Australian Broker Call

Ord Minnett rates A1M as Speculative Buy (1) -

It was a softer quarterly result from AIC Mines, with lower grades stemming from limited access to the Eloise Deeps, and low trucking
availability impacting performance, Ord Minnett notes.

The good news is both factors have now been rectified and the broker believes AIC will recoup some of the delayed grade this quarter as higher margin material is prioritised.

Attention now turns to Demetallica's ((DRM)) upcoming resource update, having recently rejected AIC’s bid given a belief it doesn’t fully reflect the upcoming resource growth.

Speculative Buy retained for AIC, target rises to 75c from 70c.

Target price is $0.75

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

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

Macquarie rates AIA as Outperform (1) -

With Auckland International Airport's recovery tracking ahead of forecast, in line with global trends, the company lifted its net profit guidance range to NZ$100-130m from NZ$50-100m.  Macquarie notes seat capacity rather than demand continues to constrain travel.

Macquarie lifts its FY23 earnings per share forecast 55% to account for the stronger passenger recovery, with Auckland International Airport now anticipating international passenger numbers to be between 60-70% of pre-covid levels for the full financial year.

The Outperform rating is retained and the target price increases to NZ$8.60 from NZ$8.57.

Current Price is $0.00. Target price not assessed.

Current consensus price target is $7.50, suggesting upside of 13.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

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

Morgan Stanley rates ANZ as Overweight (1) -

Looking forward to October 27, when ANZ Bank is scheduled to release FY22 financials, Morgan Stanley's forecast is for 2H22 pre-provision profit of $4,996m and cash profit ex notable items of $3,402m.

The broker believes market consensus sits at $4,879m and $3,318m, respectively. More importantly, the broker posits investors now expect earnings to beat consensus, thanks to Bank of Queensland's recent NIM surprise update.

Overweight. Industry view is In-Line. Target $26.90.

Target price is $26.90

Current consensus price target is $27.61, suggesting upside of 8.1% (ex-dividends)

The company's fiscal year ends in September.

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

Citi rates AWC as Buy (1) -

Alumina Ltd's quarterly update was dominated by ongoing cost challenges, judging from Citi's response. Those challenges imply near-term cash generation remains constrained, assures the broker.

The positive, suggests the broker, is Alumina Ltd's balance sheet is strong enough and should support the share price through the current alumina price challenge.

On the back of reductions to forecasts, Citi has left its dividend forecast for 2022 unchanged, with no dividend anticipated for the current half.

Buy. Target $1.60.

Target price is $1.60

Current consensus price target is $1.54, suggesting upside of 22.5% (ex-dividends)

The company's fiscal year ends in December.

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: 0.6

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

Credit Suisse rates AWC as Outperform (1) -

Lower alumina prices and higher costs led to a -68% fall in margins for Alumina Ltd in the quarter, Credit Suisse notes. The San Ciprian refinery ran at a loss, leading management to curtail -50% of production, but rising gas prices offset.

Based on December half net distributions, Alumina ltd has contributed more than it has received from AWAC. The final cash sweep in October will determine the final dividend, if any, the broker warns.

Credit Suisse has cut its 2022 earnings forecast by -50%. Outperform and $1.80 target nevertheless retained on valuation.

Target price is $1.80

Current consensus price target is $1.54, suggesting upside of 22.5% (ex-dividends)

The company's fiscal year ends in December.

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: 0.6

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

Macquarie rates AWC as Underperform (5) -

A soft quarter from Alumina Ltd was as expected by Macquarie, with the company reporting high cash costs and low cash distributions. Cash costs exceeded the broker's expectations by 8% on elevated input and maintenance costs. 

While both bauxite and alumina production were within 3% of estimates, Macquarie lowers its full year alumina production forecast  below guidance to 12.0m tonnes, reflecting lower grades reported by Alumina Ltd's joint venture partner.

Macquarie earnings forecast is reduced -25% for 2022. The Underperform rating and target price of $1.00 are retained.

Target price is $1.00

Current consensus price target is $1.54, suggesting upside of 22.5% (ex-dividends)

The company's fiscal year ends in December.

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: 0.6

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

Morgan Stanley rates AWC as Overweight (1) -

Morgan Stanley has kept its Overweight rating -Industry view: Attractive- for Alumina Ltd post the September quarter market update. Price target loses -5c to $1.80.

The broker assures investors there remains significant upside but there are presently no catalysts on the horizon. Negative news regarding cost inflation is priced-in, suggests the broker.

The quarterly release proved weaker-than-forecast with higher costs overwhelming a weaker AUD.

Target price is $1.80

Current consensus price target is $1.54, suggesting upside of 22.5% (ex-dividends)

The company's fiscal year ends in December.

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: 0.6

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

Ord Minnett rates AWC as Buy (1) -

The main issue for AWAC, and for the investment case for Alumina Ltd, is the ongoing cash drag created by the loss-making San Ciprian refinery, Ord Minnett suggests. September quarter earnings missed the broker on higher costs.

Alumina Ltd has faced a material price drop, record opex and operational challenges in WA this year, all of which have weighed on
the stock. Ord Minnett believes the second half will represent the low point in profitability, and retains a zero-dividend forecast for H2.

With the stock showing appeal for longer term investors, the broker retains Buy. Target falls to $1.50 from $1.60.

Target price is $1.50

Current consensus price target is $1.54, suggesting upside of 22.5% (ex-dividends)

The company's fiscal year ends in December.

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: 0.6

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

Citi rates BKL as Sell (5) -

Blackmores' Q1 was broadly in line, comments Citi, though the international operations did disappoint and this might weigh on consensus forecasts.

No FY23 guidance was provided, which doesn't surprise given the magnitude of macro uncertainties.

Citi posits the impact on consumer demand from recent mid-to-high single digit price rises, as well as the risk of a consumer downturn over the medium term remains yet to be seen. No changes made to forecasts.

Overall, the broker's commentary seems to have a positive skew, but this doesn't alter the Sell rating. Target $58.85, unchanged and below the current share price.

Target price is $58.85

Current consensus price target is $74.05, suggesting upside of 15.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.0

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

Credit Suisse rates CGF as Neutral (3) -

Challenger reported a solid quarterly update, Credit Suisse suggests, featuring strong annuity net book growth, which demonstrates that the company is beginning to benefit from the higher rate environment.

While profit guidance was reconfirmed, the broker believes September quarter trends put Challenger on a trajectory towards the upper end. The sale of the Bank was faster and provided a higher capital release than expected.

Neutral retained, target rises to $7.20 from $6.90.

Target price is $7.20

Current consensus price target is $6.87, suggesting upside of 2.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.1

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

Macquarie rates CGF as Neutral (3) -

Challenger has reported first quarter net Life flows of $411m and Funds management flows of -$1.7bn. The positive Life results were underpinned by a better than expected $2.8bn in sales. The company reaffirmed full year net profit guidance. 

Accounting for the higher interest rate environment, Macquarie has lifted its earnings per share forecasts 6.0%, 7.1% and 4.0% through to FY25, and 3.0% in the years following. 

The Neutral rating is retained and the target price increases to $6.60 from $6.40.

Target price is $6.60

Current consensus price target is $6.87, suggesting upside of 2.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.1

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

Morgan Stanley rates CGF as Equal-weight (3) -

Challenger's Q1 annuity book surprised on the upside, albeit the Life business underperformed, comments Morgan Stanley. FY23 guidance was re-affirmed and the banking business has found a buyer.

The broker says investors likely want to see Challenger making progress on Return on Equity (ROE) growth plus a strategic change to a less volatile earnings stream.

Equal-weight rating retained. Industry View: Attractive. Target price unchanged at $6.60.

Target price is $6.60

Current consensus price target is $6.87, suggesting upside of 2.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.1

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

Morgans rates CGF as Add (1) -

The 1Q23 trading update from Challenger has resulted in a 2% increase in earnings forecasts for FY23 and FY24 from Morgans.

A rise in the 3-year annuity rate to 4.85% in October, the highest in 10 years, is considered as one of the factors for the improvement in quote levels from advisers and new customers, management said.

Strong annuity sales boosted total Life sales (up 33% on the quarter) and total Life net book growth, according to Morgans.

The sale of the bank will release a $100m capital return to Challenger.

An Add rating is retained and the target raised to $7.71 from $7.40.

Target price is $7.71

Current consensus price target is $6.87, suggesting upside of 2.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.1

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

Ord Minnett rates CGF as Hold (3) -

Challenger posted September quarter volumes that showed strong growth in retail annuity sales, Ord Minnett notes, supported by higher interest rates, although growth in the Index Plus product was not as strong.

Overall book growth is still quite strong but moderating, the broker warns, with the capital position getting tighter. Sale of the banking business will release $100m of capital.

Hold and $6.20 target retained.

Target price is $6.20

Current consensus price target is $6.87, suggesting upside of 2.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.1

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

UBS rates CGF as Neutral (3) -

Challenger has found a buyer for its bank and UBS believes this removes an overhang for the shares. The broker thinks the deal can be done and dusted by the end of FY23.

Elsewhere, Challenger's Q1 performance is seen as rather "mixed". Forecasts have thus been reduced.

The broker suggests were Challenger to formulate a clear pathway to lifting Return on Equity (ROE) into double digit figures, the broker would be inclined to upgrade its Neutral rating.

Target $7.10, up 4% from the prior $6.80.

Target price is $7.10

Current consensus price target is $6.87, suggesting upside of 2.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.1

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

Ord Minnett rates CHN as Speculative Buy (1) -

Ord Minnett was buoyed by recent drill results at Hartog, which will assist with Chalice Mining's negotiations for a potential minority joint-venture sell-down. The company has fielded rising interest since the announcement of the Inflation Reduction Act in the US.

The Gonneville scoping study is on track for the December quarter. Speculative Buy and $6.50 target retained.

Target price is $6.50

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

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

Ord Minnett rates EQT as Buy (1) -

EQT Holdings' Sep quarter update showed minor headwinds in the Corporate Trustee Services division, Ord Minnett notes, with a low margin mandate loss and general volatility impacting its stable of fund manager clients.

Management highlighted a strong pipeline of new business opportunities in both the CTS and Super Trustee Services divisions, while the Australian Executor Trustees acquisition is on track for December completion.

Target falls to $35 from $37, Buy retained.

Target price is $35.00

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

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

Credit Suisse rates EVN as Neutral (3) -

Evolution Mining's September quarter production fell short of Credit Suisse' estimates and costs were higher. It was a heavy maintenance period, the broker notes, and east coast rainfall also impacted. More rain is expected this quarter.

No cash was generated on a net basis, as growth capex offset existing production. The company is confident its growth strategy is fully funded.

Credit Suisse cuts its FY earnings forecast by -8% on lower gold prices and higher costs. Target falls to $2.00 from $2.20, Neutral retained.

Target price is $2.00

Current consensus price target is $2.55, suggesting upside of 40.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.4

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

Macquarie rates EVN as Neutral (3) -

Evolution Mining has delivered a softer quarter than Macquarie had anticipated, with production missing estimates by -9% while all-in sustaining costs were 7% higher than expected. 

Mt Rawdon was impacted by heavy rainfall in the quarter, while Cowal, Red Lake and Ernest Henry all had planned maintenance shutdowns. Despite the soft quarter, Evolution Mining has retained its full year production guidance.  

The Neutral rating is retained and the target price decreases to $2.10 from $2.60.

Target price is $2.10

Current consensus price target is $2.55, suggesting upside of 40.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.4

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

Morgan Stanley rates EVN as Equal-weight (3) -

Morgan Stanley saw Evolution Mining releasing a weaker-than-expected quarterly performance with production disappointing by -8% and costs by 10%.

Management did stick with its FY23 guidance but the broker highlights weather poses a key risk for run rates at Cowal and Mt Rawdon.

The Equal-weight rating is maintained. Industry View: Attractive. Target $2.55.

Morgan Stanley prefers Northern Star ((NST)) and Newcrest Mining ((NCM)) in the sector.

Target price is $2.55

Current consensus price target is $2.55, suggesting upside of 40.3% (ex-dividends)

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.4

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

Ord Minnett rates EVN as Accumulate (2) -

Evolution Mining posted a softer Sep quarter than Ord Minnett expected due to lower grades at Cowal and weather at Mt Rawdon. The broker expects both assets to improve and, in combination with Red Lake, have the company meeting FY23 guidance.

The market appears fixated on Evolution's free cash flow and balance sheet in this risk-off environment, Ord Minnett notes. Only when sentiment turns positive towards gold will the miner be rewarded for growth and value.

Target falls to $2.95 from $3.10, Accumulate retained.

Target price is $2.95

Current consensus price target is $2.55, suggesting upside of 40.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.4

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

UBS rates EVN as Buy (1) -

Evolution Mining's quarterly update missed by -6%. UBS is talking about a "soft start" to FY23. Planned maintenance and the weather are to blame.

While management has stuck with its prior guidance, the broker has decided to be more conservative, penciling in 700koz at $1,550/oz cost which is respectively lower and higher than guidance.

FY23 earnings estimate has now sunk to the tune of -24%, sitting below consensus. Target price loses -5c to $2.35. Buy rating retained on expectations of a successful turnaround, exact timing unknown.

Target price is $2.35

Current consensus price target is $2.55, suggesting upside of 40.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.4

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

Citi rates EVT as Buy (1) -

Citi has been suitably impressed as Event Hospitality & Entertainment released a "substantially" stronger-than-forecast Q1 trading update, with a special 12c dividend on top.

Mimicking Qantas' stellar market update recently, Citi estimates its forecast for H1 has already been achieved in Q1. Thredbo seems to be responsible, as well as Entertainment, with the additional benefit from a weakening AUD.

Citi highlights management has identified another $100m of properties for potential sale. From here onwards, this company is one of the broker's Top Picks among ASX-listed small caps.

Buy. Target price lifts to $17.85 from $17.17.

Target price is $17.85

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

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

Credit Suisse rates HLS as Neutral (3) -

Credit Suisse notes Helius' covid testing rate "fell off a cliff" last quarter, to well below guidance. The offset is 5.5% growth in non-covid revenue but management provided no detail on pathology other than "steady growth", leading the broker to believe Healius is losing market share.

For imaging, management suggested "above market" growth. The drop in covid testing will put margins under pressure in the first half, offsetting any gains from the company's Sustainable Improvement Program, Credit Suisse suggests.

The broker has cut its FY earnings forecast by -24%. Target falls to $3.65 from $3.95, Neutral retained.

Target price is $3.65

Current consensus price target is $4.08, suggesting upside of 27.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.3

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

Macquarie rates HLS as Outperform (1) -

A faster than expected decline in covid testing rates has underpinned Macquarie's earnings forecast downgrades for Healius. The broker has revised its forecasts by -17%, -9% and -4% through to FY25. 

Healius' base business is improving, with the company reporting revenue growth of 5.5% year-on-year in the first quarter, but volumes remain below trend. The broker anticipates a reversion of longer-term trends from late FY23, supporting robust earnings growth in FY24.

The Outperform rating is retained and the target price decreases to $4.80 from $4.85.

Target price is $4.80

Current consensus price target is $4.08, suggesting upside of 27.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.3

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

Ord Minnett rates IAG as Downgrade to Hold from Buy (3) -

Ord Minnett has adjusted earnings forecasts for Insurance Australia Group to include the business interruption provision release, share buyback, mark-to-market, weather and flood costs, outlook for reinsurance and interest rates.

The result is a downgrade to Hold on valuation grounds following recent share price performance. There is more upside on offer for Suncorp, the broker believes, and the latter is upgraded to Buy.

IAG target unchanged at $5.40.

Target price is $5.40

Current consensus price target is $5.05, suggesting upside of 6.6% (ex-dividends)

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.1

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

Morgans rates IPD as Speculative Buy (1) -

ImpediMed updated the market with its 1Q23 cashflow report, which revealed a higher cash outflow of -$5.7m, although this was expected, noted Morgans.

The core business advanced 14%, a positive outcome according to the broker.

Morgans suggetss the market remains focused on the result from the late August National Comprehensive Cancer Network NCCN meeting, with a decision expected at the end of 2022 as to whether the BIS L-Dex technology can be included in cancer treatment.

A Speculative Buy rating and 19.5c target are retained.

Target price is $0.20

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

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

UBS rates MFG as Sell (5) -

New CEO David George has no plans to cut Magellan Financial's high retail fees. UBS responds with: risks of a hard earnings rebase are thus unlikely.

The flipside is that large retail outflows are likely to continue for longer. Investment performance needs to improve sustainably. UBS notes management has formulated the ambition to double funds under management to $100m in five years.

Without providing any details to support this ambition.

UBS thinks FuM trends will worsen before getting better. Sell. No changes to forecasts. Target $9.80 (unchanged).

Target price is $9.80

Current consensus price target is $10.89, suggesting upside of 9.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: -0.5

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

UBS rates MP1 as Buy (1) -

It is UBS's view that Megaport's market update contained more positives than negatives. Unfortunately, the negatives carry more weight.

Having said so, the broker also thinks the share price shellacking that followed is, simply put, excessive. Might it be that investors got spooked by balance sheet concerns?

On UBS's projections, Megaport has sufficient funding to get through 1H24 and should break-even the following half. The company also has access to a $25m credit facility, if required.

UBS retains a positive view, long term, but acknowledges momentum needs to pick up. Buy. Target falls to $14.10 from $15.55.

Target price is $14.10

Current consensus price target is $10.27, suggesting upside of 76.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.5

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

Morgans rates MVF as Add (1) -

Medicare IVF data for August was down -19.8% and softer than expected according to Morgans, however, the September to November period are viewed as seasonally stronger.

The broker views Monash IVF as well positioned to benefit from the ongoing structural growth in demand for IVF post the covid boom as well as the transition to more fertility specialists.

Monash IVF will provide a trading update at the November 11 AGM and Morgans continues to rate the stock as an Add and the target remains unchanged at $1.24.

Target price is $1.24

Current consensus price target is $1.23, suggesting upside of 29.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

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

Macquarie rates ORA as Outperform (1) -

In Macquarie's view, first quarter trading and positive momentum provide confidence in Orora's reaffirmed full year growth guidance. The company continues to focus on execution of its domestic cans expansion, and exploring bolt on acquisition opportunities in the US. 

Following a 19 percentage point share price to earnings per share decoupling, the broker highlights that Orora trades at its lowest price earnings ratio since 2014. Macquarie sees upside potential.

The Outperform rating is retained and the target price decreases to $3.60 from $3.93. 

Target price is $3.60

Current consensus price target is $3.71, suggesting upside of 21.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.3

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

Morgans rates ORG as Hold (3) -

Origin Energy guided to FY23 EBITDA which has come in below Morgans' expectations, but in line with the market consensus.

The discrepancy lays in the lower than anticipated guidance for the Energy Markets, highlights the broker, with difficult trading conditions in electricity.

Post the update, Morgans has downgraded the FY23 Energy Markets forecast by -26% and the Integrated Gas estimate by -4%, resulting in a decline in the FY23 earnings forecast of -22% and -20% for FY24.

The Hold rating is maintained, although high electricity prices will weigh on the business, with the broker stating the business is not positioned well for such an environment. Target is lowered to $5.44 from $5.70.

Target price is $5.44

Current consensus price target is $6.44, suggesting upside of 21.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.3

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

Macquarie rates PDN as Outperform (1) -

Paladin Energy continues to work towards the restart of its Langer Heinrich uranium mine. In the first quarter redundant equipment and infrastructure was removed from the mine, while water and power supply were secured and key items purchased.

Macquarie also highlights that Paladin Energy is working to finalise four uranium concentrate contracts, and has successfully negotiated an offtake agreement which should improve the company's liquidity and working capital position. 

The Outperform rating and target price of $1.10 are retained.

Target price is $1.10

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

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

Market Sentiment: 1.0

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

Citi rates PRU as Buy (1) -

Citi analysts spotted a strong performance when Perseus Mining released its Q1 report. There's a lot to like, comment the analysts, including a cash margin of US$766/oz.

There also seems to be some relief now that Perseus' operational performance seems to have become more consistent (knock on wood?).

Citi reminds investors its in-house view is quite bullish on gold, medium-term, with bullion projected to recover to US$1900/oz by H2 next year.

The target has gained an additional 10c to $2.20. Buy. Earnings estimates have lifted.

Target price is $2.20

Current consensus price target is $2.03, suggesting upside of 17.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

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

Credit Suisse rates PRU as Outperform (1) -

Perseus Mining reported record production in the quarter, beating Credit Suisse by 12%, and tracking above guidance for all three assets. Costs were -13% lower than the broker's forecast.

Management chose not to upgrade guidance but did suggest the December quarter could match the September quarter, provided there are no unplanned disruptions. Perseus also boasts a favourable hedging profile, Credit Suisse notes.

Target rises to $2.00 from $1.85, Outperform retained.

Target price is $2.00

Current consensus price target is $2.03, suggesting upside of 17.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

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

Macquarie rates PRU as Outperform (1) -

Perseus Mining mining has delivered a strong start to the year, with first quarter production 10% ahead of Macquarie's expectations while all-in sustaining costs beat estimates by 20%.

Edikan's production increased 82% quarter-on-quarter on improved throughput, grades and recovery. 

The company has maintained first half guidance, with Macquarie noting year-to-date it has achieved 55% of the mid-point of production guidance. Perseus Mining indicated a beat could be on the cards if strong performance continues. 

The Outperform rating and target price of $1.90 are retained.

Target price is $1.90

Current consensus price target is $2.03, suggesting upside of 17.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

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

Morgan Stanley rates RBL as Equal-weight (3) -

Is it anaemic or anemic? Asking for Morgan Stanley who clearly prefers the latter spelling. Anyway, the word is used to describe growth in Redbubble's Q1. Not great, thus.

Sales were missed, costs disappointed and the broker questions the timing upon which this company can reach EBITDA profitability yet again.

Equal-weight. Industry view In-Line. Forecasts have been cut. Price target falls to $0.55 from $1 as a result.

Target price is $0.55

Current consensus price target is $1.25, suggesting upside of 154.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.7

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

Citi rates SFR as Buy (1) -

No enthusiasm from Citi post the release of Sandfire Resources's September quarterly update, which has been described as "mixed".

The company's performance missed expectations on revenue and pro-rata costs. Plus cost guidance has been lifted.

On the positive side, Motheo is on track for first production in the June quarter, comments Citi.

Citi's view is that base metals will bottom in the opening quarter of 2023. The broker observes Sandfire Resources shares are trading at almost half the value of what was paid for the purchase of Matsa.

Buy/High Risk. Target price $5.50.

Target price is $5.50

Current consensus price target is $4.65

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

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

Market Sentiment: 0.7

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

Credit Suisse rates SFR as Neutral (3) -

Sandfire Resources' quarterly production and costs both missed Credit Suisse' estimates. Production and capex guidance has remained
unchanged despite higher costs at Matsa and Degrussa.

It was copper production that missed, with zinc outperforming. Sandfire will now bring Matsa zinc production to the front end of FY23, and copper to the back end -- the opposite of the original plan, the broker notes.

Higher costs and lower copper production leads to a target price cut to $3.45 from $3.75. Neutral retained on valuation, but the broker is cautious with regard funding requirements and balance sheet exposure to lower commodity prices.

Target price is $3.45

Current consensus price target is $4.65

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

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

Market Sentiment: 0.7

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

Macquarie rates SFR as Outperform (1) -

A mixed first quarter result from Sandfire Resources included solid copper production from both DeGrussa and Matsa, in line with Macquarie's estimates, but at higher cash costs than expected. 

Positively, strong grades drove a beat in zinc, lead and silver volumes, and on the back of solid results Sandfire Resources lifted its full year copper and gold volume guidance. Expansion of Motheo to 5.2m tonnes per annum, from 3.2m tonnes per annum, has been confirmed.

The Outperform rating and target price of $5.00 are retained.

Target price is $5.00

Current consensus price target is $4.65

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

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

Market Sentiment: 0.7

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

Morgan Stanley rates SFR as Overweight (1) -

Morgan Stanley had already anticipated a "miss" on higher costs, hence Sandfire Resources' quarterly report did not genuinely "miss" or surprise.

The broker does point out costs are expected to decline. Plus Motheo is on-track for first production in the June Qtr of 2023, in line with the broker's timeline.

Overweight rating retained while the price target falls to $5.10 from $5.95 on reduced forecasts. Attractive industry view.

Target price is $5.10

Current consensus price target is $4.65

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

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

Market Sentiment: 0.7

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

Ord Minnett rates SFR as Hold (3) -

Sandfire Resources' Sep quarter copper production was in line with Ord Minnett's forecast, on a balance of lower output from Matsa and higher from DeGrussa.

FY23 copper production guidance was increased slightly for DeGrussa, due to stockpile processing, although group cost guidance has also been raised, as has capex. Net debt is above the broker's forecast.

Hold and $3.30 target retained.

Target price is $3.30

Current consensus price target is $4.65

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

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

Market Sentiment: 0.7

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

UBS rates SFR as Buy (1) -

Sandfire Resources's Q1 marked a slight miss on production, comments UBS, while costs at Matsa remain elevated. The broker has reduced its forecasts despite management retaining FY23 guidance.

Lower forecast Matsa output and higher costs reduce the Net Present Value by -15% to $5. Buy rating retained.

UBS explains Sandfire Resources' valuation is very sensitive to any changes to input assumptions, yet the current share price is simply seen as too cheap.

Target price is $5.00

Current consensus price target is $4.65

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

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

Market Sentiment: 0.7

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

Credit Suisse rates SGP as Outperform (1) -

Credit Suisse has adjusted its Stockland valuation model, adopting a 50/50 sum-of-the-parts and discounted cash flow measure, with a 3% risk-free rate and 6% market premium, leading to a target cut to $4.02 from $4.15.

Were the broker to plug in the current ten-year yield of 4% as the risk-free rate, valuation would fall to $3.67.

Credit Suisse believes investors are more focused on the FY24 and beyond outlook with the share price weighed down by current sentiment towards residential markets, and suggests the market is waiting to see Stockland deliver on its strategy on an ongoing basis.

Outperform retained.

Target price is $4.02

Current consensus price target is $4.02, suggesting upside of 21.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.5

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

Citi rates STO as Buy (1) -

Citi spotted a strong quarterly performance from Santos. Higher realised prices across the portfolio were the shining light. Record sales beat both Citi and consensus.

The quarterly marked the highest ever free cash flow achievement for the company at above US$1.1bn, points out the broker.

Target price $10.70. Buy.

Target price is $10.70

Current consensus price target is $9.47, suggesting upside of 24.9% (ex-dividends)

The company's fiscal year ends in December.

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: 1.0

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

Macquarie rates STO as Outperform (1) -

Santos' third quarter production was in line with Macquarie's estimates, but revenues missed by -6% as a result of lower realised pricing.

Despite this, free cash flow exceeding US$1bn was ahead of the broker's expectations, and Macquarie remains attracted to the company's relative superior free cash flow growth profile. 

The company has narrowed production guidance to 103-106m barrels equivalent, and lowered capital expenditure by -$250m as a result of delays to Barossa and Dorado development work. Macquarie notes this frees up cashflow in the short term.

The Outperform rating is retained and the target price decreases to $10.00 from $10.60.

Target price is $10.00

Current consensus price target is $9.47, suggesting upside of 24.9% (ex-dividends)

The company's fiscal year ends in December.

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: 1.0

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

Morgans rates STO as Add (1) -

According to Morgans, Santos missed consensus on the 3Q22 sales revenue and beat on the sales volumes.

Strong cashflow generation of US$1bn allowed Santos to reduce gearing to 20.8%, with ongoing synergistic benefits from the Oil Search merger. Savings of -US$112m were achieved, notes Morgans.

The broker's earnings forecasts have been adjusted for the update, and the target price alters to $9.40 from $9.30.

An Add rating is maintained.

Target price is $9.40

Current consensus price target is $9.47, suggesting upside of 24.9% (ex-dividends)

The company's fiscal year ends in December.

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: 1.0

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

Ord Minnett rates STO as Buy (1) -

Santos' posted a strong quarter, with revenue exceeding Ord Minnett's forecast by 9% thanks to higher prices. The free cash flow yield is tracking at 23%pa on the broker's estimate.

Proceeds from the sell-down of PNG LNG are also likely to provide increased returns to shareholders.

Santos remains Ord Minnett's preferred stock in the sector, given its discretionary growth, strong balance sheet and exposure to east coast gas prices. Buy and $9.00 target price retained.

Target price is $9.00

Current consensus price target is $9.47, suggesting upside of 24.9% (ex-dividends)

The company's fiscal year ends in December.

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: 1.0

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

UBS rates STO as Buy (1) -

UBS noticed how strong DLNG production offset wet weather impacts at the Cooper Basin and GLNG during the September quarter.

The broker cannot help but noticing how Santos shares continue to trade at a discount to fundamental valuation. UBS estimates the shares are trading at an implied oil price of US$61/bbl only.

UBS suggests following completion of the PNG LNG sell-down, Santos now has ample capacity for further buybacks. Minor reductions have been applied to forecasts.

Buy. Target $9.35 (-10c).

Target price is $9.35

Current consensus price target is $9.47, suggesting upside of 24.9% (ex-dividends)

The company's fiscal year ends in December.

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: 1.0

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

Ord Minnett rates SUN as Upgrade to Buy from Hold (1) -

Ord Minnett has adjusted earnings forecasts for Suncorp to incorporate the business interruption provision release, mark-to-market, weather and flood costs, interest rates, and premium rates. This results in 5% earnings upgrades in FY24.

The broker upgrades to Buy from Hold on valuation grounds, having downgraded Insurance Australia Group to Hold from Buy for the same reason.

Target unchanged at $13.25.

Target price is $13.25

Current consensus price target is $13.11, suggesting upside of 22.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.7

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

Credit Suisse rates TCL as Neutral (3) -

Transurban's Sep quarter traffic was down -1.7% from pre-covid levels and similar to the June quarter, Credit Suisse notes, in line with forecast.

The company has maintained FY dividend guidance and raised revenue forecasts for the next three years on CPI-indexed toll increases.

The broker has cut its target to $12.00 from $12.90 due to a lower forecast of the value contribution from the opening of the West Gate
Tunnel project and a slightly higher cost of capital due to the increase in the risk-free rate.

Neutral retained.

Target price is $12.00

Current consensus price target is $14.10, suggesting upside of 13.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.4

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

Macquarie rates TCL as Outperform (1) -

Transurban Group's first quarter has been a recovery story, cycling off lockdowns in the first quarter of FY22. Macquarie notes a strong traffic rebound was reported in Brisbane and a moderate rebound in Sydney, while Melbourne lags other geographies. 

Macquarie expects an ongoing work from home trend is impacting on Melbourne traffic recovery, while new road openings since 2019 have supported Brisbane and Sydney. The broker expects the work-from-home drag to diminish in the second quarter. 

The Outperform rating and target price of $14.36 are retained.

Target price is $14.36

Current consensus price target is $14.10, suggesting upside of 13.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.4

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

Ord Minnett rates TCL as Upgrade to Buy from Accumulate (1) -

Transurban's September quarter traffic report showed traffic grew strongly year-on-year, Ord Minnett notes. Incremental traffic has continued to improve month-on-month, as trends noted at its recent FY22 result persist.

Inflation and interest rates are likely to remain elevated, resulting in the broker's risk-free rate lifting from 3.0% to 3.5%, but 70% of assets having embedded CPI-indexed escalations.

 On a valuation basis, Ord Minnett upgrades to Buy from Accumulate. Target falls to $15.00 from $15.80 on the higher risk-free rate.

Target price is $15.00

Current consensus price target is $14.10, suggesting upside of 13.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.4

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

Citi rates WDS as Buy (1) -

Woodside Energy's September quarterly revealed a strong performance, comments Citi, with both production and revenue beating expectations.

More positives stemmed from an upgrade in 2022 production guidance and lower capex. One disappointment was a delay in the Mad Dog Phase 2 startup to 2023.

Earnings estimates have been lifted. Citi points out the prospective yield in 2022 and 2023 is respectively circa 11% and 12% at assumed payout ratios of 73%/70%.

Buy. Target price improves to $38.80 from $38.30.

Target price is $38.80

Current consensus price target is $36.94, suggesting upside of 4.6% (ex-dividends)

The company's fiscal year ends in December.

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

Credit Suisse rates WDS as Outperform (1) -

Credit Suisse notes Woodside Energy is over-delivering heading into its Dec 1 strategy day. The broker suggests the stock trades at a discount due to its legacy of setting high expectations and disappointing.

But this could evolve into a premium if a new "under-promise, over-deliver" reputation is established, and production guidance has now been upgraded, while rising spot LNG price upside is apparent.

Hence a target price increase to $39.55 from $37.59. Outperform retained.

Target price is $39.55

Current consensus price target is $36.94, suggesting upside of 4.6% (ex-dividends)

The company's fiscal year ends in December.

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

Macquarie rates WDS as Neutral (3) -

Woodside Energy is performing well following its BHP Petroleum acquisition, reporting strong third quarter production that was 7% ahead of Macquarie's estimates. 

The broker finds Woodside Energy well positioned to benefit from a current tight LNG market by optimising its trading and supply books and seeking out long-term opportunities. Macquarie also likes reported progress on the long stalled Sunrise project. 

The Neutral rating is retained and the target price increases to $33.10 from $30.45.

Target price is $33.10

Current consensus price target is $36.94, suggesting upside of 4.6% (ex-dividends)

The company's fiscal year ends in December.

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

Morgans rates WDS as Hold (3) -

Morgans assesses the 3Q22 production and revenue report for Woodside Energy as above consensus expectations, with the BHP Petroleum merger contributing to a 51.7% increase on the previous quarter.

The company has alleviated cash flow concerns for the second half of 2022, with a -US$300m-US$500m reduction in capital expenditure, notes the broker.

Morgans also highlighted the positive upgrade in production estimates for 2022 of 153-157mmmboe (up from 145-153mmboe), due to the improved operational performance in all the divisions.

.A Hold rating is retained as Morgans considers much of the good news in discounted in the share price. The target is adjusted to $36.90 from $34.90 for upgraded earnings forecasts.

Target price is $36.90

Current consensus price target is $36.94, suggesting upside of 4.6% (ex-dividends)

The company's fiscal year ends in December.

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

Ord Minnett rates WDS as Hold (3) -

Woodside Energy released a strong September quarter production report, with all key metrics above Ord Minnett’s expectations. Revenue beat the broker by 12% on higher LNG prices.

Management has predictably increased its FY guidance, although it implies lower output in the final quarter, the broker notes.

Target increases to $38.80 from $37.00 but on a valuation basis, the broker retains Hold, and prefers Santos ((STO)).

Target price is $38.80

Current consensus price target is $36.94, suggesting upside of 4.6% (ex-dividends)

The company's fiscal year ends in December.

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

UBS rates WDS as Neutral (3) -

UBS has upgraded forecasts post Woodside Energy's "solid" quarterly performance update, which was slightly better than UBS's projections but well above market consensus, assures the broker.

Strong production and higher realised LNG prices did the trick while management upgraded 2022 production guidance by 4% (mid point) and lowered capex guidance.

The broker adds lower capex is largely due to timing of milestone payments shifting into 2023. The global LNG market remains tight but UBS believes this is in the price.

The target price rises to $34.40 from $34.10. Neutral.

Target price is $34.40

Current consensus price target is $36.94, suggesting upside of 4.6% (ex-dividends)

The company's fiscal year ends in December.

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

Macquarie rates ZIP as Underperform (5) -

Zip Co's US operations reported an -8% revenue decline and -3% reduction in customers in the first quarter, a result of tighter risk settings for new and existing customers that worked to moderate bad and doubtful debts from a peak of 3.0% to 2.36%.

Australia & New Zealand saw revenue increase 29% and customers 5%.

Macquarie likes that cash burn is moderating, and expects the trend will continue. While Zip Co is anticipating achieving positive cashflow earnings in the first half of FY24, Macquarie expects this won't be realised until the second half of the same year.

The Underperform rating is retained and the target price decreases to $0.55 from $0.60.

Target price is $0.55

Current consensus price target is $0.75, suggesting upside of 15.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: -0.5

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