Australian Broker Call

Macquarie rates AIZ as Underperform (5) -

Macquarie reviews the capacity outlook and updates forecasts for elevated fuel prices. The main positives for Air New Zealand are domestic dominance and partnerships which positions the business well for the re-opening of travel.

Nevertheless, jet fuel prices are a material headwind and require a balancing of pricing versus demand. The broker considers the stock closer to fair value but managing the fuel and macro risks remains a challenge.

Underperform retained. Target is reduced to NZ$0.60 from NZ$0.75.

Current Price is $0.57. Target price not assessed.

The company's fiscal year ends in June.

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: -1.0

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

Credit Suisse rates ALX as Outperform (1) -

Credit Suisse raises its target price for Atlas Arteria to $8.60 from $7.10 after media reports that IFM Investors is seeking to increase its shareholding to 15% from 7.94% at an $8.10 offer price. The suitor intends to seek access for due diligence for a full bid. 

The broker applies a 10% control premium to its underlying valuation to arrive at an $8.60 target price, up from $7.10. The raised target also factors-in higher earnings and dividends related to increasing tolls on the APPR network.

Target price is $8.60 Current Price is $7.10 Difference: $1.5
If ALX meets the Credit Suisse target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $7.50, suggesting downside of -9.1% (ex-dividends)

The company's fiscal year ends in December.

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

Macquarie rates ALX as Neutral (3) -

Macquarie notes the trend to privatise infrastructure continues which would mean a material savings for Atlas Arteria on overheads. The value creation examples are the resolution of Greenway restructure and some clarity around the French concession.

Tthe broker assesses the private sector appears willing to value the trend ahead of execution. The two options provide swing factors for the business while the timing of realisation is hard to quantify, the broker adds.

In other news, IFM Investors is attempting to build a stake at $8.10, now holding a 7% stake and seeking another 8% before considering a potential offer.

Neutral maintained. Target is raised to the tender price of $8.10 from $6.66.

Target price is $8.10 Current Price is $7.10 Difference: $1
If ALX meets the Macquarie target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $7.50, suggesting downside of -9.1% (ex-dividends)

The company's fiscal year ends in December.

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

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

Following the larger-than-expected cash rate increase by the RBA, Morgan Stanley sees more challenges for the major banks from a quick and aggressive tightening cycle compared to a gradual and measured tightening cycle.

The quicker tightening path (implied by the RBA) could lead to headwinds including more expensive wholesale funding, a weaker housing and mortgage market, and greater risk of recession, explains the analysts.

Morgan Stanley retains its Equal-weight rating and $28.90 target price for ANZ Bank. Industry view: Attractive.

Target price is $28.90 Current Price is $24.45 Difference: $4.45
If ANZ meets the Morgan Stanley target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $29.46, suggesting upside of 23.3% (ex-dividends)

The company's fiscal year ends in September.

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

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

Arena REIT is upgraded to Outperform from Neutral, as Macquarie considers the stock defensive from an income and cost perspective amid solid fundamentals.

The tenant base continues to benefit from buoyant operating conditions and additional support is now expected for the early learning sub-sector via the Labor Government policy to lift the maximum child care subsidy rate to 90% for families for the first child in care. Target is reduced to $4.61 from $4.90.

Target price is $4.61 Current Price is $4.19 Difference: $0.42
If ARF meets the Macquarie target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $4.38, suggesting upside of 1.7% (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

Macquarie rates BGL as Outperform (1) -

The update on the Bellevue gold project in Western Australia signals to Macquarie the company is delivering on its dual-track strategy, growing the reserve and resource base in parallel with developing the project.

Optimisation work appears to be offsetting the current inflationary environment and the company does not expect any material changes to its most recent capital estimates.

Outperform and $1.50 target retained.

Target price is $1.50 Current Price is $0.86 Difference: $0.64
If BGL meets the Macquarie target it will return approximately 74% (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

Macquarie rates BLD as Outperform (1) -

Boral has appointed Vik Bansal as CEO and MD from early December 2022 and Macquarie analysts, in an initial response, refer to roles at Infrabuild and Cleanaway Waste Management ((CWY)) to highlight experience with "managing large, fleet-based industrial businesses".

As Boral is lagging peers in key metrics, Macquarie suggests Bansal seems like the right choice.

Outperform. Target $4.05.

Target price is $4.05 Current Price is $2.86 Difference: $1.19
If BLD meets the Macquarie target it will return approximately 42% (excluding dividends, fees and charges).

Current consensus price target is $3.24, suggesting downside of -1.2% (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

Macquarie rates BST as Downgrade to Neutral from Outperform (3) -

Macquarie assesses increased macro uncertainty and the impact on the consumer apparel segment, noting Best & Less is exposed in a positive way to low prices and repeat purchasing in childrenswear yet has limited trading liquidity and a vulnerability to low income earners.

 All up, the broker chooses to move to Neutral from Outperform and lowers the target to $2.40 from $4.10. Risks to the rating include a change in the macro outlook, sales and/or margins that lag or exceed expectations.

Target price is $2.40 Current Price is $2.55 Difference: minus $0.15 (current price is over target).
If BST meets the Macquarie target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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

Morgan Stanley rates CBA as Underweight (5) -

Following the larger-than-expected cash rate increase by the RBA, Morgan Stanley sees more challenges for the major banks from a quick and aggressive tightening cycle compared to a gradual and measured tightening cycle.

The quicker tightening path (implied by the RBA) could lead to headwinds including more expensive wholesale funding, a weaker housing and mortgage market, and greater risk of recession, explains the analysts.

Morgan Stanley maintains its Underweight rating and $91.00 target price for CommBank. Industry view: Attractive.

Target price is $91.00 Current Price is $101.96 Difference: minus $10.96 (current price is over target).
If CBA meets the Morgan Stanley target it will return approximately minus 11% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $92.08, suggesting downside of -5.5% (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

Macquarie rates CLW as Downgrade to Neutral from Outperform (3) -

Charter Hall Long WALE REIT has outperformed the sector 2022 to date by 17%, Macquarie observes. The proportion of the leases with CPI-linked escalators has increased to 46% and while this appears resilient the offset is an expected increase in interest costs, the broker adds.

Macquarie expects asset values to increase as of June 2022 as book valuations catch up with transactions in late 2021 and early 2022. Beyond this, caution prevails on the outlook for asset values.

The end result is a downgrade to Neutral from Outperform with the target reduced to $5.11 from $5.23.

Target price is $5.11 Current Price is $4.82 Difference: $0.29
If CLW meets the Macquarie target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $5.53, suggesting upside of 18.7% (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

Morgan Stanley rates CSL as Overweight (1) -

Recent results from CSL's overseas peers indicate signs of increasing plasma collections and revenue growth.

Meanwhile, data also show CSL's collections centre rollouts remain strong.

The Overweight rating and $310 target are retained. Industry View: In-line.

Target price is $310.00 Current Price is $267.68 Difference: $42.32
If CSL meets the Morgan Stanley target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $319.02, suggesting upside of 17.8% (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: 0.9

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

Macquarie rates CWY as Outperform (1) -

The company has focused on the waste infrastructure opportunities at its strategy briefing, the largest of which are the two EfW projects in Victoria and Queensland.

Macquarie suggests the stock has been resilient in a volatile market and this should continue. Cleanaway Waste Management has flagged incremental annual overhead costs of -$15m and envisages a pay-off in efficiency and system improvements over time.

Outperform rating maintained. Target is $3.65.

Target price is $3.65 Current Price is $2.91 Difference: $0.74
If CWY meets the Macquarie target it will return approximately 25% (excluding dividends, fees and charges).

Current consensus price target is $3.15, suggesting upside of 9.0% (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

Morgan Stanley rates CWY as Overweight (1) -

Morgan Stanley believes the importance of a well-rounded ESG performance to Cleanaway Waste Management's business prospects is under-appreciated. This view follows the June 7 investor presentation by management highlighting environmental initiatives.

The broker came away feeling the company's environmental goals and customer value proposition are in alignment.

The Overweight rating and $3.30 target are retained. Industry view: Cautious. 

Target price is $3.30 Current Price is $2.91 Difference: $0.39
If CWY meets the Morgan Stanley target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $3.15, suggesting upside of 9.0% (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

Morgans rates GNC as Hold (3) -

While Morgans maintains its $10.40 target price for GrainCorp, the broker increases its FY23 earnings (EBITDA) forecast by 5.9%, following the release of an above-average east coast winter crop forecast by ABARES.

As ABARES is typically conservative, and harvest is not until November/December, the analyst notes the potential for upside to FY22 guidance.

The Hold rating is maintained as the broker expects near perfect conditions (big east coast grain crops and high grain/oil prices) will eventually revert.

Target price is $10.40 Current Price is $10.09 Difference: $0.31
If GNC meets the Morgans target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $10.23, suggesting downside of -2.3% (ex-dividends)

The company's fiscal year ends in September.

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 GNC as Neutral (3) -

ABARES' initial estimate of the FY23 east coast winter crop is slightly above the forecast by UBS, driving the broker's 12% earnings (EBITDA) upgrade for GrainCorp in FY23. Forecasts could prove conservative should the harvest be boosted by rainfall in the interim.

Apart from the 12cps special dividend declared in the 1H and the $50m buyback in the 2H, the analyst predicts further special dividends over at least 2H22-FY23.

The Neutral rating and $10.05 target are retained.

Target price is $10.05 Current Price is $10.09 Difference: minus $0.04 (current price is over target).
If GNC meets the UBS target it will return approximately minus 0% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $10.23, suggesting downside of -2.3% (ex-dividends)

The company's fiscal year ends in September.

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

Macquarie rates GPT as Downgrade to Neutral from Outperform (3) -

Macquarie remains attracted to the diversity and defensive nature of GPT Group, anticipating a retail recovery and strong industrial rental growth. Yet the sources of upside are primarily offset by the hedging profile and the rating is downgraded to Neutral from Outperform.

Given potential interest expense headwinds the broker considers the overall outlook has become more challenging on a fundamental basis. Target is reduced to $4.89 from $5.47.

Target price is $4.89 Current Price is $4.60 Difference: $0.29
If GPT meets the Macquarie target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $5.20, suggesting upside of 12.8% (ex-dividends)

The company's fiscal year ends in December.

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

Macquarie rates HAS as Outperform (1) -

The first blast has now been completed at Yangibana with site development underway. The main risk to Macquarie's base valuation is the securing of the remaining debt and equity funding.

A further $160m in debt and $200m in equity is required to complete construction and achieve first production by late 2024.

Outperform rating and 40c target price retained.

Target price is $0.40 Current Price is $0.24 Difference: $0.16
If HAS meets the Macquarie target it will return approximately 67% (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

Morgan Stanley rates HCW as Overweight (1) -

Morgan Stanley estimates HealthCo Healthcare & Wellness REIT is now trading broadly in-line with other passive REITs under the broker's coverage, following a June portfolio revaluation.

The analyst highlights around $17m of the $25m net valuation increase came from development projects, driven by pre-commits.

The Overweight rating and $2.45 target price are maintained. Industry View: In-line.

Target price is $2.45 Current Price is $1.72 Difference: $0.73
If HCW meets the Morgan Stanley target it will return approximately 42% (excluding dividends, fees and charges).

Current consensus price target is $2.35, suggesting upside of 34.1% (ex-dividends)

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

Macquarie rates HLS as Outperform (1) -

In reviewing consensus forecasts for base pathology Macquarie assesses this implies subdued trends into the first half of FY23 before recovery from the second half and into FY24.

EBIT is implied at around $150m for FY23 and $154m for FY24, albeit below original planned targets of $180-190m by FY23.

The broker remains positive on the medium to longer term outlook and finds valuation appeal at current levels, retaining an Outperform rating. Target is steady at $5.10.

Target price is $5.10 Current Price is $3.73 Difference: $1.37
If HLS meets the Macquarie target it will return approximately 37% (excluding dividends, fees and charges).

Current consensus price target is $4.47, suggesting upside of 19.1% (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

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

Following the larger-than-expected cash rate increase by the RBA, Morgan Stanley sees more challenges for the major banks from a quick and aggressive tightening cycle compared to a gradual and measured tightening cycle.

The quicker tightening path (implied by the RBA) could lead to headwinds including more expensive wholesale funding, a weaker housing and mortgage market, and greater risk of recession, explains the analysts.

Morgan Stanley retains its Equal-weight rating and $31.80 target price for National Australia Bank. Industry View: Attractive.

Target price is $31.80 Current Price is $30.10 Difference: $1.7
If NAB meets the Morgan Stanley target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $33.42, suggesting upside of 15.6% (ex-dividends)

The company's fiscal year ends in September.

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

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

Macquarie reviews the investment outlook, assessing the storage fundamentals remain solid. Downside risks include cost inflation in construction, which may affect returns from developments and refurbishments. Also interest expenses are increasing.

Given the current valuation, Macquarie considers the risks are balanced and upgrades to Neutral from Underperform. Target is reduced to $2.39 from $2.47.

Target price is $2.39 Current Price is $2.37 Difference: $0.02
If NSR meets the Macquarie target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $2.45, suggesting upside of 3.2% (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

Macquarie rates PRN as Outperform (1) -

Perenti Global expects stronger earnings and cash flow in FY23, targeting revenue of $2.5bn with EBIT margin of 10% in 2025. The company has also initiated an on-market buyback which Macquarie considers a positive given the strength of the balance sheet.

Furthermore, there is a significant amount of work in hand and a large order book which should support cash flow and deleveraging. Outperform rating maintained. Target is raised 20% to $1.20.

Target price is $1.20 Current Price is $0.77 Difference: $0.43
If PRN meets the Macquarie target it will return approximately 56% (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

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

Macquarie remains cautious about the balance sheet as gearing is 39% and there is an interest cost headwind over FY22-FY24. Still, with the stock trading on 14x FFO and at a -21% discount to NTA value seems to be emerging.

The broker also observes retail is relatively more defensive as an asset class in cyclical downturns and as a result upgrades to Neutral from Underperform.

Retail sales continue to surprise to the upside, supported by strong employment and elevated savings. Target is reduced to $2.79 from $2.85.

Target price is $2.79 Current Price is $2.72 Difference: $0.07
If SCG meets the Macquarie target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $2.98, suggesting upside of 8.1% (ex-dividends)

The company's fiscal year ends in December.

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

Macquarie rates UNI as Downgrade to Neutral from Outperform (3) -

Macquarie downgrades its rating on Universal Store to Neutral from Outperform and lowers the target to $4.40 from $9.40. The broker attempts to capture increasing macro uncertainty and the potential impact of this on consumer apparel.

Macquarie updates its view and preferences, believing there is scope for some contraction in consumer confidence with the resulting pressure on discretionary retailers.

While the business should benefit from the relaxation of pandemic constraints, and there is a strong balance sheet, a relative lack of trading liquidity leads the broker to be more cautious.

Target price is $4.40 Current Price is $4.04 Difference: $0.36
If UNI meets the Macquarie target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $6.62, suggesting upside of 69.3% (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

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

Macquarie remains attracted to the defensive cash flows of Vicinity Centres. Moreover, retail shopping centres perform well on a relative basis during a cyclical downturn.

The broker reviews the investment assessment and upgrades to Outperform from Neutral.

The balance sheet and hedging profile screen positively against peers, with Macquarie noting gearing is a conservative 26% and hedging 82%, and thus the group is relatively protected from higher rates. Target is raised to $2.01 from $1.87.

Target price is $2.01 Current Price is $1.83 Difference: $0.18
If VCX meets the Macquarie target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $1.94, suggesting upside of 3.7% (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

Morgan Stanley rates WBC as Overweight (1) -

Following the larger-than-expected cash rate increase by the RBA, Morgan Stanley sees more challenges for the major banks from a quick and aggressive tightening cycle compared to a gradual and measured tightening cycle.

The quicker tightening path (implied by the RBA) could lead to headwinds including more expensive wholesale funding, a weaker housing and mortgage market, and greater risk of recession, explains the analysts.

Morgan Stanley retains its Overweight rating and $25.70 target for Westpac. Industry view: Attractive.

Target price is $25.70 Current Price is $23.41 Difference: $2.29
If WBC meets the Morgan Stanley target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $25.49, suggesting upside of 15.5% (ex-dividends)

The company's fiscal year ends in September.

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