Australian Broker Call

Credit Suisse rates BXB as Outperform (1) -

The halt of imports of Russian lumber has spiked lumber costs in Europe, not only reducing the likelihood of a guidance upgrade from Brambles but driving a slight reduction to Credit Suisse's full year earnings forecast. 

Pricing of lumber for pallets reached a record high in March at 3x the historical average. Credit Suisse has downgraded full year earnings -1% for the impact of lumber pricing, and a further -1% due to the weaker euro. 

The Outperform rating is retained and the target price decreases to $13.00 from $13.25.

Target price is $13.00 Current Price is $9.92 Difference: $3.08
If BXB meets the Credit Suisse target it will return approximately 31% (excluding dividends, fees and charges).

Current consensus price target is $11.50, suggesting upside of 14.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

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

Morgan Stanley rates CPU as Overweight (1) -

Morgan Stanley anticipates higher margin income for Computershare after factoring in six US rate rises over 24 months. The broker also expects stronger earnings (EBITDA) on a better outlook for US mortgage servicing and Computershare Corporate Trust (CCT).

The broker sees a multi-year cost-out opportunity within the CCT division. The target rises to $28.20 from $25 and the Overweight rating is maintained. Industry view: Attractive.

Target price is $28.20 Current Price is $25.75 Difference: $2.45
If CPU meets the Morgan Stanley target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $24.38, suggesting downside of -4.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

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

Macquarie rates DXS as Outperform (1) -

Amid speculation that Dexus may acquire AMP's ((AMP)) real estate and domestic infrastructure platform, Macquarie notes the purchase would be strategically significant to funds management, adding $30bn to Dexus' existing $27bn funds under management for a 111% increase.

The broker further notes the purchase would see Dexus' funds management increase to 21% of earnings, from a current 12%.

The Outperform rating and target price of $12.39 are retained.

Target price is $12.39 Current Price is $10.81 Difference: $1.58
If DXS meets the Macquarie target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $12.02, suggesting upside of 11.7% (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

UBS rates EDV as Neutral (3) -

In anticipation of 3Q sales for Endeavour Group, due out tomorrow, UBS forecasts total sales of $2.795bn, up 0.4% versus the previous corresponding period (pcp). The consensus estimate is for $2.82bn.

Total sales for Hotels of $401m is forecast by the analyst, up 2.8% on the pcp. The Neutral rating and $7.20 target price are retained.

Target price is $7.20 Current Price is $7.81 Difference: minus $0.61 (current price is over target).
If EDV meets the UBS target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $7.20, suggesting downside of -8.6% (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 HAS as Initiation of coverage with Outperform (1) -

Macquarie initiates coverage on Hastings Technology Metals, noting the company is positioned to become a rare earth producer in the next two years through the development of its high concentration Yangibana project. 

Development is expected to cost -$600m to deliver 15,000 tonnes mixed rare earth carbonate containing 3,400 tonnes of neodymium-praseodymium annually. Macquarie considers securing the remaining funding, assuming a further -$160m in debt and -$200m in equity, to be a key risk.

With early works under way, first production should commence in the second half of 2024. The broker initiates with an Outperform rating and a target price of $0.40.

Target price is $0.40 Current Price is $0.28 Difference: $0.12
If HAS meets the Macquarie target it will return approximately 43% (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

Citi rates HUB as Buy (1) -

The 3Q update by Hub24 was weaker than Citi had estimated and profit forecasts are lowered by -4% to incorporate estimated funds under administration (FUA) downgrades. The latter was due to higher than expected negative market movements.

The profit forecast downgrade was offset by a higher cash balance, explains the broker. Flows were in-line with expectations. The target price falls to $30.90 from $31.50, while the Buy rating is maintained.

The analyst points out the company only added 30 advisers (net) in the quarter, the weakest growth since the 1Q of 2020, though management attributed this to weak additions, as opposed to churn.

Target price is $30.90 Current Price is $25.96 Difference: $4.94
If HUB meets the Citi target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $33.27, suggesting upside of 36.4% (ex-dividends)

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

Credit Suisse rates HUB as Outperform (1) -

Hub24 reported flows of $2.6bn in the March quarter, up 36% year-on-year but a slight miss on Credit Suisse's expected $2.9-3.0bn. The broker expects reduced adviser productivity, an impact of covid staff shortages, was a likely driver of the miss.

The addition of thirty new advisers in the quarter was well below the more than 200 per quarter adviser additions average of the last two years, and Credit Suisse notes it will look for signs of recovery from this potential key risk.

The company also announced it intends to undertake the migration of funds under administration from the acquired Xplore, which the broker notes is a key step to unlocking the $10m potential acquisition synergies.

The Outperform rating is retained and the target price decreases to $36.00 from $37.00. 

Target price is $36.00 Current Price is $25.96 Difference: $10.04
If HUB meets the Credit Suisse target it will return approximately 39% (excluding dividends, fees and charges).

Current consensus price target is $33.27, suggesting upside of 36.4% (ex-dividends)

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 HUB as Outperform (1) -

Hub24 reported third quarter inflows of $2.6bn, bringing total funds under administration to $51.0bn as of the end of March. Macquarie highlighted flows, which it anticipated to reach $3.0bn in the quarter, were impacted by covid-affected advisers. 

The company also announced the acquired super administration business Xplore would be discontinued, with customers moved to alternative solutions in the first half of FY23. 

Macquarie also pulled forward expected RBA interest rate increases, driving -2-3% downgrades to earnings per share forecasts from FY25.

The Outperform rating is retained and the target price decreases to $32.60 from $33.50.

Target price is $32.60 Current Price is $25.96 Difference: $6.64
If HUB meets the Macquarie target it will return approximately 26% (excluding dividends, fees and charges).

Current consensus price target is $33.27, suggesting upside of 36.4% (ex-dividends)

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

Ord Minnett rates HUB as Buy (1) -

Ord Minnett downgrades its underlying EPS forecasts by -5-7% for Hub24 over the forecast period. This comes after a 3Q update, which revealed slightly lower-than-expected net flows and funds under administration (FUA).

Despite this disappointment, the broker still points to sector-leading growth metrics across net flows and FUA.

The target price slips to $34 from $35. The Buy rating is unchanged. The analyst regards the company as the top pick in the platforms sector.

Target price is $34.00 Current Price is $25.96 Difference: $8.04
If HUB meets the Ord Minnett target it will return approximately 31% (excluding dividends, fees and charges).

Current consensus price target is $33.27, suggesting upside of 36.4% (ex-dividends)

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

Ord Minnett rates IFL as Buy (1) -

Ord Minnett notes weakness in markets from lower bond values and international equities have affected revenues for Insignia Financial.

The broker reduces its earnings forecasts by -4% in FY22 and -9% in FY23, though notes its unchanged $5.10 target price had largely anticipated these amended forecasts. The Buy rating is unchanged.

Target price is $5.10 Current Price is $3.66 Difference: $1.44
If IFL meets the Ord Minnett target it will return approximately 39% (excluding dividends, fees and charges).

Current consensus price target is $5.24, suggesting upside of 43.5% (ex-dividends)

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

Citi rates IPL as Neutral (3) -

Citi lowers its earnings (EBIT) forecast for Incitec Pivot by -3% for FY22-24 and its profit forecast by -4% on average, following an update from management on the Waggaman ammonia plant incident in February.

Despite these changed forecasts, the broker retains its Neutral rating and $3.85 target price.

Target price is $3.85 Current Price is $4.15 Difference: minus $0.3 (current price is over target).
If IPL meets the Citi target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.14, suggesting upside of 2.5% (ex-dividends)

The company's fiscal year ends in September.

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

Macquarie rates IPL as Outperform (1) -

Incitec Pivot has reported production recommencing at its WALA project, with operations at nameplate capacity. Macquarie notes repairs following a pipe rupture in February caused an eight week outage. 

The broker highlights with WALA operating at capacity, Incitec Pivot is positioned to benefit from the current cycle, with geopolitical tension in Europe only further constraining a tight global fertiliser supply, and Macquarie expects pricing will stay stronger for longer.

The broker increases its earnings per share forecasts 38%, 91% and 19% through to FY24.

The Outperform rating is retained and the target price increases to $4.62 from $3.80.

Target price is $4.62 Current Price is $4.15 Difference: $0.47
If IPL meets the Macquarie target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $4.14, suggesting upside of 2.5% (ex-dividends)

The company's fiscal year ends in September.

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

Citi rates MP1 as Buy (1) -

In anticipation of a 3Q trading update by Megaport on Thursday April 21, Citi expects an improvement in key metrics. Nonetheless, the analyst sees downside risk to consensus FY22 earnings (EBITDA) forecasts of -$4m.

Meanwhile, the broker lowers its earnings forecasts to reflect Citi’s updated foreign exchange forecasts, and the target price falls to $19.30 from $20.20. Buy.

Target price is $19.30 Current Price is $12.63 Difference: $6.67
If MP1 meets the Citi target it will return approximately 53% (excluding dividends, fees and charges).

Current consensus price target is $18.11, suggesting upside of 42.2% (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

Ord Minnett rates NWL as Accumulate (2) -

Netwealth's third quarter was slightly weaker than Ord Minnett had forecast regarding platform net flows and funds under administration (FUA). Nonetheless, the flow outlook is thought to remain very strong.

The analyst still sees the group as a key winner from structural change in the Australian wealth platforms market and retains an Accumulate rating. The target price slips to $14.80 from $15.

Target price is $14.80 Current Price is $13.16 Difference: $1.64
If NWL meets the Ord Minnett target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $16.04, suggesting upside of 23.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.5

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

Morgan Stanley rates PDL as Overweight (1) -

While Morgan Stanley retains its Overweight rating for Pendal Group, it believes investors will need to be patient and await the return of inflows before a rerating can occur. The current valuation is considered undemanding.

The target falls to $6.70 from $7.00 as the broker reduces FY22-24 underlying EPS forecasts by -12-16% on slightly lower outflows and a mark-to-market exercise. Industry view is Attractive.

Following the rejection of Perpetual's ((PPT)) takeover offer, the analyst feels Perpetual has the capacity to increase the cash component of its offer or interest from a third party may emerge.

Target price is $6.70 Current Price is $5.20 Difference: $1.5
If PDL meets the Morgan Stanley target it will return approximately 29% (excluding dividends, fees and charges).

Current consensus price target is $6.02, suggesting upside of 15.3% (ex-dividends)

The company's fiscal year ends in September.

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

Ord Minnett rates PPS as Buy (1) -

Following a 3Q update for Praemium that revealed weaker than expected funds under administration (FUA) and flows, Ord Minnett downgrades its EPS forecasts by -10-15% over the forecast period. Nonetheless, the update was considered robust.

Apart from incorporating these earnings changes into forecasts, the analyst adjusts the valuation methodology, resulting in the target price falling to $1.10 from $1.50.

The valuation is considered appealing and a Buy rating is retained.

Target price is $1.10 Current Price is $0.72 Difference: $0.38
If PPS meets the Ord Minnett target it will return approximately 53% (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 WOR as Upgrade to Outperform from Neutral (1) -

Macquarie expects Worley will benefit from the redeployment of Russian oil and gas to other regions as governments are imposing bans on Russian imports, as well as from the new energy transition. 

With 45% of Worley's revenue currently from the Americas, Macquarie expects the US is likely to increase investment in oil, gas and renewable energy to improve energy self security. Contract wins and earnings delivery will confirm the broker's outlook.

Earnings per share forecasts increase 2%, 5%, 10% and 17% through to FY25. The rating is upgraded to Outperform from Neutral and the target price increases to $15.26 from $12.60. 

Target price is $15.26 Current Price is $14.03 Difference: $1.23
If WOR meets the Macquarie target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $13.16, suggesting downside of -6.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.3

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