Australian Broker Call

Macquarie rates AKE as Outperform (1) -

Macquarie upgrades earnings for Australian lithium miners, expecting strong electric vehicle sales volumes will support a four-year run of record spot lithium prices. 

The broker increases CY22 regional lithium prices 3% to 18%, and CY23-CY25 prices by 12% to 22%.

The broker expects spodumene prices will peak in mid-2022 but increases its peak assumption by a hefty 100%.

Macquarie like's Allkem's production growth outlook and forecasts a five-year and 10-year compound annual growth rate of 26% and 14%.

Allkem's earnings forecasts are raised 22% to 53% across FY22 to FY24.

Outperform rating retained. Target price jumps 10% to $13.60.

Target price is $13.60 Current Price is $9.17 Difference: $4.43
If AKE meets the Macquarie target it will return approximately 48% (excluding dividends, fees and charges).

Current consensus price target is $10.95, suggesting upside of 17.4% (ex-dividends)

The company's fiscal year ends in December.

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

UBS rates AKE as Buy (1) -

The results of Allkem's highly anticipated feasibility study and maiden ore reserve for its James Bay Lithium project appear largely in line with UBS' expectations.

Mine life and reserve updates look promising, the broker suggests, albeit costs and capex are slightly above expectations and production is a little below.

As expected the mine and processing plant will be similar to Mt Cattlin which allows transfer of intellectual property and experience.  Management  expects construction to commence in the Sep-Q 2022 with commissioning in 2024, in line with expectation.

Buy and $10.75 target retained.

Target price is $10.75 Current Price is $9.17 Difference: $1.58
If AKE meets the UBS target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $10.95, suggesting upside of 17.4% (ex-dividends)

The company's fiscal year ends in December.

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

Macquarie rates BHP as Outperform (1) -

Macquarie says shipping data suggest iron ore prices have outpaced steel consumption growth, pointing to improved market sentiment.

The broker says China's steel consumption appears to have improved for the sixth consecutive week, while steel inventory declined -5.6% last week, after declining for five weeks. Traders' steel inventory fell a similar amount.

Iron ore prices forged ahead last week and Australian production fell -3% week on week, notes Macquarie.

BHP Group remains Macquarie's favoured big-cap pick, the company boasting a 17% free cash flow yield. Iron ore, copper, oil and coal prices will determine the company's future and ESG could prove a drag (to all the majors), raising borrowing costs and compressing multiples, says the broker.

Target price steady at $52.00. Outperform rating retained.

Target price is $52.00 Current Price is $41.71 Difference: $10.29
If BHP meets the Macquarie target it will return approximately 25% (excluding dividends, fees and charges).

Current consensus price target is $43.55, suggesting upside of 5.4% (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: 0.5

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

UBS rates BKW as Neutral (3) -

Following a change in analyst UBS reinstates coverage of Brickworks with a Neutral Rating and $26.30 target. The Washington H. Soul Pattinson ((SOL)) holding and the Brickworks/Goodman Property Trust remain the key drivers of value, the broker suggests.

Building Products is experiencing tailwinds but is only 20% of valuation, the broker notes, while the next leg of Property growth will take time. Current valuation implies the market is applying a -10% discount to the Soul Pattinson stake, in line with the broker.

Target price is $26.30 Current Price is $24.69 Difference: $1.61
If BKW meets the UBS target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $26.95, suggesting upside of 13.2% (ex-dividends)

The company's fiscal year ends in July.

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

UBS rates CAR as Buy (1) -

Following Carsales' investor day, UBS has remodelled its valuation, leading to a target increase to $27.00 from $25.50.

In Australia, the broker believes high revenue growth in Dealer can be sustained on a 3-5 year view. In Korea it would be possible to double revenues over 5 years if the company can execute on Encar Home and Dealer Direct.

In the US, the broker believes Carsales has the opportunity to leverage its expertise to help Trader Interactive grow, although risks exist around any potential changes to the revenue model, which would need to be implemented carefully over a number of years.

Buy retained.

Target price is $27.00 Current Price is $24.69 Difference: $2.31
If CAR meets the UBS target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $24.89, suggesting downside of -1.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.2

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

Macquarie rates CIA as Outperform (1) -

Macquarie says shipping data suggests iron ore prices have outpaced steel consumption growth, pointing to improved market sentiment.

The broker says China's steel consumption appears to have improved for the sixth consecutive week, while steel inventory declined -5.6% last week, after declining for five weeks. Traders' steel inventory fell a similar amount.

Iron ore prices forged ahead last week and Australian production fell -3% week on week, says Macquarie.

Macquarie views Champion Iron as its mid-sector pick, alongside Mineral Resources ((MIN)), both offering unique leverage to the capital-expenditure cycle and iron-ore price.

The company offers a 2% free cash flow yield. Iron ore prices will determine the company's future and ESG could prove a drag (to all the majors), raising borrowing costs and compressing multiples, says the broker.

Target price steady at $7.40. Outperform rating retained.

Target price is $7.40 Current Price is $5.16 Difference: $2.24
If CIA meets the Macquarie target it will return approximately 43% (excluding dividends, fees and charges).

The company's fiscal year ends in March.

Forecast for FY22:

Forecast for FY23:

This company reports in CAD. 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 DRR as Outperform (1) -

Macquarie says shipping data suggests iron ore prices have outpaced steel consumption growth, pointing to improved market sentiment.

The broker says China's steel consumption appears to have improved for the sixth consecutive week, while steel inventory declined -5.6% last week, after declining for five weeks. Traders' steel inventory fell a similar amount.

Iron ore prices forged ahead last week and Australian production fell -3% week on week, says Macquarie.

Macquarie says Deterra Royalties offers low-volatility exposure from BHP's Mining Area C production royalties.

The company enjoys a free cash flow yield of 6%.

Target price steady at $5.20. Outperform rating retained.

Target price is $5.20 Current Price is $4.33 Difference: $0.87
If DRR meets the Macquarie target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $4.53, suggesting upside of 8.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.6

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

Macquarie rates FMG as Outperform (1) -

Macquarie says shipping data suggests iron ore prices have outpaced steel consumption growth, pointing to improved market sentiment.

The broker says China's steel consumption appears to have improved for the sixth consecutive week, while steel inventory declined -5.6% last week, after declining for five weeks. Traders' steel inventory fell a similar amount.

Iron ore prices forged ahead last week and Australian production fell -3% week on week, says Macquarie.

Macquarie views Fortescue Metals Group positively.

The company offers a 5% free cash flow yield. Iron ore prices will determine the company's future and Macquarie spies material risk from the Iron Bridge Magnetite Project (upside and downside). 

Target price steady at $21.00. Outperform rating retained.

Target price is $21.00 Current Price is $19.79 Difference: $1.21
If FMG meets the Macquarie target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $16.79, suggesting downside of -13.3% (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: -0.1

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

Macquarie rates IGO as No Rating (-1) -

Macquarie upgrades earnings for Australian lithium miners, expecting strong electric vehicle sales volumes will support a four-year run of record spot lithium prices. 

The broker increases CY22 regional lithium prices 3% to 18%, and CY23-CY25 prices by 12% to 22%.

The broker expects spodumene prices will peak in mid-2022 but increases its peak assumption by a hefty 100%.

Macquarie upgrades IGO's earnings forecasts 22% to 53% across FY22 to FY24.

Macquarie is restricted from providing a rating or target price.

Current Price is $10.79. Target price not assessed.

Current consensus price target is $9.28, suggesting downside of -15.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.0

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

Morgans rates IME as Add (1) -

ImexHS has announced a strong FY21 trading update and tightened guidance. Morgans estimates the company's annual recurring revenue is already sitting at $19m after recent acquisitions and contract wins.

ImexHS shares have take a pounding on the rotation out of growth stocks in the past year but Morgans says the company continues to grow volume across existing clients, win new contracts and improve execution on contract implementation.

The company has also announced a strategic partnership with global distributor Neusoft Medical, which Morgans expects will extend its distribution reach.

The broker views the stock as materially undervalued, announcements demonstrating strong progression to breakeven in FY22. Speculative Buy rating retained. Target price steady at $2.55.

Target price is $2.55 Current Price is $0.99 Difference: $1.56
If IME meets the Morgans target it will return approximately 158% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

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

UBS rates LOV as Initiation of coverage with Buy (1) -

UBS initiates coverage of Lovisa Holdings with a Buy rating and $21.25 target.

Lovisa is a fast-fashion retailer of affordable jewellery, with a specialist focus providing competitive advantages versus a fragmented competitor set, the broker notes. It is global, with 570 stores in 21 countries across Africa, ANZ, Asia, Europe, the UK and US, offering significant store roll-out headroom.

Covid has hit margins due to store closures but re-openings and operating leverage will provide tailwinds in FY22.

Target price is $21.25 Current Price is $18.95 Difference: $2.3
If LOV meets the UBS target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $22.36, suggesting upside of 13.1% (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 LTR as Outperform (1) -

Macquarie upgrades earnings for Australian lithium miners, expecting strong electric vehicle sales volumes will support a four-year run of record spot lithium prices. 

The broker increases CY22 regional lithium prices 3% to 18%, and CY23-CY25 prices by 12% to 22%.

The broker expects spodumene prices will peak in mid-2022 but increases its peak assumption by a hefty 100%.

Earnings forecasts for Liontown Resources are unchanged given the company is not expected start production until FY25, and should report losses beforehand.

But Macquarie raises its target price 10% to $2.20 and notes FY25 and FY26 earnings prospects improve markedly.

Outperform rating retained. 

Target price is $2.20 Current Price is $1.49 Difference: $0.71
If LTR meets the Macquarie target it will return approximately 48% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 1.0

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

Macquarie rates MGX as Outperform (1) -

Macquarie says shipping data suggests iron ore prices have outpaced steel consumption growth, pointing to improved market sentiment.

The broker says China's steel consumption appears to have improved for the sixth consecutive week, while steel inventory declined -5.6% last week, after declining for five weeks. Traders' steel inventory fell a similar amount.

Iron ore prices forged ahead last week and Australian production fell -3% week on week, says Macquarie.

Mt Gibson Iron is forecast to experience a soft to negative free cash flow yield. Outperform rating and 80c target price retained.

Target price is $0.80 Current Price is $0.42 Difference: $0.38
If MGX meets the Macquarie target it will return approximately 90% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 1.0

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

Macquarie rates MIN as Outperform (1) -

Macquarie upgrades earnings for Australian lithium miners, expecting strong electric vehicle sales volumes will support a four-year run of record spot lithium prices.

The broker increases CY22 regional lithium prices 3% to 18%, and CY23-CY25 prices by 12% to 22%.

The broker expects spodumene prices will peak in mid-2022 but increases its peak assumption by a hefty 100%.

Mineral Resources is one of Macquarie's favoured sector picks, the broker saying the share price currently only reflects the company's lithium and non-iron ore mining services, the bulk of upside being forecast to come from it iron ore development projects.

The broker upgrades company earnings 14% to 26% across FY22 to FY24.

Outperform rating retained. Target price jumps to $79 from $72.00.

Target price is $79.00 Current Price is $50.11 Difference: $28.89
If MIN meets the Macquarie target it will return approximately 58% (excluding dividends, fees and charges).

Current consensus price target is $54.97, suggesting upside of 5.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.4

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

UBS rates MIN as Buy (1) -

Following a change in analyst, UBS reinstates coverage of Mineral Resources with a Buy rating and $54.15 target.

New forecasts include updated asset models, the restart of production at Wodgina and the broker's latest commodity price deck including higher lithium price forecasts.

The company's strategy puts the more defensive mining services segment at the core of the business while growing its iron ore and lithium segments. The gas discovery at Lockyer Deeps looks likely to create value but the broker is yet to assign any valuation.

Target price is $54.15 Current Price is $50.11 Difference: $4.04
If MIN meets the UBS target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $54.97, suggesting upside of 5.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.4

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

Morgans rates MME as Add (1) -

MoneyMe has acquired SocietyOne through a Merger Implementation Agreement for $132m and Morgans views the business as a good strategic fit and strongly accretive.

The broker expects MoneyMe will gain scale; $17m in pre-tax cost synergies from FY24; and more than $15m in revenue synergies.

Target price rises to $2.57 from $2.36. Add rating retained.

Target price is $2.57 Current Price is $1.96 Difference: $0.61
If MME meets the Morgans target it will return approximately 31% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 1.0

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

Macquarie rates PLS as Outperform (1) -

Macquarie upgrades earnings for Australian lithium miners, expecting strong electric vehicle sales volumes will support a four-year run of record spot lithium prices. 

The broker increases CY22 regional lithium prices 3% to 18%, and CY23-CY25 prices by 12% to 22%.

The broker expects spodumene prices will peak in mid-2022 but increases its peak assumption by a hefty 100%.

Pilbara Minerals is Macquarie's preferred pure play lithium producer, the broker estimating a five-year and ten-year compound annual growth of 20% and 14% respectively.

Pilbara enjoys the largest earnings leverage to the spodumene price, a downgrade in production guidance and tight shipping market removes only slightly dimming the glory.

Macquarie upgrades Pilbara's earnings forecasts 18% to 61% across FY22 to FY24.

Outperform rating retained. Target price jumps to $3.70 from $2.50.

Target price is $3.70 Current Price is $2.51 Difference: $1.19
If PLS meets the Macquarie target it will return approximately 47% (excluding dividends, fees and charges).

Current consensus price target is $2.79, suggesting upside of 2.5% (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

UBS rates PRN as Buy (1) -

Following a change of analyst, UBS has reinstated coverage of Perenti Global with a Buy rating and $1.00 target.

Management has reiterated FY22 earnings guidance, weighted to second half as growth projects ramp up and easing border restrictions improve labour  constraints.

UBS likes the Underground business for its solid tender pipeline, commodity mix, strong returns and opportunities to diversify from higher risk West African exposure, with opportunities in North America and Australia.

The broker acknowledges balance sheet risk, but at the current price sees value underpinned by Underground

Target price is $1.00 Current Price is $0.83 Difference: $0.17
If PRN meets the UBS target it will return approximately 20% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 1.0

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

Macquarie rates RIO as Outperform (1) -

Macquarie says shipping data suggests iron ore prices have outpaced steel consumption growth, pointing to improved market sentiment.

The broker says China's steel consumption appears to have improved for the sixth consecutive week, while steel inventory declined -5.6% last week, after declining for five weeks. Traders' steel inventory fell a similar amount.

Iron ore prices forged ahead last week and Australian production fell -3% week on week, says Macquarie.

Macquarie views Rio Tinto positively, despite the company recently lowering guidance.

The company offers a 13% free cash flow yield. Iron ore, copper, oil and coal prices will determine the company's future and ESG could prove a drag (to all the majors), raising borrowing costs and compressing multiples, says the broker.

The company recently announced Dominic Barton as the company's new Chair. He will step into the position on May 5, 2022.

Target price steady at $135.00. Outperform rating retained.

Target price is $135.00 Current Price is $101.40 Difference: $33.6
If RIO meets the Macquarie target it will return approximately 33% (excluding dividends, fees and charges).

Current consensus price target is $107.50, suggesting upside of 8.5% (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: 0.4

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

UBS rates UNI as Initiation of coverage with Buy (1) -

UBS initiates coverage of Universal Store Holdings with a Buy rating and $8.00 target.

The company is a specialty youth casual fashion apparel retailer in Australia with 77 stores operating in an attractive retail subcategory, and has been able to grow faster than the market due to superior product and price, in the broker's view.

Store expansion opportunities remain across A&NZ. The stock is trading at a 15% PE multiple to the Small Ordinaries but the broker sees revenue growth as the main driver of multiple expansion.

Target price is $8.00 Current Price is $6.89 Difference: $1.11
If UNI meets the UBS target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $8.83, suggesting upside of 29.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 1.0

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