Australian Broker Call

Ord Minnett rates ABC as Hold (3) -

Adbri has sold land at Moorebank in NSW and Kewdale in Western Australia for combined cash proceeds of $62.7m. This amount is slightly below Ord Minnett's expectation though proceeds will arrive earlier than originally expected.

The target rises to $1.87 from $1.55 after the broker adjusts for the timing of sales proceeds. The increased target was also impacted by a narrowing of the discount applied to Adbri versus the sector, as operating conditions are thought to have bottomed.

The analyst notes confidence and earnings visibility remain very low and sticks with a Hold rating.

Target price is $1.87 Current Price is $1.81 Difference: $0.06
If ABC meets the Ord Minnett target it will return approximately 3% (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 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

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

Australian Finance Group's total residential lending volumes fell sharply in the September quarter (-10.7%), downward momentum accelerating into October (-24%) and November (-16%), as lending competition intensified.

Margins also took a hit and Macquarie cuts net interest margin and securitisation settlement forecasts accordingly.

EPS forecasts fall -12.7% in FY23; -6.9% in FY24; and -6% in FY25.

Macquarie downgrades its rating to Neutral from Outperform. Target price falls to $1.81 from $2.09.

Target price is $1.81 Current Price is $1.81 Difference: $0
If AFG meets the Macquarie target it will return approximately 0% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.5

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

Macquarie rates ASG as Outperform (1) -

Autosports Group's December-half trading update outpaced Macquarie's forecast.

Servicing and parts outpaced by 6% to 9%, and management says demand for new vehicles also remains strong. Macquarie expects gross profit margins will continue to rise short term but decline out to FY25 as the economy softens.

EPS forecasts rise 1.2% in FY23; and are fairly steady thereafter.

Outperform rating retained. The broker believes a weaker backdrop is already factored into the share price. Target price falls to $3 from $3.25 to reflect changed interest rate assumptions.

Target price is $3.00 Current Price is $1.99 Difference: $1.01
If ASG meets the Macquarie target it will return approximately 51% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

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

Morgans rates BAP as Hold (3) -

Morgans has an improved medium-term outlook for Bapcor following last week's investor day. A slightly softer-than-expected trading update was counterbalanced by an expectation the 'Better Than Before' transformation program will yield benefits.

The program may deliver $100m in net earnings (EBIT) benefit in FY25 from a -$45m one-off spend (and -$10-15m per annum ongoing opex), explains the analyst.

As part of the trading update, management noted ongoing positive revenue growth, with “temporary” margin compression as price adjustments lag an increase in cost of goods sold.

The broker increases its target to $7.65 from $7.36 and retains its Hold rating.

Target price is $7.65 Current Price is $6.82 Difference: $0.83
If BAP meets the Morgans target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $7.89, suggesting upside of 15.6% (ex-dividends)

The company's fiscal year ends in June.

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

Citi rates CCX as Buy (1) -

The trading update by City Chic Collective for July 1 to November 20 was materially worse than expected though Citi points out the business does not appear to be broken. Upside is expected when pressure on the consumer abates and cost inflation moderates.

While the broker also expects comparisons to the previous corresponding period will become easier, there are still material downside risks to consensus forecasts.

Year-to-date sales fell by -2%, compared to the forecasts by the broker and consensus of 8% and 14%, respectively.

More positively, Citi believes balance sheet repair is on-track. The Buy rating and $1.74 target are retained.

Target price is $1.74 Current Price is $1.00 Difference: $0.745
If CCX meets the Citi target it will return approximately 75% (excluding dividends, fees and charges).

Current consensus price target is $1.56, suggesting upside of 56.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.4

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

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

City Chic Collective's AGM trading update reveals growing macro pressure and online competition, while higher product returns and promotional spend have hit margins, observes Macquarie.

The broker adds that the sales outlook is deteriorating (not to mention recession and inflation threats) and this should result in operating deleveraging.

EPS forecasts fall -89.5% in FY23 to reflect the percentage fall in gross margins; and -56.9% in FY24 (partly reflecting fulfilment inefficiencies).

Macquarie spies no likelihood of recovery to its mid-teen margin "sweet spot" out to FY25.

Rating downgraded to Neutral from Outperform. Target price slumps to $1 from $2.60.

Target price is $1.00 Current Price is $1.00 Difference: $0.005
If CCX meets the Macquarie target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $1.56, suggesting upside of 56.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.4

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

Morgan Stanley rates CCX as Overweight (1) -

City Chic Collective's sales for July 1 to November 20 fell by -2% compared to Morgan Stanley's forecast for a 7% rise. Higher promotion also dragged down the gross margin by -4 percentage points.

Management confirmed inventory guidance.

The broker sees some positives including an improvement of demand coming into the Black Friday/Xmas trading period though is concerned by earnings downside risk should the sales trend continue.

The Overweight rating and $2.85 target are retained. Industry View: In-Line.

Target price is $2.85 Current Price is $1.00 Difference: $1.855
If CCX meets the Morgan Stanley target it will return approximately 186% (excluding dividends, fees and charges).

Current consensus price target is $1.56, suggesting upside of 56.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.4

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

Ord Minnett rates CCX as Downgrade to Hold from Buy (3) -

Ord Minnett doesn't expect margin contraction for City Chic Collective from weaker demand (particularly in the northern hemisphere) to abate anytime soon. Elevated fulfillment costs and falling gross profit margins impacted on operating margins.

The company reported sales for the first 20 weeks of FY23 fell by -2% compared to the previous corresponding period, amid volatile demand.

The Americas experienced a -12% decline in sales as customer and competitor behaviour were impacted by the macroeconomic backdrop, explains the analyst.

The broker lowers its rating to Hold from Buy and slashes its target to $1.10 from $2.90.

Target price is $1.10 Current Price is $1.00 Difference: $0.105
If CCX meets the Ord Minnett target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $1.56, suggesting upside of 56.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.4

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

UBS rates CCX as Neutral (3) -

City Chic Collective reported a -2% year-on-year sales decline across the first twenty weeks of the fiscal year. By region, Australia New Zealand delivered 10% growth, while the Americas and Europe Middle East declined -12% and -5% respectively. 

Accounting for the sales decline, UBS has lowered its earnings per share forecasts -72% and -49% for FY23 and FY24 respectively. The broker highlights much of City Chic Collective's demographic are low and middle income earners, likely more impacted by cost of living increases. UBS anticipates the retailer will need to engage in increased promotional activity to generate sales.

The Neutral rating is retained and the target price decreases to $1.10 from $2.00.

Target price is $1.10 Current Price is $1.00 Difference: $0.105
If CCX meets the UBS target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $1.56, suggesting upside of 56.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.4

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

Ord Minnett rates COE as Buy (1) -

Ord Minnett retains its Buy rating and 34c target for Cooper Energy following a conference call with management on the troubled gas processing plant at Orbost.

The company expects electrical faults in the power generation unit will be resolved quickly and unplanned outages in November were unrelated to long-standing issues with the sulphur removal unit.

Target price is $0.34 Current Price is $0.19 Difference: $0.155
If COE meets the Ord Minnett target it will return approximately 84% (excluding dividends, fees and charges).

Current consensus price target is $0.28, suggesting upside of 49.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.4

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

Macquarie rates EBO as Outperform (1) -

Macquarie reviews industry data for October and observes trends are mixed, neurosurgical and plastics/reconstructive turnover outpacing orthopaedic (below trend) and spinal business.

The broker says Medicare's surgical trends suggest an uplift for Ebos Group's Institutional Healthcare division and the covid recovery for orthopaedic is yet to arrive, and Macquarie considers the company fairly defensive to recession with the capability to pass through inflation.

Outperform rating retained. Target price is steady at NZ$43.03.

Current Price is $37.91. Target price not assessed.

Current consensus price target is $38.45, suggesting upside of 1.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.8

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

Credit Suisse rates GNC as Outperform (1) -

While GrainCorp delivered full year earnings and net profit within guidance range, Credit Suisse has lowered its earnings per share forecasts -3.7% and -18.9% for FY23 and FY24 respectively following the result, reflecting lower than expected carry out.

The broker highlighted higher than anticipated grain outload to the domestic market contributed to a strong result, but reduced carry out and impacted on export forecast for FY24. 

Despite GrainCorp guiding to a normal earnings year, Credit Suisse notes a number of factors offering upside potential. The Outperform rating is retained and the target price ticks down to $9.25 from $9.28.

Target price is $9.25 Current Price is $8.28 Difference: $0.97
If GNC meets the Credit Suisse target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $9.58, suggesting upside of 13.4% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.6

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

UBS rates IEL as Buy (1) -

Third quarter visa data appears to be a strong positive for IDP Education according to UBS, with visa numbers more than 30% above pre-covid levels in both Canada and the UK. 

Australia benefited from a strong clearing of its visa pipeline in August, while the UK demonstrated strong recovery after a second quarter decline. UBS finds the data positive for IDP Education, and retains its view that the stock offers an attractive buying opportunity. 

The Buy rating is retained and the target price decreases to $35.25 from $35.50.

Target price is $35.25 Current Price is $29.64 Difference: $5.61
If IEL meets the UBS target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $33.01, suggesting upside of 11.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.7

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

Ord Minnett rates LGL as Buy (1) -

Management at Lynch Group now expect a materially lower 1H operating earnings (EBITDA) margin in both Australia and China due to cost pressures and ongoing lockdowns in China.

The implied margin of 7.7% compares to the double-digit earnings margin run-rate of recent years, explains the analyst.

While investor confidence is low after the second downgrade in six months, the broker currently sees an attractive share entry point for investors.

The target price is reduced to $2.60 from $3.20, while the Buy rating is unchanged as Ord Minnett feels margins have not re-based structurally lower, and freight and energy prices are expected to ease.

Target price is $2.60 Current Price is $1.76 Difference: $0.84
If LGL meets the Ord Minnett target it will return approximately 48% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

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

Morgans rates MGH as Add (1) -

Morgans fears around the trend for gearing have been allayed after more disclosure by Maas Group around acquisitions and the current debt position.

The company noted it will not proceed with a second construction materials acquisition (was to be $40m) when it announced the acquisition of Dandy Pre Mix for around $85m. The latter acquisition is Maas Group's first foray into Victoria.

The broker's earnings forecasts are unchanged. The Add rating and $4.00 target remain.

Target price is $4.00 Current Price is $2.69 Difference: $1.31
If MGH meets the Morgans target it will return approximately 49% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

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

Macquarie rates MVF as Outperform (1) -

Macquarie observes Medicare data shows total cycles fell -2% in October but rose 14.6% in September.

The broker expects Monash IVF to gain market share in FY23, laying the foundation for a new growth cycle in FY23.

Management forecast a second half earnings skew at its AGM trading update, thanks to acquisition.

Outperform rating and $1.30 target price retained.

Target price is $1.30 Current Price is $1.00 Difference: $0.3
If MVF meets the Macquarie target it will return approximately 30% (excluding dividends, fees and charges).

Current consensus price target is $1.23, suggesting upside of 23.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

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

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

Objective Corp expects a normalisation of growth in FY24 after softening revenue growth and margin expectations for FY23. Morgans lowers its rating to Hold from Add though suggests long-term investors accumulate on potential share price weakness.

The lower growth expectations come as the company phases out Perpetual Right To Use (PRTU) licensing and some adjacent services revenue relating to the enterprise content management (ECM) offering, explains the analyst.

In short, the broker's growth expectations have been deferred by a year. The PRTU licensing effect is seen as a final step to a transition to the SaaS subscription model for the entire product suite.

The target price falls to $15.20 from $17.30 on earnings revisions and a higher weighted average cost of capital (WACC) assumption.

Target price is $15.20 Current Price is $12.94 Difference: $2.26
If OCL meets the Morgans target it will return approximately 17% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.0

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

Credit Suisse rates PGH as Outperform (1) -

Pact Group looks to be impacted by surplus inventory being held by key US retailers. The company reiterated its expectation of earnings growth slightly above that achieved in FY22, assuming retailers clear backlogs and cycles normalise in the second half, but Credit Suisse lowers earnings per share forecasts -24%.-17% and -17% through to FY25.

Elsewhere, execution of price rises has underpinned steady improvement to packaging earnings, while manufacturing moves to breakeven earnings as legacy contracts roll over. 

The Outperform rating is retained and the target price decreases to $3.70 from $4.00.

Target price is $3.70 Current Price is $1.15 Difference: $2.55
If PGH meets the Credit Suisse target it will return approximately 222% (excluding dividends, fees and charges).

Current consensus price target is $2.13, suggesting upside of 95.4% (ex-dividends)

The company's fiscal year ends in June.

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 SNL as Accumulate (2) -

First half revenue and profit guidance for Supply Network were beats of 7.9% and 14.5%, respectively, compared to Ord Minnett's expectations. The outlook is considered strong in all regions.

Management will review further network expansion opportunities, though the analyst notes projects already completed or
announced will provide substantial additional capacity.

The broker upgrades its earnings forecasts by 6-9% and increases its target to $12.90 from $11.30. Accumulate.

Target price is $12.90 Current Price is $12.30 Difference: $0.6
If SNL meets the Ord Minnett target it will return approximately 5% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.5

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

Credit Suisse rates UMG as Outperform (1) -

Following delivery of its FY22 result, United Malt has maintained guidance for FY23. Credit Suisse highlights guidance accounts for material profitability recovery based on the reset of annual contracts. 

Credit Suisse considers United Malt a relatively straightforward profit recovery story, with factors largely within the company's control. Further, likely industry consolidation could provide further upside for investors. 

The Outperform rating is retained and the target price decreases to $3.96 from $4.30.

Target price is $3.96 Current Price is $3.37 Difference: $0.59
If UMG meets the Credit Suisse target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $3.83, suggesting upside of 14.7% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.8

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