Australian Broker Call

Bell Potter rates AFP as Upgrade to Buy from Hold (1) -

FY23 results from AFT Pharmaceuticals revealed a 27% increase in product sales revenue and an increase in its gross profit margin to 46.3%. Operating expenses also rose sharply.

Bell Potter observes the next catalyst is the upcoming approval date for Maxigesic IV in the US. The commercial launch will trigger a NZ$6m milestone, currently included in the broker's FY25 forecast.

Guidance for FY24 operating profit in the range of NZ$22-24m appears well within reach and the broker upgrades its rating to Buy from Hold, raising the target price to $4.00 from $3.16.

Target price is $4.00 Current Price is $3.40 Difference: $0.6
If AFP meets the Bell Potter target it will return approximately 18% (excluding dividends, fees and charges).

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: 1.0

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

Citi rates AKE as Buy (1) -

After a visit to Olaroz, Citi observes the resource can support about 100,000tpa of lithium, and says expansions are a matter of when, not if. The broker is less constructive on DLE as a "brine enabler" after the trip as a lot depends on brine geochemistry.

Still, the broker points out Allkem is well aware it should not over promise and under deliver.

The broker observes one of the most asked questions from investors regards "interloper risk" and says the company has dismissed this, saying it is not for sale. Buy rating and $17.40 target price are retained.

Target price is $17.40 Current Price is $15.00 Difference: $2.4
If AKE meets the Citi target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $16.93, suggesting upside of 11.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.8

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

UBS rates ANN as Initiation of coverage with Neutral (3) -

UBS initiates coverage on six new stocks in the Australian Healthcare sector and notes average EPS growth for its coverage
looks set to outstrip the ASX by 10% in FY24. ResMed is considered the top pick under the UBS coverage.

Ansell, the manufacturer of gloves and other PPE, has experienced unpredictable demand over FY22/23, especially in the exam/single use area, notes the analyst. Unfortunately, this sub-segment comprises around 52% of the company's Healthcare division.

Negative growth is expected by the analyst for exam/single use in the 2H as pricing continues to deteriorate, though 5% growth should resume in FY24.

UBS begins with a Neutral rating and $30 target price.

Target price is $30.00 Current Price is $26.82 Difference: $3.18
If ANN meets the UBS target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $26.93, suggesting upside of 0.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

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

Market Sentiment: 0.0

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

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

Ongoing mortgage discounting and higher wholesale funding costs for the major banks will result in a -15bps fall in average margins over the next 18 months, according to Morgan Stanley. Emerging deposit competition and mix shift are also expected to weigh.

The tailwind from higher rates is starting to fade, so the analyst believes competition will be the biggest influence on margins, with deposits likely to have a greater impact than mortgages.

ANZ Bank is Morgan Stanley's preferred exposure among the big four banks given the benefits of its differentiated business mix at this point in the cycle. 

Target price falls to $25.20 from $25.70. Equal-weight rating is retained. Industry View: In-Line.

Target price is $25.20 Current Price is $23.79 Difference: $1.41
If ANZ meets the Morgan Stanley target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $26.41, suggesting upside of 10.2% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.4

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

Morgan Stanley rates CBA as Underweight (5) -

Ongoing mortgage discounting and higher wholesale funding costs for the major banks will result in a -15bps fall in average margins over the next 18 months, according to Morgan Stanley. Emerging deposit competition and mix shift are also expected to weigh.

The tailwind from higher rates is starting to fade, so the analyst believes competition will be the biggest influence on margins, with deposits likely to have a greater impact than mortgages.

The broker maintains its Underweight rating for CommBank and lowers its target price to $82 from $85. Trading multiples are above historical levels, despite lower growth and higher rates, explain the analysts. Industry View: In-Line.

CommBank ranks last in Morgan Stanley's preferred exposures to the big four banks.

Target price is $82.00 Current Price is $98.90 Difference: minus $16.9 (current price is over target).
If CBA meets the Morgan Stanley target it will return approximately minus 17% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $89.18, suggesting downside of -10.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: -0.5

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

Macquarie rates CCX as Neutral (3) -

In its trading update, City Chic Collective has indicated sales in the second half to date were weak, down -25.8%, reflecting elevated promotional activity in January and February as well as discounting over April and May, particularly in the UK.

Macquarie now expects sales will be down -26% in the second half and a larger loss will be recorded for FY23 as margins are also below forecasts.

The company's plans for elevated promotional activity to persist in the first quarter of FY24 means the broker is now forecasting a loss for FY24. Neutral rating maintained. Target price falls to $0.39 from $0.52.

Target price is $0.39 Current Price is $0.38 Difference: $0.01
If CCX meets the Macquarie target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $0.55, suggesting upside of 40.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.0

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

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

Morgan Stanley observes yesterday's trading update by City Chic Collective is short of consensus expectations and notes the long-term impact on the company's brands from aggressive discounting remains unknown.

Gross margins fell by -19 percentage points in the 2H year-to-date, compared to the broker's 2H forecast for a -7 percentage point fall. Sales growth in the first 19 weeks fell by -26% year-on-year compared with -8% in the 1H.

The Equal-weight rating and 60c target price are unchanged. Industry view: In line. 

Target price is $0.60 Current Price is $0.38 Difference: $0.22
If CCX meets the Morgan Stanley target it will return approximately 58% (excluding dividends, fees and charges).

Current consensus price target is $0.55, suggesting upside of 40.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.0

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

Ord Minnett rates CCX as Hold (3) -

City Chic Collective has confirmed trading conditions were difficult over the second half and that further discounting is necessary to unwind the excess inventory position. Sales for the 45 weeks to May 14 declined -15.2%.

Ord Minnett notes the company is targeting additional inventory reductions in FY24 which will come at a cost to margins.

The company has also confirmed its $46.5m debt facility has been amended, with a reduction in the limit to $21.5m by the end of FY24. Extensions to current covenants were required to the first quarter of FY25, given the trading performance.

Hold rating maintained. Target price falls to $0.50 from $0.60.

Target price is $0.50 Current Price is $0.38 Difference: $0.12
If CCX meets the Ord Minnett target it will return approximately 32% (excluding dividends, fees and charges).

Current consensus price target is $0.55, suggesting upside of 40.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.0

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

Bell Potter rates CMM as Upgrade to Buy from Hold (1) -

Bell Potter believes an attractive risk/reward proposition has emerged for Capricorn Metals, given the pull-back in its share price.

Following the recently released maiden ore reserve and prefeasibility study for the Mount Gibson gold project there is now a "demonstrable" pathway to grow production to 270,000ozpa from two low-cost long-life gold mining operations in Western Australia.

As a result, the company could emerge as a highly attractive acquisition target. Buy rating maintained. Target edges up to $4.90 from $4.89.

Target price is $4.90 Current Price is $4.21 Difference: $0.69
If CMM meets the Bell Potter target it will return approximately 16% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.5

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

UBS rates COH as Initiation of coverage with Neutral (3) -

UBS initiates coverage on six new stocks in the Australian Healthcare sector and notes average EPS growth for its coverage
looks set to outstrip the ASX by 10% in FY24. ResMed is considered the top pick under the UBS coverage.

The broker sees long-term volume growth of around 7% for Cochlear but limited pricing power. It's thought long-term structural tailwinds will overcome any concerns around costs.

There is limited near-term upside though not much to provoke a downward re-rating, according to the analyst. As a result, a Neutral recommendation is adopted and a target price of $255 is set.

Target price is $255.00 Current Price is $244.97 Difference: $10.03
If COH meets the UBS target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $223.43, suggesting downside of -8.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: -0.2

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

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

UBS initiates coverage on six new stocks in the Australian Healthcare sector and notes average EPS growth for its coverage
looks set to outstrip the ASX by 10% in FY24. ResMed is considered the top pick under the UBS coverage.

The broker believes CSL will experience tailwinds in all divisions and expects consensus expectations will be beaten as management integrates the Vifor acquisition. It's also thought management can make a blockbuster of gene therapy Hemgenix for hemophilia B.

Additionally, the vaccines business is a source of upside and won't be threatened by potential mRNA vaccines for at least a few years, while Behring's immunoglobulin (IG) franchise is set to recover strongly.

UBS initiates coverage with a Buy rating and $330 target. The greatest sensitivities, in the broker's view, are to long-term growth in IG and flu vaccines.

Target price is $330.00 Current Price is $307.24 Difference: $22.76
If CSL meets the UBS target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $335.99, suggesting upside of 8.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

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

Market Sentiment: 0.8

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

Bell Potter rates EBR as Upgrade to Speculative Buy (1) -

EBR Systems has achieved the primary efficacy and interim safety end-points for its Solve-CRT product with freedom from Type 1 complications observed in 80.9% of patients.

If regulatory approval is achieved for the indications Bell Potter observes, this would provide an addressable market of about US$2bn. This decreases the risk weighting towards revenue and earnings across forecasts.

The broker upgrades to Speculative Buy from Hold and raises the target price to $1.30 from $0.70.

Target price is $1.30 Current Price is $1.00 Difference: $0.3
If EBR meets the Bell Potter target it will return approximately 30% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

Forecast for FY23:

Forecast for FY24:

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

Market Sentiment: 1.0

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

Morgans rates EBR as Speculative Buy (1) -

Given favourable Solve-CRT results and impending regulatory approval, Morgans increases its growth valuation assumption for EBR Systems, which results in an increase in the target price to $1.55 target from 97c. Its Speculative Buy rating is unchanged.

The Solve-CRT trial met efficacy and safety endpoints with statistical significance, allowing the study to conclude. The analyst expects FDA submission in the March quarter of 2024, prior to product launch in the June half of 2024.

Importantly, according to the broker, the trial provided clinical validation of leadless pacing with the company's Wireless Stimulation Endocardially (WiSE) CRT system.

Target price is $1.55 Current Price is $1.00 Difference: $0.55
If EBR meets the Morgans target it will return approximately 55% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

Forecast for FY23:

Forecast for FY24:

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

Market Sentiment: 1.0

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

Shaw and Partners rates EV1 as Buy (1) -

Evolution Energy Minerals' drilling results from its Chilalo graphite project in Tanzania has revealed two new areas of near-surface mineralisation to the east and north and the potential for lower cost mining, production growth and mine-life extensions, observes Shaw and Partners.

The broker expects first production in FY26

The company recently updated a definitive feasibility study, which confirmed a net present value of US$338m and an internal rate of return of 32% on the US$120m construction cost.

Shaw and Partners expects the company will qualify for Inflation Reduction Act subsidies. 

Buy, High Risk rating and 72c target price retained.

Target price is $0.72 Current Price is $0.22 Difference: $0.5
If EV1 meets the Shaw and Partners target it will return approximately 227% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

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

Macquarie rates GLN as Outperform (1) -

Galan Lithium has completed a $31.5m placement and will offer a $5m share purchase plan. Funds will be used to progress the development of Hombre Muerto West, Candelas and Greenbushes South.

The company is awaiting approvals for the pilot project at Hombre Muerto West. Macquarie incorporates this equity raising and still assumes additional funds will be required for further study and development.

Outperform rating maintained. Targe price is $1.80.

Target price is $1.80 Current Price is $1.07 Difference: $0.73
If GLN meets the Macquarie target it will return approximately 68% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

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

Shaw and Partners rates GTK as Buy (1) -

Gentrack Group's FY23 March interim result pleased Shaw and Partners, the company posting strong growth across most metrics and management upgrading FY23 and FY24 guidance.

Underlying growth was supported by a strong operational performance, cash flow rose and the company clocked new contract wins.

Low churn and sustained annual recurring revenues underpin the quality of the result, observes the broker.

Believing the company is cementing a reputation for conservative guidance, the broker spies further upside (the share price jumped 29% in response to the result).

Buy rating retained. Target price rises to $4.60 from $4.50.

Target price is $4.60 Current Price is $4.13 Difference: $0.47
If GTK meets the Shaw and Partners target it will return approximately 11% (excluding dividends, fees and charges).

The company's fiscal year ends in September.

Forecast for FY23:

Forecast for FY24:

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

Market Sentiment: 1.0

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

Macquarie rates LLC as Neutral (3) -

Lendlease Group has completed a further sale of US military housing. FY23 forecast returns on investments have been upgraded to the higher end of the 6% to 7.5% range while forecast returns on developments have been downgraded to 2.5% to 3.25%.

The company's construction margin has been reaffirmed. Challenging market conditions, including a slowdown in transactions and delayed settlements, means Macquarie is now forecasting $245m in development earnings (EBITDA) as opposed to a prior forecast of $358m.

Importantly, the broker assesses the company is still on track to achieve FY24 targets for completions with returns at the lower end of the 8% to 10% range. Neutral rating maintained. Target price is reduced to $8.03 from $8.32.

Target price is $8.03 Current Price is $7.88 Difference: $0.15
If LLC meets the Macquarie target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $10.54, suggesting upside of 34.7% (ex-dividends)

The company's fiscal year ends in June.

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

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

Given offsetting announcements, Morgan Stanley believes there will be an immaterial impact on its FY23 profit forecast for Lendlease Group.

The broker expects a $75m benefit for profit in FY23 from the sale of the company's -21% interest in its US Military Housing asset-management business.

On the other hand, the analyst forecasts a -$70m hit to FY23 profits as Lendlease Group now anticipates Development segment return on invested capital (ROIC) will be 2.50% to 3.25%, down from the previous 4% to 6% range.

Equal-weight rating and $9.50 target price are maintained. Industry View: In-Line.

Target price is $9.50 Current Price is $7.88 Difference: $1.62
If LLC meets the Morgan Stanley target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $10.54, suggesting upside of 34.7% (ex-dividends)

The company's fiscal year ends in June.

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

UBS rates LLC as Buy (1) -

Two announcements by Lendlease Group offset each other as far as FY23 forecasts by UBS are concerned, though the underlying development performance is considered to be weaker.

The company announced the sell down of a further -21% stake in its US Military Housing income stream for $126m (broadly consistent with prior tranches). Guidance was also lowered for FY23 Development return on invested capital (ROIC) to 2.50% to 3.25% from 4.0% to 6.0% previously.

The broker lowers its target price to $10.30 from $10.50 and holds a Buy rating.

Target price is $10.30 Current Price is $7.88 Difference: $2.42
If LLC meets the UBS target it will return approximately 31% (excluding dividends, fees and charges).

Current consensus price target is $10.54, suggesting upside of 34.7% (ex-dividends)

The company's fiscal year ends in June.

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

Macquarie rates LM8 as Outperform (1) -

Lunnon Metals has a major de-risking event for the Baker project with the release of the prefeasibility study. Macquarie notes strong financial metrics exist with low start-up capital expenditure.

Average nickel production of 4,100tpa as been outlined with the Foster deposit providing additional production upside. Macquarie maintains a target price of $1.40 and Outperform rating.

Target price is $1.40 Current Price is $1.06 Difference: $0.34
If LM8 meets the Macquarie target it will return approximately 32% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

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

Ord Minnett rates MIN as Hold (3) -

Ord Minnett considers the lull in demand for lithium as "temporary" and due to the expiry of China's electric vehicles subsidies. Strong demand growth is expected in coming years as EV sales rise.

As this occurs the broker expects a supply deficit will remain in place. Ord Minnett believes investors have an attractive opportunity to invest in lithium producers after the sell-off earlier in 2023.

Hold rating and $75 target price retained. 

Target price is $75.00 Current Price is $74.74 Difference: $0.26
If MIN meets the Ord Minnett target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $91.43, suggesting upside of 23.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.7

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

Citi rates MMS as Buy (1) -

Citi interprets the quarterly report from the NDIS, which indicated participants continue to grow at a strong pace, as positive for McMillan Shakespeare. The share of participants using plan managers increased to 59%.

McMillan Shakespeare's combined market share increased to 9.6% with its Plan Management Partners share of payments increasing to 7.5% and Plan Tracker becoming a top 10 provided for the first time.

The upcoming review into the NDIS may weigh on sentiment in the near term, Citi points out, but the stock is attractive for the consolidation opportunity that exists in the two PSS businesses.

Buy rating maintained. Target price is $16.10.

Target price is $16.10 Current Price is $15.38 Difference: $0.72
If MMS meets the Citi target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $15.72, suggesting upside of 0.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.8

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

Morgan Stanley rates NAB as Downgrade to Underweight from Equal-weight (5) -

Ongoing mortgage discounting and higher wholesale funding costs for the major banks will result in a -15bps fall in average margins over the next 18 months, according to Morgan Stanley. Emerging deposit competition and mix shift are also expected to weigh.

The tailwind from higher rates is starting to fade, so the analyst believes competition will be the biggest influence on margins, with deposits likely to have a greater impact than mortgages.

The broker suggests the positives for National Australia Bank from having below-system growth in Australian mortgages and above-average exposure to SME loans will not compensate for a greater margin headwind from deposits. 

Morgan Stanley downgrades its rating to Underweight from Equal-weight and its target price falls to $25.30 from $27.70. Industry View: In-Line.

National Australia Bank is third behind ANZ Bank and Westpac as Morgan Stanley's preferred exposure to the big four banks.

Target price is $25.30 Current Price is $26.57 Difference: minus $1.27 (current price is over target).
If NAB meets the Morgan Stanley target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $27.30, suggesting upside of 2.4% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: -0.3

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

Macquarie rates NHC as Neutral (3) -

Fourth quarter production and sales from Bengalla were in line with forecasts while Macquarie notes the re-start of New Acland stage 3 is under way. New Hope produced 2.03mt of saleable coal in the quarter, slightly below expectations.

First mining at New Acland is on track for late FY23 with first coal shipments in the first quarter of FY24, although recent legal action has been mounted regarding the associated water licence that could delay the ramp-up.

Neutral rating maintained. Target price is reduced to $5.40 from $5.50.

Target price is $5.40 Current Price is $5.15 Difference: $0.25
If NHC meets the Macquarie target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $5.69, suggesting upside of 6.5% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.3

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

Morgans rates OCL as Add (1) -

While no update was provided on either trading or M&A progress at Objective Corp's investor day, Morgans came away increasingly upbeat about the direction and outlook for each business unit.

From July 1, all content and process solutions will be sold under a subscription model following retirement of the Perpetual Right to Use (PRTU) licensing model.

Management also noted the recently launched cloud-based Nexus Enterprise Content Management (ECM) product is seeing positive adoption by customers. North American adoption of the Objective 3Sixty product is also considered promising.

The broker makes no changes to its forecasts and retains its Add rating and $15.70 target price.

Target price is $15.70 Current Price is $12.68 Difference: $3.02
If OCL meets the Morgans target it will return approximately 24% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

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

Citi rates QAN as Neutral (3) -

At first glance, Citi found the trading update "uneventful" with guidance for FY23 pre-tax profit of $2.43-48bn relatively in line. Yet the broker points out there have been negative reactions overseas to airline results that have been "in line".

Attention is on the longer-term strategy, expected at the investor briefing. Citi holds a Neutral rating and $6.70 target price.

Target price is $6.70 Current Price is $6.50 Difference: $0.2
If QAN meets the Citi target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $7.49, suggesting upside of 17.6% (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

Morgan Stanley rates RIO as Overweight (1) -

Approval timelines for development of the Resolution copper project in Arizona may be delayed. While Morgan Stanley doesn't currently include the project in its forecasts, approval would be considered a positive for the stock price.

Also, Rio Tinto's copper growth optionality may be deferred if permitting is not granted on time, suggest the analysts.

The US Forest Service has told a federal court it's "not sure when it could approve a land swap". There has been an ongoing dispute between Rio Tinto and certain Indigenous groups looking to preserve a site with religious significance, explains the broker.

Overweight rating and $124.50 target are unchanged. Industry View: Attractive.

Target price is $124.50 Current Price is $109.24 Difference: $15.26
If RIO meets the Morgan Stanley target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $112.79, suggesting upside of 3.0% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY23:

Forecast for FY24:

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

Market Sentiment: 0.0

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

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

UBS initiates coverage on six new stocks in the Australian Healthcare sector and notes average EPS growth for its coverage
looks set to outstrip the ASX by 10% in FY24.

The broker begins coverage on ResMed, it's top pick in the sector, with a US$290 price target (for the US listing) and a Buy rating.

During the Philips recall woes, the analyst notes ResMed has increased its revenue share of global Sleep and Respiratory devices over the period FY19-FY22 to 65% from 46%. It's felt the current competitive advantage is being underestimated by the market.

The broker forecasts 12% FY24 revenue growth and suggests the share price is only priced for high single digit growth. It's also noted the gross margin is expanding as mix swings to the new AirSense11.

Current Price is $33.88. Target price not assessed.

Current consensus price target is $38.00, suggesting upside of 11.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

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

Market Sentiment: 0.8

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

Citi rates S32 as Buy (1) -

South32 has updated guidance around production and capital expenditure. As a result, the broker revises up estimates for earnings (EBITDA) in FY23 and FY24 by 1% and 7%, respectively. Cash flow estimates are reduced by -4% after reviewing mid-term production and cost estimates.

Citi believes the stock lacks a re-rating catalyst as commodity prices move lower and embrace softer demand. Still, a lack of exposure to iron ore amid expected Chinese steel production cuts and the discount to peer multiples means the broker retains a Buy rating. Target is $4.55.

Target price is $4.55 Current Price is $4.03 Difference: $0.52
If S32 meets the Citi target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $4.93, suggesting upside of 22.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

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

Market Sentiment: 0.8

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

UBS rates SHL as Initiate coverage with a Sell rating (5) -

UBS initiates coverage on six new stocks in the Australian Healthcare sector and notes average EPS growth for its coverage
looks set to outstrip the ASX by 10% in FY24. ResMed is considered the top pick under the UBS coverage.

The least favoured is Sonic Healthcare, and the broker begins coverage with a Sell rating and $31.00 target. It's felt FY24 growth of 2.5% will be around half of what consensus anticipates.

The analyst also believes labour cost headwinds will persist at a time when there will be lower sales growth than consensus forecasts for the company's largest market, the US. Risk is thought to be skewed to the downside for US Pathology, the largest sales line.

As growth in the US looks like it has returned to pre-covid levels, any hint of underperformance by Sonic will result in consensus forecast downgrades, in the broker's view.

Target price is $31.00 Current Price is $36.25 Difference: minus $5.25 (current price is over target).
If SHL meets the UBS target it will return approximately minus 14% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $35.20, suggesting upside of 0.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.0

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

Ord Minnett rates SIQ as Buy (1) -

Ord Minnett observes Smartgroup Corp is enjoying multiple tailwinds. Orders are holding up and settlement volumes are up 7% and yield 3%. 

The company has reported that EV orders were about 21% of new vehicle orders in the March quarter which bodes well for increases in yield going forward as a transition to EV continues.

The broker retains a Buy rating and raises the target price to $7.60 from $6.60.

Target price is $7.60 Current Price is $7.25 Difference: $0.35
If SIQ meets the Ord Minnett target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $6.72, suggesting downside of -8.6% (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

Shaw and Partners rates SLH as Buy (1) -

Shaw and Partners observes Australian Ports data suggests Silk Logistics is well placed to benefit from growing volumes.

Strong port volumes were registered in Melbourne, Fremantle, Sydney and Brisbane for March and April (depending on the port).

The broker considers the company's recently published interim report to be a standout and observes Silk Logistics has regularly upgraded earnings guidance since its listing in 2021, increasing revenues, maintaining a strong balance sheet, raising dividends and embarking on successful M&A.

Buy rating and $3.50 target price are retained.

Target price is $3.50 Current Price is $2.27 Difference: $1.23
If SLH meets the Shaw and Partners target it will return approximately 54% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

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

Shaw and Partners rates SVR as Buy (1) -

ASIC is proceeding against Solvar in relation to historical lending conducted by the group's Money 3 car lending operations between 2019 and 2021, claiming the company breached its responsible lending obligations in relation to six customer loans.

Shaw and Partners says the issue appears to be confined to a small number of loans (0.02% of customers) and at this stage does not appear to be spread through the main book.

The broker considers this disappointing given the company is trading strongly and that while Solvar says it will defend itself against the accusations, expects the issue is likely to weigh on the share price for a year.

Shaw and Partners adds that even with the ASIC case being priced into the stock, the company's share price is "just too cheap".

Buy rating retained. Target price falls -4% to $2.54. DPS forecasts are upgraded by 19%, 23% and 36% across FY23 to FY25.

Target price is $2.54 Current Price is $1.64 Difference: $0.9
If SVR meets the Shaw and Partners target it will return approximately 55% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

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

Morgan Stanley rates TAH as Upgrade to Overweight from Equal-weight (1) -

Given a potential reset of fees and taxes via the mid-2023 announcement of the Victorian licence award, Morgan Stanley sees meaningful upside to earnings for Tabcorp Holdings should the licence be retained.

Even should the retail licence be lost, and the company operates on a digital-only basis, the analyst points out earnings would be no worse than under the current arrangement.

The broker also reduces its FY25 opex forecast to $630m (consensus $660m), with management targeting a reduction in opex to $600m-620m by FY25.

Morgan Stanley upgrades its rating to Overweight from Equal-weight and raises its target price to $1.30 from $1.08. Industry view is In-Line.

Target price is $1.30 Current Price is $1.10 Difference: $0.2
If TAH meets the Morgan Stanley target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $1.14, suggesting upside of 0.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.4

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

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

UBS initiates coverage on six new stocks in the Australian Healthcare sector and notes average EPS growth for its coverage
looks set to outstrip the ASX by 10% in FY24. ResMed is considered the top pick under the UBS coverage.

The broker sees an opportunity in the small and mid-cap (SMID) space with Telix Pharmaceuticals and initiates coverage with a Buy rating and $14 target price.

The broker expects the company's first major product, a radiodiagnostic, Illuccix (for prostate cancer), will outperform and move to profitability in FY23. The product was launched in the US and sales are bringing in around $400m annually.

The current share price only allows for circa $1.3bn of global peak sales compared to the analysts's forecast for $1.8bn. Also, it's thought the share price doesn't incorporate revenue for the 2024 launch of another diagnostic, TLX250-CDx for RCC (kidney cancer).

Target price is $14.00 Current Price is $11.48 Difference: $2.52
If TLX meets the UBS target it will return approximately 22% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

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

UBS rates TPW as Neutral (3) -

Following a 2H trading update to mid-May showing a return to 10% growth year-on-year in the last four weeks of that period, UBS is reluctant to draw too many conclusions just yet. Temple & Webster is retained as the preferred e-commerce name under coverage.

The broker describes the update as a solid turnaround, which indicates the success of pricing and promotional strategies, along with early-stage AI strategies. 

Target price rises to $4.60 from $4.40. Neutral rating retained.

Target price is $4.60 Current Price is $4.95 Difference: minus $0.35 (current price is over target).
If TPW meets the UBS target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.73, suggesting downside of -4.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.3

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

Ord Minnett rates TYR as Buy (1) -

Potentia Capital has withdrawn its intended acquisition of Tyro Payments, which surprised Ord Minnett. Apparently there were complexities for the company in owning the banking operations, which do not aligned with its risk appetite.

The withdrawal comes after two offers were made that were rejected by the Tyro Payments board.

Significantly, the broker believes the company can improve its earnings and generate value without any corporate action. Profitability is expected to be maintained from FY25. Buy rating retained. Target price is $2.60.

Target price is $2.60 Current Price is $1.28 Difference: $1.32
If TYR meets the Ord Minnett target it will return approximately 103% (excluding dividends, fees and charges).

Current consensus price target is $1.97, suggesting upside of 55.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.8

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

Morgan Stanley rates WBC as Downgrade to Equal-weight from Overweight (3) -

Ongoing mortgage discounting and higher wholesale funding costs for the major banks will result in a -15bps fall in average margins over the next 18 months, according to Morgan Stanley. Emerging deposit competition and mix shift are also expected to weigh.

The tailwind from higher rates is starting to fade, so the analyst believes competition will be the biggest influence on margins, with deposits likely to have a greater impact than mortgages.

Westpac will continue to face mortgage headwinds, suggests the broker, which downgrades its rating to Equal-weight from Overweight and lowers its target price to $21.00 from $22.80. Industry View: In-Line.

Westpac is second behind ANZ Bank as Morgan Stanley's preferred exposure to the big four banks.

Target price is $21.00 Current Price is $21.06 Difference: minus $0.06 (current price is over target).
If WBC meets the Morgan Stanley target it will return approximately minus 0% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $23.45, suggesting upside of 10.3% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.3

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

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

Previewing FY23 results for Webjet on May 24, Morgan Stanley expects ongoing strength in cash flow conversion as paid-in-advance bookings continue to rebound.

The broker forecasts $37m for 2H earnings (EBITDA) and $101m for the full financial year. 

While bullish on travel-exposed names, Morgan Stanley prefers the earnings visibility of Webjet's peers.

Equal-weight rating and $6.50 target price are unchanged. Industry View: In-line.

Target price is $6.50 Current Price is $7.46 Difference: minus $0.96 (current price is over target).
If WEB meets the Morgan Stanley target it will return approximately minus 13% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $7.04, suggesting downside of -3.5% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.8

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

Shaw and Partners rates ZIP as Buy (1) -

Shaw and Partners observes that Zip Co has become the market leader by product just as regulation of the BNPL market emerges.

The company has confirmed that it already complies to the major elements of the proposed legislation and already has experience in undertaking serviceability checks, analyses of financial information and credit checks, and expects the regulation could well work in its favour.

Shaw and Partners estimates the company will have to undertake minimal changes and that the levelling of the playing field could provided 30% to 50% upside to medium term ANZ volumes, the broker noting several large and small competitors have already ceased operations.

Meanwhile, the company's cash burn fell -80% in the March quarter and the broker expects the June quarter could prove a catalyst given margins are on the rise. The broker also considers the company to be an attractive target.

Buy rating and $2.02 target price retained.

Target price is $2.02 Current Price is $0.55 Difference: $1.47
If ZIP meets the Shaw and Partners target it will return approximately 267% (excluding dividends, fees and charges).

Current consensus price target is $0.82, suggesting upside of 29.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: -0.4

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