Australian Broker Call

Macquarie rates BKL as Neutral (3) -

Macquarie raises its target price to $93.50 from $78.50 after Blackmores posted FY21 results. Earnings (EBITDA) rose 44% versus the previous corresponding period, driven by International and China, with A&NZ sales down -14% though cost savings supported margins.

While the near-term outlook appears benign with lockdowns, e-Commerce, Pet and investment in the Blackmores and BioCeuticals brands should provide some relief, explains the analyst.

The company seems on-track to hit $900m of sales in FY25 and earnings (EBIT) margins in the mid-teens (percentage) by FY24, highlights Macquarie. The Neutral rating is unchanged.

Target price is $93.50 Current Price is $94.26 Difference: minus $0.76 (current price is over target).
If BKL meets the Macquarie target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $83.58, suggesting downside of -11.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.0

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

Macquarie rates CMM as Underperform (5) -

After an update from management on Karlawinda’s ramp-up, Macquarie estimates early signs are positive with production during August comparing favourably to expectations. The target price rises to $2.30 from $2.10 and the Underperform rating is unchanged.

Management highlights that Karlawinda is cash flow positive. Due to the strong production metrics reported for August, the broker now forecasts an additional 4.5koz of production in the first quarter of FY22.

Target price is $2.30 Current Price is $2.38 Difference: minus $0.08 (current price is over target).
If CMM meets the Macquarie target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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 CRN as Outperform (1) -

Macquarie strategists consider the outlook for coal continues to be positive, even after thermal and met-coal prices have more than doubled in 2021. Met-coal exposure is preferred to thermal coal over the medium term,

The broker notes equities have lagged the increase in coal prices and predicts material upside. A preference is maintained for Coronado Global Resources over Whitehaven Coal ((WHC)) and New Hope Corp ((NHC)), due to greater leverage to met coal prices.

Macquarie retains its Outperform rating for Coronado Global Resources and lifts its target price to $1.40 from $1.10.

Target price is $1.40 Current Price is $1.18 Difference: $0.22
If CRN meets the Macquarie target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $1.40, suggesting upside of 16.9% (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 DOW as Outperform (1) -

After a mixed reporting season for contractors, Macquarie notes the result for Downer EDI was the highlight. The broker raises its target price to $6.79 from $6.40 after appplying a higher multiple for the Services business.

The analyst feels the stock should be supported by its valuation discount and a buyback.The Outperform rating is unchanged.

Target price is $6.79 Current Price is $6.41 Difference: $0.38
If DOW meets the Macquarie target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $6.28, suggesting downside of -2.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.8

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

Morgans rates EBO as Downgrade to Hold from Add (3) -

Morgans sees potential for further sales growth and margin expansion after the acquisition announcement of Sentry Medical, a designer, marketer and distributor of medical consumables. The target rises to $34.50 from $31.68, despite no changes to near-term forecasts.

Due to recent share price strength, the analyst pulls back the rating to Hold from Add and awaits a better entry point.

Target price is $34.50 Current Price is $33.63 Difference: $0.87
If EBO meets the Morgans target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $32.33, suggesting downside of -4.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.4

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

Citi rates FCL as Buy (1) -

Citi believes Fineos Corp's equity raise of $60m, with an additional $5m share purchase plan (SPP), removes an overhang on the stock and is in line with the broker's view that the company required growth capital.

The broker notes the size of the raise also provides Fineos with the flexibility to invest in its product and integrate Limelight and Spraoi into its platform, while at the same time pursuing bolt-on acquisitions.

Target is lowered to $5.22 from $5.25 and the Buy is retained.

Target price is $5.22 Current Price is $4.53 Difference: $0.69
If FCL meets the Citi target it will return approximately 15% (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 June.

Forecast for FY22:

Forecast for FY23:

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

Market Sentiment: 0.9

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

Macquarie rates NHC as Neutral (3) -

Macquarie strategists consider the outlook for coal continues to be positive, even after thermal and met-coal prices have more than doubled in 2021. Met-coal exposure is preferred to thermal coal over the medium term,

The broker notes equities have lagged the increase in coal prices and predicts material upside. A preference is maintained for Coronado Global Resources ((CRN)) over Whitehaven Coal ((WHC)) and New Hope Corp, due to greater leverage to met coal prices.

Macquarie retains its Neutral rating for New Hope Corp and lifts its target price to $2.20 from $1.90.

Target price is $2.20 Current Price is $2.21 Difference: minus $0.01 (current price is over target).
If NHC meets the Macquarie target it will return approximately minus 0% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.22, suggesting downside of -2.6% (ex-dividends)

The company's fiscal year ends in July.

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 NXT as Buy (1) -

It is Citi's view that NextDC delivered a mixed FY21 result with revenue guidance impacted by a decline in revenue metrics, with revenue per MW declining -14% year-on-year in second half FY21.

Driven primarily by Sydney, up 4 MW, the company saw a strong pick-up in bookings in second half FY21, with net bookings of 4.5 MWs.

After putting on 9 MWs of capacity in M2 to support recent contract successes, the company is adding a further 9 MWs of capacity in FY22. Citi regards this as a sign of customer demand and expects the customer expansion options to convert into contracted utilisation in the near term.

With FY22 guidance in line with Citi's expectations, the broker's FY22 forecasts are largely unchanged, but the broker has cut FY23 earnings estimates by -9% due to a slower ramp in billing and lower revenue per MW.

With FY22 earnings largely contracted and customer expansion options underscoring Citi's medium-term forecasts, the broker maintains a Buy rating with the target increasing to $15.40 from $14.45.

Target price is $15.40 Current Price is $13.70 Difference: $1.7
If NXT meets the Citi target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $14.44, suggesting upside of 3.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.8

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

Morgan Stanley rates QBE as Overweight (1) -

In the US, Hurricane Ida's total insured loss is estimated to be around -US$14-21bn, notes Morgan Stanley. QBE Insurance Group's losses are likely capped at circa -US$200m by reinsurance and its US$500m aggregate cover moves a step closer to activating.

A large number of modest catastrophes (CAT) are likely to be more costly for the group than several larger ones, as it will take
longer to fully activate this aggregate cover, explains the broker.

If we see a further increase in CAT losses in the second half, this aggregate cover likely protects the group though the cost of next year's cover could increase, says Morgan Stanley. The Overweight rating and $14 target price are retained. Industry view: In-line. 

Target price is $14.00 Current Price is $11.70 Difference: $2.3
If QBE meets the Morgan Stanley target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $13.99, suggesting upside of 19.6% (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: 0.8

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

Morgans rates RRL as Add (1) -

With production and cost figures pre-reported, FY21 results held few surprises and were broadly in-line with Morgans estimates. A soft start to FY22 is expected, with planned mill shutdowns in the current quarter along with preventative maintenance across several open pits.

Profit was higher than the broker's estimate, driven by the timing of stamp duty payment related to the Tropicana purchase. Morgans retains its Add rating and $3.93 target price.

Target price is $3.93 Current Price is $2.39 Difference: $1.54
If RRL meets the Morgans target it will return approximately 64% (excluding dividends, fees and charges).

Current consensus price target is $3.38, suggesting upside of 41.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.6

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

Morgans rates UMG as Upgrade to Add from Hold (1) -

FY21 guidance was weaker than Morgans expected albeit a large part of the miss is due to a new accounting standard. Trading conditions indicate the recovery in North America and UK is being partially offset by covid restrictions in Australia and Asia, explains the analyst.

While the broker expects solid earnings growth in FY22, it is still likely to be impacted by covid in Asia and increased supply chain costs. After material share price weakness, the rating is upgraded to Add from Hold and the target price of $4.79 is retained.

Management reiterated the $30m in earnings (EBITDA) benefits targeted by FY24 under its transformation initiatives.

Target price is $4.79 Current Price is $4.13 Difference: $0.66
If UMG meets the Morgans target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $4.75, suggesting upside of 13.0% (ex-dividends)

The company's fiscal year ends in September.

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 UMG as Buy (1) -

UBS assesses a lower-quality FY21 result though retains its Buy rating and $5.10 target, and believes investors should focus on the broadly intact recovery story. While container/freight costs were considered elevated, the majority is passed through to export customers.

The broker makes only modest forecast earnings cuts in FY22, reflecting a trim to volumes and margins. Volumes are improving in the US/UK, including mix shifting back towards higher-margin specialty malt (craft beer), notes the analyst.

Target price is $5.10 Current Price is $4.13 Difference: $0.97
If UMG meets the UBS target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $4.75, suggesting upside of 13.0% (ex-dividends)

The company's fiscal year ends in September.

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 VVA as Upgrade to Buy from Neutral (1) -

With Viva Leisure's recent $12m equity raising having potentially resolved issues surrounding its balance sheet following recent lockdowns, Citi has upgraded the company to Buy from Neutral and increases the price target to $1.90 from $1.75.

Citi expects the strengthened balance sheet, plus the company's focus on preserving cash to provide sufficient liquidity to trade through FY22, providing the company ceases paying rent.

While Citi continues to forecast 22 greenfield clubs and 14 acquisitions in FY22, the broker suspects the improved balance sheet could result in Viva Leisure undertaking further acquisitions should the opportunity arise.

Target price is $1.90 Current Price is $1.55 Difference: $0.35
If VVA meets the Citi target it will return approximately 23% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 1.0

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

Macquarie rates WHC as Outperform (1) -

Macquarie strategists consider the outlook for coal continues to be positive, even after thermal and met-coal prices have more than doubled in 2021. Met-coal exposure is preferred to thermal coal over the medium term,

The broker notes equities have lagged the increase in coal prices and predicts material upside. A preference is maintained for Coronado Global Resources ((CRN)) over Whitehaven Coal and New Hope Corp ((NHC)), due to greater leverage to met coal prices.

Macquarie retains its Outperform rating for Whitehaven Coal and lifts its target price to $3 from $2.70.

Target price is $3.00 Current Price is $2.66 Difference: $0.34
If WHC meets the Macquarie target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $2.94, suggesting upside of 3.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.7

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