Australian Broker Call

Morgan Stanley rates BOQ as Underweight (5) -

Prior to Bank of Queensland's upcoming 2H result on October 11, Morgan Stanley takes the opportunity to lower its target to $5.50 from $5.60 to reflect the impact of one-off charges.

Last week, the bank stated the FY23 result would include one-off charges of -$125m pre tax, including -$113m of non-cash items relating to restructuring costs and the ME Bank integration.

There was also a -$12m pre-tax impact to net interest income from shortening the housing loan portfolio's weighted average life, explains the broker.

Underweight. Industry view: In-Line.

Target price is $5.50 Current Price is $5.62 Difference: minus $0.12 (current price is over target).
If BOQ meets the Morgan Stanley target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $6.19, suggesting upside of 8.6% (ex-dividends)

The company's fiscal year ends in August.

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

Morgans rates BOQ as Hold (3) -

Morgans lowers its target for Bank of Queensland to $5.65 from $6.60 after downgrading forecast earnings and after applying a higher cost of equity. There has been a significant rise in risk-free rates using the 10-year government bond yield as a proxy, notes the analyst.

The broker makes -4-9% downgrades across FY23-25 cash earnings estimates due mainly to adjustments to net interest margin (NIM), opex and credit impairment charge profiles. 

For the Bank of Queensland FY23 result due next Wednesday, Morgans forecasts a final dividend of 20cps, flat on H1, and a H2 cash EPS down -17% on H1.

The Hold rating is unchanged.

Target price is $5.65 Current Price is $5.62 Difference: $0.03
If BOQ meets the Morgans target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $6.19, suggesting upside of 8.6% (ex-dividends)

The company's fiscal year ends in August.

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

Morgan Stanley rates CSL as Overweight (1) -

CSL has increased its collection centre rollout by 3% year-on-year in September, just shy of the industry rollout of 3.5%, according to Morgan Stanley's Plasma Collection Centre Data for US and EU centres.

CSL opened 27 new centres compared to guidance for 40. In FY23, CSL opened 12 new centres in line with the broker's expectation. 

Looking across both CSL and other plasma generators (Takeda, Grifols and Haemonetics), the analysts note plasma volumes continue to grow.

The Overweight rating and $334 target are unchanged. Industry View: In-Line.

Target price is $334.00 Current Price is $249.46 Difference: $84.54
If CSL meets the Morgan Stanley target it will return approximately 34% (excluding dividends, fees and charges).

Current consensus price target is $329.70, suggesting upside of 31.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

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

Market Sentiment: 0.9

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

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

Macquarie sees limited opportunity for Carnarvon Energy to re-rate amid ongoing regulatory challenges for Australian projects. With activists having successfully challenged environmental plan approval for both the Barossa and Scarborough projects, citing insufficient consultation with Traditional Owners, it is expected new offshore oil and gas projects would be subject to the same challenges. 

Given there is little Carnarvon Energy can do to progress Dorado until a final investment decision can be made, likely now past 2025, Macquarie downgrades its rating to Underperform from Neutral and the target price decreases to 10 cents from 14 cents. The broker expects there will be temptation to deploy capital into other opportunities. 

Target price is $0.10 Current Price is $0.16 Difference: minus $0.055 (current price is over target).
If CVN meets the Macquarie target it will return approximately minus 35% (excluding dividends, fees and charges - negative figures indicate an expected loss).

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: -1.0

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

Citi rates JHX as Buy (1) -

Citi believes recent underperformance from James Hardie Industries may be driven by investor concern around ongoing high home builder cancelation rates. Builder backlogs declined -40% in 2022 as mortgage rates moved materially higher and spurred cancelations, and the broker estimates recent increases to fixed rate mortgages have shaken investor confidence. 

The broker does, however, point out that backlogs were historically high in 2022, and existing home inventory is now at record lows as house prices and rent continue to climb.

While Citi sees possibility that rates do drive cancelations, it expects these factors to buffer the impact and that a cancelation rate increase is muted compared to previous years. 

The Buy rating is retained and the target price decreases to $50.50 from $55.10.

Target price is $50.50 Current Price is $39.60 Difference: $10.9
If JHX meets the Citi target it will return approximately 28% (excluding dividends, fees and charges).

Current consensus price target is $50.74, suggesting upside of 26.7% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY24:

Forecast for FY25:

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

Morgan Stanley rates MMS as Overweight (1) -

Morgan Stanley believes there is currently a favourable risk/reward scenario for purchasing shares of McMillan Shakespeare, following a -30% retracement since hitting a peak at around $22/share.

The broker suggests uncertainty over the renewal of a key South Australian contract has been a key overhang for the stock price. In the event McMillan Shakespeare loses the contract, the analysts see a less than 10% negative impact on group profit (NPATA).

Target $20.60. Overweight. Industry view: In-line.

Target price is $20.60 Current Price is $15.55 Difference: $5.05
If MMS meets the Morgan Stanley target it will return approximately 32% (excluding dividends, fees and charges).

Current consensus price target is $20.75, suggesting upside of 31.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.5

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

Macquarie rates MP1 as Outperform (1) -

Megaport's revenue guidance looks "easily achievable", according to Macquarie, after the launches of Megaport Reach and Megaport One. The addition of sales staff in the second half should provide incremental upside, with Macquarie estimating the reinvestment into its salesforce should bring the company a $19m annual sales boost. 

The broker sees potential for strong double digit free cash flow growth over the forecast period given the company's operating leverage and high fixed cost base. 

The Outperform rating is retained but the target price decreases to $14.10 from $18.00.

Target price is $14.10 Current Price is $11.40 Difference: $2.7
If MP1 meets the Macquarie target it will return approximately 24% (excluding dividends, fees and charges).

Current consensus price target is $13.51, suggesting upside of 20.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.6

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

Macquarie rates PXA as Outperform (1) -

While Macquarie feels Pexa Group's acquisition of Smoove does help to derisk its UK strategy, the broker notes the company has been light on execution details, with the purchase expected to complete within the quarter. 

While Macquarie is encouraged by the company reiterating its UK penetration targets, the broker points out it has acquired two loss- making businesses at a cost of more than $60m since setting targets. Pexa Group does not expect to make further acquisitions to achieve its targets. 

The Outperform rating is retained and the target price decreases to $15.20 from $15.85.

Target price is $15.20 Current Price is $10.90 Difference: $4.3
If PXA meets the Macquarie target it will return approximately 39% (excluding dividends, fees and charges).

Current consensus price target is $14.53, suggesting upside of 44.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.9

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

Morgans rates PXA as Add (1) -

In a move that has been well flagged, according to Morgans, Pexa Group has announced the proposed acquisition of Smoove. The company is an online conveyancing panel manager for UK remortgages and sale and purchase property transactions.

The purchase price is around $60m though, given cash on hand at the target, the price falls to around $41m, explains the analyst.

After reviewing its existing earnings assumptions and after allowing for the acquisition, the broker lowers its FY24 and FY25 EPS forecasts by -3% and -6%, respectively. It's noted the Smoove business is not yet profitable.

The target falls to $13.45 from $14.40. Add.

Target price is $13.45 Current Price is $10.90 Difference: $2.55
If PXA meets the Morgans target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $14.53, suggesting upside of 44.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.9

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

UBS rates PXA as Buy (1) -

UBS reduces its EPS forecasts for Pexa Group to reflect the acquisition of Smoove, a UK-based conveyancing technology provider, but makes no change to its $15 target price.

The transaction will help Pexa access the fragmented transfers marketplace, suggest the analysts. No further UK M&A is likely, notes the broker, anticipating potential market scrutiny over the rising development spend in the UK and on PEXA Digital Growth (PDG).

The Buy rating is retained.

Target price is $15.00 Current Price is $10.90 Difference: $4.1
If PXA meets the UBS target it will return approximately 38% (excluding dividends, fees and charges).

Current consensus price target is $14.53, suggesting upside of 44.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.9

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

Citi rates SDR as Buy (1) -

Citi considers SiteMinder's move into being a revenue management platform as being a logical step for the company, noting it is a relatively unpenetrated opportunity that should play into SiteMinder's strengths. 

With a first iteration of the platform expected to launch next year, Citi anticipates this beta version to focus on revenue automation, expecting a revenue management system with in-depth demand and forecasting to be launched further down the track. 

A successful product launch would suggest upside to the broker's FY25 and FY26 forecasts. The Buy rating is retained and the target price increases to $5.50 from $5.20.

Target price is $5.50 Current Price is $4.54 Difference: $0.96
If SDR meets the Citi target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $5.39, suggesting upside of 17.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.8

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

Morgan Stanley rates SHL as Overweight (1) -

Pathology and diagnostic imaging benefits are growing strongly above pre-pandemic levels, observes Morgan Stanley, following the release of August Medicare data.

Sonic Healthcare is the broker's preferred exposure to domestic health services.

Target 36.60. Overweight. Industry view is In-Line.

Target price is $36.60 Current Price is $29.53 Difference: $7.07
If SHL meets the Morgan Stanley target it will return approximately 24% (excluding dividends, fees and charges).

Current consensus price target is $35.61, suggesting upside of 21.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.7

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

Shaw and Partners rates SRG as Buy (1) -

SRG Global has announced a 10-year maintenance contract renewal in New Zealand, valued at around $121m. The contract is with Transpower New Zealand Ltd to provide specialist industrial services.

Shaw and Partners notes FY24 has now yielded a solid $176m (approximate) in contracts wins and retains its Buy rating and $1.15 target. Given an around $6.5bn pipeline of opportunities in a growth sector currently worth over $120bn, more contract wins are anticipated.

Target price is $1.15 Current Price is $0.64 Difference: $0.515
If SRG meets the Shaw and Partners target it will return approximately 81% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 1.0

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

Shaw and Partners rates STA as Buy (1) -

While Shaw and Partners upgrades its FY24 revenue and earnings forecasts for Strandline Resources by 8% and 17%, respectively, following first shipment of zircon in concentrate from the Coburn project, the 57c target is unchanged.

The shipment will be for 15kt, which the analysts' estimate will generate around $21m in revenue. Another 10kt shipment is expected in the December quarter along with a second shipment of ilmenite. 

At Coburn, management noted the Wet Concentration Plant produced 30.1kt of Heavy Mineral Concentrate in the September quarter.

Target price is $0.57 Current Price is $0.10 Difference: $0.473
If STA meets the Shaw and Partners target it will return approximately 488% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 1.0

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

Bell Potter rates STX as Buy (1) -

Results from Strike Energy's South Erregulla 2 appraisal have confirmed the presence of gas in the Kingia Sandstones. The report described the presence of 16m net pay gas in South Erregulla 2, compared to the 14m net pay found in South Erregulla 1. 

Bell Potter feels the results assists in de-risking South Erregulla 3, which the company will drill next. It is expected this will be completed by the end of calendar year, allowing for an independent reserves update in early 2024. 

The Buy rating and target price of 58 cents are retained.

Target price is $0.58 Current Price is $0.44 Difference: $0.145
If STX meets the Bell Potter target it will return approximately 33% (excluding dividends, fees and charges).

Current consensus price target is $0.54, suggesting upside of 28.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.7

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