Australian Broker Call

UBS rates AKE as Buy (1) -

To reflect current tightness in the lithium market (with no signs of easing), UBS lifts its 2022 spodumene forecast by around 17%, while the longer term price forecasts are under review.

Overall, the broker expects the industry to gravitate closer to spot pricing in the future and thinks the ability of a producer to realise prices closer to (a rising) spot is a key to relative outperformance.

The Buy rating and $13.80 target for Allkem are retained.

Target price is $13.80 Current Price is $13.04 Difference: $0.76
If AKE meets the UBS target it will return approximately 6% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

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

Macquarie rates AMI as Outperform (1) -

Macquarie visited Aurelia Metals' Hera and Peak Mines.

The broker says the company's emerging Federation project is the upcoming star and says Aurelia is on track to deliver an updated resource for the project.

Meanwhile, Great Cobar has extended teh life of Peak to beyond FY25.

Lower production assumptions at Dargues results in EPS cuts, which are balanced out by the increased inventory assumptions for Federation. Outperform rating and 60c target price retained.

Target price is $0.60 Current Price is $0.48 Difference: $0.12
If AMI meets the Macquarie target it will return approximately 25% (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

Credit Suisse rates ASX as Neutral (3) -

Credit Suisse retains its Neutral rating and $86 target price for ASX following the release of March quarter trading activity statistics.

While all business segments exceeded expectations, and the broker's EPS forecasts were raised for FY22-24 by around 2%, forecasts further out were left unchanged. By not incorporating these strong activity levels, there's expected to be potential for EPS upside.

Target price is $86.00 Current Price is $82.69 Difference: $3.31
If ASX meets the Credit Suisse target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $81.62, suggesting downside of -0.5% (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

Macquarie rates ASX as Outperform (1) -

ASX's March activity report reveals continued falls in futures volumes, and strong equities growth, supported by the BHP Group ((BHP)) unification, which also buoyed capital markets activity.

Macquarie expects ASX's interest income to grow sequentially in the June half from higher investment grade spreads; and strong growth in cash equities.

EPS forecasts rise 0.2% in FY22; 3.4% in FY23 and 0.8% in FY24.

Outperform rating retained, the broker confident in the company's long-term prospects. Target price slips to $94 from $96.50.

Target price is $94.00 Current Price is $82.69 Difference: $11.31
If ASX meets the Macquarie target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $81.62, suggesting downside of -0.5% (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

Morgans rates ASX as Reduce (5) -

Morgans assesses the March trading statistics for the ASX were relatively soft with weaker volumes versus the previous corresponding period for Futures and IPO/Secondary. More positively, recent volatility has driven higher Cash Market volumes.

The broker marginally lowers its EPS forecasts and the target price edges up to $73.05 from $72.94 on adjustments to its forecasting model. The Reduce rating is attributed to the combination of a high multiple and relatively low growth profile.

Target price is $73.05 Current Price is $82.69 Difference: minus $9.64 (current price is over target).
If ASX meets the Morgans target it will return approximately minus 12% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $81.62, suggesting downside of -0.5% (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 ASX as Hold (3) -

ASX's monthly report saw fiscal year to date capital raised increase 215% to $216.5bn, supported by the transfer of BHP Group's ((BHP)) listing to Sydney from London. Ord Minnett also noted a decline in derivatives volumes in March, while the cash market was stronger. 

The futures exchange suffered a four-hour outage on March 17, and the broker raises concerns around possible sanctions from the Australian Securities and Investments Commission as a result.

The Hold rating is retained and the target price increases to $85.00 from $84.56.

Target price is $85.00 Current Price is $82.69 Difference: $2.31
If ASX meets the Ord Minnett target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $81.62, suggesting downside of -0.5% (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

UBS rates CAR as Buy (1) -

Apart from Automotive dealers, listing volumes for online classifieds were strong for the March quarter, according to UBS.

While Carsales' Dealer inventory level was -20% lower year-on-year as at April 6, the broker points out the company's dealer
revenues are derived from lead volumes (not listings). 

In Private, observed listings rose 34% though this is still -19% adrift of the April 2019 level, likely due to changes in velocity and supply chain issues, explains the analyst.

UBS retains its Buy rating and $25 target.

Target price is $25.00 Current Price is $20.70 Difference: $4.3
If CAR meets the UBS target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $24.00, suggesting upside of 19.6% (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 DHG as Buy (1) -

Listing volumes for real estate online classifieds were strong for the March quarter though UBS cautions trends should reverse in the June quarter, due to the Federal election and cycling of tough comparatives. 

The broker retains its Buy rating and $5.50 target for Domain Holdings Australia.

Target price is $5.50 Current Price is $3.93 Difference: $1.57
If DHG meets the UBS target it will return approximately 40% (excluding dividends, fees and charges).

Current consensus price target is $5.14, suggesting upside of 33.2% (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

UBS rates IAG as Sell (5) -

After a refresh of forecasts for Insurance Australia Group, UBS continues to believe that consensus expectations are too high for margin expansion into FY23. The target falls to $4.10 from $4.20 and the Sell rating is retained.

The broker adopts this view on elevated claims inflation, particularly in Home. The costs of building materials, motor supplies and labour have been rising since the end of lockdowns. It's thought recent floods have exacerbated these claims-cost pressures.

Relative to insurance and banking peers, the analyst feels the stock is expensive and prefers QBE Insurance ((QBE)) and Suncorp Group ((SUN)) for insurance exposure.

Target price is $4.10 Current Price is $4.38 Difference: minus $0.28 (current price is over target).
If IAG meets the UBS target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.96, suggesting upside of 16.0% (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 MIN as Buy (1) -

To reflect current tightness in the lithium market (with no signs of easing), UBS lifts its 2022 spodumene forecast by around 17%, while the longer term price forecasts are under review.

Overall, the broker expects the industry to gravitate closer to spot pricing in the future and thinks the ability of a producer to realise prices closer to (a rising) spot is a key to relative outperformance.

The Buy rating and $54.45 target for Mineral Resources are retained.

Target price is $54.45 Current Price is $60.35 Difference: minus $5.9 (current price is over target).
If MIN meets the UBS target it will return approximately minus 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $63.09, suggesting upside of 5.3% (ex-dividends)

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

Macquarie rates PNV as Outperform (1) -

Polynovo's March revenue grew 59% to $12.3m (about $11m of BTM sales), and Macquarie expects the company will meet its expectation of fourth quarter BTM sales of $12.2m in the June quarter.

Polynovo is earnings positive and its cash position continues to improve (excluding the Port Melbourne leaseback deal). Trials remain on track.

Macquarie remains positive on Polynovo as a medium to long-term prospect.

Outperform rating retained. Target price steady at $1.60.

Target price is $1.60 Current Price is $1.13 Difference: $0.47
If PNV meets the Macquarie target it will return approximately 42% (excluding dividends, fees and charges).

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

Credit Suisse rates PPM as Outperform (1) -

Pepper Money will acquire 65% of the car and asset finance broker Stratton Finance for -$78m, by utilising existing cash and its corporate debt facility. The balance of 35% is exercisable by put or call at a base price of -$42m.

The analyst likes the potential growth in Asset Finance and sees a sound strategic rationale though notes the transaction is not material.

Separately, a trading update revealed run-rates ahead of the broker's expectations for mortgage originations and assets under management (AUM).

The Outperform rating and $2.95 target are maintained.

Target price is $2.95 Current Price is $2.27 Difference: $0.68
If PPM meets the Credit Suisse target it will return approximately 30% (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

UBS rates REA as Neutral (3) -

Listing volumes for real estate online classifieds were strong for the March quarter though UBS cautions trends should reverse in the June quarter, due to the Federal election and cycling of tough comparatives. 

The broker retains its Neutral rating and $155 target for REA Group.

Target price is $155.00 Current Price is $131.34 Difference: $23.66
If REA meets the UBS target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $162.19, suggesting upside of 26.5% (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

Citi rates SDR as Neutral (3) -

SiteMinder officially launched its new Generation 3 platform yesterday and migration of existing customers is expected shortly with an aim of completed migration by the second half of FY23, according to Citi.

The broker expects migration costs to impact on short-term gross margins, anticipating margin improvement from 81% in FY22 to 85% in FY24. For Citi, the platform's improved integration is a key benefit which will make the attachment of Demand+ and SiteMinder Pay easier and improve up-selling and cross-selling opportunities. 

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

Target price is $5.00 Current Price is $4.99 Difference: $0.01
If SDR meets the Citi target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $6.38, suggesting upside of 32.6% (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

UBS rates SEK as Neutral (3) -

Listing volumes for employment online classifieds were strong for the March quarter though UBS cautions Seek's absolute listings inventory numbers do not reflect velocity. Hence, there are not considered a perfect indicator for growth.

Nonetheless, the broker sees upside to management guidance should volumes remain at current levels for the remainder of the half.

The broker retains its Neutral rating and $32 target.

Target price is $32.00 Current Price is $28.79 Difference: $3.21
If SEK meets the UBS target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $34.31, suggesting upside of 22.1% (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

Citi rates TWE as Buy (1) -

Audience insights suggest Treasury Wine Estates' US retail sales declined a further -6% in March, following a -6% decline in February, but Citi notes average pricing was up 3% in the last month and suggests trends support the company's premiumisation strategy.

Closer to home, the broker noted exports to markets including Singapore, Hong Kong, Thailand, Taiwan and Vietnam have materially increased as an effect of the tariffs on China exports. The recently announced free trade deal with India could offer further opportunity. 

The Buy rating and target price of $13.78 are retained.

Target price is $13.78 Current Price is $11.61 Difference: $2.17
If TWE meets the Citi target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $13.34, suggesting upside of 16.0% (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

Ord Minnett rates TWE as Hold (3) -

While Treasury Wine Estates' sales fell -5.7% year-on-year in March, Ord Minnett notes sales have grown 13.9% on pre-covid levels and are ahead of 13.1% market growth for the same period. 

The broker notes growth was attributable to the ongoing premiumisation strategy as sales volumes were largely flat. In the last month the Matua, Stags' Leap and The Stag brands were key performers, with year-on-year sales up 9.3%, 16.2% and 25.7% respectively.

The Hold rating and target price of $12.80 are retained.

Target price is $12.80 Current Price is $11.61 Difference: $1.19
If TWE meets the Ord Minnett target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $13.34, suggesting upside of 16.0% (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

Citi rates VVA as Buy (1) -

Viva Leisure intends to complete its West Australian gym acquisition today, with the company continuing to target 155,000 members by June. In its initiation, Citi had highlighted opportunity for Viva Leisure in 36 locations in WA.

Company commentary indicated rental costs in WA are significantly lower, offering a $50-60,000 discount on rental costs compared to other locations. The broker notes this allows the company to break even with less members, and offers a highly profitable opportunity. 

The Buy rating and target price of $2.34 are retained.

Target price is $2.34 Current Price is $1.69 Difference: $0.65
If VVA meets the Citi target it will return approximately 38% (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 WEB as Neutral (3) -

Macquarie says Omicron hit Webjet's March (second) half as Australian domestic airline capacity averaged 50% of 2019 levels, well below estimates of 80% prior to the outbreak.

The broker forecasts a strong domestic recovery in FY23 but expects international business will create a drag given the company generates sharply higher fees from international bookings.

In contrast, the outlook for the North America business suggests the company may be on track to outpace pre-covid levels, and Macquarie suspects this performance might be repeated by Australia and Europe at the end of 2022.

EPS forecasts slide -16% in FY22; -17% in FY23 and -4% in FY24. Target price slips -5% to $5.80 from $6.10. Neutral rating retained.

Target price is $5.80 Current Price is $5.59 Difference: $0.21
If WEB meets the Macquarie target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $6.13, suggesting upside of 12.9% (ex-dividends)

The company's fiscal year ends in March.

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