Australian Broker Call

Morgan Stanley rates 360 as Overweight (1) -

Life360 has made the list of small/mid cap ideas around which Morgan Stanley has conviction coming into the reporting season, with outperformance expected into FY24.

The broker suggests there are few ASX-listed mid caps with 50m monthly active users (MAU), sales growth of more than 30% and the ability to shift rapidly to profitability.

An upcoming catalyst is 2Q results, suggest the analysts, where the paying circles, average revenue per paying circle (ARPPC) and margins will be critical.

The Overweight rating is maintained, while the target rises to $9.50 from $8.50. Industry view: In Line.

Target price is $9.50 Current Price is $7.88 Difference: $1.62
If 360 meets the Morgan Stanley target it will return approximately 21% (excluding dividends, fees and charges).

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: 1.0

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

Macquarie rates ALD as Outperform (1) -

Macquarie had always expected the June quarter would be messy for Ampol, given the outage at Lytton. Still, preliminary first half  EBIT of $575m was broadly in line with expectations and the composition was higher quality.

The outage aside, the broker calculates underlying refining profits are now at "more normal" levels in 2023 and the business is generating strong cash flows, allowing room for additional shareholder returns at the end of the year.

Outperform rating and $36.50 target maintained.

Target price is $36.50 Current Price is $31.14 Difference: $5.36
If ALD meets the Macquarie target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $34.75, suggesting upside of 7.9% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.6

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

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

Morgan Stanley expects a muted reaction to Ampol's 1H update, with replacement cost operating profit (RCOP) EBITDA a miss versus the forecasts of the analyst and consensus of -4% and -3% respectively.

The Lytton Refiner Margin of US$10.29/bbl, was also a -27% and -19% miss versus the estimates of the broker and consensus.

The analyst highlights lower crack spreads in the Q2, higher operating costs, mainly due to electricity, as well as an unplanned refinery outage. Moreover, there were -$25m of losses from the storage and export of intermediate products.

Management noted Convenience Retail earnings grew, and the 1H will benefit from a six-month contribution from Z Energy.

Target 34.70. Equal-weight. Industry view is Attractive.

Target price is $34.70 Current Price is $31.14 Difference: $3.56
If ALD meets the Morgan Stanley target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $34.75, suggesting upside of 7.9% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.6

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

Ord Minnett rates ALD as Accumulate (2) -

Ampol reported preliminary underlying EBIT for the first half of $575m, -22% lower than the comparable period. This was largely due to the slump in Lytton refinery earnings that reflected lower regional refinery margins, higher electricity costs and one-off losses from outages.

Ord Minnett reduces forecasts for EPS in 2023 by -7% but envisages limited longer term implications. The performance from the less cyclical retailer distribution side of the business was "impressively strong". The Accumulate rating and $34.50 target are maintained.

Target price is $34.50 Current Price is $31.14 Difference: $3.36
If ALD meets the Ord Minnett target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $34.75, suggesting upside of 7.9% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.6

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

UBS rates ALD as Buy (1) -

Refining operations in the June quarter were a drag on Ampol's earnings while the non-refining divisions proved more resilient, UBS observes.

The broker notes previous headwinds from quality premiums are now stabilising for Ampol and converting to tailwinds which supports margins, and successful recontracting efforts should limit the downside to wholesale margins in times of volatility.

As the business has neared peak convenience volumes across its network in completed its non-fuel strategy, UBS finds few levers for additional organic growth.

This drives the broker's preference for Viva Energy over Ampol. Buy rating retained. Target is reduced to $33.30 from $33.90.

Target price is $33.30 Current Price is $31.14 Difference: $2.16
If ALD meets the UBS target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $34.75, suggesting upside of 7.9% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.6

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

Macquarie rates ANN as Neutral (3) -

Ansell's FY23 earnings are expected to be slightly ahead of prior forecasts although FY24 EPS guidance of US92-112c is well below Macquarie's expectations. The company expects FY23 EPS of US117-118c per security.

The broker considers the near-term operating conditions are uncertain, although there is potential for improved growth in the medium term and the balance sheet is favourable. The broker's forecasts capture improved growth from FY25.

Neutral rating reiterated for Ansell. Target is reduced to $25.10 from $27.00.

Target price is $25.10 Current Price is $23.28 Difference: $1.82
If ANN meets the Macquarie target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $26.68, suggesting upside of 13.0% (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: 0.1

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

UBS rates AZJ as Neutral (3) -

Aurizon Holdings has outlined a plan to expand its containerised freight operations to "land bridge" containers from Darwin to other domestic markets. The company estimates this would save seven days of transit time from Darwin to Melbourne for equivalent cost.

UBS does not give full credit for the opportunity as yet. Meanwhile, the company has indicated FY23 EBITDA is at the lower end of guidance of $1420-1470m while FY24 EBITDA guidance is $1590-1680m.

The broker does not find this guidance demanding and suspects Aurizon is either being conservative or there are underlying challenges elsewhere.

Neutral retained. Target is reduced to $3.75 from $3.80.

Target price is $3.75 Current Price is $3.71 Difference: $0.04
If AZJ meets the UBS target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $4.00, suggesting upside of 8.1% (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

Citi rates BHP as Neutral (3) -

At first glance, Citi observes FY23 production from BHP Group was up modestly, with copper up 9%, iron ore up 1%, energy coal up 3% and nickel up 4%. Metallurgical coal was flat. Capital expenditure is lower, because of a weaker Australian dollar.

Overall, full year unit costs guidance is expected to be achieved at Escondida, Western Australia iron ore and NSW thermal coal.

The company has flagged FY24 production guidance as being essentially flat outside of copper, with the latter benefiting from the takeover of OZ Minerals. Citi has a Neutral rating and $44 target.

Target price is $44.00 Current Price is $44.67 Difference: minus $0.67 (current price is over target).
If BHP 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 $44.20, suggesting downside of -0.9% (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: 0.2

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

Macquarie rates BKT as Outperform (1) -

Black Rock Mining has announced a US$10m prepayment agreement with POSCO and is also advancing other financing options, including potentially bringing in a partner at the Mahenge project, being a less dilutive option compared with equity.

Macquarie notes the project could potentially produce up to 340,000tpa of 98.5% graphite concentrate for 26 years. The broker also points out the company has a cost advantage versus its peers. Outperform rating and $0.28 target maintained.

Target price is $0.28 Current Price is $0.11 Difference: $0.17
If BKT meets the Macquarie target it will return approximately 155% (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

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

Ord Minnett expects the upcoming reporting season will focus on A-REIT sector initiatives, as capital remains constrained, as well as property valuations as capitalisation rates soften.

Charter Hall Long WALE REIT's rating is downgraded to Hold from Buy, as the debt profile is likely to detract from its performance in the short term.

While it is reported that the company is looking to divest assets, transaction volumes for these assets remain low and as such Ord Minnett expects slow progress on capital management initiatives. Target is reduced to $4.40 from $4.89.

Target price is $4.40 Current Price is $4.13 Difference: $0.27
If CLW meets the Ord Minnett target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $4.51, suggesting upside of 9.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.0

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

Ord Minnett rates CQR as Accumulate (2) -

Ord Minnett expects the upcoming reporting season will focus on A-REIT sector initiatives, as capital remains constrained, as well as property valuations as capitalisation rates soften.

Despite pricing in more aggressive interest-rate assumptions the broker still envisages value in A-REITs and retains an Accumulate rating for Charter Hall Retail REIT. Target is reduced to $4.01 from $4.26.

Target price is $4.01 Current Price is $3.77 Difference: $0.24
If CQR meets the Ord Minnett target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $4.13, suggesting upside of 10.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.6

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

Shaw and Partners rates DSE as Buy (1) -

Following a strong 2Q business update and outlook by data backup, archiving and compliance vendor, Dropsuite, Shaw and Partners feels a negative share price reaction to Microsoft’s Syntex updates creates a buying opportunity.

Annual recurring revenue (ARR) growth of 45% is running ahead of the broker's FY23 44% forecast and will benefit from sales and marketing spend in the 2H. Gross margins of 69% were also ahead of initial expectations.

While the introduction by Microsoft of M365 Back-up and Archive in Q4 of this year appears a direct threat to Dropsuite, the analyst points out it does not appear to target the MSP/SMB channel. Also, pricing appears to be well above Dropsuite's level.

Moreover, the announcement by Microsoft doesn’t suggest a change to Microsoft’s shared responsibility model, which has been a key driver of third-party back-up adoption, explains Shaw and Partners.

The Buy rating is maintained and the target rises to 35c from 34c.

Target price is $0.35 Current Price is $0.29 Difference: $0.06
If DSE meets the Shaw and Partners target it will return approximately 21% (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

Ord Minnett rates DXC as Upgrade to Accumulate from Hold (2) -

Dexus Convenience Retail REIT is upgraded to Accumulate from Hold as Ord Minnett believes the stock is trading at a significant discount to its net tangible assets, despite property fundamentals remaining firm for the convenience retail and healthcare sector.

The broker expects the upcoming reporting season will focus on A-REIT sector initiatives, as capital remains constrained, as well as property valuations as capitalisation rates soften. The broker reduces the target to $2.95 from $3.18.

Target price is $3.18 Current Price is $2.56 Difference: $0.62
If DXC meets the Ord Minnett target it will return approximately 24% (excluding dividends, fees and charges).

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

Citi rates EVN as Neutral (3) -

Evolution Mining released its Q4 update and Citi, upon initial reaction, reports the reported cash outcome is significantly below market consensus, it misses Citi's estimate too.

Cash flow took a hit because of weather impact at Ernest Henry, point out the analysts, leading to -$160m in forgone revenues, but higher costs at Red Lake impacted too.

There will be layoffs, some -10% of the workforce, which will save -$12m per annum. Citi, however, makes it clear this might not be the end of ongoing disappointments.

Irrespective, Citi anticipates a neutral to weak reaction to the share price post today's disappointing update, given the market is focusing on forward looking commentary while USD gold stocks traded up last night.

Target price $3.30. Neutral.

Target price is $3.30 Current Price is $3.74 Difference: minus $0.44 (current price is over target).
If EVN meets the Citi target it will return approximately minus 12% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.34, suggesting downside of -10.2% (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

Citi rates FLT as Neutral (3) -

Flight Centre Travel has this morning updated the market with a positive profit warning, i.e. guiding towards EBITDA for FY23 some 4% above market consensus, Citi analysts comment in an initial response.

It appears the "beat" was driven by the corporate travel division. It also implies the corporate division might now be larger in size than Leisure, the analysts point out.

FY23 EBITDA has now been guided to $295-$305m, with the midpoint of $300m regarded as 4% above market consensus.

Neutral. Target $25.50.

Target price is $25.50 Current Price is $20.81 Difference: $4.69
If FLT meets the Citi target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $22.71, suggesting upside of 4.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.4

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

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

Morgan Stanley assesses a strong 3Q result across all three divisions for FleetPartners Group amid broader macroeconomic concerns, with evidence of robust demand, a growing backlog and tailwinds from electric vehicles.

The third quarter year-to-date orders and backlog compared to FY19 were greater by 1.5 times and 3.3 times, respectively, while 36% of orders were for electric vehicles compared to 17% in H1.

Equal-weight rating (on valuation). Target $2.70. Industry View: In-line. Morgan Stanley sees upside to its own and consensus forecasts going forward.

Target price is $2.70 Current Price is $2.61 Difference: $0.09
If FPR meets the Morgan Stanley target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $2.65, suggesting upside of 5.3% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.7

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

Ord Minnett rates FPR as Buy (1) -

FleetPartners Group recorded a 26% increase in new business in the June quarter, with a 44% increase in the novated division alone. Ord Minnett observes the EV transition is accelerating as a 36% of the novated deliveries in the quarter were electric vehicles.

The broker notes FY23 guidance has softened slightly with net operating income expected to be down -5% and operating expenses increasing because of cost inflation and higher sales team costs.

Meanwhile, used car values remain robust. Ord Minnett retains a Buy rating and raises the target to $2.85 from $2.75.

Target price is $2.85 Current Price is $2.61 Difference: $0.24
If FPR meets the Ord Minnett target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $2.65, suggesting upside of 5.3% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.7

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

Macquarie rates MGX as Outperform (1) -

Macquarie notes shipments in the June quarter increased strongly from Koolan Island and as a result Mount Gibson Iron has exceeded its revised FY23 guidance.

Revenue of $186m in the fourth quarter was 9% above the broker's forecasts and up 66% quarter on quarter. On current forecasts the company will generate around $700m in cash over the remaining life of the Koolan Island mine.

Outperform rating retained. Target is $0.55.

Target price is $0.55 Current Price is $0.49 Difference: $0.065
If MGX meets the Macquarie 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

Citi rates MND as Neutral (3) -

The awarding of the Fortescue Metals' ((FMG)) Christmas Creek contract has "encouraged" Citi analysts about the outlook for engineers and contractors generally, and for Monadelphous Group in particular.

The number of fresh contracts hasn't been great to date and Citi for one has been toying with the idea that sector recovery might become more of a FY25 story.

Monadelphous has announced three new contracts/extensions; Christmas Creek, at BHP Group's ((BHP)) Olympic Dam (extension) and with Rio Tinto ((RIO)) for the extension of Gove. Combined value is some $150m.

Neutral. Target $12.80.

Target price is $12.80 Current Price is $12.77 Difference: $0.03
If MND meets the Citi target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $13.51, suggesting upside of 5.6% (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 NGI as Buy (1) -

Navigator Global Investments posted steady growth in assets under management in the June quarter. Around two thirds of the growth in Lighthouse Partners came from flows, with Ord Minnett noting hedge funds did particularly well.

A US$200m capital raising to acquire the balance of the strategic portfolio is a welcome funding solution, the broker adds. This will also mean Dyal a further stake in the company.

When the deal closes, expected in November, the broker estimates the strategic portfolio will account for 58% of group EBITDA. Buy rating retained. Target price is $1.90.

Target price is $1.90 Current Price is $1.27 Difference: $0.625
If NGI meets the Ord Minnett target it will return approximately 49% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

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

Citi rates NST as Neutral (3) -

Citi still believes FY24 cost guidance by Northern Star Resources is achievable despite the market reacting negatively to the 4Q activities report, which revealed higher costs and lower production for the period than expected by consensus.

The broker assesses a good June quarter with record free cash flow and record metrics at the Pogo operations in Alaska. 

Citi's $12.30 target is maintained. The broker expects gold to hit US$2,100/oz over the next six months and is happy for investors to hang on to Northern Star Resources shares. Neutral.

Target price is $12.30 Current Price is $12.59 Difference: minus $0.29 (current price is over target).
If NST meets the Citi target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $12.54, suggesting upside of 6.6% (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

Macquarie rates NST as Outperform (1) -

Northern Star Resources' fourth quarter production was in line with Macquarie's estimates although costs were higher than expected. The company finished FY23 with a net cash position of $248m.

FY24 guidance is considered by the broker to be somewhat soft, with the company expecting sales will be weighted to the second half, amid increased throughput and grade at Thunderbox and access to the higher-grade Golden Pike North area.

Macquarie considers the long-term growth prospects are firm as the KCGM mill upgrade is set to unlock regional synergies. Outperform retained. Target is reduced to $14 from $15.

Target price is $14.00 Current Price is $12.59 Difference: $1.41
If NST meets the Macquarie target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $12.54, suggesting upside of 6.6% (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

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

Morgan Stanley lowers its target for Northern Star Resources to $11.20 from $12.25 in the wake of June quarter production results.

Group cash operating costs and all-in sustaining costs (AISC) were a 5% beat and in line, respectively, with Morgan Stanley's forecasts, while group production was in line.

However, FY24 guidance for sales and costs were -8% and -9% weaker against forecasts by the broker and consensus.

Cost guidance for FY24 was higher because of lower production guidance for Pogo, Kalgoorlie and Yandal, explains the analyst.

The Equal-weight rating is unchanged.

Target price is $11.20 Current Price is $12.59 Difference: minus $1.39 (current price is over target).
If NST meets the Morgan Stanley target it will return approximately minus 11% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $12.54, suggesting upside of 6.6% (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

UBS rates NST as Downgrade to Sell from Neutral (5) -

Northern Star Resources produced 426,000 ounces  at AISC of $1700/oz in the June quarter, in line with expectations and supported by strong finish at Pogo, although UBS believes this has been overshadowed by a downgrade in guidance.

The broker is disappointed with FY24 guidance as production of 1.6-1.75m ounces is below forecasts and AISC of $1730-1790/oz is 9% higher. Growth expenditure of $1.15-1.25bn is significantly ahead of forecasts.

UBS downgrades to Sell from Neutral as the increased expenditure means the pressure on cash flow and margins has been previously underestimated. Target is reduced to $11.70 from $13.00.

Target price is $11.70 Current Price is $12.59 Difference: minus $0.89 (current price is over target).
If NST meets the UBS target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $12.54, suggesting upside of 6.6% (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 PEN as Buy (1) -

As a result of the cancelation of a resin processing contract with Uranium Energy Corp, Peninsula Energy has delayed the start (first commercial production expected this month) of its Lance uranium project.

A disappointed Shaw and Partners suggests first production may now be delayed by 12-18 months and additional funding may be required. The forecast size of a potential equity raise in FY24 has been increased to US$50m from US$40m (assumes US$35m of debt funding).

Management's plan is to accelerate the move to the larger stage 2 project which incorporates in-house processing of the uranium-bearing resins.

After rejigging its forecast model for the altered equity raise and new plans by management, the broker's target falls to 31c form 34c. Buy.

Target price is $0.31 Current Price is $0.13 Difference: $0.18
If PEN meets the Shaw and Partners target it will return approximately 138% (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 QBE as Buy (1) -

At first glance, Citi observes the QBE Insurance underlying business is performing a little better, as the company has been able to absorb cost overruns and has reiterated FY23 combined operatring ratio guidance of 94.5%.

The first half's COR is like to be 99%, higher than expected, as a result of -US$40m in crop adverse development, and an overrun of  US$165m in catastrophe events which exceeded the broker's US$100m estimate.

Investment earnings are higher than expected. Buy rating and $17.30 target maintained.

Target price is $17.30 Current Price is $15.24 Difference: $2.06
If QBE meets the Citi target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $16.55, suggesting upside of 6.1% (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: 0.7

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

UBS rates RFF as Neutral (3) -

Rural Funds is considering the sale of unreleased water entitlements, currently generating 2% yield, as well as divesting various operating assets to reduce gearing, and prove up independent evaluations while providing earnings accretion.

As well, the company is contemplating turning off the JPS guarantee, which UBS considers unlikely to eventuate as it could impact on earnings and introduce reputation risk.

From a trough in FY23 the broker envisages earnings growth of 7% and 8% in FY24 and FY25, respectively. Neutral maintained. Target is reduced to $2.17 from $2.53.

Target price is $2.17 Current Price is $2.00 Difference: $0.17
If RFF meets the UBS target it will return approximately 8% (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

UBS rates RGN as Neutral (3) -

UBS observes the A-REIT sector has underperformed the broader market over the past year, given exposure to higher interest costs and cost of capital.

The broker has a preference for those with business models that are suitable in either a "higher for longer" rate environment or with robust cash flow to sustain a period of economic weakness.

Neutral rating maintained for Region Group while the target is reduced to $2.46 from $2.69.

Target price is $2.46 Current Price is $2.40 Difference: $0.06
If RGN meets the UBS target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $2.61, suggesting upside of 8.6% (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

Citi rates RIO as Buy (1) -

The Buy rating and $123 target are maintained following yesterday's first glance by Citi at Rio Tinto's June quarter production report as summarised below:

The broker felt the report was mixed. Pilbara iron ore was in line with expectations while IOC and copper were weaker.

The KUC smelter rebuild is behind schedule so refined copper production guidance for 2023 has been reduced.

The broker believes the market should not be surprised by the higher costs and working capital that were flagged. Significantly, unit cash cost guidance for the Pilbara is unchanged at US$21-22.50/t.

Raw material costs for aluminium have eased yet the company noted, given the lag, the benefits will not be seen until the second half of 2023.

Target price is $123.00 Current Price is $116.01 Difference: $6.99
If RIO meets the Citi target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $113.17, suggesting downside of -3.1% (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 RIO as Neutral (3) -

Macquarie found the June quarter production outcome mixed as Rio Tinto's iron ore shipments were in line while mined copper was -14% lower than expected. Bauxite output was -5% below estimates while aluminium production was in line.

Production and shipment guidance remains unchanged for the Pilbara, with output anticipated at the upper end of the 320-335mt range. Guidance ranges for mined copper and aluminium are also unchanged. Macquarie retains a Neutral rating and $114 target.

Target price is $114.00 Current Price is $116.01 Difference: minus $2.01 (current price is over target).
If RIO 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 $113.17, suggesting downside of -3.1% (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

Morgan Stanley rates RIO as Overweight (1) -

Morgan Stanley assesses the earnings impact of Rio Tinto's 2Q production results will be limited and points out guidance changes were already largely captured by consensus estimates.

WA iron ore production slightly exceeded forecasts by the broker and consensus though group production was in line due to lower production at iron ore Canada (IOC) which was impacted by bushfires, as expected.

First half realised iron ore prices of US$107.2/t were 1% better than Morgan Stanley's forecast.

A lowlight was copper production, which was impacted by Kenecott coming in around -30% below the broker's forecast while Escondida also underperformed by circa -8%.

The Overweight rating and $124 target are unchanged. Sector view is Attractive.

Target price is $124.00 Current Price is $116.01 Difference: $7.99
If RIO meets the Morgan Stanley target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $113.17, suggesting downside of -3.1% (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

Morgans rates RIO as Hold (3) -

Morgans sees no major revelations from Rio Tinto's 2Q production results. Guidance for 2023 Pilbara iron ore production was in the upper half of prior 320-335mt guidance.

The market took confidence from a steadier picture for the Pilbara iron ore business though the analyst observes a number of other assets require a lot of work under the company's global productivity program.

In advance of 1H results on July 26, the broker expects some consensus downgrades to flow through regarding opex, particularly to the copper division.

The company downgraded refined copper, bauxite and iron ore Canada (IOC) production guidance, and also downgraded copper cost guidance.

The Hold rating and $116 target are unchanged.

Target price is $116.00 Current Price is $116.01 Difference: minus $0.01 (current price is over target).
If RIO meets the Morgans target it will return approximately minus 0% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $113.17, suggesting downside of -3.1% (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

Ord Minnett rates RIO as Hold (3) -

Ord Minnett observes the June quarter production numbers were "solid". Rio Tinto's share of shipments from Pilbara iron ore operations, the main driver of earnings, was similar to the prior corresponding quarter albeit -5% below the March quarter.

Ord Minnett now expects 2023 copper production of around 720,000 metric tonnes because of production issues at the Kennecott operations. While bauxite and alumina production were also slightly lower than expected, the broker considers this immaterial.

No production from Simandou is incorporated in forecasts, given this is an expensive project involving significant logistical challenges and is unlikely to produce material amounts of iron ore until beyond a five-year forecast period. Holes maintained. Target is $107.

Target price is $107.00 Current Price is $116.01 Difference: minus $9.01 (current price is over target).
If RIO meets the Ord Minnett target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $113.17, suggesting downside of -3.1% (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

UBS rates RIO as Sell (5) -

Pilbara iron ore shipments in the June quarter were in line with UBS estimates and Gudai-Darri is now at nameplate. Still, shipments were lower than production because of planned maintenance at Port Dampier and a train derailment.

Rio Tinto has lifted 2023 guidance to the top half of the prior range of 320-335mt, yet the broker remains cautious about iron ore and believes the risk/reward is skewed to the downside.

Meanwhile, mined copper was mixed, with the Oyu Tolgoi ramp-up proceeding and Kennecott sustaining a smelter shutdown until September, while Escondida has been struggling with lower throughput.

Sell rating and $95 target unchanged.

Target price is $95.00 Current Price is $116.01 Difference: minus $21.01 (current price is over target).
If RIO meets the UBS target it will return approximately minus 18% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $113.17, suggesting downside of -3.1% (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

Ord Minnett rates SPK as Hold (3) -

Ord Minnett does not consider the Infratil takeover of its joint venture partner in One New Zealand would have any impact on the valuation of Spark New Zealand.

The broker continues to believe the Spark NZ shares are slightly overvalued and envisages a harmonious competitive environment in the mobile market in New Zealand as well as stable industry structure will satisfy the company's dividend-dependent investor base. Hold maintained. Target is $4.70.

Target price is $4.70 Current Price is $4.67 Difference: $0.03
If SPK meets the Ord Minnett target it will return approximately 1% (excluding dividends, fees and charges).

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: 0.3

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

Citi rates STO as Buy (1) -

In an initial response to today's quarterly production release, Citi believes Santos' production volumes were in line with forecasts, but sales proved rather "soft".

Less oil and more of domestic gas sales are suggesting Santos is making more profits than the broker was expecting. Barossa delays have reduced capex guidance.

Target price $8. Buy.

Target price is $8.00 Current Price is $7.65 Difference: $0.35
If STO meets the Citi target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $9.37, suggesting upside of 22.7% (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: 0.9

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

Bell Potter rates TLX as Buy (1) -

Telix Pharmaceuticals posted revenue growth of 20.6% in the June quarter compared with the prior quarter. Cash disbursements increased 18%. Bell Potter considers the update "relatively benign" regarding commercial conditions such as pricing, volume and market share.

The company also provided an extensive clinical update with the submission of the biological licence application for clear cell renal carcinoma on track for this year. The broker expects a US FDA decision in mid 2024.

The new drug application for TLX101 for brain cancer imaging is also on track for this year. Buy rating and $14 target maintained.

Target price is $14.00 Current Price is $12.16 Difference: $1.84
If TLX meets the Bell Potter target it will return approximately 15% (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 TWR as Outperform (1) -

Tower has indicated underlying net profit will be affected by the ongoing challenging claims environment in New Zealand. Guidance has been downgraded to a range of a loss of -NZ$2m to profit of NZ$3m.

Macquarie estimates gross written premium growth is tracking at the mid point of 15-20% while assessing the stock provides long-term value and exposure to one of the few insurance companies in the region that is growing organically.

Still, in the current reinsurance market conditions Macquarie recognises earnings volatility could increase. Outperform maintained. Target is reduced to NZ$0.78 from NZ$0.84.

Current Price is $0.56. Target price not assessed.

The company's fiscal year ends in September.

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: 1.0

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

UBS rates VEA as Buy (1) -

Refining operations in the June quarter were a drag on Viva Energy's earnings while the non-refining divisions proved more resilient, UBS observes.

Despite softening its fuel volume outlook from the second half across the Coles Express network, UBS maintains a view that, comparatively, the company has a stronger path for growth in convenience both fuel and non-fuel over the next two years, driven by the planned acquisition of OTR and the remaining 50% of the Liberty Oil convenience business.

This drives the broker's preference for Viva Energy over Ampol. Buy rating retained. Target is reduced to $3.40 from $3.55.

Target price is $3.40 Current Price is $3.09 Difference: $0.31
If VEA meets the UBS target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $3.34, suggesting upside of 7.7% (ex-dividends)

The company's fiscal year ends in December.

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

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

Morgan Stanley believes it is a step in the right direction by Westpac to spilt the Consumer and Business banks into separate divisions. It's felt a sustained re-rating requires more consistent margin management, better cost control and improved franchise performance.

Technology will be separated from Operations, which will move to Corporate Services. It was also announced Nell Hutton will run the Institutional bank.

The Equal-weight rating and $21 target are unchanged. Industry View: In-Line.

Target price is $21.00 Current Price is $22.06 Difference: minus $1.06 (current price is over target).
If WBC meets the Morgan Stanley target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $23.45, suggesting upside of 6.0% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.3

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

Citi rates WDS as Neutral (3) -

The 2Q result for Woodside Energy was largely in line with consensus estimates, and Citi notes no surprises in management guidance and maintains its $33 target and Neutral rating.

There was 91.3mmboe produced, or 49% of the mid-point of 2023 guidance for 180-190mmboe.

The broker highlight the poor record of ASX energy companies on project execution and is becoming increasingly concerned around delays to secondary approvals at Scarborough. 

A six-month delay and capex overruns of circa -US$1bn are already incorporated into the analysts's forecast.

Target price is $33.00 Current Price is $36.05 Difference: minus $3.05 (current price is over target).
If WDS meets the Citi target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $36.58, suggesting upside of 2.0% (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: 0.3

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

Macquarie rates WDS as Neutral (3) -

Woodside Energy's June quarter was generally in line with Macquarie's estimates. The broker is surprised the market did not react more negatively to the recent announcement of delays in the Sangomar FPSO (floating production, storage & offloading). This is caused an increase in capital expenditure for the company's oil project in Senegal.

While acknowledging it is better to delay the sailing of the FPSO and resolve the problem in Singapore, a lack of oversight and awareness of the build quality raises questions for Macquarie, although China's covid policies may have contributed to the issues.

Neutral rating and $33 target maintained.

Target price is $33.00 Current Price is $36.05 Difference: minus $3.05 (current price is over target).
If WDS meets the Macquarie target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $36.58, suggesting upside of 2.0% (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: 0.3

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

Morgan Stanley rates WDS as Overweight (1) -

Morgan Stanley expects an incrementally positive market reaction to Woodside Energy's 2Q operational update.

Due to planned outages at Pluto and Ngujima-Yin production fell by -5% quarter-on-quarter but was a slight beat against forecasts by the broker and consensus. Sales revenue provided more substantial beats of 4% and 3%, respectively.

Management made no changes to guidance.

The Overweight rating and $40 target are maintained. Industry View is Attractive. 

Target price is $40.00 Current Price is $36.05 Difference: $3.95
If WDS meets the Morgan Stanley target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $36.58, suggesting upside of 2.0% (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: 0.3

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

Morgans rates WDS as Hold (3) -

Woodside Energy produced 2Q production and sales numbers generally in line with Morgans forecasts. Sales volumes were a -3% miss versus the consensus estimate. FY23 guidance for production and capex was maintained.

The company achieved an average realised oil equivalent price of US$63/boe, 5% ahead of the consensus estimate.

While Scarborough is now 38% complete (was 30% complete in April) and Woodside is still targeting first LNG cargo in 2026, the analyst cautions risks remain. Details are lacking on progress of secondary environmental approvals and when drilling will commence.

The Hold rating is unchanged and the target rises to $33.60 from $32.70.

Target price is $33.60 Current Price is $36.05 Difference: minus $2.45 (current price is over target).
If WDS meets the Morgans target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $36.58, suggesting upside of 2.0% (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: 0.3

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

Ord Minnett rates WDS as Accumulate (2) -

Ord Minnett understands a decline in production in the June quarter was largely because of planned maintenance at Pluto LNG. Full-year production guidance is unchanged at 180-190mmboe.

On the positive side,  the Scarborough/Pluto T2 development is 38% complete and on track for first LNG in 2026. The broker believes, while the shares of Woodside Energy are up nearly 10% from the March lows, they remain in materially undervalued territory.

Target is raised to $45.00 from $44.50 and the Accumulate rating is maintained.

Target price is $45.00 Current Price is $36.05 Difference: $8.95
If WDS meets the Ord Minnett target it will return approximately 25% (excluding dividends, fees and charges).

Current consensus price target is $36.58, suggesting upside of 2.0% (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: 0.3

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

UBS rates WDS as Neutral (3) -

June quarter production was below UBS estimates because of softer output from Pluto and Bass Strait which caused sales revenue to be -7% below prior forecasts.

The broker now delays first oil for Sangomar to August 2024 and, despite lifting the value to reflect lower operating expenditure assumptions, the continued overruns in capital expenditure result in the project only generating a 9.5% post-tax asset IRR.

Based on this calculation, UBS believes this would not have met Woodside Energy's hurdle rates for a greenfield oil project if it was sanctioned today.

 In addition, the broker notes commercial risks are also building for Scarborough and Pluto 2. Neutral retained. Target is raised to $34.90 from $34.80.

Target price is $34.90 Current Price is $36.05 Difference: minus $1.15 (current price is over target).
If WDS meets the UBS target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $36.58, suggesting upside of 2.0% (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: 0.3

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