Australian Broker Call

Citi rates ACL as Neutral (3) -

Citi makes large cuts to FY23-25 EPS forecasts for companies under its coverage that derive revenue from covid testing as Medicare has announced a -19% cut to the fee for covid tests.

In addition, testing volumes continue to fall and the World Health Organization now suggests the end of the pandemic is in sight, notes the analyst.

For Australian Clinical Labs, the broker lowers its EPS forecasts on lower revenue and margin assumptions and the target falls to $4.15 from $4.50. The Neutral rating is unchanged.

Target price is $4.15 Current Price is $3.84 Difference: $0.31
If ACL meets the Citi target it will return approximately 8% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.0

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

Citi rates ALL as Buy (1) -

Citi slightly lowers its FY22 and FY23 earnings forecasts for Aristocrat Leisure as higher supply chain costs are weighing on competitors, according to US casino data. The target is lowered to $40.20 from $41.00.

The Buy rating is retained, as the broker considers supply chain impacts are temporary, and data also show US casino industry revenues being sustained at high levels. The ongoing performance of the company's land-based games is considered excellent.

Target price is $40.20 Current Price is $34.29 Difference: $5.91
If ALL meets the Citi target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $43.29, suggesting upside of 25.9% (ex-dividends)

The company's fiscal year ends in September.

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 ALX as Hold (3) -

Morgans assesses the combination of a $3bn capital raise (entitlement offer) and acquisition of a 66.7% stake in Chicago Skyway toll bridge for around -$2bn is value destructive for Atlas Arteria.

Apart from the dilutionary impact of the capital raise, it's felt too much was paid for the asset though the analyst expects significant value appreciation over time.

The broker lowers its target to $6.46 from $7.76, though feels the odds are in favour of IFM Investors re-engaging with a takeover in the next 12 months. It's recommended investors take up the entitlement offer. The Hold rating is maintained.

Target price is $6.46 Current Price is $6.59 Difference: minus $0.13 (current price is over target).
If ALX meets the Morgans target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $7.29, suggesting upside of 11.5% (ex-dividends)

The company's fiscal year ends in December.

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

Morgans rates ART as Add (1) -

Commenting on FY22 results released by Airtasker on August 31, Morgans remains attracted to the strong growth pathway ahead, assuming execution by management.

A key takeaway from results for the analyst was the Australian division becoming earnings (EBITDA) positive.

The company is targeting positive operating cash flow on a monthly basis by the end of FY23 via cost initiatives and a full year contribution from the OneFlare acquisition.

The broker makes only minor changes to forecasts as most headline business metrics for FY22 were pre-released, and retains its Add rating and $1.05 target price.

Target price is $1.05 Current Price is $0.36 Difference: $0.69
If ART meets the Morgans target it will return approximately 192% (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

Macquarie rates CSL as Outperform (1) -

CSL's hereditary angioedema prevention treatment, garadacimab, has met phase 3 trial primary and secondary endpoints and continues towards potential approval. Macquarie expects treatment approval could provide a 9% boost to earnings per share by FY27.

The broker likes garadacimab's higher efficacy rates compared to existing treatments, and its favourable dosing method. It expects both of these factors will drive strong patient uptake if approved.

Macquarie's forecast relies on initial up-take in FY24 and a 45% market share by FY27. The Outperform rating and target price of $329.50 are retained.

Target price is $329.50 Current Price is $285.83 Difference: $43.67
If CSL meets the Macquarie target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $324.80, suggesting upside of 14.8% (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: 0.8

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

Macquarie rates GL1 as Outperform (1) -

Global Lithium Resources has reported results of its most recent metallurgical testing at Marble Bar, returning a final 5.92% spodumene concentrate grade and an overall recovery of 78.7%, with further testing planned.

While Macquarie's valuation for Global Lithium Resources remains heavily underpinned by Manna, its describes preliminary testing as encouraging. Equity dilution sees the broker decrease its earnings forecasts -4% and -7% for FY24 and FY25 but increase estimates 7% for FY26 and FY27.

The Outperform rating is retained and the target price increases to $3.00 from $2.70.

Target price is $3.00 Current Price is $2.78 Difference: $0.22
If GL1 meets the Macquarie target it will return approximately 8% (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

Citi rates GPT as Upgrade to Buy from Neutral (1) -

After recent share price falls for GPT Group, Citi now sees a reasonable safety margin from a -35% discount to net tangible assets (NTA) and upgrades its rating to Buy from Neutral. The $4.90 target price is unchanged.

The broker feels NTA substantially excludes the value of the funds management business and future profitability of the development pipeline.

Investors have been wary of the group's low level of interest rate hedging, the analyst points out the level has increased to 65% in 2022 from around 50% at June 2021.

Target price is $4.90 Current Price is $4.04 Difference: $0.86
If GPT meets the Citi target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $4.73, suggesting upside of 13.9% (ex-dividends)

The company's fiscal year ends in December.

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 HLS as Neutral (3) -

Citi makes large cuts to FY23-25 EPS forecasts for companies under its coverage that derive revenue from covid testing as Medicare has announced a -19% cut to the fee for covid tests.

In addition, testing volumes continue to fall and the World Health Organization now suggests the end of the pandemic is in sight, notes the analyst.

For Healius, the broker lowers its EPS forecasts on lower revenue and margin assumptions and the target falls to $3.75 from $4.00. The Neutral rating is unchanged.

Target price is $3.75 Current Price is $3.46 Difference: $0.29
If HLS meets the Citi target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $4.14, suggesting upside of 20.7% (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 HVN as Buy (1) -

Ord Minnett sees a FY23 and FY24 gross margin risk for discretionary retailers. Following supply chain pressures, retailers built in ‘safety stock’ buffers that should support near-term sales in the current robust environment. However, a sales slowdown is expected.

Harvey Norman is among the retailers with gross margins at risk, according to the broker. The Buy rating and $4.70 target are retained.

Target price is $4.70 Current Price is $4.28 Difference: $0.42
If HVN meets the Ord Minnett target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $4.62, suggesting upside of 9.6% (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

Ord Minnett rates KGL as Speculative Buy (1) -

Ord Minnett increases its long-term copper price forecast by 12% to US$3.5/lb and suggests the latest Bellbird resource update helps to de-risk the Jervois project. Bellbird is part of KGL Resources' Jervois Copper project in the Northern Territory.

The target price rises to $0.95 from $0.85 and the Speculative Buy rating is unchanged.

Target price is $0.95 Current Price is $0.29 Difference: $0.66
If KGL meets the Ord Minnett target it will return approximately 228% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

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 LYC as Sell (5) -

While management suggests the recurrence of water supply issues will have a minimal impact on FY23 production in Malaysia, Ord Minnett finds both the impact and duration hard to determine.

The broker reduces its neodymium-praseodymium (NdPr) expectations for the September quarter by -33% for Lynas Rare Earths and reduces its target to $4.80 from $4.85. The Sell rating is maintained.

Target price is $4.80 Current Price is $7.80 Difference: minus $3 (current price is over target).
If LYC meets the Ord Minnett target it will return approximately minus 38% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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 SHL as Neutral (3) -

Citi makes large cuts to FY23-25 EPS forecasts for companies under its coverage that derive revenue from covid testing as Medicare has announced a -19% cut to the fee for covid tests.

In addition, testing volumes continue to fall and the World Health Organization now suggests the end of the pandemic is in sight, notes the analyst.

For Sonic Healthcare , the broker lowers its EPS forecasts on lower revenue and margin assumptions and the target falls to $34.50 from $34.75. The Neutral rating is unchanged.

Target price is $34.50 Current Price is $31.40 Difference: $3.1
If SHL meets the Citi target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $36.11, suggesting upside of 17.4% (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 SUL as Hold (3) -

Ord Minnett sees a FY23 and FY24 gross margin risk for discretionary retailers. Following supply chain pressures, retailers built in ‘safety stock’ buffers that should support near-term sales in the current robust environment. However, a sales slowdown is expected.

Super Retail is among the retailers with gross margins at risk, according to the broker. The Hold rating and $11.00 target are retained.

Target price is $11.00 Current Price is $9.79 Difference: $1.21
If SUL meets the Ord Minnett target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $12.16, suggesting upside of 24.8% (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

Ord Minnett rates WES as Lighten (4) -

Ord Minnett sees a FY23 and FY24 gross margin risk for discretionary retailers. Following supply chain pressures, retailers built in ‘safety stock’ buffers that should support near-term sales in the current robust environment. However, a sales slowdown is expected.

Wesfarmers is among the retailers with gross margins at risk, according to the broker. The Lighten rating and $43.20 target are unchanged.

Target price is $43.20 Current Price is $45.02 Difference: minus $1.82 (current price is over target).
If WES 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 $47.95, suggesting upside of 5.5% (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 WTC as Accumulate (2) -

Despite softness in global freight volumes for US-listed FedEx Corporation, Ord Minnett remains confident the company will continue to roll out WiseTech Global's CargoWise One platform.

The broker arrives at this view given ongoing volatility of supply chains and after noting FedEx’s accelerated cost-efficiency plans. 

The Accumulate rating and $64 target are retained.

Target price is $64.00 Current Price is $55.72 Difference: $8.28
If WTC meets the Ord Minnett target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $58.43, suggesting upside of 3.1% (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