Australian Broker Call

Macquarie rates ABP as Initiate Coverage with Outperform (1) -

Macquarie ceased coverage of Abacus Property in 2013 but has now returned to "initiate" with an Outperform rating and $2.81 target.

Abacus is progressing with its shift to an annuity-style business, the broker notes, boasting a solid office portfolio given tenant mix, and a growing self-storage portfolio offering superior operating metrics to specialist National Storage ((NSR)).

The broker's forecast suggest 2% dividend growth, a 7% yield and a total shareholder return of 12%.

Target price is $2.81 Current Price is $2.68 Difference: $0.13
If ABP meets the Macquarie target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $2.76, suggesting upside of 1.6% (ex-dividends)

The company's fiscal year ends in June.

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

Macquarie rates ALQ as Outperform (1) -

The broker notes lead indicators for ALS' geochem business are improving, with Canadian resource raisings up 66% in the first half of 2020 and Australian raisings also lifting off low levels. Typically there is a 2-3 month lag for resource raisings to flow into additional exploration activity.

The broker is also now more positive on the USD gold price outlook. ALS is lagging peers on a valuation basis. Outperform and $7.78 target retained.

Target price is $7.78 Current Price is $6.67 Difference: $1.11
If ALQ meets the Macquarie target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $7.68, suggesting upside of 15.1% (ex-dividends)

The company's fiscal year ends in March.

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

Citi rates APT as Neutral (3) -

Citi considers Afterpay a beneficiary of the accelerated shift to e-commerce.

However, the broker retains a Neutral/High Risk rating, being cautious about the outlook for consumer discretionary expenditure and bad debts.

Target is increased to $64.25 from $27.10, which reflects earnings upgrades, higher peer multiples and the rollover of relative valuation to reflect the opportunity in new markets.

Target price is $64.25 Current Price is $62.24 Difference: $2.01
If APT meets the Citi target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $43.49, suggesting downside of -35.9% (ex-dividends)

The company's fiscal year ends in June.

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

Citi rates CGC as Buy (1) -

Australian wholesale prices for avocados, mushrooms, raspberries and blueberries were very strong in the month of June.

Global citrus pricing trends are also looking favourable. Citi notes Costa Group is cautious about its own citrus harvest in 2020.

The harvest could be less than 80,000 tonnes and lower quality and Citi would need to witness 10% pricing growth in exports to offset the risk to earnings.

Buy rating and $3.40 target maintained.

Target price is $3.40 Current Price is $2.91 Difference: $0.49
If CGC meets the Citi target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $3.32, suggesting upside of 7.2% (ex-dividends)

The company's fiscal year ends in December.

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

Macquarie rates GMA as Outperform (1) -

Genworth Mortgage Insurance has restructured its floating rate subordinated notes, removing medium term pressure to refinance old debt, the broker reports. Additional debt, along with the National bank contract expiry, provides Genworth with capital flexibility.

Choppy times may be ahead for the economy and housing market but the broker sees value at 0.6x net tangible assets. Outperform retained, target falls to $2.90 from $3.15 on a mark to market.

Target price is $2.90 Current Price is $2.15 Difference: $0.75
If GMA meets the Macquarie target it will return approximately 35% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

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

Ord Minnett rates HMC as Hold (3) -

Home Consortium has raised $140m to fund the acquisition of three new neighbourhood shopping centres and a residential aged care facility.

A further $20m of equity is being issued to the aged care vendors while a share purchase plan will raise up to $30m.

Ord Minnett considers the assets will provide good income security while the funding strengthens the balance sheet.

The broker retains a Hold rating and reduces the target to $3.10 from $3.20.

Target price is $3.10 Current Price is $3.00 Difference: $0.1
If HMC meets the Ord Minnett target it will return approximately 3% (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

UBS rates IAG as Upgrade to Buy from Neutral (1) -

General insurer share prices have underperformed, UBS observes, with average 2020 price declines of -30% in the year to date.

The broker attributes this to de-risked investment exposures, lower running yields and an overhang of claims risk.

Rating is upgraded to Buy from Neutral and the target is reduced to $6.45 from $6.55.

Target price is $6.45 Current Price is $5.59 Difference: $0.86
If IAG meets the UBS target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $6.31, suggesting upside of 10.0% (ex-dividends)

The company's fiscal year ends in June.

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

Citi rates ILU as Neutral (3) -

Weak demand for pigment has affected feedstocks and the company has announced a reduction in 2020 synthetic rutile offtake volumes.

One key customer has declared force majeure and in the year to date taken only 17,000t of its contracted 80,000t.

Citi also has evidence of trouble in pigment markets, pressured by China's expanding exports, and operating rates are likely to remain low for 2020.

Neutral rating retained. Target is trimmed to $9.45 from $9.75.

Target price is $9.45 Current Price is $8.45 Difference: $1
If ILU meets the Citi target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $9.54, suggesting upside of 12.7% (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

Morgans rates ISD as Add (1) -

Management has reinstated FY20 underlying operating earnings guidance of $20-21m.

The trading update reveals a resilient business and Morgans considers FY20 has provided a strong outcome relative to the performance of many other companies.

Good cash conversion has occurred and there is significant headroom on the bank facility.

Isentia will exit its North Asia business as it is considered non-core and sub-scale. Morgans retains an Add rating with a $0.33 target.

Target price is $0.33 Current Price is $0.20 Difference: $0.13
If ISD meets the Morgans target it will return approximately 65% (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 KLL as Outperform (1) -

Kalium Lakes has provided a maiden resource estimate for Ten Mile Lake West which increases Beyondie's total resource by 36% and grade by 8%, the broker notes. The prospect's proximity to production areas implies low development capital intensity.

If management can deliver Beyondie’s development to the revised construction schedule, this will be key to realising the long-term value the broker believes the project has to offer. Outperform and 45c target retained.

Target price is $0.45 Current Price is $0.17 Difference: $0.28
If KLL meets the Macquarie target it will return approximately 165% (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

Credit Suisse rates LLC as Outperform (1) -

FY20 earnings are lower than Credit Suisse expected with a statutory loss of -$230-340m guided, including -$370m of after-tax engineering separation costs.

The lower expectations are driven by the timing differences of developments and, in this, the pandemic has had a material impact.

On the positive side, the engineering sale will be completed in FY21 and the broker expects most of the bad news is now behind the company.

Credit Suisse revises FY20, FY21 and FY22 estimates down by -149%, -9.2% and -1.7%, respectively.

Outperform rating maintained. Target is raised to $13.38 from $12.37.

Target price is $13.38 Current Price is $12.21 Difference: $1.17
If LLC meets the Credit Suisse target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $14.26, suggesting upside of 9.8% (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

Macquarie rates LLC as Neutral (3) -

Lendlease has announced core FY20 profit guidance of $50-150m compared to the broker's previous forecast of $580m.

The forecast included profits from One Sydney Harbour which will come in FY21 but even adjusting for that, and higher than forecast property devaluations, earnings still remain well below the broker's prior assumptions.

The company has pointed to development delays and lower revenues given shutdowns, particularly in the US, and the broker suspects lower operating leverage.

FY21 should be better, and the Engineering & Services division is slowly being resolved. The broker retains an Outperform rating. Target falls to $14.24 from $14.92.

Target price is $14.24 Current Price is $12.21 Difference: $2.03
If LLC meets the Macquarie target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $14.26, suggesting upside of 9.8% (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

Morgan Stanley rates LLC as No Rating (-1) -

Lendlease Group expects FY20 core net profit of $50-$150m, a large miss from Morgan Stanley’s expected $611m. The broker attributes this to asset devaluation of -$180-$220m and losses in the second half from origination and construction activities.

The broker views FY20's result as a one-off with all construction projects resumed and does not expect a loss in FY21.

The sale of the company's engineering division to Acciona Infrastructure remains on track.

Net profit estimates reduced for FY20-22 by -79%, -23% and -11%. Morgan Stanley is under research restriction. Industry view: In-line.

Current Price is $12.21. Target price not assessed.

Current consensus price target is $14.26, suggesting upside of 9.8% (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 LLC as Buy (1) -

LendLease has highlighted the significant impact the pandemic has had on the business. Ord Minnett estimates a second half loss of -$160m.

Hence, the decision to raise $1.2bn in capital in April takes on additional importance.

While there remains some issues for the company to address, the broker assesses the potential rewards are high for those willing to go the distance.

Buy rating retained. Target is $14.

Target price is $14.00 Current Price is $12.21 Difference: $1.79
If LLC meets the Ord Minnett target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $14.26, suggesting upside of 9.8% (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

UBS rates LLC as Buy (1) -

Lendlease anticipates FY20 operating profit of $50-150m, which to UBS implies an operating loss of -$160-260m in the second half.

This is significantly below expectations, with material development transactions being delayed to FY21.

Management remains confident the engineering sale will settle in FY21.

This, along with the resolution of the Melbourne Metro project, is a positive catalyst although UBS suggests investors will need patience.

Buy rating retained. Target is reduced to $14.00 from $15.50.

Target price is $14.00 Current Price is $12.21 Difference: $1.79
If LLC meets the UBS target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $14.26, suggesting upside of 9.8% (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

Credit Suisse rates MFG as Upgrade to Neutral from Underperform (3) -

Credit Suisse upgrades FY20 estimates due to higher performance fees and investment income from distributions. Retail flows are tracking better than the broker expected.

While valuation appeal is limited, Credit Suisse cannot find a negative catalyst on the horizon and upgrades to Neutral from Underperform.  Target is raised to $55 from $47.

There is potential upside from an announcement on a partnership with Blackwattle, which could be a step into managing unlisted assets and add 10-15% to earnings over the next five years.

Target price is $55.00 Current Price is $59.12 Difference: minus $4.12 (current price is over target).
If MFG meets the Credit Suisse target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $47.95, suggesting downside of -22.3% (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 MGX as Outperform (1) -

The broker has tweaked its production forecasts for Mt Gibson Iron, adding 30% to FY22-23 to reflect the inclusion of the Shine project while pushing out the timing on Koolan Island production, resulting in cuts to FY21.

The addition of Shine materially boosts Mt Gibson's leverage to iron ore prices, the broker notes. Outperform and $1.00 target retained.

Target price is $1.00 Current Price is $0.64 Difference: $0.36
If MGX meets the Macquarie target it will return approximately 56% (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

Morgans rates NTD as Add (1) -

The company has upgraded operating earnings guidance by 20% because of stronger-than-expected trading in June.

Morgans forecasts flat earnings in FY21 because of the uncertain consumer backdrop but remains optimistic about the leverage to increased car usage.

The broker assesses the future strategy will be about volume, scale and diversification.

Add rating maintained. Target rises to $0.50 from $0.45.

Target price is $0.50 Current Price is $0.44 Difference: $0.06
If NTD meets the Morgans 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: 1.0

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

Macquarie rates NXT as Neutral (3) -

NextDC has announced a 4MW contract win in NSW which takes total contracted utilisation to in excess of 69MW. The company will now complete the fit-out of S2 to its planned capacity of 30MW, while S3 is in development for a first half FY22 completion.

The stock is trading at a 60-70% enterprise valuation to peers, the broker notes, which is arguably justified by a stronger growth profile, but does not reflect project delivery risk. Neutral retained, target rises to $10.50 from $9.10.

Target price is $10.50 Current Price is $10.68 Difference: minus $0.18 (current price is over target).
If NXT meets the Macquarie target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $10.51, suggesting downside of -2.1% (ex-dividends)

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

Morgans rates NXT as Hold (3) -

NextDC has contracted an additional 4MW in NSW. There is also now 24MW of customer options offered in NSW.

Morgans estimates S2 is now 70% contracted and is impressed with the large amount of options.

The broker expects existing CSP customers are planning to call these options as long as customer demand holds up.

Hold maintained. Target rises to $11.11 from $8.80.

Target price is $11.11 Current Price is $10.68 Difference: $0.43
If NXT meets the Morgans target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $10.51, suggesting downside of -2.1% (ex-dividends)

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

Ord Minnett rates NXT as Hold (3) -

NextDC has won a 4MW contract in NSW. This is ahead of Ord Minnett's estimates by 6-12 months.

The broker believes the share price already reflects the additional capacity sell-through at M2 while the stock continues to trade at a premium to global peers.

Hold rating retained. Target is raised to $10.00 from $9.15.

Target price is $10.00 Current Price is $10.68 Difference: minus $0.68 (current price is over target).
If NXT meets the Ord Minnett target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $10.51, suggesting downside of -2.1% (ex-dividends)

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

UBS rates NXT as Buy (1) -

NextDC has acquired a 4MW contract, which brings NSW to over 36MW along with 24MW in extension options.

UBS had expected that hyper-scale customers would wait until a majority of the original 16MW of contracted S2 capacity had been delivered.

The additional contract further de-risks earnings growth and the broker retains a Buy rating with a $10.70 target.

Target price is $10.70 Current Price is $10.68 Difference: $0.02
If NXT meets the UBS target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $10.51, suggesting downside of -2.1% (ex-dividends)

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

Morgan Stanley rates ORA as Overweight (1) -

Orora notes impact of the pandemic on the company has been limited with most of it restricted to North America.

In Australia, divestment of the fibre business puts spotlight on Orora's beverage business, considered high-quality by Morgan Stanley.

Proceeds worth $600m from the sale of the fibre business have been returned to the shareholders this financial year with the remaining circa $600m expected to be returned over FY21-22.

The broker has reduced FY20 group operating income forecast by -10% to $234m while also reducing its earnings forecasts.

Noting the company is an attractive defensive exposure with solid yield support, Morgan Stanley maintains its Overweight rating with its target price decreasing to $3.30 from $4.38. Industry view: Cautious.

Target price is $3.30 Current Price is $2.48 Difference: $0.82
If ORA meets the Morgan Stanley target it will return approximately 33% (excluding dividends, fees and charges).

Current consensus price target is $2.75

The company's fiscal year ends in June.

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

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

Oil Search has made a number of structural changes including reducing headcount in the face of a lower oil price environment.

The company is also aiming to reduce costs in Alaska. This is considered prudent by Morgan Stanley which views the current break-even oil price of US$45/bbl to be high.

Morgan Stanley remains Equal-weight on Oil Search with a target price of $2.80. Industry view: Cautious.

Target price is $2.80 Current Price is $3.19 Difference: minus $0.39 (current price is over target).
If OSH meets the Morgan Stanley target it will return approximately minus 12% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.34, suggesting upside of 1.9% (ex-dividends)

The company's fiscal year ends in December.

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: 0.4

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

UBS rates OSH as Buy (1) -

Oil Search will reduce its FTE workforce by -34%. The CFO, Stephen Gardiner, will step down in February 2021 to be replaced by Ayten Saridas.

UBS notes a reduction in the cost base will allow the company to withstand lower oil prices and estimates the 2020 break-even is US$46/boe.

Buy rating and $4.30 target maintained.

Target price is $4.30 Current Price is $3.19 Difference: $1.11
If OSH meets the UBS target it will return approximately 35% (excluding dividends, fees and charges).

Current consensus price target is $3.34, suggesting upside of 1.9% (ex-dividends)

The company's fiscal year ends in December.

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: 0.4

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

Credit Suisse rates PDL as Neutral (3) -

Credit Suisse increases earnings estimates slightly, driven by stronger-than-expected equity markets, as well as upgraded performance fees in JO Hambro.

The broker assesses the stock carries some valuation appeal but flows remain negative and fund performance soft.

A Neutral rating is reiterated. Target is raised to $6.20 from $5.80.

Target price is $6.20 Current Price is $6.05 Difference: $0.15
If PDL meets the Credit Suisse target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $6.43, suggesting upside of 3.0% (ex-dividends)

The company's fiscal year ends in September.

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

Morgan Stanley rates PPT as Overweight (1) -

Perpetual has announced the successful completion of its acquisition of Trillium. This is in-line with the company's plan to expand its product range and distribution globally, comments Morgan Stanley.

The company is on track to launch new Trillium ESG products in the first half of FY21, notes the broker. Earnings accretion of 1-2% is expected from the acquisition.

Morgan Stanley retains its Overweight rating on Perpetual with a target price of $42. Industry view: In-line.

Target price is $42.00 Current Price is $30.75 Difference: $11.25
If PPT meets the Morgan Stanley target it will return approximately 37% (excluding dividends, fees and charges).

Current consensus price target is $33.20, suggesting upside of 3.9% (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 PTM as Underperform (5) -

Credit Suisse reduces estimates slightly because of lower FUM forecasts and as a result of increased distributions.

The broker reiterates an Underperform rating and envisages little scope for an improvement in outflows because of the weak fund performance.

The main upside risk is if the company can attract inflows from new offshore products/distribution. Target is reduced to $3.00 from $3.20.

Target price is $3.00 Current Price is $3.78 Difference: minus $0.78 (current price is over target).
If PTM meets the Credit Suisse target it will return approximately minus 21% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.92, suggesting downside of -22.8% (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 SAR as Downgrade to Hold from Accumulate (3) -

Ord Minnett downgrades to Hold from Accumulate, assessing the stock has run out of returns.

The broker remains positive on gold, based on inflation expectations and falling real yields. Target is raised to $5.40 from $4.90.

Target price is $5.40 Current Price is $5.64 Difference: minus $0.24 (current price is over target).
If SAR meets the Ord Minnett target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.31, suggesting downside of -6.3% (ex-dividends)

The company's fiscal year ends in June.

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

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

Credit Suisse lowers FY21 estimates for earnings per share by -43% after the company guided to its casino operating capacity.

The broker previously assumed a near full recovery in FY21 but now expects FY21 revenue will be around 70% of FY19, given the ongoing coronavirus restrictions.

Rating is downgraded to Neutral from Outperform. Target is reduced to $3.40 from $3.75.

Target price is $3.40 Current Price is $2.98 Difference: $0.42
If SGR meets the Credit Suisse target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $3.33, suggesting upside of 8.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.3

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

Citi rates SUN as Neutral (3) -

Suncorp's plans for a restructuring provides hope for better returns but Citi assesses this is some time away.

The lift of just $7m in reinsurance costs is significantly less than the broker anticipated but comes with greater risk on the balance sheet because less cover was purchased.

With the bank division also facing a difficult outlook, Citi retains a Neutral rating and lowers the target to $9.10 from $9.40.

Target price is $9.10 Current Price is $8.85 Difference: $0.25
If SUN meets the Citi target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $9.64, suggesting upside of 7.8% (ex-dividends)

The company's fiscal year ends in June.

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 SUN as Downgrade to Underperform from Neutral (5) -

Credit Suisse observes Suncorp has resisted, again, resetting financial targets so investors will be faced with gradual earnings downgrades.

The broker expects the company will deliver a 6-7% return on equity in the outer years, well below the prior target of at least 10%.

Suncorp has announced an organisational restructure but this lacks detail, and Credit Suisse assumes it is just the start of larger changes.

Cash earnings estimates for FY21 are decreased by -6%.

Rating is downgraded to Underperform from Neutral as the stock has outperformed peers recently. Target is reduced to $8.75 from $9.65.

Target price is $8.75 Current Price is $8.85 Difference: minus $0.1 (current price is over target).
If SUN 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 $9.64, suggesting upside of 7.8% (ex-dividends)

The company's fiscal year ends in June.

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 SUN as Neutral (3) -

Suncorp has announced a new reinsurance structure and provided an update on operations through the virus. Changes are representative of challenges faced by the broader general insurance market, the broker notes, but the extent of downgrades was larger than expected.

That said, Suncorp did suggest the impact of the virus will prove largely neutral, and assured a line drawn between the insurance and banking businesses in the new structure does not imply any plan to divest the bank.
 
While the broker lifts forecasts to mark to a stronger equity market, an increased hazard allowance sees the target fall to $9.50 from $9.80, Neutral retained.

Target price is $9.50 Current Price is $8.85 Difference: $0.65
If SUN meets the Macquarie target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $9.64, suggesting upside of 7.8% (ex-dividends)

The company's fiscal year ends in June.

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

Morgan Stanley rates SUN as Underweight (5) -

Suncorp Group’s reinsurance cost has increased by 10-20% with the group’s general insurance earnings becoming more exposed to weather events. 

The group is increasing its FY21 catastrophic allowance by $90-130m and Morgan Stanley thinks of this as a big step up to more sustainable levels.

However, the broker expects a circa -1.5% insurance margin headwind to its FY21 forecasts, to be recovered by costs reduction and tighter underwriting.

An estimated reduction of -25% in claims frequency during March-June gives the group $120m in claim savings but this will be offset by FY20 provisions in business interruptions and increased risk margins. Capital remains strong with better dividend prospects, comments the broker.

Morgan Stanley rates the stock as Underweight with the target price increasing to $8.10 from $7.60. Industry view: In-line.

Target price is $8.10 Current Price is $8.85 Difference: minus $0.75 (current price is over target).
If SUN 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 $9.64, suggesting upside of 7.8% (ex-dividends)

The company's fiscal year ends in June.

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

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

Suncorp has announced a restructure to improve its business performance.

The company has been forced to balance pricing and cover levels during negotiations for reinsurance in FY21.

Morgans notes there is not as much P&L protection now and Suncorp will also have to hold higher general insurance capital given greater risk exposure.

The broker downgrades to Hold from Add, envisaging better value elsewhere in the sector. Target is reduced to $9.40 from $10.44.

Target price is $9.40 Current Price is $8.85 Difference: $0.55
If SUN meets the Morgans target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $9.64, suggesting upside of 7.8% (ex-dividends)

The company's fiscal year ends in June.

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

Ord Minnett rates SUN as Accumulate (2) -

Suncorp expects FY20 insurance profit will sustain a broadly neutral impact from the coronavirus pandemic.

Ord Minnett suspects the company may be taking very full provisions for landlords and some modest provisions for business interruption.

Suncorp has not committed to any hard financial targets although expects to recoup reinsurance costs within two years.

Accumulate retained. Target reduced to $11.82 from $12.05.

Target price is $11.82 Current Price is $8.85 Difference: $2.97
If SUN meets the Ord Minnett target it will return approximately 34% (excluding dividends, fees and charges).

Current consensus price target is $9.64, suggesting upside of 7.8% (ex-dividends)

The company's fiscal year ends in June.

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

UBS rates TLS as Buy (1) -

UBS is factoring in a $600m uplift in mobile operating earnings (EBITDA) over FY20-23, supported by the price changes announced to mobile.

The broker believes its FY23 underlying estimate for operating earnings of $7.7bn should be sufficient to fund a $0.16 dividend, assuming a pay-out at the top end of the 70-90% range.

This requires the price increases delivered recently to hold. The broker reiterates a Buy rating and $3.70 target.

Target price is $3.70 Current Price is $3.18 Difference: $0.52
If TLS meets the UBS target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $3.81, suggesting upside of 18.2% (ex-dividends)

The company's fiscal year ends in June.

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

Macquarie rates TPW as Outperform (1) -

Temple & Webster has announced a fully underwritten placement of $40m at $5.70 in order to support organic and inorganic growth opportunities. The broker supports the move, noting an ongoing acceleration in sales helped by first time customers coming back for more.

The virus has brought forward online growth and in particular the "at home" products the company offers, the broker notes. Outperform retained, target rises to $6.70 from $5.90.

Target price is $6.70 Current Price is $6.31 Difference: $0.39
If TPW meets the Macquarie target it will return approximately 6% (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

Morgan Stanley rates WEB as Underweight (5) -

Webjet announced a $163m convertible note offering after raising capital worth $346m in April. The proceeds will be used to repay its debt and potential acquisitions, states Morgan Stanley.

Webjet's liquidity decreased to $307m in May-end from $541m at February-end, driven by working capital costs and cash burn. The broker expects working capital to be a drag on cash.

Morgan Stanley retains its Underweight rating with a target price of $3.30. Industry view: In-line.

Target price is $3.30 Current Price is $3.57 Difference: minus $0.27 (current price is over target).
If WEB 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 $3.92, suggesting upside of 12.1% (ex-dividends)

The company's fiscal year ends in June.

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