Australian Broker Call

UBS rates ALL as Buy (1) -

Despite some of Aristocrat Leisure's staff living in Ukraine, management doesn't expect a material impact on earnings as a result of the conflict.

Now the company has abandoned the Playtech takeover, the broker removes earnings previously anticipated, and reduces its target to $49 from $53.60. The company will consider capital returns if high returning investments are not uncovered.

The Buy rating is maintained after a material sell off for the share price over the last month on geopolitical concerns. The analyst reminds investors gaming has historically been a very resilient discretionary spend category in relative terms.

Target price is $49.00 Current Price is $35.20 Difference: $13.8
If ALL meets the UBS target it will return approximately 39% (excluding dividends, fees and charges).

Current consensus price target is $48.20, suggesting upside of 33.7% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.9

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

Credit Suisse rates AMC as Neutral (3) -

Extreme energy cost increases, euro depreciation, and Eastern Europe volume losses, are weighing on Amcor's outlook. Despite guiding to being price-cost positive by financial year-end, Credit Suisse notes this is subject to commodity prices that have continued to rise. 

Amcor is not sizeably exposed to energy pricing, and the company is expected to pass higher costs through. Credit Suisse estimates a 2-3% price increase would be required to recover costs at current spot pricing. Earnings per share estimates decline -1-4% through to FY24. 

The Neutral rating is retained and the target price decreases to $16.00 from $17.50.

Target price is $16.00 Current Price is $15.01 Difference: $0.99
If AMC meets the Credit Suisse target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $18.07, suggesting upside of 20.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

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

Market Sentiment: 0.6

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

Morgans rates BBN as Add (1) -

In reviewing the February reporting season for retail stocks, Lovisa Holdings ((LOV)) was a clear standout for Morgans.  Lovisa, Baby Bunting and Universal Store ((UNI)) are now the broker's top three picks in the sector.

The broker points out that across its coverage of retailers, 1H22 earnings (EBIT) beat expectations by 5.7%. 

The analyst retains an Add rating and $6 target for Baby Bunting. 

Target price is $6.00 Current Price is $4.57 Difference: $1.43
If BBN meets the Morgans target it will return approximately 31% (excluding dividends, fees and charges).

Current consensus price target is $6.39, suggesting upside of 36.2% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 1.0

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

UBS rates BGA as Neutral (3) -

UBS believes the Bega Cheese share price has underperformed on a relative basis due to an unfounded market expectation that a FY22 earnings (EBITDA) guidance downgrade is imminent.

The broker estimates FY22 earnings will be within the existing guidance range and a guidance update prior to August results should be a positive catalyst for the stock. The Buy rating is maintained and the target falls to $5.40 from $5.64.

Target price is $5.40 Current Price is $4.79 Difference: $0.61
If BGA meets the UBS target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $5.28, suggesting upside of 8.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.0

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

Citi rates BKW as Buy (1) -

Brickworks' first half earnings look to benefit from a cap rate compression revision that Citi estimates will bring the half's result to $321m, up from earnings guidance of $290-310 suggested in December. 

The broker's earnings expectation excludes the sale of the company's Washington H Soul Pattinson shares ((SOL)), which Citi anticipates to generate a one-off profit benefit of $375-425m. 

Increases in thermal coal expectations drive a 26% and 125% earnings forecast increase from the broker in FY22 and FY23.

The Buy rating is retained and the target price decreases to $25.00 from $30.00.

Target price is $25.00 Current Price is $20.58 Difference: $4.42
If BKW meets the Citi target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $25.23, suggesting upside of 19.2% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.3

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

Citi rates IAG as Buy (1) -

Despite Insurance Australia Group issuing an increase to estimated perils costs, Citi continues to see the company's outlook as attractive. Perils costs for FY22 rose to -$1.1bn, from -$1.045bn, and the broker expects upward pressure on FY23 perils guidance moving forward.

The additional perils costs see Citi forecast a 10.6% margin for the year, in the lower half of the company's 10-12% guidance range but equating to a notable margin improvement in the second half compared to the first. 

The Buy rating and target price of $5.75 are retained. 

Target price is $5.75 Current Price is $4.26 Difference: $1.49
If IAG meets the Citi target it will return approximately 35% (excluding dividends, fees and charges).

Current consensus price target is $4.98, suggesting upside of 15.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.3

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

Ord Minnett rates IAG as Buy (1) -

Following a claims update by Insurance Australia Group, Ord Minnett makes adjustments to earnings forecasts to reflect the new guidance on events, though makes no changes to forecast investment earnings. The Buy rating and $5.50 target are unchanged.

The analyst notes the group is confident all the costs will be treated as a single event for reinsurance purposes. Otherwise it's estimated management would have needed to allow for another retention amount of -$34m.

Target price is $5.50 Current Price is $4.26 Difference: $1.24
If IAG meets the Ord Minnett target it will return approximately 29% (excluding dividends, fees and charges).

Current consensus price target is $4.98, suggesting upside of 15.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.3

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

UBS rates IAG as Sell (5) -

Following an update by Insurance Australia Group on east coast flooding, UBS feels the consensus estimate for earnings may need to be lowered. The broker's forecast was previously below consensus. Thus, the $4.20 target and Sell rating are retained.

The company has increased FY22 catastrophe guidance by -$55m to -$1.1bn. The broker estimates the FY23 consensus expectation for a sharp increase in margin will be impacted by reinsurance constraints and a likely associated increase in catastrophe budget.

Target price is $4.20 Current Price is $4.26 Difference: minus $0.06 (current price is over target).
If IAG meets the UBS target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.98, suggesting upside of 15.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.3

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

Morgan Stanley rates IEL as Overweight (1) -

According to Morgan Stanley, IDP Education's first half results offered the first hard evidence that the company can deliver on a pre-covid growth trajectory rebound and meet the more than 50% earnings compound annual growth rate factored into broker estimates. 

Earnings increased 71% on the previous comparable period and revenue increased 47%, meaning first half earnings exceeded the previous full year by 12% while revenue was equivalent to 75% of the previous full year. 

Morgan Stanley finds IDP Education better positioned to capture market share than competitors as markets reopen, and the company is a key pick from the reporting season. 

The Overweight rating and target price of $40.20 are retained. Industry view: In-Line.

Target price is $40.20 Current Price is $28.61 Difference: $11.59
If IEL meets the Morgan Stanley target it will return approximately 41% (excluding dividends, fees and charges).

Current consensus price target is $36.80, suggesting upside of 23.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.8

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

Morgans rates LOV as Add (1) -

In reviewing the February reporting season, Lovisa Holdings was a clear standout for Morgans. It's felt the company will be able to deliver growth independent of any downturn in consumer sentiment and spending.

The broker points out that across its coverage of retailers, 1H22 earnings (EBIT) beat expectations by 5.7%, and by far the largest upgrade to forecasts was reserved for Lovisa. The Add rating and $24 target are retained.

Baby Bunting ((BBN)) and Universal Store ((UNI)) also feature with Lovisa as the broker's top picks in the sector.

Target price is $24.00 Current Price is $17.70 Difference: $6.3
If LOV meets the Morgans target it will return approximately 36% (excluding dividends, fees and charges).

Current consensus price target is $22.64, suggesting upside of 21.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.8

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

Morgans rates NHC as Add (1) -

In a discussion around New Hope's pre-released 1H results on March 22, Morgans now sees upside for the FY22 dividend and forecasts 36cps. The target rises to $3.05 from $2.61 on stronger recent prices for coal.

While the broker maintains its Add rating, there's some concern that spot coal prices may have peaked and suggests there may be a cheaper entry point ahead for the stock.

Target price is $2.61 Current Price is $2.83 Difference: minus $0.22 (current price is over target).
If NHC meets the Morgans target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.83, suggesting upside of 1.3% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 1.0

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

Citi rates NIC as Buy (1) -

Nickel Mines finds itself in a trading halt having suffered a -23% share-price fall yesterday as shareholder/partner Tsingshan Holdings reportedly scrambles to resolve a material short position on nickel, but Citi notes there is minimal risk to Nickel Mines' operations.

Tsingshan holds an 18.4% stake in Nickel Mines, anticipated to increase to 21% pending approval, and is the operator of a number of rotary kiln-electric furnace plants that Nickel Mines holds an 80% equity interest in.

Cost expectations increased given higher energy prices, Citi expects the June quarter to be a cost peak. 

The Buy rating and target price of $1.90 are retained.

Target price is $1.90 Current Price is $1.41 Difference: $0.49
If NIC meets the Citi target it will return approximately 35% (excluding dividends, fees and charges).

Current consensus price target is $1.64, suggesting upside of 33.1% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

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

Credit Suisse rates NIC as Downgrade to Neutral from Outperform (3) -

Tsingshan Holdings allegedly secured credit agreement to cover the cost margin requirements that saw the company drive up nickel prices earlier in the week, but Credit Suisse notes Nickel Mines' market perception impact will likely linger given its relationship with Tsinghshan. 

Despite this, large cost base exposure to price rises in nickel ore and coal were already placing pressure on Nickel Mines' margins. Credit Suisse attributes earnings per share forecast changes to higher unit costs. 

The rating is downgraded to Neutral from Outperform and the target price decreases to $1.35 from $1.74.

Target price is $1.35 Current Price is $1.41 Difference: minus $0.06 (current price is over target).
If NIC meets the Credit Suisse target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $1.64, suggesting upside of 33.1% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

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 NIC as Downgrade to Hold from Accumulate (3) -

Ord Minnett expects negative sentiment will weigh on Nickel Mines' near-term stock price given ties to joint venture partner Tsingshan Holding, following allegations that Tsingshan spiked a nickel price rally as it attempted to address a shortfall. 

Nickel prices more than doubled on Monday, reaching more than US$100 per kilogram from US$45 per kilogram, before the London Metal Exchange suspended trading, with limited spot inventory driving the rally. 

With reports suggesting the company was short 100,000 tonnes of nickel at the beginning of the year, Ord Minnett predicts losses of -US$2.0-10.0bn, but adds the Chinese state has likely already moved to bail out Tsingshan. 

The rating is downgraded to Hold from Accumulate and the target price of $1.60 is retained.

Target price is $1.60 Current Price is $1.41 Difference: $0.19
If NIC meets the Ord Minnett target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $1.64, suggesting upside of 33.1% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

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

Credit Suisse rates ORG as Neutral (3) -

Origin Energy has so far retained its energy market guidance for the coming financial year of $600-850m, but Credit Suisse notes substantially locked in customer pricing presents risk amid a rising price environment. 

The broker estimates a potential -$100m earnings impact in FY23 if the company needs to acquire Eraring production from the electricity market at high prices.

More positively, Credit Suisse anticipates high oil pricing to benefit FY24 earnings by $275m, and notes on a forward curve model this could increase by a further $400-500m over FY23 and FY24. 

The Neutral rating is retained and the target price increases to $6.20 from $6.00.

Target price is $6.20 Current Price is $5.86 Difference: $0.34
If ORG meets the Credit Suisse target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $6.28, suggesting upside of 8.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.5

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

Macquarie rates ORG as Outperform (1) -

Origin Energy has announced an initial $250m market share buyback on the back of strong cashflow supported by oil pricing, suggesting to Macquarie a buyback expansion is likely.

Energy Market targets reiterated, including a $200-250m cost base reduction of which $110m have been achieved. Strength in oil and gas pricing sees Macquarie lift earnings 35% in FY23, while the share buyback drives a 4.6% increase to its FY24 forecast.

The Outperform rating is retained and the target price increases to $6.81 from $6.70.

Target price is $6.81 Current Price is $5.86 Difference: $0.95
If ORG meets the Macquarie target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $6.28, suggesting upside of 8.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.5

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) -

Morgan Stanley notes Origin Energy continues to look to cost saving measures, with the company targeting a -$200-250m cash cost reduction to FY18 levels over the next two years, while also targeting a -30% sustained capital expenditure reduction through to FY26. 

The company is also set to launch an initial $250m on-market buyback in April. 

The Equal-Weight rating and target price of $6.05 are retained. Industry view: Cautious. 

Target price is $6.05 Current Price is $5.86 Difference: $0.19
If ORG meets the Morgan Stanley target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $6.28, suggesting upside of 8.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.5

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

Morgans rates ORG as Add (1) -

Morgans upgrades its earnings forecasts for Origin Energy in FY23 in anticipation of another strong year for APLNG. In addition, the broker has revised up its dividend forecast in that financial year by 10cps.

The broker estimates LNG markets will likely remain tight during FY23 and notes LNG prices were elevated even prior to the Ukraine conflict.

Management also announced an on-market share buyback of up to $250m, likely to commence in April. The Add rating is maintained and the target rises by 1% to $6.44.

Target price is $6.44 Current Price is $5.86 Difference: $0.58
If ORG meets the Morgans target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $6.28, suggesting upside of 8.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.5

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

Ord Minnett rates ORG as Hold (3) -

Origin Energy's investor day further highlighted to Ord Minnett that large retailers are investing more on energy capacity
(hydrogen, battery, peaking gas) to risk-manage increasingly volatile grid prices.

Investments in both this energy capacity, as well as information technology, are to maintain a competitive advantage in retailing, explains the analyst. However, it's feared a more commoditised offering could incur greater competition.

The Hold rating and $5.50 target are maintained.

Target price is $5.50 Current Price is $5.86 Difference: minus $0.36 (current price is over target).
If ORG meets the Ord Minnett target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $6.28, suggesting upside of 8.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.5

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

UBS rates PMV as Buy (1) -

In a preview of 1H results for Premier Investments, UBS forecasts a profit of $153.8m (consensus estimate $158.6m), and a dividend of 48cps. Gross margins are expected to fall modestly to 64.5%.

The analyst believes Smiggle provides significant reopening leverage, with children now at school more often. In addition, there's considered to be potential for increased wholesale demand in existing and (in the medium term) new markets.

The Buy rating and $30 target are unchanged.

Target price is $30.00 Current Price is $26.25 Difference: $3.75
If PMV meets the UBS target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $30.55, suggesting upside of 11.0% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.6

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

Ord Minnett rates TWE as Hold (3) -

Recent data shows industry price growth in the US partially offset lower volumes, and Ord Minnett points out Treasury Wine Estates relative sales underperformance is narrowing.

The company achieved price growth of 8.6% in the four weeks to 26 February, well above market growth of 3.7%. The analyst notes strong price growth is being seen across the 19 Crimes, Frank Family Vineyards and Stags’ Leap brands.

The Hold rating and $12.80 target are maintained.

Target price is $12.80 Current Price is $11.40 Difference: $1.4
If TWE meets the Ord Minnett target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $13.34, suggesting upside of 15.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.7

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

Morgans rates UNI as Add (1) -

In reviewing the February reporting season for retail stocks, Lovisa Holdings ((LOV)) was a clear standout for Morgans. Lovisa, Baby Bunting ((BBN)) and Universal Store are now the broker's top three picks in the sector.

The broker points out that across its coverage of retailers, 1H22 earnings (EBIT) beat expectations by 5.7%. 

The analyst retains an Add rating and $8.50 target for Universal Store.

Target price is $8.50 Current Price is $5.29 Difference: $3.21
If UNI meets the Morgans target it will return approximately 61% (excluding dividends, fees and charges).

Current consensus price target is $8.55, suggesting upside of 48.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 1.0

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