Australian Broker Call

Morgan Stanley rates AGL as Upgrade to Equal-weight from Underweight (3) -

Morgan Stanley increases its rating for AGL Energy to Equal-weight from Underweight in reaction to an undemanding valuation, though investor caution on ESG and demerger uncertainty still weigh. The target price slips to $6.47 from $6.88.

Should the demerger proceed, the analyst feels AGL Australia will be attractive though thinks Accel Energy (yet to be spun-off) could be excluded from many institutional mandates. Industry view: Cautious.

Target price is $6.47 Current Price is $5.74 Difference: $0.73
If AGL meets the Morgan Stanley target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $6.94, suggesting upside of 20.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.2

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

Morgan Stanley rates ARB as Overweight (1) -

Having recently initiated coverage on ARB Corp with an Overweight rating and $56 target, which it retains, the broker addresses investor concerns over a potential demand pull-forward, after a strong FY21 result.

After de-constructing the various growth drivers, the analyst believes a two year view on organic growth better illustrates the underlying growth trajectory, implying less pull-forward headwinds. Industry view is In-Line.

Target price is $56.00 Current Price is $47.17 Difference: $8.83
If ARB meets the Morgan Stanley target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $48.74, suggesting upside of 5.8% (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

Citi rates BBN as Buy (1) -

Citi expects like-for-like sales growth will improve over the rest of the first half. The AGM has indicated the company is making fast progress on its exclusive/private-label strategy and gross margins as a result are ahead of expectations.

Despite the improving like-for-like momentum, the broker observes total sales growth has been weaker, likely because three out of the four new stores that were opened in FY21 were located in shopping centres that were more adversely affected by reduced foot traffic.

Still, a Buy rating is reiterated and the target is raised to $6.11 from $5.98.

Target price is $6.11 Current Price is $5.43 Difference: $0.68
If BBN meets the Citi target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $6.40, suggesting upside of 12.5% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 1.0

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

Morgan Stanley rates BBN as Overweight (1) -

After an AGM trading update, Morgan Stanley believes Baby Bunting delivered on positive surprises for all four key metrics alluded to in its results preview. This included an increase in comparatives for the second seven week period after June 30.

Also, online sales and the gross margin lifted, along with an increase to store roll-out targets. Overweight. Target is $6.90. Industry view: In-line.

Target price is $6.90 Current Price is $5.43 Difference: $1.47
If BBN meets the Morgan Stanley target it will return approximately 27% (excluding dividends, fees and charges).

Current consensus price target is $6.40, suggesting upside of 12.5% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 1.0

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

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

Morgans upgrades its rating for Baby Bunting to Add from Hold and raises its target price to $6.20 from $6 after an AGM trading update revealed higher margins and like-for-like sales growth. This lifts the broker's FY22/23 profit estimates by 3.6% and 3.8%.

In a time of supply chain turmoil, the analyst highlights contracted annual shipping rates until the end of 2021, with no reliance on air freight. The entry into New Zealand is considered an extra growth driver and potential precursor to more overseas expansion.

Target price is $6.20 Current Price is $5.43 Difference: $0.77
If BBN meets the Morgans target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $6.40, suggesting upside of 12.5% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 1.0

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

Ord Minnett rates BBN as Buy (1) -

Baby Bunting provided a firm update at the AGM, noting significant improvement in comparable store sales growth recently. Ord Minnett also notes the company has achieved an improvement in gross profit margins to 38.7% in trading for the year to date.

The broker's investment view remains intact and growth is expected to come through organic means as well as increased online penetration and add-on services. Buy rating and $6.65 target maintained.

Target price is $6.65 Current Price is $5.43 Difference: $1.22
If BBN meets the Ord Minnett target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $6.40, suggesting upside of 12.5% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 1.0

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

Citi rates BLX as Buy (1) -

Citi believes consensus expectations are too bearish, given the strength in housing and increasing contribution from longer-term growth opportunities, including trade and international. Like-for-like sales declined by -4.7% in the first quarter, excluding stores in NSW and ACT.

While maintaining existing like-for-like sales forecasts for the first half at a decline of -15%, Citi suspects there could be upside because of the housing cycle and demand for renovations potentially picking up when lockdowns end. Buy rating and $2.35 target maintained.

Target price is $2.35 Current Price is $2.26 Difference: $0.09
If BLX meets the Citi target it will return approximately 4% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 1.0

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

Morgan Stanley rates BOQ as Overweight (1) -

Morgan Stanley previews the second half result due on Wednesday, October 13. The analyst will be focusing upon second half margins and costs, FY22 guidance and any updates relating to the ME Bank integration. 

Overall, the broker sees upside risks to its forecasts, which are currently for around 4.5% half-on-half loan growth, a circa -2bps margin decline and around 3.5% year-on-year expense growth. Also, a second half collective provision release of circa $76m is expected. 

Morgan Stanley maintains its Overweight rating and $10.50 target price. Industry view: In-line.

Target price is $10.50 Current Price is $9.50 Difference: $1
If BOQ meets the Morgan Stanley target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $10.38, suggesting upside of 9.0% (ex-dividends)

The company's fiscal year ends in August.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.9

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

Ord Minnett rates BOQ as Accumulate (2) -

Bank of Queensland will report its FY21 results on October 13 which will include two months of contribution from ME Bank. Ord Minnett expects this will be the main focus in the result.

Should the bank sustain above-system loan growth the broker also believes its forecasts for FY22-23 could turn out to be conservative. Ord Minnett retains an Accumulate rating and raises the target to $10.00 from $9.80.

Target price is $10.00 Current Price is $9.50 Difference: $0.5
If BOQ meets the Ord Minnett target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $10.38, suggesting upside of 9.0% (ex-dividends)

The company's fiscal year ends in August.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.9

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

Macquarie rates BPT as Neutral (3) -

Macquarie marks to market for the third quarter to reflect changes to oil and FX rates and also increases its fourth quarter LNG forecast to US$20/MMBtu.

The broker raises FY22 estimates for earnings per share by 0.3% and retains a Neutral rating. Target is raised to $1.35 from $1.25.

Target price is $1.35 Current Price is $1.44 Difference: minus $0.09 (current price is over target).
If BPT 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 $1.54, suggesting upside of 7.7% (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

Ord Minnett rates CBA as Hold (3) -

Ord Minnett acknowledges Commonwealth Bank, while trading at stretched valuation multiples, has plenty of positives that differentiate it from banking peers including scale, the deposit franchise and growth in lending performance.

The broker also notes capital management is a prospect and the stock also offers better leverage to an eventual rise in interest rates. Still, even better value is assessed elsewhere in the sector and this leads the broker to retain a Hold rating and $95 target.

Target price is $95.00 Current Price is $105.50 Difference: minus $10.5 (current price is over target).
If CBA meets the Ord Minnett target it will return approximately minus 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $90.50, suggesting downside of -12.4% (ex-dividends)

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 DCN as Outperform (1) -

Dacian Gold has a term sheet for a $16m corporate facility to replace its existing debt. The new facility has a fixed repayment schedule where all repayments will occur in 2022.

Macquarie considers the new schedule positive and notes the company also intends to establish new gold hedging of around 30% production over 2022. If this is undertaken around current pricing for gold, it implies an improvement to the broker's gold and FX outlook.

Outperform maintained. Target is $0.25.

Target price is $0.25 Current Price is $0.20 Difference: $0.05
If DCN meets the Macquarie target it will return approximately 25% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 1.0

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

Macquarie rates EVN as Neutral (3) -

Evolution Mining will sell the Mount Carlton gold mine in Queensland, including the Crush Creek deposit, to Navarre Minerals ((NML)) for up to $90m. The company asserts the sale is aligned with its strategy to continuously seek to upgrade its portfolio.

The company has reduced its production guidance to reflect the sale, now expecting FY22 gold production in a range of 670-725,000 ounces, and guidance for FY23 and FY24 has also been reduced by -40,000 ounces and -90,000 ounces, respectively, to reflect the sale.

The sale price is below Macquarie's valuation of Mount Carlton and a Neutral rating and $3.90 target are maintained.

Target price is $3.90 Current Price is $3.71 Difference: $0.19
If EVN meets the Macquarie target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $4.04, suggesting upside of 9.8% (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 KAR as Outperform (1) -

Macquarie marks to market for the third quarter to reflect changes to oil and FX rates and also increases its fourth quarter LNG forecast to US$20/MMBtu.

The broker increases estimates for the Bauna oil recovery and suspects, given management commentary, the field is producing above the base case scenario. Hence, once more production data is achieved Karoon Energy may have confidence to move some 3P into 2P.

Outperform maintained. Target rises to $1.80 from $1.65.

Target price is $1.80 Current Price is $1.67 Difference: $0.13
If KAR meets the Macquarie target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $1.85, suggesting upside of 14.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 1.0

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

Macquarie rates MFG as Neutral (3) -

In an initial assessment of Magellan Financial Group's funds under management (FUM) update, released earlier today, Macquarie fears it’s unlikely negative flow trends will improve for several quarters, given recent performance figures.

Net outflows of around -1.53bn for the September quarter included outflows in retail and institutional of respectively -$617m and -$910m. FUM from market movements were up around 1%, while the MSCI World Net Total Return Index was up circa 4%.

While the analyst sees emerging valuation support, the outflows and recent performance will likely drive consensus forecast downgrades. The Neutral rating and $46.75 target are retained.

Target price is $46.75 Current Price is $33.91 Difference: $12.84
If MFG meets the Macquarie target it will return approximately 38% (excluding dividends, fees and charges).

Current consensus price target is $42.68, suggesting upside of 31.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: -0.2

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

Citi rates NCK as Buy (1) -

Citi believes the acquisition of Plush is a "great deal" as the price paid is attractive and there is opportunity for the cost and revenue synergies.

The broker also believes the acquisition is low risk because of the similarities in the business model. The broker also points out consensus has been factoring in a -25% decline in earnings per share despite a strong housing cycle and firm order book.

Citi reiterates a Buy rating and raises the target to $16.80 from $13.80.

Target price is $16.80 Current Price is $12.33 Difference: $4.47
If NCK meets the Citi target it will return approximately 36% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 1.0

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

UBS rates NEC as Buy (1) -

Nine Entertainment has Broadcast Video on Demand (BVOD) to look forward to which should offset the structural pressures facing traditional TV, UBS asserts, and factors this into the base case, forecasting growth of 40% in FY22.

The broker also upgrades FY22 metro TV advertising market forecasts to an increase of 6.5%. Other themes for traditional media in FY22 include Facebook and Google deals as well as the digital contribution to earnings.

UBS retains a Buy rating and raises the target to $3.85 from $3.10.

Target price is $3.85 Current Price is $2.59 Difference: $1.26
If NEC meets the UBS target it will return approximately 49% (excluding dividends, fees and charges).

Current consensus price target is $3.44, suggesting upside of 28.8% (ex-dividends)

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

UBS rates NWS as Buy (1) -

UBS assesses themes in traditional media that will dominate in FY22 include advertising market strength, Facebook and Google deals, and growth in the digital contribution.

Additionally, for News Corp the broker notes speculation of a potential IPO of Foxtel. Buy rating reiterated. Target is raised to $42.00 from $39.50.

Target price is $42.00 Current Price is $32.08 Difference: $9.92
If NWS meets the UBS target it will return approximately 31% (excluding dividends, fees and charges).

Current consensus price target is $40.00, suggesting upside of 23.7% (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: 1.0

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

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

Morgan Stanley likes the leverage of Origin Energy's Integrated Gas division to oil prices and regional LNG prices, which partly offsets headwinds in the Energy Market division.

The analyst now lifts its estimates toward the top half of management's guidance in most instances, and now includes the company's 20% interest in the British-based Octopus Energy. The target price rises to $5.05 from $4.61. Equal-weight retained. Industry view: Cautious.

Target price is $5.05 Current Price is $5.05 Difference: $0
If ORG meets the Morgan Stanley target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $4.99, suggesting downside of -0.6% (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

Morgan Stanley rates PPT as Overweight (1) -

Morgan Stanley believes Perpetual will enhance its Corporate Trust (PCT), data and digital capabilities via the acquisition of Laminar Capital, an Australian debt markets and advisory firm. While no price was disclosed it's thought it could add circa $5-10m in revenues.

Management has previously pointed to growth for data and digital solutions. The Overweight rating and $45 target price are retained. Industry view: In-Line.

Target price is $45.00 Current Price is $35.95 Difference: $9.05
If PPT meets the Morgan Stanley target it will return approximately 25% (excluding dividends, fees and charges).

Current consensus price target is $40.14, suggesting upside of 12.6% (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

UBS rates S32 as Buy (1) -

South32 has defensive characteristics, UBS asserts, despite a slowdown in Chinese growth. The broker has upgraded metallurgical coal, alumina and aluminium prices to reflect tight supply.

Outside of China the alumina/aluminium markets may experience structural relief as China pursues decarbonisation and energy efficiency targets.

Moreover, the broker considers the acquisition of up to 25% of Mozal is financially attractive as is a potential re-start of Alumar. Estimates are upgraded and a Buy rating is reiterated. Target rises to $4.10 from $3.40.

Target price is $4.10 Current Price is $3.62 Difference: $0.48
If S32 meets the UBS target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $4.05, suggesting upside of 12.5% (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: 0.9

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

UBS rates SWM as Buy (1) -

Broadcast Video on Demand (BVOD) should offset the structural pressures facing traditional TV, UBS asserts, on a 3-5-year view. The broker factors this into the base case, forecasting growth of 40% in FY22.

The broker also upgrades FY22 metro TV advertising market forecasts to an increase of 6.5%. Other themes for traditional media in FY22 include Facebook and Google deals as well as the digital contribution to earnings.

UBS retains a Buy rating and raises the target to $0.90 from $0.65.

Target price is $0.90 Current Price is $0.39 Difference: $0.51
If SWM meets the UBS target it will return approximately 131% (excluding dividends, fees and charges).

Current consensus price target is $0.78, suggesting upside of 85.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 1.0

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

Ord Minnett rates URW as Sell (5) -

A sell-off in property stocks in recent weeks has meant Unibail-Rodamco-Westfield is now trading -25% below its June highs.

When the company provides a third quarter update, due on October 27, Ord Minnett expects a positive tone as restrictions have eased and retail mobility is back to pre-pandemic levels in France.

Still, the broker awaits transaction evidence, particularly in the US, before considering a more positive recommendation. Sell maintained. Target is $4.

Target price is $4.00 Current Price is $5.00 Difference: minus $1 (current price is over target).
If URW meets the Ord Minnett target it will return approximately minus 20% (excluding dividends, fees and charges - negative figures indicate an expected loss).

The company's fiscal year ends in December.

Forecast for FY21:

Forecast for FY22:

This company reports in EUR. 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

Morgans rates VUK as Hold (3) -

Additional restructuring charges result in Morgans downgrading FY21 statutory profit by -7%. The price target and Hold rating are unchanged.

Charges were incurred in the name of the strategic ambition to be the UK’s best digital bank” and include store closures, greater automation and changes to the operating model, explains the analyst. It's thought such charges may continue for some time. 

Target price is $3.73 Current Price is $3.63 Difference: $0.1
If VUK meets the Morgans target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $4.02, suggesting upside of 7.1% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY21:

Forecast for FY22:

This company reports in GBP. 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

Morgans rates WHC as Add (1) -

Market feedback suggests to Morgans that elevated spot thermal coal prices will likely exceed its forecasts into 2022. The broker lifts its target price for Whitehaven Coal to $3.85 from $2.70 and maintains its Add rating.

The broker also sees upside to its current dividend forecasts, with the company currently trading on a FY22 free cashflow yield of around 26%.

Target price is $3.85 Current Price is $3.45 Difference: $0.4
If WHC meets the Morgans target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $3.43, suggesting downside of -4.4% (ex-dividends)

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 WPL as Outperform (1) -

Macquarie marks to market for the third quarter to reflect changes to oil and FX rates and also increases its fourth quarter LNG forecast to US$20/MMBtu.

Woodside Petroleum's estimates are raised by 8%. Target is raised to $27.25 from $27.10. Outperform retained.

Target price is $27.25 Current Price is $25.08 Difference: $2.17
If WPL meets the Macquarie target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $26.43, suggesting upside of 5.7% (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: 0.8

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