Australian Broker Call

Macquarie rates AFG as Outperform (1) -

Highlighting that Australian Finance Group does not compete against banks for fixed rate loan rates, Macquarie notes the company may benefit following last week's rate rise with activity levels historically increasing during rate rising cycles as consumers look to refinance. 

The company noted a preference for fixed rate over variable lodgments in the March quarter, with fixed rate lodgments declining -47.5% over the period as variable lodgments increased 8.3%. Upside risk for both book growth and margins in the current environment.

The Outperform rating and target price of $2.94 are retained.

Target price is $2.94 Current Price is $1.74 Difference: $1.2
If AFG meets the Macquarie target it will return approximately 69% (excluding dividends, fees and charges).

Current consensus price target is $2.88, suggesting upside of 56.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 1.0

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

Ord Minnett rates ALD as Buy (1) -

Ord Minnett highlights refinery margins have been setting new levels, driven largely by export quotas of refined products from China.

A refining update by Viva Energy ((VEA)) revealed its Geelong refinery in Victoria has realised a margin of US$25/bbl in April 2022 and operating earnings (EBITDA) are up 65% on the prior year.

While expecting mean reversion in the September quarter, the broker lifts its June quarter margin estimates for Ampol to a level well above market expectations. The Buy rating is maintained, while the target rises to $37.90 from $37.70.

Target price is $37.90 Current Price is $33.13 Difference: $4.77
If ALD meets the Ord Minnett target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $34.61, suggesting upside of 2.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.8

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

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

Atturra has upgraded underlying earnings (EBITDA) guidance by around 13%, and announced the acquisition of Perth-based Hayes, an OpenText/ECM specialist for $12m.

Morgans attributes the upgraded guidance to stronger results in March and April and less impact from the Federal election than originally envisaged. A one-off gain from completing a project under budget in the 4Q also contributed.

Following the acquisition, the broker removes a 10cps premium in the target price for future acquistions and after upgrading earnings estimates (offset by downgraded peer multiples), the target falls to $0.72 from $0.78. The rating is downgraded to Hold from Add on valuation.

Target price is $0.72 Current Price is $0.70 Difference: $0.02
If ATA meets the Morgans target it will return approximately 3% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.0

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

Credit Suisse rates CBA as Neutral (3) -

Credit Suisse assesses a mainly in-line 3Q result for CommBank and maintains its Neutral rating and a preference for other commercial banks to play the thematic of increasing interest rates.

The broker upgrades its EPS forecasts across the forecast period, with upgrades in FY22 driven by higher estimates for non-interest income (trading income) and lower bad debt forecasts.

For outer years, the EPS forecasts rise by 2-3% on forecasts for net interest margin (NIM) expansion due to rising interest rates.

The Neutral rating and $102.80 target price are maintained.

Target price is $102.80 Current Price is $102.15 Difference: $0.65
If CBA meets the Credit Suisse target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $92.08, suggesting downside of -9.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: -0.6

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

Macquarie rates CBA as Underperform (5) -

Despite an improved outlook for interest rates, Macquarie expects continuing mortgage competition and expenses to limit near-term upside for CommBank, anticipating the bank will be unable to outperform peers on revenue growth in coming years.

The bank disclosed pre-provision profit of $3,288m in the typically weaker third quarter, in line with Macquarie's expectations, benefiting from unwinding leave provisions.

While the broker expects CommBank to start benefiting from rate rises in the coming quarter, it also anticipates slowing balance sheet growth and weaker markets will offset, while costs will increase.

Macquarie finds the bank's current valuation premium excessive, and retained the Underperform rating and target price of $90.00.

Target price is $90.00 Current Price is $102.15 Difference: minus $12.15 (current price is over target).
If CBA meets the Macquarie target it will return approximately minus 12% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $92.08, suggesting downside of -9.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: -0.6

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

Morgan Stanley rates CBA as Underweight (5) -

Morgan Stanley believes Commonwealth Bank's operating and financial gap to its peers has been fully incorporated into the trading multiples. Hence, an Underweight rating is retained as margin expansion is now widely expected.

The broker expects mortgage growth will slow because system growth will moderate and there is no longer the benefit of cheap funding  from the Reserve Bank. Meanwhile, the performance of major competitors is gradually improving.

The broker reduces the target to $91 from $92. Morgan Stanley also suspects the prospects of another buyback in 2022 or 2023 beyond the current $2bn on-market buyback are dimming. Industry view: Attractive.

Target price is $91.00 Current Price is $102.15 Difference: minus $11.15 (current price is over target).
If CBA meets the Morgan Stanley target it will return approximately minus 11% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $92.08, suggesting downside of -9.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: -0.6

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

Ord Minnett rates CBA as Hold (3) -

A few surprises from CommBank's March quarter update according to Ord Minnett, although 1% revenue growth was largely in line with the broker's anticipated -4 basis point net interest margin decline. Cost performance looked strong, supported by one-offs, while an update on capital disappointed.

Ord Minnett expects CommBank's anticipated buyback will remain on hold until a larger capital buffer is in place, likely not until after the Bank of Hangzhou sale.

The Hold rating is retained and the target price decreases to $93.00 from $94.60.

Target price is $93.00 Current Price is $102.15 Difference: minus $9.15 (current price is over target).
If CBA meets the Ord Minnett target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $92.08, suggesting downside of -9.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: -0.6

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

UBS rates CBA as Neutral (3) -

UBS found the March quarter trading update and operating performance slightly below estimates although cash earnings were ahead of expectations.

This reflects the impact of a higher percentage of new business written at lower fixed rates with larger concessions relative to the back book.

UBS believes the latter is now factored into the base and pressure on net interest margins should subside as more business is written on a standard variable rate basis.

Neutral rating and $100 target maintained.

Target price is $100.00 Current Price is $102.15 Difference: minus $2.15 (current price is over target).
If CBA meets the UBS target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $92.08, suggesting downside of -9.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: -0.6

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

Citi rates CSL as Buy (1) -

Over the next six months Citi expects the market will shift its focus to the strong demand for plasma product and the closure of the Vifor deal.

The broker's FY23-24 estimates for earnings per share remain 5-6% above consensus and Vifor has been included in forecasts. The delayed Vifor transaction is now expected to be completed by the end of September.

Buy rating and $335 target price retained.

Target price is $335.00 Current Price is $271.18 Difference: $63.82
If CSL meets the Citi target it will return approximately 24% (excluding dividends, fees and charges).

Current consensus price target is $319.02, suggesting upside of 13.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

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

Market Sentiment: 0.9

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

Morgan Stanley rates CSL as Overweight (1) -

CSL now expects completion of the acquisition of Vifor Pharma will take longer because of a delay in the regulatory process. Morgan Stanley's best guess is post the FY22 result.

The company remains confident in satisfying the outstanding regulatory queries and the broker suspects finalisation of the deal could serve as a catalyst.

The Overweight rating and $310 target are retained. Industry View: In-line.

Target price is $310.00 Current Price is $271.18 Difference: $38.82
If CSL meets the Morgan Stanley target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $319.02, suggesting upside of 13.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

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

Market Sentiment: 0.9

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

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

While CSR missed Macquarie's full year expectations slightly, reported underlying earnings of $291.4m and net profit of $192.6m compared to anticipated $304.3m and $197.6m,  the broker noted improved efficiencies and topline momentum drove a quality result.

Performance from the Building Products segment was a feature, delivering a 160 basis point improvement to earnings margin in the second half and with solid detached activity lined up through FY23, while the company capitalised on market conditions with its Aluminium segment.

Looking ahead, house activity forecasts see Macquarie revise earnings per share forecasts -7%, -5% and -4% through to FY25.

The rating is downgraded to Neutral from Outperform and the target price decreases to $6.05 from $6.80.

Target price is $6.05 Current Price is $5.17 Difference: $0.88
If CSR meets the Macquarie target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $6.29, suggesting upside of 22.4% (ex-dividends)

The company's fiscal year ends in March.

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

Morgan Stanley rates GNC as Downgrade to Equal-weight from Overweight (3) -

The first half was slightly ahead of Morgan Stanley's expectations and, with the risks for FY22 reduced, the focus is now on FY23. Risks are weighted to the upside because of high wheat prices and improved seasonal conditions.

The broker raises FY22 EBITDA forecast by 3%, at the top end of management's guidance range. There is potential for another above-average crop in FY23 owing to increased soil moisture levels and elevated grain prices.

Management has also turned to paying fully franked dividends and away from buybacks and the broker raises its forecasts for FY22-23 total dividends to $1 a share.

As a result, now is time to take profits in the broker's opinion and the rating is downgraded to Equal-weight from Overweight. Target is $10.70. Industry View: In-Line.

Target price is $10.70 Current Price is $10.11 Difference: $0.59
If GNC meets the Morgan Stanley target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $10.23, suggesting upside of 3.4% (ex-dividends)

The company's fiscal year ends in September.

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

UBS rates IEL as Buy (1) -

UBS considers the departure of Andrew Barkla as CEO a negative, although the business should be well-positioned to continue differentiating from peers by leveraging its technology.

The broker suggests IDP Education has earned a position in the top tier of quality growth stocks, with a strong track record of earnings and market leadership. The broker asserts the stock should remain a core holding and retains a Buy rating. Target is unchanged at $35.90.

Target price is $35.90 Current Price is $22.73 Difference: $13.17
If IEL meets the UBS target it will return approximately 58% (excluding dividends, fees and charges).

Current consensus price target is $35.50, suggesting upside of 53.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.8

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

Ord Minnett rates LTR as Initiation of coverage with Hold (3) -

Ord Minnett initiates coverage of Liontown Resources with a Hold rating and $1.30 target. The broker is positive on lithium markets  highlighting Kathleen Valley, an underground development in Western Australia, is slated for first production in two years.

A lithium hydroxide plant is planned for ramping up post 2030 and presents attractive economics.

The stock is trading near current estimates and appears fully valued when compared with incumbent producers such as Pilbara Minerals ((PLS)) and Alkem ((AKE)), which the broker considers are a cheaper way to play the lithium sector.

Target price is $1.30 Current Price is $1.16 Difference: $0.14
If LTR meets the Ord Minnett target it will return approximately 12% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.5

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

Macquarie rates MVF as Outperform (1) -

Monash IVF's full year guidance has disappointed Macquarie's expectations by -11%, with covid continuing to impact. Stimulated cycles are being impacted by patients testing positive for covid, or being close contacts, and a rebound is taking longer than anticipated.

The broker highlights while profitability has been impacted in the last quarter, the company expects this will cause pent up demand for future services. With improved conditions anticipated, the broker warns not to expect this to offset year-to-date covid disruptions.

The Outperform rating and target price of $1.20 are retained.

Target price is $1.20 Current Price is $1.10 Difference: $0.1
If MVF meets the Macquarie target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $1.25, suggesting upside of 17.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 1.0

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

Morgan Stanley rates MVF as Overweight (1) -

Despite issues relating to the pandemic, back in January Monash IVF was confident that revenue and earnings will continue to grow in the second half.

Now, there are signs profitability has been affected in the four months to April to such an extent that net profit for FY22 is now guided at $22m because of the disruptions. Still, Morgan Stanley suspects the impact will be temporary and provide for a "spring-loaded FY23".

Target is $1.25. Overweight. Industry view In-Line.

Target price is $1.25 Current Price is $1.10 Difference: $0.15
If MVF meets the Morgan Stanley target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $1.25, suggesting upside of 17.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 1.0

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

Macquarie rates ORG as Outperform (1) -

Origin Energy's near-term earnings risk looks to remain constrained until coal purchase contracts are repriced in the coming year, notes Macquarie.

The broker noted government energy transition policy is increasingly important to growth in renewables, with current policy supporting 60-70 terrwatt-hours of renewable energy by 2030. Over the long-term, the broker highlights high margin retail electricity will increase with demand for electric vehicles and electrification.

The Outperform rating and target price of $7.19 are retained.

Target price is $7.19 Current Price is $6.72 Difference: $0.47
If ORG meets the Macquarie target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $6.71, suggesting downside of -1.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.3

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

Citi rates ORI as Neutral (3) -

Further to the results analysis, Citi notes steady commodity growth is expected and momentum in underlying business continues despite the planned exit from Russian operations and the challenges with the supply chain, along with the Minova sale.

The broker also highlights Orica has been able to reduce the pass-through lags in ammonium nitrate and this should benefit the second half. Citi retains a Neutral rating and raises the target to $16.40 from $15.00.

Target price is $16.40 Current Price is $16.40 Difference: $0
If ORI meets the Citi target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $17.24, suggesting upside of 5.2% (ex-dividends)

The company's fiscal year ends in September.

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

Credit Suisse rates ORI as Outperform (1) -

Following 1H results for Orica, Credit Suisse upgrades its FY22 forecasts to incorporate an improved environment for price and cost containment. A 13cps interim dividend was declared.

The broker highlights positives from the result including tight ammonium nitrate supply, a strong focus on cost pass-through and contract discipline by management.

The tight ammonium nitrate supply applies on the east coast of Australia, and the analyst anticipates full cost pass-through and
for margins to expand. Supply is also considered to be tight in North America and Latin America.

The Outperform rating is retained, while the target rises to $17.71 from $17.12.

Target price is $17.71 Current Price is $16.40 Difference: $1.31
If ORI meets the Credit Suisse target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $17.24, suggesting upside of 5.2% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.3

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

Macquarie rates ORI as Neutral (3) -

Orica has delivered a strong first half result, reporting net profit of $129m compared to Macquarie's expected $110m and reflecting a 71% increase on the previous comparable period. The broker notes cost management has been positive, with price improvements offsetting cost increases. 

Australia Pacific earnings strength surprised the broker, with earnings up 41% despite flat coal demand. Strong demand for iron ore, gold and copper were a driver, while coal supplies continue to be redirected to Indonesia amid China's ongoing ban on Australian coal.

Macquarie's earnings per share forecasts increase 7%, 1% and 3% through to FY24 following the result.

The Neutral rating is retained and the target price increases to $16.95 from $14.92.

Target price is $16.95 Current Price is $16.40 Difference: $0.55
If ORI meets the Macquarie target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $17.24, suggesting upside of 5.2% (ex-dividends)

The company's fiscal year ends in September.

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

Morgan Stanley rates ORI as Overweight (1) -

Orica's results for the first half were ahead of Morgan Stanley's estimates. Underlying net profit was more than 22% ahead of estimates. The broker suggests pricing leveraged is now the potential provider of upside and should drive meaningful growth in earnings.

In the results, management of raw material costs was a highlight, which showed the company's proactive approach and which the broker believes is an indicator of the outlook under new management.

Overweight rating reiterated. Target is raised to $19.70 from $17.40. Industry view is In-Line.

Target price is $19.70 Current Price is $16.40 Difference: $3.3
If ORI meets the Morgan Stanley target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $17.24, suggesting upside of 5.2% (ex-dividends)

The company's fiscal year ends in September.

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 ORI as Hold (3) -

First half results for Orica beat Morgans expectations assisted by a 5% rise in global explosive volumes year-on-year. Group earnings rose 24% though the margin fell to 12.9% from 13.1%.

Management expects margins and earnings to increase in FY22 as a result of volume growth, increased adoption of its technology, supply chain efficiencies and falling overhead costs.

The broker's target price rises to $16.20 from $14.89 reflecting improved pricing power, greater uptake of its technology and lower interest charge. The Hold rating is unchanged with shares trading around valuation.

Target price is $16.20 Current Price is $16.40 Difference: minus $0.2 (current price is over target).
If ORI meets the Morgans target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $17.24, suggesting upside of 5.2% (ex-dividends)

The company's fiscal year ends in September.

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

Ord Minnett rates ORI as Hold (3) -

Ord Minnett described a very strong first half from Orica, with underlying earnings of $245m reflecting 55% growth on the previous comparable period. The operating leverage, manufacturing efficiencies and higher value mix that drove the result are expected to continue into the second half, as are supply chain issues.

The company hopes to lock customers in to longer-term contracts of ten years compared to a current average three years, with 20-30% of Orica's customer book currently rolling over annually, and to guarantee commodity cost pass through at a faster rate.

The Hold rating is retained and the target price increases to $17.00 from $15.25.

Target price is $17.00 Current Price is $16.40 Difference: $0.6
If ORI meets the Ord Minnett target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $17.24, suggesting upside of 5.2% (ex-dividends)

The company's fiscal year ends in September.

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

UBS rates ORI as Neutral (3) -

First half EBIT grew 58% and was ahead of UBS estimates. The majority of the earnings improvement was in Asia-Pacific. The company expects momentum will continue into the second half regardless of any contribution from Russia.

A significant tightening of global ammonium nitrate markets over the past six months has been driven by strong demand and reduced supply from key regions and UBS assesses the company's negotiating position has significantly improved given the favourable market dynamics.

UBS retains a Neutral rating, believing the recent re-rating of the share price reflects the improved earnings outlook. Target is raised to $16.70 from $15.50.

Target price is $16.70 Current Price is $16.40 Difference: $0.3
If ORI meets the UBS target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $17.24, suggesting upside of 5.2% (ex-dividends)

The company's fiscal year ends in September.

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

Morgan Stanley rates PSQ as Overweight (1) -

In a monthly update by Pacific Smiles, $183.8m of patient fees to end of April were disclosed, which was down -8.2% year-on-year.

While $17m was received in April, Morgan Stanley points out an average of $26m pro forma per month is needed to meet the broker's $236m FY22 estimate. Thankfully, May and June are seen as the two strongest months seasonally.

A key positive for the analyst was the rollout of 125 new centres by the end of May versus an expectation of 126 by the end of June.

The Overweight rating and $3 target price are unchanged. Industry view: In-Line.

Target price is $3.00 Current Price is $1.81 Difference: $1.19
If PSQ meets the Morgan Stanley target it will return approximately 66% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 1.0

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

Morgan Stanley rates REA as Downgrade to Equal-weight from Overweight (3) -

REA Group's March-quarter result broadly met consensus' and Morgan Stanley's forecasts.

But the broker believes the company is cycling into a period where pricing power will combine with new products to become the key drivers of revenue as listing volumes fall in the June quarter, potentially weakening again in FY23.

Interest rates and election uncertainty remain a risk to near-term consensus forecasts, opines the broker, while admiring the company's medium-term growth outlook.

EPS forecasts fall -5% to -10% across FY23 and FY24 to reflect cyclical weakness. The broker sits -10% to -15% below consensus and expects things will worsen before getting better, possibly offering a reasonable entry point.

Rating falls to Equal-weight from Overweight. Target price falls to $130 from $178. Industry view: Attractive.

Target price is $130.00 Current Price is $106.31 Difference: $23.69
If REA meets the Morgan Stanley target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $140.67, suggesting upside of 26.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.7

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

Morgan Stanley rates RIO as Overweight (1) -

Morgan Stanley reviews 1Q results for Rio Tinto's 50%-owned Turquoise Hill and focuses upon the progress of the underground expansion project.

The project completion is running around two years behind initial expectations, notes the analyst, as the company confirmed Shafts 3 & 4 commissioning delays.

The Overweight rating and target price of $128.50 are retained. Industry view: Attractive.

Target price is $128.50 Current Price is $103.43 Difference: $25.07
If RIO meets the Morgan Stanley target it will return approximately 24% (excluding dividends, fees and charges).

Current consensus price target is $125.07, suggesting upside of 18.6% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

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

Market Sentiment: 0.6

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

Ord Minnett rates RIO as Hold (3) -

Pilbara shipments were the lowest since 2019 in the first quarter of FY22 and Ord Minnett continues to expect iron ore exports will fall short of guidance. At the July quarterly production update the broker expects a revision towards the lower end of guidance of 320-335mt.

Key execution risks in 2022 include labour shortages and delays in commissioning replacement mines.

In review, the broker points out Rio Tinto has downgraded iron ore shipment guidance in six out of the last seven years and the trend is likely to continue.

Hold rating and $116 target maintained.

Target price is $116.00 Current Price is $103.43 Difference: $12.57
If RIO meets the Ord Minnett target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $125.07, suggesting upside of 18.6% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

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

Market Sentiment: 0.6

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

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

Morgan Stanley assesses from a 1Q update by Scentre Group good operating metrics, which is consistent with a rebound trade.

Management retained 2022 DPS guidance, and also maintained a fund from operations (FFO) growth guidance of "in excess of 5.3%", compared to the consensus forecast of 21%.

The company also noted that 80% of specialty leases have annual CPI increases of 2%, while interest rate hedging is now 65% for 2023, up from around 50% in 2022.

The Equal-weight rating and $3.18 target price are maintained. Indusry View: In-Line.

Target price is $3.18 Current Price is $2.76 Difference: $0.42
If SCG meets the Morgan Stanley target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $3.04, suggesting upside of 7.0% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.0

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

Morgan Stanley rates SHL as Overweight (1) -

For a comparison to Sonic Healthcare, Morgan Stanley reviews 1Q results for European medical diagnostics company Synlab. A PCR volume surge more than offset any price reductions for Synlab.

Bearing in mind Sonic Healthcare has German operations, the broker overlays the Synlab German metrics. This implies an uplift to the overall company's FY22 EPS of around 6%. The Overweight rating and $40 target are retained. Industry view: In-Line.

Target price is $40.00 Current Price is $35.18 Difference: $4.82
If SHL meets the Morgan Stanley target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $39.40, suggesting upside of 9.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.4

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

Macquarie rates SIG as Neutral (3) -

Issues from Sigma Healthcare's Enterprise Resource Planning (ERP) rollout have persisted in the first three months of the year, with Macquarie noting impacts on sales, particularly in the wholesale business to pharmacy channel.

However, the company reported growth in both its Hospitals and Third-Party Logistics segments in the first quarter, with neither impacted by ERP issues. In a further positive, rapid antigen testing sales have remained resilient.

The Neutral rating and target price of $0.52 are retained.

Target price is $0.52 Current Price is $0.46 Difference: $0.06
If SIG meets the Macquarie target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $0.50, suggesting upside of 1.0% (ex-dividends)

The company's fiscal year ends in January.

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 STO as Buy (1) -

Ord Minnett believes strong market conditions could lead to elevated valuations as management now looks to sell down assets. This could in turn lead to adjustments to how much will actually be sold.

There is even a risk that asset sales could leave Santos undergeared. The company announced a target of US$2-3bn in asset sales for the current calendar year and the broker believes PNG LNG, Papua LNG and Pikka will form the majority of the process of assessment.

Ord Minnett remains positive on Santos and maintains a Buy rating with a $9.60 target.

Target price is $9.60 Current Price is $7.80 Difference: $1.8
If STO meets the Ord Minnett target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $9.77, suggesting upside of 21.7% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

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

Market Sentiment: 0.9

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

Credit Suisse rates SUN as Outperform (1) -

Credit Suisse assesses the March quarter update by Suncorp Group for the Banking segment demonstrates ongoing and accelerating growth.

Home lending rose 6.9% on an annualised basis, while lodgements were 21% up on the 2Q due to improved turnaround times and competitive offerings, according to management.

The broker lifts its bank asset growth rate assumptions for FY22, which also positively impacts outer years, though higher costs are forecast across all periods. The target falls to $14.04 from $15.10. Outperform.

Target price is $14.04 Current Price is $11.61 Difference: $2.43
If SUN meets the Credit Suisse target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $13.81, suggesting upside of 16.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.9

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

Macquarie rates TPG as Outperform (1) -

Prepaid subscribers look to be returning to TPG Telecom, with the company reporting an additional 70,000 subscribers in the first half, with 59,000 of those opting for prepaid, but Macquarie expects recovery of subscribers lost during covid is yet to ramp up.

The company maintains a targeted 160,000 fixed wireless subscribers by year's end, noting a second half skew is expected, with an aim to convert a further 138,000 fixed wireless subscribers over the medium-term.

The Outperform rating is retained and the target price decreases to $8.00 from $8.20.

Target price is $8.00 Current Price is $5.96 Difference: $2.04
If TPG meets the Macquarie target it will return approximately 34% (excluding dividends, fees and charges).

Current consensus price target is $6.86, suggesting upside of 14.0% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.6

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

Macquarie rates VEA as Outperform (1) -

Viva Energy has delivered a profit update ahead of Macquarie's expectations, reporting profit of $308m for the first four months of the year as Geelong refining earnings in April exceeded that of the entire first quarter.

The broker notes this marks the first time since its initial public offering that refining margins have provided a major tailwind for the company, and has supported Viva Energy in closing its discount to the ASX to 4%.

While the broker notes energy costs will be higher than previous years, it increases its earnings per share 35% for FY22 given the strong Geelong refining contribution, and 15% and 17% for FY23 and FY24 respectively.

The Outperform rating is retained and the target price increases to $3.00 from $2.90.

Target price is $3.00 Current Price is $2.66 Difference: $0.34
If VEA meets the Macquarie target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $2.83, suggesting upside of 0.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.8

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

Ord Minnett rates VEA as Accumulate (2) -

Ord Minnett highlights refinery margins have been setting new levels, driven largely by export quotas of refined products from China.

In a refining update, Viva Energy revealed its Geelong refinery in Victoria has realised a margin of US$26.40/bbl in April 2022 and operating earnings (EBITDA) are up 65% on the prior year.

While expecting mean reversion in the September quarter, the broker lifts its June quarter margin estimates to a level well above market expectations. The Accumulate rating and $2.95 target price are maintained.

Target price is $2.95 Current Price is $2.66 Difference: $0.29
If VEA meets the Ord Minnett target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $2.83, suggesting upside of 0.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.8

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

UBS rates VEA as Buy (1) -

The trading update on the Geelong refinery for April was positive with a refining margin at US$26.40/bbl compared with the previous month's US$11.50/bbl. Earnings for the four months ending April were well ahead of UBS estimates.

The broker expects refining margins will remain resilient albeit retreat from current highs as Asian refining capacity returns from maintenance outages.

Estimates for earnings per share are lifted by 40% for FY22 while the outer years are unchanged, although the broker recognises the upside risk if refining margins remain elevated over the next three years. Buy retained. Target is raised to $3.05 from $2.95.

Target price is $3.05 Current Price is $2.66 Difference: $0.39
If VEA meets the UBS target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $2.83, suggesting upside of 0.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.8

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

Citi rates XRO as Buy (1) -

FY22 results for Xero were broadly in-line with both Citi's forecast and consensus estimates, while average revenue per user (ARPU) growth was offest by lower-than-expected subscriptions.

The broker highlights a key negative in that international subscription additions were lower than expected, with the UK flat half-on-half. More positively, annualised monthly recurring revenue (AMRR) suggests upside to Citi's FY23 forecast.

The Buy rating and $125 target price are maintained.

Target price is $125.00 Current Price is $76.90 Difference: $48.1
If XRO meets the Citi target it will return approximately 63% (excluding dividends, fees and charges).

Current consensus price target is $116.33, suggesting upside of 38.6% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY23:

Forecast for FY24:

This company reports in NZD. 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

Macquarie rates XRO as Neutral (3) -

Weaker subscriber numbers for Xero, down -4% on Macquarie's full year forecast, are driving a more conservative outlook for the company and driven the broker to cut its longer-term subscription growth forecast accordingly, down -4%, -7% and -11% through to FY24.

The broker has revised its earnings per share forecasts 18% for FY22 on price increases, and less than -20% for FY24 and beyond to reflect revised subscriber growth. Xero has reaffirmed its focus will be on reinvesting cash to drive long-term shareholder value.

The Neutral rating is retained and the target price decreases to $80.00 from $100.00.

Target price is $80.00 Current Price is $76.90 Difference: $3.1
If XRO meets the Macquarie target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $116.33, suggesting upside of 38.6% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY23:

Forecast for FY24:

This company reports in NZD. 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

Morgan Stanley rates XRO as Overweight (1) -

Xero's FY22 revenue and earnings (EBITDA) were a 1% and 3% beat versus Morgan Stanley's expectations. It's estimated FY23 revenue growth of 23% is needed to meet the consensus expectation. This compares with the 29% growth in FY22.

Total subscriptions increased by 3.27m versus the previous corresponding period, while lower churn was a 10% beat versus the consensus estimate.

The broker sees long-term value though acknowledges the market is still coming to grips with how to value software companies.

The Overweight rating and $148 target price are maintained. Industry view is  Attractive.

Target price is $148.00 Current Price is $76.90 Difference: $71.1
If XRO meets the Morgan Stanley target it will return approximately 92% (excluding dividends, fees and charges).

Current consensus price target is $116.33, suggesting upside of 38.6% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY23:

Forecast for FY24:

This company reports in NZD. 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 XRO as Upgrade to Buy from Accumulate (1) -

Xero'a full year underlying earnings of $213m were 2.6% ahead of Ord Minnett's forecast and an 11% increase on its FY21 result, but a -$9m net loss exceeded the broker's expected -$7m.

Ord Minnett notes the market did not respond positively to the company's continued cash burn in pursuit of growth, but the broker feels Xero has a good case for continued reinvestment given the opportunity set remains sizeable.

Recent share price decline sees Ord Minnett  upgrade its rating to Buy from Accumulate and decrease the target price to $97.00 from $107.00.

Target price is $97.00 Current Price is $76.90 Difference: $20.1
If XRO meets the Ord Minnett target it will return approximately 26% (excluding dividends, fees and charges).

Current consensus price target is $116.33, suggesting upside of 38.6% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY23:

Forecast for FY24:

This company reports in NZD. 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