Australian Broker Call

Citi rates ANZ as Downgrade to Sell from Neutral (5) -

Citi downgrades its rating to Sell from Neutral and lowers its target price to $28 from $29.50 in the belief weak core profits are set to
drive future performance.

A sharp plunge in volatility and trading conditions in Markets is set to expose significant weaknesses in second half core profit, explains the analyst. Underlying revenue, ex Markets, has declined sharply in the last year, with elevated Markets revenues mitigating the impact.

Recent peer results suggest a sharp reversal of Markets revenues, and the broker now expect 2H21 core profit to miss consensus estimates by -9%.

Target price is $28.00 Current Price is $29.53 Difference: minus $1.53 (current price is over target).
If ANZ meets the Citi target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $29.75, suggesting upside of 3.6% (ex-dividends)

The company's fiscal year ends in September.

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

Citi rates BBN as Downgrade to Neutral from Buy (3) -

In the wake of FY21 results, Citi believes long-term growth prospects are still intact. Should the impacts of covid-19 continue for longer than expected, the company is considered better placed than most other listed retailers given the category's non-discretionary nature.

In the short term, the broker sees some headwinds though highlights like-for-like sales have improved into the positive since week four of the new financial year. Also, it's felt the opening of eight stores over FY22 should offset the New Zealand rollout delay.

Citi lowers its target price to $5.90 from $6.22 on forecast earnings changes and downgrades its rating to Neutral from Buy on concern the FY22 multiples don't adequately reflect the risk of covid-19 disruption.

Target price is $5.90 Current Price is $5.71 Difference: $0.19
If BBN meets the Citi target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $6.32, suggesting upside of 16.0% (ex-dividends)

The company's fiscal year ends in July.

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

Macquarie rates BBN as Outperform (1) -

Baby Bunting's FY21 earnings beat the broker by 5%. While strong sales growth was supported by a surge in online (and click & collect), 90% of sales still involve customer visits to stores, reinforcing the strength of the company's store assets, the broker suggests.

The company's outlook is supported by network expansion, sustainable margins and solid sales growth, with online providing a potential boost, the broker notes. Outperform retained, target rises to $6.15 from $5.80.

Target price is $6.15 Current Price is $5.71 Difference: $0.44
If BBN meets the Macquarie target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $6.32, suggesting upside of 16.0% (ex-dividends)

The company's fiscal year ends in July.

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 BBN as Overweight (1) -

Baby Bunting Group's FY21 results were in-line, and Morgan Stanley upgrades earnings per share estimates 2-3% through to FY23.

Morgan Stanley notes investors were spooked by a -6.4% same store sales deceleration in the first six weeks of FY22 due to covid impacts, but the broker expects a likely positive turn for the company. The broker increases same store sales growth assumption to 5% from 3% for FY22.

Baby Bunting Group has not provided FY22 guidance. The Overweight rating is retained and the target price increases to $6.90 from $6.30. Industry view: In-line.

Target price is $6.90 Current Price is $5.71 Difference: $1.19
If BBN meets the Morgan Stanley target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $6.32, suggesting upside of 16.0% (ex-dividends)

The company's fiscal year ends in July.

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

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

In the wake of Baby Buntings' FY21 3% profit beat, Morgans downgrades its rating to Hold from Add on valuation. However, the company is considered very well positioned to further grow market share and compound growth for investors.

The broker highlights strong second half gross margin expansion comfortably offset higher opex. The analyst lowers FY22 and FY23 EPS forecasts by - 2% and reduces the target price to $6 from $6.39.

Mature store level margins now sit at 19% from 17% previously, which provides upside to the long-term group earnings (EBITDA) margin target of 10%, likely now 12%, estimates Morgans.

Target price is $6.00 Current Price is $5.71 Difference: $0.29
If BBN meets the Morgans target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $6.32, suggesting upside of 16.0% (ex-dividends)

The company's fiscal year ends in July.

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 BBN as Buy (1) -

Ord Minnett suggests it is a strong FY21 result from Baby Bunting, with double digit sales and profit growth. The company is guiding to an additional ten stores in FY22. 

The broker highlights the company has been challenged by recent covid lockdowns, reporting -6.4% comparable store sales year-to-date on the previous year, which may continue to impact on near-term results. 

Given covid-impacts, Ord Minnett reduces earnings forecasts by -7.6% and -7.3% for FY22 and FY23 respectively. 

The Buy rating is retained and the target price increases to $6.65 from $6.50.

Target price is $6.65 Current Price is $5.71 Difference: $0.94
If BBN meets the Ord Minnett target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $6.32, suggesting upside of 16.0% (ex-dividends)

The company's fiscal year ends in July.

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 BEN as Hold (3) -

Bendigo and Adelaide Bank's FY21 financials released today failed to meet Ord Minnett's forecasts, the broker reports post an initial glance over today's release.

It appears slower revenue growth has combined with higher costs and higher tax to miss the broker's expectations. The announced $116m acquisition of Ferocia Pty Ltd, paid for by issuing new shares, will result in dilution by some -1.8%, reports Ord Minnett.

Hold recommendation and the target price of $10.70 are both unchanged while the broker anticipates downgrades to consensus forecasts post today's release.

Target price is $10.70 Current Price is $11.10 Difference: minus $0.4 (current price is over target).
If BEN meets the Ord Minnett target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $10.50, suggesting upside of 4.6% (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

Ord Minnett rates BPT as Buy (1) -

A first glance at Beach Energy's full-year results, shows underlying earnings of $953m were -14% below the previous year's result but above the company's provided guidance range.

Ord Minnett highlights Beach Energy is guiding to a -10-18% production decrease and a subsequent production cost increase, partly driven by increased interest in the higher cost BassGas project.

The broker predicts significant forthcoming downgrades to consensus estimates for FY22, and possibly through to FY23.

The Buy rating and $1.75 target price are retained.

Target price is $1.75 Current Price is $1.21 Difference: $0.54
If BPT meets the Ord Minnett target it will return approximately 45% (excluding dividends, fees and charges).

Current consensus price target is $1.66, suggesting upside of 50.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.7

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

Ord Minnett rates BSL as Buy (1) -

According to Ord Minnett, a first glance at BlueScope Steel's guidance for FY22 looks strong, with the company guiding to FY22 earnings of $1.72bn and net profit of $1.166bn, both in line with Ord Minnett's expectations. Working capital build has driven lower than expected net cash guidance of $800m.

The company's growth outlook is also positive, with the North Star projects phase 2 expansion progressing. As expected by the broker, the company also announced a $500m buy back. 

The Buy rating and target price of $34.00 are retained.

Target price is $34.00 Current Price is $25.49 Difference: $8.51
If BSL meets the Ord Minnett target it will return approximately 33% (excluding dividends, fees and charges).

Current consensus price target is $28.23, suggesting upside of 9.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.7

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

Macquarie rates EVN as Underperform (5) -

Evolution Mining has restructured its debt via a US$550m private debt placement in the US to pay down the $450m Red Lake acquisition facility and use for other purposes. Pushing out maturity to 7.1 years from 2.7, the placement will allow more room for investment.

The broker has made minor earnings forecast changes and trimmed its target to $3.90 from $4.00, ahead of the miner's earnings report this month. While the broker sees the deal as a positive, Underperform retained.

Target price is $3.90 Current Price is $3.91 Difference: minus $0.01 (current price is over target).
If EVN meets the Macquarie target it will return approximately minus 0% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.28, suggesting upside of 9.7% (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

UBS rates GPT as Neutral (3) -

According to UBS, an early look at GPT Group's first half results shows a strong period was interrupted by covid impacts. First half results were boosted from a cashflow of billed rent not received in FY20.

Fund from operations were up 23% on the previous half to total $302.3m, a beat on the broker's expected $288m. 

Neutral rating and target price of $4.80.

Target price is $4.80 Current Price is $4.66 Difference: $0.14
If GPT meets the UBS target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $4.81, suggesting upside of 0.6% (ex-dividends)

The company's fiscal year ends in December.

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

Macquarie rates LLC as Neutral (3) -

At a first glance, Macquarie reports Lendlease Group's net profit of $377m was at the bottom end of guidance provided at the beginning of July.

The company also highlighted an expected $160m cost out, larger than anticipated by the broker. While Lendlease Group has not provided guidance for the next year, the company reported group return on equity target of 8-11% will not be met until FY24. 

The Neutral rating and target price of $11.55 are retained. 

Target price is $11.55 Current Price is $12.59 Difference: minus $1.04 (current price is over target).
If LLC 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 $13.24, suggesting upside of 13.6% (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

Ord Minnett rates LLC as Hold (3) -

In a first glace at Lendlease Group's full year results, Ord Minnett describes weak FY21 results and a soft outlook for FY22. The broker highlights the company's core operating profit of $377m was at the bottom-end of recent guidance. 

With FY22 expected to be a cyclically low earnings year and a weak developments guide, Ord Minnett expects forthcoming consensus downgrades on earnings. Further, return on invested capital is expected to be between 2-5%, compared to the target of 10-13%.

The Hold rating and target price of $13.00 are retained.

Target price is $13.00 Current Price is $12.59 Difference: $0.41
If LLC meets the Ord Minnett target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $13.24, suggesting upside of 13.6% (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

Credit Suisse rates MGR as Outperform (1) -

Mirvac Group's FY21 result came in ahead of guidance and Credit Suisse's expectation. Operating EPS fell -9%, which was considered largely a function of lower development earnings, and was expected.

FY22 guidance is for EPS growth of 7.1% and DPS of 10.2 cents. The analyst sees enough upside to retain the Outperform rating. The target price increases to $3.13 from $3.06.

While the group is not immune to post-covid challenges that will likely continue to impact its Retail and Office portfolios in the near term, Credit Suisse expects earnings growth over the medium to long term.

Target price is $3.13 Current Price is $3.00 Difference: $0.13
If MGR meets the Credit Suisse target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $3.14, suggesting upside of 2.6% (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

Morgan Stanley rates MIN as Underweight (5) -

On the back of Mineral Resources providing new data on the Mining Services division, Morgan Stanley has updated modeling leading to updates to earnings per share through to FY24 and a 40 cent increase to the target price. 

High leverage to iron ore pricing and potential iron ore opportunities have driven a hard rally for Mineral Resources, but the company could face risk from ongoing elevated low-grade ore discounts.

The Underweight rating is retained and the target price increases to $46.10 from $45.70. Industry view: Attractive.

Target price is $46.10 Current Price is $61.52 Difference: minus $15.42 (current price is over target).
If MIN meets the Morgan Stanley target it will return approximately minus 25% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $59.52, suggesting downside of -1.1% (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

Credit Suisse rates NXT as Neutral (3) -

In anticipation of NextDC's FY21 result after market close on August 26, Credit Suisse forecasts data centre services revenue of $248.7m, underlying earnings (EBITDA) of $131.7m and capex of $389.5m.

Regarding FY22 guidance, the broker expects data centre services revenue of $302.3m and earnings of $161.7m. Other notable items to look for are thought to be details of new contracts signed in the second half, and expectations on contracted commitments for M3.

The broker retains its Neutral rating and $11.90 target price.

Target price is $11.90 Current Price is $13.06 Difference: minus $1.16 (current price is over target).
If NXT meets the Credit Suisse target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $14.12, suggesting upside of 7.1% (ex-dividends)

The company's fiscal year ends in June.

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 PXA as Initiation of coverage with Outperform (1) -

The broker initiates coverage of Link Administration ((LNK)) spin-off Pexa Group with an Outperform rating and $20.15 target, describing the company as a pioneer of digital property settlements.

Offshore expansion is the largest swing factor in the broker's valuation, with a revenue opportunity in England and Wales some 2.3x that of Australia. Competition in Australia is currently limited but will change in coming years on the launch of exchange interoperability.

The removal of stamp duty would be a handy kicker, the broker suggests.

Target price is $20.15 Current Price is $17.19 Difference: $2.96
If PXA meets the Macquarie target it will return approximately 17% (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 RHC as Underweight (5) -

Morgan Stanley is forecasting Ramsey Health Care's full year update, expected in late August, to report FY21 revenue of $12.985m, implying a 5% increase, and underlying earnings of $2.146m, a 17% increase.

Morgan Stanley expects recent covid events to have impacted late FY21 and early FY22 results. The broker's bull case for Ramsey Health Care requires a return to normal hospital activity and increased volume of delayed surgeries.  

The broker notes it may be difficult for the company to provide guidance given pandemic uncertainties, however consensus has Australian underlying earnings margins expanding in FY23 and beyond. 

The Underweight rating and target price of $57.00 are retained. Industry view: In-line.

Target price is $57.00 Current Price is $67.71 Difference: minus $10.71 (current price is over target).
If RHC meets the Morgan Stanley target it will return approximately minus 16% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $68.04, suggesting upside 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 SGR as Neutral (3) -

Credit Suisse sees potential for a 10% FY25 uplift to profit from a proposal to raise the group's slot machines in Sydney to 2,500 units from 1,500.

The proposal emanated from media reports, is conceptual in nature and would entail a long lead-time until approval, notes the analyst. The broker retains its Neutral rating and $3.95 target price.

Target price is $3.95 Current Price is $3.51 Difference: $0.44
If SGR meets the Credit Suisse target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $4.21, suggesting upside of 23.4% (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

Citi rates SHV as Buy (1) -

Citi ponders the question: Could new crop premiums head higher? After weighing industry sources on crop standards and the prevailing price, the broker concludes prices are expected to fluctuate around current levels as the harvest progresses.

Potential drought impacts (e.g. smaller kernel sizes) are likely to result in lower yields, thinks the analyst. Citi retains its Buy rating and $8.10 target price.

Target price is $8.10 Current Price is $7.89 Difference: $0.21
If SHV meets the Citi target it will return approximately 3% (excluding dividends, fees and charges).

The company's fiscal year ends in September.

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