Australian Broker Call

Macquarie rates ALD as Outperform (1) -

Following a surprise upgrade to guidance by Viva Energy Group ((VEA)), Macquarie upgrades earnings forecasts for Ampol. The EPS forecast for FY21 is raised by 18%, reflecting a faster fuels volume recovery.

Estmates for FY22 and FY23 are raised by 12% and 17%, as the analyst factors-in off-market buybacks. The target price is increased to $35.00 from $34.80 and the Outperform rating is unchanged.

Ahead of results to be released on Monday, 23 August, the broker forecasts $304m earnings (EBIT) replacement cost of sales operating profit (RCOP) for the first half 2021, an interim dividend of 40 cents and another $300m buyback.

Target price is $35.00 Current Price is $29.18 Difference: $5.82
If ALD meets the Macquarie target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $31.80, suggesting upside of 8.8% (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 API as Neutral (3) -

Wesfarmers ((WES)) has made a $1.38 cash non-binding offer for Australian Pharmaceutical, representing a 21% premium to the pre-bid close. Major shareholder Washington H Soul Pattinson ((SOL)) which holds a 19.3% interest has agreed to vote in favour of the proposal.

Credit Suisse suspects Wesfarmers may need to raise its offer in order for the bid to be accepted, given it is in line with where the shares traded in April.

The broker also points out, with heightened competition in retail pharmacy, more investment is needed to turn this business around. Neutral rating maintained. Target rises to $1.38 from $1.25.

Target price is $1.38 Current Price is $1.37 Difference: $0.01
If API meets the Credit Suisse target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $1.33, suggesting downside of -3.2% (ex-dividends)

The company's fiscal year ends in August.

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 API as No Rating (-1) -

Australian Pharmaceutical Industries has received an indicative acquisition bid from Wesfarmers ((WES)) at $1.38 per share.

Separately, the company updated on its recent strategic review, and announced the exit from manufacturing operations in New Zealand by 2H23. The focus will shift to the pharma distribution and retail businesses, highlights the broker.

The analyst also notes current lockdowns have resulted in an underlying earnings (EBIT) guidance downgrade.

Due to research restrictions, Macquarie cannot advise on either rating or target price.

Current Price is $1.37. Target price not assessed.

Current consensus price target is $1.33, suggesting downside of -3.2% (ex-dividends)

The company's fiscal year ends in August.

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

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

Australian Pharmaceutical has received an unsolicited bid from Wesfarmers at $1.38/share. The offer values the stock at 5.6x Morgan Stanley's FY22 operating earnings forecasts.

Australian Pharmaceutical has also provided a trading update, noting it will close the NZ manufacturing facilities and outsource personal care and over-the-counter products. FY21 underlying EBIT guidance is downgraded by -11% to $66-68m because of the recent lockdowns.

If Sydney's lockdowns persist beyond July 31, 2021, EBIT is expected to fall by a further -$1m per week of extension.

Morgan Stanley retains an Equal-weight rating, $1.25 target and In-Line industry view.

Target price is $1.25 Current Price is $1.37 Difference: minus $0.12 (current price is over target).
If API meets the Morgan Stanley target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $1.33, suggesting downside of -3.2% (ex-dividends)

The company's fiscal year ends in August.

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

Morgan Stanley rates ARF as Downgrade to Equal-weight from Overweight (3) -

Morgan Stanley downgrades to Equal-weight from Overweight on valuation. At the current share price the stock is implying lofty multiples. The broker assesses Arena REIT is among the most expensive amongst the asset-heavy rent-collecting A-REITs under coverage.

Still, Morgan Stanley finds strong reasons for investors to continue holding the stock including a 15-year weighted average lease expiry and the fact child care operators are one of the more secure tenant classes.

Target is raised to $3.66 from $3.14. Industry view is In-Line.

Target price is $3.66 Current Price is $3.76 Difference: minus $0.1 (current price is over target).
If ARF meets the Morgan Stanley target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.38, suggesting downside of -9.6% (ex-dividends)

The company's fiscal year ends in June.

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

Macquarie rates BOQ as Outperform (1) -

Following completion of the ME Bank acquisition, Macquarie resumes coverage of Bank of Queensland, after having been restricted on research updates. It's believed the risk-reward of the acquisition now favours investors, though success will be unknown for 3-5 years.

The broker increases EPS estimates by around 9% in FY21 to incorporate the impact of ME bank, following early completion of the acquisition, and a reduction in impairments. A target price of $10 and an Outperform rating are set.

Target price is $10.00 Current Price is $9.01 Difference: $0.99
If BOQ meets the Macquarie target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $9.84, suggesting upside of 9.1% (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

UBS rates CNU as Neutral (3) -

Chorus has lost -16,000 lines in the June quarter taking the FY21 loss to -75,000. This is lower than UBS had anticipated, and could have been worse because of the ramp up in wireless broadband competition.

The stock is trading in line with the broker's NZ$6.30 target yet a small downside risk is envisaged for when the Commerce Commission releases its estimates of the regulated asset base in August. Neutral maintained.

Current Price is $5.93. Target price not assessed.

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

This company reports in NZD. 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

Morgan Stanley rates COH as Overweight (1) -

US President, Joe Biden, has issued a proposed change to rules to allow hearing aids to be sold over the counter. Hearing aids are currently not covered by Medicare and the relatively prohibitive cost is thought to restrict patient access.

Morgan Stanley notes it could be argued this is negative for Cochlear as it breaks down the channel through which potential implant patients can be sourced.

Yet, the broker suggests hearing aids sold over-the-counter could serve to increase overall awareness of hearing loss and therefore broaden the reach of cochlear implants. Overweight rating and $227 target maintained. Industry view: In-line.

Target price is $227.00 Current Price is $241.85 Difference: minus $14.85 (current price is over target).
If COH meets the Morgan Stanley target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $216.87, suggesting downside of -9.8% (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

Ord Minnett rates CWN as Buy (1) -

While risks persist for casinos around governance, anti-money laundering, counter-terrorism financing and licence monitoring, Ord Minnett remains positive on Crown Resorts. The Buy rating and $15 target price are maintained.

The broker estimates the real estate value of the company's assets to be $5.8bn or $8.60 a share. Also, the positive view on the company is guided by the Independent Liquor & Gaming Authority (ILGA) implementing the NSW Casino Levy.

The analyst is also guided by an interpretation of previous Royal Commission enforcements and believes Crown will retain its licences with conditions. The broker's FY21 estimates are for revenues of $1.31bn, earnings (EBITDA) of $245m and a net loss of -$61.2m.

Target price is $15.00 Current Price is $10.85 Difference: $4.15
If CWN meets the Ord Minnett target it will return approximately 38% (excluding dividends, fees and charges).

Current consensus price target is $12.42, suggesting upside of 15.5% (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 FPH as Sell (5) -

UBS does not expect the recall of the Philips DreamStation will have a material impact on Fisher & Paykel Healthcare earnings.

The recall is likely to be more wide reaching than first assessed, the broker points out, with US class action lawsuits claiming the foam breakdown may affect organs or cause cancer.

Yet share gains in flow generator sales are mainly shifting to ResMed ((RMD)), in particular, the broker notes, in the case of prescriptions by sleep doctors.

UBS retains a Sell rating, believing the stock is overvalued and there will be negative earnings momentum as covid-19 hospitalisation rates fade. Target is NZ$22.65.

Current Price is $28.19. Target price not assessed.

Current consensus price target is $29.50, suggesting upside of 3.5% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY22:

Forecast for FY23:

This company reports in NZD. 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 GDF as Add (1) -

Garda Property Group announced unaudited FY21 funds from operations of 7.7 cents, which was ahead of Morgans estimate of 7.5 cents. The dividend for FY21 was 7.2 cents, in-line with guidance and representing a payout ratio of 93%.

After the announced acquisition of three industrial properties, the portfolio will offer 50/50 exposure to industrial/office, and re-weight more to industrial as the pipeline builds out, explains the broker.

After adjustments to forecasts to include FY21 FFO outcomes, June 2021 revaluations and recent acquisitions, the analyst retains an Add rating and increases the target to $1.46 from $1.21.

Target price is $1.46 Current Price is $1.26 Difference: $0.2
If GDF meets the Morgans target it will return approximately 16% (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 HLS as Accumulate (2) -

Ord Minnett increases earnings forecasts for Healius by 3% and 4% in FY21 and FY22. This comes after a sharp lift in covid testing associated with recent outbreaks and an acquisition that will add $2m of operating earnings (EBITDA), according to Ord Minnett.

The acquisition is Queensland imaging business Axis Diagnostic Holdings. Management indicated the transaction would help in its ongoing efforts to improve the imaging division and support its Australian Defence Force contract.

The analyst maintains the Accumulate rating and lifts the target price to $5 from $4.75.

Target price is $5.00 Current Price is $4.65 Difference: $0.35
If HLS meets the Ord Minnett target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $4.43, suggesting downside of -6.3% (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

Macquarie rates IAG as Neutral (3) -

Macquarie predicts FY21 general insurance results will be highlighted by hazard allowance overruns, long-term growth challenges and an absence of new information related to Business Interruption (BI) provisions.

The broker maintains a Neutral recommendation for Insurance Australia Group, given the return of excess BI provisions could be 6-12 months away and underlying margins will likely be under pressure to FY22. The multi-year growth outlook is also considered challenged.

The analyst's target price slips to $5.20 from $5.30.

Target price is $5.20 Current Price is $4.91 Difference: $0.29
If IAG meets the Macquarie target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $5.47, suggesting upside of 12.7% (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 IPL as Buy (1) -

Citi upgrades FY21 and FY22 operating earnings estimates by 15% and 4%, respectively, primarily on sustained elevated ammonia spreads.

Citi maintains a bullish outlook for fertilisers globally, noting in the year to date urea prices are up 90%, diammonium phosphate up 50% and potash up 40%.

Citi retains a Buy rating and raises the target to $3.00 from $2.90.

Target price is $3.00 Current Price is $2.43 Difference: $0.57
If IPL meets the Citi target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $2.99, suggesting upside of 15.9% (ex-dividends)

The company's fiscal year ends in September.

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 MFG as Hold (3) -

Over the past quarter, funds under management (FUM) increased by $7.8bn, driven by net outflows of -$0.4bn, and offset by market movements/performance of $8.2bn. At the end of June, there was $113.9bn in FUM, up 17.2% on June 2020.

Ord Minnett expects FY21 underlying net profit of $433.1m, up 1.3% on FY20, with higher average FUM and a pre-guided operating cost base of $110-115m. While the latter is down on FY20, it's expected to be offset by a fall in performance fees to $30m from 81m.

The analyst maintains the Hold rating and increases the target price to $52.50 from $51.

Target price is $52.50 Current Price is $51.77 Difference: $0.73
If MFG meets the Ord Minnett target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $51.55, suggesting downside of -2.7% (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

Credit Suisse rates MPL as Outperform (1) -

Credit Suisse adjusts earnings forecasts to allow for movements in investment markets in the June quarter as well as feedback on the private health insurance industry. Industry comments have consistently supported strong growth narrative of the health insurers.

Although Medibank Private's valuation appeal has deteriorated over recent months following a run up in the share price, the broker continues to believe it offers solid value and retains an Outperform rating. Target is raised to $3.50 from $3.25.

Target price is $3.50 Current Price is $3.25 Difference: $0.25
If MPL meets the Credit Suisse target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $3.18, suggesting downside of -2.0% (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 NHF as Neutral (3) -

Credit Suisse adjusts earnings forecast to allow for investment market movements in the June quarter. FY21 statutory net profit estimates are increased by 6.1% with minimal flow through to the outer years.

Operating earnings estimates are unchanged as these were already upgraded post the trading update in May. Hence, the broker retains a $6.15 target and reiterates a Neutral rating.

Target price is $6.15 Current Price is $6.37 Difference: minus $0.22 (current price is over target).
If NHF meets the Credit Suisse target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $6.29, suggesting downside of -2.0% (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 PTM as Underperform (5) -

Funds under management of $23.5bn in June were down -5%. Credit Suisse notes Platinum Asset has now experienced 30 consecutive months of outflows and fund performance remains lacklustre in the International Fund.

The broker suspects its longevity in the Australian market means the company is more likely to source a reasonable portion of its funds through legacy platforms.

Consequently, the disruption and switching in the platform industry could have an outsized impact. Underperform maintained. Target is reduced to $4.50 from $4.60.

Target price is $4.50 Current Price is $4.60 Difference: minus $0.1 (current price is over target).
If PTM meets the Credit Suisse target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.10, suggesting downside of -3.5% (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 PTM as Hold (3) -

Funds under management (FUM) were $24.5bn as at June, up 11.9% on June 2020 though broadly flat on the previous month. Outflows were -$167m in the month, bringing second-half FY21 outflows to -$1.27bn with -$805m leaking from Retail Trust Funds.

Ord Minnett remains cautious regarding the outlook for flows in the near term, as the majority of funds are meaningfully underperforming their respective benchmarks. The analyst retains the Hold rating and the target rises to $4.50 from $4.25.

The broker expects FY21 underlying net profit pre outside equity interests (OEI) of $139.4m, down -4.7% on FY20, driven by
marginally lower average FUM and a meaningful reduction in performance fees.

Target price is $4.50 Current Price is $4.60 Difference: minus $0.1 (current price is over target).
If PTM 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 $4.10, suggesting downside of -3.5% (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 RMS as Overweight (1) -

Morgan Stanley envisages upside risk to FY22 guidance based on potential extensions to mine life to the high-grade Shannon and Vivien mines.

If guidance is not upgraded the broker anticipates a strong FY22. Further extensions to mine life could lift the broker's net profit estimates by 47% and valuation by 5%.

Overweight maintained with a target of $2.20. Industry View: Attractive.

Target price is $2.20 Current Price is $1.68 Difference: $0.52
If RMS meets the Morgan Stanley target it will return approximately 31% (excluding dividends, fees and charges).

Current consensus price target is $2.15, suggesting upside of 27.8% (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 SGR as Accumulate (2) -

While risks persist for casinos around governance, anti-money laundering counter-terrorism financing and licence monitoring, Ord Minnett remains positive on Star Entertainment Group. The Accumulate rating and $4.45 target price are maintained.

The broker believes margins are likely to beat expectations, with a continued focus on cost savings and performance across the business. The company's real estate is estimated to be valued at $3.6bn.

The analyst expects FY21 revenues of $1.59bn, earnings (EBITDA) of $436.3m and net profit of $116.6m.

Target price is $4.45 Current Price is $3.63 Difference: $0.82
If SGR meets the Ord Minnett target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $4.22, suggesting upside of 17.1% (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 SUN as Outperform (1) -

Macquarie predicts FY21 general insurance results will be highlighted by hazard allowance overruns, long-term growth challenges and an absence of new information related to business interruption (BI) provisions.

The broker maintains an Outperform recommendation for Suncorp Group, with the underlying insurance trading ratio's (ITR) bottoming in FY21, and upside EPS risk should bank provisions unwind. The analyst's target price slips to $12.80 from $13.20.

Target price is $12.80 Current Price is $11.38 Difference: $1.42
If SUN meets the Macquarie target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $11.91, suggesting upside of 4.8% (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 TCL as Outperform (1) -

Macquarie updates forecasts for Citylink traffic and interest expense in FY21, potential Sydney lockdowns in FY22 and a recovery in FY23. The broker highlights April and May traffic in Sydney have been particularly strong, with the M7 back to pre-covid levels.

The price target is raised to $15.20 from $14.51 and the Outperform rating is maintained. The analyst considers the roads are of a quality that should translate to strong dividend growth in coming years.

Target price is $15.20 Current Price is $14.41 Difference: $0.79
If TCL meets the Macquarie target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $14.35, suggesting downside of -2.1% (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 VEA as Upgrade to Add from Hold (1) -

After a first half trading update from Viva Energy Group, Morgans upgrades the rating to Add from Hold, and increases the target price to $2.50 from $2.30. It's felt an acceleration in earnings growth will lift earnings above pre-covid levels as the economic recovery continues.

Management raised first half earnings (EBITDA) guidance to $390-$410m compared to the $324m forecast by the broker. A material recovery in refining margin has increased the analyst's confidence in the most volatile part of the business.

Target price is $2.50 Current Price is $2.14 Difference: $0.36
If VEA meets the Morgans target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $2.35, suggesting upside of 8.2% (ex-dividends)

The company's fiscal year ends in December.

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 WES as Sell (5) -

Citi had expected Wesfarmers to deploy excess capital via acquisitions in the absence of tax effective ways to return capital, but finds few synergies from the bid for Australian Pharmaceutical Industries.

The broker asserts this is a strategic move to garner earnings growth in the post-pandemic environment yet the company will need to invest further to realise this. Sell rating and $45 target maintained.

Target price is $45.00 Current Price is $58.29 Difference: minus $13.29 (current price is over target).
If WES meets the Citi target it will return approximately minus 23% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $53.45, suggesting downside of -8.5% (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

Credit Suisse rates WES as Neutral (3) -

While Wesfarmers is pitching the bid for Australian Pharmaceutical as part of a strategy to build its position in the health and well-being sector, Credit Suisse suspects the attractiveness of the stock is more related to the ability to successfully execute on the transaction.

Still, the transaction is not considered likely to have a material influence on the valuations of Wesfarmers, although there could be value over the longer term.

The proposal is subject to due diligence, although the company appears in a strong position to complete the transaction with a call option over 19.3% of issued equity. Neutral maintained. Target is reduced to $57.23 from $58.03.

Target price is $57.23 Current Price is $58.29 Difference: minus $1.06 (current price is over target).
If WES meets the Credit Suisse target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $53.45, suggesting downside of -8.5% (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

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

Morgan Stanley considers, at face value, the proposed acquisition of Australian Pharmaceutical Industries is relatively small although, as Wesfarmers stated this could form the basis of a new health care division, and presumably be a platform for growth.

The transaction is expected to be funded by the existing balance sheet and debt facilities and is subject to due diligence and ACCC clearance.

Morgan Stanley retains an Equal-weight rating and the target price of $52. Industry view is Attractive.

Target price is $52.00 Current Price is $58.29 Difference: minus $6.29 (current price is over target).
If WES meets the Morgan Stanley target it will return approximately minus 11% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $53.45, suggesting downside of -8.5% (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

Morgans rates WES as Hold (3) -

Morgans estimates the multiple looks reasonable for the non-binding, indicative offer to acquire 100% of Australian Pharmaceutical Industries ((API)) for $1.38 per share. It's felt the health, well-being and beauty sector can provide long-term growth opportunities.

The broker notes the transaction will require Wesfarmers to invest in the target's supply chain, systems and product range to improve its competitiveness and operating efficiency.

Achieving this is possible, given Wesfarmer’s strong retail and supply chain capabilities though it is likely to take a number of years, predicts the analyst. Morgans' Hold rating and $56.08 target price are maintained.

Target price is $56.08 Current Price is $58.29 Difference: minus $2.21 (current price is over target).
If WES 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 $53.45, suggesting downside of -8.5% (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

Citi rates WOW as Resume Coverage with Neutral (3) -

Citi resumes coverage of Woolworths post the de-merger of Endeavour Group ((EDV)) with a Neutral rating and $37.60 target.

The broker expects Woolworths will outperform Coles ((COL)) in the short term because of its better online reach.

Following the demerger, Citi also expects Woolworths will have higher cash flow and a lightly geared balance sheet provides other options.

Target price is $37.60 Current Price is $38.01 Difference: minus $0.41 (current price is over target).
If WOW meets the Citi target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $36.40, suggesting downside of -4.7% (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