Australian Broker Call
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January 14, 2022
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COMPANIES DISCUSSED IN THIS ISSUE
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The number next to the symbol represents the number of brokers covering it for this report -(if more than 1).
Last Updated: 05:00 PM
Your daily news report on the latest recommendation, valuation, forecast and opinion changes.
This report includes concise but limited reviews of research recently published by Stockbrokers, which should be considered as information concerning likely market behaviour rather than advice on the securities mentioned. Do not act on the contents of this Report without first reading the important information included at the end.
For more info about the different terms used by stockbrokers, as well as the different methodologies behind similar sounding ratings, download our guide HERE
Today's Upgrades and Downgrades
| AGL - | AGL Energy | Upgrade to Outperform from Neutral | Credit Suisse |
AGL AGL ENERGY LIMITED
Infrastructure & Utilities
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Overnight Price: $7.27
Credit Suisse rates AGL as Upgrade to Outperform from Neutral (1) -
AGL Energy was recently upgraded to Outperform from Neutral with an increased price target of $8.30 (from $7.30).
Credit Suisse last upgraded its rating to Neutral from Underperform in mid-August last year, while at that time raising its target price to $7.30 from $6.70.
EPS and DPS forecasts have been noticeably increased.
Target price is $8.30 Current Price is $7.27 Difference: $1.03
If AGL meets the Credit Suisse target it will return approximately 14% (excluding dividends, fees and charges).
Current consensus price target is $7.37, suggesting downside of -1.3% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY22:
Credit Suisse forecasts a full year FY22 dividend of 32.00 cents and EPS of 42.50 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 41.8, implying annual growth of N/A. Current consensus DPS estimate is 31.2, implying a prospective dividend yield of 4.2%. Current consensus EPS estimate suggests the PER is 17.9. |
Forecast for FY23:
Credit Suisse forecasts a full year FY23 dividend of 42.00 cents and EPS of 55.60 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 51.2, implying annual growth of 22.5%. Current consensus DPS estimate is 36.4, implying a prospective dividend yield of 4.9%. Current consensus EPS estimate suggests the PER is 14.6. |
Market Sentiment: 0.4
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Ord Minnett rates AGL as Buy (1) -
Following yesterday's general sector-review, Ord Minnett has subsequently decided to take a closer peak into the plan to demerge old from new at AGL Energy.
First observation is that the shares are no longer trading at less than the value of the reail operations alone. Ord Minnett adds it still sees significant potential upside in spot prices and thus for upgraded guidance in February.
Buy rating retained with an unchanged price target of $8.70.
This stock is not covered in-house by Ord Minnett. Instead, the broker whitelabels research by JP Morgan.
Target price is $8.70 Current Price is $7.27 Difference: $1.43
If AGL meets the Ord Minnett target it will return approximately 20% (excluding dividends, fees and charges).
Current consensus price target is $7.37, suggesting downside of -1.3% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY22:
Ord Minnett forecasts a full year FY22 EPS of 41.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 41.8, implying annual growth of N/A. Current consensus DPS estimate is 31.2, implying a prospective dividend yield of 4.2%. Current consensus EPS estimate suggests the PER is 17.9. |
Forecast for FY23:
Ord Minnett forecasts a full year FY23 EPS of 68.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 51.2, implying annual growth of 22.5%. Current consensus DPS estimate is 36.4, implying a prospective dividend yield of 4.9%. Current consensus EPS estimate suggests the PER is 14.6. |
Market Sentiment: 0.4
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $4.93
Ord Minnett rates CLW as Accumulate (2) -
Ord Minnett had interrupted coverage of Charter Hall Long WALE REIT but has now resumed with an Accumulate rating and price target of $5.46, compared with the July 2021 target of $4.94 (last one in our archive).
The broker believes not only are the shares currently undervalued, they also offer a rather attractive looking yield of circa 6.2% backed by above-average stable and predictable income streams.
Despite rising bond yields, long WALE assets continue to be in strong demand, assures the broker.
This stock is not covered in-house by Ord Minnett. Instead, the broker whitelabels research by JP Morgan.
Target price is $5.46 Current Price is $4.93 Difference: $0.53
If CLW meets the Ord Minnett target it will return approximately 11% (excluding dividends, fees and charges).
Current consensus price target is $5.55, suggesting upside of 12.1% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY22:
Ord Minnett forecasts a full year FY22 dividend of 30.60 cents and EPS of 30.60 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 31.0, implying annual growth of -72.7%. Current consensus DPS estimate is 30.7, implying a prospective dividend yield of 6.2%. Current consensus EPS estimate suggests the PER is 16.0. |
Forecast for FY23:
Ord Minnett forecasts a full year FY23 dividend of 31.20 cents and EPS of 31.20 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 31.8, implying annual growth of 2.6%. Current consensus DPS estimate is 31.6, implying a prospective dividend yield of 6.4%. Current consensus EPS estimate suggests the PER is 15.6. |
Market Sentiment: 0.6
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $20.56
Ord Minnett rates CPU as Lighten (4) -
Computershare is scheduled to report interim financials on February 9 and Ord Minnett is not only looking forward to the event, but has equally updated its assumptions and modeling.
The broker's detailed analysis has revealed leverage is much less than suggested by cash rates, but also that some divisional ex-margin income earnings are at peak levels, and likely to fall.
For now, forecasts have been lifted. Target price rises to $17.24 from $15. Lighten rating retained as the stock is deemed "expensive".
This stock is not covered in-house by Ord Minnett. Instead, the broker whitelabels research by JP Morgan.
Target price is $17.24 Current Price is $20.56 Difference: minus $3.32 (current price is over target).
If CPU meets the Ord Minnett target it will return approximately minus 16% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $19.46, suggesting downside of -4.4% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY22:
Ord Minnett forecasts a full year FY22 dividend of 45.36 cents and EPS of 70.71 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 73.2, implying annual growth of N/A. Current consensus DPS estimate is 58.3, implying a prospective dividend yield of 2.9%. Current consensus EPS estimate suggests the PER is 27.8. |
Forecast for FY23:
Ord Minnett forecasts a full year FY23 dividend of 52.04 cents and EPS of 86.72 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 86.6, implying annual growth of 18.3%. Current consensus DPS estimate is 62.7, implying a prospective dividend yield of 3.1%. Current consensus EPS estimate suggests the PER is 23.5. |
This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.
Market Sentiment: 0.1
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $12.65
Credit Suisse rates CWN as Outperform (1) -
As correctly predicted by Credit Suisse last year, suitor Blackstone has returned with a higher offer for the whole of Crown Resorts. Today's increase in price target, to $13.25 from $13, is simply a reflection of Blackstone's return to the table.
Note: Blackstone's binding offer is only for at least $13.10 per share, but Credit Suisse suggests Crown's value will only grow from here, hence the higher price target (also showing the broker's confidence).
There still is a chance of competing bidders announcing themselves, the broker comments. Outperform. Minor adjustments have been made to forecasts.
Target price is $13.25 Current Price is $12.65 Difference: $0.6
If CWN meets the Credit Suisse target it will return approximately 5% (excluding dividends, fees and charges).
Current consensus price target is $13.48, suggesting upside of 7.0% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY22:
Credit Suisse forecasts a full year FY22 dividend of 0.00 cents and EPS of minus 13.21 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is -10.5, implying annual growth of N/A. Current consensus DPS estimate is 6.7, implying a prospective dividend yield of 0.5%. Current consensus EPS estimate suggests the PER is N/A. |
Forecast for FY23:
Credit Suisse forecasts a full year FY23 dividend of 60.00 cents and EPS of 44.63 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 41.0, implying annual growth of N/A. Current consensus DPS estimate is 46.5, implying a prospective dividend yield of 3.7%. Current consensus EPS estimate suggests the PER is 30.7. |
Market Sentiment: 0.7
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Ord Minnett rates CWN as Buy (1) -
Crown Resorts has received a revised non-binding takeover bid from US suitor Blackstone, now offering $13.10 a share versus its previous offer of $12.50.
Noted: Ord Minnett sticks with its $15 per share target with the broker maintaining there remains plenty of value to unlock for the bidder that would allow Blackstone to further raise its offer.
Buy rating retained.
This stock is not covered in-house by Ord Minnett. Instead, the broker whitelabels research by JP Morgan.
Target price is $15.00 Current Price is $12.65 Difference: $2.35
If CWN meets the Ord Minnett target it will return approximately 19% (excluding dividends, fees and charges).
Current consensus price target is $13.48, suggesting upside of 7.0% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY22:
Ord Minnett forecasts a full year FY22 dividend of 20.00 cents and EPS of minus 5.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is -10.5, implying annual growth of N/A. Current consensus DPS estimate is 6.7, implying a prospective dividend yield of 0.5%. Current consensus EPS estimate suggests the PER is N/A. |
Forecast for FY23:
Ord Minnett forecasts a full year FY23 dividend of 55.00 cents and EPS of 46.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 41.0, implying annual growth of N/A. Current consensus DPS estimate is 46.5, implying a prospective dividend yield of 3.7%. Current consensus EPS estimate suggests the PER is 30.7. |
Market Sentiment: 0.7
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
MSV MITCHELL SERVICES LIMITED
Mining Sector Contracting
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Overnight Price: $0.37
Morgans rates MSV as Add (1) -
And now for that eternally present, but never resolved riddle: why are Mitchell Services shares constantly trading at a noticeable discount vis-a-vis peers?
Stockbroker Morgans adds this is once again the case, despite a "very strong" looking outlook for the drilling services provider. The broker also points out there might be a suitor appearing at some stage, given that steep valuation discount.
Rating: Speculative Buy, with M&A upside potential. Target $0.66.
And now for that question: why the persistent discount?
Morgans offers a few possible explanations, beginning with the company's relatively smaller size while low liquidity likely restricts institutional investor interest. But also: the SMS dispute possibly raised concerns about potential inter-related transactions.
However, company management's recent preferencing of growth over shareholder returns aligns with the motivations of micro-cap investors and is a less plausible driver of the discount, in Morgans' view.
Target price is $0.66 Current Price is $0.37 Difference: $0.29
If MSV meets the Morgans target it will return approximately 78% (excluding dividends, fees and charges).
The company's fiscal year ends in June.
Forecast for FY22:
Morgans forecasts a full year FY22 dividend of 0.00 cents and EPS of 6.10 cents. |
Forecast for FY23:
Morgans forecasts a full year FY23 dividend of 0.00 cents and EPS of 6.20 cents. |
Market Sentiment: 1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $1.63
Citi rates NIC as Buy (1) -
Analysts at Citi highlight an Indonesian export tax on nickel pig iron and ferronickel has again being tabled commencing in 2022 as part of the country's strategy to further downstream development.
Citi sees Nickel Mines as relatively unaffected by the news.
The company is scheduled to report Q4 results on January 27th. Buy/High Risk. Target $1.55.
Target price is $1.55 Current Price is $1.63 Difference: minus $0.08 (current price is over target).
If NIC meets the Citi target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $1.53, suggesting downside of -5.3% (ex-dividends)
The company's fiscal year ends in December.
Forecast for FY21:
Citi forecasts a full year FY21 dividend of 5.34 cents and EPS of 7.34 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 8.5, implying annual growth of N/A. Current consensus DPS estimate is 5.5, implying a prospective dividend yield of 3.4%. Current consensus EPS estimate suggests the PER is 18.9. |
Forecast for FY22:
Citi forecasts a full year FY22 dividend of 5.34 cents and EPS of 12.01 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 11.2, implying annual growth of 31.8%. Current consensus DPS estimate is 6.8, implying a prospective dividend yield of 4.2%. Current consensus EPS estimate suggests the PER is 14.4. |
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
QAN QANTAS AIRWAYS LIMITED
Transportation & Logistics
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Overnight Price: $4.99
Morgan Stanley rates QAN as Overweight (1) -
Given lower travel demand Qantas Airways has reduced capacity for the third quarter to 70% for domestic and 20% for international, compared to Morgan Stanley's prior expectations of 100% and 35% capacity respectively.
While the broker notes a likely near-term earnings impact, forecasting a -$340m hit to underlying earnings, it points to significant potential upside following short-term disruption.
Morgan Stanley's FY22 underlying earnings forecast falls to $210m from $550m, but the broker continues to expect a return to 80% of normal volumes in FY23 and 100% in FY24 and retains earnings forecasts for these years.
The Overweight rating and target price of $7.00 are retained. Industry view: In-Line.
Target price is $7.00 Current Price is $4.99 Difference: $2.01
If QAN meets the Morgan Stanley target it will return approximately 40% (excluding dividends, fees and charges).
Current consensus price target is $6.00, suggesting upside of 20.0% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY22:
Morgan Stanley forecasts a full year FY22 dividend of 0.00 cents and EPS of minus 75.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is -56.9, implying annual growth of N/A. Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A. Current consensus EPS estimate suggests the PER is N/A. |
Forecast for FY23:
Morgan Stanley forecasts a full year FY23 dividend of 16.00 cents and EPS of 50.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 47.0, implying annual growth of N/A. Current consensus DPS estimate is 10.2, implying a prospective dividend yield of 2.0%. Current consensus EPS estimate suggests the PER is 10.6. |
Market Sentiment: 0.7
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Ord Minnett rates QAN as Buy (1) -
Qantas Airways issued a profit warning as rising covid cases make their impact, as well as increased travel restrictions, comments Ord Minnett.
The broker has reduced forecasts which results in a lower price target; $6.25 instead of $6.30. Buy rating remains in place.
This stock is not covered in-house by Ord Minnett. Instead, the broker whitelabels research by JP Morgan.
Target price is $6.25 Current Price is $4.99 Difference: $1.26
If QAN meets the Ord Minnett target it will return approximately 25% (excluding dividends, fees and charges).
Current consensus price target is $6.00, suggesting upside of 20.0% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY22:
Ord Minnett forecasts a full year FY22 dividend of 0.00 cents and EPS of minus 51.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is -56.9, implying annual growth of N/A. Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A. Current consensus EPS estimate suggests the PER is N/A. |
Forecast for FY23:
Ord Minnett forecasts a full year FY23 dividend of 28.00 cents and EPS of 57.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 47.0, implying annual growth of N/A. Current consensus DPS estimate is 10.2, implying a prospective dividend yield of 2.0%. Current consensus EPS estimate suggests the PER is 10.6. |
Market Sentiment: 0.7
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Today's Price Target Changes
| Company | Last Price | Broker | New Target | Prev Target | Change | |
| AGL | AGL Energy | $7.47 | Credit Suisse | 8.30 | 7.30 | 13.70% |
| CLW | Charter Hall Long WALE REIT | $4.95 | Ord Minnett | 5.46 | 4.94 | 10.53% |
| CPU | Computershare | $20.36 | Ord Minnett | 17.24 | 15.00 | 14.93% |
| CWN | Crown Resorts | $12.60 | Credit Suisse | 13.25 | 13.00 | 1.92% |
| MSV | Mitchell Services | $0.38 | Morgans | 0.66 | 0.73 | -8.97% |
| QAN | Qantas Airways | $5.00 | Ord Minnett | 6.25 | 6.30 | -0.79% |
Summaries
| AGL | AGL Energy | Upgrade to Outperform from Neutral - Credit Suisse | Overnight Price $7.27 |
| Buy - Ord Minnett | Overnight Price $7.27 | ||
| CLW | Charter Hall Long WALE REIT | Accumulate - Ord Minnett | Overnight Price $4.93 |
| CPU | Computershare | Lighten - Ord Minnett | Overnight Price $20.56 |
| CWN | Crown Resorts | Outperform - Credit Suisse | Overnight Price $12.65 |
| Buy - Ord Minnett | Overnight Price $12.65 | ||
| MSV | Mitchell Services | Add - Morgans | Overnight Price $0.37 |
| NIC | Nickel Mines | Buy - Citi | Overnight Price $1.63 |
| QAN | Qantas Airways | Overweight - Morgan Stanley | Overnight Price $4.99 |
| Buy - Ord Minnett | Overnight Price $4.99 |
RATING SUMMARY
| Rating | No. Of Recommendations |
| 1. Buy | 8 |
| 2. Accumulate | 1 |
| 4. Reduce | 1 |
Friday 14 January 2022
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