Australian Broker Call

Morgans rates ACF as Add (1) -

The second half has started strongly with the company's hire contract wins up 28% versus pcp in the first two months of 2021. As a result management has upgraded guidance by around 8%. Morgans lifts the target to $0.53 from $0.50 and retains the Add rating.

The broker believes the outlook remains positive with record new hire contracts won over the past 6-9 months and a strong pipeline of opportunities. In addition, the stock offers an attractive yield.

Target price is $0.53 Current Price is $0.37 Difference: $0.16
If ACF meets the Morgans target it will return approximately 43% (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 ALL as Overweight (1) -

Sensor Tower data suggest Aristocrat Leisure's digital revenue grew by 23% in the first half year to date with the largest contributors in February being EverMerge, RAID and Cashman Casino.

Morgan Stanley notes the performance of RAID remains strong while Aristocrat Leisure's success with EverMerge continues as well with the game contributing about 10% of the company's digital revenue. 

The target price is $38 with an Overweight rating.

Target price is $38.00 Current Price is $33.85 Difference: $4.15
If ALL meets the Morgan Stanley target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $36.40

The company's fiscal year ends in September.

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

Citi rates ANZ as Buy (1) -

Citi believes there is scope for the bank sector to still outperform in a relative sense and the sector rotation in favour of banks is
likely to persist given strengthening inflation expectations and rising bond yields.

Looking to the past, the analyst notes that spikes in real yields have correlated with meaningful bank sector outperformance.

ANZ Bank and Westpac Bank ((WBC)) remain the broker's favoured ways to play the sector, with greater prospects of balance sheet normalisation in the short term. The price target of $26.50 and Buy rating are unchanged.

Target price is $26.50 Current Price is $28.22 Difference: minus $1.72 (current price is over target).
If ANZ meets the Citi target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $28.34

The company's fiscal year ends in September.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.9

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

Macquarie rates APA as Outperform (1) -

Macquarie calculates the well flagged debt refinancing is an incremental positive and adjusts early forecasts down to account for break costs and then upwards thereafter  for lower funding costs.

The broker estimates the benefit is the locking in of rates and certainty provided as corporate activity escalates. Separately, the analyst predicts dividend policy may shift to a percentage of free cash flow and the DRP may be reintroduced.

Outperform and target slips to $10.17 from $10.28.

Target price is $10.17 Current Price is $9.46 Difference: $0.71
If APA meets the Macquarie target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $10.83

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.7

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

Citi rates CBA as Neutral (3) -

Citi believes there is scope for the bank sector to still outperform in a relative sense and the sector rotation in favour of banks is
likely to persist given strengthening inflation expectations and rising bond yields.

Looking to the past, the analyst notes that spikes in real yields have correlated with meaningful bank sector outperformance.

ANZ Bank ((ANZ)) and Westpac Bank ((WBC)) remain the broker's favoured ways to play the sector, with greater prospects of balance sheet normalisation in the short term.

The price target for Commonwealth Bank of $82.50 and Neutral rating are unchanged.

Target price is $82.50 Current Price is $86.45 Difference: minus $3.95 (current price is over target).
If CBA 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 $80.50

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

Macquarie rates CSL as Neutral (3) -

After reviewing the drivers of 14% per annum gross profit growth during FY2016-20, Macquarie assumes a recovery for Ig though potential competitive risks in relation to key Specialty Products with less substantial incremental contributions from Seqirus.

Thus, the broker calculates more modest gross profit growth to FY23 of around 10% per annum. After minor adjustments to forecasts, the Neutral rating is maintained while the price target falls to $288 from $293.

Within CSL Behring, Ig and Specialty products were seen by Macquarie as the key drivers of the prior 14% growth rate.

Target price is $288.00 Current Price is $253.90 Difference: $34.1
If CSL meets the Macquarie target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $298.01

The company's fiscal year ends in June.

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: 0.4

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

Ord Minnett rates CSL as Hold (3) -

Ord Minnett believes a recovery in US plasma collections by mid-year may be in the offing for CSL with vaccinations allowing a return to normal conditions. This is expected to support a solid recovery in FY23.

Even so, Ord Minnett sees downside risk to FY22 especially if collections were to contract initially, as is likely to be the case. This, along with a lack of foreseeable catalysts, dissuades the broker from lifting its recommendation despite the recent share price weakness. 

Ord Minnett retains its Hold rating and lowers the target to $261 from $284.

Target price is $261.00 Current Price is $253.90 Difference: $7.1
If CSL meets the Ord Minnett target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $298.01

The company's fiscal year ends in June.

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: 0.4

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

Citi rates FLT as Sell (5) -

Citi considers Flight Centre will be a secondary beneficiary of the Federal Government’s domestic tourism stimulus package, as Australian domestic leisure accounts for around 9% of pre-covid-19 group total transaction value (TTV) and circa 5% of group profit (PBT). 

The key read-through for the broker is the federal stimulus package is likely to put pressure on state borders remaining open. Incremental revenue will moderate the rate of cash burn though will be offset by the roll-off of the JobKeeper wage subsidy, notes the analyst.

The Sell rating and $16.80 target are unchanged.

Target price is $16.80 Current Price is $19.44 Difference: minus $2.64 (current price is over target).
If FLT meets the Citi target it will return approximately minus 14% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $17.57

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

Morgan Stanley rates IEL as Overweight (1) -

Education Australia plans to take up direct ownership in IDP Education, according to Morgan Stanley, and will hold an extraordinary general meeting (EGM) in April to approve this.

The broker highlights the transaction involves a sell-down of -15% stake to fund tax obligations and a fully franked dividend. Morgan Stanley suggests this finally puts an end to the uncertainty regarding the sale but also warns about potential delays to the transaction.

Overweight retained with a target of $30. Industry view: In-line.

Target price is $30.00 Current Price is $22.86 Difference: $7.14
If IEL meets the Morgan Stanley target it will return approximately 31% (excluding dividends, fees and charges).

Current consensus price target is $30.59

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 IPL as Neutral (3) -

A panel of agricultural experts hosted by Citi concluded phosphate prices are unlikely to collapse after the spring season due to tight supply arising from the countervailing duty petition and high transportation costs.

Similarly, global urea supply has tightened as China prioritised domestic urea consumption and the winter freeze has reduced US capacity. Firmer prices are positive as fertilisers contribute 38% of estimated FY21 group earnings (EBIT), explains the broker.

The Neutral rating and $2.70 target are unchanged.

Target price is $2.70 Current Price is $2.73 Difference: minus $0.03 (current price is over target).
If IPL meets the Citi target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.99

The company's fiscal year ends in September.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.7

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

UBS rates JHC as Neutral (3) -

The Royal Commission final report released last week left UBS surprised at the level of division between commissioners Pagone and Briggs.

In the broker's view, while the report made 148 recommendations covering funding, quality and sustainability reforms, the end result is more room for the government to selectively adopt measures and delay the much needed regulatory clarity until the FY22 Budget.

In the short-term, UBS expects Japara Healthcare to benefit from the temporary funding in the second half and the increase in indexation in FY22 to 2-3%.

For the longer-term, Japara Healthcare's investment case hinges on post-reform unit economics and the continuity of the refundable accommodation deposit (RAD) funding. 

Neutral rating maintained with the target price rising to $0.75 from $0.50.

Target price is $0.75 Current Price is $0.74 Difference: $0.01
If JHC meets the UBS target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $0.81

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

Ord Minnett rates LNK as Hold (3) -

According to news reports, government, industry and legal bodies will develop an industry standard for interoperability for stakeholders in the land title transfer and registry business. The end-goal is a "single-market hub" by 2025 that will connect different platforms.

Ord Minnett notes under the newly agreed interim plan, operators without their own infrastructure can use PEXA’s back-end services to process their transactions in the $240m market. 

Hold rating retained with a target of $5.20.

Target price is $5.20 Current Price is $4.92 Difference: $0.28
If LNK meets the Ord Minnett target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $5.43

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 NAB as Neutral (3) -

Citi believes there is scope for the bank sector to still outperform in a relative sense and the sector rotation in favour of banks is
likely to persist given strengthening inflation expectations and rising bond yields.

Looking to the past, the analyst notes that spikes in real yields have correlated with meaningful bank sector outperformance.

ANZ Bank ((ANZ)) and Westpac Bank ((WBC)) remain the broker's favoured ways to play the sector, with greater prospects of balance sheet normalisation in the short term.

The price target for National Australia Bank of $24.75 and Neutral rating are unchanged.

Target price is $24.75 Current Price is $26.12 Difference: minus $1.37 (current price is over target).
If NAB 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 $26.38

The company's fiscal year ends in September.

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 NCM as Overweight (1) -

A new zone of high-grade mineralisation has been discovered at the Red Chris operation's East Ridge. Morgan Stanley believes this discovery shows operations have the potential to keep expanding to both the east and the west.

On a similar note, infill drilling results at Newcrest Mining's Havieron operations were in-line with the company's expectations. 

Overweight rating maintained with a target price of $32.10. Industry view: Attractive.

Target price is $32.10 Current Price is $24.42 Difference: $7.68
If NCM meets the Morgan Stanley target it will return approximately 31% (excluding dividends, fees and charges).

Current consensus price target is $32.38

The company's fiscal year ends in June.

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: 0.9

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

Citi rates QAN as Upgrade to Buy from Neutral (1) -

With the increased border certainty from the government stimulus package, Citi upgrades to Buy from Neutral and increases the target to $6.14 from $5.47. However, a leisure led recovery is considered negative for mix, with only negligible impacts on profitability.

Separately, the broker feels a -$1bn dollar cost out should be a key upside catalyst though previous transformation programs show the company struggled to hold onto past benefits.

Target price is $6.14 Current Price is $5.30 Difference: $0.84
If QAN meets the Citi target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $5.57

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

UBS rates RHC as Neutral (3) -

According to APRA, volume growth in health insurance in the fourth-quarter was hit by the impact of covid on elective surgery. Declining utilisation led to a significant -8.5% headwind along with a decline in private health insurer participation by -1.6%.

UBS notes the decline is mostly a continuation of the trends experienced over the last three years. In order for Ramsay Health Care to achieve volume growth of 10.6%, UBS assesses the growth in utilisation would need to recover to 8.1% in 2021.

The broker retains a Neutral rating and a $69.90 target.

Target price is $69.90 Current Price is $63.15 Difference: $6.75
If RHC meets the UBS target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $69.35

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

Citi rates SYD as Neutral (3) -

Although positive for the sector, Citi sees the announced travel support package by the federal govenment as having limited revenue impact, given the package is largely focused on domestic travel and primarily targeted on leisure routes, which were already seeing a recovery.

The broker believes the major catalyst will be the start of international travel (around 70% of revenue ), the timing of which is uncertain. The Neutral rating and $6.61 target are unchanged.

Target price is $6.61 Current Price is $6.19 Difference: $0.42
If SYD meets the Citi target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $6.21

The company's fiscal year ends in December.

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

Citi rates WBC as Buy (1) -

Citi believes there is scope for the bank sector to still outperform in a relative sense and the sector rotation in favour of banks is
likely to persist given strengthening inflation expectations and rising bond yields.

Looking to the past, the analyst notes that spikes in real yields have correlated with meaningful bank sector outperformance.

Westpac Bank and ANZ Bank ((ANZ)) remain the broker's favoured ways to play the sector, with greater prospects of balance sheet normalisation in the short term. The price target of $26 and Buy rating are unchanged.

Target price is $26.00 Current Price is $24.53 Difference: $1.47
If WBC meets the Citi target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $25.69

The company's fiscal year ends in September.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.9

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