Australian Broker Call

Credit Suisse rates APT as Initiation of coverage with Outperform (1) -

Credit Suisse initiates coverage of Afterpay with an Outperform rating and a target price of $124.

With Afterpay delivering significant growth, Credit Suisse expects the company's sales could increase almost six-fold 6x from FY20 levels over the next five years.

The broker assesses the buy now pay later (BNPL) industry is benefiting from structural growth due to higher e-commerce penetration, a shift away from credit cards and exposure to millennials/Gen Z whose retail spending is expected to rise strongly in the coming years.

Afterpay is expected to gain a higher share of total payments given its strong value proposition to both customers and merchants which extends beyond purely being a payment provider.

Target price is $124.00 Current Price is $94.50 Difference: $29.5
If APT meets the Credit Suisse target it will return approximately 31% (excluding dividends, fees and charges).

Current consensus price target is $98.36, suggesting upside of 1.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.3

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

Ord Minnett rates AQZ as Buy (1) -

Ord Minnett found the trading update positive, with first half pre-tax profit guidance 20% ahead of expectations. The move towards contract and charter flights is persisting as mining companies show a preference for flexibility.

The broker believes the company remains a key beneficiary of the changes in the Western Australian and Queensland aviation services market and retains a Buy rating. Target is raised to $4.50 from $4.15.

Target price is $4.50 Current Price is $3.90 Difference: $0.6
If AQZ meets the Ord Minnett target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $4.35, suggesting upside of 13.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 1.0

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

Credit Suisse rates ASX as Underperform (5) -

ASX’s November trading activity was broadly in line with Credit Suisse's forecasts and the broker's revenue forecasts remain largely unchanged.

While ASX benefited from higher activity and above-trend revenue growth in FY20, Credit Suisse expects revenue growth to be minimal in FY21.

Credit Suisse reiterates its Underperform rating. Target is $73.

Target price is $73.00 Current Price is $77.64 Difference: minus $4.64 (current price is over target).
If ASX meets the Credit Suisse target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $72.43, suggesting downside of -6.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: -1.0

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

Macquarie rates BHP as Outperform (1) -

Buoyant iron ore prices continue to drive strong earnings momentum for iron ore miners and impressive free cash flow yields.

Macquarie upgrades earnings forecasts by 11% for FY21 and FY22. Outperform reiterated. Target is raised to $46 from $43.

Target price is $46.00 Current Price is $41.50 Difference: $4.5
If BHP meets the Macquarie target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $41.15, suggesting downside of -2.9% (ex-dividends)

The company's fiscal year ends in June.

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: 0.9

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

Macquarie rates CSL as Neutral (3) -

Macquarie notes foot traffic for around 100 of the US-based collection centres has eased after hitting a new peak mid November. In conjunction, coronavirus cases in the US have increased.

While the broker assumes a recovery in immunoglobulin growth and earnings for CSL Behring in FY22, plasma collection continues to present risks for the short term. Neutral rating. Target is $296.

Target price is $296.00 Current Price is $293.80 Difference: $2.2
If CSL meets the Macquarie target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $316.81, suggesting upside of 7.4% (ex-dividends)

The company's fiscal year ends in June.

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: 0.4

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

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

Morgan Stanley notes large commercial and industrial customers are looking into reusing their waste or improve packaging materials, but the overall waste production behaviour in Australia has changed little.

Laws and policies now require more of recycled content in packaging manufacturing and in the government procurement process although standardisation of landfill levy is difficult to achieve across states given the regulation structure and transport costs.

Cleanaway Waste Management could improve its competitive advantage by working on its digital strategy, suggests Morgan Stanley, and help the company win municipal contracts and potentially national accounts.

Equal-Weight rating. Target is $2.50. Industry view: Cautious.

Target price is $2.50 Current Price is $2.60 Difference: minus $0.1 (current price is over target).
If CWY meets the Morgan Stanley target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.48, suggesting downside of -6.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.5

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

Macquarie rates EVN as Upgrade to Neutral from Underperform (3) -

The spot price for gold presents some upside to Macquarie's FY21 earnings forecasts, primarily a function of currency.

The broker's gold price forecasts calls for a -21% and -22% drop in gold prices in Australian dollar terms in 2021 and 2022, respectively.

Rating is upgraded to Neutral from Underperform on valuation. Target is steady at $5.30.

Target price is $5.30 Current Price is $5.05 Difference: $0.25
If EVN meets the Macquarie target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $5.24, suggesting upside of 4.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: -0.3

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

Macquarie rates FMG as Outperform (1) -

Buoyant iron ore prices continue to drive strong earnings momentum for iron ore miners and impressive free cash flow yields.

Macquarie reiterates an Outperform rating and raises the target to $23 from $20. The improved outlook for the iron ore price drives an 18% earnings upgrade for Fortescue Metals in FY21 and FY22.

Target price is $23.00 Current Price is $20.61 Difference: $2.39
If FMG meets the Macquarie target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $18.19, suggesting downside of -15.0% (ex-dividends)

The company's fiscal year ends in June.

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: 0.4

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

UBS rates FSF as Neutral (3) -

Fonterra Shareholders reported a strong start to the first quarter with broadly stable gross profit.

UBS suspects current commodity pricing means gross margins will come under material pressure in the second half because of lower returns, particularly in cheese and casein.

At this stage the broker maintains current estimates, expecting normalised earnings (EBIT) to be down -9%. Neutral maintained. Target is NZ$4.05.

Current Price is $4.11. Target price not assessed.

Current consensus price target is N/A

The company's fiscal year ends in July.

Forecast for FY21:

Forecast for FY22:

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

Market Sentiment: -0.3

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

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

Macquarie reduces manganese price forecasts which drives material reductions to earnings estimates for Jupiter Mines in FY21-24.

Rating is downgraded to Neutral from Outperform. Target is reduced to $0.30 from $0.35.

Target price is $0.30 Current Price is $0.28 Difference: $0.02
If JMS meets the Macquarie target it will return approximately 7% (excluding dividends, fees and charges).

The company's fiscal year ends in February.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.0

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

Macquarie rates NCM as Upgrade to Neutral from Underperform (3) -

Macquarie upgrades to Neutral from Underperform on valuation. The broker's gold price forecasts are -21% and -22% lower, in Australian dollar terms, versus spot prices over 2021 and 2022, respectively.

The company's copper exposure has a beneficial impact, providing amplified earnings upside, the broker adds. Target is steady at $29.

Target price is $29.00 Current Price is $27.22 Difference: $1.78
If NCM meets the Macquarie target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $33.87, suggesting upside of 24.2% (ex-dividends)

The company's fiscal year ends in June.

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: 0.6

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

Credit Suisse rates OML as Outperform (1) -

With audience and media spend recovering rapidly, Credit Suisse assumes the company will return to pre-corona revenue in 2022.

oOh!Media shares' current trading momentum indicates positive timing risk around the return to normal conditions, suggests the broker.

Outperform rating retained. Target rises to $2.30 from $1.25.

Target price is $2.30 Current Price is $1.81 Difference: $0.49
If OML meets the Credit Suisse target it will return approximately 27% (excluding dividends, fees and charges).

Current consensus price target is $1.60, suggesting downside of -11.1% (ex-dividends)

The company's fiscal year ends in December.

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

Macquarie rates PAN as Upgrade to Neutral from Underperform (3) -

Panoramic Resources has leverage to an improving nickel price environment, Macquarie assesses.

The broker lifts the rating to Neutral from Underperform following progress on development. Target edges up to $0.13 from $0.10.

Target price is $0.13 Current Price is $0.14 Difference: minus $0.01 (current price is over target).
If PAN meets the Macquarie target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.0

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

Credit Suisse rates QAN as Underperform (5) -

Credit Suisse suspects the domestic market will not be so structurally sound for Qantas Airways with Virgin expected to gain a higher share of the profit under Bain's ownership and a third entrant - the regional airline Regional Express Holdings ((REX)) - planning to enter the domestic market in March 2021.

Credit Suisse expects Qantas's business costs to reduce by $1bn (6%) from FY23 onwards, likely to be passed on in lower ticket prices ultimately.

Underperform rating and $3 target retained.

Target price is $3.00 Current Price is $5.27 Difference: minus $2.27 (current price is over target).
If QAN meets the Credit Suisse target it will return approximately minus 43% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.21, suggesting downside of -5.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.3

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

UBS rates QAN as Buy (1) -

Domestic capacity will increase to almost 70% of pre-pandemic levels by the end of the year. UBS suspects Qantas is taking share and the recent news around a vaccine now outweighs the risk of further domestic border closures.

Qantas has indicated it has liquidity of $3.6bn in net debt of $5.9bn. As a vaccine is expected within the next 12 months the broker considers the balance sheet risk is materially reduced.

Buy rating maintained. Target rises to $6.20 from $5.25.

Target price is $6.20 Current Price is $5.27 Difference: $0.93
If QAN meets the UBS target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $5.21, suggesting downside of -5.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.3

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

Macquarie rates RIO as Outperform (1) -

Buoyant iron ore prices continue to drive strong earnings momentum for iron ore miners and impressive free cash flow yields.

Macquarie reiterates an Outperform rating and raises the target to $118 from $110. Earnings estimates rise 5% for 2020 and 22% for 2021.

Target price is $118.00 Current Price is $113.20 Difference: $4.8
If RIO meets the Macquarie target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $108.07, suggesting downside of -7.1% (ex-dividends)

The company's fiscal year ends in December.

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: 0.4

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

Macquarie rates S32 as Underperform (5) -

Macquarie reiterates an Underperform rating as cuts to silver and manganese price forecasts drive -47% and -22% reductions to FY21 and FY22 estimates, respectively.

An upgrade to the aluminium outlook lifts FY24-26 estimates by 15-22%. South32's target is raised to $2.00 from $1.90.

Target price is $2.00 Current Price is $2.61 Difference: minus $0.61 (current price is over target).
If S32 meets the Macquarie target it will return approximately minus 23% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.69, suggesting upside of 3.7% (ex-dividends)

The company's fiscal year ends in June.

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: 0.7

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

Morgan Stanley rates STO as Overweight (1) -

Santos' disclosure on Barossa estimates cash costs near US$2/mmbtu with a reduction in the capex to circa US$3.6bn. Full year production guidance was increased in Western Australia to circa 30mmboe.

The company outperformed peers in 2020 and Morgan Stanley thinks there is room for more upside if oil recovers. The broker is positive on the company's ability to execute on cost synergies and scale up production.

Santos is Morgan Stanley's most preferred pick in the large-cap stocks.

Overweight retained. Target rises to $7 from $6.30. Industry view: Cautious.

Target price is $7.00 Current Price is $6.36 Difference: $0.64
If STO meets the Morgan Stanley target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $6.78, suggesting upside of 3.5% (ex-dividends)

The company's fiscal year ends in December.

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: 0.7

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

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

Macquarie makes modest reductions to 2021 and 2022 Australian dollar gold price forecasts. For the majority of gold stocks this means small reductions to earnings forecasts for FY21-23.

West African Resources is upgraded to Outperform from Neutral on valuation. Target is steady at $1.10.

Target price is $1.10 Current Price is $0.96 Difference: $0.14
If WAF meets the Macquarie target it will return approximately 15% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

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

Citi rates WPL as Neutral (3) -

Citi has included Woodside Petroleum's purchase of an additional 13.67% stake in the Sangomar oil field in its model and has delayed the company's expected final investment decision (FID) payment for the Scarborough asset to the second half of FY21, in line with guidance.

As a result, earnings forecast has decreased by -1% in 2022.

Citi retains a Neutral rating with the target price rising slightly to $22.36 from $22.06.

Target price is $22.36 Current Price is $23.00 Difference: minus $0.64 (current price is over target).
If WPL 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 $23.33, suggesting upside of 0.8% (ex-dividends)

The company's fiscal year ends in December.

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: 0.6

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

Ord Minnett rates WPL as Downgrade to Accumulate from Buy (2) -

Woodside Petroleum has exercised pre-emptive rights to acquire FAR Ltd's ((FAR)) stake in the Sangomar project in Senegal for US$165-170m.

The transaction is modestly accretive in US dollar terms, Ord Minnett suggests, although increasing the stake to 82% lifts the capital expenditure burden by around US$600m.

Woodside has indicated it will sell down to 40%, and the process of selling down should demonstrate the value of the project more so than the acquisition of the Cairn Energy and FAR stakes.

Ord Minnett downgrades to Accumulate from Buy to reflect the strong performance in the share price. Target is reduced to $23.80 from $24.00.

Target price is $23.80 Current Price is $23.00 Difference: $0.8
If WPL meets the Ord Minnett target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $23.33, suggesting upside of 0.8% (ex-dividends)

The company's fiscal year ends in December.

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: 0.6

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

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

An improved earnings outlook for base metals and, in particular, better leverage to an improving nickel price has resulted in Macquarie upgrading Western Areas to Outperform from Neutral.

Spot copper and nickel prices are trading 7-17% above upgraded FY21 and FY22 forecasts and as a result the broker calculates earnings upside of 60% to more than 100% under a spot price scenario for FY22. Target rises to $2.60 from $2.00.

Target price is $2.60 Current Price is $2.42 Difference: $0.18
If WSA meets the Macquarie target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $2.52, suggesting downside of -1.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.8

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