Australian Broker Call

Ord Minnett rates ABC as Hold (3) -

Ord Minnett’s analysis of housing construction shows the sector has fared much better than expected in recent months across all relevant regions.

This was fuelled by factors including low-interest rates, shifting consumer preferences and stimulus in some countries (like the HomeBuilder grant in Australia).

Ord Minnett maintains its Hold rating on Adbri with the target price rising to $3 from $2.70.

Target price is $3.00 Current Price is $2.92 Difference: $0.08
If ABC meets the Ord Minnett target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $2.55, suggesting downside of -11.0% (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

Credit Suisse rates ALL as Outperform (1) -

The broker noted management referenced M&A more frequently at Aristocrat Leisure's investor briefing yesterday than previously, suggesting a more active process of identifying targets.

The broker is expecting a -48% drop in second half North American revenues, but reflective of a very weak June quarter and a comeback building in the September quarter. By FY21, revenues should be back to 95% of FY19, the broker believes.

Outperform and $30.00 target retained.

Target price is $30.00 Current Price is $30.52 Difference: minus $0.52 (current price is over target).
If ALL 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 $32.61, suggesting upside of 9.8% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.9

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

Ord Minnett rates ALL as Accumulate (2) -

Ord Minnett summarises Aristocrat Leisure's roundtable event's important points. The company's land-based operations in the US continue to grow with over 90% of its properties open for business. The company is taking a market-by-market and channel-by-channel approach. The broader Asia market is opening up too.

Management stated game performance across the portfolio has “never been stronger”. New-release titles are also performing well. 

The company expects compressed market levels in FY21.

Accumulate retained with the target price unchanged at $38.60.

Target price is $38.60 Current Price is $30.52 Difference: $8.08
If ALL meets the Ord Minnett target it will return approximately 26% (excluding dividends, fees and charges).

Current consensus price target is $32.61, suggesting upside of 9.8% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.9

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

UBS rates AST as Neutral (3) -

The Australian Energy Regulator released its draft decision for AusNet's 2021-26 electricity distribution regulatory period. The draft decision notes a -5% reduction in allowed revenue over 2021-26 relative to the company's proposal and a -4% cut to its proposed operating and capital expenditure forecasts.

UBS considers this a good outcome highlighting its peers received greater reductions to their forecasts. The company will submit a revised proposal in December with the final decision in April.

UBS has reduced capex and operating income forward estimates for Mondo's Contracted Asset Base (CAB) for FY21-22. The broker has revised its forecasts and expects AusNet Services to exceed its CAB growth target of $1.5bn by FY24.

UBS maintains its Neutral rating with a target price of $1.90.

Target price is $1.90 Current Price is $1.90 Difference: $0
If AST meets the UBS target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $1.80, suggesting downside of -5.7% (ex-dividends)

The company's fiscal year ends in March.

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

Citi rates AWC as Upgrade to Buy from Neutral (1) -

In the last 6 months, Citi observes Alumina Ltd's share price is down -6% while the ASX300 Metals and Mining index is up 29% and the
market (ASX200) is up 15%. AdditionalIy, over six months the US alumina price is up 2% and is now around US$270/t.

As a result, the broker upgrades the rating for the company to Buy from Neutral and the target price of $1.80 is unchanged.

Cit lowers 2021 and 2022 profit (NPAT) forecasts by -10% and - 8%, respectively. This is a result of a higher forecast for the Australian dollar and lower alumina forecasts.

Target price is $1.80 Current Price is $1.39 Difference: $0.41
If AWC meets the Citi target it will return approximately 29% (excluding dividends, fees and charges).

Current consensus price target is $1.88, suggesting upside of 39.5% (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: 0.6

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

UBS rates AWC as Buy (1) -

UBS observes the third-quarter delivered a stronger than expected recovery in base metal prices and an earlier-than-expected recovery in coal prices. Iron ore also continued to surprise UBS, averaging US$118 per dry metric ton.

While the broker does not expect hard lockdowns again, consumer demand could take a hit and remains the biggest risk to the broker’s fourth-quarter view.

With caustic soda and energy costs on the rise, the broker notes high-cost producers in China will be impacted more than those alumina producers who are self-sufficient in bauxite.

UBS believes Alumina Ltd is well-positioned to benefit from a steepening cost curve since the company is self-sufficient in bauxite supply.

UBS maintains its Buy rating with the target price reducing to $1.95 from $2.

Target price is $1.95 Current Price is $1.39 Difference: $0.56
If AWC meets the UBS target it will return approximately 40% (excluding dividends, fees and charges).

Current consensus price target is $1.88, suggesting upside of 39.5% (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: 0.6

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

Macquarie rates BGL as Outperform (1) -

Bellevue Gold announced strong infill and extensional drill results. Macquarie notes the company remains on track to report a resource update in the second quarter along with an expansion of the higher confidence indicated resource category.

Macquarie retains its Outperform rating with a target price of $1.30. 

Target price is $1.30 Current Price is $1.06 Difference: $0.24
If BGL meets the Macquarie target it will return approximately 23% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 1.0

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

Macquarie rates BHP as Outperform (1) -

BHP Group has put in place dedicated teams to deal with native title and heritage issues. Since heritage issues form a key part of mine planning, Macquarie assesses the impact on operations and mining inventory to be minimal.

Iron-ore prices are buoyant and continue to underpin strong earnings upgrade momentum, adds the broker.

Outperform rating and target price of $44 reaffirmed.

Target price is $44.00 Current Price is $36.29 Difference: $7.71
If BHP meets the Macquarie target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $40.90, suggesting upside of 16.7% (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

UBS rates BHP as Buy (1) -

UBS observes the third-quarter delivered a stronger than expected recovery in base metal prices and an earlier-than-expected recovery in coal prices. Iron ore also continued to surprise UBS, averaging US$118 per dry metric ton.

While the broker does not expect hard lockdowns again, consumer demand could take a hit and remains the biggest risk to the broker’s fourth-quarter view.

The Juukan Gorge incident has led the broker and the market to ponder the impact on production, operating expenses and capital expenditure in the Pilbara. UBS prefers BHP Group over Rio Tinto.

The Buy rating is unchanged. The target price rises slightly to $41 from $40.50.

Target price is $41.00 Current Price is $36.29 Difference: $4.71
If BHP meets the UBS target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $40.90, suggesting upside of 16.7% (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

Ord Minnett rates BLD as Lighten (4) -

Ord Minnett’s analysis of housing construction shows the sector has fared much better than expected in recent months across all relevant regions.

This was fuelled by factors including low-interest rates, shifting consumer preferences and stimulus in some countries (like the HomeBuilder grant in Australia).

The broker has upgraded its 2020 estimate for US housing that is expected to provide support for Boral.

Lighten rating retained. Target rises to $4.10 from $3.70.

Target price is $4.10 Current Price is $4.60 Difference: minus $0.5 (current price is over target).
If BLD meets the Ord Minnett target it will return approximately minus 11% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.45, suggesting downside of -2.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.2

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

Ord Minnett rates CSR as Accumulate (2) -

Ord Minnett’s analysis of housing construction shows the sector has fared much better than expected in recent months across all relevant regions. This was fuelled by factors including low-interest rates, shifting consumer preferences and stimulus in some countries (like the Home Builder grant in Australia).

Ord Minnett believes CSR’s consensus estimates are too low and retains its Accumulate recommendation.

The target price is increased to $4.60 from $4.

Target price is $4.60 Current Price is $4.35 Difference: $0.25
If CSR meets the Ord Minnett target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $4.25, suggesting downside of -1.5% (ex-dividends)

The company's fiscal year ends in March.

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 FMG as Buy (1) -

Iron ore continued to surprise UBS, averaging US$118 per dry metric ton during the third quarter.

While the broker does not expect hard lockdowns again, consumer demand could take a hit and remains the biggest risk to the broker’s fourth-quarter view.

The broker likes Fortescue Metal Group for iron ore exposure since it is expected to deliver a yield of more than 10% at US$90/t iron ore price.

UBS retains its Buy rating with the target price increasing to $19 from $18.50.

Target price is $19.00 Current Price is $16.68 Difference: $2.32
If FMG meets the UBS target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $17.31, suggesting upside of 7.7% (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

UBS rates GXY as Neutral (3) -

A recovery in battery raw material in the third quarter saw Galaxy Resources’ share price up 46%. UBS notes the rise was driven by improving sentiment for lithium demand supported by announced government green stimulus. 

In the short term, UBS expects market conditions to remain challenging. Neutral retained with the target price rising to $1.20 from $1.10.

Target price is $1.20 Current Price is $1.20 Difference: $0
If GXY meets the UBS target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $0.97, suggesting downside of -13.9% (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

Credit Suisse rates HLS as Outperform (1) -

Recent data reveals Healius has reduced its collection centre footprint by -64 across the country, or -3%. Meanwhile, collection competitors have been going the other way, the broker notes. There is hence a risk Healius experiences revenue leakage and loss of market share.

The broker nonetheless assumes only underperforming centres are being closed, and believes the company is targeting a -5-10% footprint reduction. Lower costs will balance against lost revenues. Outperform retained on a mix of covid persisting and the economy reopening. Target unchanged at $3.52.

Target price is $3.52 Current Price is $3.59 Difference: minus $0.07 (current price is over target).
If HLS 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 $3.52, suggesting upside of 1.8% (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 IGO as Buy (1) -

In gold, UBS prefers stocks offering production growth, asset quality and free cashflow. IGO is UBS's most preferred nickel and base metals exposure.

The broker notes the miner's share price has underperformed, declining -33% year to date. Key catalysts that can help arrest the underperformance include the potential sale/demerger of Tropicana and higher capital returns/dividends, suggests the broker.

UBS maintains its Buy rating with the target price reducing to $5.50 from $5.70.

Target price is $5.50 Current Price is $4.22 Difference: $1.28
If IGO meets the UBS target it will return approximately 30% (excluding dividends, fees and charges).

Current consensus price target is $4.79, suggesting upside of 16.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.2

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

Ord Minnett rates JHX as Accumulate (2) -

Ord Minnett’s analysis of housing construction shows the sector has fared much better than expected in recent months across all relevant regions. This was fuelled by factors including low-interest rates, shifting consumer preferences and stimulus in some countries (like the Home Builder grant in Australia).

Ord Minnett believes James Hardie Industries' consensus estimates are too low.

Accumulate recommendation retained with the target price increasing to $36 from $34.

Target price is $36.00 Current Price is $34.09 Difference: $1.91
If JHX meets the Ord Minnett target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $35.22, suggesting upside of 4.7% (ex-dividends)

The company's fiscal year ends in March.

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: 0.8

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

Morgans rates MX1 as Add (1) -

Micro-X has signed its first contract for the Rover worth $1.4m. This was facilitated by the World Health Organisation with units to be sent to a number of Pacific Island nations. The Rover is a more rugged version of the Nano (portable X-ray unit) and designed for extreme operational scenarios, explains Morgans.

Importantly for the broker, the contract win indicates success of the direct marketing strategy enabling the company to retain a higher margin, given there is no distributor.

The analyst assumes 30 Rover units are sold in FY21, which accounts for around 30% of forecast revenue.

Morgans believes the company has reached a clear pivotal point and further sales momentum is likely.

The Speculative Buy and target price of $0.34 are unchanged.

Target price is $0.34 Current Price is $0.23 Difference: $0.11
If MX1 meets the Morgans target it will return approximately 48% (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

Macquarie rates OGC as Outperform (1) -

OceanaGold Corp completed a CAD150m equity raising, the proceeds of which will be used to fund growth projects and exploration and for corporate and working capital purposes.

Although no debt will be retired, Macquarie assesses the new funds will improve OceanaGold's net debt position and ease funding concerns for its capital programs. Also, while 2020 has been challenging, the broker believes the company is over the worst of it.

The Outperform rating is maintained with a price target of $2.80.

Target price is $2.80 Current Price is $2.14 Difference: $0.66
If OGC meets the Macquarie target it will return approximately 31% (excluding dividends, fees and charges).

Current consensus price target is $3.44, suggesting upside of 62.9% (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: 0.6

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

Ord Minnett rates REH as Hold (3) -

Ord Minnett’s analysis of housing construction shows the sector has fared much better than expected in recent months across all relevant regions.

This was fuelled by factors including low-interest rates, shifting consumer preferences and stimulus in some countries (like the HomeBuilder grant in Australia).

Ord Minnett maintains its Hold rating on Reece with the target price rising to $12 from $11.

Target price is $12.00 Current Price is $13.32 Difference: minus $1.32 (current price is over target).
If REH 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 $11.07, suggesting downside of -16.7% (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

Credit Suisse rates RWC as Outperform (1) -

Reliance Worldwide's year to date sales have been exceptionally strong, it was revealed at yesterday's investor day, but management remains cautious. Pent-up demand from the lockdowns, temporary government stimulus and a disproportionate shift in the US from wholesale to retail were all cited.

The broker expects current volumes to fade towards a more typical year in FY22. That said, target rises to $4.75 from $4.00 and Outperform retained.

Target price is $4.75 Current Price is $4.22 Difference: $0.53
If RWC meets the Credit Suisse target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $4.26, suggesting upside of 4.3% (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

Macquarie rates RWC as Outperform (1) -

Reliance Worldwide Corp's trading update shows market recovery is expected to be solid with the focus remaining on execution.

Macquarie highlights the stock has performed strongly and expects it to be well supported by earnings momentum in the near term. Earnings forecasts have been upgraded for FY21-23 led by upgrades to revenue and margin estimates.

Macquarie retains its Outperform rating with the target price rising to $4.60 from $3.95.

Target price is $4.60 Current Price is $4.22 Difference: $0.38
If RWC meets the Macquarie target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $4.26, suggesting upside of 4.3% (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 RWC as Equal-weight (3) -

Reliance Worldwide provided a trading update for September 2020, indicating to Morgan Stanley an exceptionally
strong first quarter.

As compared to the previous corresponding period, sales were up in the Americas, APAC and EMEA by 29%, 4% and 24%, respectively. 

While the company cautions against extrapolating these strong results, the broker believes the risk lies to the upside of consensus forecasts. However, it is considered conviction will be difficult until a “new normal” level of activity is established.

The Equal-weight rating and target price of $3.50 are unchanged. Industry view is Cautious.

Target price is $3.50 Current Price is $4.22 Difference: minus $0.72 (current price is over target).
If RWC meets the Morgan Stanley target it will return approximately minus 17% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.26, suggesting upside of 4.3% (ex-dividends)

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 RWC as Hold (3) -

Reliance Worldwide provided a trading update at an investor day which revealed continued improvement in sales growth across all regions, reports Morgans. However, while the first quarter sales result was strong, the broker remains cautious in the short term given visibility remains low with ongoing risks in all regions.

Sales in the Americas jumped 29% in September with improved demand in wholesale channels and continued recovery in Canada, highlights the broker.

The analyst notes there was a strong focus on product innovation and range expansion as well as leveraging the company’s strong distribution network and execution capabilities at the investor day.

Morgans sees the company as a high-quality business with solid long-term growth opportunities and an experienced management team.

The Hold rating is unchanged and the target price is increased to $4.39 from $3.54.

Target price is $4.39 Current Price is $4.22 Difference: $0.17
If RWC meets the Morgans target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $4.26, suggesting upside of 4.3% (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 RWC as Downgrade to Hold from Accumulate (3) -

Looking at Reliance Worldwide Corp's trading update, Ord Minnett thinks the company is on its way to a very strong first-half FY21 result. However, the current operating environment, though very favourable, is considered unsustainable. This has also been pointed out by management.

The broker is comfortable with its top-of-consensus FY21 net profit forecast of $160m.

Based on the company's valuation, Ord Minnett downgrades its recommendation to Hold from Accumulate with the target price rising to $4.20 from $4.

Target price is $4.20 Current Price is $4.22 Difference: minus $0.02 (current price is over target).
If RWC meets the Ord Minnett target it will return approximately minus 0% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.26, suggesting upside of 4.3% (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 RWC as Neutral (3) -

Reliance Worldwide Corp's September quarter sales growth was ahead of expectations. Management suggests a limited upside to margins in the near term with expenses (S&GA) normalising. 

The company is targeting long term growth of 3-5% in the US and 2-6% in EMEA, in line with UBS's estimates. 

UBS retains its Neutral rating with the target price increasing to $4.10 from $3.85.

Target price is $4.10 Current Price is $4.22 Difference: minus $0.12 (current price is over target).
If RWC meets the UBS target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.26, suggesting upside of 4.3% (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 S32 as Buy (1) -

UBS observes the third-quarter delivered a stronger than expected recovery in base metal prices and an earlier-than-expected recovery in coal prices. Iron ore also continued to surprise UBS, averaging US$118 per dry metric ton.

While the broker does not expect hard lockdowns again, consumer demand could take a hit and remains the biggest risk to the broker’s fourth-quarter view.

South32's sale of South Africa coal to Seriti Resources in the fourth quarter is expected to be a catalyst, potentially leading to a re-rating due to a reduction in exposure to South Africa.  

Target price rises to $3 from $2.85. Buy rating retained.

Target price is $3.00 Current Price is $2.09 Difference: $0.91
If S32 meets the UBS target it will return approximately 44% (excluding dividends, fees and charges).

Current consensus price target is $2.65, suggesting upside of 30.0% (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

UBS rates SKI as Neutral (3) -

The Australian Energy Regulator (AER) released its draft decision for Spark Infrastructure's Victoria Power Network assets - CitiPower and Powercor. The regulator's draft decision hands down -13% and -14% reductions in allowed revenue over 2021-26 relative to the proposals in January.

Also, both CitiPower and Powercor received cuts to their proposed capital expenditure and operating cost forecasts. CitiPower received a -33% cut to its forecast capex and a -19% cut to its opex estimate relative to its proposal. Powercor was handed a -27% cut to its forecast capex while its opex forecast was cut by -14% relative to its proposal. 

UBS expects Victoria Power Network will be able to justify its expenditure at the December's revised proposal and secure cuts of only -15% to the proposed capex and opex at the final decision in April.

Preferring to remain cautious, UBS reaffirms its Neutral rating with a target price of $2.20.

Target price is $2.20 Current Price is $2.10 Difference: $0.1
If SKI meets the UBS target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $2.29, suggesting upside of 11.0% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.3

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

Credit Suisse rates SKO as Outperform (1) -

Serko has announced a capital raising to accelerate product development, fund small M&A opportunities and provide balance sheet flexibility. A&NZ bookings are currently running at 30% of the prior year.

The near term outlook is uncertain, Credit Suisse notes, but longer term Serko can withstand a severe downturn out to 18 months while still investing in product development, given ample cash.

The company is considered in a good position to ultimately benefit from weaker competitors not lasting the distance. For now the broker downgrades to Neutral from Outperform. Target falls to NZ$4.40 from NZ$4.45.

Current Price is $4.17. Target price not assessed.

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: 1.0

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

Macquarie rates SLK as Downgrade to Neutral from Outperform (3) -

Macquarie believes SeaLink Travel Group's recent share price strength necessitates caution on accumulating the stock at current levels. Long term, the broker remains convinced of the group's defensiveness, especially looking at Transit Systems’ track record. 

Rating has been downgraded to Neutral from outperform although the broker clarifies its long-term thesis on SeaLink Travel remains intact. Target price is unchanged at $5.37.

Target price is $5.37 Current Price is $5.87 Difference: minus $0.5 (current price is over target).
If SLK meets the Macquarie target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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 SYR as Neutral (3) -

A recovery in battery raw materials in the third quarter saw Syrah Resources' share price increase by 69%. UBS expects requirement for the company's graphite could rise in early 2021.

Neutral retained with the target price rising slightly to $0.48 from $0.44.

Target price is $0.48 Current Price is $0.46 Difference: $0.02
If SYR meets the UBS target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $0.45, suggesting upside of 4.7% (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: 0.0

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