Australian Broker Call

Credit Suisse rates A2M as Underperform (5) -

Credit Suisse observes formula pricing stable in China in July and a2 Milk gained share on TMall during June, increasing its ranking to number 3 in the infant formula and vitamin supplement category.

The broker continues to hold the view that the market will remain weak in terms of demand and this will weigh on earnings.

The broker's FY22 and FY23 earnings estimates are below consensus forecasts, recognising the daigou trade has been structurally reduced to almost zero in terms of its contribution to sales. Underperform retained. Target is $5.50.

Target price is $5.50 Current Price is $6.05 Difference: minus $0.55 (current price is over target).
If A2M meets the Credit Suisse target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $6.43, suggesting upside of 7.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

This company reports in NZD. 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

Ord Minnett rates ABB as Buy (1) -

In the wake of a June quarter update, Ord Minnett highlights stand-out growth came from the business segment, with customer numbers rising by 12% (versus the March quarter), and by 92% year-on-year. The broker raises its target price to $3.58 from $3.53. 

Management tightened earnings (EBITDA) guidance to the upper end of the $17m-$20m range, for the FY21 period. Ord Minnett maintains its Buy rating.

The broker expects the network cost savings to begin accruing more substantially during FY22. The operating leverage in the combined residential and business strategy is also considered likely to show through more clearly in profit margins during FY22 and FY23.

Target price is $3.58 Current Price is $2.92 Difference: $0.66
If ABB meets the Ord Minnett target it will return approximately 23% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 1.0

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

Citi rates APT as Neutral (3) -

Citi considers Afterpay, when combined with Square's cash app and seller system, will be a much stronger operation to succeed in the US. Still, as it is early in BNPL history the broker considers the timing of the bid surprising and the offer price low.

The sale also reflects increasing competition in the sector and the importance of scale, particularly on the consumer side.

The broker also points out Afterpay is growing at a much faster rate than the offer price implies, with 50% gross profit growth forecast for FY23 compared with 17% for peers. Hence, Citi would not be surprised if another bidder emerges. Neutral rating and $125 target maintained.

Target price is $125.00 Current Price is $114.80 Difference: $10.2
If APT meets the Citi target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $121.20, suggesting downside of -5.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.4

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

Credit Suisse rates APT as Outperform (1) -

Afterpay has received a bid from Square at a 30% premium to the prior close. As a result, the company has provided a trading update which was weaker than Credit Suisse expected. Gross profit was up 67% in the second half of FY21 and up 17% quarter on quarter.

The broker considers there are strategic merits to the merger and, while the bid price is below recent highs, it reflects a price from an operator that is looking to share future benefits with shareholders through a scrip offer.

The broker retains an Outperform rating, noting there is low risk of the deal not completing and a small chance of competing bids. Shareholders will maintain exposure to a high-growth business as a result. Target is reduced to $133 from $145.

Target price is $133.00 Current Price is $114.80 Difference: $18.2
If APT meets the Credit Suisse target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $121.20, suggesting downside of -5.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.4

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

Morgan Stanley rates APT as Overweight (1) -

Square, which has agreed to acquire Afterpay, has two key businesses, points out Morgan Stanley. It has a Cash App with more than 40m users (Afterpay has 10.5m US customers), and a large merchant acquiring business, which is expanding globally.

Afterpay has demonstrated a strong ability to connect customers with merchants via its BNPL product, explains the analyst.

Separately, Afterpay's FY21 result was broadly in-line line with consensus. The Overweight rating and $145 target are retained. Industry view: In-Line.

Target price is $145.00 Current Price is $114.80 Difference: $30.2
If APT meets the Morgan Stanley target it will return approximately 26% (excluding dividends, fees and charges).

Current consensus price target is $121.20, suggesting downside of -5.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.4

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

Morgans rates APT as Hold (3) -

Morgans thinks linking with Square makes strategic sense from both a growth and competitive positioning perspective. However, with the company largely trading in-line with the broker's price target of $123.4 (raised from $114.3) the Hold rating is maintained.

The broker highlights the opportunity for both players to leverage each other’s existing client bases to drive further growth. It's felt their respective merchant ecosystems appear complementary with different areas of strength.

Joining with Square’s diverse product set positions the company to better weather increasing competition in the BNPL space, believes the analyst. Separately, the fourth quarter update showed Morgans revenue largely met consensus, and margins remained stable.

Target price is $123.40 Current Price is $114.80 Difference: $8.6
If APT meets the Morgans target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $121.20, suggesting downside of -5.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.4

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

UBS rates APT as Sell (5) -

The implied valuation of Square’s offer under the Scheme Implementation Deed is materially above the $42 price target of UBS. It is almost perfectly in-line with the consensus price target for Afterpay of $125.99, notes the analyst.

Afterpay shareholders are to receive a fixed exchange ratio of 0.375 shares of Square Class A common stock per Afterpay share, based on Square’s US$247.26 closing price. This represents a transaction price of $126.21 per Afterpay share.

While Afterpay’s trading update is unlikely to be a focus for investors, FY21 underlying sales of $21.1bn was well below the broker's $22.1bn estimate. UBS maintains its $42 target price and Sell rating.

Target price is $42.00 Current Price is $114.80 Difference: minus $72.8 (current price is over target).
If APT meets the UBS target it will return approximately minus 63% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $121.20, suggesting downside of -5.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.4

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

Citi rates APX as Buy (1) -

Citi considers the acceleration in Facebook and Google advertising revenue will support investment in artificial intelligence/machine learning and in turn create demand for Appen services.

One risk, the broker notes, is increased investment by Telus, which recently acquired Playment to enhance its computer vision annotation capability. Buy rating and $18.80 target retained.

Target price is $18.80 Current Price is $11.80 Difference: $7
If APX meets the Citi target it will return approximately 59% (excluding dividends, fees and charges).

Current consensus price target is $18.55, suggesting upside of 49.5% (ex-dividends)

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.4

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

Ord Minnett rates BBT as Buy (1) -

After BlueBet's June quarterly result, Ord Minnett notes Net win for the half of 10.3% was slightly above the broker's expectations, resulting in net revenue of $32m in FY21, around 1% above forecast.

The broker highlights customer acquisition has been efficient with the company disclosing a cost per first time depositor of only -$225.

As the business is trading at a discount to the analyst's revised valuation, a Buy rating is maintained and the broker lifts its target price to $2.30 from $2.08. This target is estimated to offer a potential 12 month total shareholder return of 8%.

Target price is $2.30 Current Price is $2.13 Difference: $0.17
If BBT meets the Ord Minnett target it will return approximately 8% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 1.0

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

Ord Minnett rates BKW as Downgrade to Accumulate from Buy (2) -

Ord Minnett lowers its rating to Accumulate from Buy and retains the $26 target price, after recent share price appreciation. In a move considered to add scale and distribution capability to existing operations, the company announced a -$70m acquisition. 

The purchase includes certain assets of Southfield Corporation, including Illinois Brick Company, the largest independently owned and operated brick distributor in the US. 

Target price is $26.00 Current Price is $24.41 Difference: $1.59
If BKW meets the Ord Minnett target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $24.55, suggesting downside of -0.1% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.5

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

Macquarie rates CHN as Outperform (1) -

Julimar continues to deliver for Chalice Mining and the latest round of drilling results provides further clarity on the potential size of the deposit. Continuity of the high-grade G11 zone has been confirmed with extensions at G3, G5 and G10.

A maiden resource is expected in the December quarter. Macquarie retains an Outperform rating and $9.50 target.

Target price is $9.50 Current Price is $7.16 Difference: $2.34
If CHN meets the Macquarie target it will return approximately 33% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 1.0

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

Morgan Stanley rates CNI as Overweight (1) -

Morgan Stanley resumes coverage of Centuria Capital Group with an Overweight rating and $3.35 target price. Industry view is in-line. It's felt the group offers exciting prospects in a traditional low-growth real estate industry.

The broker notes it offers a forecast three year EPS compound annual growth rate (CAGR) of circa 12% from FY21- FY24.

This is assuming the company can increase its property assets under management (AUM) to around $21bn from circa $15-16bn on a three year view, explains the analyst.

Target price is $3.35 Current Price is $3.03 Difference: $0.32
If CNI meets the Morgan Stanley target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $3.05, suggesting upside of 1.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.5

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

Macquarie rates DRR as Outperform (1) -

Deterra Royalties has benefited from the initial ore from South Flank that will increase MAC production to 145mt from 60mt. The company will receive $71m in capacity payments during the ramp up.

Macquarie notes the iron ore spot price implies 50% and 90% higher earnings in FY22 and FY23, respectively. Outperform maintained. Target is $5.60.

Target price is $5.60 Current Price is $4.58 Difference: $1.02
If DRR meets the Macquarie target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $5.01, suggesting upside of 10.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.8

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

Ord Minnett rates HLS as Accumulate (2) -

In a preview of results due on August 30, Ord Minnett lifts FY22 pathology earnings estimates by 25%, with covid testing in Australia surging to record levels in July. This is estimated to be offset by cuts to routine care, due to the extended Sydney lockdown.

The broker's FY21 forecasts remain unchanged, allowing for both strong covid testing and a solid recovery from the other divisions. Ord Minnett lifts its target price to $5.35 from $5, due to the FY22 upgrades and higher ongoing covid testing volumes.

The broker retains its Accumulate rating.

Target price is $5.35 Current Price is $4.93 Difference: $0.42
If HLS meets the Ord Minnett target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $4.66, suggesting downside of -6.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.5

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

Macquarie rates JHG as Outperform (1) -

Earnings upgrades provide scope for further multiple upside, Macquarie suggests. The broker notes flow momentum has improved slightly while, on an underlying basis, adjusted operating income was $269.3m, well ahead of expectations.

Equities were the main drag during the quarter while multi-asset and alternatives provided a positive offset. Outperform maintained. Target rises to $63.50 from $56.00.

Target price is $63.50 Current Price is $57.05 Difference: $6.45
If JHG meets the Macquarie target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $58.45, suggesting upside of 5.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY21:

Forecast for FY22:

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

Macquarie rates LLC as Neutral (3) -

Ahead of the FY21 results on August 16, Macquarie notes, on normalised earnings per share, value is emerging, although the company needs to deal with the negative top-line momentum.

Increased earnings visibility is also required to engender further confidence that a recovery can occur in line with targeted returns. Neutral retained. Target is $11.55.

Target price is $11.55 Current Price is $12.16 Difference: minus $0.61 (current price is over target).
If LLC meets the Macquarie target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $13.24, suggesting upside of 10.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.5

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

Macquarie rates LTR as Outperform (1) -

Liontown Resources is expected to provide its definitive feasibility study on Kathleen Valley spodumene by the end of the year. A pre-feasibility study on a downstream refinery has also commenced.

Macquarie assesses Kathleen Valley has potential to produce 700,000tpa of spodumene, large enough to underpin a fully-integrated lithium hydroxide refinery. Outperform rating and $1.05 target maintained.

Target price is $1.05 Current Price is $0.92 Difference: $0.13
If LTR meets the Macquarie target it will return approximately 14% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 1.0

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

Macquarie rates MIN as Outperform (1) -

Macquarie assesses the acquisition of the 40% interest in the Red Hill iron ore joint venture has materially increased the company's reserve and resource base in the Pilbara. Mineral Resources will pay -$200m in cash and -$200m on production.

Despite a complex ownership structure, Mineral Resources has the largest interest, at 44.5%. Given the location of the reserves, the potential to add material volume to the base development scenario has opened up, the broker adds.

Development of Kemerton is also on track for completion at the end of 2021 should mean the company adds lithium hydroxide production in 2022. Outperform rating and $75 target.

Target price is $75.00 Current Price is $60.27 Difference: $14.73
If MIN meets the Macquarie target it will return approximately 24% (excluding dividends, fees and charges).

Current consensus price target is $60.04, suggesting downside of -0.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.2

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

Macquarie rates OGC as Neutral (3) -

June quarter production was in line and 2021 guidance implies a slightly stronger second half, with the performance in New Zealand offsetting a softer Haile.

Macquarie still anticipates a reduction in Haile's production in the second half. The recent approval for Didipio should pave the way for a return to operations at what the broker believes is the company's best mine.

Still, the outlook is affected by the ongoing issues at Haile. Neutral maintained. Target is $2.70.

Target price is $2.70 Current Price is $2.63 Difference: $0.07
If OGC meets the Macquarie target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $2.37, suggesting downside of -9.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY21:

Forecast for FY22:

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

Macquarie rates ORG as Outperform (1) -

Macquarie believes the downgrade cycle in energy markets is complete with earnings likely to bottom in FY22 before recovering in FY23. Lead indicators include increasing power prices, higher pricing for LREC, and the step down in gas mitigated by price increases.

Continued strength in the oil price should drive strong cash flow from APLNG and support the company's deleveraging objective, in the broker's view. Outperform rating and $5.08 target retained.

Target price is $5.08 Current Price is $4.25 Difference: $0.83
If ORG meets the Macquarie target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $4.81, suggesting upside of 10.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.6

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

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

In a further update to yesterday's research, Morgan Stanley lowers its target price to $4.39 from $4.88, noting commodity prices are squeezing the company's Energy Markets margins, leading to last week's FY22 downgrade. The broker retains its Equal-weight rating. 

The broker provides several reasons for hope in FY23 including the National Electricity Market's proposed move to a capacity market. It's believed this will reduce earnings variability for dispatchable plant, and improve the scale advantages of larger retailers.

Industry view: Cautious.

Target price is $4.39 Current Price is $4.25 Difference: $0.14
If ORG meets the Morgan Stanley target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $4.81, suggesting upside of 10.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.6

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

UBS rates ORG as Buy (1) -

Very soft guidance for FY22 Energy Markets earnings (EBITDA) and -$2.5bn of non-cash charges overshadowed a solid June quarter result from APLNG, in the opinion of UBS. The guidance is estimated to imply a -47% fall at the midpoint year-on-year.

The broker's prior forecast expected a -30% fall and factored in lower electricity prices and higher gas procurement costs. This is considered due to failing to hedge exposure to high coal prices, which have risen 70% since May.

Hence, the analyst cuts FY22 Energy Markets earnings by a further -21% to $539m, while at the same time noting FY23 Energy Markets guidance points to a solid recovery from FY22. UBS lowers its price target to $4.75 from $5.15 and retains its Buy rating.

Target price is $4.75 Current Price is $4.25 Difference: $0.5
If ORG meets the UBS target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $4.81, suggesting upside of 10.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.6

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

Morgans rates OSH as Add (1) -

Santos ((STO)) has made a revised merger proposal to Oil Search of 0.6275 Santos shares for every Oil Search share held, up from the original offer of 0.589. While this is still a discount to Morgans' $4.60 target price, a merger will bring synergies and other benefits.

The broker imagines one post-merger scenario whereby the merged entity could seek to divest its interest in Alaska (ESG complexities). It's felt the proceeds could be used to support Santos' growth projects in Barossa and Dorado.

The Oil Search board has indicated it is likely to recommend the new merger proposal. Morgans retains its Add rating and $4.60 target price.

Target price is $4.60 Current Price is $3.99 Difference: $0.61
If OSH meets the Morgans target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $4.57, suggesting upside of 15.6% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY21:

Forecast for FY22:

This company reports in USD. 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 OSH as Buy (1) -

Subject to due diligence, the Oil Search board plans to recommend the 8% higher revised Santos ((STO)) offer for the company. The broker notes this would create the largest exploration and production company in Australia and generate synergies.

In addition, the combined entity would provide balance sheet strength to fund growth, points out the analyst. Although seeing some EPS dilution, the broker estimates the transaction would be 5% accretive to Santos' net present value. 

Ord Minnett retains its Buy rating and $5.50 target price.

Target price is $5.50 Current Price is $3.99 Difference: $1.51
If OSH meets the Ord Minnett target it will return approximately 38% (excluding dividends, fees and charges).

Current consensus price target is $4.57, suggesting upside of 15.6% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY21:

Forecast for FY22:

This company reports in USD. 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

Macquarie rates PLS as Outperform (1) -

The first sale on the BMX platform is 10,000dmt at 5.5% spodumene concentrate priced at US$1250/dmt.

The realised price was significantly higher than Macquarie had expected and rising spot lithium prices present the key risk to base case forecasts.

Outperform rating and $2 target retained.

Target price is $2.00 Current Price is $1.91 Difference: $0.09
If PLS meets the Macquarie target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $1.57, suggesting downside of -19.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.3

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

Morgans rates RCW as Hold (3) -

Morgans retains its Hold rating and $0.39 target price after Rightcrowd's fourth quarter annual recurring revenue (ARR) doubled year-on-year, marginally ahead of guidance. Revenue booked was a estimated to be a marginal miss.

The broker notes the year ended with $9.9m of cash, which equates to 2.7 quarters of funding based on the fourth quarter cash burn rate. While costs stepped up substantially, they were considered to include a number of one-offs costs. 

The analyst anticipates operating expenses should drop by -$1m per annum, as the acquired Offsite Vision settles into the core business.

Target price is $0.39 Current Price is $0.32 Difference: $0.07
If RCW meets the Morgans target it will return approximately 22% (excluding dividends, fees and charges).

Market Sentiment: 0.0

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

Macquarie rates RSG as Upgrade to Outperform from Neutral (1) -

June quarter production was softer than Macquarie expected. Syama sulphides were solid, despite power interruptions and an extended shutdown of the mill.

Yet the project performed well on other physical metrics while the continued performance of the mine is key to the broker's de-leveraging base case. Rating is upgraded to Outperform from Neutral on recent weakness in the share price. Target is $0.60.

Target price is $0.60 Current Price is $0.55 Difference: $0.05
If RSG meets the Macquarie target it will return approximately 9% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

Forecast for FY21:

Forecast for FY22:

This company reports in USD. 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

UBS rates SPK as Neutral (3) -

UBS maintains its Neutral rating and lifts its price target to NZ$4.70 from NZ$4.60, due to a lift in its sum-of-the-parts valuation, as a result of improved IT service disclosure. Any upside from the Infrastructure review on August 18 is estimated to be modest (10-20cps).

The company's shares have outperformed the top 50 index on the New Zealand exchange by 8.5% in the last three months. The analyst believes this is most likely driven by the re-rating in Telstra ((TLS)) following its -49% Tower sale.

Current Price is $4.52. Target price not assessed.

Current consensus price target is $4.50, suggesting downside of -0.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

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

Morgans rates STO as Add (1) -

Santos has made a revised merger proposal to Oil Search ((OSH)) of 0.6275 Santos shares for every Oil Search share held, up from the original offer of 0.589. While this is still a discount to Morgans' $4.60 target price, a merger will bring synergies and other benefits.

The broker imagines one post-merger scenario whereby the merged entity could seek to divest its interest in Alaska (ESG complexities). It's felt the proceeds could be used to support Santos' growth projects in Barossa and Dorado.

The Oil Search board has indicated it is likely to recommend the new merger proposal. Morgans retains its Add rating and $8.60 target price.

Target price is $8.60 Current Price is $6.49 Difference: $2.11
If STO meets the Morgans target it will return approximately 33% (excluding dividends, fees and charges).

Current consensus price target is $8.02, suggesting upside of 25.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY21:

Forecast for FY22:

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

Market Sentiment: 0.7

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

Macquarie rates STX as Outperform (1) -

Production in the June quarter was in line with expectations. The next well will be Walyering, commencing in September.

Macquarie notes interest is building in the Geraldton urea plant while the geothermal strategy will take some time.

Outperform maintained. Target is $0.60.

Target price is $0.60 Current Price is $0.31 Difference: $0.29
If STX meets the Macquarie target it will return approximately 94% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 1.0

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

Macquarie rates SYD as Neutral (3) -

Macquarie assesses the valuation of Sydney Airport could reach $8-8.10 per share amid further upside potential from unlocking the land value. The broker's analysis suggests there is latent value of at least $0.55-65/share in the property book.

Longer term, the broker expects investors will place some value on these land banks. Neutral and $8.50 target retained.

Target price is $8.50 Current Price is $7.79 Difference: $0.71
If SYD meets the Macquarie target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $8.21, suggesting upside of 6.4% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.2

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

Ord Minnett rates SZL as Buy (1) -

Sezzle’s recent quarterly was a little weak against Ord Minnett's expectations though the rate of income was broadly flat quarter-on-quarter at 5.9%. This is estimated to illustrate a steady average merchant fee.

The broker observes the company is well positioned to deliver on its growth aspirations, ending the quarter with US$59.1m of unrestricted cash.

The Square Inc and Afterpay ((APT)) proposal suggests a period of strategic investment in the space, and provides another significant validation of the sector, believes the analyst.

Additionally, the price implies a healthy FY22 EV/Sales multiple of 25.2x for Afterpay, compared with Sezzle on around 6.9x. Ord Minnett retains its Buy rating and lowers its target price to $10.60 from $11.90.

Target price is $10.60 Current Price is $7.48 Difference: $3.12
If SZL meets the Ord Minnett target it will return approximately 42% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

Forecast for FY21:

Forecast for FY22:

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

Macquarie rates TWE as Neutral (3) -

Macquarie revises forecasts ahead of the results on August 19. The broker has FY21 group EBITS at the top end of guidance, factoring in strong wine exports to the UK.

The main issues in the results will be the offshore performance, progress with supply chain optimisation and premiumisation trends. Target is raised to $12.00 from $10.50 and a Neutral rating is maintained.

Target price is $12.00 Current Price is $12.20 Difference: minus $0.2 (current price is over target).
If TWE meets the Macquarie target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $11.16, suggesting downside of -7.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.0

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

Credit Suisse rates WES as Neutral (3) -

Credit Suisse reduces its forecasts for the retail divisions in the first quarter of FY22 because of the impact of the Melbourne and Sydney lockdowns.

Yet the broker remains positive on the outlook for discretionary expenditure beyond the first quarter, expecting wage growth will accelerate and employment prospects improve. Housing and household goods expenditure is also likely to benefit from ongoing travel restrictions.

Wesfarmers Farmers also appears likely to expand its ammonia manufacturing capacity while the lithium project has received regulatory approval. Credit Suisse retains a Neutral rating and raises the target to $58.74 from $57.23.

Target price is $58.74 Current Price is $62.19 Difference: minus $3.45 (current price is over target).
If WES meets the Credit Suisse target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $53.95, suggesting downside of -13.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.0

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

Macquarie rates WGX as Outperform (1) -

June quarter production was mixed and below Macquarie's expectations while costs were in line. Significantly, Big Bell is approaching nameplate and is the single biggest component of the brokers improved cash flow expectations for FY22.

The company expects the cave to reach nameplate output in the second half. Outperform maintained. Target is $2.50.

Target price is $2.50 Current Price is $1.86 Difference: $0.64
If WGX meets the Macquarie target it will return approximately 34% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 1.0

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

Citi rates WSA as Neutral (3) -

FY22 production is expected to be 16-17,000t of nickel in concentrate with cash costs of $4.25-4.65/lb. Production at Spotted Quoll and Flying Fox is drawn out, with lower grade stockpiles maximising the plant utilisation.

Costs and inflation pressures are expected to impact on capital, as Odysseus reaches planned peak expenditure. Long-term production profile has been lifted to sustaining 20,000t of nickel in concentrate from FY28. Neutral maintained. Target rises to $2.60 from $2.40.

Target price is $2.60 Current Price is $2.58 Difference: $0.02
If WSA meets the Citi target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $2.61, suggesting upside of 1.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.3

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

Macquarie rates WSA as Outperform (1) -

Western Areas has released a long-term production profile and updated FY22 guidance. Macquarie notes a slower ramping up at Cosmos for the first two years is more than offset by higher long-term production. The outlook does not include New Morning.

The main change to the broker's estimates is a -26% reduction to nickel production in FY24 to reflect a slower ramp up at Cosmos. Outperform retained. Target rises to $2.90 from $2.80.

Target price is $2.90 Current Price is $2.58 Difference: $0.32
If WSA meets the Macquarie target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $2.61, suggesting upside of 1.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.3

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

Citi rates Z1P as Buy (1) -

Reading through the Square takeover bid for Afterpay ((APT)), Citi observes on one hand it increases the takeover appeal for Zip Co, but arguably it also underscores the importance of scale.

The broker is concerned that the combination of Square and Afterpay will increase the medium-term risk for Zip Co, as the scale disadvantage will be increased relative to competitors in the US. Buy rating and $8.90 target maintained.

Target price is $8.90 Current Price is $7.24 Difference: $1.66
If Z1P meets the Citi target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $7.94, suggesting upside of 2.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.1

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