Australian Broker Call

Morgan Stanley rates 360 as Overweight (1) -

Following a trading update at Life360's AGM, Morgan Stanley feels organic execution continues to be very strong. Management reiterated revenue and earnings guidance and that free cash flow would be positive by FY24.

The company cautioned on the outlook for US electronics sales, especially in Tile's category. Tile (acquired late last year) makes a Bluetooth tracking device for lost items.

The Overweight rating and $5.50 target are maintained. Industry view: In-line.

Target price is $5.50 Current Price is $3.89 Difference: $1.61
If 360 meets the Morgan Stanley target it will return approximately 41% (excluding dividends, fees and charges).

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: 1.0

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

Ord Minnett rates ABB as Buy (1) -

Following the NBN wholesale Market Indicator Report for the March quarter, released by the ACCC, Ord Minnett notes Aussie Broadband continues to grow broadband market share at the expense of peers.

More generally, the broker points out a sizeable shift towards higher-margin, higher-speed tiers for all telco companies.

The Buy rating and $5.10 target price are maintained.

Target price is $5.10 Current Price is $4.08 Difference: $1.02
If ABB meets the Ord Minnett target it will return approximately 25% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 1.0

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

Citi rates BWX as Buy (1) -

BWX's management provided long-term earnings (EBITDA) margin guidance 22% ahead of Citi and consensus estimates at the company's investor day, but retreated from medium-term revenue targets in all three markets.

Citi reports the major impact was in Europe, the company withdrawing its target altogether to focus on the US.

Management reports a switch in focus from M&A and digital growth to organic growth through core brands, and is undertaking a strategic review of its digital business due to underperformance.

Meanwhile, the company plans to cut gearing over FY23 as inventory unwinds and the new manufacturing facility scales up.

All up, Citi retains a Buy rating but prefers Bubs Australia ((BUB)), and cuts the target price to $2.76 from $2.90.

Target price is $2.76 Current Price is $1.35 Difference: $1.41
If BWX meets the Citi target it will return approximately 104% (excluding dividends, fees and charges).

Current consensus price target is $2.50, suggesting upside of 77.5% (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

Macquarie rates BWX as Outperform (1) -

A strategy shift change to focus further on core brands announced by BWX, as the company reduces a number of medium-term targets. In line with the shift, Macquarie notes focus will move away from Europe to focus on the Americas.

The company anticipates sales of $30-50m from Europe in FY23 will be missed, and has stretched its target of $100m in conventional and mass skincare in the US to FY25. In Australia, $50m in skincare supermarket sales is now expected to be exceeded across skin, body and hair.

The broker also notes no major projects or acquisitions are planned in the foreseeable future, with limited capital expenditure as the company address headwinds and works to improve margins.

The Outperform rating is retained and the target price decreases to $2.20 from $2.40.

Target price is $2.20 Current Price is $1.35 Difference: $0.85
If BWX meets the Macquarie target it will return approximately 63% (excluding dividends, fees and charges).

Current consensus price target is $2.50, suggesting upside of 77.5% (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

UBS rates BWX as Buy (1) -

BWX took the opportunity to outline strategic initiatives at a recent tour of its Clayton DC facility, and UBS appreciated the company's operational capabilities, more prudent cost management and focus on its core brands.

Management plans considerable efficiency gains but for now the leaves forecasts largely unchanged, preferring to wait until execution (given the company's recent report fell drastically short of forecasts).

Buy rating retained, the broker appreciating the company's opportunity to expand global distribution and clock a 14% compound annual growth rate between FY23 and FY26.

Target price falls -6% to $2.55 from $2.70 after the broker revised working capital assumptions.

Target price is $2.55 Current Price is $1.35 Difference: $1.2
If BWX meets the UBS target it will return approximately 89% (excluding dividends, fees and charges).

Current consensus price target is $2.50, suggesting upside of 77.5% (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 FMG as Hold (3) -

In the final installment of Fortescue Metals' 10-year iron ore guidance review, Ord Minnett still regards the group as the best Pilbara operator. It's also felt management's recently increased FY22 shipments guidance to 185-188mt is achievable.

The broker maintains its Hold rating and $19.00 target price.

Target price is $19.00 Current Price is $20.15 Difference: minus $1.15 (current price is over target).
If FMG meets the Ord Minnett target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $18.22, suggesting downside of -12.0% (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: -0.3

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

Citi rates HLS as Neutral (3) -

Healius's 2022 strategy day reveals the company plans to divest its Day Surgery business, the sustainable investment program is a year overdue, delaying margin benefits, and trading was pretty much in line with forecasts (despite covid and flood impacts), reports Citi.

The company also detailed its digital strategy but did not reveal the required investment to progress it.

Neutral rating retained. Target rice steady at $4.70.

Target price is $4.70 Current Price is $4.22 Difference: $0.48
If HLS meets the Citi target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $4.96, suggesting upside of 15.3% (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

Credit Suisse rates HLS as Neutral (3) -

Following a strategy day for Healius, Credit Suisse maintains its earnings forecasts, Neutral rating and $4.65 target, despite noting a slower than expected business-as-usual recovery. The delay is impacting delivery of the Sustainable Improvement Program initiatives.

The analyst now doesn't expect the initiatives will be fully achieved until FY24, after management re-iterated $67m of incremental earnings (EBIT) will be attained by the end of FY23.

Target price is $4.65 Current Price is $4.22 Difference: $0.43
If HLS meets the Credit Suisse target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $4.96, suggesting upside of 15.3% (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 HLS as Outperform (1) -

A trading update from Healius was been largely as anticipated by Macquarie, with the company reporting revenue improvement in all divisions, although still below pre-covid levels, and the broker anticipates base business improvement heading into FY23.

Delivery of both the Sustainable Improvement Program (SIP) and the Laboratory Information System (LIS) is largely unchanged, but the broker notes the LIS integration, expected to be delivered in two years, looks to provide $15-20m in annual benefits.

The Outperform rating and target price of $5.20 are retained.

Target price is $5.20 Current Price is $4.22 Difference: $0.98
If HLS meets the Macquarie target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $4.96, suggesting upside of 15.3% (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

Ord Minnett rates HLS as Accumulate (2) -

Ord Minnett leaves its earnings forecasts unchanged for Healius following a strategy day where management's overall guidance was in-line with the broker's FY23 and FY24 forecasts. There's estimated to be potential upside should covid-19 PCR testing hold at current levels.

Management confirmed day hospitals will likely be sold following recent media speculation. The Accumulate rating and $4.80 target price are retained.

Target price is $4.80 Current Price is $4.22 Difference: $0.58
If HLS meets the Ord Minnett target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $4.96, suggesting upside of 15.3% (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

UBS rates IGO as Upgrade to Buy from Neutral (1) -

IGO has announced consistent first production of battery-grade lithium hydroxide at its Kwinana Lithium Hydroxide factory.

UBS says this is a key de-risking event for the TLEA joint venture.

The broker updates realised spodumene price forecasts (-1.7% in FY22 and -11.3% in FY23) and remains structurally bullish on lithium and nickel in the medium and long term.

Upgrade to Buy from Neutral given the recent share-price retreat. Target price dips to $12.15 from $12.40.

Target price is $12.15 Current Price is $11.66 Difference: $0.49
If IGO meets the UBS target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $12.82, suggesting upside of 9.9% (ex-dividends)

The company's fiscal year ends in June.

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

Macquarie rates IPL as No Rating (-1) -

At first glance Macquarie notes Incitec Pivot's first half result beat on revenue but missed on earnings. Cash flow was weaker seasonally ahead of key Australian winter planting period in second half and a working capital unwind should lead to strong cash flow generation in the period.

Pending a comprehensive review, Incitec plans to split its Fertiliser and Dyno Nobel (explosives) businesses into two separate listed companies.

Macquarie is on research restriction.

Current Price is $3.74. Target price not assessed.

Current consensus price target is $4.14, suggesting upside of 14.5% (ex-dividends)

The company's fiscal year ends in September.

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

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

Key positives for Morgan Stanley in InvoCare's trading update were a normalisation of mortality rates and improvement in memorialisation sales. Even so, staffing levels were impacted by covid, while funerals and memorial parks were affected by floods.

The broker retains its Equal-weight rating and $13.00 target price. Industry view: In-Line.

Target price is $13.00 Current Price is $12.09 Difference: $0.91
If IVC meets the Morgan Stanley target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $13.05, suggesting upside of 10.9% (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

UBS rates IVC as Neutral (3) -

InvoCare's March-quarter trading update suggests death rates are recovering post lockdown, but UBS expects this will be tempered by rising labour costs (which represents 62% of operating expenditure) and first-quarter Omicron disruptions, which constrains the company's leverage.

Pet cremation volumes grew and UBS reports a sharp and early acceleration in the flu season.

The broker estimates a 5.7% rise in deaths will be required to return to ABS forecast trend-lines and get InvoCare back to pre-covid levels. 

The company is offering a 13% EPS compound annual growth rate between FY23 and FY26.

EPS forecasts fall -6% in FY23, -5% in FY24 and -5% in FY25. Neutral rating retained. Target price falls to $12.40 from $13.00.

Target price is $12.40 Current Price is $12.09 Difference: $0.31
If IVC meets the UBS target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $13.05, suggesting upside of 10.9% (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 JIN as Overweight (1) -

Morgan Stanley expects a lift in formerly negative sentiment around transaction completion after Jumbo Interactive announced regulatory approval for its acquisition of Stride.

The broker likes the added certainty and inclusion of a full FY23 contribution for Stride. The Overweight rating and $22.00 target price are retained. Industry view: In-line.

Target price is $22.00 Current Price is $16.16 Difference: $5.84
If JIN meets the Morgan Stanley target it will return approximately 36% (excluding dividends, fees and charges).

Current consensus price target is $20.13, suggesting upside of 23.6% (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 KGL as Speculative Buy (1) -

Ord Minnett updates its financial model for KGL Resources following the latest 1 for 6 entitlement offer, which has the impact of lowering the broker's target price to $0.85 from $0.90.

Simon Finnis has resigned as CEO, while Chairman Peter Hay and Director Denis Gately have also advised they will not seek re-election. The broker looks forward to hearing about any updated project plans from the incoming team.

The Speculative Buy rating is retained.

Target price is $0.85 Current Price is $0.33 Difference: $0.52
If KGL meets the Ord Minnett target it will return approximately 158% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 1.0

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

Morgans rates MYD as Hold (3) -

Morgans increases its target price to $1.05 from $0.60 for MyDeal.com.au to align with Woolworths Group's ((WOW)) proposal to acquire an 80.2% stake in the company for $1.05 in cash.

While the analyst doesn't rule out a counter bid, the current offer is the most likely outcome. The directors of MyDeal.com.au intend to vote in favour of the offer in the absence of a higher-priced alternative.

Target price is $1.05 Current Price is $1.00 Difference: $0.05
If MYD meets the Morgans target it will return approximately 5% (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 NST as Outperform (1) -

Credit Suisse believes Northern Star Resources will opt for the larger 22Mtpa (versus 17Mtpa) alternative when an expansion of the mill at KCGM is announced in coming weeks. It's estimated this alternative has superior returns, production and cost metrics.

The analyst also believes the Super Pit could return to its best, producing in excess of 900kozpa from the current 480kozpa, which will drive a lower average all-in sustaining cost (AISC) of around $1,000/oz. The target rises to $11.50 from $11.00. Outperform.

Target price is $11.50 Current Price is $9.07 Difference: $2.43
If NST meets the Credit Suisse target it will return approximately 27% (excluding dividends, fees and charges).

Current consensus price target is $12.53, suggesting upside of 38.4% (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

UBS rates SHV as Buy (1) -

Select Harvests has flagged more weather imposts but says conditions are improving.

Earlier this month, Select Harvests announced that persistent rain had affected crop quality, resulting in a lower percentage of the premium in-shell product, but now the company reports the entire crop has been affected and costs have risen sharply.

Overall, UBS expects this the good may balance out the bad for FY23 and for now retains a Buy rating and $7.80 target price but is planning a FY23 earnings revision after the company reports on May 27.

Target price is $7.80 Current Price is $5.99 Difference: $1.81
If SHV meets the UBS target it will return approximately 30% (excluding dividends, fees and charges).

The company's fiscal year ends in September.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 1.0

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

Macquarie rates SKO as Outperform (1) -

With Serko management suggesting revenue will approximately double in FY23, reflecting revenue guidance of around $40m, Macquarie has decreased its own revenue forecast -23% to $49m, noting guidance was disappointing but likely conservative.

The company's joint venture with Booking.com did exceed Macquarie's expectations, reaching 444,000 customers in the year, but growth looks to slow on Serko's guidance which the broker notes could be attributed to increased market competition. 

Cash burn for the year was better than anticipated, but will likely increase as hiring commences in the first half of FY23.

The Outperform rating is retained and the target price decreases to NZ$7.33 from NZ$8.95. 

Current Price is $3.66. Target price not assessed.

Current consensus price target is $5.57, suggesting upside of 47.2% (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: 1.0

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

Macquarie rates TAH as Outperform (1) -

Following shareholder approval for Tabcorp's demerger, the Lottery Corporation is set to start trading on the ASX on May 24. Macquarie assumes an enterprise valuation of $12.8bn and share price of $5.00 for the Lottery Corporation, and a valuation of $2.4bn and share price of $1.00 for Tabcorp.

Tabcorp continues to navigate challenges, and while the broker is hopeful for improvement with a potential two new wagering brands entering Australia in the next year, expiration of the Victoria Wagering license approaching, and a WA TAB sale in process, capital may need to be deployed.

The Outperform rating is retained and the target price decreases to $6.00 from $6.10.

Target price is $6.00 Current Price is $5.39 Difference: $0.61
If TAH meets the Macquarie target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $5.81, suggesting upside of 8.7% (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

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

Morgan Stanley notes 2H revenue and earnings were a miss compared to the broker's forecasts and the consensus estimates. The FY23 EPS forecast is cut by -15%. Nonetheless, a post-covid travel rebound is expected to lend ongoing support.

The Equal-weight rating is retained by the broker due to lower take rates and an uncertain B2B competitive response. The $6.00 target price is also retained. Industry view: In-line.

Target price is $6.00 Current Price is $6.00 Difference: $0
If WEB meets the Morgan Stanley target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $6.38, suggesting upside of 6.4% (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

Credit Suisse rates WOW as Underperform (5) -

Credit Suisse feels the proposed 80% acquisition of MyDeal.com.au ((MYD)) adds no value to Woolworths Group as its unlikely to generate material free cash flow and additional funding could be required for growth.

Funds would be better applied as a return to shareholders, according to the analyst. The Underperform rating and $33.89 target are retained.

Target price is $33.89 Current Price is $35.35 Difference: minus $1.46 (current price is over target).
If WOW meets the Credit Suisse target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $38.12, suggesting upside of 9.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: -0.1

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

UBS rates WPL as Neutral (3) -

Woodside Petroleum's shareholders gave final approval to the merger with BHP's Petroleum division at the annual general meeting.

UBS reports that 49% of shareholders also voted against the company's climate report (a non-binding advisory vote), suggesting Woodside is under pressure to outline its decarbonisation plans and reduce dependence on offsets.

The broker expects the company will continue to offer an attractive dividend over the next two years but maintains a Neutral rating. Target price eases to $31.80 frm $32.20 after removing Algeria from the valuation.

Target price is $31.80 Current Price is $28.77 Difference: $3.03
If WPL meets the UBS target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $31.82, suggesting upside of 9.9% (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: 0.4

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

Ord Minnett rates WTC as Accumulate (2) -

Recent data show Ord Minnett positive signs for shipping volumes and container prices. Also, traffic to WiseTech Global CargoWise platform remained at elevated levels following a record start to 2022.

The platform enables companies to centralise their logistics operations on a single global database, explains the broker. Accumulate rating and $52 target retained.

Target price is $52.00 Current Price is $42.17 Difference: $9.83
If WTC meets the Ord Minnett target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $48.34, suggesting upside of 14.1% (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