Australian Broker Call

Macquarie rates BPT as Outperform (1) -

Macquarie marks to market 2021 estimates to allow for higher oil prices. Estimates are raised to US$50.90-54.77/bbl for 2021.

The broker notes US shale companies are showing strong capital discipline. Higher compliance from OPEC et al has driven the higher oil price despite significant spare capacity in the organisation.

While the next quarter may be disappointing for production Macquarie believes weakness can be used as an opportunity to accumulate the stock. Outperform retained. Target is $1.95.

Target price is $1.95 Current Price is $1.70 Difference: $0.25
If BPT meets the Macquarie target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $1.97, suggesting upside of 10.5% (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

Citi rates CGC as Neutral (3) -

Now that Costa Group has announced the acquisition of KW Orchards, Citi analysts see the acquired assets as complementary to Costa's existing assets and there will be synergies.

Initially the analysts expect modest EBITDA contribution of $4-5m from synergies which translates into EPS accretion of 0.4%. The broker thinks more of the same should be expected, with Costa management showing discipline when targeting acquisitions, concentrating on market segments where the company can build scale and use ag tech to improve yields and margins.

Neutral rating retained with the target intact at $4.90 (was lifted after the release of FY20 financials).

Target price is $4.90 Current Price is $4.55 Difference: $0.35
If CGC meets the Citi target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $4.81, suggesting upside of 5.7% (ex-dividends)

The company's fiscal year ends in December.

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

UBS rates CRN as Buy (1) -

UBS highlights Coronado Global Resources' 2020 result reflects the impact of covid and China-Australia trade tensions on coal prices. The company showed a loss of -US$148m. down -149% year on year.

Even so, UBS remains positive noting the stock is trading up circa 55% over the last 6 months.

The company has guided to saleable production of 18-19mt and capex of -US$135-155m, both ahead of market expectations of circa 18mt and circa -US$180m. 

Buy rating retained with a target of $1.40.

Target price is $1.40 Current Price is $1.00 Difference: $0.4
If CRN meets the UBS target it will return approximately 40% (excluding dividends, fees and charges).

Current consensus price target is $1.39, suggesting upside of 35.2% (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: 1.0

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

Macquarie rates CWY as Neutral (3) -

Cleanaway Waste Management has expressed interest in acquiring Suez’s Australian waste management assets. While deal uncertainty remains high, Macquarie thinks the deal makes strategic and financial sense.

The broker believes a potential valuation range of 9-12x EV/EBITDA may be possible and the combined business is expected to reap significant synergies via network/fleet optimisation and overhead cost reductions.

Neutral rating with a target of $2.50.

Target price is $2.50 Current Price is $2.32 Difference: $0.18
If CWY meets the Macquarie target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $2.45, suggesting upside of 5.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.2

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

Macquarie rates FCL as Outperform (1) -

Macquarie reviews its modeling and assumptions after making comparisons with international competitors Guidewire and Duck Creek.

The broker concludes the offering from Fineos, supported by ongoing R&D, should position the business appropriately to win new clients and upgrade existing clients to the cloud.

The main risk is the timing of new contracts and client upgrades. The broker makes no changes to forecasts, retaining an Outperform rating and $4.63 target.

Target price is $4.63 Current Price is $3.65 Difference: $0.98
If FCL meets the Macquarie target it will return approximately 27% (excluding dividends, fees and charges).

Current consensus price target is $4.51, suggesting upside of 25.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

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

Market Sentiment: 0.8

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

Macquarie rates IMD as Outperform (1) -

Macquarie assesses Imdex can benefit from the strengthening of global exploration expenditure over 2021-22.

The recent increase in the copper price is expected to translate into more exploration activity as mining companies seek to replenish reserves. The broker retains an Outperform rating and $2.10 target.

Target price is $2.10 Current Price is $1.63 Difference: $0.47
If IMD meets the Macquarie target it will return approximately 29% (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

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

Magellan Financial Group's February update shows net inflows were almost $0.7bn in December but were aided by the $726m partnership offer.

While expecting retail flows to hold up given the group's track record and distribution capabilities, Macquarie notes the flows decreased more than anticipated and expects more outflows for most of 2021. 

The broker has also reduced its performance fee expectations for the half.

Macquarie downgrades to Neutral from Outperform with the target slipping to $44.50 from $52.

Target price is $44.50 Current Price is $43.00 Difference: $1.5
If MFG meets the Macquarie target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $50.84, suggesting upside of 18.9% (ex-dividends)

The company's fiscal year ends in June.

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

UBS rates MFG as Neutral (3) -

UBS observes Magellan Financial Group delivered a flat funds under management outcome in February with assets under management growing 0.2% to $100.6bn.

Excluding this, the group experienced net outflows of -$35m with small net outflows across both retail and institutional channels. UBS believes this suggests that the lag between investment underperformance and weaker net flows is just starting to play out.

While near-term the investment performance may remain volatile, the broker is concerned about the impact on Magellan's long-term track record and potential implications on net flows going forward.

 The target remains unchanged at $52 with a Neutral rating.

Target price is $52.00 Current Price is $43.00 Difference: $9
If MFG meets the UBS target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $50.84, suggesting upside of 18.9% (ex-dividends)

The company's fiscal year ends in June.

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

Citi rates MYR as Buy (1) -

For Citi's initial take on Myer's interim result, see Friday's Report. The broker maintains the outlook for Myer remains challenging in terms of profitability, but there is more security in terms of balance sheet health.

Earnings estimates have been cut by -18% in FY21, -2% in FY22 and -9% in FY23 with management placing the balance sheet on a higher priority than earnings.

Citi retains the $0.40 target and Buy/High Risk rating, also because of the possibility of corporate action at the current depressed looking share price.

Target price is $0.40 Current Price is $0.28 Difference: $0.12
If MYR meets the Citi target it will return approximately 43% (excluding dividends, fees and charges).

The company's fiscal year ends in July.

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

Macquarie rates OSH as Underperform (5) -

Macquarie marks to market 2021 estimates to allow for higher oil prices. Estimates are raised to US$50.90-54.77/bbl for 2021.

The broker notes US shale companies are showing strong capital discipline. Higher compliance from OPEC et al has driven the higher oil price despite significant spare capacity in the organisation.

Underperform maintained. Target rises to $4.10 from $3.90.

Target price is $4.10 Current Price is $4.42 Difference: minus $0.32 (current price is over target).
If OSH meets the Macquarie target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.31, suggesting downside of -5.5% (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: -0.1

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

Macquarie rates SDF as Outperform (1) -

Steadfast Group's project Trapped Capital initiative has the group looking to acquire new equity stakes within the Steadfast Network and unlock trapped capital by a partial sale initiative.

Macquarie is of the view the initiative will accelerate acquisition growth and is consistent with the group strategy since the IPO in 2013.

Outperform rating with a target of $4.40.

Target price is $4.40 Current Price is $3.91 Difference: $0.49
If SDF meets the Macquarie target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $4.49, suggesting upside of 14.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.9

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

Morgan Stanley rates SGP as Overweight (1) -

With a 2.1% rise in February, Morgan Stanley notes dwelling values showed the highest month-on-month price growth since 2003 across Australia. This has sparked concerns that regulators may introduce some measures to cool off dwelling values and credit growth.

The broker thinks any intervention will be unlikely and believes the near-term tightening is less of a risk, because house prices have only been rising for 5 months and a large portion of market activity is driven by first home buyers, seen to be a lower-risk segment.

Morgan Stanley's investment thesis on Stockland is based on residential tailwinds with sales volumes likely to remain at 20-30% above pre-covid levels and a solid performance in the retail portfolio.

Overweight rating. Target is $4.90. Industry view: In-line.

Target price is $4.90 Current Price is $4.53 Difference: $0.37
If SGP meets the Morgan Stanley target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $4.52, suggesting upside of 1.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.2

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

Macquarie rates STO as Neutral (3) -

Macquarie marks to market 2021 estimates to allow for higher oil prices. Estimates are raised to US$50.90-54.77/bbl for 2021.

The broker notes US shale companies are showing strong capital discipline. Higher compliance from OPEC et al has driven the higher oil price despite significant spare capacity in the organisation.

The broker expects Santos will take FID on the US$3.6bn Barossa project in coming weeks and this will trigger the sell down of -25% of Bayu-Undan and Darwin LNG.

Neutral maintained. Target is raised to $7.00 from $6.85.

Target price is $7.00 Current Price is $7.76 Difference: minus $0.76 (current price is over target).
If STO meets the Macquarie target it will return approximately minus 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $7.54, suggesting downside of -0.4% (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: 0.5

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

Citi rates TWE as Sell (5) -

Citi asserts scale is important in wine and Treasury Wine may need to spend more in order to sustain above-market growth in the US. The broker notes the company's cost to sales ratio is more like that of Constellation Brands which is four times its size.

Citi values the Americas segment at $2.4bn and believes there is upside risk if the company can create another 19 Crimes brand. The Americas accounts for 29% of valuation and the broker requires more brand investment to apply a higher multiple.

The key event is the strategy briefing on May 13. Sell/High Risk rating and $9.30 target.

Target price is $9.30 Current Price is $10.31 Difference: minus $1.01 (current price is over target).
If TWE meets the Citi target it will return approximately minus 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $10.50, suggesting downside of -4.3% (ex-dividends)

The company's fiscal year ends in June.

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

Morgan Stanley rates VCX as Underweight (5) -

Vicinity Centres has a lot of leasing to do in the next 18 months, according to Morgan Stanley, given around 38% of its specialty leases are set to expire.

While not a negative development in itself, especially with leasing volumes trending back to pre-covid levels, the broker suggests the period between January 2021 to June 2022 may not be the best time to have such onerous lease maturities, more so after a particularly volatile 2020.

In theory, Morgan Stanley believes if sales across Vicinity's tenants were to snap back hard, renewals in the next 18 months could work in its favour and there would be material improvements on the core leasing spreads achieved in the first half.

On the flip side, the existing tenants may demand rent cuts similar to what other occupiers received in 2020.

Underweight rating. The target rises to $1.63 from $1.57. Industry view: In-line.

Target price is $1.63 Current Price is $1.70 Difference: minus $0.07 (current price is over target).
If VCX meets the Morgan Stanley target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $1.63, suggesting downside of -2.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: -0.2

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

Macquarie rates WPL as Outperform (1) -

Macquarie marks to market 2021 estimates to allow for higher oil prices. Estimates are raised to US$50.90-54.77/bbl for 2021.

The broker notes US shale companies are showing strong capital discipline. Higher compliance from OPEC et al has driven the higher oil price despite significant spare capacity in the organisation.

Macquarie assesses Woodside Petroleum has lagged peers and envisages value in the stock. Outperform. Target is reduced to $28.20 from $28.25.

Target price is $28.20 Current Price is $25.46 Difference: $2.74
If WPL meets the Macquarie target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $27.44, suggesting upside of 7.0% (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: 0.6

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

Ord Minnett rates WPL as Upgrade to Buy from Hold (1) -

Following OPEC’s decision to keep oil production steady, and in line with its global research partner, Ord Minnett increase its price forecasts for Brent crude oil to be in line with the forward curve, and on valuation grounds has raised its recommendation on Woodside Petroleum to Buy from Hold, and its price target is raised to $29.05 from $26.80.

The broker’s 2021 Brent price forecast increases to US$60 a barrel (bbl) from US$53/bbl, and its 2022–23 forecasts also increase to US$60/bbl, while the long-run price from 2026 is unchanged at US$60/bbl.

Despite some challenges ahead for Woodside in progressing growth projects through to first production, the broker believe the higher oil price environment has come at an opportune time ahead of commercial discussions for offtake and potential asset sales.

Target price is $29.05 Current Price is $25.46 Difference: $3.59
If WPL meets the Ord Minnett target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $27.44, suggesting upside of 7.0% (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: 0.6

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

Macquarie rates XRO as Neutral (3) -

Macquarie factors in the acquisition of Planday, expecting this will contribute around 10% of revenue over the longer term. This is a software-as-a-service product that makes it easier for managers and hourly workers to communicate.

The broker reduces FY22 estimates by -2% to account for additional losses from the integration of Planday while FY23 estimates are raised by 17%. Neutral maintained. Target is reduced to $120 from $140.

Target price is $120.00 Current Price is $113.17 Difference: $6.83
If XRO meets the Macquarie target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $105.25, suggesting downside of -6.6% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY21:

Forecast for FY22:

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

Market Sentiment: -0.2

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

UBS rates XRO as Sell (5) -

Xero will be acquiring Planday, a workforce management platform, for EUR155.7m and up to EUR27.8m in earn-outs. UBS notes this will still leave Xero with circa NZ$1.2bn of liquidity.

Further, the broker highlights the acquisition will push Xero outside core accounting software product into employee management and workforce management planning. The deal may also help Xero build direct relationships with employees, presenting future opportunities.

Sell rating with the target rising to $79.50 from $77.

Target price is $79.50 Current Price is $113.17 Difference: minus $33.67 (current price is over target).
If XRO meets the UBS target it will return approximately minus 30% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $105.25, suggesting downside of -6.6% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY21:

Forecast for FY22:

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

Market Sentiment: -0.2

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