Australian Broker Call

Morgan Stanley rates ASX as Underweight (5) -

Morgan Stanley suggests volumes for ASX rate futures are now benefiting from higher interest rates. May volumes were 30% ahead year-on-year. It's also noted the company's investment income should be aided by higher short-end rates.

The Underweight rating and target price of $74.00 are retained. Industry view: Attractive.

Target price is $74.00 Current Price is $81.86 Difference: minus $7.86 (current price is over target).
If ASX meets the Morgan Stanley target it will return approximately minus 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $81.54, suggesting downside of -0.8% (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 BXB as Buy (1) -

Following confirmation that Brambles has had preliminary engagement with CVC Capital Partners around a potential bid, Citi estimates investors could ask for at least $13 p/share.

The broker's valuation is based upon both the size of the transaction and recent comparable’s for infrastructure and defensive assets. It's thought CVC sees an undervaluation by the market, given Brambles has little in the way of excess assets.

The Buy rating and $12.29 target price are maintained.

Target price is $12.29 Current Price is $11.60 Difference: $0.69
If BXB meets the Citi target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $11.99, suggesting upside of 11.6% (ex-dividends)

The company's fiscal year ends in June.

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: 0.4

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

Credit Suisse rates BXB as Outperform (1) -

Brambles has confirmed preliminary discussions with CVC Capital Partners while press speculation suggests a potential bid of $20bn. Credit Suisse considers the speculated offer, at around $11.57 a share, grossly undervalues Brambles.

The broker believes potential fair value is around $15.20 based on FY24 earnings and excluding a control premium and would be surprised if the board granted access at such a low indicative offer.

Recent US dollar strength means the broker reduces FY23 and FY24 forecasts. Target is raised to $13.45 from $13.15 and an Outperform rating is reiterated.

Target price is $13.45 Current Price is $11.60 Difference: $1.85
If BXB meets the Credit Suisse target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $11.99, suggesting upside of 11.6% (ex-dividends)

The company's fiscal year ends in June.

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: 0.4

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

Ord Minnett rates BXB as Buy (1) -

Brambles has confirmed media reports of an unsolicited approach from CVC Capital Partners. Ord Minnett is not surprised there is interest, given a relatively undemanding valuation and a business with strong market share.

The broker believes the bid prospect highlights the latent value that could be realised in the business, should the problems with CHEP Americas, such as loss rates, be resolved.

Moreover, corporate activity is likely to provide support for the share price until efficiencies from the transformation program are realised and an outcome on the Costco plastic pallets trial is announced.

The broker retains a Buy rating and raises the target to $12.70 from $11.95.

Target price is $12.70 Current Price is $11.60 Difference: $1.1
If BXB meets the Ord Minnett target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $11.99, suggesting upside of 11.6% (ex-dividends)

The company's fiscal year ends in June.

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: 0.4

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

UBS rates BXB as Buy (1) -

Brambles has confirmed an incomplete engagement with CVC Capital Partners regarding an unsolicited bid, highlighting no formal offer has been made.

UBS still retains a fundamental valuation that is higher than the 11% increase in the share price that occurred in reaction to press speculation, which indicated the bid was above a $20bn enterprise value.

While negative free cash flow in FY22 is suspected a strong recovery over coming years is considered likely, and the broker will look through the temporary headwinds of higher lumber costs, loss provisions and timing of expenditure.

Buy rating maintained. Target rises to $13.70 from $13.25.

Target price is $13.70 Current Price is $11.60 Difference: $2.1
If BXB meets the UBS target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $11.99, suggesting upside of 11.6% (ex-dividends)

The company's fiscal year ends in June.

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: 0.4

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

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

Despite a circa -20% share price decline for Charter Hall so far in the June quarter, Morgan Stanley stays with its Equal-weight rating on relativity to peers and unfolding macroeconomic conditions.

The target price falls to $15.17 from $18.88 to incorporate sundry factors including lower fees assumptions from FY24 and lower passive income growth due to higher cost of debt.

The asset under management (AUM) compound annual growth rate (CAGR) is also lowered for FY23 and FY24, explains Morgan Stanley. Industry view: In-line.

Target price is $15.17 Current Price is $13.15 Difference: $2.02
If CHC meets the Morgan Stanley target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $20.58, suggesting upside of 58.2% (ex-dividends)

The company's fiscal year ends in June.

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

Morgans rates COE as Add (1) -

Given Cooper Energy's strong recent performance, Morgans had expected yesterday's guidance upgrade. As a result, the lift in FY22 production and earnings (EBITDAX) guidance, and reduced planned FY22 capex spend were in-line with the analysts's forecasts.

The broker retains the Add rating and $0.35 target and notes the outcome of talks between the company and Orbost-operator APA Group ((APA)) is keenly awaited.

In terms of outcomes, Morgans would prefer a change of ownership transaction on Orbost compared to a new long-term commercial operating agreement between APA Group and Cooper Energy.

Target price is $0.35 Current Price is $0.28 Difference: $0.07
If COE meets the Morgans target it will return approximately 25% (excluding dividends, fees and charges).

Current consensus price target is $0.29, suggesting upside of 2.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: -0.2

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

Morgans rates CRN as Add (1) -

Commodity strategists at Morgans lift metallurgical coal price forecasts driving 7-33% 2022-24 EPS forecast upgrades for Coronado Global Resources. The 2022-24 hard coking coal forecasts rise by 6-15% and the long term price estimate remains at US$170/t.

The broker also sees upside risk for dividends. The target price rises to $2.97 from $2.73 and the Add rating is unchanged.

Target price is $2.97 Current Price is $2.18 Difference: $0.79
If CRN meets the Morgans target it will return approximately 36% (excluding dividends, fees and charges).

Current consensus price target is $3.19, suggesting upside of 39.3% (ex-dividends)

The company's fiscal year ends in December.

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: 1.0

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

Citi rates GMG as Buy (1) -

Following a 3Q update by Goodman Group highlighting a continuation of strong conditions, Citi re-iterates its Buy rating and suggests now is a good entry point, given a -25% decline in the share price over recent time.

Management upgraded FY22 EPS growth guidance to 23% from 20%, as like-for-like rental income, development work-in-progress and assets under management (AUM) all increased.

The broker still believes guidance is conservative given strong funds under management (FUM) growth into the 4Q. The $29.50 target price is maintained.

Target price is $29.50 Current Price is $19.55 Difference: $9.95
If GMG meets the Citi target it will return approximately 51% (excluding dividends, fees and charges).

Current consensus price target is $26.77, suggesting upside of 42.8% (ex-dividends)

The company's fiscal year ends in June.

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 GMG as Outperform (1) -

Goodman Group has increased FY22 guidance to growth of 23% and reaffirmed distribution guidance of $0.30 per security. In its update, the company provided a positive commentary across all aspects of the business with work in progress increased to $13.4bn.

Work in progress is anticipated to remain around current levels as of June, which Macquarie believes will allay concerns regarding Amazon's commentary about its space requirements.

The broker observes the business continues to benefit from structural tailwinds which should also result in upgrades beyond FY22. Outperform rating. Target is $27.38.

Target price is $27.38 Current Price is $19.55 Difference: $7.83
If GMG meets the Macquarie target it will return approximately 40% (excluding dividends, fees and charges).

Current consensus price target is $26.77, suggesting upside of 42.8% (ex-dividends)

The company's fiscal year ends in June.

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

Morgan Stanley rates GMG as Overweight (1) -

Following a 3Q update, Morgan Stanley believes things are tracking along nicely for Goodman Group. FY22 EPS guidance was upgraded to 23% growth from 20%, in-line with the broker's forecasts and the consensus estimate.

The analyst highlights work in progress increased to $13.4bn from $12.7bn back in December and believes this negates talk of a
warehouse slowdown.

The Overweight rating and $27.88 target are retained. Industry View: In Line.

Target price is $27.88 Current Price is $19.55 Difference: $8.33
If GMG meets the Morgan Stanley target it will return approximately 43% (excluding dividends, fees and charges).

Current consensus price target is $26.77, suggesting upside of 42.8% (ex-dividends)

The company's fiscal year ends in June.

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

Ord Minnett rates GMG as Hold (3) -

The March quarter update signalled the third consecutive quarterly earnings upgrade, albeit the company warned about escalating cost pressures.

Nevertheless, Ord Minnett envisages little earnings risk over the next three years and increases estimates for earnings per share by 2% per annum because of higher development work-in-progress. Tenant demand remains exceptionally strong, too.

Hold rating retained. Target is reduced to $23 from $24.

Target price is $23.00 Current Price is $19.55 Difference: $3.45
If GMG meets the Ord Minnett target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $26.77, suggesting upside of 42.8% (ex-dividends)

The company's fiscal year ends in June.

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

Ord Minnett rates IGO as Lighten (4) -

Ord Minnett has rebuilt its financial model for IGO following the transition to nickel plus lithium from nickel and gold.

With two ‘tier one’ assets in WA and production of critical minerals including nickel, lithium, copper and cobalt, the analyst considers the company has a unique business.

Nonetheless, after assessing valuation, capital allocation and project execution risk, the broker maintains its Lighten rating. A target price of $8.80 is set.

Target price is $8.80 Current Price is $10.62 Difference: minus $1.82 (current price is over target).
If IGO meets the Ord Minnett target it will return approximately minus 17% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $12.87, suggesting upside of 17.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: -0.2

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

Citi rates NUF as Buy (1) -

While supply chain pressures and other cost headwinds will likely continue through 2022, Citi notes continued strength in volume and pricing across Nufarm's key regions following recent results from peers.

The broker raises its  FY22/23 earnings (EBITDA) forecasts by 16% and 6%, respectively, and estimates 1H earnings of $333m compared to guidance for $320m-$340m.

The outlook for Nufarm is bright given the Australian summer crop is expected to be the fourth highest on record, while the winter crop is also expected to be a record, notes the analyst.

The Buy rating is retained, while the target price rises to $7.40 from $6.50.

Target price is $7.40 Current Price is $6.47 Difference: $0.93
If NUF meets the Citi target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $6.91, suggesting upside of 3.9% (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

Macquarie rates PPH as Neutral (3) -

Macquarie asserts the operating performance of Pushpay Holdings continues to deteriorate. Customer growth disappointed in FY22 with total unique customers -4% below estimates. Expenditure growth has also surprised to the upside.

The tax benefit provided by the IP transfer to the US from New Zealand provides some offset against FY23 earnings downgrades, the broker notes.

With a potential bid on the table this could support the share price, yet Macquarie cautions a positive result for investors is not guaranteed. Neutral maintained. Target is NZ$1.35.

Current Price is $1.12. Target price not assessed.

The company's fiscal year ends in March.

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: 0.0

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

Morgans rates QUB as Hold (3) -

Morgans updates its financial model following the completion of Qube Holdings' $400m off-market buyback at a price of $2.59/share, which reduces shares on issue by around -8%.

The valuation increases as the buyback was undertaken at a price below the analyst's intrinsic valuation per share. After also allowing for a valuation roll forward, the target price rises to $2.83 from $2.77.

The Hold rating is unchanged as Morgans is aware that rising interest rates will likely impact the company's cost of capital.

Target price is $2.83 Current Price is $2.94 Difference: minus $0.11 (current price is over target).
If QUB meets the Morgans target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.33, suggesting upside of 13.7% (ex-dividends)

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

Ord Minnett rates REG as Hold (3) -

Ord Minnett reviews its earnings forecasts for Regis Healthcare.

While FY22 estimates are lowered due to lower occupancy levels and ongoing covid-related costs, the broker likes the FY23 outlook. Covid grant payments are weighted to that financial year and funding is set to increase from October.

Nonetheless, the analyst retains a Hold rating pending further clarity around the government’s new funding regime. The target price rises to $2.30 from $2.10 as the broker's valuation model is rolled forward.

Target price is $2.30 Current Price is $2.37 Difference: minus $0.07 (current price is over target).
If REG meets the Ord Minnett target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.10, suggesting downside of -14.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.0

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

Macquarie rates SCG as Underperform (5) -

Macquarie observes customer visits and sales are recovering in shopping centres and the total portfolio is now at 88% of pre-pandemic levels.

The broker remains sceptical whether retail landlords will be able to pass through CPI +2% growth in rents, given the headwinds facing the consumer and the longer term structural changes to retail.

Amid the sell-off across the sector the broker increases its shareholder return estimates, yet on a relative basis Scentre Group remains the lowest. Underperform maintained. Target is $2.85.

Target price is $2.85 Current Price is $2.85 Difference: $0
If SCG meets the Macquarie target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $3.04, suggesting upside of 6.6% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.0

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

Morgans rates STP as Add (1) -

While retaining an Add rating for Step One Clothing, Morgans acknowledges confidence has taken a big hit after management now expects to miss prospectus forecasts.

FY22 earnings (EBITDA) in the range of $7-8.5m and sales growth of 15-20% are now expected. Both ranges are materially lower than previous guidance of $15m for earnings and 21-25% revenue growth, points out the analyst.

While it's a long road back, the broker expects the company to remain profitable and cash generative. The Add rating is retained while the target falls to $0.60 from $2.40.

Target price is $0.60 Current Price is $0.21 Difference: $0.39
If STP meets the Morgans target it will return approximately 186% (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

UBS rates WEB as Buy (1) -

UBS observes Australian domestic volumes remain strong and Webjet should make further progress around its strategy. The major obstacle to expectations is a slower uplift in Australian outbound international travel.

Qantas ((QAN)) expects to be at 70% of capacity by the September quarter but other international carriers have been slower to return services.

UBS envisages upside in outer years for Webjet on the back of market share gains and higher EBITDA margins related to cost efficiency.  Buy rating retained. Target is reduced to $6.75 from $6.95.

Target price is $6.75 Current Price is $5.64 Difference: $1.11
If WEB meets the UBS target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $6.12, suggesting upside of 8.6% (ex-dividends)

The company's fiscal year ends in March.

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