Australian Broker Call

Macquarie rates A11 as Outperform (1) -

Atlantic Lithium has broadened its 2023 drilling program, adding 8000m of RC drilling, targeting depth and strike extensions at Ewoyaa.

Macquarie considers the positive intersections to be encouraging, suggesting a stronger resource.

The broker observes offtake discussions for part of the company's 50% uncommitted spodumene output are under way and says successful completion would prove a major catalyst.

Outperform rating and 66c target price retained.

Target price is $0.66 Current Price is $0.42 Difference: $0.245
If A11 meets the Macquarie target it will return approximately 59% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 1.0

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

Macquarie rates CCP as Neutral (3) -

Macquarie conducts a read-through from recent PRA Group and Encore Capital Group September-quarter results for Credit Corp's US operations.

Purchase volumes and pricing strengthened, although pricing gains were slower, as credit card balances, delinquency rates and charge-off rates rose.

Looking forward, Encore predicted 2023 would prove to be a record year of capital deployment and strong returns, reports the broker.

Encore said: "a number of competitors are starting to face the realities of their prior purchasing and valuation decisions".

Neutral rating and $11.80 target price retained.

Target price is $11.80 Current Price is $12.48 Difference: minus $0.68 (current price is over target).
If CCP meets the Macquarie target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $15.18, suggesting upside of 20.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.5

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

Macquarie rates CHN as Outperform (1) -

Chalice Mining has conducted metallurgical testing at Gonneville which suggests an extra 2% to 3% recovery on Scoping Study assumptions, and Macquarie observes the company is examining a high-grade starter to generate higher grades and recoveries.

To get an idea of the order of magnitude, the Scoping Study pegged nickel recoveries at 43% but a high-grade pit could yield 70%, observes the broker.

Outperform rating and $3.10 target price retained.

Target price is $3.10 Current Price is $1.81 Difference: $1.295
If CHN meets the Macquarie target it will return approximately 72% (excluding dividends, fees and charges).

Current consensus price target is $4.16, suggesting upside of 127.5% (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

Bell Potter rates CIP as Initiation of coverage with Hold (3) -

Bell Potter has initiated coverage of nine stocks in the A-REIT sector.

Centuria Industrial REIT is reaping the benefits of an Australian industrial sub-sector which has the lowest vacancy amongst any global markets, the broker notes, manifesting in strong net effective rental growth which is expected to continue in FY24 and beyond.

Hold, target $3.20.

Target price is $3.20 Current Price is $2.98 Difference: $0.22
If CIP meets the Bell Potter target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $3.35, suggesting upside of 12.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.3

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

Bell Potter rates CNI as Initiation of coverage with Buy (1) -

Bell Potter has initiated coverage of nine stocks in the A-REIT sector.

The key to Centuria Capital, the broker notes, is a wide offering across the real estate sub-sector spectrum (office, industrial, retail, healthcare, and agriculture) as well as geographically (A&NZ), and across equity as well as debt.

The bears will be cautious of some 36% exposure to office and significant unlisted real estate platform, however, the fund manager has cash on hand and undrawn debt on balance sheet, Bell Potter points out.

Buy, target $1.55.

Target price is $1.55 Current Price is $1.24 Difference: $0.31
If CNI meets the Bell Potter target it will return approximately 25% (excluding dividends, fees and charges).

Current consensus price target is $1.58, suggesting upside of 26.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.6

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

Bell Potter rates COF as Initiation of coverage with Hold (3) -

Bell Potter has initiated coverage of nine stocks in the A-REIT sector.

Centuria Office REIT screens as value on a -44% discount to NTA and near 10% distribution yield, and coupled
with recent underperformance, however Bell Potter sees three key headwinds

Further assets sales likely with ongoing negative investor sentiment towards office, gearing is above target range post recent asset
sales, and there are finite levers to pull to drive earnings growth and offset headwinds.

Hold, Target $1.25.

Target price is $1.25 Current Price is $1.20 Difference: $0.05
If COF meets the Bell Potter target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $1.47, suggesting upside of 20.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.3

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

Macquarie rates COH as Underperform (5) -

Macquarie reviews its valuations and return on equity metrics for Australia's global market health leaders.

The broker forecasts a gentle improvement in return on equity for all companies under review out to FY25, but ResMed and Cochlear are expected to outpace CSL and Fisher & Paykel Healthcare in this respect.

But CSL and ResMed stack up best when looking at a range of valuation metrics, says Macquarie.

The broker observes Cochlear garnered positive EPS revisions in response to a FY24 guidance beat so the share price has held up and multiples remain elevated.

The broker expects higher cash balances could hamper improvement gong forward, and therefore spies little valuation appeal at these prices, while suspecting the Oticon acquisition could result in near-term EPS downgrades.

Underperform rating retained. Target price eases to $212.00 from $215.00.

Target price is $212.00 Current Price is $250.38 Difference: minus $38.38 (current price is over target).
If COH meets the Macquarie target it will return approximately minus 15% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $236.90, suggesting downside of -6.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: -0.3

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

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

Cash rates in the US at the short end of the spot curve have increased by over 100bps since late July, so Morgan Stanley upgrades margin income (MI) forecasts for Computershare by 5%.

The analysts feel FY24 guidance may be upgraded at next week's AGM.

The broker increases FY24-26 management EPS forecasts for Computershare by around 1%, despite circa -2.5% headwinds to EPS from a stronger US dollar so far in FY24.

The broker is currently not rated on the stock and has not provided a target price. 

Current Price is $23.88. Target price not assessed.

Current consensus price target is $28.79, suggesting upside of 18.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

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

Market Sentiment: 0.8

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

Macquarie rates CSL as Outperform (1) -

Macquarie reviews its valuations and return on equity metrics for Australia's global market health leaders.

The broker forecasts a gentle improvement in return on equity for all companies under review out to FY25, but ResMed and Cochlear are expected to outpace CSL and Fisher & Paykel Healthcare in this respect.

But CSL and ResMed stack up best when looking at a range of valuation metrics, says Macquarie.

The broker's estimates for CSL do not include contributions from pipeline productions or yield improvements. Outperform rating and $321 target price retained.

Target price is $321.00 Current Price is $248.12 Difference: $72.88
If CSL meets the Macquarie target it will return approximately 29% (excluding dividends, fees and charges).

Current consensus price target is $329.70, suggesting upside of 33.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

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

Market Sentiment: 0.9

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

Citi rates DHG as Neutral (3) -

Citi's initial commentary following Domain Holdings Australia's Q1 trading update suggests questions will be raised whether key competitor REA Group ((REA)) is increasing market share and Domain is losing share?

Group revenues missed forecasts but the broker believes revenue deferral is responsible. Adjusted for the deferral, Citi believes the number falls in line with forecasts.

The broker does not think consensus forecasts will undergo major changes post today's update, assuming the deferral is an actual deferral, but also believes the decline in listings will be perceived as a disappointment.

Target $3.70. Neutral.

Target price is $3.70 Current Price is $3.67 Difference: $0.03
If DHG meets the Citi target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $3.31, suggesting downside of -8.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: -0.4

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

Bell Potter rates DXC as Initiation of coverage with Buy (1) -

Bell Potter has initiated coverage of nine stocks in the A-REIT sector.

Dexus Convenience Retail REIT offers one of the most attractive risk-adjusted propositions in the sector trading, the broker suggests,
at an all time low -37% discount to NTA with a forecast FY24 dividend yield of 8.7%. 

This is despite lower sub-sector volatility where assets continue to transact providing price discovery and balance sheet comfort.

Buy, target $2.85.

Target price is $2.85 Current Price is $2.34 Difference: $0.51
If DXC meets the Bell Potter target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $2.94, suggesting upside of 27.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.8

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

Bell Potter rates DXI as Initiation of coverage with Sell (5) -

Bell Potter has initiated coverage of nine stocks in the A-REIT sector.

On one hand, the broker notes, Dexus Industria REIT has some positive attributes in strong sub-sector exposure and proactive capital recycling. Bell Potter believes these have benefited the share price relative to the REIT sector.

Despite asset sales minimising absolute interest rate P&L impact and substantiating tangible asset value, the broker sees an earnings cliff ahead in FY26 when the impact of higher locked-in hedging rolls on.

Sell, target $2.65.

Target price is $2.65 Current Price is $2.55 Difference: $0.1
If DXI meets the Bell Potter target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $2.95, suggesting upside of 15.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.3

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

Morgans rates DXI as Add (1) -

Following previously announced divestments totaling around $90m, Dexus Industria REIT has sold a further two industrial assets at around book value for $45m.

FY24 guidance is unchanged.

The broker notes gearing will now fall by -2% post settlement to around 25%. The target is reduced to $3.17 from $3.19. Add.

Target price is $3.17 Current Price is $2.55 Difference: $0.62
If DXI meets the Morgans target it will return approximately 24% (excluding dividends, fees and charges).

Current consensus price target is $2.95, suggesting upside of 15.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.3

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

Macquarie rates FPH as Neutral (3) -

Macquarie reviews its valuations and return on equity metrics for Australia's global market health leaders.

The broker forecasts a gentle improvement in return on equity for all companies under review out to FY25, but ResMed and Cochlear are expected to outpace CSL and Fisher & Paykel Healthcare in this respect.

But CSL and ResMed stack up best when looking at a range of valuation metrics, says Macquarie.

Macquarie observes Fisher & Paykel Healthcare's return on equity improved up to 2019 but this trend changed in FY22 and FY23. The broker expects an improvement out to FY25 along with operating margins, aided by limited competition in underpenetrated markets.

Neutral rating retained. Target price eases to $23.80 from $24.30.

Target price is $23.80 Current Price is $20.95 Difference: $2.85
If FPH meets the Macquarie target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $21.93, suggesting upside of 6.7% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY24:

Forecast for FY25:

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

Market Sentiment: -0.2

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

Bell Potter rates GDI as Initiation of coverage with Buy (1) -

Bell Potter has initiated coverage of nine stocks in the A-REIT sector.

GDI Property has not been a REIT sector market darling over the last 12 months, the broker notes, and post FY23 result the downward trajectory has continued.

Bell Potter thinks this is overdone and the downside for Perth office exposure, balance sheet headroom and liquidity is priced in.

Buy, target 75c.

Target price is $0.75 Current Price is $0.55 Difference: $0.2
If GDI meets the Bell Potter target it will return approximately 36% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 1.0

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

Bell Potter rates HCW as Initiation of coverage with Buy (1) -

Bell Potter has initiated coverage of nine stocks in the A-REIT sector.

HealthCo Healthcare & Wellness REIT’s Healthscope transaction earlier this year afforded the REIT a much more significant platform from which to grow as the largest listed diversifed healthcare REIT, the broker notes, with index inclusion into the ASX300 and a meaningful $1bn-plus development pipeline to grow into going forward.

Buy, target $1.75.

Target price is $1.75 Current Price is $1.42 Difference: $0.33
If HCW meets the Bell Potter target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $1.65, suggesting upside of 18.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.8

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

Bell Potter rates HDN as Initiation of coverage with Hold (3) -

Bell Potter has initiated coverage of nine stocks in the A-REIT sector.

HomeCo Daily Needs REIT boasts a strong management team, with a high quality underlying portfolio of neighbourhood shopping centres. The broker sees scope to continue to grow via its development pipeline.

Near-term capital headwinds are mitigated by greater hedging versus peers but Bell Potter sees more compelling value and greater growth opportunities elsewhere in its coverage universe.

Hold, target $1.25.

Target price is $1.25 Current Price is $1.13 Difference: $0.125
If HDN meets the Bell Potter target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $1.32, suggesting upside of 17.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.5

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

Bell Potter rates HMC as Initiation of coverage with Buy (1) -

Bell Potter has initiated coverage of nine stocks in the A-REIT sector.

HMC Capital is a real estate fund manager in its relative infancy, the broker notes, with exposure to high growth sub-sectors (healthcare), sectors with strong long-term thematics (convenience/non-discretionary retail) and a motivated and experienced management team.

The bear view will be that the stock looks expensive with some binary views on management, but Bell Potter sees strong long-term upside at current levels.

Buy, target $5.55.

Target price is $5.55 Current Price is $4.60 Difference: $0.95
If HMC meets the Bell Potter target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $5.36, suggesting upside of 14.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.4

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

Citi rates JHX as Buy (1) -

Upon first glance, Citi assesses today's 2Q result for James Hardie Industries was operationally "strong" and anticipates a materially positive share price reaction to brighter outlook commentary than expected.

Profit for the 2Q of US$179m was in line with the consensus forecast, notes the broker, while the midpoint of the profit guidance range
was 27% ahead of expectations. Also, both 2Q and 3Q (so far) volumes are tracking ahead of what traditional seasonality would suggest.

Sales for North America and APAC/Europe for the 2Q beat consensus by 2% and 4%, respectively, the latter due to better pricing, explains the analyst.

Buy rating. Target $50.50.

Target price is $50.50 Current Price is $41.29 Difference: $9.21
If JHX meets the Citi target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $50.28, suggesting upside of 7.0% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY24:

Forecast for FY25:

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

Market Sentiment: 0.8

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

UBS rates JHX as Buy (1) -

UBS, in an initial review, comments James Hardie Industries' Q2 market update released this morning proved broadly in line with expectations, but the positive surprise came with management's guidance for Q3.

The "beat" is significant, assures the broker, pointing towards a magnitude of no less than 27% (against consensus pre-today).

Also, the broker believes the positive growth guided suggests FY24 is the trough in volumes. UBS points out margins at the current turning point are at much higher level than in past precedents.

The freshly announced US$250m share buyback is seen as yet another positive, Buy. Target $54.

Target price is $54.00 Current Price is $41.29 Difference: $12.71
If JHX meets the UBS target it will return approximately 31% (excluding dividends, fees and charges).

Current consensus price target is $50.28, suggesting upside of 7.0% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY24:

Forecast for FY25:

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

Market Sentiment: 0.8

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

Macquarie rates RMD as Outperform (1) -

Macquarie reviews its valuations and return on equity metrics for Australia's global market health leaders.

The broker forecasts a gentle improvement in return on equity for all companies under review out to FY25, but ResMed and Cochlear are expected to outpace CSL and Fisher & Paykel Healthcare in this respect.

But CSL and ResMed stack up best when looking at a range of valuation metrics, says Macquarie.

The broker believes ResMed's share-price weakness relating to diabetes fat-loss drugs doesn't appear to reflect the facts.

Macquarie also expects recent weakness in gross margins is likely to slowly improve over FY24 and FY25 as workforce reductions kick in.

Outperform rating retained. Target price edges up to $33.40 from $32.30.

Target price is $33.40 Current Price is $23.76 Difference: $9.64
If RMD meets the Macquarie target it will return approximately 41% (excluding dividends, fees and charges).

Current consensus price target is $32.23, suggesting upside of 35.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

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

Market Sentiment: 0.8

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

Morgan Stanley rates RMD as Overweight (1) -

At the end of October, Morgan Stanley upgraded its rating for ResMed to Overweight from Equal-weight in the belief the market has overcompensated for the negative impact of weight loss drugs on the obstructed sleep apnea (OSA) market.

Following an analysis of medical literature, the broker believes Surmount-OSA trial data, due next March, will impact the CPAP market within the ranges the analysts had previously modeled, supporting the prior ratings upgrade.

The Overweight rating and $26 target are unchanged. Industry View: In-Line.

Target price is $26.00 Current Price is $23.76 Difference: $2.24
If RMD meets the Morgan Stanley target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $32.23, suggesting upside of 35.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

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

Market Sentiment: 0.8

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

Morgans - Cessation of coverage

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

Morgans rates TWE as Add (1) -

Treasury Wine Estates will use a combination of equity and debt for the -US$900m acquisition of high-margin luxury wine business DAOU Vineyards.

Not only does this move align with the company's premiumisation and growth strategy, notes Morgans, but it also strengthens a key gap in the Treasury Americas portfolio. The transaction is expected to be EPS accretive from FY25, with cost synergies of -US$20m by FY26.

The broker increases its FY24-26 profit forecasts by 5.8%, 16.8% and 19.1%, respectively, and raises its target to $14.15 from $13.00. Add.

Target price is $14.15 Current Price is $11.46 Difference: $2.69
If TWE meets the Morgans target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $13.22, suggesting upside of 15.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.6

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

Macquarie rates VEA as Outperform (1) -

Heading into Viva Energy's investment day, Macquarie hones in on the company's OTR Group acquisition, expecting further sites will need to be divested pending ACCC determinations.

Adelaide metro and Darwin are most likely in the regulator's scope, although competition appears to be strong in Adelaide, judging by margins observes the broker.

Macquarie doubts ACCC rulings will be materials. Outperform rating and $3.50 target price retained.

Target price is $3.50 Current Price is $2.84 Difference: $0.66
If VEA meets the Macquarie target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $3.39, suggesting upside of 17.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.6

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