Australian Broker Call

UBS rates APT as Sell (5) -

During November, Afterpay's global sales were $2.1bn, up 112%, UBS observes. Sales in Australia and New Zealand were up 54% while US sales grew by 186%. Active customers in the US increased by circa 1m since September 30.

While November represents a significant milestone for Afterpay, as US sales surpassed that of ANZ for the first time, UBS analysts have a lot of questions.

With no trading update for October, the broker suspects sales may have been potentially pulled forward into November. Other questions are around the selective disclosures by the company, like refraining to provide the exact customer numbers and data on costs and credit performance.

Target remains at $30 with a Sell rating.

Target price is $30.00 Current Price is $96.20 Difference: minus $66.2 (current price is over target).
If APT meets the UBS target it will return approximately minus 69% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $94.09, suggesting downside of -0.4% (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 AQZ as Outperform (1) -

Alliance Aviation Services has guided to a first half profit (PBT) of $26m, ahead of the $21m expected by Credit Suisse. The drivers are considered a mix of temporary (social distance flying, sports related charter) and more permanent (charter/fly-in-fly-out) factors.

The company announced the Virgin Australia ((VAH)) wet lease flying has recommenced. The broker notes a mere restoration of this agreement represents material upside to activity levels.

Despite the analyst upgrading EPS forecasts by 9-20%, it's still considered conservative.

The Outperform rating is unchanged and the target increased to $4.15 from $4.05.

Target price is $4.15 Current Price is $3.78 Difference: $0.37
If AQZ meets the Credit Suisse target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $4.23, suggesting upside of 8.5% (ex-dividends)

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

Morgans rates AQZ as Add (1) -

Morgans assesses the company has provided strong first half guidance, with underlying profit (NPBT) expected to be up 71% on the previous corresponding period. This is also 5% higher than what was considered an extremely strong second half FY20 result.

Given the high degree of near-term earnings certainty, it’s likely the group’s strong trading will continue into the second half, predicts the broker.

Morgans increases profit estimates for FY21-23 by 10.7%, 4.4% and 4.0%, respectively. The broker now forecasts FY21 profit of $47.0m, which implies second half profit of $20.5m.

The Add rating is maintained and the target is increased to $4.40 from $4.

Target price is $4.40 Current Price is $3.78 Difference: $0.62
If AQZ meets the Morgans target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $4.23, suggesting upside of 8.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 1.0

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

Macquarie rates ARF as Outperform (1) -

Arena REIT has upgraded FY21 DPS guidance to 14.8 cents, which is around 3% above the estimate of Macquarie. The broker considers the beat to be driven by -$33m of net acquisitions.

The REIT also saw re-valuations of 4% across its portfolio, with sale premiums implying to the broker additional upside to valuations.

The analyst continues to note the resilient nature of the REIT’s tenant base, with a 100% collection of November net rent.

The Outperform rating is unchanged and the target price is increased to $2.98 from $2.86.

Target price is $2.98 Current Price is $2.87 Difference: $0.11
If ARF meets the Macquarie target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $2.86, suggesting downside of -0.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.7

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

Morgan Stanley rates ARF as Overweight (1) -

Arena REIT has upgraded its FY21 dividend guidance to 14.8c from 14.4c-14.6c, Morgan Stanley notes. The uplift is driven by the acquisition of seven assets that will contribute around $1m to the REIT's income this year.

The company is also expecting its net tangible assets to lift to $2.33 from $2.22 on the back of positive revaluations for the December half. 100% of rent was collected in the last 5 months with rent relief provided to a very small portion of tenants.

The broker considers the update positive. Overweight retained. Target is $2.75. Industry view is In-Line.

Target price is $2.75 Current Price is $2.87 Difference: minus $0.12 (current price is over target).
If ARF meets the Morgan Stanley target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.86, suggesting downside of -0.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.7

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

Morgan Stanley rates COE as Initiation of coverage with Equal-weight (3) -

Morgan Stanley initiates coverage of Cooper Energy with an Equal-Weight rating and a target price of $0.40.

While 2020 has been a challenging year for the company, Morgan Stanley expects a better 2021 as the Sole project reaches higher production. The broker puts Cooper Energy second in its order of preference amongst the mid-cap energy stocks.

The company is well placed to address a tightening gas supply landscape in East Australia over the medium term, believes the broker, with a number of development opportunities setting the platform for medium-term growth.

A key challenge will be the limited free cash available in the next few years combined with an abandonment programme around FY23 that will drive up the capex, the broker notes. Industry view: Cautious.

Target price is $0.40 Current Price is $0.38 Difference: $0.02
If COE meets the Morgan Stanley target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $0.41, suggesting upside of 8.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.4

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

UBS rates CSL as Buy (1) -

UBS observes of the 105 plasma collection centres opened over the last 12 months, circa 40% are owned by CSL. In November, the company opened 3 new centres and looks well on track to reach the FY21 target of 20-30 centres.

While new centres may partially mitigate collection pressures due to covid, the inability to catch public transport to plasma centres has been identified as a limiting factor in donor attendance, assesses the broker.

UBS estimates transit activity was down by about -30% during the first two weeks in November versus January levels due to resurgence in covid cases, although this was not as severe as the April/May period which saw mobility declining by -30- 40%.

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

Target price is $346.00 Current Price is $294.13 Difference: $51.87
If CSL meets the UBS target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $316.81, suggesting upside of 7.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

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

Market Sentiment: 0.4

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

Citi rates ELD as Buy (1) -

Citi, backed by preliminary data from the latest wool and sheepmeat survey, expects lamb prices to decline by -5% in 2021 due to increased slaughter supply.

While this is negative for Elders’ livestock agency business, the broker expects the increased sheep volumes will offset the lower prices.  Citi expects 3% growth in sheep commissions in FY21.

Buy rating is maintained with a $13 target.

Target price is $13.00 Current Price is $10.44 Difference: $2.56
If ELD meets the Citi target it will return approximately 25% (excluding dividends, fees and charges).

Current consensus price target is $12.89, suggesting upside of 25.0% (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

Macquarie rates FLT as Neutral (3) -

Macquarie reviews the trading updates of both Qantas Airways ((QAN)) and Serko ((SKO)) as a read-through for Flight Centre.

The broker sees encouraging signs of recovery in domestic travel from an improvement in domestic capacity and transaction booking volumes.

Revenue margins will be lower in a recovery where there is a shift to domestic, cautions the analyst.

Macquarie already forecasts a 30% and 50% total transaction value (TTV) recovery (of precovid-19 levels) for FY21 and FY22, respectively. This is considered to predominantly capture domestic travel.

The Neutral rating and target of $13.50 are maintained.

Target price is $13.50 Current Price is $17.47 Difference: minus $3.97 (current price is over target).
If FLT meets the Macquarie target it will return approximately minus 23% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $14.75, suggesting downside of -15.9% (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 HLS as Outperform (1) -

Healius has completed the sale of its Medical Centres business to BGH Capital, receiving $483m. Credit Suisse believes the company could return up to -$200m to shareholders via a special dividend and increase the ordinary dividend payout ratio.

The broker also expects margin expansion from the collection centre rationalisation that has occurred so far in FY21.

The Outperform rating and target of $4 are maintained.

Target price is $4.00 Current Price is $3.63 Difference: $0.37
If HLS meets the Credit Suisse target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $3.86, suggesting upside of 7.2% (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

Citi rates HVN as Buy (1) -

Covid has been a tremendous earnings growth driver for housing-related retailers in 2020, observes Citi with the housing cycle expected to be a key tailwind over the next three years.

Rather than earnings normalising in 2021, Citi expects the net effect of the pandemic and housing to be a prolonged period of elevated earnings for housing-exposed retailers.

When it comes to housing leverage, the broker prefers Harvey Norman Holdings since it is the most exposed to the strong housing market. Citi is around 8% ahead of FY22 consensus for Harvey Norman.

Buy rating is retained. The target rises to $5.50 from $5.20.

Target price is $5.50 Current Price is $4.73 Difference: $0.77
If HVN meets the Citi target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $5.14, suggesting upside of 10.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.8

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

Citi rates JBH as Neutral (3) -

Covid has been a tremendous earnings growth driver for housing-related retailers in 2020, observes Citi with the housing cycle expected to be a key tailwind over the next three years.

Rather than earnings normalising in 2021, Citi expects the net effect of the pandemic and housing to be a prolonged period of elevated earnings for housing-exposed retailers.

Citi is around 6% ahead of FY22 consensus for JB Hi-Fi. The broker highlights focus has shifted to the beneficiaries of a reopening of the Australian economy, leading to a circa 10% de-rating throughout November for JB Hi-Fi which presents opportunities.

Overall, the broker prefers Harvey Norman ((HVN)) and Metcash over JB Hi-Fi ((JBH)).

Neutral rating is retained. The target rises to $50 from $49.30.

Target price is $50.00 Current Price is $45.59 Difference: $4.41
If JBH meets the Citi target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $48.05, suggesting upside of 6.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.0

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

Credit Suisse rates KGN as Upgrade to Outperform from Neutral (1) -

In the opinion of Credit Suisse, the acquisition of New Zealand based online retailer Mighty Ape represents a material step-change in the Kogan.com business.

The broker considers Mighty Ape is a quality business and management is being retained. They are considered to have strong incentives to deliver financial objectives.

There is opportunity to grow the acquired company's private label offer and leverage the marketplace of Kogan.com, in the analyst's view. Also, there is considered a number of potential synergies across the merged group.

The target price is increased to $20.60 from $19.49. The rating is increased to Outperform from Neutral.

Target price is $20.60 Current Price is $17.35 Difference: $3.25
If KGN meets the Credit Suisse target it will return approximately 19% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.5

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

UBS rates KGN as Neutral (3) -

Kogan.Com has acquired Mighty Ape, an Australian and New Zealand online retailer with a broad product mix and a loyal customer base. With the rationale of the deal including access to more than 690k customers along with synergies, UBS considers the acquisition sound.

While FY20 was soft with operating margins falling to circa 3%, Kogan expects about 44% sales growth in FY21 with margins of around 10%.

Earnings growth forecasts have been revised upwards by 6-10%. Neutral retained. Target rises to $18.80 from $18.00.

Target price is $18.80 Current Price is $17.35 Difference: $1.45
If KGN meets the UBS target it will return approximately 8% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.5

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

Citi rates MQG as Neutral (3) -

Armed with excess capital, Macquarie Group has bolstered its asset management division with the purchase of NYSE-listed asset and wealth manager, Waddell & Reed for US$1.7bn, Citi observes.

Once acquired, Macquarie plans to strip the excess cash of circa US$100m, sell down Waddell & Reed's investment securities and offload its wealth management division to LPL Financial for US$300m.

The broker upgrades its earnings forecasts for FY22-23 by circa 3%-5% with ongoing declines in the asset under management to be more than offset by the cost synergies.

Neutral rating retained with a target price of $125.

Target price is $125.00 Current Price is $138.60 Difference: minus $13.6 (current price is over target).
If MQG meets the Citi target it will return approximately minus 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $137.83, suggesting downside of -2.8% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.4

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

Morgan Stanley rates MQG as Overweight (1) -

Macquarie Group is buying the asset manager business of Waddell & Reed for US$1.4bn. Morgan Stanley sees the deal as financially compelling but remains reserved on its strategic rationale.

The broker believes this may indicate the group is ready to deploy excess capital. The deal is expected to be circa 2.5-3.5% FY22E earnings accretive for the group, before any potential synergies.

The deal is expected to close by mid-2021.

Overweight rating and In-Line industry view maintained. Target is unchanged at $148.

Target price is $148.00 Current Price is $138.60 Difference: $9.4
If MQG meets the Morgan Stanley target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $137.83, suggesting downside of -2.8% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.4

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

Morgans rates MQG as Add (1) -

Macquarie Group has announced the acquisition of Waddell & Reed Financial (WRF), a US-listed Asset Management (AM) and Wealth Management (WM) business.

Strategically the acquisition makes sense to Morgans, adding significant scale and AM diversity. The area of concern is considered WRF’s declining funds under management (FUM) profile over time, meaning the business will have to be reinvigorated.

The broker leaves the FY21 EPS forecast unchanged and lifts the FY22 EPS estimate by around 3%.

The Add rating is unchanged and the target price increased to $147 from $141.20, after the forecast earnings change and an increase in long-term growth assumptions.

Target price is $147.00 Current Price is $138.60 Difference: $8.4
If MQG meets the Morgans target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $137.83, suggesting downside of -2.8% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.4

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

Ord Minnett rates MQG as Accumulate (2) -

Macquarie Group has acquired the US-listed fund manager Waddell & Reed Financial for US$1.7bn or A$2.3bn. The group plans to retain the asset management business but on-sell the wealth management business to LPL Financial Holdings for US$300m along with excess net assets.

Ord Minnett notes the transaction will be earnings-accretive to Macquarie given deployment of US$650m of surplus capital, which stood at $9.4bn as at 30 September.

The broker believes investors are happy with the idea of the group deploying capital into the asset management segment since Macquarie Asset Management accounts for more than 40% of the group's divisional pre-tax profit.

Accumulate rating retained with a price target of $144.

Target price is $144.00 Current Price is $138.60 Difference: $5.4
If MQG meets the Ord Minnett target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $137.83, suggesting downside of -2.8% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.4

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

UBS rates MQG as Neutral (3) -

Macquarie Group has acquired US-based asset manager Waddell & Reed for US$1.7bn. The group will also be selling Waddell & Reed Financial Services to LPL Financial Holdings.

UBS notes the acquisition will increase Macquarie's funds under management to circa $650bn from $556bn. The group believes the acquisition will increase its scale and diversification, and the tie-up with LPL may attract new flows. Synergy benefits are also anticipated.

The Neutral rating is unchanged with a target price of $135.

Target price is $135.00 Current Price is $138.60 Difference: minus $3.6 (current price is over target).
If MQG meets the UBS target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $137.83, suggesting downside of -2.8% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.4

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

Citi rates MTS as Buy (1) -

Covid has been a tremendous earnings growth driver for housing-related retailers in 2020, observes Citi with the housing cycle expected to be a key tailwind over the next three years.

Rather than earnings normalising in 2021, Citi expects the net effect of the pandemic and housing to be a prolonged period of elevated earnings for housing-exposed retailers.

The broker prefers grocery and housing-related retailers for now and likes Metcash more than JB Hi-Fi ((JBH)) and Wesfarmers ((WES)).

Buy rating is retained. The target rises to $3.70 from $3.50.

Target price is $3.70 Current Price is $3.10 Difference: $0.6
If MTS meets the Citi target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $3.52, suggesting upside of 9.7% (ex-dividends)

The company's fiscal year ends in April.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.9

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

Morgans rates MYD as Add (1) -

Morgans highlights the recent strength of MyDeal.com.au's growth momentum has continued, with the November gross transaction value (GTV) up 192%.

The marketplace take-rate is in-line with the FY20 average and private label sales reached $1.2m in November ($14m run-rate), tracking ahead of the broker's expectation.

Having recently initiated coverage, Morgans sees the November data lends upside to the broker's current forecasts.

The Add rating and $1.70 target are unchanged at this stage. 

Target price is $1.70 Current Price is $1.26 Difference: $0.44
If MYD meets the Morgans target it will return approximately 35% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 1.0

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

Citi rates QAN as Neutral (3) -

In its latest update, Qantas pointed towards an improving domestic outlook with capacity expected to improve to 68% in December and to about 80% in the third quarter, a far cry from the circa 30% seen recently, Citi comments. The optimism is based on the opening of state borders over the last few weeks.

Qantas gained a number of business customers from Virgin and expects its domestic market share of more than 70% to be maintained. No material international travel recovery is expected until July 2021.

The airline's expectation of reaching breakeven (on an operating income basis) in the first half has led the broker to adjust its near term estimates downwards, anticipating a slower domestic recovery. Longer-term forecasts remain intact.

Neutral (High Risk) rating retained. Target rises to $5.70 from $4.40.

Target price is $5.70 Current Price is $5.49 Difference: $0.21
If QAN meets the Citi target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $4.83, suggesting downside of -8.8% (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 QAN as Overweight (1) -

Liquidity declined to $3.6bn in November from $4.5bn in June. Qantas Airways expects to be net free cash flow positive by the second half of FY21. Net debt has increased to $5.9bn as at 30 November from $4.7bn on 30 June.

The airline has advised the first-half operating income is likely to break-even versus Morgan Stanley's expectation of circa $440m, implying a pre-tax loss of about -$1.1bn versus the broker's estimated -$690m.

Overweight rating is retained. Target is $4.90. Industry view: In-line.

Target price is $4.90 Current Price is $5.49 Difference: minus $0.59 (current price is over target).
If QAN meets the Morgan Stanley target it will return approximately minus 11% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.83, suggesting downside of -8.8% (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

Ord Minnett rates QAN as Hold (3) -

Qantas Airways' market update indicates domestic capacity recovering to 68% for December, up from 20% in the first quarter and 40% in the second quarter.

With net debt rising to $5.9bn by November-end from $4.7bn in June, and liquidity down to $3.6bn, the company will look to increase its debt facility limit by a further $500m in the short-term.

Ord Minnett notes domestic recovery is tracking ahead of its forecasts although the balance sheet appears to be slightly worse than expected.

Hold rating maintained. The target price rises to $5.20 from $4.20.

Target price is $5.20 Current Price is $5.49 Difference: minus $0.29 (current price is over target).
If QAN meets the Ord Minnett target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.83, suggesting downside of -8.8% (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

UBS rates SEK as Neutral (3) -

Seek's announcement in early November on phasing out job ad templates will help the company lift depth penetration, suggests UBS, and reminds the broker of the strategy followed by REA Group ((REA)) and Domain Holdings Australia ((DHG)).

The broker highlights circa 40%-45% of Seek's Australia and New Zealand job ads are on StandOut, currently priced at about $65 per ad. Every additional 10% of standout penetration could be worth circa $10m of job revenues every year, calculates UBS.

Neutral rating is retained with a target of $26.

Target price is $26.00 Current Price is $25.92 Difference: $0.08
If SEK meets the UBS target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $23.67, suggesting downside of -8.8% (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 SXY as Outperform (1) -

Following the announced divestment of the company’s Cooper Basin business and upgraded Surat CSG growth targets, Macquarie updates forecasts.

The broker was impressed with the $87.5m price achieved for divestment (25% above Macquarie's valuation). Importantly, it's considered this transaction will enable Senex Energy to accelerate the Surat CSG development.

The company has outlined a plan to triple Surat CSG production by FY23. The analyst considers the company will be able to lock-in more contracts as the East Coast market tightens (and contract prices rise), prior to future drilling campaigns.

Macquarie raises FY21-23 EPS estimates by 38%, 20% and 40%,respectively, which raises the target price to $0.45 from $0.42.

The Outperform rating is maintained.

Target price is $0.45 Current Price is $0.34 Difference: $0.11
If SXY meets the Macquarie target it will return approximately 32% (excluding dividends, fees and charges).

Current consensus price target is $0.43, suggesting upside of 27.0% (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

Macquarie rates SYD as Neutral (3) -

Macquarie considers the quarterly statement for Qantas Airways ((QAN)) is encouraging for a domestic travel rebound for Sydney Airport in FY21.

The arline indicated capacity is at 70% of pre covid-19 levels and should manage 80% in the first quarter 2021. Qantas also indicated leisure and visiting friends and relatives (VFR) bookings are bouncing back to pre-covid levels.

The broker cautions domestic has lower leverage than international to the recovery at around 30% of earnings (EBITDA), as terminal fees and retail are materially lower. International recovery is considered likely to be a second half 2021 opportunity.

The Neutral rating and $7.09 target are unchanged.

Target price is $7.09 Current Price is $6.70 Difference: $0.39
If SYD meets the Macquarie target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $6.08, suggesting downside of -8.8% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.1

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 and APRA have agreed to a court enforceable undertaking (CEU) that requires the bank to develop an integrated plan for all of its risk governance remediation programs and assign accountabilities for delivery of the plan.

This comes one year after AUSTRAC first launched civil action against the bank and APRA announced a program to review Westpac's risk governance. APRA concluded the bank has failed to deliver the expected improvements in risk governance.

Morgan Stanley believes the CEU will add to Westpac's expenses in FY21.

Overweight rating and target of $20.40 are unchanged. Industry view: In-line.

Target price is $20.40 Current Price is $20.20 Difference: $0.2
If WBC meets the Morgan Stanley target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $21.39, suggesting upside of 5.3% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.9

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

Ord Minnett rates WBC as Hold (3) -

Westpac Banking Corporation has agreed to a court enforceable undertaking (CEU) with the Australian Prudential Regulation Authority (APRA) and has pledged to lift its efforts to address risk governance deficiencies.

This comes as a response to concerns from APRA about the progress made by the bank in remediating its risk management practices and structures. Westpac’s undertakings include the development of an integrated risk management plan with independent third-party assurance on implementation.

In Ord Minnett’s view, the undertaking is likely to involve higher and more immediate costs for the bank. The broker also believes other banks will see capital normalisation in a more timely fashion than Westpac.

Hold recommendation is retained with a $20.20 target price.

Target price is $20.20 Current Price is $20.20 Difference: $0
If WBC meets the Ord Minnett target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $21.39, suggesting upside of 5.3% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.9

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

UBS rates WBC as Buy (1) -

Australian Prudential Regulation Authority (APRA) has voiced its concerns with respect to Westpac Bank's progress in dealing with risk governance-related issues.

The regulator finds the bank's measures are not far-reaching enough to effectively address the gaps in risk governance, with the bank failing to deliver the expected risk governance improvements despite almost two years of remediation.

UBS is disappointed and notes the issues are having a detrimental impact on the bank's returns with costs rising 6% in FY20 as spend on risk and compliance continues to accelerate.

While Westpac has flagged a three-year plan to address its cost base, the broker believes the bank will find it challenging to substantially reduce its cost base while addressing its risk and compliance deficiencies without compromising spend on technology.

Buy rating is maintained with a target price of $22.

Target price is $22.00 Current Price is $20.20 Difference: $1.8
If WBC meets the UBS target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $21.39, suggesting upside of 5.3% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.9

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

Citi rates WES as Sell (5) -

Covid has been a tremendous earnings growth driver for housing-related retailers in 2020, observes Citi, with the housing cycle expected to be a key tailwind over the next three years.

Rather than earnings normalising in 2021, Citi expects the net effect of the pandemic and housing to be a prolonged period of elevated earnings for housing-exposed retailers. Given the non-housing exposure, Citi's estimates are about 3% ahead of consensus for Wesfarmers.

Citi has a strong preference for grocery and housing-related retailers currently and prefers Harvey Norman Holdings ((HVN)) and Metcash ((MTS)) over Wesfarmers ((WES)).

Sell rating retained. Target rises to $44 from $43.

Target price is $44.00 Current Price is $49.76 Difference: minus $5.76 (current price is over target).
If WES meets the Citi target it will return approximately minus 12% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $47.14, suggesting downside of -4.6% (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