Australian Broker Call

Macquarie rates AGI as Outperform (1) -

Macquarie assesses Ainsworth Game Technology can return to profitability in FY22 and narrows its expected loss for FY21 to -$13m. The company has announced an exclusive five-year real money gambling licensing agreement with GAN.

Macquarie assesses the business has come "a long way" with increased earnings from North American gambling operations. There continues to be operating leverage to improved outright sales volumes and demand is improving from the lows of the pandemic.

Macquarie retains an Outperform rating and raises the target to $1.10 from 95c.

Target price is $1.10 Current Price is $0.88 Difference: $0.22
If AGI meets the Macquarie target it will return approximately 25% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.0

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

Citi rates ALD as Neutral (3) -

After the announcement of government refinery support, Citi believes Ampol has significant downside protection on Lytton refining margins for up to nine years.

The flow on effect is an asymmetric refining earnings profile, enabling higher levels of gearing and facilitating an around $600m capital return, explains the broker. It's expected an off-market share buy-back will be launched at the first half result in August.

Neutral rating retained, though the high-risk designation, due to the higher risk associated with refining margins, is removed. The target price increases to $30.40 from $26.92.

Target price is $30.40 Current Price is $27.91 Difference: $2.49
If ALD meets the Citi target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $30.79, suggesting upside of 10.2% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.5

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

Credit Suisse rates ALD as Neutral (3) -

Credit Suisse has adjusted forecasts for Ampol post the federal government’s refining package. The broker upgrades FY21 earnings estimate to cater to the inclusion of the refining subsidy.

Even though the package does not completely eliminate earnings downside, Credit Suisse expects the refining segment operating income to be supported at circa $100m under most scenarios.

Also, while the implications of a minimum stockholding requirement are not so clear, there appears to be no material downside in the broker's view.

Credit Suisse retains a Neutral rating and raises the target to $29.87 from $27.54.

Target price is $29.87 Current Price is $27.91 Difference: $1.96
If ALD meets the Credit Suisse target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $30.79, suggesting upside of 10.2% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.5

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

Ord Minnett rates CCP as Upgrade to Buy from Hold (1) -

Ord Minnett upgrades the rating for Credit Corp Group to Buy from Hold, after the share price has underperformed the Small Ordinaries index by -20% since mid-March. This is considered due to a slower-than-expected recovery in Purchased Debt Ledger (PDL) supply in both Australia and the US.

The broker sees evidence that some larger financial participants could re-enter the purchased debt ledger sale market over the next 12–18 months. Also, a number of forbearance measures are set to expire in the US, including rent and mortgages in June.

The analyst suspects collections in the US and arrears rates in the consumer lending business have performed better than previous  assumptions. The target price is unchanged at $31.50.

The $31.50 target price maintained.

Target price is $31.50 Current Price is $27.05 Difference: $4.45
If CCP meets the Ord Minnett target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $33.25, suggesting upside of 24.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.7

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

Morgans - Cessation of coverage

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

Citi rates CLW as Buy (1) -

The acquisition announced of a $415m portfolio of five assets is viewed as in-line with the REIT's strategy, with Citi pointing out a few positives such as high tenant quality and higher average fixed review.

The positives, says the broker, are being offset by a lower WALE. Earnings impact from the transaction is broadly-neutral and Citi has made minimal adjustments to forecasts.

Citi retains its Buy rating with the analysts suggesting there is potential upside to the REIT's guidance for FY21. No news on the price target which was last set in February at $5.30.

Citi makes the additional point this transaction is an added positive for Charter Hall ((CHC)), the broker's top pick in the sector.

Target price is $5.30 Current Price is $4.81 Difference: $0.49
If CLW meets the Citi target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $5.10, suggesting upside of 9.4% (ex-dividends)

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.6

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

Macquarie rates CLW as Outperform (1) -

A $250m equity raising has been announced to partially fund the acquisition of $415.4m in assets.

FY21 operating earnings guidance has been upgraded to 29.2c per security, reflecting growth of 3.2%. Operating earnings are expected to grow by 2.75% in FY22.

Macquarie retains an Outperform rating, noting the attractive distribution yield of 6.3%. Target is reduced to $5.24 from $5.38.

Target price is $5.24 Current Price is $4.81 Difference: $0.43
If CLW meets the Macquarie target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $5.10, suggesting upside of 9.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.6

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

Ord Minnett rates CLW as Hold (3) -

Ord Minnett maintains a Hold rating for Charter Hall Long WALE REIT. After the announcement of a $250m non-renounceable entitlement offer to partly fund the acquisition of five property assets, the broker notes the raising will be dilutive to net tangible assets by circa -1%.

The remainder of the funding will be from debt of $197m. Management also upgraded FY21 OEPS guidance to 29.2cps, in-line with
the broker's estimate and consensus. The $4.82 target price is maintained.

Target price is $4.82 Current Price is $4.81 Difference: $0.01
If CLW meets the Ord Minnett target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $5.10, suggesting upside of 9.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.6

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

UBS rates CLW as Neutral (3) -

The company will acquire $415m in assets funded in part by a $250m rights issue. UBS estimates the transaction will be marginally dilutive to earnings and this explains the underwhelming FY22 growth guidance of 2.75%.

The attractive attributes of the portfolio of buildings in which Charter Hall Long WALE will acquire a 50% stake include around 75% of leasing to government tenants.

Neutral rating maintained. Target is reduced to $4.77 from $4.80.

Target price is $4.77 Current Price is $4.81 Difference: minus $0.04 (current price is over target).
If CLW meets the UBS target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.10, suggesting upside of 9.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.6

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

Morgans rates ELD as Hold (3) -

As expected by Morgans, Elders reported a strong first half result, which was only slightly ahead of forecast though a material beat to consensus. Earnings (EBIT) growth of 40% was considered due to favourable operating conditions, strong execution and M&A. 

The analyst highlights strong demand for crop inputs, elevated livestock prices, increased Real Estate profitability and successful integration of the AIRR acquisition and associated synergies.

The broker retains a Hold, due to high multiples and a belief that earnings growth will now moderate and cattle prices will eventually fall from current record high levels. The target price is increased to $11.95 from $11.85.

Target price is $11.95 Current Price is $11.78 Difference: $0.17
If ELD meets the Morgans target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $13.15, suggesting upside of 12.1% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.7

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

Morgan Stanley rates ELO as Overweight (1) -

Elmo Software has narrowed annual recurring revenue guidance to $83-85m and operating earnings (EBITDA) to $2.5-3.5m.

At the mid point the guidance implies a re-acceleration in organically generated revenue, Morgan Stanley assesses.

Overweight rating. Target is $9.70. Industry view: In-line.

Target price is $9.70 Current Price is $4.62 Difference: $5.08
If ELO meets the Morgan Stanley target it will return approximately 110% (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

Ord Minnett rates GXY as Buy (1) -

Ord Minnett feels the proposed merger between Orocobre ((ORE)) and Galaxy Resources will result in a unique, pure lithium producer. The merged company is considered to have a diversified, low-carbon, strategic and growing production base.

The Buy rating is unchanged. Assuming timely deal completion, and including Olaroz Stage 3 in the valuation, the broker decreases the target price to $4.10 from $4.30, while increasing the Orocobre target to $7.15 from $5.50.

The combined entity will grow to the fifth largest lithium company globally, based on forecast 2030 production.

Target price is $4.10 Current Price is $3.61 Difference: $0.49
If GXY meets the Ord Minnett target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $3.63, suggesting upside of 4.8% (ex-dividends)

The company's fiscal year ends in December.

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: 0.3

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

Morgans rates HDN as Add (1) -

HomeCo Daily Needs REIT recently raised $265m via a placement and 1 for 2.36 entitlement issue at $1.295. Home Consortium ((HMC)), with a 26.6% shareholding, took up its full entitlement.

The funds will be used to acquire a new Neighbourhood asset as well as seven large-format retail (LFR properties) from Home Consortium. 

Management's FY21 FFO guidance is set at 3.9c, while  FY22 FFO guidance of at least 8.3c implies to Morgans 24% growth. The yield is considered to remain attractive. The Add rating is maintained and the target increased to $1.50 from $1.45.

Target price is $1.50 Current Price is $1.26 Difference: $0.24
If HDN meets the Morgans target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $1.45, suggesting upside of 14.2% (ex-dividends)

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

Ord Minnett rates HSN as Buy (1) -

After an investor day, Ord Minnett notes that while financial targets are unchanged, it's felt the organic growth potential of the business is underestimated by the market. This is particularly so, given favourable dynamics in the global telco market.

The analyst's key insights included strong industry growth drivers due to various developments in telco including 5G and
Internet of Things. Sigma is also considered well-placed to continue to grow in a world with increased product and service bundling.

The Buy rating and $6 target price are retained.

Target price is $6.00 Current Price is $5.30 Difference: $0.7
If HSN meets the Ord Minnett target it will return approximately 13% (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

Credit Suisse rates HT1 as Outperform (1) -

HT&E announced the signing of a non-binding term sheet to sell a circa 25% interest in Soprano to LINK Mobility, a global CPaaS provider listed in Norway for 22.2m shares in LINK and $6.2m in cash.

Also, Soprano is expected to make a pre-transaction dividend payment of up to $40m of which HT&E will receive about $10m, taking the total implied proceeds to almost $148m.

While the headline proceeds are lower than Credit Suisse's valuation for HT&E's Soprano interest of $177m, the broker thinks there may be room for upside looking at LINK’s recent trading.

Outperform rating and $2.10 target maintained.

Target price is $2.10 Current Price is $1.76 Difference: $0.34
If HT1 meets the Credit Suisse target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $1.80, suggesting upside of 1.1% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.3

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

Morgans - Cessation of coverage

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

Citi rates JHX as Neutral (3) -

After the FY21 result, Citi assesses that while US housing remains supportive, costs are rising, which should drive FY22 earnings (EBIT) margins lower. It's considered influencing buying decisions via marketing will take time, and new products also need time to gain traction.

The broker maintains a Neutral rating, as while the company is well positioned for medium-term growth, it is likely priced-in. The target price falls to $41.10 from $43.25.

Management has indicated that trading for the June quarter has trended back in the ‘high double digit teens’ growth with the impacts from weather likely proving temporary.

Target price is $41.10 Current Price is $40.20 Difference: $0.9
If JHX meets the Citi target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $45.82, suggesting upside of 12.9% (ex-dividends)

The company's fiscal year ends in March.

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

Credit Suisse rates JHX as Neutral (3) -

Credit Suisse highlights James Hardie Industries' March-quarter net profit after tax was 7% above consensus forecast with strong APAC/Europe offsetting a weaker North America.

Volumes growth in North America missed the target with 12% exteriors growth and 1% interiors compared to consensus forecasts of 21% and 8%.

whille management blames this on high March quarter 2020 comps, the broker notes growth remains -8-10% weaker than the third quarter whether the company uses a 1 or 2-year comp.

Even then, Credit Suisse is not really concerned about a slowdown noting reported growth has so far been in the high teens this quarter.

Neutral rating with the target dropping slightly to $39.80 from $40.

Target price is $39.80 Current Price is $40.20 Difference: minus $0.4 (current price is over target).
If JHX meets the Credit Suisse target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $45.82, suggesting upside of 12.9% (ex-dividends)

The company's fiscal year ends in March.

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

Macquarie rates JHX as Outperform (1) -

Underlying net profit of US$458m was up 30% and ahead of Macquarie's estimates. Asia-Pacific and Europe beat on sales and margin expectations.

North American trading was slightly softer than Macquarie expected, partially explained by the shutting down of two Texas plants.

The focus now turns to the investor briefing on May 25. Macquarie retains an Outperform rating and raises the target to $50.00 from $45.30.

Target price is $50.00 Current Price is $40.20 Difference: $9.8
If JHX meets the Macquarie target it will return approximately 24% (excluding dividends, fees and charges).

Current consensus price target is $45.82, suggesting upside of 12.9% (ex-dividends)

The company's fiscal year ends in March.

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

Morgan Stanley rates JHX as Overweight (1) -

FY21 results were in line with expectations although Morgan Stanley was disappointed with US volumes. While management believes it has delivered on targeted primary demand growth (PDG) the broker finds it hard to reconcile the gains.

Nevertheless, substantial PDG is still expected in FY22. The broker expects the market should become more comfortable about pricing and mix initiatives when the company briefs investors on May 25.

Overweight rating. Target is $50. Industry view is In-Line.

Target price is $50.00 Current Price is $40.20 Difference: $9.8
If JHX meets the Morgan Stanley target it will return approximately 24% (excluding dividends, fees and charges).

Current consensus price target is $45.82, suggesting upside of 12.9% (ex-dividends)

The company's fiscal year ends in March.

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

Ord Minnett rates JHX as Accumulate (2) -

The FY21 net profit outcome was 2.2% above Ord Minnett’s estimate and 2% ahead of consensus and guidance, driven mainly by the Asia Pacific and Europe divisions.

Management will be applying a sharper focus on driving the adoption of higher-priced products. The broker believes this should benefit distributors, contractors, homeowners and shareholders.

The analyst feels the company has a clear strategy to profitably gain market share in all regions over the FY22–24 period. The Accumulate rating and $47 target price are retained.

Target price is $47.00 Current Price is $40.20 Difference: $6.8
If JHX meets the Ord Minnett target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $45.82, suggesting upside of 12.9% (ex-dividends)

The company's fiscal year ends in March.

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

UBS rates JHX as Buy (1) -

FY21 net profit was ahead of UBS estimates. US revenue growth of 12% was in line. UBS anticipates demand created by robust US housing starts will support volume growth in FY22 of around 10%.

The company has provided FY22 underlying net profit guidance of US$520-570m. Cost inflation is expected to be a key headwind in FY22.

Favourable housing markets across the US and Australia are expected to drive earnings growth of around 8% in these regions. Buy rating retained. Target rises to $47.00 from $45.50.

Target price is $47.00 Current Price is $40.20 Difference: $6.8
If JHX meets the UBS target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $45.82, suggesting upside of 12.9% (ex-dividends)

The company's fiscal year ends in March.

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 MPL as Neutral (3) -

Despite recent industry data showing robust net margins, Citi questions the sustainability of such margins, due to a bounce-back in utilisation, especially in ancillary. The quarter’s claims benefited from lower working days and, for some, deferral provision releases.

The broker still sees this as consistent with the current forecast for the net margin of Medibank Private to gradually reduce, thereby limiting the EPS growth outlook. The Neutral rating and $3.10 target are retained.

Target price is $3.10 Current Price is $2.98 Difference: $0.12
If MPL meets the Citi target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $3.13, suggesting upside of 5.5% (ex-dividends)

The company's fiscal year ends in June.

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

Citi rates NHF as Neutral (3) -

Despite recent industry data showing robust net margins, Citi questions the sustainability of such margins, due to a bounce-back in utilisation, especially in ancillary. The quarter’s claims benefited from lower working days and, for some, deferral provision releases.

The broker still sees this as consistent with the current forecast for the net margin of nib Holdings to gradually reduce, thereby limiting the EPS growth outlook. The Neutral rating and $6.40 target are retained.

Target price is $6.40 Current Price is $6.18 Difference: $0.22
If NHF meets the Citi target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $6.27, suggesting upside of 4.2% (ex-dividends)

The company's fiscal year ends in June.

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

Morgan Stanley rates NXL as Overweight (1) -

The investor briefing largely featured product demonstration and Morgan Stanley notes, while the new product opportunities outlined are incrementally useful, there were no new financial data or changes to guidance.

The broker remains positive about the investigative analytics industry but notes the market still lacks confidence in the revised FY21 numbers while debating the long-term growth rate. Overweight rating and $7.50 target retained. Industry view is Attractive.

Target price is $7.50 Current Price is $3.50 Difference: $4
If NXL meets the Morgan Stanley target it will return approximately 114% (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

Ord Minnett rates ORE as Upgrade to Accumulate from Hold (2) -

Ord Minnett feels the proposed merger between Orocobre and Galaxy Resources ((GXY)) will result in a unique, pure lithium producer. The merged company is considered to have a diversified, low-carbon, strategic and growing production base.

The rating is upgraded to Accumulate from Hold. Assuming timely deal completion, and including Olaroz Stage 3 in the valuation, the broker increases the target price to $7.15 from $5.50.

The combined entity will grow to the fifth largest lithium company globally, based on forecast 2030 production.

Target price is $7.15 Current Price is $6.27 Difference: $0.88
If ORE meets the Ord Minnett target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $6.26, suggesting upside of 3.4% (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

Morgans - Cessation of coverage

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

Credit Suisse rates RHC as Neutral (3) -

APRA private health insurance (PHI) hospital stats indicate private hospital industry benefits increased 1.3% over last year in the March quarter. Day cases reduced slightly by -0.2% and overnight episodes dropped by -3.7%. Credit Suisse estimates third-quarter industry revenue growth of 1.1%.

Further, the broker notes Victoria continues to lag behind the rest of Australia in its recovery with total volume drop ex-Victoria at -0.4% (as compared to volume drop after including Victoria at -4.5%). 

Hospital PHI membership improved 20bps over the last quarter to 44.2% but even so, Credit Suisse would like to see more evidence of this trend post the PHI premium increases in April 2021.

Credit Suisse believes Ramsay Health Care will benefit from its greater surgical case mix relative to the industry even as industry stats hint at a slower recovery.

Further, the broker believes earnings are likely to remain lumpy until the vaccination program is widely rolled out in Australia.

Neutral rating with a $70 target price.

Target price is $70.00 Current Price is $63.43 Difference: $6.57
If RHC meets the Credit Suisse target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $68.97, suggesting upside of 9.4% (ex-dividends)

The company's fiscal year ends in June.

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 S32 as Buy (1) -

South32 announced an additional US$200m to the existing buy back program to be completed by September 2021. With the South Africa Energy Coal (SAEC) transaction completed, Citi now sees the company focusing on the internal growth pipeline.

Management expects to book a loss on the SAEC sale of -US$125m-$175m, which is to be excluded from underlying earnings. On revised forecasts the broker expects the balance sheet to be net cash of $158m at the end of FY21 and $923m at the end of FY22.

The Buy rating and $3.30 target are retained.

Target price is $3.30 Current Price is $3.03 Difference: $0.27
If S32 meets the Citi target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $3.19, suggesting upside of 9.1% (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

Morgan Stanley rates S32 as Overweight (1) -

South32 has announced an increase to its capital management program of US$200m.

Assuming the additional amount will be used to buy back shares in FY22, and accounting for the US$250m that has been committed to vendor support at SAEC, Morgan Stanley assesses the company retains net cash of US$500m.

With a net debt target of US$250m having been cited by the company, the broker calculates this leaves US$750-900m for further buybacks/special dividends, acquisitions or new projects.

Overweight rating. Target is $3.35. Industry view: Attractive.

Target price is $3.35 Current Price is $3.03 Difference: $0.32
If S32 meets the Morgan Stanley target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $3.19, suggesting upside of 9.1% (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

Citi rates SBM as Buy (1) -

Citi had acknowledged the risk that the June quarter could prove challenging and had expected Simberi to miss guidance. However, the analyst had not anticipated the magnitude of the disappointing downgrade at Gwalia.

More widely, the broker is more concerned with sites inability (again) to forecast realistic plans, even when close to quarter end. The analyst acknowledges the unchanged Buy high-risk rating is not for the faint-hearted.

The further downgrade at Simberi and Gwalia trims the broker's FY21 and FY22 earnings (EBITDA) forecasts by -12% and -3%. The target price falls to $2.30 from $2.40.

Target price is $2.30 Current Price is $1.87 Difference: $0.43
If SBM meets the Citi target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $2.38, suggesting upside of 36.8% (ex-dividends)

The company's fiscal year ends in June.

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

Macquarie rates SBM as Downgrade to Underperform from Neutral (5) -

St Barbara has cut FY21 guidance to 330-360,000 ounces amid grade issues and the contractor change at Gwalia as well as low mining rates at Simberi.

Macquarie had expected a downgrade to guidance but this update was materially weaker than anticipated. Tonnage will be delayed into FY22 although grade reconciliation issues are considered short term.

Macquarie downgrades to Underperform from Neutral, noting a number of meaningful catalysts are ahead that could be key to re-setting the production profile. Target is reduced to $1.80 from $1.90.

Target price is $1.80 Current Price is $1.87 Difference: minus $0.07 (current price is over target).
If SBM meets the Macquarie target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.38, suggesting upside of 36.8% (ex-dividends)

The company's fiscal year ends in June.

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

Morgan Stanley rates SBM as Overweight (1) -

FY21 guidance for gold production has been downgraded by -8% to 330-360,000 ounces. Morgan Stanley had expected the downgrades at both Gwalia and Simberi so was not surprised.

The broker considers the new numbers are reasonable and still signal a rising production trajectory at Gwalia.

Operating improvements will need to be demonstrated at Gwalia yet the broker still finds value in the stock and retains an Overweight rating. Target is $2.85. Industry view is Attractive.

Target price is $2.85 Current Price is $1.87 Difference: $0.98
If SBM meets the Morgan Stanley target it will return approximately 52% (excluding dividends, fees and charges).

Current consensus price target is $2.38, suggesting upside of 36.8% (ex-dividends)

The company's fiscal year ends in June.

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

Ord Minnett rates SBM as Downgrade to Hold from Buy (3) -

Ord Minnett lowers the rating to Hold from Buy and reduces the target price to $2 from $2.80, after St Barbara issued another production downgrade. It's felt the market may take some time to regain confidence in the company and the potential growth story.

“Negative grade reconciliation” in both stope ore and stockpiles affected production at Leonora. Production from the Simberi operation in PNG was downgraded -10%, due to ore variability on lower mining rates and lower recoveries.

The broker cuts the FY21 production forecast to 320,000oz at AISC of $1,712/oz, and reduces earnings estimates by -40% in FY21 and -30% in FY22.

Target price is $2.00 Current Price is $1.87 Difference: $0.13
If SBM meets the Ord Minnett target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $2.38, suggesting upside of 36.8% (ex-dividends)

The company's fiscal year ends in June.

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

Ord Minnett rates SUN as Hold (3) -

After a strategy day, Ord Minnett concludes that achieving some aspirational targets may be a stretch. Management is aiming for a 50% cost-to-income (CTI) ratio for the bank. Given net interest margin pressure, it's considered above-system lending growth will be needed.

The other hard-to-attain target is at least -$60m of cost savings by FY23, or circa 8% of the annualised cost base (using a first-half FY21 run rate), explains the broker.

The analyst highlights net interest margin strength continued post the first half result, due to lower funding costs. The broker maintains the Hold recommendation and lifts the target price to $12 from $11.00.

Target price is $12.00 Current Price is $10.61 Difference: $1.39
If SUN meets the Ord Minnett target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $11.83, suggesting upside of 12.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.7

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

Credit Suisse rates TWE as Neutral (3) -

Credit Suisse upgrades Treasury Wine Estates' expected operating income for FY21 to the top end of the company's guidance of $495-$515m. FY22 and FY23 earnings forecasts have been upgraded by circa 20%.

The upgrades are due to re-opening restaurants and higher cellar door activity in US and Australia, increase in cost savings target to $75m from $50m, among other reasons.

The broker expects a drop in FY22 operating income given Treasury Wine Estates must overcome an estimated -$70m hole from China’s lost contribution. In FY24, Credit Suisse assumes China actually resumes importation of Australian wine driving double-digit growth.

Neutral rating with a target of $11.30. 

Target price is $11.30 Current Price is $10.95 Difference: $0.35
If TWE meets the Credit Suisse target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $10.94, suggesting upside of 0.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.0

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

Macquarie rates VCX as Upgrade to Outperform from Neutral (1) -

Macquarie reviews the outlook for Vicinity Centres, noting the current share price implies a decline in asset values of -33% compared with pre-pandemic levels.

Yet the broker points to some key assets and believes the pricing is not recognising the performance of convenience-based assets or the strength of the balance sheet.

Macquarie assesses current pricing provides an opportunity and upgrades to Outperform from Neutral. The main risk in the short term is a reduction in the pay-out ratio. Target edges down to $1.64 from $1.65.

Target price is $1.64 Current Price is $1.52 Difference: $0.12
If VCX meets the Macquarie target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $1.64, suggesting upside of 8.3% (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

Credit Suisse rates VEA as Neutral (3) -

Credit Suisse has adjusted forecasts for Viva Energy Group post the federal government’s refining package. The broker upgrades FY21 earnings estimate to cater to the inclusion of the refining subsidy.

Even though the package does not completely eliminate earnings downside, Credit Suisse expects the refining segment operating income to be supported at circa $100m under most scenarios. 

Operating income below this level could occur with a Geelong refining margin below $7.30/bbl, adds the broker. While details on working capital are less clear, there appears to be no material downside.

Target is raised to $1.95 from $1.92. Neutral maintained.

Target price is $1.95 Current Price is $2.08 Difference: minus $0.13 (current price is over target).
If VEA meets the Credit Suisse target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.23, suggesting upside of 10.1% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.6

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

Macquarie rates WOW as Outperform (1) -

Macquarie assesses Endeavour Group has been a beneficiary of a shift to off-premises liquor consumption over 2020 as hotels have been adversely affected throughout the pandemic.

Retail liquor sales have grown at 4.5% over four years prior to the pandemic amid increased population growth and premiumisation.

Yet, as hotel revenue declined -21% in FY20, Macquarie envisages an opportunity for Endeavour to gain share and maintain a leading market position through a refreshed offering.

The broker retains its Outperform rating and a $44.50 target.

Target price is $44.50 Current Price is $40.69 Difference: $3.81
If WOW meets the Macquarie target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $42.54, suggesting upside of 5.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.6

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

Macquarie rates WPL as Outperform (1) -

Woodside Petroleum will exit the Kitimat LNG project in British Columbia and write off US$40-60m after tax following Chevron's recent withdrawal of funding for the project.

Macquarie is not surprised and does not attribute value to Kitimat. The broker assesses the main areas of risk for the company centre on the timing and guidance for Scarborough and decommissioning liabilities and these have been priced into the stock.

The broker maintains an Outperform rating. Target is $28.60.

Target price is $28.60 Current Price is $22.99 Difference: $5.61
If WPL meets the Macquarie target it will return approximately 24% (excluding dividends, fees and charges).

Current consensus price target is $27.55, suggesting upside of 23.0% (ex-dividends)

The company's fiscal year ends in December.

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: 0.7

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

Morgans rates WPL as Add (1) -

After Woodside Petroleum announced the withdrawal from the Kitimat LNG joint venture, Morgans expects further changes to Woodside Petroleum’s asset portfolio. Management noted it will write down between -US$40-$60m at the August result. 

The write down will not impact the dividend calculation for the half. The analyst makes no changes to estimates of underlying earnings though applies the midpoint of the guided write down to first half 2021 headline forecasts.

The Add rating and $28.80 target price are maintained. The broker attributes the current share price discount to valuation to uncertainties relating to the CEO position and possible dilution risk. Gearing already sits at 24% before the next capex phase, the report points out.

Target price is $28.80 Current Price is $22.99 Difference: $5.81
If WPL meets the Morgans target it will return approximately 25% (excluding dividends, fees and charges).

Current consensus price target is $27.55, suggesting upside of 23.0% (ex-dividends)

The company's fiscal year ends in December.

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: 0.7

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