Australian Broker Call

Morgans rates ADH as Add (1) -

Morgans conducts a review of the retail sector and assesses there continues to be several consumption tailwinds in place. These include strong housing, ultra-low interest rates and likely inability to travel offshore until 2022. 

Additionally, there is the rising Australian dollar, solid household savings and the likelihood of less snap lockdowns as vaccines roll out, explains the broker.

The analysts highlight Adairs where the valuation simply doesn’t reflect the strength of the business. The stock is considered to trade at a discount to most peers and Morgans is confident earnings will normalise at a level materially higher than pre-covid.

The Add rating and $4.50 target are retained. Morgans highlights Mocka could reach over $100m of sales in Australia over time versus $35m today.

Target price is $4.50 Current Price is $4.01 Difference: $0.49
If ADH meets the Morgans target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $4.47, suggesting upside of 14.2% (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 BBN as Add (1) -

Morgans conducts a review of the retail sector and assesses there continues to be several consumption tailwinds in place. These include strong housing, ultra-low interest rates and likely inability to travel offshore until 2022. 

Additionally, there is the rising Australian dollar, solid household savings and the likelihood of less snap lockdowns as vaccines roll out, explains the broker.

The analysts like the compounding growth options of Baby Bunting Group. The move into New Zealand is considered to provide further longevity to an already strong growth profile.

While the valuation is at a premium to retail peers (but in-line with the market), the growth profile is far superior and Morgans thinks a solid birth-rate back-drop in the next year or so will assist. The Add rating and target of $6.39 are retained.

Target price is $6.39 Current Price is $5.45 Difference: $0.94
If BBN meets the Morgans target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $6.24, suggesting upside of 15.6% (ex-dividends)

The company's fiscal year ends in July.

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

Morgans rates BLX as Hold (3) -

Morgans conducts a review of the retail sector and assesses there continues to be several consumption tailwinds in place. These include strong housing, ultra-low interest rates and likely inability to travel offshore until 2022. 

Additionally, there is the rising Australian dollar, solid household savings and the likelihood of less snap lockdowns as vaccines roll out, explains the broker.

While the analysts don't have Beacon Lighting Group among the key picks, there was commentary around the sizeable opportunity to take meaningful share of the Trade market. 

The Hold rating and $1.81 target are retained. Morgans notes from a recent trading update that like-for-like sales have continued at an elevated level compared to the pcp.

Target price is $1.81 Current Price is $1.74 Difference: $0.07
If BLX meets the Morgans target it will return approximately 4% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.5

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

Morgans rates BRG as Add (1) -

Morgans conducts a review of the retail sector and assesses there continues to be several consumption tailwinds in place. These include strong housing, ultra-low interest rates and likely inability to travel offshore until 2022. 

Additionally, there is the rising Australian dollar, solid household savings and the likelihood of less snap lockdowns as vaccines roll out, explains the broker.

The analysts like the compounding growth options of Breville Group. It's considered earnings risk over coming years remains to the upside, with management continuing to report strong demand trends in new and existing markets and investing in growth projects.

The Add rating and $33.90 target are maintained.

Target price is $33.90 Current Price is $27.67 Difference: $6.23
If BRG meets the Morgans target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $32.93, suggesting upside of 16.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.7

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

Macquarie rates ELD as Outperform (1) -

Macquarie expects 8% EBIT growth for the three years to FY23, noting the turn in seasonal conditions has set up a favourable outlook for the agriculatural sector.

The ABARES estimated value of farm production for 2021 has been revised up 9% in the past 12 months with the main driver being broad acre crop production, modestly offset by a forecast -8% fall in livestock production.

The broker increases FY21 and FY22 estimates by 6.9% and 4.6%, respectively. Target is reduced to $13.80 from $13.98.

Target price is $13.80 Current Price is $11.52 Difference: $2.28
If ELD meets the Macquarie target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $12.83, suggesting upside of 8.0% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.7

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

Morgans rates LOV as Add (1) -

Morgans conducts a review of the retail sector and assesses there continues to be several consumption tailwinds in place. These include strong housing, ultra-low interest rates and likely inability to travel offshore until 2022. 

Additionally, there is the rising Australian dollar, solid household savings and the likelihood of less snap lockdowns as vaccines roll out, explains the broker.

The analysts like the reopening leverage and compounding growth options of  Lovisa Holdings.The strength of trading in markets like A/NZ is considered to show how quickly sales can recover in more normal conditions.

The Add rating and target of $17.95 are retained. Morgans believes the company offers not only a strong covid-exit trade, but also material leverage given the Beeline acquisition. The re-opening of Europe could coincide with the rebranding of 90 Beeline stores.

Target price is $17.95 Current Price is $14.95 Difference: $3
If LOV meets the Morgans target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $15.44, suggesting upside of 2.9% (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

Citi rates MHJ as Neutral (3) -

Citi anticipates second half sales growth of 52%, noting the company is cycling 5-13 weeks of store closures across all markets in the prior corresponding period.

Moreover the savings rate was significantly higher in June and September 2020, which should support discretionary expenditure in 2021.

The broker lowers FY21 estimates by -4% because of higher corporate costs but raises FY22 in FY23 estimates by 4-12%, amid lower depreciation from store closures. Neutral rating and $0.75 target retained.

Target price is $0.75 Current Price is $0.70 Difference: $0.05
If MHJ meets the Citi target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $0.88, suggesting upside of 28.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.7

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

Morgans rates MSV as Add (1) -

Mitchell Services' underlying 1H financials and underlying FY21 earnings (EBITDA) guidance were very close to Morgans expectations. However, it's considered it will likely take time to repair investor confidence from the -$7.3m SMS Mining Services impairment.

While management has confidence in a positive outcome in the dispute, the broker doesn’t forecast a full recovery of outstanding receivables via court proceedings commencing March 10.

The Speculative Buy rating is maintained. The target price is decreased to $0.725 from $0.906. While noting the impairment does delay de-gearing, Morgans forecasts an acceleration towards a net cash position by 2H 2022, with likely capital management. 

Target price is $0.73 Current Price is $0.42 Difference: $0.305
If MSV meets the Morgans target it will return approximately 73% (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

Macquarie rates NIC as Outperform (1) -

Macquarie has used a general sector update to express its satisfaction with Nickel Mines' recently updated 2020 financial performance. Key financial metrics proved better-than-expected.

Completion of the Angel Nickel acquisition is expected in the next six months, points out the broker, underpinning a doubling of nickel production by 2023.

Nothing of this is new, however. Outperform. Target rises to $1.60 from $1.50.

Target price is $1.60 Current Price is $1.42 Difference: $0.18
If NIC meets the Macquarie target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $1.60, suggesting upside of 11.1% (ex-dividends)

The company's fiscal year ends in December.

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: 0.7

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

Macquarie rates PNI as Outperform (1) -

Performance fees are increasing as a component of the Pinnacle Investment earnings, to 33% from 17% in FY16. Macquarie suggests the earnings capacity and outlook are under appreciated.

In respect of institutional mandates the company pursues a deliberate strategy of favouring performance fee structures over a base fee only mandate.

In addition, Macquarie expects growth from existing affiliates can support upside. Outperform retained. Target rises to $10.11 from $9.48.

Target price is $10.11 Current Price is $9.00 Difference: $1.11
If PNI meets the Macquarie target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $9.73, suggesting upside of 4.6% (ex-dividends)

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

Morgan Stanley rates PSQ as Overweight (1) -

Pacific Smiiles has announced a $15m placement and $5m share pruchase plan at $2.60 a share to improve liquidity and strengthen the balance sheet.

Morgan Stanley believes the most durable improvement to liquidity is actually achieved by growing earnings. Moreover, in terms of the balance sheet, by retaining earnings versus a 70-100% pay-out the company could have delivered a similar lift in cash.

In other words, returning capital to existing shareholders and then taking capital from new shareholders when returns are improving appears to the broker to be unnecessary.

Overweight retained. Target is $3.20. Industry view: In-line.

Target price is $3.20 Current Price is $2.69 Difference: $0.51
If PSQ meets the Morgan Stanley target it will return approximately 19% (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

Citi rates QUB as Buy (1) -

Citi considers the company's strategy of diversification through geography has withstood the pandemic and envisages strong ongoing demand in bulk volumes. Additionally, extra volumes should attract higher pricing.

While disappointed with the terminal result, Citi is optimistic rail can eventually gain a greater share of the freight task from Port Botany.

Citi retains a Buy rating. Target ticks up to $3.51 from $3.50.

Target price is $3.51 Current Price is $3.07 Difference: $0.44
If QUB meets the Citi target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $3.08, suggesting downside of -0.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.0

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

Morgan Stanley rates RHC as Underweight (5) -

Database update. Post initial assessment, Morgan Stanley decided to reduce their price target to $60 from $62 on lower estimates inspired by underlying margin pressures.

Underweight rating retained with the broker referring to "systemic uncertainty". Industry view: In-line.

Target price is $60.00 Current Price is $67.43 Difference: minus $7.43 (current price is over target).
If RHC 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 $69.35, suggesting upside of 2.8% (ex-dividends)

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.1

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

Morgans rates UNI as Add (1) -

Morgans conducts a review of the retail sector and assesses there continues to be several consumption tailwinds in place. These include strong housing, ultra-low interest rates and likely inability to travel offshore until 2022. 

Additionally, there is the rising Australian dollar, solid household savings and the likelihood of less snap lockdowns as vaccines roll out, explains the broker.

The analysts like the reopening leverage and compounding growth options of Universal Store Holdings. The company is still considered ‘young’ in terms of brand awareness and store footprint, leaving meaningful upside for incoming investors.

Morgans forecasts a three year EPS compound annual growth rate (CAGR) of 34%. The Add rating and target of $8.37 are maintained.

Target price is $8.37 Current Price is $6.69 Difference: $1.68
If UNI meets the Morgans target it will return approximately 25% (excluding dividends, fees and charges).

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