Australian Broker Call

UBS rates AGL as Sell (5) -

AGL plans to separate into two companies, believing that its NewAGL, the retail business, can offer investors a low-risk annuity on essential services which could possibly re-rate.

This may create a cleaner, more ESG-friendly narrative but UBS flags a risk that investor appetite may be low for PrimeCo - which will hold the thermal coal assets.

Guidance is yet to be forthcoming on financial profiles, capital structures or investment plans. UBS retains a Sell rating and $10.10 target.

Target price is $10.10 Current Price is $9.65 Difference: $0.45
If AGL meets the UBS target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $10.11, suggesting upside of 4.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: -0.5

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

UBS rates ALQ as Neutral (3) -

After a company briefing, UBS asserts the outlook for geochemical services is set to recover in 2021, underpinned by strong gold & base metal prices and a greater level of funding available for junior and intermediate miners.

The broker retains a Neutral rating, believing the stock is adequately pricing in the improvement. Target is $9.90.

Target price is $9.90 Current Price is $9.68 Difference: $0.22
If ALQ meets the UBS target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $10.18, suggesting upside of 3.5% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.6

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

Credit Suisse rates ANZ as Outperform (1) -

APRA has released their temporary loan repayment deferral data for February 2021. As at the end of February 2021 there were $14bn ($37bn previous month) worth of loans that have been granted temporary repayment deferrals or 0.5% of total loans.

Housing deferrals declined by -63% over the month to $12bn and SME deferrals declined by -58% to $1.5bn.

ANZ saw a -54% decrease in total deferrals over the month with a total loan deferral balance of $3.9bn. This was driven by a -66% reduction in SME deferrals. The bank had the largest number of new deferrals (-94m) out of the major banks, explains Credit Suisse.

The Outperform rating and $29.50 target are retained.

Target price is $29.50 Current Price is $28.18 Difference: $1.32
If ANZ meets the Credit Suisse target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $28.56, suggesting upside of 1.0% (ex-dividends)

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

Morgan Stanley rates ANZ as Overweight (1) -

System housing loan growth picked up to an annualised rate of around 5.1% in February. Further data leads the broker to believe that the surge in deposits has ended. 

An environment of improving loan growth and slowing deposit growth is typically a headwind for margins. However, the analyst believes the high levels of liquidity, the ongoing deposit mix shift and the low cost of wholesale funding support the near-term outlook.

ANZ Bank loan growth is losing momentum and there is downside risk to the broker's first half housing loan growth estimates.

First half annualised housing loan growth is now tracking at around 3%, which suggests meaningful downside risk to the broker's first half forecast of circa 8%. Overweight rating and target of $26.20. Industry view: In-Line.

Target price is $26.20 Current Price is $28.18 Difference: minus $1.98 (current price is over target).
If ANZ meets the Morgan Stanley target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $28.56, suggesting upside of 1.0% (ex-dividends)

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

Morgan Stanley rates BEN as Underweight (5) -

System housing loan growth picked up to an annualised rate of around 5.1% in February. Further data leads the broker to believe that the surge in deposits has ended. 

An environment of improving loan growth and slowing deposit growth is typically a headwind for margins. However, the analyst believes the high levels of liquidity, the ongoing deposit mix shift and the low cost of wholesale funding support the near-term outlook.

Morgan Stanley retains the Underweight rating and target of $9.90 for Bendigo and Adelaide Bank. Industry View: In-line.

Target price is $9.90 Current Price is $10.06 Difference: minus $0.16 (current price is over target).
If BEN meets the Morgan Stanley target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $10.27, suggesting upside of 3.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.0

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

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

UBS downgrades to Neutral from Buy as the stock has generated a total return of 108% over the past 12 months, mainly on the back of the strong iron ore price.

UBS believes the risk in the iron ore price is building as Brazilian supply recovers and Chinese demand slows. The broker now considers the risk/reward is more balanced.

Target is reduced to $42 from $50. Over the medium term UBS also envisages further headwinds from latent capacity, scrap and greenfield developments.

Target price is $42.00 Current Price is $45.30 Difference: minus $3.3 (current price is over target).
If BHP 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 $47.04, suggesting upside of 3.1% (ex-dividends)

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

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

System housing loan growth picked up to an annualised rate of around 5.1% in February. Further data leads the broker to believe that the surge in deposits has ended. 

An environment of improving loan growth and slowing deposit growth is typically a headwind for margins. However, the analyst believes the high levels of liquidity, the ongoing deposit mix shift and the low cost of wholesale funding support the near-term outlook.

Morgan Stanley retains the Equal-Weight rating and $9.60 target for Bank of Queensland. Industry view: In-line.

Target price is $9.60 Current Price is $8.65 Difference: $0.95
If BOQ meets the Morgan Stanley target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $9.15, suggesting upside of 5.9% (ex-dividends)

The company's fiscal year ends in August.

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

Credit Suisse rates CBA as Neutral (3) -

APRA has released their temporary loan repayment deferral data for February 2021. As at the end of February 2021 there were $14bn ($37bn previous month) worth of loans that have been granted temporary repayment deferrals or 0.5% of total loans.

Housing deferrals declined by -63% over the month to $12bn and SME deferrals declined by -58% to $1.5bn.

Commonwealth Bank had a -76% reduction in the balance of total deferrals to $2.3bn. The bank’s deferrals are predominantly mortgages with only $147m of SME deferrals. The Neutral rating and $85 target are retained.

Target price is $85.00 Current Price is $86.10 Difference: minus $1.1 (current price is over target).
If CBA meets the Credit Suisse target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $80.71, suggesting downside of -6.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: -0.3

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

Morgan Stanley rates CBA as Underweight (5) -

System housing loan growth picked up to an annualised rate of around 5.1% in February. Further data leads the broker to believe that the surge in deposits has ended. 

An environment of improving loan growth and slowing deposit growth is typically a headwind for margins. However, the analyst believes the high levels of liquidity, the ongoing deposit mix shift and the low cost of wholesale funding support the near-term outlook.

Commonwealth Bank loan growth went to 5.0% from 4.2%. The Underweight rating and $79 target are retained. Industry view: In-line.

Target price is $79.00 Current Price is $86.10 Difference: minus $7.1 (current price is over target).
If CBA meets the Morgan Stanley target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $80.71, suggesting downside of -6.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: -0.3

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

Macquarie rates CHC as Outperform (1) -

Macquarie notes the company's development pipeline is getting larger, at $7bn, aiding returns to both unit holders and the underlying funds.

Nevertheless, acquisitions are expected to remain the growth driver. Outperform rating and $15.78 target retained.

Target price is $15.78 Current Price is $12.88 Difference: $2.9
If CHC meets the Macquarie target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $15.69, suggesting upside of 23.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.8

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

Ord Minnett rates CHC as Accumulate (2) -

Charter Hall has showcased its capabilities and projects. The scale of office and industrial developments has been increased and development is likely to provide a higher proportion of growth in assets under management.

Ord Minnett believes Charter Hall has a better track record than the market appreciates, having delivered $5bn in development since FY15.

Details on project returns and yields on costs were limited although the company is targeting mid to high-teen gross development profit margins. Sourcing capital remains the key constraint. Ord Minnett retains an Accumulate rating and $16.50 target.

Target price is $16.50 Current Price is $12.88 Difference: $3.62
If CHC meets the Ord Minnett target it will return approximately 28% (excluding dividends, fees and charges).

Current consensus price target is $15.69, suggesting upside of 23.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.8

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

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

Morgan Stanley expects the company will generate around 48% of plasma revenue from Ig sales in FY21 and that circa 35% of such revenue could be at risk of disruption from "FcRn" molecules.

However, the broker's bull case assumes headroom in driving greater Primary & Secondary Immune Deficiency (PID/SID) penetration to absorb any associated share loss from disruption in the neurology market.

The analyst already models for around -2% pa lower long-term Ig growth due to FcRn related share loss. The Equal-weight rating and $276 target are retained. Industry view: In-Line.

Target price is $276.00 Current Price is $264.65 Difference: $11.35
If CSL meets the Morgan Stanley target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $297.30, suggesting upside of 13.2% (ex-dividends)

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: 0.6

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

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

UBS downgrades CSR to Neutral from Buy. The business is highly leveraged to housing and remains in an earnings upgrade cycle as the benefit from the recent surge in housing approvals is still to come over the next 6-12 months.

The broker also suspects earnings margins could exceed the prior cycle high of 14%. Nevertheless, there is talk of potential macro prudential measures for late 2021 to curb surging home prices and approvals could be near their peak, UBS asserts.

The stock is up 20% from its pre-pandemic levels and the broker believes the price is more than capturing the upside. Target is raised to $5.73 from $5.19.

Target price is $5.73 Current Price is $5.78 Difference: minus $0.05 (current price is over target).
If CSR 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 $5.51, suggesting downside of -5.7% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.6

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

Credit Suisse rates DBI as Outperform (1) -

Credit Suisse regards the Final Decision of the Queensland Competition Authority (QCA) to transition to a light-touch framework as a key catalyst for the company. The decision allows the transition to a negotiate/arbitrate framework with coal miners, explains the broker.

When the analyst assumes $3.11/t pricing from FY22-30, with no change to long-term forecasts, it raises the share valuation to $3.07 from $2.75. However, a more conservative approach raises the target to $2.75 from $2.50 while the Outperform rating is maintained.

Target price is $2.75 Current Price is $2.20 Difference: $0.55
If DBI meets the Credit Suisse target it will return approximately 25% (excluding dividends, fees and charges).

Current consensus price target is $2.61, suggesting upside of 12.0% (ex-dividends)

The company's fiscal year ends in December.

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

Morgans rates DBI as Add (1) -

The Final Decision from the Queensland Competition Authority (QCA)  to transition to light-handed regulation is in-line with Morgans’ investment view. This is considered to give the company greater bargaining power with customers and supports the long-term valuation.

The broker forecasts FY22 earnings (EBITDA) to be around 24% higher than FY20, based on the assumption that the company negotiates an average Terminal Infrastructure Charge of $2.94/t in 2022 versus 2.46/t in 2021 (all adjusted due to December 2020 IPO).

The Add rating is maintained and the target increases to $2.57 from $2.55. The broker notes the shares have an appealing yield and the company’s policy is to grow the DPS at 1-2% pa and pay quarterly.

Target price is $2.57 Current Price is $2.20 Difference: $0.37
If DBI meets the Morgans target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $2.61, suggesting upside of 12.0% (ex-dividends)

The company's fiscal year ends in December.

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 EVN as Equal-weight (3) -

Morgan Stanley advises the feasibility study for GRE46 is on schedule for a mid-year release. Management expects mine permitting to be completed around September, with mine construction to commence soon after. The broker estimates first mine production in 2H FY23.

Morgan Stanley retains its Equal-weight rating. Target is $4.10. Industry view: Attractive.

Target price is $4.10 Current Price is $4.08 Difference: $0.02
If EVN meets the Morgan Stanley target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $4.43, suggesting upside of 5.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.3

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

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

UBS downgrades to Neutral from Buy, reducing the target to $18 from $25. Fortescue Metals has generated a total shareholder return of 213% over 12 months on the back of the strong iron ore price.

Yet the broker believes the iron ore price risk is building as Brazilian supply recovers and Chinese demand slows. Hence, UBS considers the risk/reward is no longer compelling despite the high cash returns.

Target price is $18.00 Current Price is $19.99 Difference: minus $1.99 (current price is over target).
If FMG meets the UBS target it will return approximately minus 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $22.02, suggesting upside of 9.0% (ex-dividends)

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: 0.3

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

Credit Suisse rates IAG as Outperform (1) -

Now that all three general insurers having provided guidance on estimated costs from the recent floods, Credit Suisse updates natural perils assumptions and provides an update on the key considerations for Insurance Australia Group.

The group increased the natural perils allowance for FY21 by around -$20m to $680m, decreasing the broker's FY21 cash profit (NPAT) by around -2%. There is a risk of further increases but these are considered likely to be moderate.

The company's maximum event retention is $169m and management expects the floods net cost post quota-share to be -$135m.

The Outperform rating and $5.35 target are retained and given the robust reinsurance structure and higher allowances, Credit Suisse expects more stable earnings versus the past decade.

Target price is $5.35 Current Price is $4.68 Difference: $0.67
If IAG meets the Credit Suisse target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $5.42, suggesting upside of 13.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.6

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

Credit Suisse rates NAB as Outperform (1) -

APRA has released their temporary loan repayment deferral data for February 2021. As at the end of February 2021 there were $14bn ($37bn previous month) worth of loans that have been granted temporary repayment deferrals or 0.5% of total loans.

Housing deferrals declined by -63% over the month to $12bn and SME deferrals declined by -58% to $1.5bn.

The National Australia Bank had the lowest balance of deferrals out of the major banks, with a total deferral balance of $900m or 0.2% of total loans. The Outperform rating and $27 target are retained.

Target price is $27.00 Current Price is $26.00 Difference: $1
If NAB meets the Credit Suisse target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $26.41, suggesting upside of 1.2% (ex-dividends)

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 NAB as Equal-weight (3) -

System housing loan growth picked up to an annualised rate of around 5.1% in February. Further data leads the broker to believe that the surge in deposits has ended. 

An environment of improving loan growth and slowing deposit growth is typically a headwind for margins. However, the analyst believes the high levels of liquidity, the ongoing deposit mix shift and the low cost of wholesale funding support the near-term outlook.

The National Australia Bank's loan growth remains well below system but picked up to around 2.4% from circa 1.3%. The Equal-weight rating and target of $25.30 are retained. Industry view: In-line.

Target price is $25.30 Current Price is $26.00 Difference: minus $0.7 (current price is over target).
If NAB meets the Morgan Stanley target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $26.41, suggesting upside of 1.2% (ex-dividends)

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

Macquarie rates NCM as Outperform (1) -

Initial resource estimates have been established for Red Chris. The estimates assume both open pit and block cave underground mining methods.

The measured and indicated resource totals 980mt at 0.41g/t gold and 0.38% copper for 13m ounces of contained gold and 3.7mt of copper. Around 80% of gold and 75% of copper are contained in the underground estimate.

The company continues to target higher grade mineralisation, presenting upside risk, and Macquarie expects the meaningful copper exposure will provide earnings support. Outperform rating and $28 target.

Target price is $28.00 Current Price is $24.42 Difference: $3.58
If NCM meets the Macquarie target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $31.21, suggesting upside of 24.6% (ex-dividends)

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

Morgan Stanley rates NCM as Overweight (1) -

Updated resource estimates for both open pit and underground for Red Chris shows Morgan Stanley the limited potential of the asset as an open pit ore body.

In a comparison to the commencement of Cadia, the broker highlights Red Chris shows better grades and lower tonnes currently with significant potential still to expand the resource inventory. Overweight rating and target price of $30.20 maintained. Industry view: Attractive.

Target price is $30.20 Current Price is $24.42 Difference: $5.78
If NCM meets the Morgan Stanley target it will return approximately 24% (excluding dividends, fees and charges).

Current consensus price target is $31.21, suggesting upside of 24.6% (ex-dividends)

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

Credit Suisse rates QBE as Outperform (1) -

Now that all three general insurers having provided guidance on estimated costs from the recent floods, Credit Suisse updates natural perils assumptions and provides an update on the key considerations for QBE Insurance Group.

The group has left its natural peril allowance unchanged as it reports on a calendar year basis so has a further nine months of perils performance still to play out. Its net exposure to the floods is capped at -US$125m.

The Outperform rating and $11.80 target are unchanged.

Target price is $11.80 Current Price is $9.62 Difference: $2.18
If QBE meets the Credit Suisse target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $10.64, suggesting upside of 8.6% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY21:

Forecast for FY22:

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

Market Sentiment: 0.8

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

Macquarie rates SGF as Outperform (1) -

SG Fleet will acquire LeasePlan Australia and New Zealand. The acquisition price of $387m comprises $273m in cash and a 13% equity interest in the combined entity. Majority shareholder Super Group has committed to take up its entitlement.

Macquarie notes this will make SG Fleet the largest fleet and novated operator in Australia with successful execution of the integration adding value over the medium term. Outperform rating maintained. Target rises to $3.07 from $2.90.

Target price is $3.07 Current Price is $2.58 Difference: $0.49
If SGF meets the Macquarie target it will return approximately 19% (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 SGF as Overweight (1) -

Morgan Stanley updates after the LeasePlan ANZ ((ANZ)) acquisition at a cost of -$387m and notes the combined entity will have around 70% recurring revenue. Cash EPS accretion of circa 5% is expected in FY22/23 and greater than 20% after.

The broker explains the rationale for the acquisition includes scale and synergies, and a strategic alliance with global LeasePlan.

Current trading suggests to the analyst a strong pipeline of growth and while there are supply constraints, novated is at the highest order level since late 2019. The Overweight rating and target of $3 are retained. Industry view: In-Line.

Target price is $3.00 Current Price is $2.58 Difference: $0.42
If SGF meets the Morgan Stanley target it will return approximately 16% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 1.0

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

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

Citi notes Suncorp's flood costs of $240m are likely to mean it will exceed its FY21 allowance by around $40m, assuming around $25m per month in attritional hazard losses from March to June 2021.

Citi lowers estimates by -3% to reflect the overrun to date. As the stock has retreated since its result and capital initiatives will potentially come into play in August the rating is lifted to Buy from Neutral. Target is reduced to $11.40 from $11.50.

Suncorp's recovery story is considered more about the medium term and the broker continues to nominate QBE Insurance ((QBE)) as its top pick.

Target price is $11.40 Current Price is $9.90 Difference: $1.5
If SUN meets the Citi target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $11.67, suggesting upside of 13.4% (ex-dividends)

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

Credit Suisse rates SUN as Outperform (1) -

Now that all three general insurers having provided guidance on estimated costs from the recent floods, Credit Suisse updates natural perils assumptions and provides an update on the key considerations for Suncorp Group.

The group estimates a flood cost of around -$230-250m with a capped exposure of -$250m. The broker assumes total FY21 natural perils of -$1,010m, decreasing FY21 cash profit (NPAT) by circa -4%.

Earnings for FY21 are updated to reflect an estimated -$60m increased natural perils cost versus the analyst's previous forecast and reinsurance costs in FY22 onwards are increased by -15 basis points. Outperform and target is lowered to $11.25 from $11.40.

Target price is $11.25 Current Price is $9.90 Difference: $1.35
If SUN meets the Credit Suisse target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $11.67, suggesting upside of 13.4% (ex-dividends)

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

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

Suncorp Group has updated that the recent east coast flooding will lead to -$230-250m of claims, where they will be capped by reinsurance. Catastrophe (CAT) costs were -$643m at end of February and are now expected to be -$900m versus -$950m CAT budget.

The broker feels comfortable with a forecast of -$1.0bn CAT costs given the combination of drop-down and aggregate reinsurance covers will protect the group.

All else being equal, a 5% increase in FY22 forecast group reinsurance costs would see the insurance margin fall by circa -0.7%, insurance profit fall by around -8% and group cash earnings fall by approximately -4%, calculates the analyst.

Equal-weight rating. Target is $11.10. Industry view: In-line.

Target price is $11.10 Current Price is $9.90 Difference: $1.2
If SUN meets the Morgan Stanley target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $11.67, suggesting upside of 13.4% (ex-dividends)

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

Morgans rates SUN as Add (1) -

Suncorp Group has disclosed it expects net costs from the recent floods to be -$230-250m. Morgans expects the group’s strong reinsurance protections (for the rest of FY21) will help limit total FY21 hazards costs to only marginally above the hazard budget.

Morgans downgrades FY21 EPS by -3% reflecting revised claims forecasts for the year while outer year forecasts are unchanged. The Add rating is maintained and the target falls to $11.80 from $12.63.

The broker believes the group has weathered the covid period well and the outlook will improve from here as the insurance book is repriced and more positive macro trends assist the bank.

Target price is $11.80 Current Price is $9.90 Difference: $1.9
If SUN meets the Morgans target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $11.67, suggesting upside of 13.4% (ex-dividends)

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

UBS rates SUN as Buy (1) -

Suncorp has updated on the recent flooding claims across NSW and Queensland. The company expects the cost of the event to be $230-250m, with UBS noting Suncorp appears to be assuming a higher average claim cost compared with Insurance Australia Group ((IAG)).

A $250m event would result in a maximum retention from a further event in the second half being capped at $40m and one after that at $5m. The main exposure therefore, UBS notes, remains an accumulation of smaller events.

Buy rating and $11.15 target are unchanged.

Target price is $11.15 Current Price is $9.90 Difference: $1.25
If SUN meets the UBS target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $11.67, suggesting upside of 13.4% (ex-dividends)

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

Credit Suisse rates WBC as Outperform (1) -

APRA has released their temporary loan repayment deferral data for February 2021. As at the end of February 2021 there were $14bn ($37bn previous month) worth of loans that have been granted temporary repayment deferrals or 0.5% of total loans.

Housing deferrals declined by -63% over the month to $12bn and SME deferrals declined by -58% to $1.5bn.

Westpac had the highest balance of deferrals with a total deferral balance of $5.1bn or 0.9% of total loans. The Outperform rating and $25.50 target are retained.

Target price is $25.50 Current Price is $24.41 Difference: $1.09
If WBC meets the Credit Suisse target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $26.11, suggesting upside of 6.4% (ex-dividends)

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

Morgan Stanley rates WBC as Overweight (1) -

System housing loan growth picked up to an annualised rate of around 5.1% in February. Further data leads the broker to believe that the surge in deposits has ended. 

An environment of improving loan growth and slowing deposit growth is typically a headwind for margins. However, the analyst believes the high levels of liquidity, the ongoing deposit mix shift and the low cost of wholesale funding support the near-term outlook.

Progress was encouraging at Westpac Bank, with 1H growth now tracking comfortably above Morgan Stanley's forecast. It's believed the franchise performance and mortgage growth will improve, given greater focus from management and a better housing outlook.

The Overweight rating and $27.20 target are retained. The bank's 1H21 annualised housing loan growth is now tracking at circa 1.6% which is comfortably above the broker's forecast of 0%. Industry view: In-line.

Target price is $27.20 Current Price is $24.41 Difference: $2.79
If WBC meets the Morgan Stanley target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $26.11, suggesting upside of 6.4% (ex-dividends)

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