Australian Broker Call

Credit Suisse rates A2M as Neutral (3) -

In an update on a2 Milk Company's China performance, Credit Suisse notes the company continues to improve its consumer messaging in the region, with a stronger focus on key opinion leaders and consumer-preferred ingredients.

While many daigous remain in China given border closures, the channel has adapted with many fulfilling demand by ordering from Australian popup shops. 

The Neutral rating and target price of $5.75 are retained.

Target price is $5.75 Current Price is $5.50 Difference: $0.25
If A2M meets the Credit Suisse target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $6.19, suggesting upside of 13.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

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

Market Sentiment: 0.2

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

Macquarie rates CHN as Outperform (1) -

As was noted by Macquarie yesterday, Chalice Mining has communicated the latest round of drilling results at Julimar with intersections confirming mineralisation circa 400m below the open pit resource at the Gonneville deposit.

The broker welcomes the results and believes an upgrade to the inferred resource at the project is in the making. In addition, the broker notes early stage work has identified a new exploration target, which has a similar lens shaped magnetic feature to Gonneville.

The new target has been named Flinders and has now been elevated to high priority for drilling.

Macquarie also points out the Hartog target in the Julimar State Forest essentially remains untested, as the company has yet to be able to establish drilling platforms that will enable drill testing of the main target areas.

The broker has not made any changes to forecasts. Outperform rating and $10.55 target price retained.

Target price is $10.55 Current Price is $7.48 Difference: $3.07
If CHN meets the Macquarie target it will return approximately 41% (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

Citi rates DMP as Buy (1) - Database update. Rating is Buy. Target is $108.30.

Target price is $108.30 Current Price is $78.09 Difference: $30.21
If DMP meets the Citi target it will return approximately 39% (excluding dividends, fees and charges).

Current consensus price target is $101.47, suggesting upside of 26.3% (ex-dividends)

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 EBO as Overweight (1) -

Strong sales momentum in Healthcare and Animal Care has seen Ebos Group deliver a notable beat to Morgan Stanley's forecast, reporting first half revenue of $5,251m, up 12.8% and comparing to a forecast $5,027m.

Despite no formal guidance for FY22, expect manufacturing costs to keep capital expenditure elevated through to the end of the financial year. 

The Overweight rating is retained and the target price increases to $43.00 from $42.00. Industry view: In-Line.

Target price is $43.00 Current Price is $36.96 Difference: $6.04
If EBO meets the Morgan Stanley target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $40.19, suggesting upside of 10.5% (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

Macquarie rates ECX as Outperform (1) -

US-based Element Fleet Management has released quarterly results. Macquarie looks to Element's subsidiary Custom Fleet, which has 15% of the A&NZ market, for a read-through to Eclipx Group.

The conclusion is that Element's forecasts for production normalisation in mid 2023 could see higher used car prices sustained, boosting end-of-lease income for Eclipx.

The broker makes no changes to forecasts. Outperform and $2.82 target retained.

Target price is $2.82 Current Price is $2.27 Difference: $0.55
If ECX meets the Macquarie target it will return approximately 24% (excluding dividends, fees and charges).

Current consensus price target is $2.87, suggesting upside of 28.3% (ex-dividends)

The company's fiscal year ends in September.

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 EOS as Neutral (3) -

Somewhere between November last year and this week Citi had temorarily ceased and now has resumed coverage with Neutral/High Risk and a target price of $2.23.

The analysts see plenty of reasons to become excited again, but for the time being await more proof Electro Optic Systems can replenish its declining backlog before turning more positive.

The escalation in geopolitical tensions could well play into the company's favour, but again, Citi likes to see some tangible signs first.

Target price is $2.23 Current Price is $1.82 Difference: $0.41
If EOS meets the Citi target it will return approximately 23% (excluding dividends, fees and charges).

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

UBS rates NEC as Buy (1) -

Looking at valuations for both Nine Entertainment Co and Domain Holdings ((DHG)), UBS estimates the latter comprises 30% of the valuation of the former.

The remainder of Nine Entertainment Co is valued by the market at $1.97/share versus the value of $2.79 ascribed by the broker. The Buy rating and $3.90 target are unchanged.

Target price is $3.90 Current Price is $2.78 Difference: $1.12
If NEC meets the UBS target it will return approximately 40% (excluding dividends, fees and charges).

Current consensus price target is $3.56, suggesting upside of 30.4% (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

Morgan Stanley rates NTO as Overweight (1) -

Morgan Stanley was unsurprised by Nitro Software's FY21 release given the result was largely pre-released. The company provided guidance for the coming year, with an annual recurring revenue range of US$64-68m and an earnings loss of -US$18-21m. 

The broker considers the adoption of high trust e-signing capability will be a key risk for the company. Morgan Stanley reiterates the complementary value in deep e-signing capability, and notes the segment offers higher growth. 

The Overweight rating is retained and the target price decreases to $2.30 from $3.90. Industry view: In-Line.

Target price is $2.30 Current Price is $1.41 Difference: $0.89
If NTO meets the Morgan Stanley target it will return approximately 63% (excluding dividends, fees and charges).

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: 1.0

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

UBS rates NWS as Buy (1) -

Looking at valuations for both News Corp and REA Group ((REA)), UBS estimates the latter comprises 63% of the former's market value.

This calculation implies a valuation of around $11.90 per share for all of News Corp's other assets, well shy of the $20.03 valuation the analyst ascribes. The Buy rating and $42.50 target are unchanged.

Target price is $42.50 Current Price is $29.69 Difference: $12.81
If NWS meets the UBS target it will return approximately 43% (excluding dividends, fees and charges).

Current consensus price target is $41.88, suggesting upside of 36.6% (ex-dividends)

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: 1.0

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

Macquarie rates ORG as Outperform (1) -

There is deep change occurring in the energy retailer market, Macquarie declares, with positioning for the transition driven by Australia’s rich sun and wind resources. Retailers have suffered for ten years, but the emergence of EVs and the need for demand response should see the offerings and earnings grow.

Numerous players are now positioning, including Ampol ((ALD)), Telstra ((TLS)) and Shell.

Origin Energy is attractive on a traditional net present value approach, the broker notes, but a sum-of-the-parts suggests this is a low-end value with upside of up to $1.50ps for the Electricity Markets business.

Macquarie looks to the upcoming strategy day to refresh investor confidence in cost management and new services to supplement the
favourable macro. Outperform retained, target rises to $6.70 from $6.53.

Target price is $6.70 Current Price is $5.64 Difference: $1.06
If ORG meets the Macquarie target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $6.19, suggesting upside of 5.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.3

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

UBS rates SFR as Buy (1) -

The maiden guidance for the Matsa project at 1H results for Sandfire Resources disappointed UBS due to lower grades and higher costs. Hence, the target is revised down to $7, from $8.30 though it's felt the market has already priced in lower earnings.

The poor start confirms to the analyst the complexity of optimising Matsa's mines/deposits, ore types and infrastructure. The Buy rating is maintained.

Target price is $7.00 Current Price is $6.22 Difference: $0.78
If SFR meets the UBS target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $7.31, suggesting upside of 16.2% (ex-dividends)

The company's fiscal year ends in June.

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: 0.6

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

Citi rates SIG as Neutral (3) -

Sigma Healthcare has upgraded FY22 guidance and Citi clarifies one-off benefit from the extraordinary demand for rapid antigen tests
in January is directly responsible for the positive turn.

The broker has thus left estimates unchanged beyond FY22. While forecasting the future remains fraught with danger, Citi nevertheless maintains the pending acquisition of Australian Pharmaceutical ((API)) by Wesfarmers ((WES)) is unlikely to be a positive for Sigma longer-term.

This company is scheduled to report FY22 results on 29 March. Target price 50c. Rating: Neutral.

Target price is $0.50 Current Price is $0.49 Difference: $0.01
If SIG meets the Citi target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $0.51, suggesting upside of 2.0% (ex-dividends)

The company's fiscal year ends in January.

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

Credit Suisse rates SIG as Neutral (3) -

Demand for rapid antigen tests has seen Sigma Healthcare upgrade its earnings guidance range to 10-15% year-on-year growth, which Credit Suisse notes implies a $20m earnings benefit since its last guidance upgrade in early December.  

Initial full year guidance of 5% year-on-year earnings growth, was updated to a -10% year-on-year decline in early December. Expect January surge demand for rapid antigen tests to be a one-off, but earnings tailwinds could benefit through FY23. 

Credit Suisse increases earnings forecasts 25% to $93m in FY22, and 12% to $95m in FY23.

The Neutral rating and target price of $0.53 are retained. 

Target price is $0.53 Current Price is $0.49 Difference: $0.04
If SIG meets the Credit Suisse target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $0.51, suggesting upside of 2.0% (ex-dividends)

The company's fiscal year ends in January.

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

Macquarie rates SIG as Neutral (3) -

Following a volatile half on the back of covid, Sigma Healthcare has upgraded its FY22 earnings guidance from a -10% decline to growth of 10-15% on the back of RAT demand.

While Macquarie sees significant operational and earnings downside risk in the short term as the group grapples with a new IT system, the broker has lifted its FY22 earnings forecast by 65% and its target to 53c from 45c.

The broker notes Sigma's warehouse facilities remain best in class, and with ongoing industry consolidation the upside risk is that the group could be well positioned to win new pharmacy customers who wish to remain independent of larger operators.

Neutral retained.

Target price is $0.53 Current Price is $0.49 Difference: $0.04
If SIG meets the Macquarie target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $0.51, suggesting upside of 2.0% (ex-dividends)

The company's fiscal year ends in January.

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 WPR as Add (1) -

FY22 results for Waypoint REIT came in at the top-end of the guidance range. Rental income rose 1.9% on the previous corresponding period, driven by fixed 3% rental increases offset by lower income as 37 assets were sold during 2021, explains Morgans.

The broker expects further capital management in 2022 following $173.4m of capital being returned during 2021 via a 17cpu distribution and a buyback.

FY22 EPS guidance is 16.44cpu and assumes -$150m in asset sales and $100m of associated capital management. The Add rating is retained and the target rises to $3.07 from $3.

Target price is $3.07 Current Price is $2.71 Difference: $0.36
If WPR meets the Morgans target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $2.92, suggesting upside of 7.5% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.2

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

Morgan Stanley rates WTC as Overweight (1) -

Morgan Stanley found Wisetech Global's first half results solid, with 18% revenue growth on the previous comparable period just -2% shy of the broker's forecast, while earnings and free cash flow were both ahead of expectations. 

Based on company commentary it appears likely Wisetech Global will look for larger and strategically significant acquisition opportunities, having pursued small and medium bolt-on acquisitions since its initial public listing. 

The Overweight rating is retained and the target price increases to $50.00 from $35.00.

Target price is $50.00 Current Price is $46.22 Difference: $3.78
If WTC meets the Morgan Stanley target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $48.98, suggesting upside of 4.4% (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

Ord Minnett rates Z1P as Accumulate (2) -

Ord Minnett sees sound strategic merit in Zip Co's proposed merger with Sezzle ((SZL)). The US active customers will jump to around 8m from 5.7m providing greater network effects, as well as providing increased value add to new merchants.

Following the recently completed $148.7m placement, the broker estimates current cash reserves should see the company through to positive cash earnings (EBTDA) in FY25. Management has a shorter time frame (FY24) to reach cash earnings profitability.

Following 1H results, and after decreasing multiples, the analyst lowers the target to $4 from $6 and retains an Accumulate rating.

Target price is $4.00 Current Price is $1.95 Difference: $2.05
If Z1P meets the Ord Minnett target it will return approximately 105% (excluding dividends, fees and charges).

Current consensus price target is $2.59, suggesting upside of 37.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: -0.1

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

UBS rates Z1P as Downgrade to Sell from Neutral (5) -

UBS updates forecasts to allow for Zip Co's unexpected -$108m negative 1H cash earnings (EBTDA), when the broker had forecast breakeven. In addition, the $150m-$200m capital raising and proposed merger with Sezzle ((SZL)) are taken into account.

As a result, the target price is slashed to $1 from $5.20 reflecting lower long-term profit forecasts, dilution from the capital raise and the application of a higher discount rate. The latter reflects a longer path to breakeven and overall uncertainty.

The rating is also downgraded to Sell from Neutral.

Target price is $1.00 Current Price is $1.95 Difference: minus $0.95 (current price is over target).
If Z1P meets the UBS target it will return approximately minus 49% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.59, suggesting upside of 37.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: -0.1

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