Australian Broker Call

Citi rates ALL as Buy (1) -

Having conducted a deeper-dive into industry dynamics for social casino games, Citi analysts note Aristocrat Leisure is not enjoying a jolly good time of late, but it appears overall industry trends might be worse.

Among the observations made is that Aristocrat Leisure's bookings for the Social Casino portfolio declined by -7% YoY when bookings for the Social Casino genre in general declined by -15%.

It turns out, bookings for RAID are weak while Mech Arena is improving, but needs to do better still, on the analysts' assessment.

Changing focus, Citi remains of the view that Aristocrat's land-based business continues to perform well and could well provide an upside surprise.

Buy. Target $41.

Target price is $41.00 Current Price is $34.45 Difference: $6.55
If ALL meets the Citi target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $43.11, suggesting upside of 23.1% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.9

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

Citi rates ALU as Neutral (3) -

Altium's parts search engine Octopart is seeing growth moderate as parts supply improves, reporting web visits down -6% half-on-half to date. Citi had forecast 5% half-on-half click growth, and notes clicks have been growing faster than web visits.

Citi sits at the bottom end of the company's guidance range, expecting yields to remain positive but slowing demand to impact. 

The Neutral rating and target price of $35.40 are retained.

Target price is $35.40 Current Price is $35.80 Difference: minus $0.4 (current price is over target).
If ALU meets the Citi target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $33.95, suggesting downside of -8.7% (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: 0.6

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

Morgans rates ANP as Speculative Buy (1) -

FY22 results for Antisense Therapeutics revealed a net reported loss of -$5.8m compared to the $11.1m forecast by Morgans due to slower than expected in-clinic progression leading to higher R&D expenses.

The company has reworked its EU trial structure design and the analyst now assumes elongation of timeframes, which pushes out  commercialisation forecasts. The target falls to $0.26 from $0.27. The Speculative Buy rating is unchanged.

Target price is $0.26 Current Price is $0.10 Difference: $0.16
If ANP meets the Morgans target it will return approximately 160% (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 CBA as Underweight (5) -

Australian housing loans account for around 65% of CommBank's total loan balance. Hence, Morgan Stanley notes the bank's two year share price recovery has coincided with strong growth in seasonally adjusted Australian housing loan approvals, excluding refinancing.

In reaction to higher interest rates, the analyst suggests housing approvals appear to be heading lower, while refinancing activity is increasing. Forecasts remain unchanged.

The Underweight rating and $83 target are retained. Industry View. Attractive.

Target price is $83.00 Current Price is $94.10 Difference: minus $11.1 (current price is over target).
If CBA meets the Morgan Stanley target it will return approximately minus 12% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $89.09, suggesting downside of -6.3% (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 CTM as Outperform (1) -

Centaurus Metals returned in-line cash flow at its 1H result, while profits were softer than Macquarie expected. It's felt the company is well funded for exploration over the next 12 months, with cash reserves of $60m.

Management indicated the mineral resource at the Jaguar nickel sulphide deposit is on track for completion late in the 3Q of 2022.

The Outperform rating and target price of $1.30 are retained.

Target price is $1.30 Current Price is $1.12 Difference: $0.18
If CTM meets the Macquarie target it will return approximately 16% (excluding dividends, fees and charges).

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

Macquarie rates DEG as Outperform (1) -

De Grey Mining today released a pre-feasibility study (PFS) for its Mallina Gold Project, and at first glance Macquarie notes a big production estimate uplift from its estimates and the prior scoping study.

Years 1-10 production of 540koz (in the PFS) is a 17% beat versus the analyst's expectations, while the pre-production capex estimate was -11% higher than the broker's expectations.

The PFS is a key de-risking step by De Grey Mining, according to the broker. It's thought additional production growth may arise from plant debottlenecking, new pit optimisations, a new discovery and/or the potential for a concurrent underground operation.

The Outperform rating and $1.60 target are retained.

Target price is $1.60 Current Price is $0.92 Difference: $0.68
If DEG meets the Macquarie target it will return approximately 74% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 1.0

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

Macquarie rates FCL as Outperform (1) -

After US competitor Guidewire slightly moderated its FY23 expectations as part of 4Q results, Macquarie lowers it target for Fineos Corp to $2.17 from $2.37 on a lower comparative multiple for software peers.

The broker retains its Outperform rating given Fineos Corp is trading at an excessive discount to that comparative multiple.

Target price is $2.17 Current Price is $1.32 Difference: $0.85
If FCL meets the Macquarie target it will return approximately 64% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

This company reports in EUR. 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

Morgans rates GNC as Hold (3) -

As Morgans expected, ABARES upgraded its 2022/23 winter crop forecast from the June estimate due to favourable seasonable conditions. While the initial summer sorghum crop forecast is down -4% on last year’s crop, it is still the fourth highest on record.

The broker makes only small upgrades to its earnings forecasts for GrainCorp, and the target rises to $8.99 from $8.90, while the Hold rating is kept as earnings look set to decline over FY23-25.

GrainCorp will report FY22 results on November 16.

Target price is $8.99 Current Price is $8.30 Difference: $0.69
If GNC meets the Morgans target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $9.71, suggesting upside of 13.9% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.4

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

Morgans rates IPL as Add (1) -

While a weaker-than-expected trading update at Incitec Pivot's investor day leads Morgans to lower its FY22 profit forecasts by -8%, FY23 and F24 estimates are increased on higher forecast fertiliser prices.

The broker notes industry bodies are predicting a positive step change for prices.

Phosphate Hill’s production guidance was weak, according to the analyst, and management explained it incurred -$45m of additional gas costs due to disruptions with its supplier.

Morgans retains its Add rating and $4.45 target price.

Target price is $4.45 Current Price is $3.70 Difference: $0.75
If IPL meets the Morgans target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $4.25, suggesting upside of 14.2% (ex-dividends)

The company's fiscal year ends in September.

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 MMS as Overweight (1) -

Morgan Stanley came away from the August reporting season more bullish than consensus on McMillan Shakespeare after being surprised by the 2H earnings acceleration for the Group Remuneration Services division.

The broker also liked the 10% buyback, the potential for an Asset Management exit in the UK and the 2H operating leverage for Plan and Support Services. 

The target rises to $17.50 from $14.35 and the Overweight rating is kept. Industry View: In-Line.

Target price is $17.50 Current Price is $13.75 Difference: $3.75
If MMS meets the Morgan Stanley target it will return approximately 27% (excluding dividends, fees and charges).

Current consensus price target is $15.46, suggesting upside of 9.0% (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

Ord Minnett rates MTS as Upgrade to Buy from Accumulate (1) -

Following an AGM trading update by Metcash, Ord Minnett raises its rating to Buy from Accumulate and lifts its target to $5.00 from $4.80, after the last ten weeks have shown ongoing sales momentum.

In general, independent supermarkets are proving resilient, according to the analyst.

In addition, Mitre 10 has seen a further sales growth acceleration via strong demand in the trade channel and general inflationary gains, while Total Tools is also benefiting from store rollouts, explains the broker.

Ord Minnett increases its FY23-25 EPS forecasts by 1-2%.

Target price is $5.00 Current Price is $4.14 Difference: $0.86
If MTS meets the Ord Minnett target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $4.73, suggesting upside of 14.9% (ex-dividends)

The company's fiscal year ends in April.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.6

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

UBS rates MTS as Buy (1) -

Having reported sales growth of 8.6% in the first seven weeks of the new year, momentum for Metcash appears to have continued with reported sales growth of 8.9% in the first seventeen weeks. UBS notes a slight shift mix, with growth in food slowing while liquor increased.

The company reported supply challenges are improving, but labour costs pressures look to remain a headwind. UBS expects cost pressure control will prevent earnings margins contraction for Metcash, unlike peers. 

The Buy rating and target price of $5.00 are retained.

Target price is $5.00 Current Price is $4.14 Difference: $0.86
If MTS meets the UBS target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $4.73, suggesting upside of 14.9% (ex-dividends)

The company's fiscal year ends in April.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.6

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

UBS rates NUF as Buy (1) -

Nufarm's share price has declined -10% since the reporting season start in July, underperforming crop protection peers -20%. UBS notes this comes despite the company's earnings outperforming peers over the last 12-18 months. 

The broker finds Nufarm's recent share price weakness unjustified given the strong global agricultural outlook, leaving the stock currently undervalued.

The Buy rating and target price of $7.40 are retained.

Target price is $7.40 Current Price is $4.88 Difference: $2.52
If NUF meets the UBS target it will return approximately 52% (excluding dividends, fees and charges).

Current consensus price target is $6.87, suggesting upside of 30.7% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.4

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

UBS rates NWS as Buy (1) -

Seven West Media ((SWM)) and News Corp's part owned Foxtel have signed a new $4.5bn seven-year broadcast deal with the AFL. UBS notes under the new agreement, average annual payment for broadcast rights have lifted 36% on the 2023-24 season, and 54% on the 2017-22 seasons.

The broker considers the deal a positive for Foxtel, securing key winter sport programming for the next five years. Foxtel's NRL rights expire in 2027, and its cricket rights in 2024, which the broker notes are a key risk to subscriber numbers, particularly for its Kayo platform.

The Buy rating and target price of $36.50 are retained.

Target price is $36.50 Current Price is $24.44 Difference: $12.06
If NWS meets the UBS target it will return approximately 49% (excluding dividends, fees and charges).

Current consensus price target is $33.87, suggesting upside of 33.6% (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: 0.8

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

Citi rates QAN as Sell (5) -

Citi has made material upgrades to its revenue forecast for Qantas Airways in FY23 on better than expected ticket pricing, but retains the view that FY19 earnings levels may be a high hurdle for the airline. 

The broker remains cautious on the company's outlook, but does expect revenue per available seat kilometres (RASK) to remain elevated in the first half.

Indicators of RASK retaining strength through the second half would drive a more positive view, but Citi notes consumer sentiment declined for the ninth month in a row.

The Sell rating is retained and the target price increases to $4.72 from $4.28.

Target price is $4.72 Current Price is $5.06 Difference: minus $0.34 (current price is over target).
If QAN meets the Citi target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $6.34, suggesting upside of 20.9% (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

Credit Suisse rates RMD as Outperform (1) -

According to Credit Suisse, ResMed stands to incrementally benefit from switching to its brand of CPAP masks after the FDA issued a recall for competitor Philips' masks.

Credit Suisse notes ResMed also has magnetic clips on its mask (which potentially also interfere with other medical devices), but unlike Philips, ResMed's masks have a label noting the risk.

The analyst estimates a 1% market share gain for ResMed and raises its earnings forecasts by 1%, and the target rises to $40 from $39. Outperform.

Target price is $40.00 Current Price is $33.51 Difference: $6.49
If RMD meets the Credit Suisse target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $36.83, suggesting upside of 7.2% (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: 0.5

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

Macquarie rates RMD as Outperform (1) -

Following US medical device reports highlighting dangers, ResMed's competitor Philips has voluntarily provided notification for users, with updated instructions and labeling of certain Philips Respironics sleep masks.

While Macquarie leaves its forecasts unchanged for ResMed, potential exists for market share gains, and the broker estimates a 1.0% increase in mask/accessories volume growth equates to an EPS uplift of 0.8%.

The Outperform rating and $38.70 target are unchanged.

Target price is $38.70 Current Price is $33.51 Difference: $5.19
If RMD meets the Macquarie target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $36.83, suggesting upside of 7.2% (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: 0.5

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

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

As long as ResMed masks are unaffected, Morgan Stanley sees upside risk to its EPS forecasts, after US competitor Philips issued a recall of certain mask products on safety grounds.

At issue is the interference by magnets on the mask upon other medical devices, and the analyst takes some comfort that ResMed magnets are at a lower strength and adequate instructions to users are provided.

The Equal-weight rating and $31.70 target are unchanged. Industry view In-Line.

Target price is $31.70 Current Price is $33.51 Difference: minus $1.81 (current price is over target).
If RMD meets the Morgan Stanley target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $36.83, suggesting upside of 7.2% (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: 0.5

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

Ord Minnett rates RMD as Hold (3) -

Ord Minnett retains its Hold rating and $36.50 target for ResMed following the voluntary recall of competitor Philips' face masks, whose magnets potentially interfere with other medical devices.

The broker notes it's unclear whether the lower magnet strength and appropriate labeling of ResMed's masks is sufficient to avoid a recall. Hold. 

Target price is $36.50 Current Price is $33.51 Difference: $2.99
If RMD meets the Ord Minnett target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $36.83, suggesting upside of 7.2% (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: 0.5

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

Macquarie rates SWM as Neutral (3) -

Macquarie alters its sport cost forecasts for Seven West Media and increases its target to $0.46 from $0.45 in the wake of the renewed AFL free-to-air rights for the 2025-2031 seasons.

More negatively, the broker's industry analysis shows the implied cost per impression (CPM) spread between TV and the other mediums is at the highest in five years, given viewership declines.

It's implied rate cards need to decline by -20% and audiences need to increase by 20%. The Neutral rating is maintained.

Target price is $0.46 Current Price is $0.49 Difference: minus $0.03 (current price is over target).
If SWM meets the Macquarie target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $0.67, suggesting upside of 40.0% (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

UBS rates SWM as Buy (1) -

Seven West Media and Foxtel ((NWS)) have signed a new $4.5bn seven-year broadcast deal with the AFL. UBS notes under the new agreement, average annual payment for broadcast rights have lifted 36% on the 2023-24 season, and 54% on the 2017-22 seasons.

The new deal allows Seven West Media to live stream games to its 7plus platform. While the annual cost increase is around $10m more than UBS had assumed, the broker notes it provides a platform for programming through to 2031 and ultimately considers this a positive. 

The Buy rating is retained and the target price decreases to $0.85 from $0.90 as earnings estimates have been reduced.

Target price is $0.85 Current Price is $0.49 Difference: $0.36
If SWM meets the UBS target it will return approximately 73% (excluding dividends, fees and charges).

Current consensus price target is $0.67, suggesting upside of 40.0% (ex-dividends)

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

Macquarie rates TLC as Outperform (1) -

Following a review of Australian lottery volumes and jackpot activity, and after including a $375m buyback for Lottery Corp shares in forecasts, Macquarie raises its target to $4.70 from $4.65.

While near-term sentiment may be negative for the company on soft lottery volumes, the analyst expects volumes will normalise. Outperform.

Target price is $4.70 Current Price is $4.32 Difference: $0.38
If TLC meets the Macquarie target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $4.96, suggesting upside of 11.7% (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

UBS rates UMG as Neutral (3) -

United Malt anticipates an earnings recovery from the second quarter of FY23, with UBS forecasting the company can achieve its earnings guidance of $100-108m in FY22 and $140-160m in FY23.

The broker noted crop outlook remains positive in Canada, with production up 47% year-on-year and malt produced on this harvest so far of good quality. UBS also notes crop conditions in the UK and Australia remain favourable. Covenant amendments have been received for FY22 and the first half of FY23, in another positive. 

The Neutral rating is retained and the target price increases to $3.50 from $3.05.

Target price is $3.50 Current Price is $3.45 Difference: $0.05
If UMG meets the UBS target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $4.02, suggesting upside of 13.3% (ex-dividends)

The company's fiscal year ends in September.

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 WBC as Overweight (1) -

Australian housing loans account for around 65% of Westpac's total loan balance.

While it appears to Morgan Stanley housing loan approvals are heading lower, the broker points out the 2020-21 surge in approvals was not reflected in the bank's share price (a historical anomaly).

The Overweight rating and $22.30 target are maintained. Industry view: Attractive.

Target price is $22.30 Current Price is $20.83 Difference: $1.47
If WBC meets the Morgan Stanley target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $24.38, suggesting upside of 15.2% (ex-dividends)

The company's fiscal year ends in September.

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

Ord Minnett rates XRO as Accumulate (2) -

Management of Xero noted at its Australian conference that technology does well during economic downturns, which allows business owners reflection time for business improvements.

The talkfest also covered the building of an app ecosystem and the opportunity to leverage artificial intelligence and data to help customers of Xero’s accounting partners, highlights Ord Minnett.

The broker retains its Accumulate rating and $97.00 target price.

Target price is $97.00 Current Price is $84.14 Difference: $12.86
If XRO meets the Ord Minnett target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $97.01, suggesting upside of 11.0% (ex-dividends)

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: 0.3

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

UBS rates XRO as Sell (5) -

Off the back of XeroCon, UBS notes payments uptake is tracking stronger in the UK than Australia, New Zealand and the US. Key payment partner GoCardless flagged it expects the UK to be its largest market. 

The broker notes the launch of direct debit system PayTo in April and e-invoicing will likely be catalysts for payment uptake in Australia, with the perceived cost of digitising a key barrier.

The Sell rating and target price of $70.00 are retained.

Target price is $70.00 Current Price is $84.14 Difference: minus $14.14 (current price is over target).
If XRO meets the UBS target it will return approximately minus 17% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $97.01, suggesting upside of 11.0% (ex-dividends)

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: 0.3

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