Australian Broker Call

Macquarie rates AGL as No Rating (-1) -

The extended outage at Loy Yang A is expected to depress earnings by -$40-50m, with the company reporting a delay in the restart of Loy Yang A2 by six weeks. Macquarie considers the delay disappointing, with most of the 0.5TWh lost during the winter months of August.

The broker also notes the shuffle of the executive committee continues, with Christine Corbett resigning, in the wake of the withdrawal of the de-merger plan.

The broker is currently on research restriction.

Current Price is $8.74. Target price not assessed.

Current consensus price target is $9.25, suggesting upside of 9.0% (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 AGL as Add (1) -

Morgans allows for a greater financial impact now that AGL Energy has extended the expected duration of the Loy Yang A unit 2 outage to mid-September from August 1. Some impact from the short duration outages in FY22 is also incorporated into forecasts.

The target price slips to $9.92 from $10.08 though the broker still sees potential for strong earnings growth given tailwinds as higher prices flow through customer contracts. The Add rating is maintained.

Target price is $9.92 Current Price is $8.74 Difference: $1.18
If AGL meets the Morgans target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $9.25, suggesting upside of 9.0% (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 ALD as Buy (1) -

UBS is positive regarding the refining industry and prefers Ampol to Viva Energy ((VEA)). This stems from the belief that earnings growth will be greater and separate from the recovery in fuel demand.

As Ampol has acquired Z Energy the broker maintains a Buy rating and lifts estimates for earnings per share by 13-17%, also expecting higher refining margins in the first half.

UBS also expects $30m in EBIT growth in convenience retail as the benefits from initiatives implemented over recent years are realised. Target is raised to $39.40 from $35.65.

Target price is $39.40 Current Price is $35.31 Difference: $4.09
If ALD meets the UBS target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $35.95, suggesting upside of 4.4% (ex-dividends)

The company's fiscal year ends in December.

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 APA as No Rating (-1) -

Macquarie asserts the current energy crisis is presenting an opportunity for APA Group. There is an immediate desire to increase storage and physical storage outside of Victoria may increase the need for further pipeline expansion.

The government is looking for a broader proposal to resolve peak day supply shortfalls through storage which would provide more effective utilisation of storage and demand management.

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

Current Price is $11.47. Target price not assessed.

Current consensus price target is $9.93, suggesting downside of -13.5% (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

Citi rates DMP as Buy (1) -

Citi's analysis of high-frequency data signals the website traffic in key markets is under increasing pressure. This will be aggravated by inflationary pressures on labour shortages.

Nevertheless, the broker reiterates a Buy rating for Domino's Pizza Enterprises, envisaging upside from potential M&A. Sales momentum is expected to rebound later in 2022 once the business has cycled the abnormal comparables. Target is $100.95.

Target price is $100.95 Current Price is $62.41 Difference: $38.54
If DMP meets the Citi target it will return approximately 62% (excluding dividends, fees and charges).

Current consensus price target is $91.90, suggesting upside of 45.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.7

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

Macquarie rates EDV as Upgrade to Outperform from Neutral (1) -

Macquarie envisages significant scope for Endeavour Group to reinvest in its hotel network and if this is initially focused on gaming the 15% return on investment hurdle could be conservative.

The broker suggests retail and hotels in combination offer a natural hedge to consumer confidence and a return to services should mean high-margin hotels growth accelerates.

In the current climate, Macquarie prefers staples over discretionary retailers and upgrades Endeavour Group to Outperform from Neutral. Target is steady at $7.70.

Target price is $7.70 Current Price is $7.15 Difference: $0.55
If EDV meets the Macquarie target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $7.46, suggesting upside of 4.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.1

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

Citi rates FBU as Buy (1) -

The NZ government has published data showing the current construction backlog in the industry. Citi observes, with the elongation of the cycle, the data implies the time required to clear the backlog might be longer than previously expected.

The main issue, the broker contends, is whether house prices have stabilised by the time the backlog has been addressed.

Buy rating maintained. Target is NZ$7.76.

Current Price is $4.66. Target price not assessed.

Current consensus price target is $9.30, suggesting upside of 108.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

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

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

Morgan Stanley again lowers its EPS forecasts for Healius due to a faster than expected decline in PCR testing and a slower recovery in the base pathology business, in-line with the industry decline. In addition, volumes for diagnostic imaging have disappointed.

Moreover, the cost-out program and the sustainable improvement program (SIP) targets are uncertain, explains the analyst.

The broker keeps the Equal-weight rating as there is only a small risk to FY22 expectations and the outlook is expected to improve in FY23. Target price reduced to $3.75 from $4.40. Industry view: In line.

Target price is $3.75 Current Price is $3.84 Difference: minus $0.09 (current price is over target).
If HLS meets the Morgan Stanley target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.36, suggesting upside of 15.6% (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 HVN as Downgrade to Neutral from Outperform (3) -

Macquarie has a more bearish outlook on consumer expenditure amid rising inflation and interest rates and a rebound in service consumption.

While the broker likes Harvey Norman's asset backing and proven business model that is resilient during downturns it remains concerned about the macro outlook for the short term.

The likely over-consumption of goods over the past two years is a key risk to near-term performance, the broker adds. Rating is downgraded to Neutral from Outperform and the target lowered to $4.40 from $6.40.

Target price is $4.40 Current Price is $4.08 Difference: $0.32
If HVN meets the Macquarie target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $5.47, suggesting upside of 42.1% (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 JBH as Downgrade to Underperform from Outperform (5) -

Macquarie has a more bearish outlook on consumer expenditure amid rising inflation and interest rates and a rebound in service consumption.

JB Hi-Fi is a best-in-class operator, in the broker's view, but the macro environment is making life challenging. Macquarie downgrades to Underperform from Outperform, expecting reduced discretionary spending going forward.

The broker observes increased numbers of electronics and appliances being purchased for the home over the last two years will lead to a longer replacement cycle. Target is reduced to $40.90 from $57.80.

Target price is $40.90 Current Price is $41.69 Difference: minus $0.79 (current price is over target).
If JBH meets the Macquarie target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $54.50, suggesting upside of 38.6% (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

Ord Minnett rates MAF as Buy (1) -

MA Financial provided a positive update regarding fund flows and loans on platform and Ord Minnett notes some "interesting insights" into development initiatives within Finsure.

Loans on that platform are up 20% to $80bn and a number of other initiatives are underway within lending, including a re-launch of MKM.

FY22 earnings guidance of 10-20% growth has been affirmed. The broker reiterates a Buy rating and reduces the target to $10.00 from $12.50.

Target price is $10.00 Current Price is $5.33 Difference: $4.67
If MAF meets the Ord Minnett target it will return approximately 88% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

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 PAN as Outperform (1) -

Panoramic Resources has completed its fourth shipment from Savannah and indicated the fifth will be shipped from June to early July.

Macquarie makes adjustments to its concentrate shipping schedule, reducing estimates for earnings in FY22 and FY23 by -89% and -17%, respectively. An additional shipment drives a 38% increase to FY24 earnings.

Strong positive cash flow is now considered unlikely until the second half of FY23. Outperform maintained. Target is reduced to $0.35 from $0.40.

Target price is $0.35 Current Price is $0.26 Difference: $0.09
If PAN meets the Macquarie target it will return approximately 35% (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 STO as Outperform (1) -

Macquarie asserts Santos is a key operator for adding spare capacity to the east coast gas market with Narrabri expected to take 2-3 years and requiring a new pipeline.

There is only minor flexibility, the broker acknowledges, to raise east coast gas supply as, by the time Narrabri is on board, some of the coal issues will be resolved.

Meanwhile, the company will add a fifth rig in the Cooper Basin and has committed to the next phase of Fairview for GLNG.

Macquarie maintains an Outperform rating and $10.30 target and raises estimates for earnings per share over 2022-23 by 4-6% because of near-term oil/LNG prices. The broker asserts the shares could re-rate more if a precise dividend policy were provided.

Target price is $10.30 Current Price is $8.53 Difference: $1.77
If STO meets the Macquarie target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $9.77, suggesting upside of 20.6% (ex-dividends)

The company's fiscal year ends in December.

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: 0.9

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

Macquarie rates WES as Downgrade to Underperform from Neutral (5) -

Macquarie has a more bearish outlook on consumer expenditure amid rising inflation and interest rates and a rebound in service consumption.

While the Wesfarmers portfolio is well-placed in a downturn, the broker believes rising interest rates will pressure its customer base more than most. The broker updates its forecasts to reflect increased economic uncertainty over the next 12 months, with the US entering a recession and Australia slowing significantly.

Over consumption of goods over the last two years is the key risk to the near-term performance of the Wesfarmers retail businesses. Rating is downgraded to Underperform from Neutral. Target is reduced to $43.30 from $47.50.

Target price is $43.30 Current Price is $43.67 Difference: minus $0.37 (current price is over target).
If WES meets the Macquarie target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $50.20, suggesting upside of 19.8% (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