Australian Broker Call

Credit Suisse rates AMC as Neutral (3) -

Credit Suisse reviews the opportunity for Amcor from European protein packaging (meat, cheese and fish). The analyst concludes if the company were extremely successful and market share were doubled in 3-4 years, organic growth guidance could be exceeded.

The broker makes no changes to its forecasts, Neutral rating or $17.20 target price.

Target price is $17.20 Current Price is $16.70 Difference: $0.5
If AMC meets the Credit Suisse target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $18.27, suggesting upside of 8.9% (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: 0.6

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

Morgan Stanley rates APT as No Rating (-1) -

Morgan Stanley reviews the November BNPL app downloads in the US. Afterpay had downloads up of around 1.3x year-on-year (yoy), though below its March-21 record.

Meanwhile competitor Affirm's November downloads were up circa 1.5x, while Klarna's downloads were down around -15% from its Nov-20 record. The broker illustrates via a graph the seemingly strong correlation between app downloads and share price for Afterpay.

The broker has no rating or target at present. Industry view: In-Line.

Current Price is $117.39. Target price not assessed.

Current consensus price target is $141.68, suggesting upside of 18.2% (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

Macquarie rates BST as Outperform (1) -

Best & Less Group's trading update confirmed prospectus guidance and the company guides to a first-half revenue miss due to lockdowns, which met Macquarie's conservative forecasts.

Inventory levels are healthy, which should protect against supply-chain bottlenecks but pressure remains; and the broker says strategies and initiatives have proved effective.

Gross margins have exceeded forecasts but the broker expects this to moderate by December and downgrades FY22 gross margin -4%

Target price rises to $3.90 from $3.40. Outperform rating retained, the broker expecting the performance revealed at the trading update warrants a re-rating.

Target price is $3.90 Current Price is $3.44 Difference: $0.46
If BST meets the Macquarie target it will return approximately 13% (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

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

A trading update at Capitol Health's AGM suggested a solid result amidst lockdowns. Underlying growth exceeded Ord Minnett's forecast by 4%, with Victoria's 75% of the company's total sites performing better than expected.

Capitol Health's organic growth profile from clinic maturation, greenfield opportunities and demographic tailwinds should underpin earnings growth over the medium-term, the broker suggests. With $110m in unused debt facilities & negligible gearing, M&A continues to provide optionality.

Target unchanged at 43c, rating upgraded to Buy from Accumulate.

Target price is $0.43 Current Price is $0.37 Difference: $0.06
If CAJ meets the Ord Minnett target it will return approximately 16% (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 CBA as Sell (5) -

Upon initial analysis of today's Q1 release, Citi analysts believe CommBank missed market expectations, including Citi's, because of weak pre-provision profits.

Underlying, a sharp fall in net interest margin (NIM) caused the disappointment. Another factor is rising costs. Another negative is the lack of revenue growth.

As the shares significantly outperformed the rest of the sector recently, Citi sees no justification for the relative premium. Sell. Target $94.50.

Target price is $94.50 Current Price is $107.68 Difference: minus $13.18 (current price is over target).
If CBA 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 $90.50, suggesting downside of -8.6% (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

Ord Minnett rates CBA as Hold (3) -

CommBank earlier today released its Q1 performance and Ord Minnett, upon initial assessment, is of the view the bank's financial performance was much weaker than expected.

Culprits seem to be softer non-interest income and compression of the net interest margin (NIM); in particular the latter compression proved a big negative surprise.

Ord Minnett expects to see large reductions to consensus forecasts and doesn't think CBA's sector premium can still be justified. Hold. Price target $95.

Target price is $95.00 Current Price is $107.68 Difference: minus $12.68 (current price is over target).
If CBA meets the Ord Minnett target it will return approximately minus 12% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $90.50, suggesting downside of -8.6% (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

Morgans rates ELD as Hold (3) -

Morgans upgrades forecasts after Elders delivered a material beat for FY21 results over consensus forecasts. Outlook comments were upbeat though the analyst retains a Hold rating, wary of earnings growth moderation from the 2H22 and an easing of cattle prices.

Management expects wool will recover further, while Real Estate and Financial Services are expected to continue to perform well.The broker lifts FY22-24 earnings (EBIT) estimates by 8.7%, 9.3% and 9.3%, respectively and raises its target to $12.55 from $12.10.

Target price is $12.55 Current Price is $11.77 Difference: $0.78
If ELD meets the Morgans target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $13.60, suggesting upside of 16.5% (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 NEA as Neutral (3) -

True to Citi's expectation for protracted proceedings, the Utah Federal Court has denied Nearmap’s motion to dismiss two of
competitor Eagleview’s claims, on the basis that the patents are invalid.

The broker understands the case should now progress to a discovery phase and cautions its estimate of -$5m for FY22 legal costs may be exceeded. The Neutral rating and $2.20 target price are unchanged.

Target price is $2.20 Current Price is $1.74 Difference: $0.46
If NEA meets the Citi target it will return approximately 26% (excluding dividends, fees and charges).

Current consensus price target is $2.53, suggesting upside of 46.4% (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

Macquarie rates NUF as Outperform (1) -

Macquarie, upon initial assessment, reports Nufarm's FY21 reports proved stronger-than-expected with lower tax providing extra-support and explaining the difference.

The final dividend of 4c compares with the broker's forecast of 3c.

Highlights, in the broker's view, include strong cash flows and a reduction in debt. Macquarie believes the outlook for soft commodity prices remains positive and Nufarm stands to benefit.

Outperform. Target $5.90.

Target price is $5.90 Current Price is $5.02 Difference: $0.88
If NUF meets the Macquarie target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $5.71, suggesting upside of 24.3% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.6

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

Macquarie rates OZL as Outperform (1) -

Macquarie finds OZ Minerals' updated annual Mineral Resource and Ore Reserve summary shows strong resource reclassification and conversion at Prominent Hill have offset mining depletion.

Strong copper prices and upgrade momentum combined to generate a spot-price scenario boosting earnings by more than 37%, notes the broker.

The company's reserve-contained copper rose by roughly 5% and the mineral and ore reserve upgrades are driven by progress on several projects, including Wira Shaft Mine Expansion, the West Musgrave project, and the discovery of a maiden mineral resource at Santa Lucia.

Target price is steady at $32. Outperform rating retained.

Target price is $32.00 Current Price is $25.32 Difference: $6.68
If OZL meets the Macquarie target it will return approximately 26% (excluding dividends, fees and charges).

Current consensus price target is $24.83, suggesting downside of -3.3% (ex-dividends)

The company's fiscal year ends in December.

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

Macquarie rates RMC as Outperform (1) -

Resimac's updated trading update and guidance outpaced Macquarie's estimates, the company recording a 72% jump in home-loan settlements between July and October.

Total book growth disappointed the broker.

In other news, the company's new home-loan origination system was rolled out in New Zealand and is set to roll out in Australia in mid December.

EPS estimates fall -1.7% and -3.1% for FY22 and FY23, and rise 3.7% for FY24, to account for Resimac's net interest margin trajectory, offset by book growth.

Outperform rating and $2.84 target price retained.

Target price is $2.84 Current Price is $1.76 Difference: $1.08
If RMC meets the Macquarie target it will return approximately 61% (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

Morgans rates STP as Initiation of coverage with Add (1) -

Morgans initiates coverage on Step One Clothing with an Add rating and price target of $3.20. In the field of underpants, the broker believes a design has been developed that addresses all the company's targeted issues around comfort and freshness.

Underwear is made of organically grown bamboo fabric, with a 3D elastic pouch stitched at the front for support and two elastane panels on the inner thigh to combat chafing. Launched in Australia and the UK in 2017 and 2020, explosive growth in sales has been achieved.

The next frontier is the US (launched October 2021) and the analyst believes there is a ready market globally. The company sources bamboo only from forest stewardship council (FSC)-certified forests, while bamboo itself has a lighter environmental impact than cotton.

Target price is $3.20 Current Price is $2.89 Difference: $0.31
If STP meets the Morgans target it will return approximately 11% (excluding dividends, fees and charges).

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 TCL as Outperform (1) -

Macquarie jumps back in to Transurban Group post-restriction with an Outperform rating and $14.72 target price, citing a strong covid recovery and yield growth.

The broker's forecasts for organic traffic growth remains constrained given slower population and registration growth and the potential affects of higher interest rates on household budgets.

Macquarie expects inflation will prove transitory, boding well for Transurban given 65% to 70% of its revenue relates to fixed pricing increases.

The broker notes the company is leveraged to a low bond environment and estimates a 100 basis point easing in bonds increases the company's valuation by 17%.

FY23 EPS forecasts ease -0.8% and FY24 estimates ease -2.2% to reflect a lower A25 contribution from delayed tolling increases.

Target price is $14.72 Current Price is $13.70 Difference: $1.02
If TCL meets the Macquarie target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $14.90, suggesting upside of 8.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.7

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

Credit Suisse rates TLS as Outperform (1) -

Credit Suisse makes no changes to its Telstra forecasts, $4.40 target price or its Outperform rating, after an investor day where key FY25 target were reaffirmed. 

The analyst notes the focus was largely upon the mobile network quality.  Management affirmed a target of 95% 5G population coverage and more than 80% of network traffic to be on 5G by 2025.

Target price is $4.40 Current Price is $3.95 Difference: $0.45
If TLS meets the Credit Suisse target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $4.41, suggesting upside of 10.5% (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

Macquarie rates TLS as No Rating (-1) -

Telstra's has reiterated group-level guidance, T25 aspirations, and forecasts for a compound annual growth rate (CAGR) in earnings in the high teens at its Investor Day.

The broker hones in on Telstra Health, expecting it will yield strong CAGR and margins, but is less impressed with the energy outlook given gross margin compression within the industry. No changes to EPS estimates.

 Macquarie is on research resections and cannot provide a rating or target at present.

Current Price is $3.95. Target price not assessed.

Current consensus price target is $4.41, suggesting upside of 10.5% (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

Ord Minnett rates TLS as Buy (1) -

Ord Minnett picked up three key points at Telstra's second investor day this year. The first is that the company's 5G wireless rollout will only target a small number of customers who do not have a reliable NBN service.

The second is that expansion into the health sector is expected to result in a tripling of health revenues by FY25, mostly through acquisitions.

The third is that by expanding into the energy sector, Telstra's target is to become the fifth largest retailer by FY25, Very exciting, except the broker points out this would leave Telstra with a mere 5% of the market.

No change to forecasts. Buy and $4.60 target retained.

Target price is $4.60 Current Price is $3.95 Difference: $0.65
If TLS meets the Ord Minnett target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $4.41, suggesting upside of 10.5% (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

Macquarie rates WPL as Neutral (3) -

The sale of Woodside Petroleum's 49% stake in the Pluto Train 2 project to Global Infrastructure Partners (GIP) has been agreed.

Macquarie estimates the sale will yield a reduction of -30% in net capital expenditure for the entire Scarborough-plus Pluto project, which the company can now fund through a combination of free cash flow and existing facilities without an equity raising.

But the broker remains concerned about sustaining Pluto after recent downgrades.

Neutral rating retained given the -11% downgrade-driven retreat in the share price, and as the risk/reward profile improves with the GIP deal. Target price rises to $24.50 from $23.75.

Elsewhere, Woodside's solar partner Heliogen has overcome solar's biggest challenge - storage costs - says Macquarie, and Woodside plans to start construction of a full-scale demonstration facility in California in 2022.

Heliogen aims to reduce levered breakevens down to US5c/kWh by 2026, a price Macquarie describes as transformational.

This suggests sustainability pariah Woodside may still be in the game.

For now, no changes to EPS have been incurred, Macquarie awaiting FID completion before incorporating solar projects into its model.

Target price is $24.50 Current Price is $22.33 Difference: $2.17
If WPL meets the Macquarie target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $26.39, suggesting upside of 17.9% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY21:

Forecast for FY22:

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

Market Sentiment: 0.6

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