Australian Broker Call

Credit Suisse rates AGL as Outperform (1) -

AGL Energy's 1H earnings (EBITDA) missed Credit Suisse's forecasts by double digits, largely due to non-recurring impacts from generation outages and extreme spot prices.

Management narrowed FY23 earnings guidance to $1,250-1,375m from $1,250-1,450m and profit to $200-280m from $200-320m. An improvement is expected in 2H cash flows, while strong earnings growth in FY24 is anticipated.

While not evident in 1H results, the analyst likes the attractive free cash flow yields forecast for FY24 and beyond.

The target falls to $8.70 from $9.60. Outperform.

Target price is $8.70 Current Price is $7.12 Difference: $1.58
If AGL meets the Credit Suisse target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $8.84, suggesting upside of 27.2% (ex-dividends)

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.6

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

Macquarie rates AGL as No Rating (-1) -

AGL Energy's first half was always going to be a shocker and as such it was only slightly worse than Macquarie expected. FY23 guidance is revised down.

The disappointment for the broker was worst cash conversion in 13 years. As a result, debt and interest costs are higher. Seeing this partially reverse in the second half is important for investors confidence.

Gas trading was nonetheless a positive surprise as AGL benefits from contract rollovers.

Macquarie is currently on restriction.

Current Price is $7.12. Target price not assessed.

Current consensus price target is $8.84, suggesting upside of 27.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.6

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

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

AGL Energy's 1H profit of $87m was a miss compared to Morgan Stanley's forecast due largely to outages and volatility, though the broker liked the quality of the Customer Markets result.

The analyst is encouraged by management's confidence in refinancing debt and in the reversal in negative working capital. 

Rather than focus upon the past result, the broker prefers to highlight the implied normalisation of the 2H earnings run-rate and electricity forward curves leading into FY24. These measures suggest an uplift of around $14/MWh.

The target falls to $7.77 from $8.01. Equal-weight. Industry View: Cautious.

Target price is $7.77 Current Price is $7.12 Difference: $0.65
If AGL meets the Morgan Stanley target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $8.84, suggesting upside of 27.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.6

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

Morgans rates AGL as Hold (3) -

Underlying net profit for AGL Energy was a miss against the forecasts of Morgans and consensus by -60% and -45%, respectively, as tight winter conditions (supply shocks) weighed on the wholesale trading business.

Additionally, the mid-point of underlying net profit guidance was lowered by -8% to $240m.

The plan is to increase retail tariffs over FY24/25 significantly to recoup the higher cost of hedging that retailers had to absorb during the supply shocks in 2022. However, the analyst feels pressure may be placed on the industry to limit such tariff increases.

An interim dividend of only 8cps was declared, though Morgans anticipates increasing dividends as earnings recover over the next 12 months.

After incorporating the result into forecasts and increasing the discount rate assumption, the broker’s target falls to $6.89 from $7.88. Hold.

Target price is $6.89 Current Price is $7.12 Difference: minus $0.23 (current price is over target).
If AGL meets the Morgans target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $8.84, suggesting upside of 27.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.6

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

Ord Minnett rates AGL as Buy (1) -

Despite a share price plunge after the release of AGL Energy's 1H results, Ord Minnett is not alarmed, noting earnings were impacted by power station outages.

Without this impact, profit would have risen by 13% on the previous corresponding period, explains the analyst.

Weak underlying cash flow was mainly caused by temporary factors and the broker expects an improvement in the 2H.

The retail division, known as Customer Markets, performed well in the 1H, while the wholesale division (Integrated Energy) suffered from power station outages as well as an outage at Loy Yang unit 2, explains Ord Minnett.

The broker expects strong earnings growth in FY24 and further upside in FY25. Buy. Target of $12.80 retained.

Target price is $12.80 Current Price is $7.12 Difference: $5.68
If AGL meets the Ord Minnett target it will return approximately 80% (excluding dividends, fees and charges).

Current consensus price target is $8.84, suggesting upside of 27.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.6

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

UBS rates AGL as Buy (1) -

Lower electricity earnings, driven by the timing of rising wholesale electricity costs, have seen AGL Energy disappoint UBS's first half profit expectations by -30%. 

With the miss largely a timing issue, UBS has retained its full year forecasts, while AGL Energy has cut its earnings and net profit guidance ranges by -3% and -8% at the top end respectively.

The broker continues to see potential for AGL Energy to more than double earnings by FY25. The Buy rating is retained and the target price decreases to $8.05 from $8.60.

Target price is $8.05 Current Price is $7.12 Difference: $0.93
If AGL meets the UBS target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $8.84, suggesting upside of 27.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.6

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

Citi rates ANZ as Buy (1) -

According to Citi, ANZ Bank's first quarter disclosures have shown strong trends in both lending growth and asset quality.

The broker points out asset quality is set to be a focus of the bank's release, noting an unexpected write-back in the quarter suggests better asset quality will be retained for longer. 

The bank has disclosed -$83m in provisions in the first quarter. The Buy rating and target price of $29.95 are retained.

Target price is $29.25 Current Price is $25.92 Difference: $3.33
If ANZ meets the Citi target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $28.09, suggesting upside of 9.3% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.6

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

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

Morgan Stanley assesses ANZ Bank's credit quality remains very good and the impairment benefit disclosed in the bank's Pillar 3 update for December 2022 was better than expected.

The Equal-weight rating and $25.50 target are unchanged. Industry view: In-line.

Target price is $25.50 Current Price is $25.92 Difference: minus $0.42 (current price is over target).
If ANZ meets the Morgan Stanley target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $28.09, suggesting upside of 9.3% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.6

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

Ord Minnett rates ANZ as Accumulate (2) -

Following pillar 3 disclosures by ANZ Bank, Ord Minnett makes no changes to its earnings forecasts or $31 target. The Accumulate rating is also unchanged.

In a surprise to the analyst, the bank reported a benefit from releasing bad debt provisions. A total of $17m was added to collective provisions but individual provisions reduced by -$101m on an improvement for loans previously impaired or at risk.

The $31 target is a step-up from the $27.00 level previously in the FNArena database as Ord Minnett now whitelabels its research from Morningstar instead of JP Morgan.

Target price is $31.00 Current Price is $25.92 Difference: $5.08
If ANZ meets the Ord Minnett target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $28.09, suggesting upside of 9.3% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.6

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

Citi rates APX as Sell (5) -

Citi raised concerns about risk to Appen's gross margins as key customers call out an increased focus on costs in 2023, with Google specifically stating its intention to more effectively manage costs with suppliers and vendors. 

An increased interest in the applications of artificial intelligence (AI) does offer potential upside for Appen's volumes, with Google, Microsoft and Facebook all pursuing further utilisation of AI in their platforms. Citi particularly notes Microsoft's new AI-powered search engine could provide a volume boost. 

The Sell rating and target price of $2.55 are retained.

Target price is $2.55 Current Price is $2.95 Difference: minus $0.4 (current price is over target).
If APX meets the Citi target it will return approximately minus 14% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.53, suggesting downside of -23.3% (ex-dividends)

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

Morgans rates AQZ as Add (1) -

A change in accounting treatment for expansionary costs by Alliance Aviation Services makes analysis of 1H results tricky, notes Morgans.

Adjusting for these costs, the result missed the broker’s underlying profit (NPBT) forecast by -19.7%, while FY23 guidance was actually a slight upgrade compared to the forecasts by the broker and consensus.

A material increase in wet lease activity and utilisation during the 2Q provides a strong trajectory into the 2H, according to the analyst.

The Add rating is unchanged and the target rises to $4.65 from $4.50.

Target price is $4.65 Current Price is $3.45 Difference: $1.2
If AQZ meets the Morgans target it will return approximately 35% (excluding dividends, fees and charges).

Current consensus price target is $4.60, suggesting upside of 32.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

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

Ord Minnett rates AQZ as Buy (1) -

The ACCC will announce its review of the takeover by Qantas Airways ((QAN)) of Alliance Aviation Services on March 23, though Ord Minnett sees potential for another delay.

The broker lowers its FY23 and FY24 profit (PBT) estimates following a soft 1H result, largely due to timing differences, and lowers its target to $4.40 from $4.50. Buy.

Target price is $4.40 Current Price is $3.45 Difference: $0.95
If AQZ meets the Ord Minnett target it will return approximately 28% (excluding dividends, fees and charges).

Current consensus price target is $4.60, suggesting upside of 32.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

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

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

Arena REIT's first half was in line with Macquarie and FY guidance is reaffirmed.

The ACCC has launched an inquiry into childcare pricing, which may lead to limitations and downside catalysts as the year progresses, but the broker is comfortable with the REIT's growth outlook and returns from developments should increase from here.

Given a defensive balance sheet, a solid earnings growth outlook and resilient income, Macquarie upgrades to Outperform from Neutral.

Target rises to $4.05 from $3.94.

Target price is $4.05 Current Price is $3.74 Difference: $0.31
If ARF meets the Macquarie target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $4.16, suggesting upside of 8.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.3

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

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

Arena REIT's 1H EPS of 8.59cpu beat Morgan Stanley's 8.4cpu forecast, due to stronger-than-expected rental income, partly offset by higher interest costs.

FY23 DPS guidance for 8.4cpu was maintained.

Without being critical, the broker highlights two healthcare assets are contracted to sell, even though the REIT has been battling to expand into this sector for some time.

The Equal-Weight rating and target price of $4.36 are retained. Industry view: In-Line.

Target price is $4.36 Current Price is $3.74 Difference: $0.62
If ARF meets the Morgan Stanley target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $4.16, suggesting upside of 8.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.3

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

Ord Minnett rates BWP as Upgrade to Hold from Lighten (3) -

Ord Minnett raises its rating for BWP Trust to Hold from Lighten on valuation, noting significant investor demand for warehouse properties and the likelihood of a gradual increase in distributions.

The broker doesn't refer to half year results released on February 8. 

The target of $3.60 is unchanged.

Target price is $3.60 Current Price is $3.84 Difference: minus $0.24 (current price is over target).
If BWP meets the Ord Minnett target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.63, suggesting downside of -5.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: -0.8

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

Morgan Stanley rates CBA as Underweight (5) -

Results for the 1H are due on February 15 and Morgan Stanley predicts a strong outcome for CommBank.

The broker forecasts pre-provision profit and cash profit of $8,102m and $5,389m, respectively, compared to consensus estimates of $7,808m and $5,172m, respectively.

The Underweight rating is retained and the target is increased to $88 from $86.50. Industry view: In-Line.

Target price is $88.00 Current Price is $110.21 Difference: minus $22.21 (current price is over target).
If CBA meets the Morgan Stanley target it will return approximately minus 20% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $93.50, suggesting downside of -15.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: -0.6

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

Macquarie rates CCP as Downgrade to Neutral from Outperform (3) -

In the wake of Credit Corp 's result, Macquarie has reviewed its US purchased debt ledger expectations, drawing the following conclusions.

The near-term performance for the company's Consumer Lending segment is set to drive second half growth. The US PDL segment requires performance improvement over the medium-term to achieve target performance metrics.

The A&NZ PDL segment is expected to be a drag until supply of PDL books improves.

Downgrade to Neutral from Outperform. Target falls to $20.70 from $24.90.

Target price is $20.70 Current Price is $20.48 Difference: $0.22
If CCP meets the Macquarie target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $24.40, suggesting upside of 20.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.5

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

Citi rates CLW as Buy (1) -

Citi expects Charter Hall Long WALE REIT's earnings per share guidance could prove conservative and sits 1% ahead of forecast largely given consumer price index linked leases. 

While the REIT's gearing is higher than peers, often a focus for investors, the broker expects inflation linked revenues can offer some protection even if asset values decline, and notes the REIT has continued to improve income growth by transacting "accretively and in a gearing-neutral way".

Buy rating and target price of $5.00.

Target price is $5.00 Current Price is $4.60 Difference: $0.4
If CLW meets the Citi target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $4.74, suggesting upside of 4.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.2

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

Macquarie rates CLW as Neutral (3) -

Charter Hall Long WALE REIT's first half operating earnings were in line with Macquarie and FY guidance is reaffirmed. Earnings are benefiting from an increase in CPI versus original expectations as well as profitable capital recycling, offset by a higher cost of debt, the broker notes.

Macquarie nevertheless views the outlook for the REIT’s earnings as challenging. While the group will achieve income growth via CPI-linked leases across some 50% of the portfolio, it will need to contend with a rising cost of capital, particularly in FY25 as the benefit of low rate swaps roll off.

Despite trading at a deep discount to net tangible asset valuation, Neutral retained. Target rises to $4.65 from $4.34.

Target price is $4.65 Current Price is $4.60 Difference: $0.05
If CLW meets the Macquarie target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $4.74, suggesting upside of 4.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.2

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

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

Morgan Stanley attributes a mild 1H EPS miss (versus the broker's forecast) to higher-than-expected interest expense, offset in part by strong net operating income (NOI) growth.

CPI-linked leases enabled like-for-like rental growth for Charter Hall Long WALE REIT of 4.1%, a 7% uplift. 

Long WALE retail assets experienced a valuation uplift (due to CPI rental growth, but minimal cap rate expansion), while Agri-logistics had asset devaluations, explains the analyst.

Guidance for FY23 EPS was maintained at 28cpu.

The Equal-weight rating and $4.75 target are unchanged.

Target price is $4.75 Current Price is $4.60 Difference: $0.15
If CLW meets the Morgan Stanley target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $4.74, suggesting upside of 4.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.2

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

Ord Minnett rates CLW as Buy (1) -

Charter Hall Long WALE REIT's first half results were in line with Ord Minnett's forecasts and FY23 operating EPS (OEPS) guidance was maintained.

OEPS for the 1H was 14cpu, a fall of -8.6% on the previous corresponding period due to the rising cost of debt, while property income rose by 17% as a result of acquisitions and like-for-like rental growth, explains the analyst.

The broker highlights rental growth derived from CPI-linked rent reviews (50% of the trust's leases).

While the REIT continues to recycle capital by selling industrial assets to fund investments in the alternative real estate space, Ord Minnett would prefer a pay down of debt and the introduction of buybacks.

The target rises to $4.89 from $4.87. Buy.

Target price is $4.89 Current Price is $4.60 Difference: $0.29
If CLW meets the Ord Minnett target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $4.74, suggesting upside of 4.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.2

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

UBS rates CLW as Sell (5) -

UBS does not find Charter Hall Long WALE REIT's favourable triple net leases and consumer price index linked leases enough to balance risk. The broker highlights elevated gearing, low cap rates and poor comparative cash flows all underpin its Sell rating. 

The REIT did manage to increase its weighted average lease expiry through the sale of two assets and the acquisition of an interest in Geoscience Australia, with 8% of the portfolio expiring out to FY27 following the divestment.

The REIT's first half result was marginally below expectations for UBS, with full year guidance reaffirmed. Target price increases to $4.39 from $4.35.

Target price is $4.39 Current Price is $4.60 Difference: minus $0.21 (current price is over target).
If CLW meets the UBS target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.74, suggesting upside of 4.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.2

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

Credit Suisse rates CPU as Outperform (1) -

Triggered by the one year anniversary of the acquisition of Corporate Trust (which now accounts for around 40% of Computershare's EBIT), Credit Suisse reviews the impact of higher interest rates on issuance trends.

The number of new corporate trust contracts declined by -25% in 2022, with the 2H of the year showing even steeper declines. Computershare also experienced a loss in market share of around -2-4%.

These two outcomes suggest to the analysts a slower rate of growth in the portfolio (potential for shrinkage) and slower growth in trust fees over time.

The Outperform rating and $27 target are unchanged.

Target price is $27.00 Current Price is $24.50 Difference: $2.5
If CPU meets the Credit Suisse target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $30.83, suggesting upside of 24.5% (ex-dividends)

Forecast for FY23:

Forecast for FY24:

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

Citi rates DMP as Neutral (3) -

While feeling more positive on Domino's Pizza Enterprises, Citi remains cautious given it sees potential for a number of headwinds it feels are not currently factored into the stock's valuation. Headwinds include a slower than expected store roll out and potentially higher costs in new Asian markets. 

While website traffic has continued to decline, the broker points out strong consumer uptake of Domino's Pizza's new app, which continued in January, alongside a resurgence in carry out could be driving the decline. 

The Neutral rating and target price of $70.36 are retained.

Target price is $70.36 Current Price is $70.85 Difference: minus $0.49 (current price is over target).
If DMP 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 $75.57, suggesting upside of 5.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.4

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

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

Following a -19% share price decline for Endeavour Group since its August peak, UBS has upgraded its rating on the stock finding the regulatory risk is now better reflected in the valuation. 

With regulatory risk to gaming rising, UBS estimates gaming represents 70% of Endeavour Group's hotel earnings and 30% of group earnings.

The broker does point out that New South Wales and Tasmania, where risk is highest, represent only 13-15% of the company's gaming revenue. 

The rating is upgraded to Neutral from Sell and target price of $6.75 is retained.

Target price is $6.75 Current Price is $6.66 Difference: $0.09
If EDV meets the UBS target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $6.65, suggesting downside of -2.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

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 confirmed FY23 DPS guidance of 7.2cpu while announcing 1H funds from operations (FFO) of 7.6cpu and an interim distribution of 3.6cpu.

The broker expects updated revaluations in April/May, which will include current industrial developments, and news on potential asset sales in the 2H.

The Add rating is unchanged, while the target eases to $1.90 from $1.98.

Target price is $1.90 Current Price is $1.38 Difference: $0.52
If GDF meets the Morgans target it will return approximately 38% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

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

Morgan Stanley rates IEL as Overweight (1) -

After a detailed review, strategists at Morgan Stanley believe IDP Education and Treasury Wine Estates are the two stocks under the broker's coverage with the most direct impacts from China's reopening and easing of trade tensions.

Relevant to IDP Education, Chinese policy now directs students to return in person to foreign universities where they have been studying online, which gives the broker more confidence in the recovery of China student placements.

The Overweight rating and $36.80 target are maintained. Industry View: In-Line.

Target price is $36.80 Current Price is $31.89 Difference: $4.91
If IEL meets the Morgan Stanley target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $33.22, suggesting upside of 6.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.7

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

Credit Suisse rates ILU as Downgrade to Neutral from Outperform (3) -

While Credit Suisse raises its target for Iluka Resources to $10.90 from $10.00 on higher forecast prices for mineral sands, the rating is downgraded to Neutral from Outperform.

The broker believes dividends may be limited due to capex requirements for the company's transformational projects, while technical difficulties for those projects raises the risk of cost overruns.

Full year results are due on February 21.

Target price is $10.90 Current Price is $11.24 Difference: minus $0.34 (current price is over target).
If ILU 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 $11.17, suggesting upside of 3.1% (ex-dividends)

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

Macquarie rates MGH as Outperform (1) -

Maas Group has provided a first half trading and FY guidance update. First half proforma earnings are up 60% year on year and FY guidance is reaffirmed, Macquarie notes.

Maas revised guidance down in November due to sustained periods of above average rainfall, and headwinds in its residential property business from the rising rate environment, reducing buyer confidence and conversion time from enquiry to sale.

Only the weather is set to improve, so maintaining guidance is a solid outcome in an deteriorating residential environment, the broker suggests.

Outperform retained, target rises to $3.75 from $3.40.

Target price is $3.75 Current Price is $3.07 Difference: $0.68
If MGH meets the Macquarie target it will return approximately 22% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

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

Morgans rates MGH as Add (1) -

Maas Group has provided first time 1H guidance and reaffirmed FY23 guidance for earnings (EBITDA) of between $150-180m.

First half guidance of $64-66m was a 9% beat versus Morgans estimate and indicated strength for the business.

While currently elevated, the analyst expects gearing levels will ease upon settlements within the development book (residential lots and houses) in the 2H.

The broker slightly increases its earnings forecasts and raises its target to $4.10 from $4.00. Add.

Target price is $4.10 Current Price is $3.07 Difference: $1.03
If MGH meets the Morgans target it will return approximately 34% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

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

Credit Suisse rates MGR as Downgrade to Neutral from Outperform (3) -

Despite a better-than-expected 1H result and retained FY23 guidance, Credit Suisse lowers its rating for Mirvac Group to Neutral from Outperform. Value exists for longer-term investors, though it's felt market sentiment will weigh in the short-term.

The group reported 1H EPS of 7.7cpu, ahead of the broker's forecast for 6.4cpu and the 7.1cpu expected by consensus.

Management retained FY23 guidance for EPS and DPS. An unexpected 2H boost for Commercial development earnings is countered by lower-than-expected Residential earnings, explains the analyst.

The target price falls to $2.42 from $2.45.

Target price is $2.42 Current Price is $2.29 Difference: $0.13
If MGR meets the Credit Suisse target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $2.39, suggesting upside of 5.1% (ex-dividends)

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.3

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

Macquarie rates MGR as Neutral (3) -

Mirvac Group's operating earnings were 5% ahead of Macquarie, driven by retail property income and performance fees, while the composition of development earnings had a greater skew to commercial compared to the broker's expectations.

FY23  operating earnings guidance is reaffirmed. Mirvac is controlling what it can, the broker suggests, as evidenced by robust investment earnings and progress in planned asset sales.

Given uncertainty on cyclical development earnings in FY24, Macquarie retains Neutral. Target rises to $2.38 from $2.30.

Target price is $2.38 Current Price is $2.29 Difference: $0.09
If MGR meets the Macquarie target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $2.39, suggesting upside of 5.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.3

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

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

After Morgan Stanley excludes a number of one-off style profits, Mirvac Group's 1H results were an implied -10% miss versus the broker's forecast on weaker residential/higher interest expense, with further headwinds into FY24.

Management reaffirmed FY23 EPS guidance of at least 15.5c. The details of this guidance suggests to the analyst a tough FY24 as an improved commercial office outlook is offset by ongoing expectations for weaker residential and higher interest expenses.

The broker believes execution risk for FY24 is high and profit visibility has been reduced.

The target price falls to $2.25 from $2.30 and Equal-weight rating is retained. Industry view: In-Line.

Target price is $2.25 Current Price is $2.29 Difference: minus $0.04 (current price is over target).
If MGR meets the Morgan Stanley target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.39, suggesting upside of 5.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.3

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

UBS rates MGR as Neutral (3) -

While transactional items are typical for Mirvac Group, they accounted for 15% of earnings in the first half and saw the company's result underwhelm the market. 

UBS notes items included a $45m C&I profit related to the sale of the Waterloo Road profit, a $7m fee performance fee on Switchyard, and a $5m retail covid rental provision release.

The company's operational profit after tax did beat the broker's expectations by 6%, and the broker does like Mirvac Group's residential exposure, and expects the company can benefit from increasing immigration and a return of international students amid low levels of supply. 

The Neutral rating is retained and the target price decreases to $2.37 from $2.40.

Target price is $2.37 Current Price is $2.29 Difference: $0.08
If MGR meets the UBS target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $2.39, suggesting upside of 5.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.3

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

Citi rates MP1 as Buy (1) -

While Megaport has been cautious in providing forward guidance, Citi highlights the pipeline remains strong and improvements reported in January have continued. Although not concerned about a lack of forward guidance, Citi finds a lack of detail to explain recent weakness a negative.

The company claims first half issues are largely macro, with year-end impacting on pipeline conversion in the US, but Citi notes this does not account for slowing customer adds in both Europe and Australia Pacific. 

The Buy rating and target price of $10.95 are retained.

Target price is $10.95 Current Price is $5.89 Difference: $5.06
If MP1 meets the Citi target it will return approximately 86% (excluding dividends, fees and charges).

Current consensus price target is $9.61, suggesting upside of 62.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.9

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

Credit Suisse rates MP1 as Neutral (3) -

Credit Suisse makes only minor changes to its forecast earnings following 1H results that were largely pre-released (via 2Q results) and maintains its Neutral rating and $6.45 target for Megaport.

The broker estimates asset turnover growth will need to grow to 2.7 times in FY25, up form 1.8 times in FY22, to meet consensus forecasts for revenue and capex. It's felt upcoming price increases for VXC services and increased Port utilisation will assist.

FY23 guidance is due for release on February 21.

Target price is $6.45 Current Price is $5.89 Difference: $0.56
If MP1 meets the Credit Suisse target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $9.61, suggesting upside of 62.6% (ex-dividends)

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.9

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

Macquarie rates MP1 as Outperform (1) -

Macquarie does not qualify Megaport's result but given last month's update it was well flagged.

Management stated the pipeline is solid and the opportunity for growth of customers and revenue remains unchanged, but did not commit to providing quantitative guidance on revenue growth, port growth or cash burn.

Cash burn should decline in the second half, the broker suggests, boosted by lowered capex and inventory requirements, but this may be offset by macro-driven growth headwinds. Near-term headwinds do not displace longer-term structural growth.

Outperform retained, target rises to $7.80 from $7.60.

Target price is $7.80 Current Price is $5.89 Difference: $1.91
If MP1 meets the Macquarie target it will return approximately 32% (excluding dividends, fees and charges).

Current consensus price target is $9.61, suggesting upside of 62.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.9

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

Morgan Stanley rates MP1 as Overweight (1) -

After reviewing operational and cash burn trends contained within Megaport's 1H results, Morgan Stanley decides to lower its target to $8.50 from $10.00 on limited near-term growth due to the macroeconomic backdrop.

Customer, port and total services growth undershot the analyst's expectations by -5-10%, while the cash balance fell by -$25m to $57.7m at end of the half.

The analyst still sees a compelling risk/reward balance for the company and maintains an Overweight rating. Industry View: Attractive.

Target price is $8.50 Current Price is $5.89 Difference: $2.61
If MP1 meets the Morgan Stanley target it will return approximately 44% (excluding dividends, fees and charges).

Current consensus price target is $9.61, suggesting upside of 62.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.9

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

Morgans rates MP1 as Add (1) -

Following Megaport’s 1H results, Morgans makes immaterial changes to its forecasts as most details had been pre-reported via a recent quarterly update.

The broker feels recent sales weakness is the result of macroeconomic conditions and some company-specific matters, and doesn’t indicate any broader problems.

In the period before new sales rebound, the analysts believes existing customers will continue to purchase more of their telecommunications needs off the company.

Morgans feels the path to free cash positivity within the next 18 months has been substantially de-risked.

The Add rating and $8.25 target are maintained.

Target price is $8.25 Current Price is $5.89 Difference: $2.36
If MP1 meets the Morgans target it will return approximately 40% (excluding dividends, fees and charges).

Current consensus price target is $9.61, suggesting upside of 62.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.9

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

Ord Minnett rates MP1 as Buy (1) -

Ord Minnett eases its target for Megaport to $13 from $15 (on altered forecasts for later this decade) though still believes the stock is attractive and maintains its Buy rating, following largely pre-released 1H results.

As opposed to a short-term focus by the market on individual metrics, the broker prefers to look at the longer-term, as well as indications that quarterly profitability is approaching.

Target price is $13.00 Current Price is $5.89 Difference: $7.11
If MP1 meets the Ord Minnett target it will return approximately 121% (excluding dividends, fees and charges).

Current consensus price target is $9.61, suggesting upside of 62.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.9

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

UBS rates MP1 as Buy (1) -

Following the release of Megaport's first half result, UBS notes operating leverage is becoming more evident for the company.

The broker highlights the exit gross margin of 69% is approaching Megaport's long-term target of 70-72%, with operating cash flow demonstrating similar improvement. 

While the broker finds Megaport's model to be working, it notes execution hurdles including a weaker macro backdrop driving deal deferrals and a lengthened sales cycle, and indirect and partner sales taking longer to materialise. 

The Buy rating is retained and the target price decreases to $12.30 from $12.75.

Target price is $12.30 Current Price is $5.89 Difference: $6.41
If MP1 meets the UBS target it will return approximately 109% (excluding dividends, fees and charges).

Current consensus price target is $9.61, suggesting upside of 62.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.9

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

UBS rates NWS as Buy (1) -

Upon first glance, News Corp's interim performance missed forecasts with UBS pointing out higher interest rates and inflation are to blame. No guidance has been provided.

UBS tends to see the 'miss' as "modest" though EBITDA fell by -30% from last year. FX proved a negative drag as well, on top of slowing consumer demand and logistical constraints at Amazon for the books division.

Housing portals REA and Move both are experiencing pressures from housing markets in respectively Australia and the USA while lower income from advertising is being felt through Dow Jones and News Media.

Cost cutting, including laying off 1250 staff (5%), is on the agenda. Negotiations about the sale of Move continue.

Target $34. Buy.

Target price is $34.00 Current Price is $30.07 Difference: $3.93
If NWS meets the UBS target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $33.37, suggesting upside of 17.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

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

Citi rates REA as Buy (1) -

Having attended a briefing with REA Group's management team after the release of interim financials, Citi analysts report all-in-all there seems to have been an implicit admission that prior forecasts by management were a bit too rosy.

Management at the portal is more cautious now on the outlook, and Citi finds this "not surprising".

Some tough comparables are lining up and there will be headwinds, but REA Group's market position should serve it well, the broker suggests, while "healthy" price increases remain on the agenda for FY24.

Cost growth should remain tamed and losses for the Indian operation should not increase in H2. As some projects are deferred, capex should be lower in H2.

Target price is $144.00 Current Price is $124.43 Difference: $19.57
If REA meets the Citi target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $123.14, suggesting upside of 1.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.1

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

UBS rates REA as Neutral (3) -

On initial assessment, UBS believes REA Group released a solid interim result, with hints it might be increasing market share in Australia.

The financial performance was supported by a strong result from the Australian portal, with the company claiming the number one position in India, and with Move in the USA feeling the downward pressure.

Management's outlook is perceived as relatively positive, but the broker prefers a wait-and-see approach given the full brunt of RBA rate hikes is yet to show up.

Neutral. Target $120.

Target price is $120.20 Current Price is $124.43 Difference: minus $4.23 (current price is over target).
If REA meets the UBS target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $123.14, suggesting upside of 1.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.1

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

Citi rates SSM as Neutral (3) -

Following a prior -$5m provision related to a problematic Queensland utility project in August, Service Stream has now identified a further -$20m in costs required to complete the project. 

Citi has been surprised by the announcement, but expects the market could respond positively to the effective removal of the -$5m overhang which the broker feels has partially contributed to a -30% share price decline. 

Project completion is delayed to late 2023 on design delays, scope development, increased labour and material costs, on top of additional overheads.

The Neutral rating and target price of $0.75 are retained.

Target price is $0.75 Current Price is $0.59 Difference: $0.16
If SSM meets the Citi target it will return approximately 27% (excluding dividends, fees and charges).

Current consensus price target is $0.85, suggesting upside of 34.9% (ex-dividends)

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.3

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

Macquarie rates STO as Outperform (1) -

Santos underperformed "chronically" in 2022 versus peers, Macquarie notes, during a period of record profits and cashflow. Now trading back near takeover offer levels from 2018, the board will surely be considering alternatives to unlock value, the broker suggests.

Macquarie sees some US$2bn of funds to distribute in 2023, roughly split US$1bn in dividends and US$1bn in buybacks.

Target rises to $10.30 from $10.00, Outperform retained.

Target price is $10.30 Current Price is $7.03 Difference: $3.27
If STO meets the Macquarie target it will return approximately 47% (excluding dividends, fees and charges).

Current consensus price target is $9.57, suggesting upside of 37.5% (ex-dividends)

The company's fiscal year ends in December.

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: 1.0

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

Morgan Stanley rates TWE as Overweight (1) -

After a detailed review, strategists at Morgan Stanley believe IDP Education and Treasury Wine Estates are the two stocks under the broker's coverage with the most direct impacts from China's reopening and easing of trade tensions.

Relevant to Treasury Wine Estates, a potential easing of trade tensions may result in the removal of China's tariffs, which could accelerate the pace at which the historical level of volumes are regained.

The $15.70 target and Overweight rating are unchanged. Industry view is In-Line.

Target price is $15.70 Current Price is $14.15 Difference: $1.55
If TWE meets the Morgan Stanley target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $14.57, suggesting upside of 1.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.6

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

Macquarie rates WES as Underperform (5) -

Macquarie sees 2023 cost of living pressures weighing on Bunnings, and while Kmart and Target offer value propositions, the broker remains concerned over discretionary spending from the typical discount consumer.

The good news for the Wesfarmers conglomerate is nevertheless Mt Holland lithium, which should start production by the end of the calendar year, providing exposure to the soaring lithium market.

On that basis Macquarie's target rises to $46.20 from $43.80, but Underperform retained.

Target price is $46.20 Current Price is $49.39 Difference: minus $3.19 (current price is over target).
If WES meets the Macquarie target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $48.80, suggesting downside of -1.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: -0.2

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