Australian Broker Call

Morgans rates ADH as Add (1) -

Adairs FY20 result was circa 10% above Morgans forecast. The company also reported a strong start to 1H21, according to the broker, but no FY21 guidance was provided.

The analyst attributes the strong result to product execution, elevated demand for home-related products, JobKeeper, tight gross margin and cost management and a strong rebound in trading conditions following store closures resulting from covid-19.

Morgans forecasts 16% earnings (EBIT) growth in FY21, with the company to benefit from an incremental contribution from Mocka (the New Zealand retailer acquired in late 2019). Additionally, the company’s online platform is delivering growth akin to pure play peers, while the store network remains very profitable.

The company declared a final dividend of 11 cents, which translates into around 6.2% fully franked, according to the broker. Add rating maintained. Target rises to $3.80 from $2.62.

Target price is $3.80 Current Price is $3.05 Difference: $0.75
If ADH meets the Morgans target it will return approximately 25% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 1.0

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

UBS rates ADH as Buy (1) -

The broker finds Adairs delivered a strong FY20 result with the second half operating income growing by about 14% year on year. Cash flow was strong and investors received a surprise with a distribution of 11c per share.

UBS believes top-line growth will continue despite macro-risks. This can be attributed to new customers, increasing online penetration and re-allocation of consumer spending to at-home consumption. The broker upgrades its earnings forecast for FY21-23.

UBS reaffirms its Buy rating with the target price increasing to $3.30 from $2.55.

Target price is $3.30 Current Price is $3.05 Difference: $0.25
If ADH meets the UBS target it will return approximately 8% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 1.0

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

Ord Minnett rates ALD as Accumulate (2) -

Ampol will be reporting its 2020 first-half results on August 17.

Ord Minnett forecasts Ampol’s net profit to fall by -10.9% led by refining weakness. The company is expected to announce an interim dividend of 26c per share.

Looking at Ampol’s cost-saving potential and franking credit return optionality, Ord Minnett retains its Accumulate recommendation with a target price of $30.

Target price is $30.00 Current Price is $29.75 Difference: $0.25
If ALD meets the Ord Minnett target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $27.53, suggesting downside of -6.9% (ex-dividends)

The company's fiscal year ends in December.

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

Citi rates AZJ as Buy (1) -

Citi downgrades forecasts for FY21 by -10% following a reduced earnings outlook for the coal and network divisions. The broker highlights the lack of visibility around coal volumes and network revenue.

Still, the broker assesses there is considerable appeal in the stock's relative valuation to the ASX200 ex resources and also notes the robust balance sheet position. Buy rating retained. Target is reduced to $5.15 from $5.60.

Target price is $5.15 Current Price is $4.65 Difference: $0.5
If AZJ meets the Citi target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $5.22, suggesting upside of 14.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.8

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

Credit Suisse rates AZJ as Outperform (1) -

FY20 results were slightly ahead of Credit Suisse forecasts. Management has guided to FY21 earnings (EBIT) of $830-880m.

This is lower than expected and stems from network pricing being based on regulatory below-rail volume assumptions of 239mt.

The broker expects a further buyback in FY22 of $400m. Outperform retained. Target is reduced to $5.40 from $5.55.

Target price is $5.40 Current Price is $4.65 Difference: $0.75
If AZJ meets the Credit Suisse target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $5.22, suggesting upside of 14.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.8

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

Macquarie rates AZJ as Outperform (1) -

FY20 earnings were ahead of Macquarie's estimates, reflecting slightly better volumes and better network performance. However, FY21 guidance has been lowered because of flat volumes and the impact of under collecting on the network.

The broker considers the stock remains defensive in the current environment, supported by a buyback from an under-geared balance sheet.

Outperform rating retained. Target is reduced to $4.91 from $5.31 because of more cautious long-term assumptions around terminal growth.

Target price is $4.91 Current Price is $4.65 Difference: $0.26
If AZJ meets the Macquarie target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $5.22, suggesting upside of 14.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.8

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

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

FY20 earnings were slightly ahead of expectations. Morgan Stanley finds investor appeal is still captured in the stock, despite margin headwinds.

FY21 earnings (EBIT) guidance of $830-880m is lower than expected, attributed to lower volumes in the network that are offsetting efficiency gains.

The broker finds few near-term catalysts for a re-rating and retains an Equal-weight rating. Target is reduced to $5.18 from $5.19. Industry view: Cautious.

Target price is $5.18 Current Price is $4.65 Difference: $0.53
If AZJ meets the Morgan Stanley target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $5.22, suggesting upside of 14.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.8

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

Morgans rates AZJ as Add (1) -

Aurizon Holdings earnings (underlying EBIT) of $909m were ahead of Morgans estimates. Network and Bulk were the key growth drivers, according to the broker.

However, FY21 earnings guidance was less than expected. The analyst states this partly reflects expected coal export softness in 1H2. The 2H20 dividend was 13.7 cents (70% franked), which was ahead of Morgans' forecast.

The company highlighted it has $1.2bn of capacity on its balance sheet and has initiated a new $300m on-market buyback. Morgans views the buyback as accretive, as it is being undertaken at share prices below the broker's valuation.

The Add rating is maintained. The target price is decreased to $5.14 from $5.27.

Target price is $5.14 Current Price is $4.65 Difference: $0.49
If AZJ meets the Morgans target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $5.22, suggesting upside of 14.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.8

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

UBS rates AZJ as Buy (1) -

Aurizon Holdings' FY20 operating income was in line with UBS’s forecast. The company’s Bulk business reported an operating income of $90m, versus a loss of -$14m three years ago. 

The company will be buying back another $300m of shares next year, reports UBS.

Aurizon expects volume growth to be flat in FY21 within its coal haulage business, while operating income from Bulk will continue to grow 5-10% per year.

UBS reiterates its Buy rating with a target price of $5.55.

Target price is $5.55 Current Price is $4.65 Difference: $0.9
If AZJ meets the UBS target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $5.22, suggesting upside of 14.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.8

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

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

Credit Suisse remains positive about the long-term growth prospects but the share price has appreciated over 160% since March. Therefore, this is considered a good opportunity to take a breather and the broker downgrades to Neutral from Outperform.

The target is raised to $26.81 from $20.27. Market trends provide confidence with respect to the performance in May and June and forecasts are upgraded accordingly.

Medium term forecasts are also upgraded based on the coffee category continuing to drive overall growth in the small home appliances industry. Breville will report its results on August 13.

Target price is $26.81 Current Price is $28.47 Difference: minus $1.66 (current price is over target).
If BRG meets the Credit Suisse target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $23.97, suggesting downside of -15.8% (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 CIP as Hold (3) -

Morgans describes the FY20 result for Centuria Industrial REIT as solid and reflects the resilience of industrial assets exposure.

The company also announced a $340m capital raising with funds to be used for acquisitions.

FY21 guidance earnings and dividend guidance by the company equates to a yield paid quarterly of around 5%, estimates the broker.

Morgans notes the Trust remains one of the few listed REITs offering investors pure exposure to Australian industrial property which is leveraged to the key ecommerce/ logistics thematic, and while not immune to covid-19 impacts, the portfolio is well placed.

The Hold rating is maintained. The target price is increased to $3.12 from $2.93.

Target price is $3.12 Current Price is $3.27 Difference: minus $0.15 (current price is over target).
If CIP meets the Morgans target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.28, suggesting downside of -0.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.3

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

Ord Minnett rates CSL as Hold (3) -

CSL will be reporting its FY20 result on August 19.

Ord Minnett expects net profit of $2,049m after including a -$100m currency headwind. Plasma collections have started to recover, notes the broker but expects immunoglobulin and albumin supply levels to contract in FY21.

The broker thinks there is a risk supply issues will continue to be a headwind in FY22 and thus expects CSL to take a conservative approach in setting guidance.

Ord Minnett retains its Hold recommendation with the target price decreasing to $280 from $300.

Target price is $280.00 Current Price is $279.52 Difference: $0.48
If CSL meets the Ord Minnett target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $302.74, suggesting upside of 7.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

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

Market Sentiment: 0.4

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

Citi rates FBU as Neutral (3) -

Fletcher Building has pre-released its financial numbers and Citi responded with a quick, initial follow-up. The actual performance is labeled not as bad as feared and near what Citi was expecting, but misses estimates nevertheless.

There is yet another large provision, with Citi commenting the risk for additional provisioning in the near future is now low.

Guidance indication for the year ahead remains cautious and Citi, positioned below market consensus for FY21, sees risk of falling forecasts.

At least the balance sheet is in better shape with net debt at NZ$497m and liquidity of NZ$1.6bn, the analysts exclaim. Fletcher Building will release its FY20 with more details on 19th August 2020.

Current Price is $3.22. Target price not assessed.

Current consensus price target is $3.87, suggesting upside of 19.4% (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

Citi rates GPT as Buy (1) -

First half results were below expectations. No full year guidance was provided although Citi notes the potential for stronger cash collections in the second half.

Retail earnings were very weak but appear to reflect significant conservatism when it comes to rent collections.

While there is a significant impact on the retail portfolio from the pandemic in 2020, Citi assesses the longer-term impacts are unclear and makes little change to forecasts for 2021. Buy rating retained. Target is reduced to $4.41 from $4.49.

Target price is $4.41 Current Price is $3.85 Difference: $0.56
If GPT meets the Citi target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $4.50, suggesting upside of 11.7% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.6

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

Macquarie rates GPT as Outperform (1) -

First half distributions and free cash flow were ahead of Macquarie's expectations. Despite making acquisitions and developments over the period, GPT was able to reduce operating expenses and other expenditure. A total saving of 8% of free cash flow resulted.

Macquarie observes the balance sheet is strong even after accounting for further downside risk to asset values and retains an Outperform rating. Target rises 2% to $4.84.

Target price is $4.84 Current Price is $3.85 Difference: $0.99
If GPT meets the Macquarie target it will return approximately 26% (excluding dividends, fees and charges).

Current consensus price target is $4.50, suggesting upside of 11.7% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.6

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

Morgan Stanley rates GPT as Underweight (5) -

First half free cash flow of $182m with a distribution of 9.3c was below expectations. Retail was the key reason for the underperformance. The company reported a -$75.5m hit to income in retail from pandemic-related rent relief.

Morgan Stanley found the first half outlook conservative, as it assumes 86% of uncollected rent will not be recovered. Retail rent collection troughed in April and May but lifted to 64% in July.

Underweight rating. Target is reduced to $4.00 from $4.20. Industry view is In-Line.

Target price is $4.00 Current Price is $3.85 Difference: $0.15
If GPT meets the Morgan Stanley target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $4.50, suggesting upside of 11.7% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.6

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

Ord Minnett rates GPT as Accumulate (2) -

GPT Group’s first-half funds from operations are -22% below the same period last year as well as -15% below Ord Minnett’s expectations. The variance was driven by lower rent collections, notes the broker.

Mobility restrictions and isolation measures have disrupted the group's retail assets. The broker expects retail income to stabilise at 85-90% of 2019 levels while cash flow is likely to stabilise in the second half of 2022.

Ord Minnett maintains its Accumulate rating with a target price of $4.70.

Target price is $4.70 Current Price is $3.85 Difference: $0.85
If GPT meets the Ord Minnett target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $4.50, suggesting upside of 11.7% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.6

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

UBS rates GPT as Buy (1) -

GPT Group’s funds from operations (FFO) of $244m in the first half was less than UBS expected. Distribution was ahead of the broker's expectations.

UBS attributes the divergence to the group writing off -$35m worth of rent billed but not received. Logistics is the stand out performer but isn't currently fully appreciated, according to the broker.

With 45% of the group’s retail portfolio exposed to Melbourne, the broker thinks the lockdowns will lead to extended periods of waivers and slower cash collection.

UBS maintains its Buy rating with the target price decreasing to $4.50 from $4.70.

Target price is $4.50 Current Price is $3.85 Difference: $0.65
If GPT meets the UBS target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $4.50, suggesting upside of 11.7% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.6

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

Citi rates JHX as Buy (1) -

In an initial response to today's Q1 market update, Citi analysts believe James Hardie delivered a strong result, broadly in-line with the analysts' expectations.

While guidance for the year ahead, at its mid-point, seems a tad below Citi's projections, the analysts believe it'll trigger upgrades elsewhere, lifting market consensus to the tune of at least 4%.

All in all, a strong performance expected to lift market consensus forecasts is good enough for Citi to retain its Buy rating.

Target price is $32.90 Current Price is $30.16 Difference: $2.74
If JHX meets the Citi target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $32.63, suggesting upside of 1.3% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY21:

Forecast for FY22:

This company reports in USD. 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 KGN as Neutral (3) -

Kogan.com produced a strong month of trading in July amid elevated online transactions and ongoing substitution of leisure and food services expenditure to home-based products, comment the analysts.

Credit Suisse believes there is enough household income support to lead to strong sales growth in the first quarter and upgrades forecasts.

A deceleration in the second quarter is expected as there is less certainty around consumer expenditure when various income support measures will wind down.

Given all that is now known, the results on August 17 are now just expected to reveal division performance and specific cost drivers. Neutral rating retained. Target rises to $19.49 from $16.88.

Target price is $19.49 Current Price is $20.66 Difference: minus $1.17 (current price is over target).
If KGN meets the Credit Suisse 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 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 MCR as Resume Coverage with Outperform (1) -

Mincor Resources has completed a $60m capital raising and share purchase plan which has boosted its cash reserves to over $100m. The company, once a debt facility is secured, will now have more than enough to cover the funding requirements for full production.

Further extensions to the Cassini and Cassini North deposits present material upside, in Macquarie's view. The broker resumes coverage with an Outperform rating and $1 target.

Target price is $1.00 Current Price is $0.77 Difference: $0.23
If MCR meets the Macquarie target it will return approximately 30% (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 ORE as Neutral (3) -

Ahead of the FY20 results on August 28, Credit Suisse updates estimates, factoring in the June quarter trading and the outlook for the September quarter as well as assuming lower lithium prices.

The September quarter is likely to be similarly weak because underlying demand is soft and there is excess supply chain inventory, comment the analysts.

Hence, estimates are downgraded and this limits the broker to a Neutral rating. Target is raised to $3.05 from $2.50 as the model multiples are rolled forward.

Target price is $3.05 Current Price is $3.19 Difference: minus $0.14 (current price is over target).
If ORE meets the Credit Suisse target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.85, suggesting downside of -9.9% (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

UBS rates SIG as Neutral (3) -

Sigma Healthcare announced the finalised sale and leaseback of two distribution centres. The proceeds worth $172m will be used to pay off debt, reports the broker. Given the company had already intimated the market about this, UBS is not surprised.

Earnings forecasts for FY21-22 have been upgraded by 1%.

With a significant funding increase from the 7CPA agreement along with the completed sale and leaseback process, the broker considers Sigma Healthcare to be in a favourable position to fund ERP system deployment and growth opportunities.

UBS maintains its Neutral rating with the target price increasing to $0.66 from $0.61.

Target price is $0.66 Current Price is $0.68 Difference: minus $0.02 (current price is over target).
If SIG 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 $0.68, suggesting downside of -1.0% (ex-dividends)

The company's fiscal year ends in January.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.3

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

Credit Suisse rates TLS as Outperform (1) -

Credit Suisse envisages limited risk that the market will not have appropriately captured the impact of the pandemic on the company's earnings.

FY20 guidance is for underlying operating earnings (EBITDA) to be at the lower end of the $7.4-7.9bn range.

Outperform rating and $4.10 target retained. Telstra will report its results on August 13.

Target price is $4.10 Current Price is $3.39 Difference: $0.71
If TLS meets the Credit Suisse target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $3.79, suggesting upside of 11.4% (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 TYR as Accumulate (2) -

Tyro Payments’ trading update highlights the continuous decline in transaction value (TV) for the week ended August 7.

The transaction value was -1% below the same period last year and according to Ord Minnett, captures the impact of the new lockdown restrictions in Victoria and Melbourne.

Year to date TV is 9% above last year levels and the broker expects this to moderate until the lockdown is lifted.

Ord Minnett retains its Accumulate rating with a target price of $4.15.

Target price is $4.15 Current Price is $3.39 Difference: $0.76
If TYR meets the Ord Minnett target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $3.60, suggesting upside of 9.1% (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

Ord Minnett rates VEA as Accumulate (2) -

Viva Energy Group will be reporting its 2020 first-half results on August 25.

Ord Minnett forecasts the group’s net profit to fall by -22.7% to $39.3m led by refining weakness. The broker expects the group to announce an interim dividend of 1.5c per share.

Noting Viva Energy’s rational retail fuel margins, recovery leverage and cost leverage, Ord Minnett reaffirms its Accumulate recommendation with a target price of $2.

Target price is $2.00 Current Price is $1.75 Difference: $0.25
If VEA meets the Ord Minnett target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $2.08, suggesting upside of 20.0% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.6

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