Australian Broker Call

UBS rates APT as Sell (5) -

UBS increases first half underlying sales forecasts for current markets to $9.3bn, reflecting continued customer growth and higher transaction frequency. This drives upgrades to estimates for FY21-22.

A Sell rating is maintained, although the broker acknowledges, in the absence of a catalyst, the market is likely to view the valuation differently. Target is raised to $30.00 from $28.25.

Afterpay has also announced a strategic partnership with Stripe which will offer Afterpay at the point of sale. The broker understands the Stripe merchants are likely to pay above the average merchant margin.

Target price is $30.00 Current Price is $99.13 Difference: minus $69.13 (current price is over target).
If APT meets the UBS target it will return approximately minus 70% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $92.38, suggesting downside of -8.3% (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

Morgans rates BPT as Add (1) -

Beach Energy is buying all of Senex Energy's ((SXY)) Cooper Basin assets for a cash consideration of $87.5m.

The company will acquire circa 7MMboe of 2P reserves and hopes to unlock around $5m in operational synergies.

Morgans thinks the acquisition is a low risk option, given the moderate impact to the balance sheet and the company's knowledge of the geology.

(Beach Energy and Senex Energy have been joint venture participants together in the Cooper Basin for a number of years). 

In addition to the proved reserves, the company has identified ten promising exploration targets that could provide further upside if successful.

The Add rating is unchanged and the target increased to $2.08 from $2.06.

Target price is $2.08 Current Price is $1.23 Difference: $0.85
If BPT meets the Morgans target it will return approximately 69% (excluding dividends, fees and charges).

Current consensus price target is $1.89, suggesting upside of 52.7% (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 BXB as Overweight (1) -

Brambles reported 2.6% revenue growth (5% growth in constant foreign exchange) for the first quarter.

Management noted a slowdown towards the end of October and said the tailwind from inventory stocking in the US is not expected to continue in the remainder of FY21.

Revenue guidance has been revised to the upper end of the range and Morgan Stanley forecasts 2% constant foreign exchange revenue growth in FY21.

The broker sees the update as positive given an upgrade to the midpoint of guidance, demonstrated resilience, and a weaker Australian dollar.

Overweight. Target is $13. Industry view is In-Line.

Target price is $13.00 Current Price is $10.10 Difference: $2.9
If BXB meets the Morgan Stanley target it will return approximately 29% (excluding dividends, fees and charges).

Current consensus price target is $12.24, suggesting upside of 20.7% (ex-dividends)

The company's fiscal year ends in June.

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 BXB as Upgrade to Add from Hold (1) -

The first quarter trading update for Brambles was better than Morgans expected.  

CHEP Americas and CHEP Europe, Middle East & Africa (EMEA) performed above expectations, while CHEP Asia-Pacific was in line with the broker’s forecast.

Sales growth was driven by strong demand for pallets in grocery supply chains (as inventory levels are increased in preparation for the holiday season, and ahead of any further lockdown measures).

Following recent share price weakness, the rating is upgraded to Add from Hold and the target is increased to $12.16 from $12.05.

Target price is $12.16 Current Price is $10.10 Difference: $2.06
If BXB meets the Morgans target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $12.24, suggesting upside of 20.7% (ex-dividends)

The company's fiscal year ends in June.

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

UBS rates BXB as Neutral (3) -

First quarter revenue growth of 5% revealed a slight acceleration from July. Earnings guidance has been tightened to growth of 3-5% from 0-5%.

The tightening of the guidance range signals to UBS the company has a clearer view of the outlook. The broker upgrades estimates by 2% for FY21. Neutral rating and $10.80 target maintained.

Target price is $10.80 Current Price is $10.10 Difference: $0.7
If BXB meets the UBS target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $12.24, suggesting upside of 20.7% (ex-dividends)

The company's fiscal year ends in June.

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

Credit Suisse rates CNU as Neutral (3) -

Credit Suisse updates forecasts to allow for changes in parameters associated with the weighted average cost of capital (WACC) which reflects the low interest rate environment. This has little impact on valuation

The broker assesses Chorus is doing a good job in marketing fibre and growing uptake and the approach the board takes to gearing and dividends will ultimately determine where the business settles at the end of its 10-year build.

Neutral retained. Target is raised to NZ$8.38 from NZ$8.34.

Current Price is $7.88. Target price not assessed.

Current consensus price target is N/A

The company's fiscal year ends in June.

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: -0.3

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

UBS rates CNU as Sell (5) -

UBS observes a final decision from the NZ Commerce Commission on the company's financial loss asset has minimal impact on valuation.

UBS maintains its Sell rating as, even though the stock provides short-term dividend growth, it is trading at a 25% premium to the target price of NZ$6.75.

The broker notes the busy regulatory calendar over the next 12 months with attention centred on the regulated asset base valuation due by the end of the second quarter in FY21.

Current Price is $7.88. Target price not assessed.

Current consensus price target is N/A

The company's fiscal year ends in June.

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: -0.3

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

Morgan Stanley rates HLS as No Rating (-1) -

Morgan Stanley believes the outlook for Healius is simplifying as the balance sheet is de-leveraging and the focus is on three business segments as continuing operations.

The company's first quarter trading update (22nd October, 2020), revealed revenue growth of 17.5% on the previous corresponding period and underlying earnings (EBIT) up 250.6% to $81.2m.

The company expects to receive $470m proceeds from the sale of its HPC business in 1HFY21.

Morgan Stanley is under research restriction on Healius.

Current Price is $3.43. Target price not assessed.

Current consensus price target is $3.86, suggesting upside of 10.8% (ex-dividends)

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

Ord Minnett rates JHX as Accumulate (2) -

Ord Minnett expects net profit of US$121m will be reported at the second quarter results on November 10.

The broker expects the results will provide more understanding regarding management's ability to push price in North America and how construction of the new fibre cement plant in Alabama is tracking.

Ord Minnett will also look for whether management will reinstate dividends, given strong cash generation and a positive outlook for demand. Accumulate rating retained. Target rises to $39 from $36.

Target price is $39.00 Current Price is $36.27 Difference: $2.73
If JHX meets the Ord Minnett target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $39.56, suggesting upside of 6.4% (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: 0.8

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

UBS rates MTS as Buy (1) -

UBS assesses the market is pricing in little structural benefit obtained from the pandemic, despite improvements in the company's value and in-store offering.

Further investment is required to improve consistency and develop the online business but the broker assesses the risks are more than priced in.

Industry feedback suggests strong first quarter sales trends have continued into the second quarter. Buy rating and $3.25 target retained.

Target price is $3.25 Current Price is $3.03 Difference: $0.22
If MTS meets the UBS target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $3.46, suggesting upside of 16.6% (ex-dividends)

The company's fiscal year ends in April.

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

Citi rates NUF as Buy (1) -

Citi assesses Nufarm is currently emerging from a tough three years for the agricultural industry. At 5x enterprise value/EBITDA estimates for FY21 the broker considers the stock is good value.

There is also a strong balance sheet post the sale of the Latin American business. Moreover, commercialisation of Nuseed's omega-3 canola provides the long-term growth option.

Global peers have provided positive indications over the September quarter, particularly from Europe and Asia Pacific. Buy rating and $5.30 target maintained.

Target price is $5.30 Current Price is $3.49 Difference: $1.81
If NUF meets the Citi target it will return approximately 52% (excluding dividends, fees and charges).

Current consensus price target is $4.96, suggesting upside of 42.1% (ex-dividends)

The company's fiscal year ends in July.

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 SXY as Add (1) -

Senex Energy has announced the sale of its Cooper Basin assets to Beach Energy ((BPT)) for $87.5m, which sits at a premium to Morgans $54m valuation.

In the analyst’s opinion, the Cooper interests are non-core and at odds with the company's gas strategy.

The company will update production and earnings guidance at the investor day on November 5.

The Add rating is unchanged and the target is increased to $0.51 from $0.49.

Target price is $0.51 Current Price is $0.31 Difference: $0.2
If SXY meets the Morgans target it will return approximately 65% (excluding dividends, fees and charges).

Current consensus price target is $0.42, suggesting upside of 38.3% (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

Ord Minnett rates SXY as Buy (1) -

Senex Energy has announced the sale of Cooper Basin assets to Beach Energy ((BPT)) for $87.5m in cash. The proceeds are expected to strengthen the balance sheet and result in a net cash position.

Ord Minnett expects, with an effective sale date of July 1 2020, it is likely the entire contribution to production from oil will be removed from overall guidance.

Management will announce the impact on FY21 production at its investor briefing on November 5. Buy rating and $0.42 target retained.

Target price is $0.42 Current Price is $0.31 Difference: $0.11
If SXY meets the Ord Minnett target it will return approximately 35% (excluding dividends, fees and charges).

Current consensus price target is $0.42, suggesting upside of 38.3% (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 TWE as Neutral (3) -

Citi updates its view on China's wine tariffs. Some form of duty is considered inevitable.

The broker places a 40% probability that a tariff will be implemented on wine that is less than RMB100 a bottle. This could be favourable for Treasury Wine.

Meanwhile, the Americas look more encouraging for the company.

Citi considers the risks are skewed to the upside but retains a Neutral/High Risk rating, awaiting clarity on the tariffs. Target is raised to $10.40 from $10.05.

Target price is $10.40 Current Price is $8.95 Difference: $1.45
If TWE meets the Citi target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $11.36, suggesting upside of 31.1% (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

Citi rates WOW as Buy (1) -

In an initial response to today's Q1 trading update, Citi analysts call it broadly in-line but sales growth was actually a little better than anticipated by the broker; 12.3% versus 11.7% forecast.

Supermarket sales are starting to slow to single digits, but Citi observes still a healthy pace, suggesting Woolworths continues to outpace competitor Coles ((COL)) in this compartment.

Price inflation has halved plus New Zealand growth is decelerating noticeably, the analysts observe. Buy rating and $44.50 target retained with expectations of little changes to market consensus forecasts happening on the back of today's update.

Target price is $44.50 Current Price is $38.81 Difference: $5.69
If WOW meets the Citi target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $42.17, suggesting upside of 9.4% (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