Australian Broker Call

UBS rates APA as Buy (1) -

APA Group plans to deploy $1bn of growth expenditure over the next 2-3 years. Despite low oil prices and the economic downturn, the company has also reconfirmed a commitment to US growth.

However, UBS assesses cross-border M&A will be difficult until travel restrictions ease and expects 2021 will be the most likely timing for any M&A in the US.

The broker increases FY21-22 estimates for earnings per share by 1-5% and retains a Buy rating. Target is raised to $11.95 from $11.40.

Target price is $11.95 Current Price is $11.25 Difference: $0.7
If APA meets the UBS target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $11.48, suggesting upside of 2.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.1

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

Credit Suisse rates CIM as Outperform (1) -

First quarter revenue was down -3% and net profit down -8%. Management remains positive but provided no update on 2020 guidance, preferring to wait until there is more visibility on the impact of the pandemic.

Credit Suisse notes there is a slightly smaller pipeline of bids, with new work of $2.5bn in the quarter taking work in hand to $36bn.

The broker maintains an Outperform rating and reduces the target to $35.00 from $38.50.

Target price is $35.00 Current Price is $22.00 Difference: $13
If CIM meets the Credit Suisse target it will return approximately 59% (excluding dividends, fees and charges).

Current consensus price target is $30.18, suggesting upside of 37.2% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.5

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

Macquarie rates CIM as Neutral (3) -

Cimic reported a weak March quarter, down -8% year on year. Based on the broker's run-rate to achieve FY20 forecasts, underpinned by 1-6% profit growth guidance, Cimic has fallen behind on the run-rate and the June quarter will bring the real impact.

Management made no mention of prior guidance, but also did not withdraw it, rather it will provide an update once the full impact is understood.

The company's liquidity position is nevertheless strong, and infrastructure investment both public and private should support demand. Neutral and $25.73 target retained.

Target price is $25.73 Current Price is $22.00 Difference: $3.73
If CIM meets the Macquarie target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $30.18, suggesting upside of 37.2% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.5

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

Ord Minnett rates CIM as Buy (1) -

First quarter operating earnings were in line with Ord Minnett's forecasts. The decision to draw down $4.5bn of credit facilities has meant net profit missed expectations because of increased financing costs.

Nevertheless, the broker believes CIMIC could be a beneficiary of accelerated infrastructure expenditure by governments after the pandemic passes. Buy rating retained. Target is reduced to $35 from $40.

Target price is $35.00 Current Price is $22.00 Difference: $13
If CIM meets the Ord Minnett target it will return approximately 59% (excluding dividends, fees and charges).

Current consensus price target is $30.18, suggesting upside of 37.2% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.5

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

UBS rates CIM as Neutral (3) -

UBS suggests operations have only been modestly affected by the pandemic as Australian construction and mining projects continue to be viewed as essential services. First quarter earnings were slightly ahead of estimates although 2020 net profit guidance was not reiterated.

As Cimic Group is the dominant civil construction company in Australia's infrastructure market, UBS believes it will provide significant leverage to the relatively resilient industry. Neutral maintained.

The company's top shareholder, Hochtief, now hold 77% and there is a risk that free float is further reduced by any additional share buyback, the broker points out. Target is reduced to $25.00 from $25.40.

Target price is $25.00 Current Price is $22.00 Difference: $3
If CIM meets the UBS target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $30.18, suggesting upside of 37.2% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.5

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

Citi rates COH as Neutral (3) -

After a significant decline in surgery across major markets in April, Cochlear notes resumption in elective surgery in some markets, earlier than expected. 

Cochlear’s April group sales revenue was down -60% with Citi estimating a heavy fall in sales of implants and acoustics.

Citi has revised forecasts, upgrading FY20 earnings forecast by 110% with fourth-quarter revenue estimated to reduce -50%.

The broker forecasts revenue to decline by -20% in the first half and normalise by the second half of FY21. Neutral rating retained with target price at $203.

Target price is $203.00 Current Price is $187.64 Difference: $15.36
If COH meets the Citi target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $180.33, suggesting downside of -3.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.0

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

Credit Suisse rates COH as Neutral (3) -

Cochlear reported sales declined -60% in April. This was better than Credit Suisse had expected although, while elective surgery has re-started in some countries, caution prevails regarding the rate of recovery.

The broker does not believe cochlear implant surgery for adults will be a high priority until all restrictions are eased. Additionally, as economic conditions deteriorate, costs may cause potential recipients to defer treatment and continue using hearing aids.

The broker assumes services revenue declines -19% in the second half, with a faster recovery in FY21 relative to implants. Neutral maintained. Target is raised to $192 from $190.

Target price is $192.00 Current Price is $187.64 Difference: $4.36
If COH meets the Credit Suisse target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $180.33, suggesting downside of -3.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.0

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

Morgan Stanley rates COH as Overweight (1) -

Revenue was down -60% in April and implant units down -80% in developed markets. Nevertheless, Morgan Stanley notes China's surgery is back to near pre-pandemic levels, despite Beijing, the largest surgery centre, remaining closed.

There is also no shortage of components expected. While cash flow is negative, the company's update provides the broker with some confidence of a recovery, as implant surgeries are recommencing in the US, Germany and Australia.

Overweight retained. Target is $187. Industry view: In Line.

Target price is $187.00 Current Price is $187.64 Difference: minus $0.64 (current price is over target).
If COH meets the Morgan Stanley target it will return approximately minus 0% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $180.33, suggesting downside of -3.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.0

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

Ord Minnett rates COH as Lighten (4) -

Despite a return to elective surgery in selected regions, Ord Minnett continues to believe it will be a long, slow recovery for the company in a weaker economic environment.

Cochlear may improve its market position, given its recapitalised balance sheet and market-leading offering but this is considered unlikely to be sufficient to offset weaker market growth.

Ord Minnett retains a Lighten rating and raises the target to $165 from $160.

Target price is $165.00 Current Price is $187.64 Difference: minus $22.64 (current price is over target).
If COH meets the Ord Minnett target it will return approximately minus 12% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $180.33, suggesting downside of -3.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.0

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

UBS rates COH as Sell (5) -

UBS assumes, over the longer term, unit sales growth of 8%, slightly ahead of the industry. Implants are expected to recover after the disruption from the pandemic.

Revenue has declined -60% in April, with implant sales down -80% across developed markets and services revenue down -30%. However, surgeries in China are now running close to pre-virus rates. The broker retains a Sell rating and $150 target.

Target price is $150.00 Current Price is $187.64 Difference: minus $37.64 (current price is over target).
If COH meets the UBS target it will return approximately minus 20% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $180.33, suggesting downside of -3.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.0

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

Citi rates CSR as Neutral (3) -

In an initial response to today's results release, Citi analysts report CSR's financial performance proved better-than-expected helped by lightweight building products, insulation sales and lower coal costs in Aluminium. No final dividend has been declared.

No guidance has been provided for FY21 with the company indicating sales in the first few weeks of the new financial year seem less negative than the -7% run rate in H2. Citi notes the balance sheet could afford for dividends. Maybe management is eyeing M&A?

Citi rates the stock Neutral, suggesting CSR is in good enough shape to weather the economic downturn and there still is the option for further cost reductions to support earnings, if required.

Target price is $3.45 Current Price is $3.69 Difference: minus $0.24 (current price is over target).
If CSR meets the Citi target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.58, suggesting downside of -2.9% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.0

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

Morgans rates DHG as Reduce (5) -

Morgans expects sale listings volumes for Domain Holdings Australia to be on the lower end.

The broker expects sale listings volumes to fall by circa -30% in the fourth quarter along with a -10% drop estimated in the first two-quarters of FY21. Morgans revenue forecast for FY21 reduced by -$32m.

Reduce rating reiterated with target price at $2.25.

Target price is $2.25 Current Price is $2.95 Difference: minus $0.7 (current price is over target).
If DHG meets the Morgans target it will return approximately minus 24% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.15, suggesting upside of 6.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.6

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

Morgan Stanley rates ELO as Overweight (1) -

Morgan Stanley considers the equity raising will allow for opportunistic M&A domestically and in the UK, in what could be a challenging environment for peers that do not have the access to capital.

The $70m in capital raising plus the $20m share purchase plan should ensure the company can take advantage of tough conditions. The trade-off is a dilution and, if a material acquisition occurs, a more cloudy outlook on organic economics, in the broker's view.

 Overweight rating. In-Line industry view. Target is $9.

Target price is $9.00 Current Price is $7.08 Difference: $1.92
If ELO meets the Morgan Stanley target it will return approximately 27% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 1.0

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

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

Garda Property Group, with exposure to 17 east coast office/industrial properties, has withdrawn its FY20 guidance after the announcement of the mandatory Code of Conduct for commercial tenants and landlords.

Morgans assumes dividends to be $0.074 for FY20 from $0.09 earlier and a longer Botannica 9 asset lease. The broker also highlights uncertainty surrounding rent relief measures.

The broker takes a long term view and upgrades rating to Add from Hold with target price at $1.07.

Target price is $1.07 Current Price is $0.90 Difference: $0.17
If GDF meets the Morgans target it will return approximately 19% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 1.0

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

Credit Suisse rates IPL as Outperform (1) -

Credit Suisse suspects risks to mining, quarry markets and downward pressure on commodity prices will likely limit the upside over the short term for prospective new investors post the company's capital raising.

Long-term value drivers should return to prominence once the market risks become clearer. The first half result was lower than forecast, largely because of unanticipated costs in the US ammonia and agriculture segments.

Australian explosives segment earnings were ahead of forecasts because of efficiency gains at Moranbah.

The company's $675m capital raising takes the funding risk off the table and creates flexibility to pursue small bolt-on acquisitions, which Credit Suisse suspects has been underestimated by the market. Outperform maintained. Target is reduced to $3.20 from $3.72.

Target price is $3.20 Current Price is $2.03 Difference: $1.17
If IPL meets the Credit Suisse target it will return approximately 58% (excluding dividends, fees and charges).

Current consensus price target is $2.73, suggesting upside of 34.2% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.3

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

Macquarie rates IPL as No Rating (-1) -

Incitec Pivot reported first half profit in line with the broker. There were no significant items, but no interim dividend was declared.

The company is seeking to raise $600m at $2.00, an -8.7% discount to the last close and equivalent to 18.6% of shares on issue, the broker notes.

The broker is involved with the raising and hence is now under research restriction.

Current Price is $2.03. Target price not assessed.

Current consensus price target is $2.73, suggesting upside of 34.2% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.3

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

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

The first half result was softer than Morgan Stanley expected but the capital raising indicates Incitec Pivot is able to withstand the uncertainty over the short term.

Fertiliser earnings (EBIT) were lower than Morgan Stanley expected, while the Dyno Nobel business in the Americas and Asia Pacific performed broadly in line.

Equal-weight. Cautious industry view. Target is reduced to $2.00 from $2.70.

Target price is $2.00 Current Price is $2.03 Difference: minus $0.03 (current price is over target).
If IPL meets the Morgan Stanley target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.73, suggesting upside of 34.2% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.3

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

Ord Minnett rates IPL as Buy (1) -

First half revenue was roughly in line with Ord Minnett's forecasts, while earnings (EBIT) and net profit were below estimates. No interim dividend was announced.

The broker retains a Buy rating and $2.95 target.

Target price is $2.95 Current Price is $2.03 Difference: $0.92
If IPL meets the Ord Minnett target it will return approximately 45% (excluding dividends, fees and charges).

Current consensus price target is $2.73, suggesting upside of 34.2% (ex-dividends)

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.3

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

UBS rates IPL as Neutral (3) -

Incitec Pivot produced a solid first half result, UBS assesses. The global explosives business is resilient and produced a flat earnings outcome despite the headwinds from contract re-pricing and a sharp decline in US coal volumes.

Despite the improved cropping conditions across the US and Australia, UBS suspects depressed ammonia/diammonium phosphate prices will weigh on fertiliser earnings through the second half because of excess supply.

The broker is attracted to the company's strong position in the Australian and US explosives market and notes the equity raising alleviates the concerns regarding the balance sheet. Neutral rating maintained. Target is reduced to $2.25 from $2.30.

Target price is $2.25 Current Price is $2.03 Difference: $0.22
If IPL meets the UBS target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $2.73, suggesting upside of 34.2% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.3

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

Morgans rates IVC as Add (1) -

InvoCare’s first-quarter revenue was flat at $116.5m due to the impact of covid-19 with operating earnings falling by -11% to $24.7m on account of higher costs.

The company expects covid-19 to have an even bigger impact in the second quarter with the easing of gathering restrictions taking the sting out somewhat.

Morgans has reduced FY20 estimated operating income by -5% to $131.6m with net profit forecasted at $54m.

Add rating retained with target price reduced slightly to $13.10 from $13.36.

Target price is $13.10 Current Price is $10.84 Difference: $2.26
If IVC meets the Morgans target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $12.50, suggesting upside of 15.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.5

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

UBS rates NWS as Buy (1) -

A move on cost reductions in response to the pandemic was faster than UBS expected and, as a result, operating earnings (EBITDA) in the third quarter beat estimates. The company also recorded an impairment of -$1.3bn.

The broker assumes a further -19% revenue decline in the first quarter of FY21 before a return to trend. The focus remains on simplifying the company structure which the broker suspects may unlock value.

If the separately-listed REA Group ((REA)) is stripped out, UBS values the remainder at around $9.30 a share, which compares with the market's $4.36-5.65 a share. Buy rating retained. Target is reduced to $21.70 from $22.00.

Target price is $21.70 Current Price is $16.92 Difference: $4.78
If NWS meets the UBS target it will return approximately 28% (excluding dividends, fees and charges).

Current consensus price target is $22.27, suggesting upside of 31.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

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

Market Sentiment: 0.5

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

Ord Minnett rates ORG as Accumulate (2) -

Ord Minnett trims estimates for the energy markets business and forecasts remain at the lower end of the $1.4-1.5bn guidance range for FY20.

Despite the headwinds in energy markets and lower oil prices, the broker estimates free cash flow of $1.3bn in FY21, of which $600m comes from APLNG.

Accumulate maintained. Target rises to $7.70 from $7.50.

Target price is $7.70 Current Price is $5.39 Difference: $2.31
If ORG meets the Ord Minnett target it will return approximately 43% (excluding dividends, fees and charges).

Current consensus price target is $6.67, suggesting upside of 23.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.6

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

Citi rates PDL as Neutral (3) -

Pendal Group’s first half was better than expected but Citi expects some of the positives to reverse in the second half on account of lower funds under management and fee margins.

The broker expects performance fees to rise to circa $12m in FY20 from $6m in FY19.

Even with a diversified business, Citi is cautious about the group's outlook and retains its neutral rating, with increased target price to $5.80 from $5.

Target price is $5.80 Current Price is $5.97 Difference: minus $0.17 (current price is over target).
If PDL meets the Citi target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $6.37, suggesting upside of 6.7% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.4

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

Credit Suisse rates PDL as Neutral (3) -

First half net profit was ahead of estimates. Credit Suisse suggests the result was improved by the company's decision to accrue first half compensation in light of an expected deterioration in profitability in the second half.

The broker also suggests continued outperformance of the Global Select and UK Opportunities Funds could deliver on performance fee expectations in the first half of FY21, while JO Hambro funds have improved to within "striking distance of performance fees".

Neutral rating maintained. Target is raised to $5.80 from $4.90.

Target price is $5.80 Current Price is $5.97 Difference: minus $0.17 (current price is over target).
If PDL 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 $6.37, suggesting upside of 6.7% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.4

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

Macquarie rates PDL as Outperform (1) -

Pendal Group's first half result beat the broker on lower employee expenses. Management fees exceeded expectation but will come under pressure in the second half, predicts the broker.

Expenses are being well managed, the broker suggests, with fixed expense growth guidance reduced. Funds performance rebounded in the half.

Target rises to $6.50 from $6.00. The broker retains Outperform, seeing relative valuation appeal over Magellan Financial ((MFG)), Perpetual ((PPT)) and Platinum Asset Management ((PTM)) given a -13% discount to peers. Janus Henderson ((JHG)) remains the top pick.

Target price is $6.50 Current Price is $5.97 Difference: $0.53
If PDL meets the Macquarie target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $6.37, suggesting upside of 6.7% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.4

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

Morgan Stanley rates PDL as Overweight (1) -

Morgan Stanley considers the stock offers compelling value and the increasing investment in ESG (environmental, social and governance) products globally as well as the diversity of growth options stand the company in good stead.

Pendal Group believes the pandemic episode will increase investor focus on social outcomes.

Base fee group margins of 49 basis points were ahead of Morgan Stanley's estimates in the first half. However, costs are likely to rise as the company builds out a global platform and ESG presence.

Overweight rating. Target is raised to $7.00 from $6.30. Industry view: In-Line.

Target price is $7.00 Current Price is $5.97 Difference: $1.03
If PDL meets the Morgan Stanley target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $6.37, suggesting upside of 6.7% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.4

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

Morgans rates PDL as Downgrade to Hold from Add (3) -

Pendal Group reported a 2% growth in cash net profit to $86.6m for the first half. The operating profit exceeded Morgans estimates by circa 10% driven by better than anticipated funds under management (FUM) and fee revenue margins.

The group’s second half is off to a subdued start with -13% lower FUM than the previous half, notes Morgans, expecting this to continue in the near term. The broker considers medium-term outlook, backed by cost control, a strong balance sheet and market leverage, to be positive.

Rating downgraded to Hold from Add with target price increased to $6.50 from $6.37.

Target price is $6.50 Current Price is $5.97 Difference: $0.53
If PDL meets the Morgans target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $6.37, suggesting upside of 6.7% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.4

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

Ord Minnett rates PDL as Accumulate (2) -

First half net profit was up 2.4% and ahead of forecasts. The interim dividend of $0.15 was below Ord Minnett's estimates, with the company deciding to reduce the pay-out ratio in light of increased market volatility.

The broker believes the business will face near-term challenges and negative flows in the legacy book, although the latter is now only around 8% of management fee revenue.

Ord Minnett maintains an Accumulate rating and reduces the target to $7.00 from $7.20.

Target price is $7.00 Current Price is $5.97 Difference: $1.03
If PDL meets the Ord Minnett target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $6.37, suggesting upside of 6.7% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.4

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

UBS rates PDL as Neutral (3) -

First half cash net profit was ahead of UBS estimates, at $100.2m, which largely reflected stronger base management fee revenue. Operating costs and performance fees were in line.

Still, with a lower revenue base heading into the second half the broker envisages a risk of a significantly weaker performance at JO Hambro that may constrain any rebound.

UBS perceives limited value upside and retains a Neutral rating. Target is raised to $6.00 from $5.55.

Target price is $6.00 Current Price is $5.97 Difference: $0.03
If PDL meets the UBS target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $6.37, suggesting upside of 6.7% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.4

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

Macquarie rates SCG as Neutral (3) -

A March quarter update from Scentre Group revealed foot traffic has risen to 78% of pre-virus levels compared to a trough of 39%. Discretionary remains soft but staples are sound. The interim dividend has been withdrawn to protect the balance sheet, with gearing at 33%.

The broker sees this as prudent, but warns the REIT is still exposed to a likely decline in property values, of which Scentre made no mention. The broker forecasts -15% which would push gearing to 39% (target range 30-40%), and that would prompt asset sales or a raising, the broker suggests. The broker thus retains Neutral. Target unchanged at $2.18.

Target price is $2.18 Current Price is $2.19 Difference: minus $0.01 (current price is over target).
If SCG 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 $2.49, suggesting upside of 13.8% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.2

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

Morgan Stanley rates SCG as Overweight (1) -

Scentre Group has confirmed it will not pay a dividend in the first half but still intends to pay one in 2020. Morgan Stanley notes rent relief discussions remain slow and the company retains a preference for negotiating once stores have re-opened and foot traffic returns.

Scentre Group is targeting a 25% savings in centre-level operating expenditure during the pandemic, although Morgan Stanley notes 60% of costs are worn by the tenants anyway.

Overweight. Target is $2.20. Industry view: In Line.

Target price is $2.20 Current Price is $2.19 Difference: $0.01
If SCG meets the Morgan Stanley target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $2.49, suggesting upside of 13.8% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.2

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

Ord Minnett rates SCG as Hold (3) -

Scentre Group will not pay a first half distribution, retaining the cash flow to strengthen its flexibility. Management has noted stores are now re-opening in shopping centres, with 57% of tenants over 70% of the gross lettable area now open for business.

Ord Minnett assesses the main factors underpinning its view on the stock are the re-opening of stores and the negotiations with tenants, amid measures to limit the rise in gearing from asset devaluations. Rating is Hold. Target is $2.10.

Target price is $2.10 Current Price is $2.19 Difference: minus $0.09 (current price is over target).
If SCG meets the Ord Minnett target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.49, suggesting upside of 13.8% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.2

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

UBS rates SCG as Neutral (3) -

The March quarter update has signalled a first half distribution will not be paid, as UBS expected. Specialty retail sales in March were down -25.6% and foot traffic down -61% in March/April at its lows.

Development projects are being reviewed and deferred, enabling a -60% reduction in the design & construction workforce. UBS also notes gearing is elevated and the decision not to pay a distribution reflects this.

To preserve long-term gearing the broker forecasts a pay-out ratio of 70% which would put the stock on a distribution yield of 7%, with minimal growth and considerable uncertainty regarding sustainable rents and valuations. Neutral rating and $1.53 target maintained.

Target price is $1.53 Current Price is $2.19 Difference: minus $0.66 (current price is over target).
If SCG meets the UBS target it will return approximately minus 30% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.49, suggesting upside of 13.8% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.2

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

Macquarie rates SGP as Neutral (3) -

The broker has reviewed its outlook for Stockland ahead of tomorrow's update, noting the company has withdrawn formal and informal guidance. Feedback suggests a sharp decline in residential sales and the broker is expecting a 10% increase in settlement defaults and delays in the second half.

The broker remains constructive on residential in the longer term but has cut its target to $3.16 from $3.36 to reflect near term risk. The broker awaits a dividend update, foreseeing a cut to the payout ratio. Neutral retained.

Target price is $3.16 Current Price is $2.71 Difference: $0.45
If SGP meets the Macquarie target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $3.57, suggesting upside of 31.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.1

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

Macquarie rates SLK as Outperform (1) -

The broker has taken into consideration the support the Queensland government is providing for tourism operators, reducing overhead costs, and the relief provided by JobKeeper, and an earlier than expected easing of restrictions nationally in updating its view on SeaLink Travel.

The company will be able to reopen its Magnetic Island ferry service profitably, and a more rapid return of domestic tourism is now foreseen.

SeaLink's UK Transit System continues to provide a defensive earnings stream, and the broker has increased group forecast earnings by 18% and 15.5% in FY20-21. Target rises to $4.38 from $3.99. Outperform retained.

Target price is $4.38 Current Price is $3.76 Difference: $0.62
If SLK meets the Macquarie target it will return approximately 16% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 1.0

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

Morgans rates SOL as Initiation of coverage with Hold (3) -

Morgans initiates coverage of Washington H. Soul Pattinson & Company. The company has a long performance history, outperforming the ASX All Ordinaries Accumulation Index by circa 5% over a 20-year period and boasts of a broad and diversified portfolio with cross-shareholding in Brickworks ((BKW)).

Morgans is impressed with the strong management team, diversified portfolio, organic and inorganic growth and consistent shareholder returns. Coverage initiated with a Hold rating and target price of $20.04.

Target price is $20.04 Current Price is $17.88 Difference: $2.16
If SOL meets the Morgans target it will return approximately 12% (excluding dividends, fees and charges).

The company's fiscal year ends in July.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.0

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

Citi rates SUN as Neutral (3) -

Suncorp Group's -$133m collective provision is mostly in line with Citi’s estimated -$125m and the broker allows for a further -$125m over the next two years to deal with covid-19.

The broker cut its forecasted final dividend for the year, in-line with the group’s stance.? Citi believes the bank will continue to drag down Suncorp Group’s share price in the near term.

Neutral rating retained with target price increased slightly to $9.40 from $9.20.

Target price is $9.40 Current Price is $8.85 Difference: $0.55
If SUN meets the Citi target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $10.08, suggesting upside of 13.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.2

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

Credit Suisse rates SUN as Neutral (3) -

The third quarter update was largely in line with expectations. Credit Suisse suggests a dividend is still a possibility in the second half. Nevertheless, the valuation appeal is not enough and the broker retains a Neutral rating.

Suncorp has noted a reduction in claims frequency across the general insurance portfolio, notably in motor vehicles, but this is partially offset by landlord rental claims.

There was a -0.4% decline in bank lending in the March quarter and further contraction is expected in the June quarter.

Because of the uncertainty, the company has decided to convert up to $194m of convertible preference share into equity and boost its excess capital position. Credit Suisse raises the target to $9.65 from $9.15.

Target price is $9.65 Current Price is $8.85 Difference: $0.8
If SUN meets the Credit Suisse target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $10.08, suggesting upside of 13.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.2

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

Macquarie rates SUN as Neutral (3) -

Suncorp has made a series of announcements which include charges for technology, collective provisions for the bank, the discovery of staff underpayment and the resignation of the bank CEO.

Taking all of this into account, but also marking to market for asset prices, leads the broker to increase FY20 forecast earnings by 10%.

Near term uncertainty nonetheless remains, and the broker's target falls to $9.80 from $9.90. Neutral retained.

Target price is $9.80 Current Price is $8.85 Difference: $0.95
If SUN meets the Macquarie target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $10.08, suggesting upside of 13.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.2

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

Morgan Stanley rates SUN as Underweight (5) -

Morgan Stanley assesses Suncorp is facing a difficult time, although in terms of non-housing loan coverage the banking division appears appropriately provisioned.

No loan growth is expected in the June quarter and anecdotes suggest more work will be needed to improve mortgage brokers support.

This is partially offset by lower investment losses in the insurance division, amid lower motor vehicle claims in Australia.

Underweight rating.  In-Line sector view. Price target is reduced to $8.10 from $8.20.

Target price is $8.10 Current Price is $8.85 Difference: minus $0.75 (current price is over target).
If SUN meets the Morgan Stanley target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $10.08, suggesting upside of 13.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.2

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

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

Suncorp Group’s trading update shows mark to market investment losses in the third quarter amounting to circa -$200m along with a bank collective provision of -$133m booked to deal with a difficult economic scenario.

EPS estimates for FY20 and FY21 downgraded by -30% and -16% by Morgans mainly driven by the investment market losses, bank collective provision and overall low growth rates. 

Even so, robust CET1 capital and medium-term value prompts the broker to upgrade its rating to Add from Hold, with target price at $10.44.

Target price is $10.44 Current Price is $8.85 Difference: $1.59
If SUN meets the Morgans target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $10.08, suggesting upside of 13.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.2

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

Ord Minnett rates SUN as Accumulate (2) -

Gross written premium was affected by hardship and lower economic activity in the third quarter, Ord Minnett notes. Natural hazard costs are expected to remain within allowances.

Some mark-to-market losses were unwound in April. The lending portfolio is expected to contract in the fourth quarter while net interest margins are expected to be at the top end of the 1.85-1.95% range because of lower funding costs.

Ord Minnett retains an Accumulate rating and lowers the target to $12.05 from $12.83.

Target price is $12.05 Current Price is $8.85 Difference: $3.2
If SUN meets the Ord Minnett target it will return approximately 36% (excluding dividends, fees and charges).

Current consensus price target is $10.08, suggesting upside of 13.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.2

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

UBS rates SUN as Buy (1) -

UBS observes Suncorp has sidestepped the more severe impacts from the pandemic compared with listed general insurer peers.

Third quarter bad debt provisions in the bank were larger than expected but the investment mark-to-market losses were lower.

Moreover, the capital position remains robust, even ahead of the pending $194m convertible preference share conversion.

While more conservative dividends are likely over the near term, the broker envisages compelling value upside and retains a Buy rating and $11.15 target.

Target price is $11.15 Current Price is $8.85 Difference: $2.3
If SUN meets the UBS target it will return approximately 26% (excluding dividends, fees and charges).

Current consensus price target is $10.08, suggesting upside of 13.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.2

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

Macquarie rates TAH as Outperform (1) -

Near term earnings uncertainty remains for Tabcorp but there are small positives building, the broker suggests. Major sports are set to resume within months and retail venues offering wagering may open sooner than expected.

The broker's positive view is underpinned by Lotteries & Keno. Target falls to $3.80 on discounted cash flow, Outperform retained.

Target price is $3.80 Current Price is $3.17 Difference: $0.63
If TAH meets the Macquarie target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $3.17, suggesting upside of 1.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.2

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

Ord Minnett rates TYR as Accumulate (2) -

Tyro Payments has highlighted a rapid recovery in transaction volumes as businesses adapt to the operating environment produced by the pandemic.

The company recorded a -20% like-for-like decline in transaction value over the first eight days of May, a material improvement on the -38% decline recorded in April.

Ord Minnett expects the conditions will improve materially over the remainder of FY20 as the Australian government repeals some of the social distancing measures.

Moreover, the company is likely to benefit from a broader shift to a cashless economy in the future. Accumulate rating maintained. Target rises to $3.90 from $2.80.

Target price is $3.90 Current Price is $3.51 Difference: $0.39
If TYR meets the Ord Minnett target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $3.30, suggesting downside of -6.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.2

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

UBS rates UMG as Initiation of coverage with Buy (1) -

Following the de-merger from Graincorp ((GNC)), UBS initiates coverage of United Malt with a Buy rating and $5.10 target. This is the world's only major listed malt producer, the fourth in size globally, and represents a unique investment exposure, in the broker's view.

There is also M&A appeal, the division having received interest when part of Graincorp. UBS believes United Malt can deliver growth through the cycle at 8% for operating earnings (EBITDA) and 13% for earnings per share over FY20-23.

Target price is $5.10 Current Price is $4.21 Difference: $0.89
If UMG meets the UBS target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $5.03, suggesting upside of 19.4% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.7

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

UBS rates Z1P as Buy (1) -

UBS points out recent market concerns are focused on the company's ability to manage credit risk and funding and the performance in April should alleviate some of the concerns.

Moreover, the lifting of government restrictions in coming months is likely to be a positive. UBS retains a Buy rating and raises the target to $3.70 from $3.30.

Target price is $3.70 Current Price is $3.40 Difference: $0.3
If Z1P meets the UBS target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $3.19, suggesting downside of -6.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.8

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