Australian Broker Call

UBS rates ALL as Buy (1) -

UBS observes more than 85% of US casinos remain open and more than 90% of machines at these venues are switched on. Margins are high because of a positive mix to gaming revenue.

Commentary suggests growth in users is starting to moderate but retention is still strong. The broker factors in operating upgrades and currency downgrades and retains a Buy rating, raising the target to $34.25 from $29.60.

Target price is $34.25 Current Price is $28.91 Difference: $5.34
If ALL meets the UBS target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $30.24, suggesting upside of 1.7% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.9

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

Ord Minnett rates AMP as Hold (3) -

Ord Minnett reports AMP will be reviewing its group assets due to the various unsolicited offers it has received. The broker notes the company seems open to pursuing options if they release more shareholder value. 

Even so, there may be constraints, indicates the broker, in the form of unsatisfactory offers for some assets or certain assets needing to be sold together (like the bank and the Australian Wealth Management business).

Hold rating retained with a target price of $1.75.

Target price is $1.75 Current Price is $1.62 Difference: $0.13
If AMP meets the Ord Minnett target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $1.61, suggesting downside of -3.1% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.0

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

UBS rates BLD as Buy (1) -

Boral's end markets are improving, UBS notes. Nevertheless, for now the broker suggests investors may be inclined to go elsewhere for leverage to the recovery, as Boral remains a story about execution.

The broker believes Boral should improve its customer insights and not simply sell products, in order to become a supplier of choice, which could allow less competition on price.

Another lever to higher returns is further cost control and improved efficiencies. Buy rating and $4.30 target maintained.

Target price is $4.30 Current Price is $4.00 Difference: $0.3
If BLD meets the UBS target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $4.07, suggesting downside of -1.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.0

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

UBS rates BSL as Neutral (3) -

UBS observes US market conditions are normalising. The company has been a little surprised at the speed at which idled capacity has come back given the low prices and uncertain demand.

The main concern UBS has is that favourable government policy and low interest rates will slow supply rationalisation, which is needed for confidence in long-term spreads. Neutral rating and $12.30 target maintained.

Target price is $12.30 Current Price is $13.15 Difference: minus $0.85 (current price is over target).
If BSL meets the UBS target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $13.22, suggesting downside of -0.9% (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 CCL as Outperform (1) -

Credit Suisse points out Coca-Cola Amatil's cost reduction programs over 2019-22 should reduce the cost base by -$120m. The broker assesses these will be directed towards discretionary spending.  

The company is recovering in the on-the-go channel sales in places where covid-19 restrictions have been relaxed, observes the broker. 2022 group sales are expected to be just slightly less than in 2019.

Credit Suisse retains its Outperform rating with the target decreasing to $10.95 from $11.25.

Target price is $10.95 Current Price is $9.08 Difference: $1.87
If CCL meets the Credit Suisse target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $9.83, suggesting upside of 6.1% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.4

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

Morgan Stanley rates COH as Overweight (1) -

Morgan Stanley considers Cochlear's Remote Check to be a good marketing tool that is likely to free up 13-15% of channel capacity.

The broker notes the company is winning market share due to its off-the-ear solution and the new product - Kanso 2 - will likely help gain more. 

Overweight retained with a target price of $229. Industry view: In-line.

Target price is $229.00 Current Price is $191.81 Difference: $37.19
If COH meets the Morgan Stanley target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $201.33, suggesting upside of 2.6% (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 DMP as Equal-weight (3) -

Domino's Pizza Enterprises' FY20 result was in line with Morgan Stanley's estimates except for in ANZ and Europe due to covid-19 related disruptions.

The broker calculates net headwind from covid-19 to be -$15-18m in ANZ and Europe, which dragged down the second half operating income by circa -14% in both regions. Japan did very well with second-half operating income growth of 58%, observes the broker.

A stronger-than-expected start to FY21 prompts the broker to increase its FY21-23 earnings forecast, aided by strong momentum and the increase in scale in Japan creating a stronger platform for long-term growth.

The key focus here will be on retaining new customers, adds Morgan Stanley.

Equal-weight rating reiterated. Target is raised to $70 from $55. Industry view is Cautious.

Target price is $70.00 Current Price is $83.20 Difference: minus $13.2 (current price is over target).
If DMP meets the Morgan Stanley target it will return approximately minus 16% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $70.84, suggesting downside of -16.2% (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 EVN as Upgrade to Neutral from Underperform (3) -

The investor briefing highlighted the potential the company envisages for Red Lake. Macquarie finds the prospect of an open pit at the site compelling but awaits more clarity on the costs and the path to approval before including it in forecasts.

The broker assumes a higher conversion of resources to reserves, which extends assumed mine life of the assets. This leads to an upgrade to Neutral from Underperform. Target is raised to $5.60 from $5.20.

Target price is $5.60 Current Price is $5.67 Difference: minus $0.07 (current price is over target).
If EVN meets the Macquarie target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.00, suggesting downside of -11.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: -0.6

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

UBS rates EVN as Sell (5) -

The broker reports the main news from the company's strategy briefing were the aspirations outlined by management for Red Lake and Mungari. The 300-500,000 ozpa target at Red Lake is materially higher than previously indicated and the 200-300,000 ozpa that underpinned the acquisition.

UBS considers this a stretch target at this stage. At Mungari the company is working on an extension from the current five years of reserves to detail a 10-year new mine plan. UBS maintains a Sell rating and $4.90 target.

Target price is $4.90 Current Price is $5.67 Difference: minus $0.77 (current price is over target).
If EVN meets the UBS target it will return approximately minus 14% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.00, suggesting downside of -11.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: -0.6

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

Credit Suisse rates GNC as Outperform (1) -

Credit Suisse has upgraded its east coast winter crop forecast to 25mt led by favourable rainfall through autumn, winter and spring for east coast Australia.

Consensus forecasts indicate the market appears to be under-estimating the size of the winter crop along with Graincorp's leverage to incremental export volume, comment the analysts.

Credit Suisse retains its Outperform rating with the target price rising to $4.85 from $4.72.

Target price is $4.85 Current Price is $4.32 Difference: $0.53
If GNC meets the Credit Suisse target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $4.60, suggesting upside of 2.4% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.8

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

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

Ord Minnett notes risks around IOOF Holdings' proposed acquisition of National Australia Bank's ((NAB)) MLC business. The broker highlights the company has bought businesses like MLC that have negative net flows and it is unclear if the negative flow can be stopped.

On the bright side, the company will be the largest superannuation player in the market which, the broker feels, should ensure longevity.

Ord Minnett upgrades its recommendation to Buy from Hold with the target price lowered to $4.15 from $5.00.

Target price is $4.15 Current Price is $3.58 Difference: $0.57
If IFL meets the Ord Minnett target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $4.66, suggesting upside of 28.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.5

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

Morgan Stanley rates JIN as Overweight (1) -

Morgan Stanley notes clarity on Jumbo Interactive's future relationship with LotteryWest by September-end could have a material impact on the company's total transaction value, revenue and business mix.

The broker sees the most upside if both companies enter into a SaaS agreement which could see the bulk of LotteryWest's sales migrate to Jumbo Interactive's platform.  

Morgan Stanley reiterates its Overweight rating with a target price of $14.30. Industry view: In-line.

Target price is $14.30 Current Price is $13.37 Difference: $0.93
If JIN meets the Morgan Stanley target it will return approximately 7% (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 NUF as Buy (1) -

Citi observes Nufarm is emerging from difficult agricultural and industry conditions. The impairment of -$215m for the European business is consistent with lower sustainable earnings, the broker assesses.

Moreover, Citi remains of the view the acquired portfolio would only generate around 84% of the original plan for operating earnings. Buy rating reiterated. Target rises to $5.60 from $5.50.

Target price is $5.60 Current Price is $4.02 Difference: $1.58
If NUF meets the Citi target it will return approximately 39% (excluding dividends, fees and charges).

Current consensus price target is $4.76, suggesting upside of 20.2% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.4

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

Credit Suisse rates NUF as Outperform (1) -

Nufarm provided guidance for FY20 operating income of $230-$240m versus Credit Suisse's forecast of $253m. The company expects operating income in the second half to improve for Australia and North America while declining in Europe.

FY21-22 forecasts for Europe have been downgraded due to persistent under-performance.

Credit Suisse reaffirms its Outperform rating with the target price reducing to $5.04 from $6.74, mostly on account of downgrade to European forecasts.

Nufarm will be reporting its FY20 result on September 23, 2020.

Target price is $5.04 Current Price is $4.02 Difference: $1.02
If NUF meets the Credit Suisse target it will return approximately 25% (excluding dividends, fees and charges).

Current consensus price target is $4.76, suggesting upside of 20.2% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.4

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

Macquarie rates NUF as Upgrade to Neutral from Underperform (3) -

Nufarm, which reports its FY20 result on September 23, anticipates underlying FY20 operating earnings of $230-240m. A non-cash impairment of -$215m will be taken in relation to the European assets.

Europe is the main culprit in the weaker-than-expected outcome although there was some potential relief on the way with lower raw material costs over the last quarter.

Given the extent of the recent share price decline, Macquarie upgrades to Neutral from Underperform. Target is reduced to $4.26 from $4.85.

Target price is $4.26 Current Price is $4.02 Difference: $0.24
If NUF meets the Macquarie target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $4.76, suggesting upside of 20.2% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.4

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

Morgan Stanley rates NUF as Overweight (1) -

Nufarm pre-guided FY20 profit and expects operating income to be $290-300m which is -10% below Morgan Stanley's estimate. This is excluding impairments worth -$215m in its European business.

The broker highlights while business seems to be improving in North America and Australia, cyclical weakness is increasing issues in Europe.

FY20 operating income forecast has been reduced by -10% to $298m with net profit forecast declining to a loss of -$17m. The broker sees upside for the company under normal conditions and potential upside from the Omega-3 opportunity.

Morgan Stanley rates the stock as Overweight with the target price decreasing to $4.80 from $4.90. Industry view: Cautious.

Target price is $4.80 Current Price is $4.02 Difference: $0.78
If NUF meets the Morgan Stanley target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $4.76, suggesting upside of 20.2% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.4

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

Ord Minnett rates NUF as Hold (3) -

Nufarm announced its preliminary FY20 operating earnings in the range of $290–$300m which is below Ord Minnett’s estimated $314m. An impairment charge of -$215m related to its European assets was announced.

Ord Minnett expects earnings to recover from FY21 after a challenging few years in ANZ driven by unfavourable weather and supply chain issues affecting costs in Europe.

Some major structural challenges facing the company include long term overhang from the regulatory environment and penetration of innovators in the crop protection industry's generic segment.

Ord Minnett maintains its Hold recommendation, with the target price reducing to $4.00 from $4.70.

Target price is $4.00 Current Price is $4.02 Difference: minus $0.02 (current price is over target).
If NUF meets the Ord Minnett target it will return approximately minus 0% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.76, suggesting upside of 20.2% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.4

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

UBS rates NUF as Buy (1) -

Nufarm expects FY20 operating earnings (EBITDA) of $230-240m from continuing operations, which at the mid point represents a decline of -27%. UBS believes the decline has largely been caused by the European division.

Europe has been affected by severe drought, higher input costs and elevated channel inventory. UBS suspects Europe may be at an earnings trough and with cyclical factors reversing and a potential re-basing of costs this creates substantial upside potential.

The broker retains a Buy rating and reduces the target to $4.87 from $5.19.

Target price is $4.87 Current Price is $4.02 Difference: $0.85
If NUF meets the UBS target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $4.76, suggesting upside of 20.2% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.4

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

Morgans rates PAL as Add (1) -

The first half underlying net loss for Palla Pharma was larger than forecast by Morgans.The result was impacted by a major UK customer manufacturing license loss and the early jettison of a non-opiate contract manufacturing organisation (CMO) contract.

Additionally, the supply chain was affected by covid-19 disruptions, explains the broker. FY20 guidance is unchanged.

Morgans revises down 2020 and 2021 earnings (EBITDA) by -72% and -28%, respectively, after lower sales assumptions and re-basing costs.

Execution remains paramount, notes the analyst, with the pieces in place for significant growth acceleration from the second half, 2020.

The Add rating is unchanged and the target price is decreased to $1.02 from $1.23.

Target price is $1.02 Current Price is $0.76 Difference: $0.26
If PAL meets the Morgans target it will return approximately 34% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 1.0

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

Ord Minnett rates RMD as Lighten (4) -

The implications of US Medicare 2019's data release on ResMed in the current environment are limited, asserts Ord Minnett. The data show funding for sleep devices and masks rose 15% during 2019.

The broker remains cautious on the outlook for ResMed due to near-term challenges to patient diagnosis and the risk of weaker demand for sleep therapy during the expected economic downturn.

Ord Minnett retains its Lighten recommendation with a target price of $20.00.

Target price is $20.00 Current Price is $24.67 Difference: minus $4.67 (current price is over target).
If RMD meets the Ord Minnett target it will return approximately minus 19% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $24.96, suggesting downside of -1.8% (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

Macquarie rates UMG as Outperform (1) -

United Malt continues to enjoy progressive monthly improvements in volumes and the outcome for the year to date is better than Macquarie expected.

Admittedly, the pandemic is having a short-term impact on beer volumes because of the restrictions for sale on public premises.

Macquarie finds the stock is still attractive relative to global brewer peers and retains an Outperform rating. Target rises to $5.05 from $4.72.

Target price is $5.05 Current Price is $4.09 Difference: $0.96
If UMG meets the Macquarie target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $4.61, suggesting upside of 9.2% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.7

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

UBS rates UMG as Buy (1) -

United Malt has indicated volumes in the year to date are at 90% of pre-pandemic levels. UBS remains positive on the underlying market position and notes the hard-to-replicate assets. This is expected to support defensive growth.

Moreover, the valuation is attractive and the broker retains a Buy rating and $4.65 target.

UBS lifts FY20 estimates by 13% to reflect the better-than-expected recovery in volumes in the second half. The company has also announced a $27m investment to upgrade the existing kiln at its Perth processing plant, to be completed by October 2021.

Target price is $4.65 Current Price is $4.09 Difference: $0.56
If UMG meets the UBS target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $4.61, suggesting upside of 9.2% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.7

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

Macquarie rates WSA as Outperform (1) -

The company has released a maiden reserve for the AM6 deposit. This extends Macquarie's assumed mine life at Cosmos beyond 11 years. However, the broker suspects higher production rates may be assessed as part of the updated mine scheduling.

Macquarie also notes spot nickel prices have risen 20% in the past couple of months while the share price has fallen -13%.

This rise in the nickel price enhances the earnings upgrade momentum and the broker maintains an Outperform rating. Target is raised to $2.80 from $2.70.

Target price is $2.80 Current Price is $2.27 Difference: $0.53
If WSA meets the Macquarie target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $2.72, suggesting upside of 15.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.7

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

Morgan Stanley rates WSA as Overweight (1) -

Western Areas declared a maiden AM6 Reserve of 2.1mt for 47kt Nickel at 2.2% which is in-line with Morgan Stanley's estimated 47kt at 2.3% Nickel.

The reported net present value of the project is $47m (pre-tax) while using a nickel price and capital cost broadly in line with the broker's estimates. The broker believes this implies the reported net present value (after tax) will likely be around half of its estimate of $74m.

Target is $2.75. Overweight rating.  Industry view: Attractive.

Target price is $2.75 Current Price is $2.27 Difference: $0.48
If WSA meets the Morgan Stanley target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $2.72, suggesting upside of 15.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.7

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