Australian Broker Call

Morgan Stanley rates AGL as Downgrade to Underweight from Equal-weight (5) -

Morgan Stanley notes wholesale energy prices have fallen but it looks like the markets have not priced in the fall being passed onto consumers. Retail prices are expected to fall and many of the larger players will likely be pricing at the cheapest available price.

AGL Energy’s appeal could decrease led by structural challenges. The broker sees downside risk due to lower electricity prices, legacy gas contract re-pricing, smelter re-contracting and retail competition.

Morgan Stanley downgrades its rating to Underweight from Equal-weight rating with the target price decreasing to 15.68 from $18.68. Industry view: Cautious.

Target price is $15.68 Current Price is $17.23 Difference: minus $1.55 (current price is over target).
If AGL meets the Morgan Stanley target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $16.79, suggesting downside of -0.1% (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

Citi rates ALL as Buy (1) -

Citi continues to expect the land-based market will remain under pressure but the June quarter is likely to represent the trough.

The latest survey data indicate that, contrary to the broker's expectations, fee-per-day discounts are driving a better net installation outcome for Aristocrat Leisure compared with its competitors.

Meanwhile, outright sales are under pressure. Unit sales fell by -80% across the market in the June quarter as casinos remain cautious about expenditure. Buy rating and $30.10 target retained.

Target price is $30.10 Current Price is $25.99 Difference: $4.11
If ALL meets the Citi target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $29.57, suggesting upside of 11.3% (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) -

A survey by Eilers-Fantini shows Aristocrat Leisure achieved a 25% ship share during the June quarter. Ship share is used to measure the market share of slot manufacturers at casinos.

The survey highlights unit sales for the company were down just -60-70% year on year which is much better than expected. The survey also points out the company continues to hold three out of the top five most anticipated premium leased titles.

UBS highlights casino closures in the US could delay recovery and put pressure on second-half earnings.

UBS maintains its Buy rating with a target price of $29.60.

Target price is $29.60 Current Price is $25.99 Difference: $3.61
If ALL meets the UBS target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $29.57, suggesting upside of 11.3% (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

Morgan Stanley rates ALQ as Overweight (1) -

Morgan Stanley has reinstated coverage on the engineering and construction (E&C) sector. The near-term earnings outlook is expected to be challenging.

Share prices across the sector have declined materially and point towards lower revenues, margins and profits, notes the broker.

ALS’s larger global footprint along with mining capital expenditure is expected to hold it in good stead. The company is on a multi-year expansion. It is currently trading at a discount to global peers due to higher cyclical exposure.

Morgan Stanley reinstates its coverage with an Overweight rating and a target price of $8.8. Industry view: In-line.

Target price is $8.80 Current Price is $7.76 Difference: $1.04
If ALQ meets the Morgan Stanley target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $7.84, suggesting upside of 2.9% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.6

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

Morgans rates AQZ as Initiation of coverage with Add (1) -

Alliance Aviation Services is a leading provider of contracted and ad hoc charter services to Australia's mining, energy, tourism and government sectors.

According to Morgans, in a very challenging market globally, the company has been one of the few operators to capitalise on a short-term increase in charter demand and more importantly, secure long-term opportunities that have arisen.

The broker believes the recent $95.7m capital raise has given the company the required balance sheet strength to expand its fleet. Additionally, the company has recently provided profit guidance for FY20, which was around 15% better than pre covid-19 broker consensus.

Initiation of coverage with Add. The target price is $3.54.

Target price is $3.54 Current Price is $3.00 Difference: $0.54
If AQZ meets the Morgans target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $3.66, suggesting upside of 14.8% (ex-dividends)

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

Citi rates BLD as Downgrade to Neutral from Buy (3) -

While the outcome of the strategic review could streamline the business and drive a re-rating, Citi believes this is balanced by the risk of a re-basing and potential capital raising.

Meanwhile, the earnings outlook is challenged because of the shifting nature of infrastructure projects and the headwinds to housing.

Rating is downgraded to Neutral from Buy/High Risk and the target is raised to $4.22 from $3.00.

Target price is $4.22 Current Price is $3.75 Difference: $0.47
If BLD meets the Citi target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $3.75, suggesting upside of 0.1% (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

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

Bank of Queensland released its Pillar 3 disclosures for May 2020 which saw total non-performing loans (NPLs) increasing by $58m or circa 9% quarter on quarter. Even within NPLs, the more than 90-day past-due loans increased by about 45%.

The bank raised an additional covid-19 overlay of -$61m, bringing the total to -$71m. This is at the top end of the range provided during the first half of the result.

The credit quality and provision outcomes are consistent with Morgan Stanley's expectations.

Morgan Stanley maintains its Equal-weight rating with a target price of $5.90. Industry view: In-line.

Target price is $5.90 Current Price is $6.18 Difference: minus $0.28 (current price is over target).
If BOQ meets the Morgan Stanley target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.86, suggesting downside of -4.3% (ex-dividends)

The company's fiscal year ends in August.

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 BOQ as Hold (3) -

Bank of Queensland has added -$61m to its collective provisioning for the impact of the pandemic, taking this to the top end of guidance of -$49-71m provided at the interim result.

Moreover, underlying credit quality deteriorated in the third quarter. There was no update on whether an interim dividend would be eventually paid, given this was deferred at the results. Hold rating and $6.10 target retained.

Target price is $6.10 Current Price is $6.18 Difference: minus $0.08 (current price is over target).
If BOQ meets the Ord Minnett target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.86, suggesting downside of -4.3% (ex-dividends)

The company's fiscal year ends in August.

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 BOQ as Neutral (3) -

UBS thinks Bank of Queensland’s third-quarter covid-19 collective provision top-up of -$61m is less than expected, especially looking at the extent of loan deferrals and potential slow-down in economic recovery.

The broker expects more top-ups in the June quarter to bring it in-line with peers. Credit impairment charges for the second half are expected to be -$121m. The interim dividend has been deferred until there is more clarity on the outlook.

UBS retains its Neutral rating with a target price of $6.

Target price is $6.00 Current Price is $6.18 Difference: minus $0.18 (current price is over target).
If BOQ meets the UBS target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.86, suggesting downside of -4.3% (ex-dividends)

The company's fiscal year ends in August.

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

Citi rates CCX as Neutral (3) -

City Chic has announced a $90m capital raising and will acquire the Catherines online business, not the accompanying 300 stores. Catherines has filed for Chapter 11.

Citi observes, while the acquisition is at an attractive multiple, success over the medium term will require an improvement in gross margins.

Given FY20 estimates, it appears Avenue is still hovering on an 9% operating earnings (EBITDA) margin which is a signal there is a high level of discounting.

Citi retains a Neutral rating, envisaging plenty of scope for sales and earnings growth, although the business complexity is growing. Target is raised to $3.40 from $2.85.

Target price is $3.40 Current Price is $3.20 Difference: $0.2
If CCX meets the Citi target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $3.24, suggesting downside of -7.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.7

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

Morgans rates CDD as Add (1) -

Cardno have positively surprised the market by providing guidance for FY20 earnings of $41m-$43m, according to Morgans.

Net debt has been reduced down to around $1m and the company has benefited from a $12m deferral of GST.

However, the broker reduces its expectations for FY21 and FY22 and lowers earnings estimates by -9% and -14%, respectively. This is due to the ongoing impact of covid-19 in the key markets of Asia Pacific and the Americas.

The Add rating is maintained. The target price is decreased to $0.565 from $0.594.

Target price is $0.56 Current Price is $0.34 Difference: $0.225
If CDD meets the Morgans target it will return approximately 66% (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 COE as Neutral (3) -

The delay in the ramp up of Sole, caused by technical issues, has overshadowed production rates and Credit Suisse suspects a further six months could pass before nameplate is reached.

Moreover, exploration expenditure has been deferred from FY21 because of the impact of the pandemic and lower cash flow stemming from the delay.

Hence, key growth catalysts are pushed out beyond the next 12 months. Credit Suisse retains a Neutral rating and reduces the target to $0.40 from $0.44.

Target price is $0.40 Current Price is $0.39 Difference: $0.01
If COE meets the Credit Suisse target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $0.49, suggesting upside of 25.6% (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

Citi rates CSR as Upgrade to Buy from Neutral (1) -

Citi believes the housing cycle is turning in Australasia which will weigh on demand for building products.

CSR has lagged peers despite its more variable cost structure, which makes the stock the best placed to manage the downturn.

There is also unrealised value in the large property portfolio, Citi points out.

Rating is upgraded to Buy from Neutral and the target raised to $4.30 from $3.95.

Target price is $4.30 Current Price is $3.48 Difference: $0.82
If CSR meets the Citi target it will return approximately 24% (excluding dividends, fees and charges).

Current consensus price target is $4.04, suggesting upside of 17.7% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.4

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

Credit Suisse rates DHG as Outperform (1) -

Credit Suisse had expected a recovery in Sydney and Melbourne property markets would support volumes and this has been evident in commentary.

The second round of restrictions in Melbourne is likely to have a disproportionate impact on Domain Holdings as opposed to REA Group ((REA)).

Still, this is not expected to be as significant as it was back in April. Credit Suisse retains an Outperform rating and raises the target to $3.60 from $2.90.

Target price is $3.60 Current Price is $3.24 Difference: $0.36
If DHG meets the Credit Suisse target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $3.27, suggesting downside of -1.0% (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

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

Morgan Stanley has reinstated coverage on the engineering and construction (E&C) sector. The near-term earnings outlook is expected to be challenging.

Share prices across the sector have declined materially and point towards lower revenues, margins and profits. 

Downer EDI is trading on lower multiples and Morgan Stanley thinks there is a possibility of a re-rate if the company’s urban services strategy proves successful.

The broker expects earnings volatility to be high but notes the company’s plans to raise capital will reduce this risk.

Morgan Stanley reinstates its coverage with an Equal-weight rating and a target price of $4.6. Industry view: In-line.

Target price is $4.60 Current Price is $4.33 Difference: $0.27
If DOW meets the Morgan Stanley target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $4.66, suggesting upside of 10.3% (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 FBU as Neutral (3) -

Citi remains cautious about Australasian residential activity, which accounts for almost half of Fletcher Building's revenue. Any meaningful earnings recovery is not expected until FY22.

A -29% drop in NZ housing starts is expected in FY21 and lower net migration will lead to a more modest recovery.

While infrastructure will benefit from government expenditure, the broker remains cautious about activity in office, retail and entertainment developments.

Meanwhile, the Australian business is operating on thin margins. Citi retains a Neutral rating and raises the target to NZ$3.55 from NZ$3.50.

Current Price is $3.26. Target price not assessed.

Current consensus price target is $3.87, suggesting upside of 19.8% (ex-dividends)

The company's fiscal year ends in June.

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: 0.0

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

Macquarie rates GOR as Downgrade to Underperform from Neutral (5) -

The June quarter was broadly in line with Macquarie's estimates and the processing plant continues to perform above nameplate.

The broker also notes production guidance for 2020 has been maintained while costs are higher. Still, Gold Road is now debt free.

After a strong run up in the share price, the broker downgrades to Underperform from Neutral. Target is lifted 6% to $1.80.

Target price is $1.80 Current Price is $1.90 Difference: minus $0.1 (current price is over target).
If GOR meets the Macquarie target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

The company's fiscal year ends in December.

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

Ord Minnett rates GOR as Accumulate (2) -

Ord Minnett updates estimates to incorporate June quarter production results from Gold Road Resources. Production guidance of 250-285,000 ounces has been confirmed for 2020.

The broker suggests dividends may be on the cards after December. Accumulate rating and $2.15 target retained.

Target price is $2.15 Current Price is $1.90 Difference: $0.25
If GOR meets the Ord Minnett target it will return approximately 13% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

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

Macquarie rates GXY as Underperform (5) -

June quarter production was in line with expectations. Work continues at Sal de Vida with the start of stage I targeted for late 2022.

Macquarie observes the company has the ability to quickly flex curtailed production but challenges continue for the lithium market and shipments are currently being made to meet ad hoc demand on a spot price basis.

Underperform rating maintained. Target is raised to $0.40 from $0.35.

Target price is $0.40 Current Price is $1.10 Difference: minus $0.7 (current price is over target).
If GXY meets the Macquarie target it will return approximately minus 64% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $0.84, suggesting downside of -23.6% (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: -0.3

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

Citi rates IAG as Buy (1) -

Citi adjusts FY20 estimates down by -36% and FY21 down by -8% to adjust for the company's pre-released FY20 result. Expectations for future underlying margins are also reassessed.

The short-term outlook is clouded and Citi finds the outlook for the stock in FY21 is subdued.

Still, as the share price adjusts there appears to be longer-term value and Insurance Australia Group seems more defensive than some other stocks.

Buy rating retained. Target is lowered to $6.15 from $6.60.

Target price is $6.15 Current Price is $5.32 Difference: $0.83
If IAG meets the Citi target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $5.93, suggesting upside of 17.4% (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

Credit Suisse rates IAG as Outperform (1) -

The company has updated on FY20, with guidance -10% below Credit Suisse forecasts because of a number of one-off costs. Hence, Insurance Australia Group will not pay a dividend in the second half.

Having upgraded to Outperform in May, and the stock has underperformed the market by -12.5% since then, Credit Suisse acknowledges this was not a good call and momentum is against the stock.

Still, the broker maintains a view that the company is ahead of the curve on the challenges that lay ahead and valuation appeal remains compelling. Target is reduced to $6.25 from $6.40.

Target price is $6.25 Current Price is $5.32 Difference: $0.93
If IAG meets the Credit Suisse target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $5.93, suggesting upside of 17.4% (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 IAG as Neutral (3) -

Insurance Australia Group has pre-released some results for FY20. No FY21 guidance was forthcoming.

The underlying insurance margin of 16% has been affected by higher reinsurance costs, lower investment returns and a deterioration in the performance of commercial long-tail portfolios. No final dividend will be paid.

Still, the headwinds are not as bad as Macquarie had anticipated, although concerns remain around further re-basing in FY21. Neutral retained. Target is reduced to $5.50 from $5.70.

Target price is $5.50 Current Price is $5.32 Difference: $0.18
If IAG meets the Macquarie target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $5.93, suggesting upside of 17.4% (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

Morgan Stanley rates IAG as Overweight (1) -

Insurance Australia Group pre-released its second half result. The result was weak led by lower margins, more reserve top-ups, higher catastrophe costs and customer refunds, lists out Morgan Stanley.

Motor claims were lower leading to savings of circa $100m. This amount will be used to build a buffer for FY21-22, reports the broker.

The insurer has not provided any margin guidance for FY21. The broker remains positive given strong pricing momentum and high exposure to defensive personal lines.

Morgan Stanley retains its Overweight rating with a target price of $6.55. Industry view: In-line.

Target price is $6.55 Current Price is $5.32 Difference: $1.23
If IAG meets the Morgan Stanley target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $5.93, suggesting upside of 17.4% (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

Ord Minnett rates IAG as Hold (3) -

Insurance Australia has flagged strong margin pressure in its pre-release of the FY20 result. There will be no final dividend.

An underlying insurance margin of 16% has been flagged, hit by increased peril costs and reduced reserve releases.

Ord Minnett notes unknowns include premium rate changes and quota share re-pricing and suspects underlying margins could be around 12.8% in FY21.

Hold rating retained. Target is reduced to $5.13 from $6.30.

Target price is $5.13 Current Price is $5.32 Difference: minus $0.19 (current price is over target).
If IAG 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 $5.93, suggesting upside of 17.4% (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

UBS rates IAG as Buy (1) -

Insurance Australia Group pre-released a complex FY20 result, comments UBS. Margins at 10% missed guidance (12.5-14.5%) led by higher catastrophe losses and reserve top-ups. The insurer also did not provide any guidance for FY21.

UBS allows for more covid-19 related losses of -$45m and reserve top-ups of -$25m in FY21. The broker sees value in the stock, believing rates will inevitably rise and a positive outcome on business interruption will de-risk the stock.

UBS maintains its Buy rating with the target price reducing to $6.10 from $6.50.

Target price is $6.10 Current Price is $5.32 Difference: $0.78
If IAG meets the UBS target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $5.93, suggesting upside of 17.4% (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

Morgans rates KAR as Add (1) -

While deal risk remains, Brazilian energy major Petrobas announced a revised Buana transaction, which includes less consideration upfront.

Morgans believes the news is a material positive that de-risks and supports the broker's investment thesis.

The broker states the most important aspect of the deal structure for Karoon Energy is that only paying -US$150m upfront means the company can complete the transaction without the need for any debt.

The Add rating is maintained. The price target is increased to $1.50 from $1.13.

Target price is $1.50 Current Price is $0.67 Difference: $0.83
If KAR meets the Morgans target it will return approximately 124% (excluding dividends, fees and charges).

Current consensus price target is $1.06, suggesting upside of 43.7% (ex-dividends)

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 MIN as Outperform (1) -

Fourth quarter results were strong, Macquarie observes, with iron ore and spodumene shipments ahead of expectations.

The broker was particularly impressed with a record result in iron ore and shipping rates at Koolyanobbing suggest there is upside risk to volume forecasts for FY21.

The rise in realised pricing was also a major positive. Macquarie retains an Outperform rating and lifts the target 15% to $26.50.

Target price is $26.50 Current Price is $24.37 Difference: $2.13
If MIN meets the Macquarie target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $21.80, suggesting downside of -13.3% (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

Morgan Stanley rates MIN as Overweight (3) -

Strong iron ore and lithium production were the key highlights of the June quarter for Mineral Resources.

Morgan Stanley sees upside risk to its operating income forecast for FY20 led by iron ore pricing.

The company has purchased Buckland, a project near Kumina, for circa $20m.

Morgan Stanley reaffirms its Equal-weight rating with a target price of $20.10. Industry view: Attractive.

Target price is $20.10 Current Price is $24.37 Difference: minus $4.27 (current price is over target).
If MIN meets the Morgan Stanley target it will return approximately minus 18% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $21.80, suggesting downside of -13.3% (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

Ord Minnett rates MIN as Hold (3) -

June quarter production revealed iron ore volumes that were -4% below Ord Minnett's forecasts. Realised prices were better-than-expected because of lower discounting.

As the price of spodumene is at its lows and any new contract gains are difficult to forecast, the broker considers Mineral Resources is an iron ore story.

Hold rating retained. Target is reduced to $18.80 from $19.00.

Target price is $18.80 Current Price is $24.37 Difference: minus $5.57 (current price is over target).
If MIN meets the Ord Minnett target it will return approximately minus 23% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $21.80, suggesting downside of -13.3% (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

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

Morgan Stanley has reinstated coverage on the engineering and construction (E&C) sector. The near-term earnings outlook is expected to be challenging.

Share prices across the sector have declined materially and point towards lower revenues, margins and profits. 

Monadelphous Group remains focused on its core strategy of engineering, construction, maintenance in the resources, energy and infrastructure sectors, notes broker Morgan Stanley.

Morgan Stanley reinstates its coverage with an Equal-weight rating and a target price of $10.3. Industry view: In-line.

Target price is $10.30 Current Price is $9.66 Difference: $0.64
If MND meets the Morgan Stanley target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $11.53, suggesting upside of 21.8% (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

UBS rates MP1 as Neutral (3) -

UBS notes Megaport’s quarterly ports added in the June quarter could not match the number achieved in the third quarter. This metric is considered critical by the broker

While quarterly revenue showed an impressive 56% growth (year on year), other key metrics were subdued, notes the broker. The broker’s FY21 revenue forecast decreases by -7% with earnings forecasts reduced for FY21-22.

UBS maintains its Neutral rating with the target price reducing to $13.85 from $14.05.

Target price is $13.85 Current Price is $13.01 Difference: $0.84
If MP1 meets the UBS target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $13.63, suggesting upside of 5.2% (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

UBS rates NST as Sell (5) -

Northern Star Resources’ costs for the June quarter were in-line with expectations, reports UBS.

The analysts believe the miner offers very strong production growth with a circa 5% growth rate (compounded annual growth rate) to FY24.

UBS feels FY21 guidance may disappoint the market. Also, consensus forecasts for FY21 are considered too high driven by Kalgoorlie’s grade and productivity at Pogo.

UBS reiterates its Sell rating with a target price of $14.20.

Target price is $14.20 Current Price is $15.50 Difference: minus $1.3 (current price is over target).
If NST meets the UBS target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $14.01, suggesting downside of -13.2% (ex-dividends)

The company's fiscal year ends in July.

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 ORG as Equal-weight (3) -

Wholesale energy prices have fallen but Morgan Stanley does not think the markets are pricing in the fall being passed onto consumers.

The broker expects retail prices to fall across the National Energy Market. Many of the larger players too will likely be pricing at the cheapest available price.

The widening gap between price caps and wholesale costs will lead to increased discounting and retail competition, predicts the broker.

Origin Energy’s wholesale positioning provides a cushion to energy market price headwinds although the billing platform Kraken’s implementation adds some uncertainty.

Morgan Stanley retains its Equal-weight rating with the target price decreasing to $6.14 from $6.33. Industry view: Cautious.

Target price is $6.14 Current Price is $5.71 Difference: $0.43
If ORG meets the Morgan Stanley target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $6.74, suggesting upside of 17.6% (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 PTB as Initiation of coverage with Hold (3) -

PTB Group provides Maintenance, Repair and Overhaul (MRO) services for narrow body aircraft, aircraft and engine leasing, as well as the sale of spare parts.

The company has been operating in Australia since 2001 and has expanded into a number of other regions. During 1H20, the company earned 46% of its revenue from Asia, with Australia and New Zealand, and America making up 21% and 19%, respectively.

The US is a much bigger market than Australia and the broker sees significant growth opportunities. PTB Group competes with the engine and aircraft manufacturers for maintenance services as well as other third party service providers.

Morgans believes the company's US growth looks promising but is concerned about the impact a slowing economy might have in the next two years.

Initiation of coverage with Hold. The target price is $0.65.

Target price is $0.65 Current Price is $0.63 Difference: $0.02
If PTB meets the Morgans 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: 0.0

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

Credit Suisse rates REA as Neutral (3) -

Credit Suisse had expected a recovery in Sydney and Melbourne property markets would support volumes but suspects REA Group could lag Domain Holdings ((DHG)) because of its broader national exposure.

The broker is of the view that the recent strength in listings will allow the company to reinstate its price increase at the start of 2021. On this basis 3.5% yield growth is expected in FY21.

Credit Suisse retains a Neutral rating and raises the target to $110.30 from $94.50.

Target price is $110.30 Current Price is $107.32 Difference: $2.98
If REA meets the Credit Suisse target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $101.02, suggesting downside of -8.5% (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

Citi rates REH as Downgrade to Sell from Neutral (5) -

Citi downgrades to Sell from Neutral, expecting lower earnings growth over the next two years.

The operating performance early in the pandemic is unlikely to be severely affected but the broker expects sales will slow later in FY21 as the pandemic has spread across the US.

The Australian alterations and additions market is also forecast to slow materially in the December quarter, reflecting weaker activity and lower house prices. The target is reduced to $8.55 from $8.85.

Target price is $8.55 Current Price is $9.56 Difference: minus $1.01 (current price is over target).
If REH meets the Citi target it will return approximately minus 11% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $8.92, suggesting downside of -6.4% (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

Macquarie rates STO as Neutral (3) -

June quarter production and sales were in line with expectations. The company continues to progress Dorado, Barossa and the Moomba carbon capture/storage project. Infill drilling is also being considered to extend the Bayu-Undan field life.

Macquarie believes each of these growth options will be critical to re-evaluating any upside potential in the stock relative to the sector.

Neutral maintained. Target is increased by 5% to $5.80.

Target price is $5.80 Current Price is $5.58 Difference: $0.22
If STO meets the Macquarie target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $6.31, suggesting upside of 14.8% (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: 0.6

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

Morgan Stanley rates VCX as Underweight (5) -

Vicinity Centres announced its June 2020 asset valuations declined by -11.3%, in-line with expectations.

Morgan Stanley notes Chadstone was devalued by -7.5% while regional malls declined by -10.5% driven by increasing vacancies and rent relief in the near term.

The REIT will be reporting its FY20 result on August 19 but the broker does not expect a lot of good news.

Morgan Stanley retains its Underweight rating with a target price of $1.28. Industry view: In-line.

Target price is $1.28 Current Price is $1.37 Difference: minus $0.09 (current price is over target).
If VCX meets the Morgan Stanley target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $1.56, suggesting upside of 12.4% (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 WAF as Neutral (3) -

The June quarter results were in line and Sanbrado declared commercial production. Macquarie now expects production will progressively grow over the next year as the underground ramps up.

The broker currently retains a more conservative view on production, at 275,000 ounces versus the company's 300,000 ounces, and a Neutral rating. Target is raised to $1.10 from $1.00.

Target price is $1.10 Current Price is $1.05 Difference: $0.05
If WAF meets the Macquarie target it will return approximately 5% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

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

Citi rates WSA as Neutral (3) -

First assays from Sahara are encouraging, Citi notes and remains optimistic on grades at Flying Fox as well.

The broker still expects nickel will be a late-stage play with limited upside in the short term. Cash now appears tight going forward after funding for Odysseus is consumed.

Neutral rating retained. Target rises to $2.70 from $2.50.

Target price is $2.70 Current Price is $2.53 Difference: $0.17
If WSA meets the Citi target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $2.78, suggesting upside of 7.4% (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

Credit Suisse rates WSA as Neutral (3) -

June quarter production slightly missed guidance but tonnage pushed through the mill was at the highest quarterly rate for the year.

Credit Suisse awaits FY21 guidance to obtain a better understanding of forward mine planning and the extent to which the lower grades that affected the June quarter will feature.

Meanwhile, Odysseus is progressing well, although there are some minor delays as the pandemic affects equipment logistics.

Neutral rating retained. Target is raised to $2.40 from $2.25.

Target price is $2.40 Current Price is $2.53 Difference: minus $0.13 (current price is over target).
If WSA meets the Credit Suisse target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.78, suggesting upside of 7.4% (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 WSA as Outperform (1) -

June quarter results were weaker than Macquarie expected as the cut to Flying Fox resources was larger than expected. The grade of the Sahara discovery was also lower than anticipated.

Macquarie notes the leverage to nickel prices is significant and the recent recovery in spot prices underpins upgrade momentum. Outperform maintained. Target is reduced to $2.80 from $3.00.

Target price is $2.80 Current Price is $2.53 Difference: $0.27
If WSA meets the Macquarie target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $2.78, suggesting upside of 7.4% (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

Morgan Stanley rates WSA as Overweight (1) -

June quarterly results for Western Areas were mostly in line in terms of production with costs slightly more than expected. Sales were lower due to a sales shipment being delayed into July.

Morgan Stanley notes nickel presence has been confirmed at Western Gawler but it is too early to determine the grade and likely capital expenditure.

The miner remains the broker’s preferred nickel stock with substantial potential at Odysseus.

Morgan Stanley reaffirms its Overweight rating with a target price of $2.50. Industry view: Attractive.

Target price is $2.50 Current Price is $2.53 Difference: minus $0.03 (current price is over target).
If WSA meets the Morgan Stanley target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.78, suggesting upside of 7.4% (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

Ord Minnett rates WSA as Buy (1) -

June quarter production was in line with Ord Minnett's forecasts. Despite reduced earnings estimates, Odysseus continues to be de-risked and remains at 60% of valuation.

Assays at Sahara disappointed the market but were in line with the broker's expectations.

The broker retains a Buy rating and lowers the target to $3.25 from $3.30. Ord Minnett notes the nickel price remains below long-term forecasts but is improving.

Target price is $3.25 Current Price is $2.53 Difference: $0.72
If WSA meets the Ord Minnett target it will return approximately 28% (excluding dividends, fees and charges).

Current consensus price target is $2.78, suggesting upside of 7.4% (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

UBS rates WSA as Neutral (3) -

Western Areas’ June quarter production result was somewhat weaker than expected while costs were in-line, reports UBS.

The broker has decreased its FY20 net profit forecasts by -16% along with cutting the FY21 production estimate by -1% due to lower grades.

Odysseus, considered by the analysts as the future of Western Areas, will extend the company’s mine life by more than ten years.

UBS reaffirms its Neutral rating with the target price reducing to $2.60 from $2.85.

Target price is $2.60 Current Price is $2.53 Difference: $0.07
If WSA meets the UBS target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $2.78, suggesting upside of 7.4% (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