Australian Broker Call
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September 20, 2022
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COMPANIES DISCUSSED IN THIS ISSUE
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The number next to the symbol represents the number of brokers covering it for this report -(if more than 1).
Last Updated: 05:00 PM
Your daily news report on the latest recommendation, valuation, forecast and opinion changes.
This report includes concise but limited reviews of research recently published by Stockbrokers, which should be considered as information concerning likely market behaviour rather than advice on the securities mentioned. Do not act on the contents of this Report without first reading the important information included at the end.
For more info about the different terms used by stockbrokers, as well as the different methodologies behind similar sounding ratings, download our guide HERE
Today's Upgrades and Downgrades
| BKW - | Brickworks | Upgrade to Add from Hold | Morgans |
Overnight Price: $17.26
Credit Suisse rates AMC as Neutral (3) -
Credit Suisse has described Amcor as becoming increasingly focused on "organic, constant currency revenue growth".
Having previously discussed Amcor's growth opportunities in North American small customers and European protein packaging, the broker honed in on the company's North American pet food packaging opportunity in its latest report.
Amcor's North American pet food packaging sales are estimated at US$50m, underdeveloped compared to its European operations. Credit Suisse expects growing its North American presence could be a US$150m medium-term sales opportunity for Amcor.
The Neutral rating and target price of $17.85 are retained.
Target price is $17.85 Current Price is $17.26 Difference: $0.59
If AMC meets the Credit Suisse target it will return approximately 3% (excluding dividends, fees and charges).
Current consensus price target is $18.58, suggesting upside of 6.8% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY23:
Credit Suisse forecasts a full year FY23 dividend of 65.71 cents and EPS of 114.82 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 121.9, implying annual growth of N/A. Current consensus DPS estimate is 72.8, implying a prospective dividend yield of 4.2%. Current consensus EPS estimate suggests the PER is 14.3. |
Forecast for FY24:
Credit Suisse forecasts a full year FY24 dividend of 69.90 cents and EPS of 126.55 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 128.0, implying annual growth of 5.0%. Current consensus DPS estimate is 75.4, implying a prospective dividend yield of 4.3%. Current consensus EPS estimate suggests the PER is 13.6. |
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
Overnight Price: $72.32
Morgan Stanley rates ASX as Equal-weight (3) -
Intra-month data for September imply to Morgan Stanley interest rate volumes are up for the ASX by around 2% for FY23 so far.
Should volumes grow by 2% year-on-year, the broker expects a circa -1% fall in its earnings forecast for FY23.
The Equal-weight rating and $80.20 target are retained. Industry view: Attractive.
Target price is $80.20 Current Price is $72.32 Difference: $7.88
If ASX meets the Morgan Stanley target it will return approximately 11% (excluding dividends, fees and charges).
Current consensus price target is $80.93, suggesting upside of 11.7% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY23:
Morgan Stanley forecasts a full year FY23 dividend of 253.70 cents and EPS of 282.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 278.7, implying annual growth of 6.1%. Current consensus DPS estimate is 252.7, implying a prospective dividend yield of 3.5%. Current consensus EPS estimate suggests the PER is 26.0. |
Forecast for FY24:
Morgan Stanley forecasts a full year FY24 dividend of 262.60 cents and EPS of 292.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 289.4, implying annual growth of 3.8%. Current consensus DPS estimate is 262.0, implying a prospective dividend yield of 3.6%. Current consensus EPS estimate suggests the PER is 25.0. |
Market Sentiment: 0.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
BKW BRICKWORKS LIMITED
Building Products & Services
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Overnight Price: $20.51
Morgans rates BKW as Upgrade to Add from Hold (1) -
As Brickworks shares are currently trading at an around -30% discount to the last disclosed net tangible assets (NTA) metric, Morgans upgrades its rating to Add from Hold. Investors can now buy a quality business well below replactement value, notes the analyst.
While the business is correlated to both the US and domestic housing markets, the broker points out cyclicality is partially offset by earnings stability from the investment in WH Soul Pattinson ((SOL)). A 50% share in two long-lease property trusts provides a further offset.
The target price falls to $23 from $26.10. Morgans believes Brickworks can maintain the trend, in place since 1976, of maintaining or increasing its normal dividend.
Target price is $23.00 Current Price is $20.51 Difference: $2.49
If BKW meets the Morgans target it will return approximately 12% (excluding dividends, fees and charges).
Current consensus price target is $24.74, suggesting upside of 14.2% (ex-dividends)
The company's fiscal year ends in July.
Forecast for FY22:
Morgans forecasts a full year FY22 dividend of 63.00 cents and EPS of 264.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 346.7, implying annual growth of 118.1%. Current consensus DPS estimate is 62.5, implying a prospective dividend yield of 2.9%. Current consensus EPS estimate suggests the PER is 6.2. |
Forecast for FY23:
Morgans forecasts a full year FY23 dividend of 65.00 cents and EPS of 152.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 158.2, implying annual growth of -54.4%. Current consensus DPS estimate is 64.0, implying a prospective dividend yield of 3.0%. Current consensus EPS estimate suggests the PER is 13.7. |
Market Sentiment: 0.6
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
LNK LINK ADMINISTRATION HOLDINGS LIMITED
Wealth Management & Investments
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Overnight Price: $3.40
Ord Minnett rates LNK as Accumulate (2) -
The board of Link Administration does not recommend a revised offer from Dye & Durham. The company will proceed with the sale of at least 80% of its Pexa Group ((PXA)) shares, should the scheme implementation deed not proceed.
Ord Minnett highlights the current share price is well adrift of the revised (rejected) offer and maintains its Accumulate rating and $4.20 target price. It's felt a much better revised offer will be needed for the deal to proceed.
This stock is not covered in-house by Ord Minnett. Instead, the broker whitelabels research by JP Morgan.
Target price is $4.20 Current Price is $3.40 Difference: $0.8
If LNK meets the Ord Minnett target it will return approximately 24% (excluding dividends, fees and charges).
Current consensus price target is $4.58, suggesting upside of 33.2% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY23:
Ord Minnett forecasts a full year FY23 dividend of 10.00 cents and EPS of 20.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 22.8, implying annual growth of N/A. Current consensus DPS estimate is 11.5, implying a prospective dividend yield of 3.3%. Current consensus EPS estimate suggests the PER is 15.1. |
Forecast for FY24:
Ord Minnett forecasts a full year FY24 dividend of 13.00 cents and EPS of 25.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 25.7, implying annual growth of 12.7%. Current consensus DPS estimate is 13.0, implying a prospective dividend yield of 3.8%. Current consensus EPS estimate suggests the PER is 13.4. |
Market Sentiment: 0.3
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $5.76
Macquarie rates ORG as Outperform (1) -
Macquarie is positive on the sale of Beetaloo acreage for $60m, as it will provide cost savings to increase dividends in the near term or free capacity for new energy investment. It's also considered to reduce ESG risk.
The broker anticipates strong cash flow from current above-forecast oil prices and maintains its Outperform rating and $7.42 target price.
Target price is $7.42 Current Price is $5.76 Difference: $1.66
If ORG meets the Macquarie target it will return approximately 29% (excluding dividends, fees and charges).
Current consensus price target is $6.48, suggesting upside of 9.5% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY23:
Macquarie forecasts a full year FY23 dividend of 35.00 cents and EPS of 30.80 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 39.6, implying annual growth of N/A. Current consensus DPS estimate is 33.0, implying a prospective dividend yield of 5.6%. Current consensus EPS estimate suggests the PER is 14.9. |
Forecast for FY24:
Macquarie forecasts a full year FY24 dividend of 30.00 cents and EPS of 48.10 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 54.7, implying annual growth of 38.1%. Current consensus DPS estimate is 33.8, implying a prospective dividend yield of 5.7%. Current consensus EPS estimate suggests the PER is 10.8. |
Market Sentiment: 0.3
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Morgans rates ORG as Hold (3) -
Morgans raises its investing cashflow forecast (and dividend expectations) on much reduced exploration activity and the one off boost from the sale of Origin Energy's position in the Beetaloo Basin.The target price rises to $5.70 from $5.68.
The Hold rating is maintained as the broker notes ongoing uncertainty in energy markets and the company's lack of detail on how to participate in the energy transition.
Target price is $5.70 Current Price is $5.76 Difference: minus $0.06 (current price is over target).
If ORG meets the Morgans target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $6.48, suggesting upside of 9.5% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY23:
Morgans forecasts a full year FY23 dividend of 29.00 cents and EPS of 52.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 39.6, implying annual growth of N/A. Current consensus DPS estimate is 33.0, implying a prospective dividend yield of 5.6%. Current consensus EPS estimate suggests the PER is 14.9. |
Forecast for FY24:
Morgans forecasts a full year FY24 dividend of 29.00 cents and EPS of 57.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 54.7, implying annual growth of 38.1%. Current consensus DPS estimate is 33.8, implying a prospective dividend yield of 5.7%. Current consensus EPS estimate suggests the PER is 10.8. |
Market Sentiment: 0.3
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
UBS rates ORG as Buy (1) -
UBS supports the strategic decision by Origin Energy to focus capital allocation on energy transition in its Energy Markets division and upon its 27.5% operating-interest in APLNG. This view follows the sale of the company's interest in the Beetaloo basin.
The analyst expects guidance from management on the Energy Markets division within the next eight weeks, which could lead to further capital management initiatives.
Should the acquirer go on to develop Betaloo, UBS notes Origin Energy retains royalty upside. The Buy rating and $7.35 target are maintained.
Target price is $7.35 Current Price is $5.76 Difference: $1.59
If ORG meets the UBS target it will return approximately 28% (excluding dividends, fees and charges).
Current consensus price target is $6.48, suggesting upside of 9.5% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY23:
UBS forecasts a full year FY23 dividend of 31.00 cents and EPS of 14.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 39.6, implying annual growth of N/A. Current consensus DPS estimate is 33.0, implying a prospective dividend yield of 5.6%. Current consensus EPS estimate suggests the PER is 14.9. |
Forecast for FY24:
UBS forecasts a full year FY24 dividend of 39.00 cents and EPS of 38.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 54.7, implying annual growth of 38.1%. Current consensus DPS estimate is 33.8, implying a prospective dividend yield of 5.7%. Current consensus EPS estimate suggests the PER is 10.8. |
Market Sentiment: 0.3
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
PNV POLYNOVO LIMITED
Pharmaceuticals & Biotech/Lifesciences
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Overnight Price: $1.49
Macquarie rates PNV as Outperform (1) -
The announced FDA clearance for NovoSorb MTX is complementary to the existing NovoSorb BTM offering, but will allow for use in a wider variety of indications, according to Macquarie.
The broker highlights MTX will broaden the depth of PolyNovo's product offering, and hopefully lead to greater penetration into existing hospital accounts.
The product may diversify sales into indications outside of burns, explains the analyst. The $1.90 target and Outperform rating are unchanged.
Target price is $1.90 Current Price is $1.49 Difference: $0.41
If PNV meets the Macquarie target it will return approximately 28% (excluding dividends, fees and charges).
The company's fiscal year ends in June.
Forecast for FY23:
Macquarie forecasts a full year FY23 dividend of 0.00 cents and EPS of 0.00 cents. |
Forecast for FY24:
Macquarie forecasts a full year FY24 dividend of 0.00 cents and EPS of 2.40 cents. |
Market Sentiment: 0.5
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $3.99
Macquarie rates SFR as Outperform (1) -
Macquarie raises its target price for Sandfire Resources to $5.40 from $5.00 after raising medium and longer-term estimates for the Matsa operation in Spain, following a site tour.
The increased estimates reflect increased resource conversion, which extends the mine life to 2040, explains the analyst. It's estimated rising grades will see zinc production increase at Matsa by 25% over the next three years, underpinning a reduction in cash costs.
The Outperform rating is unchanged.
Target price is $5.40 Current Price is $3.99 Difference: $1.41
If SFR meets the Macquarie target it will return approximately 35% (excluding dividends, fees and charges).
Current consensus price target is $5.47, suggesting upside of 34.4% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY23:
Macquarie forecasts a full year FY23 dividend of 0.00 cents and EPS of 13.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 11.2, implying annual growth of N/A. Current consensus DPS estimate is 2.5, implying a prospective dividend yield of 0.6%. Current consensus EPS estimate suggests the PER is 36.3. |
Forecast for FY24:
Macquarie forecasts a full year FY24 dividend of 0.00 cents and EPS of 7.55 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 4.4, implying annual growth of -60.7%. Current consensus DPS estimate is 0.7, implying a prospective dividend yield of 0.2%. Current consensus EPS estimate suggests the PER is 92.5. |
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
Overnight Price: $5.21
Credit Suisse rates WEB as Neutral (3) -
Credit Suisse reinitiates on Webjet, highlighting the company retains its first mover advantage in Australia and New Zealand and a dominant 50% market share across online travel agents.
The broker considers a shift towards e-commerce a likely medium-term earnings headwind for Webjet. Credit Suisse also expects the WebBeds offering will appeal to hoteliers given its low-cost model, and remains constructive on the platform's earnings generation potential.
The broker reinitiates its coverage on Webjet with an Outperform rating and a target price of $6.60.
Target price is $6.60 Current Price is $5.21 Difference: $1.39
If WEB meets the Credit Suisse target it will return approximately 27% (excluding dividends, fees and charges).
Current consensus price target is $6.56, suggesting upside of 21.3% (ex-dividends)
The company's fiscal year ends in March.
Forecast for FY23:
Credit Suisse forecasts a full year FY23 dividend of 4.50 cents and EPS of 15.75 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 16.2, implying annual growth of N/A. Current consensus DPS estimate is 1.4, implying a prospective dividend yield of 0.3%. Current consensus EPS estimate suggests the PER is 33.4. |
Forecast for FY24:
Credit Suisse forecasts a full year FY24 dividend of 8.80 cents and EPS of 31.28 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 30.4, implying annual growth of 87.7%. Current consensus DPS estimate is 7.4, implying a prospective dividend yield of 1.4%. Current consensus EPS estimate suggests the PER is 17.8. |
Market Sentiment: 0.7
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $0.79
Citi rates ZIP as Sell (5) -
Citi has used a general sector update on the local technology sector to sneakily upgrade its price target for Zip Co to 80c from 70c previously.
Rating remains Sell, High Risk.
Target price is $0.80 Current Price is $0.79 Difference: $0.01
If ZIP meets the Citi target it will return approximately 1% (excluding dividends, fees and charges).
Current consensus price target is $0.76, suggesting downside of -2.3% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY23:
Citi forecasts a full year FY23 dividend of 0.00 cents and EPS of minus 36.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is -22.4, implying annual growth of N/A. Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A. Current consensus EPS estimate suggests the PER is N/A. |
Forecast for FY24:
Citi forecasts a full year FY24 dividend of 0.00 cents and EPS of minus 24.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is -12.3, implying annual growth of N/A. Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A. Current consensus EPS estimate suggests the PER is N/A. |
Market Sentiment: -0.5
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Today's Price Target Changes
| Company | Last Price | Broker | New Target | Prev Target | Change | |
| BKW | Brickworks | $21.66 | Morgans | 23.00 | 26.10 | -11.88% |
| ORG | Origin Energy | $5.92 | Morgans | 5.70 | 5.68 | 0.35% |
| SFR | Sandfire Resources | $4.07 | Macquarie | 5.40 | 5.00 | 8.00% |
| WEB | Webjet | $5.41 | Credit Suisse | 6.60 | 5.40 | 22.22% |
| ZIP | Zip Co | $0.78 | Citi | 0.80 | 0.70 | 14.29% |
Summaries
| AMC | Amcor | Neutral - Credit Suisse | Overnight Price $17.26 |
| ASX | ASX | Equal-weight - Morgan Stanley | Overnight Price $72.32 |
| BKW | Brickworks | Upgrade to Add from Hold - Morgans | Overnight Price $20.51 |
| LNK | Link Administration | Accumulate - Ord Minnett | Overnight Price $3.40 |
| ORG | Origin Energy | Outperform - Macquarie | Overnight Price $5.76 |
| Hold - Morgans | Overnight Price $5.76 | ||
| Buy - UBS | Overnight Price $5.76 | ||
| PNV | PolyNovo | Outperform - Macquarie | Overnight Price $1.49 |
| SFR | Sandfire Resources | Outperform - Macquarie | Overnight Price $3.99 |
| WEB | Webjet | Neutral - Credit Suisse | Overnight Price $5.21 |
| ZIP | Zip Co | Sell - Citi | Overnight Price $0.79 |
RATING SUMMARY
| Rating | No. Of Recommendations |
| 1. Buy | 5 |
| 2. Accumulate | 1 |
| 3. Hold | 4 |
| 5. Sell | 1 |
Tuesday 20 September 2022
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