Australian Broker Call

Citi rates ALQ as Neutral (3) -

Citi upgrades net profit estimates by 2-8% for FY21-23 to reflect recent constructive exploration and financing data. The broker forecasts a -10% drop in sample volumes in the first half, offset by the strong price and favourable mix achieved at the end of FY20.

The outlook is constructive for a recovery in commodities and life sciences although asset care within the industrial segment is expected to remain weak throughout FY21.

Citi raises the target to $9.57 from $8.31. Neutral/High Risk retained.

Target price is $9.57 Current Price is $9.12 Difference: $0.45
If ALQ meets the Citi target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $8.72, suggesting downside of -7.2% (ex-dividends)

The company's fiscal year ends in March.

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 AMC as Accumulate (2) -

Amcor will be selling its 47.6% equity stake in the Hong Kong-listed AMVIG Holdings to the private debt and equity firm New Prospect Capital. AMVIG is the market leader in the cigarette packaging printing industry in China with 10 production plants.

Ord Minnett notes the sale price will be US$124m, implying a 50% premium to the latest closing price.

The broker maintains its Accumulate rating with a target price of $17.50.

Target price is $17.50 Current Price is $15.05 Difference: $2.45
If AMC meets the Ord Minnett target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $16.89, suggesting upside of 9.8% (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: 0.6

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

UBS rates AWC as Buy (1) -

With mobility restrictions lifting, UBS notes manufacturing in China and the rest of the world is starting to increase as can be seen from the uplift in alumina prices to circa US$270/t currently from circa US$224/t in mid-April.

The broker expects China's alumina imports to be about 3.6mt in 2020. As caustic soda and energy costs rise, UBS notes high-cost producers will be impacted more than those who are self-sufficient in bauxite.

UBS believes Alumina Ltd looks well-placed to benefit as the company is self-sufficient in bauxite supply and is a low volume consumer of caustic soda.

UBS maintains its Buy rating with a target price of $2.

Target price is $2.00 Current Price is $1.43 Difference: $0.57
If AWC meets the UBS target it will return approximately 40% (excluding dividends, fees and charges).

Current consensus price target is $1.89, suggesting upside of 32.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Forecast for FY21:

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 BLD as Neutral (3) -

Quarries may be attractive investments but Credit Suisse assesses Boral's record on Australian quarries falls short of expectations. The broker notes, in contrast, US companies with significant aggregate exposure trade at large premiums to their cement/concrete peers.

Credit Suisse believes the market is not undervaluing the Australian earnings and the main issue is whether Boral's quarries can be restored to profitability in Australia.

The broker expects government stimulus and the company strategic review will be positive catalysts. Target is raised to $4.15 from $3.75. Neutral maintained.

Target price is $4.15 Current Price is $4.29 Difference: minus $0.14 (current price is over target).
If BLD 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 $4.15, suggesting downside of -8.7% (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 CWN as Outperform (1) -

Despite considering it unlikely the NSW public inquiry into Crown Resorts will find the company unsuitable to hold a casino licence, Credit Suisse does acknowledge the press has frequently drawn observations of impropriety.

Hence, the broker considers it possible that individuals may be deemed unsuitable including close associates.

Credit Suisse reduces FY23 estimates for earnings per share by -5% and scales back VIP volume expectations because of regulatory pressures. Outperform retained. Target is reduced to $11.10 from $11.20.

Target price is $11.10 Current Price is $9.19 Difference: $1.91
If CWN meets the Credit Suisse target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $10.29, suggesting upside of 17.0% (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 GOR as Outperform (1) -

A bearing failure at the mill at Gruyere has affected production for a week and 2020 guidance has been reduced by -15,000 ounces to 250-270,000 ounces. All-in sustainable costs have been lifted by $100 to $1,250-1,350/oz.

The company expects the third quarter will be the softest for 2020, as Gruyere transitions to a fresh feed. Macquarie retains an Outperform rating and lowers the target to $1.80 from $1.90.

Target price is $1.80 Current Price is $1.47 Difference: $0.33
If GOR meets the Macquarie target it will return approximately 22% (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

Citi rates HLS as Neutral (3) -

Citi anticipates Healius will finish FY21 with low net debt once the pending sale of the medical centre division is completed. Then the balance sheet will have potential for new gearing, given the stability of cash flow.

In the short term the broker believes there is upside risk to consensus expectations for FY21 should coronavirus testing volumes remain elevated. Neutral rating and $3.55 target retained.

Target price is $3.55 Current Price is $3.52 Difference: $0.03
If HLS meets the Citi target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $3.52, suggesting downside of -2.4% (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

Morgans rates HMC as Add (1) -

Home Consortium has provided further detail on the Daily Needs REIT (DNR) spin-off, which is expected to list in late November 2020.

The REIT will be focused on hyper-convenience and daily needs tenants.

DNR will be established via an in-specie distribution to Home Consortium security holders.

The company will hold a direct co-investment stake of around 20-30% and manage the REIT.

Morgans explains the company is evolving into a capital light model with income to be sourced via rental income, distributions, fee income and developments.

Another near term focus is the launch of an unlisted Healthcare and Wellness fund in 2021.

The Add rating and target price of $3.60 are unchanged.

Target price is $3.60 Current Price is $3.31 Difference: $0.29
If HMC meets the Morgans target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $3.34, suggesting downside of -1.0% (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 NST as Outperform (1) -

Pogo and Yandal are expected to be the main drivers of production growth over the short term. Northern Star Resources intends to grow production by 40% over the next three years and reduce costs by -10%.

The company has reiterated an intention to supplement its pay-out policy of 6% of revenue with special dividends. Macquarie retains an Outperform rating and raises the target 1% to $16.60.

Target price is $16.60 Current Price is $13.62 Difference: $2.98
If NST meets the Macquarie target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $14.58, suggesting upside of 2.8% (ex-dividends)

The company's fiscal year ends in July.

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

UBS rates NST as Upgrade to Neutral from Sell (3) -

Looking at Northern Star Resources' Strategy Day, UBS asserts its Sell recommendation no longer holds true.

Northern Star Resources expects to see its production to increase by 40% over the next three years led by Jundee/Yandal and Pogo. Costs are expected to decline and noting its forecasts were too conservative, the broker has reduced its cost outlook.

UBS upgrades its rating to Neutral from Sell with the target price raised to $14.20 from $14.

Target price is $14.20 Current Price is $13.62 Difference: $0.58
If NST meets the UBS target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $14.58, suggesting upside of 2.8% (ex-dividends)

The company's fiscal year ends in July.

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

Ord Minnett rates ORG as Accumulate (2) -

Ord Minnett has made some adjustments to Origin Energy's earnings forecast which includes some downgrades driven by higher non-cash expenses. Overall, the broker remains positive on the company and projects a free cash flow yield of 13% in FY21 and 15% in FY22.

Capital management is expected to be a key driver in FY21, suggests the broker, with Origin’s high cash generation and low payout ratio providing potential upside to market estimates. 

Ord Minnett maintains its Accumulate rating with the target price reducing to $7.60 from $7.70.

Target price is $7.60 Current Price is $4.51 Difference: $3.09
If ORG meets the Ord Minnett target it will return approximately 69% (excluding dividends, fees and charges).

Current consensus price target is $6.38, suggesting upside of 39.6% (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

Citi rates PMV as Neutral (3) -

The margin outlook is improving, Citi observes, because of gross margin expansion and rent reductions as well as a shift in mix to online. The broker expects margins to expand to 15.1% in FY21, from 13.2% in FY19.

Online penetration is expected to increase to 20% in FY21, driven by store closures, investment in online and a soft outlook for shopping centres. Neutral retained. Target rises to $20.60 from $19.30.

Target price is $20.60 Current Price is $19.00 Difference: $1.6
If PMV meets the Citi target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $20.40, suggesting upside of 1.3% (ex-dividends)

The company's fiscal year ends in July.

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 PMV as Neutral (3) -

The FY20 result was previously guided so there were no material surprises for Credit Suisse. Earnings forecasts are upgraded based on a strong performance by Peter Alexander and solid momentum in apparel brands.

Smiggle sales were weaker because of school closures and the broker remains cautious about the division. Up to 55 UK Smiggle stores could close in FY21 although management is confident the profit contribution can be maintained.

The potential closures confirm the strategy to drive growth in margin accretive online sales, in the broker's view. Neutral rating and Credit Suisse raises the target to $20.39 from $18.12.

Target price is $20.39 Current Price is $19.00 Difference: $1.39
If PMV meets the Credit Suisse target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $20.40, suggesting upside of 1.3% (ex-dividends)

The company's fiscal year ends in July.

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 PMV as Equal-weight (3) -

Results were in line with previous guidance and no outlook commentary was provided. FY20 retail earnings (EBIT) were up 12%.

Morgan Stanley finds the re-opening trends encouraging, noting Australasia delivered like-for-like sales growth of 14% in the final 10 weeks of FY20.

Equal-weight rating. Target price is increased to $18.40 from $17.40. Industry view: In-Line.

Target price is $18.40 Current Price is $19.00 Difference: minus $0.6 (current price is over target).
If PMV 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 $20.40, suggesting upside of 1.3% (ex-dividends)

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

UBS rates PMV as Buy (1) -

Premier Investments delivered an in-line FY20 result with strong cash flow, observes UBS. For FY21, the broker estimates a circa -14% fall in underlying earnings growth.

The broker highlights Smiggle disappointed due to reduced retail footfall, school closures & slower wholesale door growth. The broker is positive and believes covid-19 has delayed but not structurally challenged Premier Investments' strategy. 

While uncertainty is high, the broker believes the company is well placed given its net-cash balance and asset backing. In the medium-term, opportunities include the rollout of Smiggle globally, consolidation in apparel and improving online margins.

Buy rating maintained. Target is increased to $20.50 from $19.30.

Target price is $20.50 Current Price is $19.00 Difference: $1.5
If PMV meets the UBS target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $20.40, suggesting upside of 1.3% (ex-dividends)

The company's fiscal year ends in July.

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 SOL as Hold (3) -

Washington H Soul Pattinson & Company released its FY20 result with the headline numbers impacted by several moving parts, explains Morgans. These moving parts included New Hope Corporation ((NHC)) and the TPG Telecom ((TPG))/Vodafone merger.

The company’s investment portfolio remained resilient, in the analyst’s view, outperforming the All Ordinaries index by around 7% in the 12 months to July 31, 2020.

Morgans lowers FY21 and FY22 cash profit (NPAT) by over -35%, mainly due to the cyclical nature of earnings for New Hope and Brickworks ((BKW)).

The broker continues to like the story and the company’s long history of dividend distributions.

The Hold rating is unchanged and the target price is increased to $23.32 from $20.04.

Target price is $23.32 Current Price is $24.78 Difference: minus $1.46 (current price is over target).
If SOL meets the Morgans target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

The company's fiscal year ends in July.

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 SSR as Initiation of coverage with Buy (1) -

UBS has initiated coverage on SSR Mining post its merger with Alacer Gold ((AQG)).

The broker expects group gold production to be 836koz in 2021. UBS highlights the company's key assets are Copler and Marigold with Copler performing consistently through 2020 and Marigold processing ore below reserve grade.

The group production growth is lower than peers and UBS suggests the key here is to arrest a longer-term production decline. 

Looking at SSR Mining's attractive valuation and strong cashflow, UBS initiates coverage with a Buy rating and a target price of $33.

Target price is $33.00 Current Price is $26.06 Difference: $6.94
If SSR meets the UBS target it will return approximately 27% (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

Citi rates STO as Buy (1) -

The NSW Independent Planning Commission is considered likely to hand down its decision on the Narrabri gas project on September 30. If the project is approved Citi anticipates an expedited federal approval process of just 1-2 months.

Santos would then be afforded the opportunity to appraise a resource and an investment decision is likely in early 2022.

Santos continues to be the broker's top pick because of a greater level of confidence in farming down growth assets. Target is reduced to $7.14 from $7.43. Buy (High Risk) rating retained.

Target price is $7.14 Current Price is $5.12 Difference: $2.02
If STO meets the Citi target it will return approximately 39% (excluding dividends, fees and charges).

Current consensus price target is $6.53, suggesting upside of 28.1% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Forecast for FY21:

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: 0.8

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

Credit Suisse rates STX as Outperform (1) -

Credit Suisse observes, unlike sector peers which have sustained lower prices and strained balance sheets, Strike Energy has avoided adverse impacts from the pandemic. Growth remains on track with the stock up 50% since pre-pandemic levels in January.

Credit Suisse increases the target to $0.31 from $0.27 on the back of some exploration upside. The main issue is whether the stock is now pricing in too much upside too early, but the broker does not believe this is a risk at this stage. Outperform retained.

Target price is $0.31 Current Price is $0.26 Difference: $0.05
If STX meets the Credit Suisse target it will return approximately 19% (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

Macquarie rates SUN as Upgrade to Outperform from Neutral (1) -

Macquarie considers the risks of business interruption are over stated and the bank provisions are fair. Hence the discount of -33% compared with the ASX100 is considered excessive.

The broker understands Suncorp has provisioned -$70-75m, post reinsurance, for Australian business interruption losses. While Macquarie's estimate is closer to -$225m, pre-reinsurance, this is considered substantially less than the discount currently encapsulated in the stock price.

Rating is upgraded to Outperform from Neutral and the target is raised to $11.00 from $10.40.

Target price is $11.00 Current Price is $8.59 Difference: $2.41
If SUN meets the Macquarie target it will return approximately 28% (excluding dividends, fees and charges).

Current consensus price target is $10.48, suggesting upside of 20.0% (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

Morgan Stanley rates TWE as Overweight (1) -

Morgan Stanley considers the risk/reward skew to the upside despite the investigation into wine dumping in China and the risk of tariffs. Industry participants expects some tariff will be imposed on Australian winemakers by China.

Meanwhile, feedback regarding the outlook for the Americas is more constructive, as some planted acreage has been removed since a previous assessment in January and there is strong pandemic-driven demand at certain price points.

Moreover, the risk of significant taint from smoke due to Californian fires is likely to mean the US 2020 vintage is meaningfully lower.

Overweight rating maintained. Target is reduced to $11 from $14. Industry view: Cautious.

Target price is $11.00 Current Price is $9.01 Difference: $1.99
If TWE meets the Morgan Stanley target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $11.31, suggesting upside of 27.3% (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