Australian Broker Call

Morgan Stanley rates CBA as Underweight (5) -

Morgan Stanley highlights the share price movements of CommBank have been in the same direction as housing values over the past decade.

Housing values have risen by around 5% over the past six months and are now just -4.5% below the peak. Over the same period the CommBank share price has increased by 1.5%.

The broker considers this an important relationship as Australian housing loans account for more than 60% of the bank's total loan balance, while housing values affect the loan size, which in turn affects growth of the mortgage loan book.

The target is $85.50. Underweight. Industry View: In-Line.

Target price is $85.50 Current Price is $100.08 Difference: minus $14.58 (current price is over target).
If CBA meets the Morgan Stanley target it will return approximately minus 15% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $91.08, suggesting downside of -9.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: -0.7

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

UBS rates CPU as Buy (1) -

Computershare will acquire the European equity share plan business of Solium from Morgan Stanley for an undisclosed price. The business provides equity share plans (ESP) to around 120 companies listed in the UK and Europe.

UBS expects the Solium UK business is one the company knows well given its existing UK footprint and previous ownership of a stake.

The acquisition of the UK segment will lift Computershare's global ESP scale by around 7% in terms of participants and 9% in terms of assets under administration.

UBS considers the acquisition strategically sensible and retains a Buy rating. Target is $30.

Target price is $30.00 Current Price is $26.05 Difference: $3.95
If CPU meets the UBS target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $26.40, suggesting upside of 1.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

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

Market Sentiment: 0.7

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

Macquarie rates FSF as Neutral (3) -

While Fonterra Shareholders Fund produced a record result in FY23, Macquarie notes half of the earnings per share were driven by price relativities. The situation remains favourable for FY24 earnings, along with falling milk prices aiding C&FS margins, the broker adds.

Distributions are estimated to remain at the top of the range, although increased capital expenditure may drag on medium-term free cash flow.

As a result Macquarie considers the stock fully valued at present and retains a Neutral rating. Target is reduced to NZ$3.52 from NZ$3.63.

Current Price is $3.24. Target price not assessed.

The company's fiscal year ends in July.

Forecast for FY24:

Forecast for FY25:

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

Market Sentiment: 0.0

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

Macquarie rates GL1 as Outperform (1) -

Global Lithium Resources has completed a second ore sorting trial at Manna with the lift in overall grade of 16%.

The company is evaluating the option to produce spodumene concentrate for up to 24 months to bring forward cash flow, which presents upside risk to Macquarie's base case forecasts.

The definitive feasibility study is underway and outcomes are expected in the first quarter of 2024, which should enable a final investment decision by mid 2024.

Macquarie continues to envisage resource upside through exploration success and maintains an Outperform rating. Target is $2.40.

Target price is $2.40 Current Price is $1.45 Difference: $0.95
If GL1 meets the Macquarie target it will return approximately 66% (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

Shaw and Partners rates GL1 as Buy (1) -

Shaw and Partners is encouraged by the results from the second Manna ore sorting trial, with concentrate of 1.64% achieved by Global Lithium Resources.

The broker was also impressed with the -90% reduction in iron, which confirms multi-sensor ore sorting technology will underpin the opportunity in the near term to export spodumene concentrate and significantly reduce funding requirements for the processing plant.

The business is assessed to be well funded to complete future work programs prior to a final investment decision. Shaw and Partners retains a Buy rating and $3.50 target based on the company further expanding its resource base by 25% in the next 12 months.

Target price is $3.50 Current Price is $1.45 Difference: $2.05
If GL1 meets the Shaw and Partners target it will return approximately 141% (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 GLN as Outperform (1) -

Galan Lithium has yielded no major discovery from its maiden drilling program at Greenbushes South and is now planning to target new areas.

Macquarie notes its approach is similar to the one adopted for the Hombre Muerto West discovery, where drilling focused on areas near known lithium deposits.

The stock continues to trade on attractive multiples with an offtake announcement or product purchase agreement presenting the potential for a re-rating, the broker adds. Outperform retained. Target is $1.40.

Target price is $1.40 Current Price is $0.63 Difference: $0.775
If GLN meets the Macquarie target it will return approximately 124% (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

Bell Potter rates GSS as Upgrade to Speculative Buy from Hold (1) -

The US represents around 65% of the global molecular diagnostics market and, Bell Potter highlights, has always been a target for Genetic Signatures.

The launch of core operations were delayed by the pandemic and trial issues, yet the EasyScreen gastrointestinal parasite detection kit validation has now been completed, with the submission to the US FDA this month.

US infrastructure has been established with a distribution/warehouse facility in California and the reimbursement code is in place for US$263 per test. The broker upgrades to Speculative Buy from Hold, reducing the target to $0.90 from $0.95.

Target price is $0.90 Current Price is $0.51 Difference: $0.395
If GSS meets the Bell Potter target it will return approximately 78% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 1.0

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

Ord Minnett rates LNK as Reinstate Coverage with Hold (3) -

Ord Minnett reinstates coverage of Link Administration with a Hold rating and $1.50 target. While delivering administration services to corporations in Australia and the UK, the business is the largest provider of superannuation administration services and the second largest provider of share registry services in Australia.

The broker expects a focus on higher-returning core businesses amid revenue growth from foreign markets, expansion in superannuation memberships and cross selling.

The shares are considered modestly undervalued at current prices with the main concern being the potential for further contract losses following the recent termination from Hesta Super, although the broker considers this an isolated incident.

Target price is $1.50 Current Price is $1.40 Difference: $0.105
If LNK meets the Ord Minnett target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $1.45, suggesting downside of -0.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.0

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

Citi rates MP1 as Upgrade to Buy from Neutral (1) -

Citi upgrades Megaport to Buy from Neutral, anticipating upside risk to FY24 forecasts and retaining an EBITDA forecast that is 10% above consensus.

The business is considered a substantial beneficiary of increased cloud adoption and the increased investment and focus on the customer should result in greater share of wallet.

The company is making progress on hiring staff with management expecting 20 new sales roles by the end of October. Target is raised to $12..50 from $11.00.

Target price is $12.50 Current Price is $10.98 Difference: $1.52
If MP1 meets the Citi target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $14.16, suggesting upside of 28.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.6

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

Bell Potter rates MSB as Upgrade to Speculative Buy from Hold (1) -

Mesoblast has met with the US FDA and provided clarity regarding the nature of the potency assay data that is now required, having confirmed the strategy for resubmission of a Biological Licence Application for Remestemcel-L in paediatric Graft versus Host Disease (GvHD).

Subsequent to the success of generating new data, Bell Potter is encouraged by the outcome of the meeting and estimates a submission could occur in the first quarter of 2024.

The broker makes no changes to earnings and valuation with the target unchanged at $0.58. Rating is upgraded to Speculative Buy from Hold based on the movement in the share price.

Target price is $0.58 Current Price is $0.37 Difference: $0.21
If MSB meets the Bell Potter target it will return approximately 57% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

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

Macquarie rates NUF as Outperform (1) -

Macquarie observes the global agricultural chemical sector has experienced a significant unwinding of demand in 2023 that reflects industry-wide destocking and just-in-time purchasing after a strong 2022.

Agricultural chemical prices have also fallen across glyphosate and selective grades. As El Nino weather patterns emerge this will lead to dry conditions in Australia albeit wetter weather in North America and Nufarm's geographic diversity should be a positive.

Macquarie estimates FY23 EBITDA will be down -3%. Estimates for FY24 and FY25 are reduced by -7-8%. Outperform retained. Target is reduced to $6.25 from $6.94.

Target price is $6.25 Current Price is $4.63 Difference: $1.62
If NUF meets the Macquarie target it will return approximately 35% (excluding dividends, fees and charges).

Current consensus price target is $6.97, suggesting upside of 47.4% (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 SIG as Hold (3) -

The improvement in Sigma Healthcare's first half earnings was largely in line with expectations, underpinned by efficiencies across distribution centres and improved cost management.

Ord Minnett's mid-cycle EBIT margin forecasts is 2.0% which compares with the company's target range of 1.5-2.5%. Improved operating leverage is expected as the company takes on the full Chemist Warehouse contract from July 2024.

Ord Minnett retains a Hold rating with an $0.80 target.

Target price is $0.80 Current Price is $0.76 Difference: $0.045
If SIG meets the Ord Minnett target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $0.82, suggesting upside of 14.4% (ex-dividends)

The company's fiscal year ends in January.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.2

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

UBS rates TCL as Buy (1) -

The ACCC has concluded that the acquisition of a majority stake in EastLink by Transurban Group would be likely to substantially lessen competition for future toll road concessions in Victoria.

The regulator is not concerned about the combination with its existing toll roads but rather the advantage the acquisition would provide the company in winning further concessions.

UBS asserts it may be important to challenge the decision, given the precedent this may set for future situations should they arise, although a lengthy court process could still preclude the company from closing a deal.

The broker does not include EastLink or any future new major project in forecasts and retains a Buy rating and $15.35 target.

Target price is $15.35 Current Price is $12.65 Difference: $2.7
If TCL meets the UBS target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $14.41, suggesting upside of 11.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.3

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