Australian Broker Call

Credit Suisse rates A2M as Underperform (5) -

Formula pricing was stable in August compared to July, according to recent data, notes Credit Suisse. Also, channel inventory is considered to be moving in the right direction.

While the TMall ranking for the A2 brand remains in the top 10, there are some concerns around the rate of China births slowing, explains the analyst. The broker retains its Underperform rating and target price of $5.50.

Target price is $5.50 Current Price is $5.73 Difference: minus $0.23 (current price is over target).
If A2M meets the Credit Suisse target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $6.53, suggesting upside of 13.7% (ex-dividends)

The company's fiscal year ends in June.

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: 0.0

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

Ord Minnett rates APA as Upgrade to Buy from Accumulate (1) -

Following results season, Ord Minnett prefers APA Group within the Utilities sector due to its strong free cash flow generation, and opportunities for organic and inorganic growth.

The broker increases its rating to Buy from Accumulate on valuation. The price target of $10.75 is unchanged.

Target price is $10.75 Current Price is $9.15 Difference: $1.6
If APA meets the Ord Minnett target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $10.28, suggesting upside of 11.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.6

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

Citi rates ARB as Neutral (3) -

Citi is increasingly concerned about the sustainability of the current new car sales momentum, given industry articles indicate new car orders are down significantly in lockdown areas. Also, auto manufacturers continue to be impacted by semi-conductor supply issues.

The broker retains a Neutral rating, with the current share price fairly factoring in the upside from an improving consumer environment in the US and medium-term opportunities with Ford.

Also, the adverse impact of recent lockdowns in Australia on mobility, combined with the lack of super withdrawals and JobKeeper this year, could adversely impact Australian aftermarket demand. The $48.80 target price is unchanged.

Target price is $48.80 Current Price is $50.98 Difference: minus $2.18 (current price is over target).
If ARB meets the Citi target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $46.93, suggesting downside of -10.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: -0.3

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

Citi rates BAP as Neutral (3) -

Citi is increasingly concerned about the sustainability of the current new car sales momentum, given industry articles indicate new car orders are down significantly in lockdown areas. Also, auto manufacturers continue to be impacted by semi-conductor supply issues.

The broker explains this should be a tailwind for Bapcor once lockdown restrictions are lifted though increasing risks are seen around covid-19 disruptions to FY22. There's thought to be fewer positive medium-term catalysts with acquisitions now seeming less likely.

Citi retains its Neutral rating and $8.20 target price.

Target price is $8.20 Current Price is $7.44 Difference: $0.76
If BAP meets the Citi target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $8.76, suggesting upside of 16.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.7

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

Credit Suisse rates CAJ as Outperform (1) -

Credit Suisse assesses FY21 revenue was in-line with expectations while earnings (EBITDA) were a minor miss, reflecting a step-up in second half costs (particularly in personal protective equipment).

The broker makes only modest forecast earnings changes and retains its Outperform rating and $0.43 target price. Although lockdowns will be a first half FY22 headwind, a return to a normal growth trajectory is expected by the second half.

Target price is $0.43 Current Price is $0.37 Difference: $0.06
If CAJ meets the Credit Suisse target it will return approximately 16% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.8

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

Macquarie rates CSL as Neutral (3) -

Foot traffic trends in around 100 US-based collection centres remains slightly weaker against expectations. Macquarie anticipates a gradual improvement in plasma collection volumes over the rest of 2021 and into 2022.

Broadly, with a new plasmapheresis platform the company has potential to increase efficiency, although Macquarie asserts this is captured within forecasts. Considerations for the next few months include the jump in new covid cases in the US, which is a potential risk.

Neutral rating and $302.50 target maintained.

Target price is $302.50 Current Price is $303.87 Difference: minus $1.37 (current price is over target).
If CSL meets the Macquarie target it will return approximately minus 0% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $308.84, suggesting upside of 1.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

This company reports in USD. 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

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

Macquarie assesses Dexus has been able to improve cash flow by recycling capital, and earnings have grown despite a challenged environment. Office markets form the base and asset valuations are resilient. The broker expects earnings growth in excess of 6% in both FY23 and FY24.

There is also upside from funds management. The business has $23bn in funds under management making it the fourth largest under the broker's coverage with unlisted and listed funds in the platform.

While Macquarie does not assume it is all blue sky, generating a track record of growth in this area could mean the multiple expands. Rating is upgraded to Outperform from Neutral and the target is raised to $11.67 from $11.11.

Target price is $11.67 Current Price is $10.64 Difference: $1.03
If DXS meets the Macquarie target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $10.91, suggesting upside of 2.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.3

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

Macquarie rates GNC as Outperform (1) -

In assessing what the 2021/22 east coast winter crop may look like, Macquarie remains positive. The outlook suggests above-average rainfall for the east coast grain belt over the next three months.

The broker assesses 24.8mt is appropriate estimate for the winter crop at this point in the season. This is 12% above the June estimate from ABARES.

If Macquarie's estimates prove accurate it could earn Graincorp an additional $33m in FY22 and increase net profit estimates by 23%, given the leverage.

The broker retains an Outperform rating with a $7.27 target.

Target price is $7.27 Current Price is $6.19 Difference: $1.08
If GNC meets the Macquarie target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $6.80, suggesting upside of 9.2% (ex-dividends)

The company's fiscal year ends in September.

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 GUD as Upgrade to Buy from Neutral (1) -

Citi is increasingly concerned about the sustainability of the current new car sales momentum given industry articles indicate new car orders are down significantly in lockdown areas. Also, auto manufacturers continue to be impacted by semi-conductor supply issues.

The broker upgrades to Buy from Neutral, as this should be a tailwind once lockdown restrictions are lifted. The target price remains at $12.30. Following a recent share price decline it's thought the significant discount to peer Bapcor ((BAP)) is excessive.

Target price is $12.30 Current Price is $10.74 Difference: $1.56
If GUD meets the Citi target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $12.96, suggesting upside of 17.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.6

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

Credit Suisse rates IDX as Neutral (3) -

Following FY21 results, Credit Suisse estimates revenue was a -2% miss versus expectations. Overall revenue growth was partly offset by elevated employee, equipment and consumable costs driving an earnings (EBITDA) margin miss of -5%.

This results in forecast profit (NPATA) downgrades of -6% for FY22 and FY23 by the broker. Management noted FY22 YTD trading is down around -5% versus prior expectations, which includes New Zealand down -75% versus estimates.

While the analyst expects the industry to return to normality from the second half, the company will be more reliant on organic growth, given elevated M&A multiples. The Neutral rating is unchanged and the target price falls to $4.65 from $5.

Target price is $4.65 Current Price is $4.49 Difference: $0.16
If IDX meets the Credit Suisse target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $5.17, suggesting upside of 11.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.5

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

Morgan Stanley rates LLC as Downgrade to Underweight from Equal-weight (5) -

Over the next 6-12 months the business may lack upside, Morgan Stanley asserts, as the company takes its development work-in-hand towards a target of around $20bn, so that its target for $8bn per year in completions from FY24 can be realised.

Beyond FY24 the broker finds it unclear if production targets are sustainable or adequately funded.

Rating is downgraded to Underweight from Equal-weight as FY22 and FY23 estimates are revised down -20% and -12%, respectively, to reflect reduced cost reductions at the group level. Target is reduced to $11.40 from $13.00. Industry view is In-Line.

Target price is $11.40 Current Price is $11.90 Difference: minus $0.5 (current price is over target).
If LLC meets the Morgan Stanley target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $12.69, suggesting upside of 11.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.3

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

Citi rates LVT as Neutral (3) -

Following FY21 results, Citi would like to see consistent execution before turning more positive and retains its Neutral rating and $0.18 target price. The pickup in large client wins is thought encouraging, as is increased focus on LiveTiles Reach and existing customers.

As part of a recent strategic review, LiveTiles is simplifying its go-to-market and product development priorities, and increasing the focus on LiveTiles Reach. Also, as part of the organisation restructure, around -$3.5m in annualised cost savings has been achieved.

The analyst cautions the change in strategy and the restructure could negatively impact near term bookings.

Target price is $0.18 Current Price is $0.15 Difference: $0.03
If LVT meets the Citi target it will return approximately 20% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.0

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

Credit Suisse rates NIC as Outperform (1) -

Nickel Mines has entered a Memorandum of Agreement with PT Iriana Mutiara Mining for a staged acquisition (100%) of the Siduarsi nickel/copper project in Papua, Indonesia. Credit Suisse notes historical work has clearly identified a deposit of potential scale.

The broker feels further drilling could prove-up a sizeable, low-cost resource in the coming years. The Outperform rating and $1.40 target price are retained, despite a conservative view on nickel.

Target price is $1.40 Current Price is $1.01 Difference: $0.39
If NIC meets the Credit Suisse target it will return approximately 39% (excluding dividends, fees and charges).

Current consensus price target is $1.25, suggesting upside of 21.4% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY21:

Forecast for FY22:

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

Market Sentiment: 0.7

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

Citi rates NST as Buy (1) -

Citi retains its Buy rating and lifts its target price to $12 from $11.50 after revisiting forecasts for the Kalgoorlie District Milling synergies. Processing stockpiles are expected to yield strong cash margins.

Target price is $12.00 Current Price is $9.76 Difference: $2.24
If NST meets the Citi target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $12.19, suggesting upside of 22.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.7

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

UBS rates QAN as Buy (1) -

UBS believes disruption from the pandemic will mean Qantas returns as a stronger airline in future. Primary benefits include costs transformation, a new domestic market structure and a resetting of the international portfolio with a better focus on returns.

The broker expects FY24 will be the year when profitability will surpass pre-pandemic levels and Qantas will be on a new trajectory. Nevertheless, the recovery is sensitive to vaccination rates, cooperation borders and a resumption of traffic from pent-up demand.

The broker includes almost all of the company's $1bn transformation target, but anticipates this will be achieved by FY24, one year later than guidance. Buy rating retained. Target rises to $6.25 from $6.20.

Target price is $6.25 Current Price is $5.34 Difference: $0.91
If QAN meets the UBS target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $5.86, suggesting upside of 9.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.7

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

Ord Minnett rates STO as Buy (1) -

In a results season review, Santos and Senex Energy ((SXY)) are Ord Minnett's top picks in the energy sector. With Santos' large-cap peers encountering issues throughout the year, it's believed the company remains the best place for investors to gain exposure. 

The Buy rating is unchanged and the target price falls to $8 from $8.05.

Target price is $8.00 Current Price is $6.25 Difference: $1.75
If STO meets the Ord Minnett target it will return approximately 28% (excluding dividends, fees and charges).

Current consensus price target is $8.00, suggesting upside of 30.5% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY21:

Forecast for FY22:

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

Market Sentiment: 0.7

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

Ord Minnett rates SXY as Buy (1) -

In a results season review, Santos ((STO)) and Senex Energy are Ord Minnett's top picks in the energy sector. Of the small caps, Senex energy is preferred because of its strong balance sheet, growth prospects and exposure to east coast gas markets.

The Buy rating is unchanged and the target price falls to $4 from $4.05.

Target price is $4.00 Current Price is $3.14 Difference: $0.86
If SXY meets the Ord Minnett target it will return approximately 27% (excluding dividends, fees and charges).

Current consensus price target is $3.78, suggesting upside of 18.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.7

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

Citi rates TWE as Sell (5) -

Citi considers the highlight of the FY21 result was an ability to reallocate China wine volumes to other Asian countries, following the imposition of tariffs late last year.

While keeping FY22 and FY23 EPS forecasts broadly unchanged, the target rises to $12.86 from $12.10, due to the analyst applying higher market multiples.

Before turning more positive than a Neutral rating, the broker needs to see how sustainable the volume reallocation is, and how the company navigates continued covid-19 disruptions on its higher-end sales channels.

Target price is $12.86 Current Price is $12.37 Difference: $0.49
If TWE meets the Citi target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $11.98, suggesting downside of -3.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.0

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