Australian Broker Call

Macquarie rates ABC as Underperform (5) -

Macquarie has an Underperform rating and $2.30 target for Adbri (formerly Adelaide Brighton).

Target price is $2.30 Current Price is $3.26 Difference: minus $0.96 (current price is over target).
If ABC meets the Macquarie target it will return approximately minus 29% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.71, suggesting downside of -15.0% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: -0.1

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

Credit Suisse rates ALL as Outperform (1) -

The pandemic and resultant lockdown are accelerating the activity in real-money gambling online. While this is a seemingly lucrative market, Credit Suisse assesses that, in the context of US land-based casino revenue, it is insignificant.

The broker suspects Aristocrat Leisure will not capture the level of market share in digital that it has achieved in land-based gaming. Outperform rating and $28 target maintained.

Target price is $28.00 Current Price is $27.02 Difference: $0.98
If ALL meets the Credit Suisse target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $29.89, suggesting upside of 10.8% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 1.0

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

UBS rates ALL as Buy (1) -

UBS notes a significant increase in second half social casino revenue, driven by social distancing restrictions.

However, April and May are likely to represent peak disruption as a result of the pandemic, and this should moderate as people spend less time at home.

There could be some lasting benefits, the broker concedes, as some customers will re-activate their interest in the apps.

Buy rating maintained. Target is $31.80.

Target price is $31.80 Current Price is $27.02 Difference: $4.78
If ALL meets the UBS target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $29.89, suggesting upside of 10.8% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 1.0

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

UBS rates AMA as Buy (1) -

UBS notes trends are improving, with traffic volumes well placed to end up higher than pre-pandemic levels as Australians increase their use of cars.

Public transport remains weak, with surveys suggesting a large portion of Australians are uncomfortable taking public transport at present.

Buy rating retained. Target rises to $0.75 from $0.55.

Target price is $0.75 Current Price is $0.65 Difference: $0.1
If AMA meets the UBS target it will return approximately 15% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 1.0

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

UBS rates ANN as Neutral (3) -

UBS assesses the longer-term outlook across the Ansell divisions, envisaging upside risk for the healthcare division out to FY24, while the industrial division is skewed to the downside.

The broker suspects the market is not yet pricing in any structural change to earnings. Should evidence of a true structural change in demand for personal protective equipment emerge, the healthcare division is expected to re-rate.

Neutral rating maintained. Target rises to $35 from $31.

Target price is $35.00 Current Price is $35.36 Difference: minus $0.36 (current price is over target).
If ANN 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 $31.78, suggesting downside of -10.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

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

Market Sentiment: 0.3

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

Ord Minnett rates AQZ as Buy (1) -

Ord Minnett assesses the business is benefiting from structural change in the domestic aviation market as well as the competitive landscape in charter.

The business is being set up to move to the next level, with a combination of more services for existing customers as well as the addition of new customers.

Ord Minnett retains a Buy rating and raises the target to $3.70 from $3.00.

Target price is $3.70 Current Price is $3.02 Difference: $0.68
If AQZ meets the Ord Minnett target it will return approximately 23% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 1.0

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

Macquarie rates CGC as Upgrade to Neutral from Underperform (3) -

Pandemic-related restrictions are being eased in Australia with sequential improvement in the food service sector. Meanwhile, Macquarie notes produce pricing remains solid and seasonal conditions robust.

Rating is upgraded to Neutral from Underperform. While Costa Group is at the higher end of the investment risk spectrum, Macquarie believes the bar is now set lower after a recent decline in the share price. Target is $2.87.

Target price is $2.87 Current Price is $2.87 Difference: $0
If CGC meets the Macquarie target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $3.32, suggesting upside of 13.8% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.6

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

Credit Suisse rates CGF as Neutral (3) -

Credit Suisse calculates that the company's capital position dropped to the lower end of the target range in March because of the large expansion in sub-investment-grade credit spreads and a drop in equity markets.

Furthermore, the broker assesses that around half of the third quarter investment loss will not unwind because of changes in asset mix.

With hindsight, Credit Suisse suggests an equity raising may have been easier and a less dilutive option.

In the short term the broker is concerned that investors may overestimate the extent and speed at which an investment market unwinding will occur and there is downside risk to consensus forecasts. Neutral rating maintained. Target rises to $5.70 from $4.25.

Target price is $5.70 Current Price is $5.22 Difference: $0.48
If CGF meets the Credit Suisse target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $4.79, suggesting downside of -8.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.0

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

Macquarie rates COH as Outperform (1) -

Macquarie has surveyed 14 US-based audiologists specialising in cochlear implants. The survey found Cochlear has the strongest product offering.

Restrictions on elective surgery have affected most participants in the survey and new patient volumes were -68% below pre-pandemic levels as of mid May.

However, while there is a degree of uncertainty in the outlook, the broker expects a recovery in volumes, which combined with the strength of the company's portfolio and the AB product recall should support above-industry unit sales growth.

Target is raised to $208.50 from $196.00. Outperform retained.

Target price is $208.50 Current Price is $193.46 Difference: $15.04
If COH meets the Macquarie target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $183.61, suggesting downside of -5.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.0

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

Ord Minnett rates CQE as Accumulate (2) -

Ord Minnett updates its financial modelling for Charter Hall Social Infrastructure. The broker believes income disruption for childcare landlords will be modest as a result of the pandemic and value declines relatively minor.

The broker considers the assets offer attractive returns and maintains an Accumulate rating and $2.80 target.

Target price is $2.80 Current Price is $2.45 Difference: $0.35
If CQE meets the Ord Minnett target it will return approximately 14% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.5

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

Macquarie rates FPH as Upgrade to Outperform from Neutral (1) -

In the US, Macquarie has research that indicates hospitalisation rates for the pandemic imply a high severity flu season. For the company, hospitalisation rates are a key driver of demand for consumables.

The broker assesses earnings momentum, combined with upside risk presented by second coronavirus wave, is compelling. Rating is upgraded to Outperform from Neutral. Target is raised to NZ$30.97 from NZ$25.02.

Current Price is $26.26. Target price not assessed.

Current consensus price target is N/A

The company's fiscal year ends in March.

Forecast for FY20:

Forecast for FY21:

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

UBS rates FPH as Sell (5) -

UBS notes initial attempts to assess sales related to the pandemic were based on high estimates of infection rates, available ICU beds and manufacturing capability.

Amid further information, the broker lifts hospital revenue estimates in FY21 but believes the magnitude and longevity of the pandemic-related sales will eventually be disappointing. In addition, the share price has added 30% since mid January.

Sell rating retained. Target is raised to NZ$18.20 from NZ$17.45.

Current Price is $26.26. Target price not assessed.

Current consensus price target is N/A

The company's fiscal year ends in March.

Forecast for FY20:

Forecast for FY21:

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

Morgans rates HLS as Downgrade to Hold from Add (3) -

Healius has divested its medical centres business to BGH Capital for $500m with the transaction to be completed by end of 2020.

Morgans considers the transaction reasonably priced that will strengthen Healius’s balance sheet and simplify operations across the main divisions. The company, as per a trading update, is seeing a recovery across its entire business.

The broker cautions the transition to a specialist diagnostic and day hospital operator is far from complete and highlights risks around GP referrals, optimisation of cost base and growth to drive market share gains.

The broker downgrades to Hold from Add on account of the divesture with target price reduced to $2.96 from $3.04.

Target price is $2.96 Current Price is $3.11 Difference: minus $0.15 (current price is over target).
If HLS meets the Morgans target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.28, suggesting upside of 5.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.8

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

Ord Minnett rates ILU as Downgrade to Hold from Accumulate (3) -

As there has been no update since the company withdrew guidance and reduced zircon production settings, Ord Minnett assesses there is plenty of risk around the outlook.

The main catalyst is a confirmation of the structure and timing of the spin-off of the royalty for the Mining Area C.

The broker also awaits further detail on the project pipeline to assess how this will benefit from the higher prices that are anticipated.

While remaining positive on the stock for the medium to longer term, Ord Minnett downgrades to Hold from Accumulate. Target is $8.90.

Target price is $8.90 Current Price is $8.82 Difference: $0.08
If ILU meets the Ord Minnett target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $9.43, suggesting upside of 10.4% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.4

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

Macquarie rates IVC as Downgrade to Underperform from Outperform (5) -

Macquarie's analysis suggests the company continues to lose market share. Earnings risk is skewed to the downside. FY20 has been affected by lower case averages because of funeral restrictions.

There is also likely to be lower influenza-related deaths this winter because of physical distancing. Rating is downgraded to Underperform from Outperform and the target is lowered to $10.20 from $12.80.

Target price is $10.20 Current Price is $11.38 Difference: minus $1.18 (current price is over target).
If IVC meets the Macquarie target it will return approximately minus 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $11.98, suggesting upside of 5.9% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.2

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

Morgan Stanley rates MTS as Upgrade to Overweight from Equal-weight (1) -

Morgan Stanley anticipates a strong update for April and May. The broker believes Metcash merits a higher multiple, given its earnings diversification and balance sheet strength.

Industry feedback suggests the company's food business has taken share over the period of the lockdowns.

Morgan Stanley remains positive on the supermarket segment because of easing food deflation and discounters being less of a headwind.

Rating is upgraded to Overweight from Equal-weight and the target raised to $3.30 from $2.90. Cautious industry view.

Target price is $3.30 Current Price is $2.79 Difference: $0.51
If MTS meets the Morgan Stanley target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $2.94, suggesting upside of 2.1% (ex-dividends)

The company's fiscal year ends in April.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.4

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

Morgans rates PAL as Add (1) -

Palla Pharma is well on its way to become a fully integrated contract manufacturing organisation (CMO) and drug detailer with plenty in terms of narcotic raw materials (NRM) supply, reports Morgans. The company has acquired seven marketing authorisations (MAs) while choosing not to acquire a major UK customer.

The broker sees significant growth prospects but not before the fourth quarter of 2020, expecting headwinds in the first half of 2020 from the loss of manufacturing license (UK customer), exit from the non-opiate, low margin CMO contract with Karo Pharma and covid-19 led supply chain issues with lower pain prescription demand.

Morgans retains its Add rating with the target price unchanged at $1.23.

Target price is $1.23 Current Price is $0.77 Difference: $0.46
If PAL meets the Morgans target it will return approximately 60% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 1.0

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

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

The reaffirming of the Standard and Poor's credit rating for the company's senior debt at BBB-plus with a negative outlook is a small positive, in Morgan Stanley's view.

The rating agency's working assumptions are lower than forecasts from the International Travel Association (IATA) but then, as the broker points out, no one has a high conviction on aviation currently.

Morgan Stanley envisages a reduced need for Sydney Airport to undertake additional repair to the balance sheet. Equal-weight. Target is $6.88. Industry view is Cautious.

Target price is $6.88 Current Price is $6.24 Difference: $0.64
If SYD meets the Morgan Stanley target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $6.40, suggesting upside of 2.5% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.1

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

Macquarie rates TWE as Underperform (5) -

Macquarie observes wine preferences are shifting towards value globally which will likely put pressure on FY21 margins.

The reopening of restaurants and bars in Australia should help improve the mix but the feedback suggests they will require support and discounting to encourage purchases, given challenges in cash flow.

Macquarie retains an Underperform rating and lowers the target to $9.30 from $9.60.

Target price is $9.30 Current Price is $11.20 Difference: minus $1.9 (current price is over target).
If TWE meets the Macquarie target it will return approximately minus 17% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $11.21, suggesting upside of 1.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.0

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

Credit Suisse rates VEA as Neutral (3) -

Credit Suisse found the company's update positive. Guidance implies a $30m net profit benefit from FX and oil derivatives.

A strategy for the development of the Geelong site has been unveiled, but the broker suspects there is much to be done before money is spent.

An investment decision has also been decoupled from shareholder returns from the proceeds of the A-REITs sale, which Credit Suisse assumes will proceed in the second half of 2020 or in the first half of 2021.

Aviation remains the chief uncertainty in the commercial outlook, while petrol volumes are expected to quickly return to pre-pandemic levels in the second half. Neutral maintained. Target rises to $1.74 from $1.35.

Target price is $1.74 Current Price is $1.76 Difference: minus $0.02 (current price is over target).
If VEA 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 $2.08, suggesting upside of 14.7% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.6

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

Morgan Stanley rates VEA as Overweight (1) -

First half guidance was strong, Morgan Stanley observes, given the challenging backdrop from the pandemic. The main issue is whether the retail fuel market has turned the corner.

The broker assesses relatively low trading multiples and the share buyback present upside. A modest upgrade to refinery earnings in 2021 also drives the valuation.

Overweight retained. Target rises to $2.40 from $2.10. Industry view is Cautious.

Target price is $2.40 Current Price is $1.76 Difference: $0.64
If VEA meets the Morgan Stanley target it will return approximately 36% (excluding dividends, fees and charges).

Current consensus price target is $2.08, suggesting upside of 14.7% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.6

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

Morgans rates VEA as Add (1) -

It appears Viva Energy Group has been able to deal well with the pandemic induced disruptions with the group announcing a better than expected first-half guidance (unaudited). The group has guided towards first-half operating income between $257.5-$287.5m and net profit between $20-$50m.

Morgans notes the collapse in oil prices helped Viva to flex margins in order to tackle lower demand. Refining continues to generate losses and the broker expects this to remain a drag on the overall business. The group has resumed its share buyback and plans to buy back $50m of stock.

The broker maintains its Add rating with target price increasing to $2 from $1.90.

Target price is $2.00 Current Price is $1.76 Difference: $0.24
If VEA meets the Morgans target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $2.08, suggesting upside of 14.7% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.6

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

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

The first half update was ahead of Ord Minnett's forecasts. Costs and capital expenditure have been managed better than the broker expected.

The announcement of the Geelong energy hub provides an option but the broker has become more positive on the stock because of retail fuel margins, cost management and capital management.

Rating is upgraded to Accumulate from Hold. Target is raised to $2.00 from $1.40.

Target price is $2.00 Current Price is $1.76 Difference: $0.24
If VEA meets the Ord Minnett target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $2.08, suggesting upside of 14.7% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.6

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

UBS rates VEA as Buy (1) -

First half guidance for operating earnings of $257.5-287.5m is ahead of UBS estimates and drives a 56% upgrade to 2020 forecasts. Commercial volumes were the largest driver of the beat to estimates.

The broker also notes Viva Energy hopes to monetise its Geelong terminal through an LNG imports supply and storage facility.

A $50m buyback has been announced with the remainder of the proceeds from the A-REIT sale under consideration. Buy rating retained. Target rises to $2.30 from $2.20.

Target price is $2.30 Current Price is $1.76 Difference: $0.54
If VEA meets the UBS target it will return approximately 31% (excluding dividends, fees and charges).

Current consensus price target is $2.08, suggesting upside of 14.7% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.6

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