker highlights promotional activity has intensified, which means the company might meet its inventory target for December.

All in all, Macquarie believes the outlook remains uncertain, specifically mentioning macro conditions and promotions. With earnings continuing under downward pressure, the forecast is now for a loss in FY23.

Target price tumbles to 42c from 72c on reduced forecasts. Neutral rating retained.

Target price is $0.42 Current Price is $0.46 Difference: minus $0.035 (current price is over target).
If CCX meets the Macquarie target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $0.84, suggesting upside of 89.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.0

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

Macquarie rates CNB as Outperform (1) -

Macquarie only initiated coverage on junior copper explorer Carnaby Resources in December. At the time, the broker stated Carnaby has "all the right ingredients for success". 

A dispute regarding the southern border of the company's mining lease has now been resolved and management will be able to focus on drilling high priority targets at Mount Hope Central, the broker states.

Outperform rating retained with a price target of $1.30. Macquarie's thesis is that Carnaby Resources could develop into a 25ktpa copper producer with production occurring as early as FY25.

Target price is $1.30 Current Price is $0.94 Difference: $0.36
If CNB meets the Macquarie target it will return approximately 38% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

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

Morgan Stanley rates CSL as Overweight (1) -

CSL's rather lacklustre share price performance early into 2023 might well be related to market updates and progress made by biotech argenx.

Analysts at Morgan Stanley, however, don't seem too worried. They see it as a manageable risk for CSL. For every three patients potentially lost to Vyvgart, which is argenx's prescription medicine used to treat generalized myasthenia gravis, CSL only needs to diagnose one pelvic inflammatory disease (PID) patient, the analysts counter.

Overweight. Target $337. Industry view In Line.

Target price is $337.00 Current Price is $278.28 Difference: $58.72
If CSL meets the Morgan Stanley target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $328.70, suggesting upside of 18.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

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

Market Sentiment: 0.9

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

Citi rates DMP as Neutral (3) -

Citi's analysis of high frequency data suggests website traffic for Domino's markets, outside of France, has been weak throughout December.

The broker does acknowledge its analysis might be flawed as Domino's has shifted to a new mobile app. Regardless, it also turns out store rollout in this half is falling short by some -13 stores, equal to -14%.

It is Citi's view a slower rollout might be indicative of cost headwinds adversely impacting franchisee profitability and thus willingness to open new stores.

Target price $70.36. Neutral. No changes made to forecasts.

Target price is $70.36 Current Price is $67.99 Difference: $2.37
If DMP meets the Citi target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $75.57, suggesting upside of 9.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.4

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

Macquarie rates FMG as Underperform (5) -

Chief Financial Officer Ian Wells has resigned and Macquarie comments his leaving appears to be unexpected, with the company only now starting a search for his replacement.

Meanwhile, iron ore prices continue to enjoy strong momentum. On current spot prices, Macquarie points out its base case forecasts might be beaten by no less than 24% in FY23.

The Underperform rating is retained and the target price increases by 50c to $17.50.

Target price is $17.50 Current Price is $21.63 Difference: minus $4.13 (current price is over target).
If FMG meets the Macquarie target it will return approximately minus 19% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $16.41, suggesting downside of -24.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

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

Market Sentiment: -0.9

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

Ord Minnett rates GQG as Buy (1) -

GQG Partners' market update for the December quarter has been well received. Ord Minnett, independently from Morningstar this time, is referring to a "solid result" against a background of challenging conditions.

A strong investment performance should equal positive longer term fund flows, suggests the broker.

Buy rating retained. Target price $2.20. Estimates have received a minor downgrade on expectation of slightly lower funds flows in the years ahead.

Ord Minnett thinks the stock is priced cheaply.

Target price is $2.20 Current Price is $1.50 Difference: $0.705
If GQG meets the Ord Minnett target it will return approximately 47% (excluding dividends, fees and charges).

Current consensus price target is $2.03, suggesting upside of 35.1% (ex-dividends)

The company's fiscal year ends in December.

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

Citi rates IAG as Buy (1) -

Insurance Australia Group has had to deal with a big price increase for reinsurance renewal but Citi analysts had expected even tougher conditions, so the outcome is seen as a positive.

The analysts do make the point there is a clear trend in that IAG needs to retain more risk, hold more capital and pay more for the reinsurance it can buy.

The broker also highlights the insurer sticks with its 15-17% medium term reported margin target. Small adjustments downwards have been made to forecasts.

Buy. Target unchanged at $5.40.

Target price is $5.40 Current Price is $4.74 Difference: $0.66
If IAG meets the Citi target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $5.17, suggesting upside of 12.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.3

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

Morgan Stanley rates IAG as Underweight (5) -

Morgan Stanley analysts welcome Insurance Australia Group's renewed disclosure on reinsurance and coverage. They believe the outcome includes certainty on capital, which is seen as a positive despite tougher pricing.

As the industry is equally accelerating its own price increases, the broker believes all remains in line with its own margin assumptions.

Underweight. Target $4.20. Industry view In-Line.

Target price is $4.20 Current Price is $4.74 Difference: minus $0.54 (current price is over target).
If IAG meets the Morgan Stanley target it will return approximately minus 11% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.17, suggesting upside of 12.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.3

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

Macquarie rates IGO as Outperform (1) -

IGO has, through the Tianqi Lithium Energy Australia (TLEA) JV, launched a takeover offer for Essential Metals ((ESS)) and Macquarie sees more evidence of the JV's intention to increase exposure to lithium.

Only minor adjustments have been made to forecasts. The Outperform rating and target price of $21.00 are retained.

Target price is $21.00 Current Price is $14.17 Difference: $6.83
If IGO meets the Macquarie target it will return approximately 48% (excluding dividends, fees and charges).

Current consensus price target is $15.44, suggesting upside of 10.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.2

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

Ord Minnett rates NXT as Downgrade to Accumulate from Buy (2) -

The broker seems to have switched its research relationship with JP Morgan to Morningstar. One of the immediate impacts is a light downgrade for NextDC; to Accumulate from Buy.

Today's update makes the point the downgrade has nothing to do with operational prospects which seem to still be thought of as positive.

NextDC, the update surmises, continues to operate well in a sector that remains in a secular uptrend. The analyst also doesn't think there will be any problems the data centres operator will be strapped for cash or face financial difficulties, while the business should not be heavily affected by any economic downturns.

Price target $11. The stock has suffered partially because it doesn't pay a dividend, is one of the suggestions made.

Target price is $11.00 Current Price is $8.96 Difference: $2.04
If NXT meets the Ord Minnett target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $12.48, suggesting upside of 39.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.8

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

Macquarie rates PAN as Outperform (1) -

Panoramic Resources' production update disappointed with nickel volume missing Macquarie's forecast by -10%. According to the company, there has been minor impact from flooding in the Kimberley region.

Positively, Savannah North is ramping up well, the broker observes, with nickel production 15% higher on the preceding quarter.

The Outperform rating is retained with an unchanged target price of $0.23.

Target price is $0.23 Current Price is $0.20 Difference: $0.035
If PAN meets the Macquarie target it will return approximately 18% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

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

Ord Minnett rates PTM as Hold (3) -

Platinum Asset Management's fair value estimate has experienced yet another downgrade as funds under management continues to erode.

Ord Minnett, apparently, has switched JP Morgan research for Morningstar, whose research sums up several positives, but not without incorporating lower margins.

Irrespectively, the shares are deemed too cheap though a Hold rating is upheld. Target price $2.25.

Target price is $2.25 Current Price is $1.93 Difference: $0.32
If PTM meets the Ord Minnett target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $1.84, suggesting downside of -8.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: -0.3

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

Ord Minnett rates PWR as Initiation of coverage with Buy (1) -

Ord Minnett has initiated coverage of Peter Warren Automotive with a Buy rating and price target of $3.50. The positive view is based on the assumption the company will benefit from improved used cars supply once car volumes start to improve.

Another supportive factor is the sustained disruption to supply chains in the near term.

Ord Minnett also sees Peter Warren as somewhat protected against inflation-linked rent increases given the company's landholdings.

Yet another positive is the removal of private equity ownership overhang which now allows the company to become a Toyota dealer.

Target price is $3.50 Current Price is $2.76 Difference: $0.74
If PWR meets the Ord Minnett target it will return approximately 27% (excluding dividends, fees and charges).

Current consensus price target is $3.36, suggesting upside of 21.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

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

Macquarie rates SUL as Neutral (3) -

Macquarie's analysis of high frequency consumer data suggests spending on fitness in Australia remains ahead of pre-covid levels. This, the broker assures, is consistent with industry feedback.

With positive implications for Rebel Sport, Macquarie has upgraded forecasts. However, the broker continues to position below market consensus.

Macquarie remains cautious and sees limited positive catalysts on the horizon. The Neutral rating is retained and the target price increases to $10.91 from $10.46.

Target price is $10.91 Current Price is $11.13 Difference: minus $0.22 (current price is over target).
If SUL meets the Macquarie target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $12.44, suggesting upside of 10.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.7

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

Morgans rates VHT as Add (1) -

Having announced five new contracts, Volpara Health Technologies, in the eyes of stockbroker Morgans, has made a strong start into 2023. The broker's prediction: expect more.

The broker believes the fresh five contracts with an average size of US$1.6m are a clear demonstration of the company's focus on larger customers.

In addition, the 3Q23 cashflow report is due shortly and cost savings as well as growing cash receipts should feature prominently, is the suggestion made. Morgans believes Volpara Health Technologies can breakeven by 4Q24.

Add. Target $1.21.

Target price is $1.21 Current Price is $0.63 Difference: $0.585
If VHT meets the Morgans target it will return approximately 94% (excluding dividends, fees and charges).

The company's fiscal year ends in March.

Forecast for FY23:

Forecast for FY24:

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

Market Sentiment: 1.0

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