Australian Broker Call

Citi rates BKL as Sell (5) -

Citi believes Nestle's interest in The Bountiful Company could suggest broader interest by companies in general toward the vitamins and mineral supplements (VMS) category. However, the broker feels the share price is expensive and somewhat factoring in M&A.

The analyst  also concludes the VMS category has more diverse routes to market (includes pharmacies, drugstores, e-commerce) compared to fast moving consumer goods (FMCG) companies like Nestle. That is, the Nestle acquisition may be problematic.

Citi retains a Sell rating and $55.50 target price.

Target price is $55.50 Current Price is $72.00 Difference: minus $16.5 (current price is over target).
If BKL meets the Citi target it will return approximately minus 23% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $73.83, suggesting upside of 3.3% (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

Credit Suisse rates BKL as Neutral (3) -

As a result of the company's investor presentation, Credit Suisse notes Australian discounting has returned which has affected margin and profitability. Strong growth continues in Asia and China.

Gross margin expansion is anticipated moving to the high 50% levels from 52%. Credit Suisse downgrades estimates for earnings per share by -2-4% and retains a Neutral rating.

Despite a strong recovery in earnings and a solid balance sheet the broker notes the stock is trading at a 40% PE premium to FY22 estimates. Target is reduced to $77 from $80.

Target price is $77.00 Current Price is $72.00 Difference: $5
If BKL meets the Credit Suisse target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $73.83, suggesting upside of 3.3% (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 CHN as Outperform (1) -

The latest drilling updates from Julimar have extended and widened the known zones of mineralisation. Macquarie upgrades its development scenario to allow for a larger scale open pit development after incorporating the latest results.

This drives material upgrades to earnings forecasts for the medium to longer term, as the mine life projection has now grown to 12 years from 8 previously. Outperform maintained. Target rises to $9.20 from $5.50.

Target price is $9.20 Current Price is $6.80 Difference: $2.4
If CHN meets the Macquarie target it will return approximately 35% (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

Ord Minnett rates COL as Hold (3) -

Coles Group will report its March quarter results on 28 April and Ord Minnett expects Woolworths ((WOW)) to outperform Coles in food division like-for-like (LFL) sales.

The broker expects Coles to grow 4.3% in liquor division sales with the category supported by premiumisation and limited international travel.

Hold recommendation with a $16.50 target price.

Target price is $16.50 Current Price is $15.64 Difference: $0.86
If COL meets the Ord Minnett target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $18.43, suggesting upside of 18.0% (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

Morgan Stanley rates DOW as Overweight (1) -

Downer EDI will be selling its Otraco tyre management business for circa $80m. Morgan Stanley assumes margins will be higher than for the rest of the mining business given the specialised nature of the tyre management business.

The final piece of Downer’s mining divestment strategy is its open-cut business in Eastern Australia which generates almost $600m of revenue.

The broker contends a divestment here would yield about $180-240m, bringing the total laundries and mining divestment to nearly $800m.

Target is $6.20. Overweight. Industry view: In-line.

Target price is $6.20 Current Price is $5.42 Difference: $0.78
If DOW meets the Morgan Stanley target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $5.99, suggesting upside of 12.8% (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 DXS as Overweight (1) -

Looking at the Sydney CBD office supply pipeline and major tenant relocations in 2021-22, Morgan Stanley believes the outlook is not bad for Dexus. The broker notes some mooted projects look unlikely until 2026-27 and that Dexus has no large Sydney tenants vacating space.

Based on its channel checks and market data analysis, the broker is of the view the Sydney office market will stop deteriorating in the next 12 months. Also, while the pace of recovery remains uncertain Morgan Stanley believes we are close to an inflexion point.

Overweight rating with a target of $11.70. Industry View: In-line.

Target price is $11.70 Current Price is $10.05 Difference: $1.65
If DXS meets the Morgan Stanley target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $9.92, suggesting upside of 0.2% (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

Ord Minnett rates HMC as Hold (3) -

Home Consortium has entered into conditional agreements to sell seven balance-sheet assets to HomeCo Daily Needs REIT ((HDN)) for a total consideration of $266m. Ord Minnett notes the company is continuing its transition from asset owner to property fund manager.

Post the asset sales, the broker expects Home Consortium to be net cash and well placed to fund growth in assets under management (AUM) to $5bn-plus without needing any new equity.

Hold recommendation with the target price rising to $4.40 from $3.70.

Target price is $4.40 Current Price is $4.82 Difference: minus $0.42 (current price is over target).
If HMC meets the Ord Minnett target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.16, suggesting downside of -18.2% (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

Macquarie rates IGO as Resume Coverage with Outperform (1) -

Macquarie believes the business has been transformed by the sale of its 30% interest in Tropicana and the acquisition of an interest in the lithium joint venture.

The sale of the stake in Tropicana will result in the company emerging from both transactions with a modest net cash position, points out the analyst.

The broker predicts the 24.99% stake in the Greenbushes spodumene mine and 49% of the Kwinana lithium hydroxide plant will be the key growth engines for the company. Greenbushes is the largest and lowest-cost spodumene mine globally with a life of over 20 years.

Macquarie resumes coverage with an Outperform rating and $8 target.

Target price is $8.00 Current Price is $7.18 Difference: $0.82
If IGO meets the Macquarie target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $6.54, suggesting downside of -10.0% (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 NHF as Neutral (3) -

The new company guidance for FY21 underlying operating profit (UOP) of $200m-$225m is well above Citi's prior forecast of $183m. This was due to the “catch-up” in treatment deferrals being less than expected, which is a one-off sugar hit, notes the broker.

Further, the analyst highlights the risk that some of the benefit will have to be given back in future pricing or via other methods. Reflecting this, the Neutral rating is retained with the target edging up to $6.40 from $6.30.

Target price is $6.40 Current Price is $5.94 Difference: $0.46
If NHF meets the Citi target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $6.27, suggesting upside of 5.1% (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

Credit Suisse rates NHF as Neutral (3) -

Credit Suisse notes policyholder growth is running ahead of expectations while the company has guided to underlying operating profit of $200-225m, the mid point of which represents a 20% upgrade to consensus forecasts.

The broker increases underlying operating profit estimates for FY21 by 31%. Target is raised to $6.15 from $5.50. The stock is considered fair value and a Neutral rating is reiterated.

Target price is $6.15 Current Price is $5.94 Difference: $0.21
If NHF meets the Credit Suisse target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $6.27, suggesting upside of 5.1% (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

Macquarie rates NHF as Neutral (3) -

Underlying operating profit has been upgraded for FY21 to $200-225m. Policyholder growth was 3.7% for the nine months to March. A catch-up in claims has been slower than Macquarie assumed while policyholder growth has outpaced expectations.

The broker considers the primary risk to its view is a variation in the pace of claims catch-up post the pandemic. Neutral maintained. Target is raised to $5.90 from $5.45.

Target price is $5.90 Current Price is $5.94 Difference: minus $0.04 (current price is over target).
If NHF 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 $6.27, suggesting upside of 5.1% (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 NHF as Equal-weight (3) -

Group operating profit for nib Holdings FY21 is expected to be in the range of $200-225m, 17-32% ahead of Morgan Stanley's estimated $170m. The broker notes nib's claims experience, especially risk equalisation, continues to be lower than expected.

The company states strong Australian resident insurance business (ARHI) performance coupled with stable performance in New Zealand is more than offsetting the weakness in international inbound health insurance (IIHI) and travel insurance business.

Equal-weight rating. Target is raised to $6.05 from $5.75. Industry view: In-line.

Target price is $6.05 Current Price is $5.94 Difference: $0.11
If NHF meets the Morgan Stanley target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $6.27, suggesting upside of 5.1% (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

Morgans rates NHF as Hold (3) -

Morgans assesses a very strong third quarter group result as favourable claims trends in the key Australian residents health insurance (ARHI) business (linked to covid) continue.

This is highlighted by the third quarter “catch up” on covid deferred treatments being slower than the group assumed as at December 2020, explains the broker.

Morgans upgrades EPS forecasts for FY21 and FY22 by around 19% and 5%. This incorporates a market update by the group and reduced ARHI claims expectations across the forecast period. 

Management has guided to a  FY21 group underlying operating profit (UOP) of $200m-$225m, which is circa 7% above previous consensus expectations at the mid-point, calculates the analyst. Add rating and target rises to $6.45 from $5.58 on earnings changes.

Target price is $6.45 Current Price is $5.94 Difference: $0.51
If NHF meets the Morgans target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $6.27, suggesting upside of 5.1% (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 NHF as Accumulate (2) -

nib Holdings has upgraded its guidance driven by favourable claims trends for the Australian residents health insurance (ARHI) business and on expectations of a very strong result for FY21.

While Ord Minnett is unclear how much of this will continue in FY22 but expects weakness in travel to be fully offset by strength in ARHI.

Accumulate recommendation with the target price rising to $6.56 from $6.44.

Target price is $6.56 Current Price is $5.94 Difference: $0.62
If NHF meets the Ord Minnett target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $6.27, suggesting upside of 5.1% (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 NHF as Neutral (3) -

Maiden FY21 guidance is for underlying operating profit of $200-225m, greater than the $189m UBS estimated. That said, the broker did not allow for one-off benefits from the release of covid-19 provisions.

While most health insurers have provided a commitment to return pandemic-related savings to customers, it appears to the broker that nib Holdings will distribute this back to shareholders.

UBS increases the target to $6.35 from $6.15 on the back of outer-year earnings upgrades. While recent share price weakness has opened up some valuation appeal, the broker suggests the short-term outlook is unclear. Neutral maintained.

Target price is $6.35 Current Price is $5.94 Difference: $0.41
If NHF meets the UBS target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $6.27, suggesting upside of 5.1% (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 OSH as Upgrade to Buy from Neutral (1) -

First quarter production was in line with UBS estimates. Revenue was marginally lower than expected because of reduced volumes from PNG LNG. Realised LNG prices outperformed peers in the quarter, the broker notes.

2021 guidance has been revised, with capital expenditure reduced by -28% as expenditure on the biomass project and seismic analysis in PNG are deferred. Yet operating cost guidance has been revised up 35% because of higher hedging costs.

UBS upgrades to Buy from Neutral, assessing the outlook for oil demand is improving and Oil Search has the highest leverage to a forecast oil price recovery. Target is reduced to $4.50 from $4.60.

Target price is $4.50 Current Price is $3.75 Difference: $0.75
If OSH meets the UBS target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $4.39, suggesting upside of 18.0% (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: 0.1

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

Macquarie rates RMD as Neutral (3) -

Macquarie considers ResMed exposed to improving activity with a recovery in new sleep apnoea patient growth. The reimbursement environment is stable, reducing gross margin risk.

The broker's main concerns relate to the potential outcomes associated with the US healthcare and research quality report, which raises questions about the efficacy of CPAP therapy. Target is raised to $28.00 from $27.80. Neutral retained.

Target price is $28.00 Current Price is $27.10 Difference: $0.9
If RMD meets the Macquarie target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $28.20, suggesting upside of 3.1% (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: 0.3

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

Ord Minnett rates RWC as Buy (1) -

Reliance Worldwide Corp's third-quarter sales rose by 14% to $359.4m. By region, constant currency sales increased 39% in the Americas, 11% in APAC and 13% in EMEA.

In its initial response, Ord Minnett notes Reliance Worldwide Corp's sales activity to date in April is considerably higher than last year.

Further, with a conservatively geared balance sheet, the broker thinks Reliance Worldwide is well-positioned to add to its growth profile through acquisitions and capital management initiatives.

Buy rating with a target of $5.60. 

Target price is $5.60 Current Price is $4.88 Difference: $0.72
If RWC meets the Ord Minnett target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $4.86, suggesting downside of -1.2% (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

Credit Suisse rates WBC as Outperform (1) -

Westpac has indicated the first half cash earnings will be reduced by -$282m as a result of notable items, an additional $70m of notable items since the first quarter update.

The items relate to additional remediation provisions, write-down of capitalised software and goodwill. Credit Suisse considers the announcement mostly about compositional changes and retains an Outperform rating and $25.50 target.

Target price is $25.50 Current Price is $25.08 Difference: $0.42
If WBC meets the Credit Suisse target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $26.72, suggesting upside of 6.9% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.7

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

Morgan Stanley rates WBC as Overweight (1) -

Westpac Bank's first-half cash earnings will be down by -$282m post-tax primarily due to notable items like customer remediation and write-downs of intangibles. All else equal, Morgan Stanley notes the impact on its first-half forecast would be circa -1%. 

The bank also announced a change to its software capitalisation policy, which will see a higher proportion of investment expensed and, in the broker's view, could add about 2-3% to near-term expense growth.

The target is $28 with an Overweight rating. Industry view: In-line.

Target price is $28.00 Current Price is $25.08 Difference: $2.92
If WBC meets the Morgan Stanley target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $26.72, suggesting upside of 6.9% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.7

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

Ord Minnett rates WBC as Hold (3) -

Westpac Bank will report its first-half result on May 3 and Ord Minnett forecasts a net profit of $3.487bn, more than double the second-half FY20 result. The result is expected to be driven by lower one-off items and provision write-backs. An interim dividend of 60c is forecast.

Hold recommendation with a $25.30 target price.

Target price is $25.30 Current Price is $25.08 Difference: $0.22
If WBC meets the Ord Minnett target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $26.72, suggesting upside of 6.9% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.7

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

Ord Minnett rates WOW as Accumulate (2) -

Woolworths will report March quarter results on 29 April and Ord Minnett expects Woolworths to outperform Coles ((COL)) in food division like-for-like (LFL) sales.

The broker expects local and online shopping to be the key drivers of Woolworths’ superior performance. Woolworths is also expected to extend its market share lead in liquor division sales with the category supported by premiumisation and limited international travel.

Accumulate rating and $45 target.

Target price is $45.00 Current Price is $41.88 Difference: $3.12
If WOW meets the Ord Minnett target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $43.16, suggesting upside of 3.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.6

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

Ord Minnett rates WSP as Buy (1) -

Whispir's third-quarter update highlights an annual recurring revenue (ARR) of $50.3m, on track to meet its FY21 guidance, notes Ord Minnett. Highlighting some key positives from the result, the broker points out 43 new customer additions taking the total customers to 750.

Further, with a net cash position of $51.7m, Ord Minnett considers Whispir well capitalised to chase a large USA market opportunity and is also seeing early signs of success here with 11 new customers in the region during the quarter.

Buy rating with a target of $4.25.

Target price is $4.25 Current Price is $3.32 Difference: $0.93
If WSP meets the Ord Minnett target it will return approximately 28% (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