Australian Broker Call

Macquarie rates AMC as Outperform (1) -

Macquarie suspects Amcor may be one of the few companies that will provide quantitative guidance for FY21.

FY20 earnings guidance has been maintained throughout the pandemic.

Earnings growth is expected to be 11-12% in FY20 amid a shift to home consumption and greater focus on hygiene, which is positive for packaged goods.

Macquarie retains an Outperform rating and $16.98 target.

Target price is $16.98 Current Price is $14.48 Difference: $2.5
If AMC meets the Macquarie target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $16.29, suggesting upside of 11.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

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

Market Sentiment: 0.6

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

Morgans rates CKF as Add (1) -

Collins Foods’ FY20 result beat expectations by about 6%, despite the pandemic which, as per Morgans, shows resilience.

The broker notes growth in all brands in the first seven weeks of the first half of FY21, with KFC Australia’s same-store sales (SSS) growing 11.6% while Taco Bell has almost reached pre-covid levels. KFC Europe recorded negative SSS growth.

Morgans expects the company to focus on the higher returning KFC Australia segment and approves of this strategy.

FY21 operating income is forecasted at $129m with earnings growing by circa 3-5% across FY21-23.

Morgans maintains its Add rating with the target price increasing to $10.23 from $8.17.

Target price is $10.23 Current Price is $9.42 Difference: $0.81
If CKF meets the Morgans target it will return approximately 9% (excluding dividends, fees and charges).

The company's fiscal year ends in May.

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

UBS rates CKF as Buy (1) -

UBS notes the brand power of KFC Australia is uppermost as it has generated sales growth of 11.6% in the first seven weeks of FY21.

Delivery continues to provide the tailwind. Taco Bell is the main area that underperformed UBS estimates and management has decided to slow the roll-out in the coming 12 months.

Still, KFC's second half performance impressed UBS and the broker retains a Buy rating. Target is raised to $10.65 from $8.95.

Target price is $10.65 Current Price is $9.42 Difference: $1.23
If CKF meets the UBS target it will return approximately 13% (excluding dividends, fees and charges).

The company's fiscal year ends in May.

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 CQR as Outperform (1) -

Credit Suisse revises distribution estimates for the second half to be in line with guidance and has also lowered FY21 pay-out expectations.

The company has not yet quantified the earnings impact of the pandemic or cash rent collection relative to billings in the June quarter.

Conservatively, Credit Suisse assumes a -9% decline in asset value for the period to June 2020 relative to December 2019.

Outperform rating maintained. Target is raised to $3.41 from $3.32.

Target price is $3.41 Current Price is $3.35 Difference: $0.06
If CQR meets the Credit Suisse target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $3.49, suggesting upside of 3.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.3

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

Macquarie rates FBU as Neutral (3) -

Macquarie adjusts forecasts for earnings per share down -36% to account for the trading update for May, which implies FY20 earnings guidance of NZ$309m.

Fletcher Building continues to preserve its balance sheet and retains conservative volume forecasts for FY21-22.

Neutral rating maintained. Target is reduced to NZ$3.92 from NZ$4.03.

Current Price is $3.45. Target price not assessed.

Current consensus price target is $3.59, suggesting upside of 4.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

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

Morgans rates GEM as Hold (3) -

Transition payments under the shift from free childcare to Child Care Subsidy will provide G8 Education with more flexibility by removing the cap on revenues as was the case previously.

Morgans notes company management has implemented cost reduction measures like rostering optimisation, reducing non-essential capital expenditure and rent relief negotiations.

The company has deferred its FY19 final dividend of $0.06 until October, while deciding not to pay any this fiscal year.

Morgans reiterates its Hold rating with the target price decreasing to $1.12 from $1.89.

Target price is $1.12 Current Price is $0.89 Difference: $0.23
If GEM meets the Morgans target it will return approximately 26% (excluding dividends, fees and charges).

Current consensus price target is $1.08, suggesting upside of 21.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.0

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

Morgans rates HUB as Add (1) -

The ASX 200 has recovered by about 16% in the fourth quarter which has led to higher funds under administration (FUA) levels heading into FY21.

Morgans forecasts solid net inflows for the fourth quarter for Hub24. Also, the FUA is expected to grow by 15% for the fourth quarter, driven by market performance and flows.

The broker also expects the company to benefit from heightened trading activity in the fourth quarter and a higher cash balance.

Morgans reaffirms its Add rating with a target price of $11.15.

Target price is $11.15 Current Price is $9.30 Difference: $1.85
If HUB meets the Morgans target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $11.03, suggesting upside of 7.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.6

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

UBS rates IEL as Buy (1) -

IDP Education is highly dependent on international travel but, UBS asserts, the structural thematic is unchanged.

Increasing wealth in developing countries is leading to increased demand for education in developed countries.

Moreover, the company's digital strategy differentiates, as it builds student contacts via "virtual" fairs while competitors remain in lockdown.

Buy rating retained. Target rises to $18.20 from $13.95.

Target price is $18.20 Current Price is $15.49 Difference: $2.71
If IEL meets the UBS target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $16.56, suggesting upside of 0.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 1.0

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

Morgans rates IFN as Hold (3) -

Iberdrola, the Spanish utility company, has increased its offer price for Infigen Energy to $0.89 per share and has also removed most of the conditions of its bid. Iberdrola still needs FIRB approval although Morgans does not expect this to be an issue.

The broker notes Infigen Energy’s largest shareholder has agreed to support Iberdrola’s bid, implying Iberdrola is already 40% on its way towards meeting the minimum acceptable conditions.

Philippine investment company UAC has also lifted the offer price to $0.86 per share and this is totally unconditional but Infigen Energy’s board is backing Iberdrola because of its higher bid.

Morgans continues to rate the company as Hold but lifts its target price to $0.89 from $0.86.

Target price is $0.89 Current Price is $0.94 Difference: minus $0.05 (current price is over target).
If IFN meets the Morgans target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $0.77, suggesting downside of -17.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.3

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

Credit Suisse rates NUF as Outperform (1) -

Nufarm has guided to $15m in operating earnings (EBITDA) improvement with the closure of manufacturing at Raymond Road and 2, 4-D synthesis at its site in Austria.

Credit Suisse believes the decision recognises the reality of sub-scale manufacturing positions.

The Raymond Road plant has operated below nameplate even in normal seasonal conditions.

The broker retains an Outperform rating and $6.74 target.

Target price is $6.74 Current Price is $4.09 Difference: $2.65
If NUF meets the Credit Suisse target it will return approximately 65% (excluding dividends, fees and charges).

Current consensus price target is $5.44, suggesting upside of 32.4% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.1

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

Morgans rates NWL as Hold (3) -

The ASX 200 has recovered by about 16% in the fourth quarter which has led to higher funds under administration levels heading into FY21.

Morgans solid net inflows for the fourth quarter for Netwealth Group and estimates a sustained increase in cash will neutralise the impact of a lower cash margin.

The broker expects fourth-quarter net inflows for the group to be around $2.2bn with FY20 operating income at $64.8m, 5% above the group's guidance.

Morgans considers the group a high-quality business albeit fully valued and retains its Hold rating with a target price of $8.20.

Target price is $8.20 Current Price is $8.97 Difference: minus $0.77 (current price is over target).
If NWL meets the Morgans target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $7.36, suggesting downside of -19.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.0

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

Morgan Stanley rates PSQ as Overweight (1) -

Patient demand has rebuilt since dental restrictions were eased in May.

June like-for-like sales were up 7% and this suggests to Morgan Stanley there is more deferred demand to work through.

However, the company's exposure to Victoria means conditions may take longer to normalise.

Overweight rating, In-Line industry view. Target is $1.60.

Target price is $1.60 Current Price is $1.57 Difference: $0.03
If PSQ meets the Morgan Stanley target it will return approximately 2% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 1.0

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

Macquarie rates QAN as Resume Coverage with Outperform (1) -

Macquarie resumes coverage with an Outperform rating and $4.35 target.

The broker assesses, with -$1bn in sustainable cost reductions, Qantas should come through the pandemic as a more profitable entity.

Macquarie forecasts a return to profitability after FY22. Forecasts are updated to reflect the recent capital raising and proposed cost initiatives.

Target price is $4.35 Current Price is $3.78 Difference: $0.57
If QAN meets the Macquarie target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $4.37, suggesting upside of 13.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.6

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

Morgans rates RMS as Add (1) -

Ramelius Resources had a strong fourth quarter, reporting gold production of 74koz till June 22, which Morgans notes to be equivalent to an annualised 297koz.

The company also announced its new life of mine plan which will lead to a 34% increase in gold production over six years, while increasing FY21 guidance to 260-280koz at all-in sustaining costs (AISC) of $1,280/oz.

The broker notes the company has maintained its margins and controlled costs. 

Morgans retains its Add rating with the target price increased to $2.31 from $1.93.

Target price is $2.31 Current Price is $1.99 Difference: $0.32
If RMS meets the Morgans target it will return approximately 16% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 1.0

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

Credit Suisse rates SGP as Outperform (1) -

Credit Suisse revises second half distribution estimates to 10.6c, in line with the recently declared dividend.

Against an uncertain backdrop, the broker lowers the pay-out estimate to 70-75% for FY21 and beyond to allow for a greater proportion of retained earnings.

Outperform rating and $3.56 target maintained.

Target price is $3.56 Current Price is $3.31 Difference: $0.25
If SGP meets the Credit Suisse target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $3.54, suggesting upside of 2.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.2

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

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

Citi is of the view that thermal coal prices are now so low for so long that a producer response will follow. Productions cuts are on the cards, predict the analysts.

Citi analysts are anticipating a repeat of 2015 when aggressive reductions followed, with the price for thermal coal subsequently rising.

Target price for Whitehaven Coal has been pared back to $1.75 from $1.80 but the anticipated scenario for the sector overall has now triggered an upgrade to Buy from Neutral.

Target price is $1.75 Current Price is $1.43 Difference: $0.32
If WHC meets the Citi target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $2.46, suggesting upside of 71.8% (ex-dividends)

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.6

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