Australian Broker Call

Macquarie rates AMP as Neutral (3) -

Having conducted further analysis on the proposed joint venture with Ares for the private market business, Macquarie assesses this is undervalued.

The broker would be surprised if the deal proceeds on currently disclosed metrics. The broker concludes the proposed JV implies a -25% discount to market value, signalling ongoing pressure on institutional mandates.

Neutral rating and $1.45 target retained. The broker estimates AMP will be left with the scraps and does not envisage how it can agree to the deal in its current form.

Target price is $1.45 Current Price is $1.46 Difference: minus $0.01 (current price is over target).
If AMP 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 $1.57, suggesting upside of 9.4% (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

Morgans rates CSL as Upgrade to Add from Hold (1) -

With underperformance in the shares, no structural concerns and technicals being supportive, Morgans believes the risk/reward is more attractive for CSL and upgrades the rating to Add from Hold.

While identifying plasma collection as the main concern, the broker sees upside in Seqirus, on the potential for a bad northern hemisphere flu season. The recent flu respite may leave the population more vulnerable to more severe flu outbreaks over the medium/long term.

Morgans makes no changes to forecasts or the price target of $301.10.

Target price is $301.10 Current Price is $252.21 Difference: $48.89
If CSL meets the Morgans target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $302.01, suggesting upside of 19.0% (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

Credit Suisse rates ECX as Outperform (1) -

Credit Suisse observes Eclipx Group is enjoying profits from end-of-lease income and benefiting from extremely strong used car prices but this is unsustainable and a reversion to the norm poses a headwind to FY22 earnings.

Still, the company can bank the cash today and reduce debt. Moreover, Credit Suisse observes a healthy outlook for new business and this should continue to grow as the economy normalises. Outperform retained. Target is raised to $2.05 from $1.90.

Target price is $2.05 Current Price is $1.88 Difference: $0.17
If ECX meets the Credit Suisse target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $2.32, suggesting upside of 24.5% (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

Macquarie rates ECX as Outperform (1) -

In its business update for the first five months of FY21, Eclipx Group has signalled a surge in end-of-lease income. Used car market conditions remain strong and higher prices have driven Macquarie to upgrade earnings estimates by more than 20% for FY21.

The broker notes buoyancy in used car prices stems from supply issues with new vehicles and should this situation extend into FY22 upside risk prevails. Macquarie retains an Outperform rating and $2.41 target.

Target price is $2.41 Current Price is $1.88 Difference: $0.53
If ECX meets the Macquarie target it will return approximately 28% (excluding dividends, fees and charges).

Current consensus price target is $2.32, suggesting upside of 24.5% (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

Morgan Stanley rates ECX as Overweight (1) -

Eclipx Group released an incremental update, highlighting a material outperformance in end-on-lease income. Come mid 2021 this is expected to normalise.

The operating performance is consistent with Morgan Stanley's expectations and the business is tracking in line for forecast net profit in FY21 of $56.7m.

Target is $2.60. Overweight rating. Industry view: In-line.

Target price is $2.60 Current Price is $1.88 Difference: $0.72
If ECX meets the Morgan Stanley target it will return approximately 38% (excluding dividends, fees and charges).

Current consensus price target is $2.32, suggesting upside of 24.5% (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

UBS rates ECX as Buy (1) -

Eclipx Group's first half end-of-lease income was $26.4m against UBS's expected $28m and up 70% over last year. UBS assesses the current performance is temporary in nature driven by the limited supply of new vehicles into Australia and New Zealand.

The company expects the global supply shortage in new cars will cease in the third quarter and is mostly consistent with independent third party research.

The broker continues to view Eclipx's multiples as undemanding looking at the organic growth opportunities and upside risks from sector consolidation. The consolidation scenario, in particular, could imply material upside risks for the company, suggests the broker.

Buy rating and $2.20 target maintained.

Target price is $2.20 Current Price is $1.88 Difference: $0.32
If ECX meets the UBS target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $2.32, suggesting upside of 24.5% (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

Macquarie rates GOR as Outperform (1) -

2020 net profit was ahead of Macquarie's estimates. Operating cash flow of $140m was also better than expected. The company declared a maiden dividend of 1.5c.

The main driver of outperformance over the medium term will be the open pit and process plant optimisation at Gruyere, the broker asserts. Moreover, given the recent weakness in gold a high margin producer such as Gold Road should perform well versus peers.

Outperform rating and $1.50 target retained.

Target price is $1.50 Current Price is $1.12 Difference: $0.38
If GOR meets the Macquarie target it will return approximately 34% (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

Ord Minnett rates HSN as Buy (1) -

Hansen Technologies won an important contract with the German division of telco Telefonica. In Ord Minnett's view, the deal will not only provide a significant boost to earnings in FY21 but also increase confidence in an improving organic growth outlook.

While acknowledging the company's making good progress as far as engagement with the market is concerned, Ord Minnett thinks there is more to come and finds the valuation compelling. 

Buy retained with the target price rising to $6 from $5.50.

Target price is $6.00 Current Price is $5.21 Difference: $0.79
If HSN meets the Ord Minnett target it will return approximately 15% (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

Credit Suisse rates IRE as Upgrade to Outperform from Neutral (1) -

The share price has dropped to a level Credit Suisse considers compelling, upgrading to Outperform from Neutral. The broker concludes Iress has a defensible and recurring revenue base and there are several opportunities to drive modest earnings growth over time.

The share price now offers a 2021 dividend yield of 5%, the broker notes, attractive in the current environment amid limited downside. Target is steady at $11. As the OneVue integration progresses, Credit Suisse believes the opportunity becomes even more attractive to investors.

Target price is $11.00 Current Price is $9.26 Difference: $1.74
If IRE meets the Credit Suisse target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $10.93, suggesting upside of 16.0% (ex-dividends)

The company's fiscal year ends in December.

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

Citi rates LNK as Upgrade to Buy (1) -

Link Administration has been "re-initiated" at Citi, hidden in a post-February sector report, and involving an upgrade to Buy from No Rating with a $5.70 price target.

On their own admission, Citi's Buy rating is a non-consensus call and a lot seems to revolve around realised value from the equity stake in PEXA.

Target price is $5.70 Current Price is $4.85 Difference: $0.85
If LNK meets the Citi target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $5.43, suggesting upside of 10.7% (ex-dividends)

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

Credit Suisse rates MTS as Outperform (1) -

Ahead of the investor briefing on March 16, Credit Suisse notes a very supportive industry backdrop. Moreover, the market appears to still be underrating the longevity of changes in consumer shopping habits.

Hardware has a strong cyclical tailwind and growth opportunities over the longer term and the supermarket trading update is expected to show strong double-digit growth. Outperform retained. Target rises to $4.08 from $3.97.

Target price is $4.08 Current Price is $3.59 Difference: $0.49
If MTS meets the Credit Suisse target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $3.91, suggesting upside of 8.5% (ex-dividends)

The company's fiscal year ends in April.

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 NEA as Buy (1) -

Citi notes Nearmap's main Australian competitor, Aerometrex ((AMX)), is seeing rising traction with enterprise customers. This, in Citi's view, could partly explain Nearmap's weak Australia and New Zealand's performance in the first half.

Competition remains a risk and Citi's A&NZ forecasts assume below trend growth in the near-term. Even so, Nearmap's incumbency and scale act as a barrier for competitors, adds the broker, which has been acknowledged by management at Aerometrex.

Buy retained with a target of $3.10.

Target price is $3.10 Current Price is $2.12 Difference: $0.98
If NEA meets the Citi target it will return approximately 46% (excluding dividends, fees and charges).

Current consensus price target is $2.93, suggesting upside of 40.4% (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 OZL as Outperform (1) -

Macquarie notes, after the company's briefing, copper and gold prices will drive upside momentum for earnings. The company's sustainability briefing highlighted lowering emissions and minimising water use and waste.

Macquarie highlights OZ Minerals ranking in the second quintile (20-40) of ASX100 companies in its ESG equity strategy rating.

Outperform rating. Target is $30.

Target price is $30.00 Current Price is $21.61 Difference: $8.39
If OZL meets the Macquarie target it will return approximately 39% (excluding dividends, fees and charges).

Current consensus price target is $19.76, suggesting downside of -7.9% (ex-dividends)

The company's fiscal year ends in December.

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 TWE as Sell (5) -

Probably the most eye-catching statistic in today's research update by Citi is that the new licensing agreement management negotiated for low-priced wines in the Americas reduces sales volume by -35% but group earnings only by -3%.

Citi believes more lowly priced wines are on their way out. The broker expects the residual business will have EBITS margins nearer 25% as low margin produce is exiting the mix.

Citi has made only small amendments to forecasts while keeping the price target at $9.30 and the rating on Sell. This restructuring still has a longer road ahead, concludes the broker.

Target price is $9.30 Current Price is $11.42 Difference: minus $2.12 (current price is over target).
If TWE meets the Citi target it will return approximately minus 19% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $10.61, suggesting downside of -7.5% (ex-dividends)

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 TWE as Downgrade to Neutral from Outperform (3) -

Treasury Wine has divested around -4.5m cases of commercial wine for around $100m, in line with its strategy of concentrating on premium wine. Credit Suisse points out the earnings changes are not material across the forecast horizon.

The broker notes the share price has largely closed the valuation gap to peers and downgrades to Neutral from Outperform. Target is $11.30.

Credit Suisse also assumes competition will intensify in Australia and Europe as grape supply previously destined for China competes in these markets.

Target price is $11.30 Current Price is $11.42 Difference: minus $0.12 (current price is over target).
If TWE meets the Credit Suisse target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $10.61, suggesting downside of -7.5% (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 TWE as Equal-weight (3) -

Treasury Wine is progressing its US plan, announcing that The Wine Group will source and sell several brands, including Beringer Main & Vine and Founders' Estate and Meridian, in the Americas under a long-term licensing agreement.

Morgan Stanley notes the brands represent 35% of the company's first half Americas volumes and 17% of the revenue. The transaction will generate $100m.

While assuming the turnaround in the US is successful, Morgan Stanley highlights ongoing execution risk. Equal-weight maintained. Target is $10. Industry view is Attractive.

Target price is $10.00 Current Price is $11.42 Difference: minus $1.42 (current price is over target).
If TWE meets the Morgan Stanley target it will return approximately minus 12% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $10.61, suggesting downside of -7.5% (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 TWE as Downgrade to Hold from Accumulate (3) -

Ord Minnett downgrades Treasury Wine Estates to Hold from Accumulate following strong share price outperformance since the first-half result, with the target price rising to $11.50 from $11.

Treasury Wine Estates has entered into a long-term deal with The Wine Group to license some of Treasury’s commercial US wine brands, namely Beringer Main & Vine, Beringer Founders’ Estate, Coastal and Meridian for $100 million.

Ord Minnett notes these form part of the more than -$300m identified by Treasury Wine in 2020 to be sold as the company refocuses on premium US wine brands from its cheaper offerings.

Target price is $11.50 Current Price is $11.42 Difference: $0.08
If TWE meets the Ord Minnett target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $10.61, suggesting downside of -7.5% (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 TWE as Neutral (3) -

Treasury Wine Estates has entered into a long-term licensing agreement with The Wine Group under which the latter can source and sell selected Beringer brands in the Americas for circa $100m.

UBS is of the view the agreement marks a key step in Treasury Wine's -$300m wine divesture plans over 2021 (almost -$157m of which stand completed), with an aim of circa $197m in operating income as a baseline with margins of almost 25%.

The deal is consistent with Treasury Wine's intentions and increases UBS's confidence in the company's ability to pivot to a lower volume/higher-margin business.

UBS retains a Neutral rating, which remains under review with a target of $10.60.

Target price is $10.60 Current Price is $11.42 Difference: minus $0.82 (current price is over target).
If TWE meets the UBS target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $10.61, suggesting downside of -7.5% (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 WSA as Upgrade to Outperform from Neutral (1) -

Western Areas will raise $85-100m in new equity to support Odysseus. This consists of a fully underwritten placement and up to $15m in a share purchase plan.

The capital raising has been motivated by balance sheet considerations, Credit Suisse notes, in order to have Odysseus fully funded from cash and debt and eliminating any future funding requirement from "at risk" cash flow from Forrestania.

The broker considers the capital raising prudent and upgrades to Outperform from Neutral. Target is reduced to $2.45 from $2.60.

Target price is $2.45 Current Price is $2.03 Difference: $0.42
If WSA meets the Credit Suisse target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $2.69, suggesting upside of 31.8% (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 WSA as Neutral (3) -

With the Flying Fox and Spotted Quoll operations almost at the end of their lives, Western Areas is pivoting to the Odysseus project, observes UBS.

The company completed an $85m placement along with a share purchase plan and the funds will mainly be used in the project (a nickel mine) due to enter production in mid FY23. 

While the broker believes Western Areas can fund the project from net cash, debt and operating cash flow through to 2023, the operating cash flow carries risk.

The company is a high-cost nickel producer and cashflow from the existing business is highly levered to the nickel price, elaborates UBS. Also, the equity raising reinforces this risk and the high-cost nature of the business.

Neutral rating with the target price falling to $2.40 from $2.50.

Target price is $2.40 Current Price is $2.03 Difference: $0.37
If WSA meets the UBS target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $2.69, suggesting upside of 31.8% (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