Australian Broker Call

UBS rates BXB as Buy (1) -

UBS highlights shares in Brambles, its preferred Transport exposure, are still trading around -10% below the ASX Industrials ex Financials ex Healthcare measure, despite numerous positives.

These positives include rational competition in the company's core markets, double-digit earnings growth and a strong current free cash flow recovery, explain the analysts. It's also thought Brambles is well placed to weather slowing consumption risk.

The Buy rating and $15.90 target are maintained.

Target price is $15.90 Current Price is $13.77 Difference: $2.13
If BXB meets the UBS target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $14.64, suggesting upside of 5.5% (ex-dividends)

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: 0.3

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

Shaw and Partners rates CLG as Buy (1) -

Shaw and Partners revisits Close the Loop, believing the company offers a chance for investors to take a position in a global, defensive, ESG-focused packaging company.

The broker considers the company's valuation to be attractive, with considerable upside to earnings, citing high global growth potential, contracts under the belt and more to come at highly attractive gross margins.

Meanwhile, the broker expects regulation is likely to kick in following the industry's failure to make sufficient progress towards Australia's Waste Action Plan (2019) 2025 target of 70% recycling or compostable waste by 2025 (currently 16%).

Close the Loop results recently sharply surprise to the upside and the broker spies more accretive M&A on the horizon. Meanwhile, it says gearing is undemanding and valuation is highly attractive. 

Buy rating retained and 70c target price retained.

Target price is $0.70 Current Price is $0.43 Difference: $0.27
If CLG meets the Shaw and Partners target it will return approximately 63% (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

Citi rates CSL as Buy (1) -

CSL's has cut FY24 net profit after tax and amortisation guidance, disappointing consensus by -12%, due to higher than expected FX headwinds. The company also advised its Behring GM business will return to pre-pandemic levels later than expected.

The company advised donor fees and labour cost inflation have outpaced expectations, postponing Behring gross margin recovery to pre-covid level to FY26-FY28 (previously expected in FY26). Citi is banking on FY27 and observes donor fees are unlikely to ever return to pre-pandemic levels.

Cit cuts EPS forecasts -4% in FY23; -17% in FY24; and -17% in FY25.

Buy rating retained. Target price falls to $340.00 from $350.00.

Target price is $340.00 Current Price is $287.25 Difference: $52.75
If CSL meets the Citi target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $331.17, suggesting upside of 18.5% (ex-dividends)

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: 0.8

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

Morgan Stanley rates CSL as Overweight (1) -

First-time FY24 profit (NPATA) guidance by CSL missed forecasts by Morgan Stanley and consensus by -10% and -16%, respectively.

Also, FY23 constant currency profit guidance of US$2.7-2.8bn was unchanged, though skewed to the top end, while the expected currency headwind increased to a range of US$230-250m from US$175m.

The broker downgrades its FY24 profit estimate by around -9%, half attributable to currency and the other half a slower gross margin recovery than previously estimated. Management expects the gross margin will regain 2019 levels by FY26-28.

The Overweight rating is unchanged as Morgan Stanley sees no change to the overall picture apart from a six-twelve month delay. The target falls to $325 from $339. Industry View: In-Line.

Target price is $325.00 Current Price is $287.25 Difference: $37.75
If CSL meets the Morgan Stanley target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $331.17, suggesting upside of 18.5% (ex-dividends)

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: 0.8

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

Morgans rates CSL as Add (1) -

Following guidance updates by CSL and a subsequent fall in share price, Morgans sees a buying opportunity as it remains confident in improving margins and earnings trajectory.

Constant currency FY23 profit (NPATA) guidance was reaffirmed at the top end of the range, despite an increase in currency headwinds, explains the broker. FY24 guidance targeting 13-18% profit growth fell short of the consensus forecast for 28% growth.

The FY24 miss was due to only "modest" improvement in Behring margins in the near term, and a return to pre-covid levels over the “medium term”, suggest the analysts.

The Add rating is unchanged and the target falls to $323 from $337.90.

Target price is $323.00 Current Price is $287.25 Difference: $35.75
If CSL meets the Morgans target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $331.17, suggesting upside of 18.5% (ex-dividends)

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: 0.8

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

Ord Minnett rates CSL as Hold (3) -

CSL has provided guidance for FY24 constant-currency net profit of US$2.9-3.0bn, which factors in modest gross margin expansion in CSL Behring and the Ferinject label expansion for heart failure.

Ord Minnett notes, given inflationary pressures and current currency rates, management has signalled that CSL Behring's gross margin is unlikely to return to pre-pandemic levels in the near term.

The broker decreases underlying net profit forecasts for the next three years by an average of -7%, largely because of unfavourable currency movements, and expects a recovery to the pre-pandemic level of 57% gross margins for CSL Behring by FY27.

Hold rating and $315 target price retained.

Target price is $315.00 Current Price is $287.25 Difference: $27.75
If CSL meets the Ord Minnett target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $331.17, suggesting upside of 18.5% (ex-dividends)

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: 0.8

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

UBS rates CSL as Buy (1) -

CSL's trading updated disappointed consensus by -12% and UBS's forecasts, the company advising Behring's gross margin recovery to pre-pandemic levels would be postponed by up to two years. 

UBS cuts Behring's gross margin estimates, given the expectation of sustained higher donor fees. The broker adopts a more cautious stance on Ferinject (IV iron) growth prospects in Europe given a pending patent expiry, but remains upbeat on the prospects of gene therapy Hemgenix, expecting it to be a "blockbuster" product.

Buy rating retained. Target price falls to $340 from $350.

Target price is $340.00 Current Price is $287.25 Difference: $52.75
If CSL meets the UBS target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $331.17, suggesting upside of 18.5% (ex-dividends)

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: 0.8

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

Morgans rates CWP as Hold (3) -

Weak FY23 profit guidance came as little surprise, and Morgans still sees the longer run potential for Cedar Woods Properties. Guidance was downgraded to $30m from $37.4m due to slower residential sales and construction delays which deferred settlements into FY24.

Moreover, the previously flagged sale of the Williams Landing Shopping Centre will now likely occur in FY24, notes the analyst.

The broker sees a net positive in the company acquiring an additional pipeline on a capital-light basis. Management announced a joint venture in Queensland with QIC to develop around 400 dwellings on surplus land around QIC’s Robina Town Centre shopping centre.

The target falls to $4.65 from $5.00 on lower FY23 earnings partially offset by Morgans reducing its discount to net tangible assets valuation as Cedar Woods approaches the bottom for earnings in the cycle. Hold.

Target price is $4.65 Current Price is $4.85 Difference: minus $0.2 (current price is over target).
If CWP meets the Morgans target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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

Ord Minnett rates DMP as Accumulate (2) -

The current sales improvement noted by Domino's Pizza Enterprises is too marginal to boost operating margins in the second half, with management expecting a similar decline in EBIT of -21% to the first half.

The company is shutting corporate stores and will exit Denmark to bolster profits. Ord Minnett agrees with the decision, highlighting the company's expectations for EBIT to increase by $12m a year from exiting Denmark.

The broker lowers sales and earnings estimates by the low single digits from FY24 to reflect the network rationalisation, although asserts the impact on intrinsic valuation is immaterial. Accumulate maintained. Target is steady at $68.

Target price is $68.00 Current Price is $43.14 Difference: $24.86
If DMP meets the Ord Minnett target it will return approximately 58% (excluding dividends, fees and charges).

Current consensus price target is $53.63, suggesting upside of 25.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.1

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

Ord Minnett rates DXS as Accumulate (2) -

Dexus will sell 44 Market Street, Sydney, at a -17% discount to the December 2022 valuation and -23% below the June 30 2023 valuation. Ord Minnett believes this confirms its view that the company, along with other major office A-REITs, is undervalued.

Ord Minnett expects a gradual recovery in office rents as CBD activity continues to increase with population growth. Accumulate rating and $10.80 target maintained.

Target price is $10.80 Current Price is $7.87 Difference: $2.93
If DXS meets the Ord Minnett target it will return approximately 37% (excluding dividends, fees and charges).

Current consensus price target is $9.11, suggesting upside of 14.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.1

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

Bell Potter rates FDV as Buy (1) -

Bell Potter reviews forecasts for Pakistan-exposed companies following the recent meeting of the country's monetary policy committee. Interest rates have been maintained at 21% as inflation rose to 38% in May, as expected.

The broker suggests the elevated interest rates will be a headwind for property transaction volumes, which impacts Zameen of which Frontier Digital Ventures has over 25%.

The MPC also observed a double-digit decline in automotive volumes as a high-frequency indicator of economic activity which has implications for PakWheels, of which the company has over 28.6%.

Speculative Buy rating maintained. Target is reduced to $0.83 from $0.89.

Target price is $0.83 Current Price is $0.35 Difference: $0.48
If FDV meets the Bell Potter target it will return approximately 137% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

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 GL1 as Outperform (1) -

Global Lithium Resources has commenced drilling at the Marble Bar lithium project with up to 20,000m planned. Macquarie is also encouraged by the recent ore sorting trials at Manna as the company achieved an uplift in average grade with lower impurities.

Forthcoming catalysts include progress on the Manna definitive feasibility study and exploration results from both Manna and Marble Bar. Outperform maintained. Target is steady at $2.50.

Target price is $2.50 Current Price is $1.54 Difference: $0.965
If GL1 meets the Macquarie target it will return approximately 63% (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

Citi rates IAG as Buy (1) -

Insurance Australia Group has cut medium term reported margin guidance to 15% from 15%-17% as tougher reinsurance markets bite.

Citi had previously forecast a margin toll for high reinsurance and perils costs and expects perils will rise above the company's FY23 revised allowance, generating even higher margin headwinds and reinsurance costs in FY24, which the broker expects will offset price increases.

In the meantime, expenses remain under pressure but the broker expects expense ratio improvements could be forthcoming as inflation eases. The broker believes underlying conditions remain strong and that the company provides value for those prepared to see past short-term challenges.

Buy rating retained. Target price rises to $5.85 from $5.60.

Target price is $5.85 Current Price is $5.23 Difference: $0.62
If IAG meets the Citi target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $5.34, suggesting downside of -2.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.2

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

Macquarie rates IAG as Outperform (1) -

Insurance Australia Group has downgraded medium-term margin guidance to 15% from 15-17%, while FY23 reported margin guidance is unchanged at 10%.

Macquarie notes, while  FY23 was unchanged, it is now supported by reserve releases and credit spread improvements.

The broker considers the stock cheap, even against its forecasts which are lower than consensus, but remains mindful of the multiple risks in the short term. Outperform maintained. Target rises to $5.70 from $5.50.

Target price is $5.70 Current Price is $5.23 Difference: $0.47
If IAG meets the Macquarie target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $5.34, suggesting downside of -2.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.2

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

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

Morgan Stanley came away from the Insurance Australia Group investor day noting the margin recovery is taking longer on reinsurance headwinds and emerging customer affordability constraints.

The broker highlights pricing is higher in 2H compared to the 1H for motor, home, intermediated and in New Zealand, however, Australian pricing has not risen in the past few months due to the above mentioned affordability issue.

There are downside risks to FY24 EPS estimates, suggest the analysts, and management reduced its medium-term margin, though also gave reassuring comments on FY23.

The Equal-weight rating and $4.75 target for Insurance Australia Group are maintained, with the analysts expecting near-term support from strong pricing, capital management and favourable weather. Industry View: In-Line.

Target price is $4.75 Current Price is $5.23 Difference: minus $0.48 (current price is over target).
If IAG meets the Morgan Stanley target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.34, suggesting downside of -2.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.2

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

Morgans rates IAG as Hold (3) -

Morgans notes from Insurance Australia Group's investor day the Intermediate Insurance Australia business is on track to achieve its $250m profit target by FY24.

The broker also highlights a change of focus by management away from growth in customer numbers to profitability. The target is to add 750,000 new direct customers by 2027 instead of 2026 previously.

The group also slightly lifted its expected medium-term return on equity (ROE) target range, but simultaneously lowered its medium-term insurance margin expectations.

Morgans retains its Hold rating and increases its target to $5.54 from $5.24 on minor upwards adjustments to forecast earnings and a valuation roll forward.

Target price is $5.54 Current Price is $5.23 Difference: $0.31
If IAG meets the Morgans target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $5.34, suggesting downside of -2.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.2

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

Ord Minnett rates IAG as Hold (3) -

After the investor briefing Ord Minnett observes Insurance Australia Group is continuing to track towards a 10% reported insurance margin in FY23, up from 7.4% in FY22.

The NZ business, despite strong top-line growth, is still lagging in terms of margin performance because of the inflationary effects of the disasters on North Island.

Amid rising global yields and widening credit spreads, the broker observes investment income on the company's $12bn in assets should improve materially from FY23 onwards.

The broker continues to assume gross written premium growth moderates, averaging around 6% per year over the five years to FY27. Hold rating and $5.50 target maintained.

Target price is $5.50 Current Price is $5.23 Difference: $0.27
If IAG meets the Ord Minnett target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $5.34, suggesting downside of -2.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.2

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

UBS rates IAG as Sell (5) -

At Insurance Australia Group's investor day, management reiterated FY23 margin guidance, which was a better than UBS was expecting. It's thought favourable results in Australia covered for an earnings shortfall in New Zealand.

FY23 margin guidance of  "around 10%" beat the broker's 8.3% forecast, due to favourable reserving and credit spreads. However, the analyst points out mid-term margin guidance fell short of the consensus forecast.

While UBS raises its earnings forecasts and lifts its target to $4.70 from $4.30, the Sell rating is maintained on caution around earnings volatility into FY24.

Target price is $4.70 Current Price is $5.23 Difference: minus $0.53 (current price is over target).
If IAG meets the UBS target it will return approximately minus 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.34, suggesting downside of -2.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.2

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

Bell Potter rates IMD as Buy (1) -

Bell Potter reviews its Imdex revenue assumptions for FY23-25. Medium to longer term structural exploration themes underpin expectations for FY24 and beyond.

Furthermore, the complimentary and strategic nature of the Devico and Krux Analytics acquisitions should support the Imdex product offering in under-penetrated markets. Successful commercialisation of Blast Dog is expected to drive earnings growth.

Buy rating maintained. Target is reduced to $2.50 from $2.80.

Target price is $2.50 Current Price is $1.81 Difference: $0.695
If IMD meets the Bell Potter target it will return approximately 39% (excluding dividends, fees and charges).

Current consensus price target is $2.73, suggesting upside of 48.4% (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

Shaw and Partners rates IPG as Buy (1) -

IPD Group has upgraded guidance, outpacing Shaw and Partners forecasts by roughly 6%, after strong trading in the June half.

Management advises it is benefiting from electrification trends and that trading conditions remain strong.

Shaw and Partners appreciates the company's "rock-solid" balance sheet and track record.

EPS forecasts rise 16.9% in FY24 and 27.4% in FY25.

Buy rating retained. Target price rises to $4.50 from $3.60.

Target price is $4.50 Current Price is $3.98 Difference: $0.52
If IPG meets the Shaw and Partners target it will return approximately 13% (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

Shaw and Partners rates JAN as Buy (1) -

Janison Education should re-rate strongly, Shaw and Partners asserts. The broker believes investors are underestimating the potential for operating leverage and have overlooked recent partnerships that have been announced with two of the world's largest exam publishers, Cambridge and Oxford.

The broker considers the stock too cheap as it is growing at 20% and has a validated technology platform. Buy rating reiterated. Target is steady at $0.80.

Target price is $0.80 Current Price is $0.43 Difference: $0.37
If JAN meets the Shaw and Partners target it will return approximately 86% (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

UBS rates LYC as Downgrade to Neutral from Buy (3) -

Following a share price rally for Lynas Rare Earths and a more cautious outlook on NdPr pricing by UBS, the broker lowers its rating to Neutral from Buy.

UBS downgrades its NdPr price forecasts for FY23-25 by -9%, -11% and -10%, respectively. The target falls to $8.30 from $8.60 as the broker's long-term NdPr price forecast of US$95/kg determines most of the valuation and is unchanged.

Several factors are weighing on the NdPr price including a surplus of primary material and less discipline from China producers to maintain pricing in the face of growing ex-China supply, explain the analysts.

Target price is $8.30 Current Price is $7.68 Difference: $0.62
If LYC meets the UBS target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $8.12, suggesting upside of 13.1% (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

Shaw and Partners rates MAD as Buy (1) -

Over the past year of covering Mader Group Shaw and Partners observes a total shareholder return of over 100%, amid strong organic growth in North America/Canada.

The broker envisages potential for re-rating despite the challenges regarding the perceived cyclical nature of the industry and capital investment. Yet the business is self-financing.

The stock remains a high conviction pick in the broker's coverage and the Buy rating and $5.34 target are maintained.

Target price is $5.34 Current Price is $5.20 Difference: $0.14
If MAD meets the Shaw and Partners target it will return approximately 3% (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 MGX as Upgrade to Outperform from Neutral (1) -

Mount Gibson Iron has increased shipment rates and is on track to achieve and potentially surpass its FY23 guidance of 2.9m wmt. On Macquarie's forecasts the company generates around $700m in cash over the remaining life of the mine, which lifts to $1bn at spot.

The broker forecasts cash of $133m at the end of FY23, a 60% increase quarter on quarter. Rating is upgraded to Outperform from Neutral given the strong cash flow, and the target is raised to $0.60 from $0.50.

Target price is $0.60 Current Price is $0.48 Difference: $0.12
If MGX meets the Macquarie target it will return approximately 25% (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 PAN as Outperform (1) -

Panoramic Resources has suspended production at Savannah for two weeks as the result of a crack in the filter pressure plate. As a result FY23 guidance has been reduced to 5,400-800t. Cash costs guidance has also been lifted to $13-13.50/lb.

Incorporating this into forecasts results in a -71% decrease in Macquarie's estimates for FY23 earnings and easing the ramp-up profile in the first half of FY24 results in a -68% cut to FY24 EPS. Outperform is maintained. Target is reduced to $0.18 from $0.19.

Target price is $0.18 Current Price is $0.09 Difference: $0.091
If PAN meets the Macquarie target it will return approximately 102% (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

Citi rates RIO as Buy (1) -

Rio Tinto's is expanding it Jonquiere AP60 aluminium smelter in Quebec, to replace Arvida, at a cost of US$1.1bn, roughly halving those carbon emissions in the replacement process, and allows Rio Tinto to keep full use of water rights for its hydro power generation.

Citi observes the figure is already included as replacement capital expenditure in the company's 2023 capex guidance, and that 2024 and 2025 capex guidance is unchanged.

The broker estimates a return on invested capital of 17% on the $1.1bn, and a C1 cash margin of roughly 50% in 2027. Construction is forecast to take 2.5 years.

In other news, Aluminium Chief Executive is leaving Rio Tinto to take up the role of CEO at IGO ((IGO)).

Buy rating retained. Target price is $123, which compared with the last entry in the FNArena database on June 8 of $120.00. 

Target price is $123.00 Current Price is $116.15 Difference: $6.85
If RIO meets the Citi target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $114.58, suggesting downside of -2.5% (ex-dividends)

The company's fiscal year ends in December.

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: 0.2

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

Macquarie rates SGR as Neutral (3) -

Macquarie assesses a number of hurdles remain before there is more certainty regarding the earnings outlook for Star Entertainment.

Some issues will clear sooner such as the debt refinancing and, the broker hopes, covenant relief, given the risk of breaching the interest coverage ratio test as of June 30, 2023. The AUSTRAC monetary penalty is also likely and should fall between $150-450m.

Longer dated issues include the opening of Queen's Wharf, Brisbane, which has been delayed by four months to April 2024 and the execution of the business improvement initiatives.

Amid the uncertainty Macquarie sticks with a Neutral rating and lowers the target to $1.25 from $1.35.

Target price is $1.25 Current Price is $1.13 Difference: $0.12
If SGR meets the Macquarie target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $1.55, suggesting upside of 38.1% (ex-dividends)

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 SKC as Outperform (1) -

SkyCity Entertainment is intent on achieving operating excellence and shareholder returns as opposed to new developments and expansions.

Macquarie also highlights the resilient earnings and forecasts 2% compound growth in the six years from FY19, with the upside based on online casino regulation and improved international business volumes.

Yet, the broker acknowledges investor sentiment is mixed with the main concern relating to the findings at SkyCity Adelaide which may force the NZ government to conduct a review, although the risk is assessed as low.

Outperform retained. Target is reduced to NZ$2.95 from NZ$3.10.

Current Price is $2.01. Target price not assessed.

The company's fiscal year ends in June.

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 SWM as Accumulate (2) -

Ord Minnett observes Seven West Media shares continue to languish but considers the pessimism excessive. The shares are trading at a -35% discount to the broker's $0.60 "fair value" target and an Accumulate rating is maintained.

On analysis, the current price appears to be assuming that group EBITDA will fall by more than -10% each year on average, while the broker's assumptions have an average decline of -6%, reaching $246m in five years time.

Ord Minnett believes the current share price implies a "doomsday scenario" and presupposes that the company will make no inroads into the YouTube-dominated advertising-based video on demand (AVOD). The latter being what the broker calls "space filled with content best described as frivolous".

Target price is $0.60 Current Price is $0.39 Difference: $0.21
If SWM meets the Ord Minnett target it will return approximately 54% (excluding dividends, fees and charges).

Current consensus price target is $0.58, suggesting upside of 41.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.1

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

Shaw and Partners rates ZIP as Buy (1) -

Zip Co has completed an exercise involving an equity raising alongside the simultaneous conversion of the outstanding $330m in 2028 convertible notes.

Shaw and Partners observes the notes may have been a great idea at the time of issue but became a significant problem for the company. Successful execution means the business is now a significantly different investment proposition in a strategic sense, with a more open capital structure.

Buy rating retained. Target is reduced to $1.87 from $2.02.

Target price is $1.87 Current Price is $0.49 Difference: $1.38
If ZIP meets the Shaw and Partners target it will return approximately 282% (excluding dividends, fees and charges).

Current consensus price target is $0.79, suggesting upside of 60.8% (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