Australian Broker Call

Citi rates AMC as Buy (1) -

Citi believes the increased scale and product offerings following the Bemis acquisition are bearing fruit for Amcor.

Rigid plastics also performed well in the first quarter, with North American volumes up 7%; this more than offset continued weakness in Latin America.

The broker raises the target to $17.90 from $17.10 and retains a Buy rating.

Target price is $17.90 Current Price is $16.07 Difference: $1.83
If AMC meets the Citi target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $17.42, suggesting upside of 7.7% (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: 0.6

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

Credit Suisse rates AMC as Neutral (3) -

Credit Suisse upgrades estimates by 4%, projecting FY21 earnings above Amcor's new growth guidance of 7-12%.

The guidance does not factor in the higher level of volume achieved in the first quarter or allows for that momentum to continue, in the broker's view.

Amcor has announced a US$150m buyback, partially offset by a lower-than-expected dividend.

It appears to Credit Suisse Amcor is blending dividends and buybacks while targeting a dividend yield of above 4%. Neutral retained. Target rises to $16.00 from $15.50.

Target price is $16.00 Current Price is $16.07 Difference: minus $0.07 (current price is over target).
If AMC meets the Credit Suisse target it will return approximately minus 0% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $17.42, suggesting upside of 7.7% (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: 0.6

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

Macquarie rates AMC as Outperform (1) -

Amcor posted September quarter earnings ahead of consensus and FY21 earnings growth guidance has been upgraded to 7-12% from 5-10%. Strength in North America and emerging markets offset weakness in Europe in the quarter.

The broker notes Amcor began FY20 with 5-10% growth guidance before delivering 13%, helped by lower rates, but then rates are now lower still. The company has also announced a $150m buyback.

With the virus fighting back, Amcor's defensiveness is again attractive, the broker suggests. Outperform retained, target rises to $17.85 from $17.00.

Target price is $17.85 Current Price is $16.07 Difference: $1.78
If AMC meets the Macquarie target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $17.42, suggesting upside of 7.7% (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: 0.6

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

Morgan Stanley rates AMC as Overweight (1) -

First quarter results were in line with Morgan Stanley's expectations. Amcor has upgraded guidance, now expecting constant currency growth in earnings per share of 7-12%. The company also announced a new buyback.

The broker believes the outcome reflects high quality and defensive earnings and would not be surprised if further upgrades were considered as the year progresses.

The quarterly dividend increased to US11.8c and Morgan Stanley expects this level to be held across FY21.

Overweight reiterated. Target is raised to $19 from $18. Industry view: Cautious.

Target price is $19.00 Current Price is $16.07 Difference: $2.93
If AMC meets the Morgan Stanley target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $17.42, suggesting upside of 7.7% (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: 0.6

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

Morgans rates AMC as Add (1) -

Amcor’s first quarter result was well ahead of Morgans expectations with constant currency underlying EPS growth of 20% versus the broker’s 5% forecast.

Group constant currency underlying earnings (EBIT) grew 9% with flexibles up 11% and rigid plastics up 7%.

The company delivered Bemis synergy benefits of US$20m during the quarter (bringing total synergies so far to US$100m) with the company maintaining its target of US$50-70m for the full year.

A US$150m buyback was announced, funded by recent divestments.

The DPS of US11.75cps was broadly in-line with the analyst’s forecast.

Morgans increases the FY21 underlying EPS forecast by 3% to US$72.2cps, implying constant currency growth of 10%.

The Add rating is unchanged and the target is increased to $17.80 from $17.10.

Target price is $17.80 Current Price is $16.07 Difference: $1.73
If AMC meets the Morgans target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $17.42, suggesting upside of 7.7% (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: 0.6

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

Ord Minnett rates AMC as Accumulate (2) -

First quarter earnings were ahead of forecasts and Ord Minnett now expects around 11% growth in FY21.

The broker assesses Amcor offers exposure to a well diversified and highly defensive earnings stream and maintains its Accumulate rating with a target price of $17.50.

Target price is $17.50 Current Price is $16.07 Difference: $1.43
If AMC meets the Ord Minnett target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $17.42, suggesting upside of 7.7% (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: 0.6

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

Morgans rates AST as Reduce (5) -

In advance of the first half result on November 11, Morgans assesses regulatory and fiscal developments have been positive for AusNet Services.

The company should benefit from the immediate expensing of capex for tax purposes for assets acquired/installed after budget night and first used prior to June 2022, explains the broker.

Also, the draft decision for electricity distribution indicated a stronger revenue allowance than the analyst had anticipated. This was due to higher opex and incentive allowances, as well as accelerated return of capital.

The Reduce rating is unchanged and the target is increased to $1.80 from $1.57.

Target price is $1.80 Current Price is $2.04 Difference: minus $0.24 (current price is over target).
If AST meets the Morgans target it will return approximately minus 12% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $1.85, suggesting downside of -8.7% (ex-dividends)

The company's fiscal year ends in March.

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 BXB as Buy (1) -

First quarter trading highlighted strong sales and the company has upgraded sales guidance for FY21 to growth of 2-4%.

Citi updates estimates to reflect the change in growth forecasts as well as updating for FX and higher overheads.

There could be further upside to guidance if the company's expectations of a U-shaped economic recovery by the end of 2021 prove to be conservative, in the broker's view. Buy rating retained with a target of $12.90.

Target price is $12.90 Current Price is $10.42 Difference: $2.48
If BXB meets the Citi target it will return approximately 24% (excluding dividends, fees and charges).

Current consensus price target is $12.24, suggesting upside of 15.2% (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

Macquarie rates CCP as Neutral (3) -

In the wake of Credit Corp's AGM and results from US rivals, the broker notes US debt purchasing prices have improved, but not to the level that reflects collection outlook risk, and volumes remain weak. 

Collection activity remains strong in the US and A&NZ and Credit Corp's consumer lending book is stablising earlier than expected, but the broker considers increased deployment of available funds is necessary to drive outperformance. Neutral and $18.50 target retained.

Target price is $18.50 Current Price is $19.13 Difference: minus $0.63 (current price is over target).
If CCP meets the Macquarie target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $19.90, suggesting upside of 0.9% (ex-dividends)

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

UBS rates CSL as Buy (1) -

CSL's phase 3 trial for AEGIS-II aims to evaluate how effective plasma-derived CSL112 is in reducing the risk of cardiovascular death, myocardial infarction (MI), and stroke in acute myocardial infarction (AMI) patients.

The study noted lower than expected end-point events during the trial, which UBS believes may suggest CSL112 is best targeted towards a population group with more severe cardiovascular disease. The CSL112 opportunity has not been included in UBS's forecasts.

The Buy rating and target price of $346 are unchanged.

Target price is $346.00 Current Price is $301.99 Difference: $44.01
If CSL meets the UBS target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $309.96, suggesting upside of 2.0% (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: 0.4

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

Macquarie rates FCL as Outperform (1) -

In the wake of Fineos Corp's AGM, the broker has cut its FY21 services revenue forecast given a cautious tone. The company has nonetheless retained guidance of 20% growth, with subscription fees up 30% pre Limelight Health contribution.

The broker's subscription and software forecasts are unchanged. Outperform retained on the expectation of new client wins increasing confidence. Target drops to $5.22 from $6.25.

Target price is $5.22 Current Price is $4.16 Difference: $1.06
If FCL meets the Macquarie 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:

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

Ord Minnett rates FCL as Downgrade to Accumulate from Buy (2) -

The company has reiterated guidance for 30% underlying growth in FY21 subscription revenue at its AGM but did not recommit to the 20% organic top-line growth target.

While the long duration growth opportunity is highly attractive, particularly in the US, Ord Minnett moves the rating down to Accumulate from Buy, pending a clearer view on the impact of macro conditions, such as the pandemic and the US election.

Uncertainty around new deal closures are likely to overhang the stock, in the broker's view, albeit probably short term. Target is reduced to $4.50 from $5.00.

Target price is $4.50 Current Price is $4.16 Difference: $0.34
If FCL meets the Ord Minnett 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:

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

Morgans rates IBG as No Rating (-1) -

Ironbark Zinc is evaluating the 100% owned Citronen zinc-lead project in Greenland.

The decision of the US export credit agency EXIM to finance up to US$216m is expected to underpin access to US capital markets and to other strategic partners with the Final Investment Decision (FID) for Citronen projected for Calendar 2021.

The mine plan optimisation and production schedule are updated from the 2017 Feasibility Study. The metallurgical review confirms previous work and is refining the potential for improved performance using more recent technology.

Morgans expectation is that what was shown to be a robust greater than US$500m development will be even more robust, as project design, financing, logistics and operations are optimised.

The broker has a Speculative Buy rating and target of $0.088.

Target price is $0.09 Current Price is $0.02 Difference: $0.068
If IBG meets the Morgans target it will return approximately 340% (excluding dividends, fees and charges).

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

UBS rates MFG as Neutral (3) -

Magellan Financial Group's October assets under management (AUM) at $103.5bn were ahead of UBS's December expectations. This leads the broker to upgrade its net flow and AUM estimates, in turn leading to earnings growth upgrades for FY21-22.

Investment performance across the group's key retail funds was below benchmark between June 30 and November 4. With momentum in net flows and product initiatives in the pipeline, UBS believes the group's AUM growth prospects for the near-term remain robust. 

Neutral maintained. Target rises to $63.75 from $60.

Target price is $63.75 Current Price is $60.00 Difference: $3.75
If MFG meets the UBS target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $60.20, suggesting downside of -1.4% (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

Citi rates MQG as Neutral (3) -

Citi notes the impact on the first half result of the coronavirus pandemic was stark. Difficult conditions are set to continue, with weak transaction-related revenue and a lack of market volatility hampering opportunities.

Capital is continuing to build and creating a drag on returns, as assets are sold and dividends are constrained amid a lack of deployment opportunities.

Neutral rating retained as the broker believes investors should remain cautious. Target is $125.

Target price is $125.00 Current Price is $135.45 Difference: minus $10.45 (current price is over target).
If MQG meets the Citi target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $136.87, suggesting upside of 0.2% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.4

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

Credit Suisse rates MQG as Neutral (3) -

Credit Suisse notes the first half result was affected by higher impairments and delays in asset realisations because of the pandemic. Net profit of $985m was down -23% on the second half of FY20.

The broker has decided not to adjust earnings estimates in spite of the incrementally negative outlook, given there are significant asset realisations in the pipeline. Target is raised to $128.00 from $107.50 and a Neutral rating is retained.

Target price is $128.00 Current Price is $135.45 Difference: minus $7.45 (current price is over target).
If MQG 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 $136.87, suggesting upside of 0.2% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.4

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

Morgan Stanley rates MQG as Overweight (1) -

Morgan Stanley assesses the first half was the low point for earnings. Earnings should stabilise in the second half on a combination of a better outlook for gains on sales and performance fees along with lower impairments.

Impairment charges have peaked, in the broker's view, although improvement is likely to be gradual. Softer underlying revenue estimates have meant reductions to forecasts.

Overweight rating and In-Line industry view maintained. Target is reduced to $148 from $152.

Target price is $148.00 Current Price is $135.45 Difference: $12.55
If MQG meets the Morgan Stanley target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $136.87, suggesting upside of 0.2% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.4

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

Morgans rates MQG as Add (1) -

Morgans sees the first half result for Macquarie Group as reasonably clean, and slightly better than the group’s recent guidance.

The broker highlights group surplus capital remains strong and well up on April, while the home loan portfolio grew 10% sequentially.

Negative surprises included credit and other impairment charges broadly tripling versus the previous corresponding period and Macquarie Capital had a very soft result on higher impairments and lower deal flow, comments the broker.

The first half dividend was slight better than consensus.

Morgans lifts FY21 and FY22 EPS forecasts by 3%-6% on various changes to divisional earnings assumptions.

The Add rating is unchanged and the target is increased to $141.20 from $130.40.

Target price is $141.20 Current Price is $135.45 Difference: $5.75
If MQG meets the Morgans target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $136.87, suggesting upside of 0.2% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.4

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

Ord Minnett rates MQG as Accumulate (2) -

First half net profit was ahead of Ord Minnett's forecast. The composition of the result was weaker, nevertheless, with Macquarie Group relying more on capital recycling gains and performance fees than the broker had expected.

Recent increases in valuation multiples mean the risk/reward balance is not as clear as when the rating was upgraded to Accumulate in March but the broker still envisages potential upside in the medium term from capital deployment and reduced impairments.

Accumulate retained. Target is raised to $144 from $130.

Target price is $144.00 Current Price is $135.45 Difference: $8.55
If MQG meets the Ord Minnett target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $136.87, suggesting upside of 0.2% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.4

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

UBS rates MQG as Neutral (3) -

UBS observes a mixed first half result from Macquarie Group, impacted by subdued deal flow and impairments. Macquarie Asset Management was down -5% with revenue falling -5%. Banking and financial services were down -18%.

While loan growth was strong, it was offset by lower net interest margin and cost pressures. Overall, driven by lower investment income, M&A and higher impairments, the result has disappointed the broker.

UBS expects a jump in performance fees, investment income and M&A in FY22-23 led by the group's leverage to hard assets.

The Neutral rating is unchanged. The target price is increased to $135 from $125.

Target price is $135.00 Current Price is $135.45 Difference: minus $0.45 (current price is over target).
If MQG meets the UBS target it will return approximately minus 0% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $136.87, suggesting upside of 0.2% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.4

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

Credit Suisse rates NWS as Outperform (1) -

First quarter results were ahead of estimates. Credit Suisse was pleased with the combination of a better sales performance and margin improvement, given the impact of the pandemic.

The performance of Move was a significant turnaround from recent trends and was the driver behind the better outcome in digital real estate.

While further action may be required to crystallise the upside, the broker considers the value on offer is now more pronounced than ever. Outperform rating retained. Target rises to $27.10 from $25.00.

Target price is $27.10 Current Price is $21.63 Difference: $5.47
If NWS meets the Credit Suisse target it will return approximately 25% (excluding dividends, fees and charges).

Current consensus price target is $25.88, suggesting upside of 19.0% (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: 0.5

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

Macquarie rates NWS as Outperform (1) -

Cost-cutting drove News Corp to a much better than expected result in the September quarter. Revenues continue to be impacted by the virus, the broker notes, but the digital businesses of REA Group ((REA)), Move, books and Dow Jones are providing an offset.

The virus is accelerating the structural decline of old media but the broker suggests shareholder value could be unlocked via the crystallisation of core assets REA and Dow Jones. Outperform retained, target rises to $25.55 from $24.16.

Target price is $25.55 Current Price is $21.63 Difference: $3.92
If NWS meets the Macquarie target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $25.88, suggesting upside of 19.0% (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: 0.5

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

Morgan Stanley rates PSQ as Overweight (1) -

The first quarter update for Pacific Smiles revealed near-term trading is going to plan, with comparable sales up 11% until the end of October.

Morgan Stanley notes, with Victoria re-opening, much of the recovery and pent-up demand will fall into November/December.

Target price is $2.40. Overweight rating. Industry view: In-line.

Target price is $2.40 Current Price is $1.99 Difference: $0.41
If PSQ meets the Morgan Stanley target it will return approximately 21% (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

Credit Suisse rates REA as Neutral (3) -

First quarter results were better than Credit Suisse expected. Results were supported by deferred revenue from FY20 and the timing of costs.

The broker found commentary around listing volumes in October also "reasonably positive". Forecasts include a -2.5% decline in FY21 underlying core operating expenditure.

Neutral retained. Target is raised to $123.50 from $109.00.

Target price is $123.50 Current Price is $127.89 Difference: minus $4.39 (current price is over target).
If REA meets the Credit Suisse target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $121.38, suggesting downside of -12.6% (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

Morgans rates REA as Hold (3) -

REA Group's quarterly result has seen a -3.3% revenue decline translate into a 7.7% earnings (EBITDA) increase on the previous corresponding period, enthuses Morgans.

Aggregate listings declined only -2%, despite the Melbourne lockdown and cost containment was well ahead of guidance, explains the broker.

Despite first quarter listing volumes being well above the analyst's expectations, the broker still sees strong listings growth into a ‘more normal’ second half and further into FY22, with housing churn still well below historic levels.

Morgans sees the acquisition of a majority stake in Indian-based Elara Technologies as a sensible risk, noting large upside potential in this market.

The Hold rating is unchanged and the target is increased to $114.8 from $101.8.

Target price is $114.80 Current Price is $127.89 Difference: minus $13.09 (current price is over target).
If REA meets the Morgans target it will return approximately minus 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $121.38, suggesting downside of -12.6% (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

Ord Minnett rates REA as Hold (3) -

First quarter results were ahead of Ord Minnett's expectations. Encouraging signs of a recovery in October mean the broker now assumes listings decline -2.5% in the first half and grow 5.1% in FY21.

Hold rating retained on valuation grounds. Target is raised to $110 from $104 as a result of the better listings environment and cost management.

Target price is $110.00 Current Price is $127.89 Difference: minus $17.89 (current price is over target).
If REA meets the Ord Minnett target it will return approximately minus 14% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $121.38, suggesting downside of -12.6% (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

UBS rates REA as Neutral (3) -

REA Group had a strong first quarter that beat UBS's expectations. Both revenue deferrals and cost-out were higher than expected. These two factors together accounted for a large part of the difference between the broker's forecast and actual operating income. 

After incorporating the stronger first-quarter result, the group's acquisition of Elara (India) and stronger international prospects, the broker has revised upwards its longer-term assumptions. Near term estimates stay unchanged.

The broker reaffirms its Neutral rating with the target price rising to $130 from $107.

Target price is $130.00 Current Price is $127.89 Difference: $2.11
If REA meets the UBS target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $121.38, suggesting downside of -12.6% (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

Credit Suisse rates SM1 as Neutral (3) -

Synlait Milk has a new supply agreement with a multinational and will provide nutritional products that include plant-based ingredients to Asian markets. Commercial production is expected to start mid 2022.

The Pokeno land covenant legal dispute has now been settled and management has indicated the price was not material. Credit Suisse considers this a good outcome, removing an overhang on the share price.

The broker updates estimates to include the new contract and lower pricing inflation generally. Neutral retained. Target rises to NZ$6.30 from NZ$6.15.

Current Price is $5.10. Target price not assessed.

Current consensus price target is $5.53, suggesting downside of -0.2% (ex-dividends)

The company's fiscal year ends in July.

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: 0.5

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

Morgans rates STA as Add (1) -

Morgans adjusts the rating for Strandline Resources to Add from Speculative Buy, based on project progress and a clearer pathway to development.

The broker believes a final investment decision (FID) on the Coburn project in Western Australia is close, given the number of recent contract selections and awards in the past month implies finalisation of commercial debt is nearing.

Company guidance is for funding and development announcements this quarter, which prompts the analyst to begin unwinding a valuation discount for the mineral sands company.

The target price is increased to $0.38 from $0.359.

Target price is $0.38 Current Price is $0.19 Difference: $0.19
If STA meets the Morgans target it will return approximately 100% (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 SUN as Outperform (1) -

Suncorp's natural hazards update suggests first half FY21 hazards are set to exceed the insurer's allowance, but "interplay" with the reinsurance program should reduce the second half expectation and have no impact on the FY21 result, the broker believes.

This nevertheless assumes reinsurance cover lasts till the end of the period, and La Nina will continue to create uncertainty, but long term investors should consider such as a buying opportunity, the broker advises. Outperform and $11.00 target retained.

Target price is $11.00 Current Price is $8.30 Difference: $2.7
If SUN meets the Macquarie target it will return approximately 33% (excluding dividends, fees and charges).

Current consensus price target is $10.48, suggesting upside of 22.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.4

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

Ord Minnett rates SUN as Accumulate (2) -

On the back of an update on catastrophe and perils costs for the four months to October, Ord Minnett reduces first-half FY21 earnings forecasts by -$100m.

The second half is increased by $50m, assuming stronger reinsurance protections. Accumulate rating and $11.82 target retained.

Target price is $11.82 Current Price is $8.30 Difference: $3.52
If SUN meets the Ord Minnett target it will return approximately 42% (excluding dividends, fees and charges).

Current consensus price target is $10.48, suggesting upside of 22.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.4

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

Morgans rates SXY as Add (1) -

In an environment where some peers have equity raising risk, Morgans thinks it significant that Senex Energy is in a position where it has announced a new dividend policy.

Starting in FY22 at the latest, the company will pay out 20-30% of free cash flow.

The company also flagged plans for a share consolidation early in 2021.

Also announced at the investor day was a stretch production target of 10mmboe/a by the end of 2025.

Pro forma net cash at 30 September is $30m (post Cooper asset sale).

The Add rating and target of $0.51 are unchanged.

Target price is $0.51 Current Price is $0.32 Difference: $0.19
If SXY meets the Morgans target it will return approximately 59% (excluding dividends, fees and charges).

Current consensus price target is $0.42, suggesting upside of 30.7% (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

UBS rates TAH as Buy (1) -

UBS notes media speculation suggesting multiple offers for Tabcorp Holdings with one of the consortiums interested in the entire business while the other is interested in the wagering business. 

UBS believes the lottery business is better now with the last few years showing lottery revenue can grow above the usual 2-4% per annum average by tweaking the math behind it.

The broker also notes the business is protected through strong regulatory barriers and competition in the online reseller space is unlikely.

The Buy rating and $4.70 price target are unchanged.

Target price is $4.70 Current Price is $4.10 Difference: $0.6
If TAH meets the UBS target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $3.87, suggesting downside of -1.7% (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

Ord Minnett rates UWL as Buy (1) -

Settlement of the OptiComm acquisition is scheduled for November 20. Ord Minnett assesses this will increase the share of group operating earnings generated from the wholesale infrastructure segment to above 70% and substantially raise earnings quality.

The combined share of the fibre-to-the-premises (FTTP) market rises to 12%. Uniti Group, the broker observes, is now a clear second behind the incumbent in the FTTP market. Buy rating and $1.82 target retained.

Target price is $1.82 Current Price is $1.39 Difference: $0.43
If UWL meets the Ord Minnett target it will return approximately 31% (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 VCX as Neutral (3) -

Vicinity Centres' cash collection fell to 55% in the September quarter from 66% in the second half of FY20, with Melbourne in lockdown. This will improve with Melbourne reopening, the broker notes, and the REIT may have yet over-provisioned for collection shortfalls.

The broker forecasts 75% for the December quarter, and notes that while guidance remains withdrawn, Vicinity still intends to pay a first half dividend. Neutral and $1.42 target retained.

Target price is $1.42 Current Price is $1.40 Difference: $0.02
If VCX meets the Macquarie target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $1.48, suggesting upside of 2.0% (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

Morgan Stanley rates VCX as Underweight (5) -

Morgan Stanley found the September quarter update mixed. Around 56% of September quarter billings have been collected, which compares with 70% for Scentre Group ((SCG)) on the broker's estimates.

Yet the company has indicated that excluding Victoria, which is 63% of the portfolio, collections were 76%. Shopping centre productivity was up 1.1%, again excluding Victoria.

Morgan Stanley retains an Underweight rating. Target is $1.25. Industry view: In-line.

Target price is $1.25 Current Price is $1.40 Difference: minus $0.15 (current price is over target).
If VCX 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 $1.48, suggesting upside of 2.0% (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

Ord Minnett rates VCX as Buy (1) -

Operating metrics were severely affected by the lockdowns in Victoria during the first quarter, given the company's 52% weighting to that state.

Still, Ord Minnett is encouraged by the sharp recovery in foot traffic in Victorian assets in the last two weeks and expects retail operating metrics in Melbourne will recover quickly to levels similar to Sydney.

Based on an assumed pay-out ratio of 95% of adjusted funds from operations, Ord Minnett expects a stabilised distribution yield of 7.3% in FY22. Buy rating and $1.70 target retained.

Target price is $1.70 Current Price is $1.40 Difference: $0.3
If VCX meets the Ord Minnett target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $1.48, suggesting upside of 2.0% (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

UBS rates VCX as Neutral (3) -

UBS observes improvement across multiple metrics in Vicinity Centres' quarterly update. Sales were better than the June quarter. Cash collections for the September quarter improved to 56% of the gross rental billings versus 49% in the June quarter.

UBS notes cash flows, while improving, are below the broker's expectations. As a result, Vicinity's FY21 funds from operations forecast has been reduced by -9%.

While quarterly trends are encouraging, UBS does not think they are enough to warrant a change in the broker's views.

The Neutral rating is under review with a target price of $1.38.

Target price is $1.38 Current Price is $1.40 Difference: minus $0.02 (current price is over target).
If VCX meets the UBS target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $1.48, suggesting upside of 2.0% (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

Citi rates XRO as Neutral (3) -

Citi upgrades FY21-23 estimates for operating earnings by 2-8% to reflect stronger subscriber growth in the short term and operating leverage as well as lower costs growth assumptions.

The target price is raised to $121.30 from $82.00 to reflect higher peer multiples, a rolling forward of the valuation and earnings upgrades.

A Neutral rating is retained as the broker considers the valuation stretched.

Target price is $121.30 Current Price is $118.17 Difference: $3.13
If XRO meets the Citi target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $91.55, suggesting downside of -23.0% (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