Australian Broker Call

Morgan Stanley rates APT as Overweight (1) -

In exploring the potential of Afterpay Money, Morgan Stanley thinks it could almost double the company's Australian revenues, increase engagement in core BNPL and reduce processing costs. It's also believed it will enhance data and boost Afterpay's shopping platform.

The broker sees an around 80% base-case revenue uplift from a range of products and views cashback as the most promising new segment. The Overweight rating and $145 target are retained. Industry view: In-Line.

Target price is $145.00 Current Price is $107.47 Difference: $37.53
If APT meets the Morgan Stanley target it will return approximately 35% (excluding dividends, fees and charges).

Current consensus price target is $120.90, suggesting upside of 5.8% (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

Credit Suisse rates ARF as Neutral (3) -

Arena REIT's announced asset revaluation gains resulted in a 7% ($72m) uplift relative to December 2020 book values, with the overall portfolio cap rate -33bp lower to 5.80%.

The early learning centre (ELC) portfolio was up 6.8%, while the Healthcare portfolio was up 8.4%. Arena indicated revaluations will have a positive $0.21/share impact on net asset value (NAV), implying an estimated 30-June-2021 NAV of $2.53.

Arena announced its fourth quarter FY21 dividend per share (DPS) of 3.725c, bringing the FY21 DPS of 14.8cps in line with previous guidance.

Based on current pricing, Credit Suisse notes Arena is trading at a 35% premium to NAV on a market implied cap rate of 4.51%.

While at face value this premium screens “high”, the broker believes the equities market is paying a premium for the company's predictable earnings, strong balance sheet and favourable industry structure.

Neutral retained. Target is raised to $3.23 from $3.04.

Target price is $3.23 Current Price is $3.41 Difference: minus $0.18 (current price is over target).
If ARF meets the Credit Suisse target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.21, suggesting downside of -8.1% (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

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

Morgan Stanley assesses the NSW government's coal export demand scenarios provide further evidence on Aurizon Holding's long-term coal volume and environmental risk from the global energy transition.

As the largest Australian coal haulage company, the broker estimates around 87% coal earnings (EBIT) exposure and the coal volume will still be the dominant long-term earnings driver.

Equal-weight rating. Target is $4.03. Industry view: Cautious.

Target price is $4.03 Current Price is $3.79 Difference: $0.24
If AZJ meets the Morgan Stanley target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $4.60, suggesting upside of 22.1% (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

Macquarie rates BHP as Outperform (1) -

BHP Group has updated on its planned Jansen potash project, declaring a bullish medium to long term view on the potash market with deficits expected by the end of the decade. An investment decision will be made in the next few months.

Critical to that decision, the broker notes, is deciding on a suitable port, which may have to be built from scratch, impacting on project return estimates.

The broker is not currently including a valuation for Jansen. Outperform rating and $61 target underpinned by iron ore price momentum.

Target price is $61.00 Current Price is $47.69 Difference: $13.31
If BHP meets the Macquarie target it will return approximately 28% (excluding dividends, fees and charges).

Current consensus price target is $49.47, suggesting upside of 5.9% (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: 0.4

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

Morgan Stanley rates BHP as Overweight (1) -

In a general update on potash by management, discussions around the development of the Jansen potash mine were highlighted by Morgan Stanley. The project is expected to be able to progress without a partnership, if required. A key hurdle remains a port solution.

More generally, the company noted additional mines will be needed to meet potash demand, with depletion expected in Belarus, Russia and China beyond 2030. Overweight rating with a target price of $47.50. Industry view: Attractive.

Target price is $47.50 Current Price is $47.69 Difference: minus $0.19 (current price is over target).
If BHP meets the Morgan Stanley target it will return approximately minus 0% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $49.47, suggesting upside of 5.9% (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: 0.4

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

Morgans rates BHP as Hold (3) -

Morgans is cautious on iron ore due to lofty market valuations and potential early signs of moderation. It's believed peaking global steel demand will be tough to sustain and flat inventories indicate a lack of tightness in the iron ore market.

As the cycle matures the broker expects the equity market focus to switch from earnings momentum to earnings direction (i.e. spot price trumping consensus upgrades).

Morgans has a preference for BHP Group among large cap peers and sees the stock as a core portfolio holdings for yield investors. For more active investors, further share price strength is considered an opportunity to take some profit. 

Hold rating and the target increases to $45.80 from $43.60.

Target price is $45.80 Current Price is $47.69 Difference: minus $1.89 (current price is over target).
If BHP 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 $49.47, suggesting upside of 5.9% (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: 0.4

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

Morgan Stanley rates BTH as Overweight (1) -

With three weeks of trading remaining, Bigtincan Holdings has hit the top end of annualised recurring revenue (ARR) guidance. This implies to Morgan Stanley at least 48% growth year-on-year, and an estimated circa 28% growth organically, despite FX headwinds.

Management also announced the integration of Clearslide has been completed. The Overweight rating and $1.50 target are retained and the analyst sees the trading update as further de-risking consensus expectation hurdles for FY22. Industry view is In-Line.

Target price is $1.50 Current Price is $1.13 Difference: $0.37
If BTH meets the Morgan Stanley target it will return approximately 33% (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

Citi rates CGF as Neutral (3) -

Citi expects Challenger's book value to increase to over $6.00 by end of June, following a strong market adjustment in the second half equating to around $225m after tax coupled with a $200m gross capital release from the life risk book. 

As a result, the broker increases its statutory earnings per share estimate by 57% for FY21. 

Challenger has also reduced long-term return on equity targets to the cash rate plus 12%, but Citi notes investors may question if this is enough for a company with Challenger's risk profile. 

The Neutral rating is retained and the target price increases to $6.00 from $5.90. 

Target price is $6.00 Current Price is $5.55 Difference: $0.45
If CGF meets the Citi target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $5.92, suggesting upside of 8.3% (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

Credit Suisse rates CGF as Neutral (3) -

As part of its annual Investor Day briefing, Challenger reaffirmed its FY21 guidance, with Life earnings weaker than expected and Funds Management stronger.

While the cash operating earnings margin is expected to decline yet again in second half FY21 to 2.37%, Challenger reported positive investment experience of $225m post tax in second half FY21 to date.

Challenger also raised its capital target making its commentary at the last result, that it would likely operate at the top end of its capital target over the next year or two, a permanent shift; and lowered its pre-tax return on equity target to cash 12%.

Commenting on the announcement, Credit Suisse believes the increase in the capital target equates to a -180bp drop in the return on equity (ROE) if it is fully equity funded and if the additional capital is invested in cash.

Rather than hastily viewing this as a permanent rebasing, the broker continues to believe there remains upside to the ROE in the medium/long term as credit spreads widen.

Credit Suisse estimates when risk premium returns to the long-run average, it will add 130bp to the pre-tax ROE compared to front book economics of 12%.

Driven by Funds Management which offset downgrades to Life, Credit Suisse upgrades FY22-23 earnings estimates by 2-4%.

Neutral rating and $6.05 price target both retained.

Target price is $6.05 Current Price is $5.55 Difference: $0.5
If CGF meets the Credit Suisse target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $5.92, suggesting upside of 8.3% (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

Macquarie rates CGF as Neutral (3) -

Challenger provided FY22 profit guidance at its investor day well below the broker's expectations, which had previously reflected higher credit spreads. Guidance included no significant change to asset allocation and Life earnings margins remaining flat.

The broker continues to like the longer term thematic, along with the benefits of acquiring a banking licence, but for now valuation seems fair. Neutral retained, target falls to $5.30 from $5.90.

Target price is $5.30 Current Price is $5.55 Difference: minus $0.25 (current price is over target).
If CGF meets the Macquarie target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.92, suggesting upside of 8.3% (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 CGF as Equal-weight (3) -

After the recent surprise FY21 downgrade, at first glance Morgan Stanley is reassured after Challenger maintained guidance for FY21. In addition, the company issued first-time FY22 guidance of $430-480m normalised net profit (PBT), in-line with the broker's expectation.

Management's return on equity (ROE) target has been reduced by -2% points to 12% over the cash rate. The analyst had already
forecast 12.5% pre-tax ROE in FY22 and thinks the lower target is sensible given tighter credit spreads. 

The broker also highlights the target capital range lifted to 1.3-1.7 times from 1.3-1.6 times. Equal-weight with a target of $6.50. Industry view: In-line.

Target price is $6.50 Current Price is $5.55 Difference: $0.95
If CGF meets the Morgan Stanley target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $5.92, suggesting upside of 8.3% (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

Morgans rates CGF as Add (1) -

At an investor day, management reconfirmed FY21 profit (NPBT) will be at the bottom end of its previously disclosed guidance range of $390m-$440m. The FY22 profit guidance range provided was $430m-$480m.

As a buffer for volatile markets, more capital will be held going forward. This leads management to lower the return on equity (ROE) target to 12% plus the RBA cash rate from 14% plus the RBA cash rate.

Morgans lowers EPS forecasts for FY22 and FY23 by around -3% to -5% on slightly more conservative margin estimates and sales growth. The price target is reduced to $6.26 from $6.34 and the Add rating is maintained.

Target price is $6.26 Current Price is $5.55 Difference: $0.71
If CGF meets the Morgans target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $5.92, suggesting upside of 8.3% (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

Ord Minnett rates CGF as Hold (3) -

At its investor day, Challenger noted an improvement in the FY21 capital position, which was offset by downgraded guidance on the life business return on equity (ROE).

While the latter was a negative, Ord Minnett considers it has improved the resilience of the leveraged spread model when markets fall, reducing the probability of an expensive capital raising.

Pre-tax profit (PBT) guidance for FY21 was maintained at the bottom end of the 390–440m range, with FY22 to show a strong expansion to 430–480m, notes the broker. The Hold rating and $5.50 target are maintained.

Target price is $5.50 Current Price is $5.55 Difference: minus $0.05 (current price is over target).
If CGF meets the Ord Minnett target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.92, suggesting upside of 8.3% (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

UBS rates CGF as Downgrade to Neutral from Buy (3) -

UBS considers an otherwise positive sales story at the investor day was offset by management lowering the long-term return on equity (ROE) target. It's the second rebase in two years.

The company re-affirmed FY21 profit (NPBT) guidance at the 'lower end' of $390-440m and provided a maiden FY22 guidance of $430-480m.

UBS lowers the rating to Neutral from Buy and the target price to $5.80 from $7. This largely reflects the lower cost of equity (COE)
spread margin outlook, and the path back towards the lower ROE target, explains the broker.

Target price is $5.80 Current Price is $5.55 Difference: $0.25
If CGF meets the UBS target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $5.92, suggesting upside of 8.3% (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 COL as Downgrade to Neutral from Buy (3) -

Coles' capital expenditure to sales has risen to around 2.6%, compared to 2.0% pre-covid. Citi notes the company was under invested pre-covid compared to Woolworths, and implications of this and subsequent catch-up spend will be less severe if a rational market persists. 

Higher capital expenditure has been invested in supply chain and online improvements. Citi expects return on capital expenditure to be invested rather than flow to underlying earnings, and that expenditure will moderate at around $1.5bn by FY24. 

Earnings are downgraded for FY22 and FY23 by -4% and -8% respectively. 

The rating is downgraded to Neutral and the target price decreases to $17.20 from $18.00. 

Target price is $17.20 Current Price is $16.29 Difference: $0.91
If COL meets the Citi target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $17.49, suggesting upside of 6.3% (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

Credit Suisse rates COL as Downgrade to Neutral from Outperform (3) -

Despite the increase in depreciation guidance which led to a reduction in FY22/23 earnings forecasts, Credit Suisse regards Coles Group's strategy update, in which it reaffirmed a commitment to pressing ahead with investment, as broadly positive.

Commenting on the update, the broker notes Coles' plans to accelerate e-commerce performance and maintain momentum on store
renewals take on added importance. The broker believes lower population growth is likely to make market share an even more important differentiator of relative performance near term.

Credit Suisse believes upgraded capital expenditure guidance enables all of those variables to be managed alongside peak expenditure in FY22 for warehouse automation.

In the latest update, 60% of capital expenditure is being directed towards efficiency and growth initiatives.

Given that Coles had a net cash position at the end of first half FY21, Credit Suisse notes funding is not a constraint. Despite higher reinvestment, the broker has not materially changed outer year earnings forecasts.

The broker downgrades Coles to Neutral from Outperform and lowers the price target to $17.16 from  $18.19.

Target price is $17.16 Current Price is $16.29 Difference: $0.87
If COL meets the Credit Suisse target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $17.49, suggesting upside of 6.3% (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 COL as Outperform (1) -

Coles Group did not provide a trading update at its strategy day, but rather stuck to outlining a strategy focusing on omnichannel experience, including automated distribution centres, tailoring range and further store renewals and rollouts.

All well and good, except it means FY22 capex guidance has been lifted by 27% over FY21, the broker notes.

The broker nonetheless continues to see value, supported by normalising consumer behaviour and the comparable sales gap to last year's hoarding period now starting to close. Target nevertheless falls to $17.30 from $18.20, Outperform retained.

Target price is $17.30 Current Price is $16.29 Difference: $1.01
If COL meets the Macquarie target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $17.49, suggesting upside of 6.3% (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 COL as Overweight (1) -

After the Coles Group investor day, Morgan Stanley is pleased by indications of normalising shopping patterns, suggesting recent declines were covid-driven rather than due to structural factors.

Despite higher capex and D&A flowing through to earnings/valuation, the broker believes the stock is oversold and at a peak discount to both Woolworths ((WOW)) and the market. Management reiterated a 80-90% dividend payout policy.

The analyst lowers the earnings forecast for FY22-23 by -5% and -4%, on the back of increased D&A, driven by increased capex as well as increased AASB16 leasing impacts. This is partially offset by higher assumed space growth.

Overweight rating. Target is reduced to $19 from $20.25. Industry view: Attractive.

Target price is $19.00 Current Price is $16.29 Difference: $2.71
If COL meets the Morgan Stanley target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $17.49, suggesting upside of 6.3% (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

Morgans rates COL as Add (1) -

At an investor day, Coles Group outlined increased investment in areas such as data, eCommerce, technology, automation, range, stores and sustainability. Management also noted the normalisation in consumer behaviour seen early in Q4 has continued (ex-Victoria).

The broker expects the group to continue to benefit from a normalisation in consumer behaviour. While increased investment will be negative for near-term earnings, it's estimated the longer-term benefits should be positive.

The Add rating is maintained and the target is decreased to $17.80 from $18.50.

Target price is $17.80 Current Price is $16.29 Difference: $1.51
If COL meets the Morgans target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $17.49, suggesting upside of 6.3% (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

Morgans rates FMG as Reduce (5) -

Morgans is cautious on iron ore due to lofty market valuations and potential early signs of moderation. It's believed peaking global steel demand will be tough to sustain and flat inventories indicate a lack of tightness in the iron ore market.

As the cycle matures the broker expects the equity market focus to switch from earnings momentum to earnings direction (i.e. spot price trumping consensus upgrades).

Morgans notes Fortescue Metals Group is the most sensitive of the three heavyweight Australian producers to a changing iron ore price. The share price is estimated to be trading at a premium to value, which outweighs an attractive dividend yield.

The Reduce rating is unchanged. The target price  is $18.80.

Target price is $18.80 Current Price is $22.61 Difference: minus $3.81 (current price is over target).
If FMG meets the Morgans target it will return approximately minus 17% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $21.89, suggesting downside of -3.2% (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: 0.1

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

Ord Minnett rates HLS as Accumulate (2) -

Ord Minnett lowers FY21 earnings forecasts for Healius to allow for the impact of the recent Victorian shutdown. However, it's believed the high demand for covid testing, combined with a moderate recovery in underlying demand, will lead to a record full-year result.

The broker sees clear potential upside to pre-pandemic margins and raises the target price to $4.75 from $4.60, reflecting higher margin estimates from FY22. The Accumulate rating is unchanged.

Target price is $4.75 Current Price is $4.34 Difference: $0.41
If HLS meets the Ord Minnett target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $4.38, suggesting downside of -0.7% (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 rates IAG as Add (1) -

Following the Victorian storms and flooding, the insurer will likely come in between -$50m-$100m above its original FY21 natural hazard allowance. Morgans lowers the FY21 EPS forecast by around -9% though maintains an Add rating due to an undemanding valuation.

The broker also expects future margin improvement as price increases roll through the group's book and sees potential for covid-19 provision releases over the medium term. The target price rises to $5.71 from $5.35.

Target price is $5.71 Current Price is $5.22 Difference: $0.49
If IAG meets the Morgans target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $5.47, suggesting upside of 3.7% (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

Citi rates ING as Buy (1) -

Citi is predicting a 26% increase to Inghams Group's earnings per share compound annual growth rate to FY23 as Australian channels normalise in the second half of FY21. 

An expected lift in the average selling price for Australian poultry of 4% in the second half should help stabilise prices following covid-related volume boosts. 

The broker expects benefits from reduced feed costs to flow through to FY22. 

The Buy rating and target price of $4.40 are retained. 

Target price is $4.40 Current Price is $3.88 Difference: $0.52
If ING meets the Citi target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $4.07, suggesting upside of 3.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.8

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

Citi rates IVC as Downgrade to Sell from Neutral (5) -

InvoCare management has highlighted a road to recovery, but Citi notes it will be difficult, estimating the company has lost around -260 basis points market share between 2015 and 2020. 

This is despite the $455m spent on acquisition and capital expenditure during that time. The company has set a target of continued annual capital expenditure at around $35m going forward. 

The death rate remains below trend for 2021 to date, presenting a challenging near-term outlook. Citi downgrades earnings per share forecasts for FY21, F22 and FY23 by -29%, -13% and -15% respectively. 

The rating is downgraded to Sell and the target price decreases to $10.00 from $11.50. 

Target price is $10.00 Current Price is $11.54 Difference: minus $1.54 (current price is over target).
If IVC meets the Citi target it will return approximately minus 13% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $10.73, suggesting downside of -6.1% (ex-dividends)

The company's fiscal year ends in December.

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

Macquarie rates MND as Outperform (1) -

Monadelphous Group is, like all service providers, suffering from increased commodity demand meeting labour shortages and covid restrictions in WA, which are keeping margins under pressure. Latest feedback appears the situation is only getting worse.

While the broker has cut earnings forecasts, it does see a margin trough ahead as new contracts incorporate higher costs. The stock is trading well below its traditional multiple. Target falls to $12.39 from $13.85, Outperform retained.

Target price is $12.39 Current Price is $9.55 Difference: $2.84
If MND meets the Macquarie target it will return approximately 30% (excluding dividends, fees and charges).

Current consensus price target is $12.40, suggesting upside of 23.6% (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 PPM as Initiation of coverage with Outperform (1) -

Credit Suisse is forecasting $126m FY21 net profit, 4% above prospectus estimates and is initiating coverage on Pepper Money Ltd with an Outperform rating and a $3.55 target price.

As a large, experienced non-bank focused on underserved markets, the broker believes Pepper Money is likely to generate continued growth well above system to take advantage of still relatively small market share in very large lending and financial services markets.

In so doing, the broker believes Pepper Money has the opportunity to continue to capitalise on structural tailwinds for non-bank financial institutions, such as continued regulatory and reputational challenges for banks.

Target price is $3.55 Current Price is $2.69 Difference: $0.86
If PPM meets the Credit Suisse target it will return approximately 32% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

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

Morgans rates RIO as Hold (3) -

Morgans is cautious on iron ore due to lofty market valuations and potential early signs of moderation. It's believed peaking global steel demand will be tough to sustain and flat inventories indicate a lack of tightness in the iron ore market.

As the cycle matures the broker expects the equity market focus to switch from earnings momentum to earnings direction (i.e. spot price trumping consensus upgrades).

Morgans sees Rio Tinto as a core portfolio holdings for yield investors. For more active investors, further share price strength is considered an opportunity to take some profit. The Hold rating is unchanged and the target rises to $121 from $118.

Target price is $121.00 Current Price is $124.23 Difference: minus $3.23 (current price is over target).
If RIO meets the Morgans target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $130.00, suggesting upside of 5.3% (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: 0.6

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

Macquarie rates SDF as Outperform (1) -

This year will see market-leading Commercial Motor insurance underwriters going live on the Steadfast Client Trading Platform, joining existing BizPack, Home and Personal Motor underwriters which have to date proven successful.

Market conditions and current operating performance support the outlook, the broker suggests, and Commercial Motor represents a key step in platform development and earnings growth. Outperform and $4.70 target retained.

Target price is $4.70 Current Price is $4.30 Difference: $0.4
If SDF meets the Macquarie target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $4.67, suggesting upside of 8.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.9

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

Credit Suisse rates SHL as Outperform (1) -

Sonic Healthcare has announced the acquisition of Canberra Imaging Group (CIG), which has annual revenue of circa $60m, 15 radiologists across 10 sites and includes one full and two partial MRI licenses.

While the purchase price was not disclosed, Credit Suisse estimates a 9.0x earnings multiple (or $135m–150m EV), with Sonic showing more discipline relative to other recent radiology deals.

With the deal being cash/debt funded, Credit Suisse estimates it will be around 1% earnings per share accretive, without incorporating any additional potential synergies.

While Credit Suisse doesn't believe this acquisition is very significant to Group earnings, the broker increases estimates for Sonic Imaging earnings by 20% in FY23/24.

The key opportunity, notes Credit Suisse is for Sonic is to use its enhanced scale to win more Government radiology contracts and achieve further procurement savings.

Credit Suisse maintains an Outperform rating and $40 target.

Target price is $40.00 Current Price is $37.03 Difference: $2.97
If SHL meets the Credit Suisse target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $37.36, suggesting downside of -1.7% (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 SHL as Hold (3) -

Ord Minnett adjusts EPS forecasts by -1% in FY21 and 2.5% in FY22. This was driven by the purchase of Canberra Imaging Group and a little higher-than-expected domestic covid testing though this was offset by lower testing levels in Europe.

The Hold rating and $36.40 target are unchanged.

Target price is $36.40 Current Price is $37.03 Difference: minus $0.63 (current price is over target).
If SHL meets the Ord Minnett target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $37.36, suggesting downside of -1.7% (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

Morgan Stanley rates STO as Overweight (1) -

With climate risks growing quickly across the energy sector, Morgan Stanley assesses Santos has been more aggressive than peers laying out a plan to reduce emissions. 

It is one of three resource companies in Australia that has set Net Zero by 2040 and is leading in the energy sector. In the medium term, Scope III emissions (burning the hydrocarbons by its customers) need to be addressed, explains the broker.

The analyst believes this could occur via hydrogen with carbon capture or via customers installing technologies like carbon capture at end use (i.e. power plants). Overweight rating is retained. Target is $8.60. Industry view: Attractive.

Target price is $8.60 Current Price is $7.61 Difference: $0.99
If STO meets the Morgan Stanley target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $7.92, suggesting upside of 7.4% (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: 0.5

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

Morgans rates SUN as Downgrade to Hold from Add (3) -

Following the Victorian storms and flooding, the insurer will likely come in between -$50m-$100m above its original FY21 natural hazard allowance. Morgans forecasts are unaltered, having previously catered for natural hazard costs -$80m above allowances.

The broker lowers the rating to Hold from Add to reflect a strong share price rise over the last month. The price target of $11.44 is unchanged.

Target price is $11.44 Current Price is $11.37 Difference: $0.07
If SUN meets the Morgans target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $11.81, suggesting upside of 4.1% (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

Credit Suisse rates SWM as Outperform (1) -

Seven West Media has guided to FY21 underlying earnings of $250-255m with fourth quarter FY21 ad revenue expected to grow by more than 45% year-on-year.

Driven by strong growth 7Plus and payments from Google/Facebook, Seven West Media has also guided to Digital earnings more than doubling the $60m expected in FY21.

While the payments from the digital platforms were not quantified, Credit Suisse is now forecasting $27.5m in FY22, split between Digital ($20m) and WAN ($7.5m).

The broker is now forecasting net debt of $246m at the end of FY21.

With leverage significantly reduced, Credit Suisse believes there's scope for the company to renegotiate its debt facilities in FY22 and reduce any discount the market was placing on the stock due to elevated debt levels.

Outperform rating and target price of $0.80 both retained.

Target price is $0.80 Current Price is $0.50 Difference: $0.3
If SWM meets the Credit Suisse target it will return approximately 60% (excluding dividends, fees and charges).

Current consensus price target is $0.67, suggesting upside of 39.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.9

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

UBS rates SWM as Buy (1) -

In a trading update, the company now expects underlying earnings (EBITDA) of $250m-$255m in FY21. This compares to previous analyst consensus of $235m-$245m, and the UBS forecast of $240m.

The analyst lifts the FY21 EPS forecast by 9% and maintains the Buy rating and $0.60 price target, as longer-term operating assumptions are broadly unchanged. Strong fourth quarter growth was not considered a surprise given the covid-impacted pcp.

Target price is $0.60 Current Price is $0.50 Difference: $0.1
If SWM meets the UBS target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $0.67, suggesting upside of 39.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.9

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

Morgan Stanley rates WHC as Overweight (1) -

Morgan Stanley notes Whitehaven Coal still stands to benefit from high coal prices and stays with an Overweight rating, despite Narrabri causing another -3% downgrade to production.

Management expects a difficult circa 18 months at Narrabri before moving back to shallower panels. The analyst has already incorporated this into forecasts and highlights Narrabri contributes only 21% of equity coal production in FY22.

Morgan Stanley maintains the Overweight rating and $2.10 target price. Industry view: Attractive. 

Target price is $2.10 Current Price is $1.81 Difference: $0.29
If WHC meets the Morgan Stanley target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $2.21, suggesting upside of 16.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.9

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