Australian Broker Call

Macquarie rates AGL as No Rating (-1) -

The NSW government has signalled zero coal generation by 2030 is possible and the energy regulator is preparing a grid for 100% renewables at certain points in the day by 2025. Macquarie estimates, given the current timetable for AGL's closures a more aggressive shut-down scenario could be increasingly likely.

The broker suggests earnings pressure will re-emerge in FY24-28 as capacity continues to grow ahead of the withdrawals. The broker upgrades FY22 estimates by 10%, lowering coal cost expectations, while reducing subsequent years because of lower power prices and lower generation from the coal fleet.

Due to research restrictions, Macquarie cannot advise its valuation on AGL Energy at present.

Current Price is $5.97. Target price not assessed.

Current consensus price target is $7.34, suggesting upside of 24.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: -0.2

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

Citi rates ANZ as Sell (5) -

While ANZ Bank has the largest exposure of the majors to New Zealand, Citi estimates it may not have the leverage to rising rates that some investors expect. The broker retains its Sell rating and $28 target price.

This comes as the analyst expects the Reserve Bank of New Zealand to offer investors a preview for the impact of rising interest rates.

Target price is $28.00 Current Price is $27.41 Difference: $0.59
If ANZ meets the Citi target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $29.60, suggesting upside of 6.6% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.2

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

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

Ord Minnett downgrades its rating to Accumulate from Buy after a recent share price rally. The target price is increased to $25.78 from $21.98 after raising the earnings forecast for FY22 to the midpoint of the group’s underlying net profit guidance range of $70-73m.

Over the last few months, the analyst highlights the group has seen strong underlying EPS growth and consistent dividend growth, with the operating environment expected to remain favourable.

Target price is $25.78 Current Price is $23.77 Difference: $2.01
If AUB meets the Ord Minnett target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $25.67, suggesting upside of 7.8% (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

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

After stronger rent collections than initially expected, Aventus Group intends to pay a distribution of 4.5cps for the first quarter. On a run-rate basis across FY22, Morgan Stanley estimates a full-year distribution of 18cps, or around 2% upside to its original 17.6cps forecast.

While the broker likes the large format retail thematic (and cap rate tailwinds) current valuation may limit upside. The Equal-weight rating and target of $3.30 are unchanged. Industry view: In-line. Management will provide an update at or prior to its AGM on November 24.

Target price is $3.30 Current Price is $3.28 Difference: $0.02
If AVN meets the Morgan Stanley target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $3.24, suggesting downside of -2.6% (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 AX1 as Neutral (3) -

Citi leaves its Neutral rating and $2.14 target price unchanged after weighing Nike's recent downgrade to its FY22 outlook on the back of supply chain issues. It's though Accent Group's excess inventory position will somewhat protect against this risk over the first half.

Nonetheless, supply chain issues do pose some risk to second half performance, cautions the analyst.

Target price is $2.14 Current Price is $2.15 Difference: minus $0.01 (current price is over target).
If AX1 meets the Citi target it will return approximately minus 0% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.50, suggesting upside of 13.3% (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

Credit Suisse rates BPT as Outperform (1) -

Credit Suisse asserts Beach Energy has taken a hit to credibility amid a lack of catalysts and the risk of downgrades since the update on Western Flank.

Yet the broker believes, with the de-rating of -5% since mid August, the valuation can be justified based on Otway, Waitsia and the CBJV alone.

The risk of further downgrades is reduced while production should lift over the next 12 months, the broker adds. Outperform maintained. Target is raised to $1.57 from $1.50.

Target price is $1.57 Current Price is $1.19 Difference: $0.38
If BPT meets the Credit Suisse target it will return approximately 32% (excluding dividends, fees and charges).

Current consensus price target is $1.43, suggesting upside of 15.1% (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

Citi rates BXB as Buy (1) -

Citi was disappointed by a large (though less-than-expected) transformational investment program and profit guidance which raised more uncertainties than answers. The former is thought to have halted the underling momentum emerging in the business.

However, the analyst sees attractive growth off re-based earnings, due to potential returns from automation and digitisation. The broker retains its Buy rating and lowers its target price to $13.35 from $13.58.

Target price is $13.58 Current Price is $10.93 Difference: $2.65
If BXB meets the Citi target it will return approximately 24% (excluding dividends, fees and charges).

Current consensus price target is $12.50, suggesting upside of 14.7% (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

Macquarie rates CHN as Outperform (1) -

Macquarie updates estimates to incorporate the FY21 result. The loss was larger than the broker expected largely because of increased costs associated with employees shares and higher exploration expenses.

The maiden resource at Julimar is due at the end of the year and, subsequently, the Gonneville drilling is expected to be completed by early 2022.

The near-term catalysts is securing access to the state forest, the broker suggests. Outperform rating and $9.70 target retained.

Target price is $9.70 Current Price is $7.01 Difference: $2.69
If CHN meets the Macquarie target it will return approximately 38% (excluding dividends, fees and charges).

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

Citi rates COH as Sell (5) -

Citi believes a lawsuit bought by the University of Pittsburgh in the US for alleged patent infringement of a wireless energy transfer system will be immaterial to Cochlear. The $220 target price and Sell rating are unchanged.

The analyst makes no changes to forecasts and does not expect any disruption to the existing and future business of the company in any meaningful way.

Target price is $220.00 Current Price is $225.73 Difference: minus $5.73 (current price is over target).
If COH meets the Citi target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $222.64, suggesting downside of -1.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: -0.1

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

Citi rates DMP as Buy (1) -

After recently hosting a meeting with the ceo of Burger King in France, Ord Minnett notes an outlook and view which is broadly supportive of Domino's Pizza Enterprise's plans in France.

The analyst sees France as a key market. It's the company's third biggest market and accounts for 14% of its stores. The Buy rating and $159.05 target price are unchanged.

Target price is $159.05 Current Price is $158.52 Difference: $0.53
If DMP meets the Citi target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $116.07, suggesting downside of -26.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: -0.2

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

UBS rates DXS as Neutral (3) -

Dexus, together with APN Industria REIT (((ADI)), announced -$1.5bn of acquisitions including the -$1.3bn Jandakot airport (Perth’s second airport). The transaction adds significant assets under management (AUM) and the 4.7% cap rate appears reasonable to UBS. 

However, being a Perth exposure, it doesn’t reflect a material discount for the complexity associated with owning an airport and introducing new future capital partners, explains the broker.

The REIT is raising $350m to fund the acquisitions and to provide capacity for the developments and post the transaction will be 79% logistics (previously 67%) including a 6% development exposure. The Neutral rating and $11.15 target are unchanged.

Target price is $11.15 Current Price is $10.78 Difference: $0.37
If DXS meets the UBS target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $11.11, suggesting upside of 3.0% (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

Credit Suisse rates ECX as Outperform (1) -

Credit Suisse remains upbeat on the stock ahead of the FY21 result, assessing underlying conditions will be similar in the second half. Used car prices remain high and the broker suspects these will stay that way until around mid 2022 when new car supply should normalise.

The broker also understands the order book is strong. FY23 earnings per share are likely to decline on FY22, Credit Suisse ascertains, as the business cycles abnormally high end-of-lease income. Yet by that stage assets under management should be growing strongly.

Outperform maintained. Target rises to $2.60 from $2.40.

Target price is $2.60 Current Price is $2.30 Difference: $0.3
If ECX meets the Credit Suisse target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $2.61, suggesting upside of 13.6% (ex-dividends)

The company's fiscal year ends in September.

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

UBS rates FSF as Neutral (3) -

FY21 normalised earnings (EBIT) rose 8% and were 3% ahead of the UBS estimate, driven by stronger Asia Pacific and Europe, Middle East & Africa and North Asia (AMENA) consumer contributions and lower overheads. This was  partly offset by greater Ingredients margin pressure.

The broker feels EPS looks to have stabilised, the balance sheet is repaired and management has set new aspirations for significantly
better financial outcomes over the next three years. The target falls to NZ$4.30 from NZ$5.

The Neutral rating is retained, especially as the key upside potential from the proposed AMENA disposal is currently more than 12 months away. 

Current Price is $3.85. Target price not assessed.

The company's fiscal year ends in July.

Forecast for FY22:

Forecast for FY23:

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

Market Sentiment: 0.5

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

Macquarie rates HLS as Outperform (1) -

Macquarie reviews its assumptions regarding coronavirus testing globally. While vaccination rates have increased in key countries over 2021, case numbers and testing volumes are also higher. The broker revises forecasts to capture this increase in testing volumes over FY22 and the contribution in FY23-24 as well.

Macquarie prefers Healius over Sonic Healthcare ((SHL)) in this space given the opportunity for margin improvement. Target is raised to $5.55 from $5.30 and an Outperform rating is maintained.

Target price is $5.55 Current Price is $4.93 Difference: $0.62
If HLS meets the Macquarie target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $5.14, suggesting upside of 2.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.4

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

Ord Minnett rates SFR as Hold (3) -

Ord Minnett sees strategic merit in the introduction of existing production from an OECD jurisdiction, after Sandfire Resources announced the acquisition of 100% of Minas De Aguas Tenidas (MATSA) for -$2.57bn. The Hold rating and $6.40 target are unchanged.

The broker also notes the transaction will replace depletion from the DeGrussa operation and will provide cornerstone production as the pipeline is built out. The acquisition will be funded via a $1.248bn equity raising, $1.1bn in debt funding and a $297m cash contribution.

Target price is $6.40 Current Price is $6.22 Difference: $0.18
If SFR meets the Ord Minnett target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $7.05, suggesting upside of 30.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.4

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

Macquarie rates SHL as Neutral (3) -

Macquarie reviews its assumptions regarding coronavirus testing globally. While vaccination rates have increased in key countries over 2021, case numbers and testing volumes are also higher. The broker revises forecasts to capture this increase in testing volumes over FY22 and the contribution in FY23-24 as well.

Macquarie prefers Healius ((HLS)) over Sonic Healthcare given the opportunity for margin improvement. Target is raised to $41.50 from $40.50 and a Neutral rating is maintained.

Target price is $41.50 Current Price is $40.59 Difference: $0.91
If SHL meets the Macquarie target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $44.00, suggesting upside of 6.5% (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 SWP as No Rating (-1) -

Morgans initiates coverage of Swoop Holdings with a $2.43 target price. The company owns and operates one of Australia’s largest fixed Wireless Internet Service Providers and is focused on regional areas, where there are low internet speeds.

The broker starts with a Hold rating due to a full multiple though acquisitions should quickly pull this multiple lower. However, it's thought integration and execution risk are the largest short-term risks for the company.

The company has around 1-2% market share in its key markets and 46% of these customers are on-net and the balance are resold (eg NBN last-mile). Gross profits will more than double if customers are moved onto the company’s fixed wireless network, according to the analyst.

Target price is $2.43 Current Price is $2.19 Difference: $0.24
If SWP meets the Morgans target it will return approximately 11% (excluding dividends, fees and charges).

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

Citi rates TCL as Neutral (3) -

Citi updates estimates to reflect the acquisition of the remaining 49% stake in WestConnex by Sydney Transport Partners, in which Transurban Group holds a 50% stake. The group also introduced first half DPS guidance at 15cps.

The broker believes the transaction is positive though sees some near-term dilution to free cashflow/dividend forecasts. The broker reduces its target price to $13.78 from $13.85 and retains its Neutral rating. 

Target price is $13.78 Current Price is $14.05 Difference: minus $0.27 (current price is over target).
If TCL 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 $14.97, suggesting upside of 5.6% (ex-dividends)

The company's fiscal year ends in June.

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 VTG as Downgrade to Hold from Buy (3) -

Ord Minnett lowers its rating to Hold from Speculative Buy. The broker's bear case scenario was realised after the sale of the ICT business at a favourable price to Telstra ((TLS)) of  $110m or $0.66 cents per Vita Group share. The price target falls to $0.93 from $1.11.

Management intends to pay a special dividend of $0.39-$0.45cps out of the proceeds, with attached franking credits of $0.17-$0.19cps. The group will retain around $35m to support the growth of the Artisan skin health and wellness business and pay transaction costs.

Target price is $0.93 Current Price is $0.88 Difference: $0.05
If VTG meets the Ord Minnett target it will return approximately 6% (excluding dividends, fees and charges).

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