Australian Broker Call

Credit Suisse rates ALD as Neutral (3) -

Refiner margins at Lytton improved in the June quarter while production was in line with forecasts. Lytton is expected to produce a modest EBIT profit for the second quarter after breaking even in the first.

Credit Suisse now forecasts EBIT of $48m, which includes the $40m short-term government support payment.

The broker assumes Ampol's retail fuel margins will outperform the industry and was a little surprised there was no update to volume guidance, which stands at 13.5-14.0bn litres for the full year. Neutral rating and $29.87 target maintained.

Target price is $29.87 Current Price is $27.69 Difference: $2.18
If ALD meets the Credit Suisse target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $31.80, suggesting upside of 12.6% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.5

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

Morgan Stanley rates ALD as Overweight (1) -

Given Ampol disclosed a refining break-even earnings for first quarter FY21 and a modest profit in second quarter FY21 in addition to the government subsidy of $40m, Morgan Stanley estimates Ampol’s refining earnings guidance for second quarter FY21 implies $40-50m earnings compared to the broker's estimates of $25m.

The broker forecasts refining margins will continue to rise US$6.75/bbl in second half FY21 and US$8/bbl for FY22.

Morgan Stanley also suspects Ampol could announce an off-market share buyback (circa $300m) at its first half FY21 results on 23 August.

The broker thinks today's refining result is an incremental positive for future buy-backs, particularly as refining margins continue to strengthen towards US$8/bbl – a level where no government support is required. 

Overweight rating. Target is $35. Industry view is Attractive.

Target price is $35.00 Current Price is $27.69 Difference: $7.31
If ALD meets the Morgan Stanley target it will return approximately 26% (excluding dividends, fees and charges).

Current consensus price target is $31.80, suggesting upside of 12.6% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.5

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

UBS rates ALD as Buy (1) -

Ampol provided a positive update on Lytton, achieving a refining margin of US$6.30/bbl in the June quarter, up 15% quarter on quarter.

Ampol now expects this will generate modest first half earnings before accounting for the $40m one-off temporary refining production payment.

UBS expects modest consensus upgrades amid further upside as refining margins improve from seasonal demand, lower inventory and regional closures. Buy rating and $33.50 target maintained.

Target price is $33.50 Current Price is $27.69 Difference: $5.81
If ALD meets the UBS target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $31.80, suggesting upside of 12.6% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.5

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

Morgans rates ANZ as Add (1) -

Morgans sees potential for further capital management by ANZ Bank, in the wake of the announced on-market share buyback program of up to $1.5bn, commencing in August. Morgans retains its Add rating and $34.50 target.

The broker suggests the announcement is expected to provide investors with increased confidence in the strength of major bank balance sheets, and the potential for capital management.

Target price is $34.50 Current Price is $27.32 Difference: $7.18
If ANZ meets the Morgans target it will return approximately 26% (excluding dividends, fees and charges).

Current consensus price target is $30.00, suggesting upside of 8.5% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.4

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

Macquarie rates APA as Neutral (3) -

The Victorian goverment has sponsored two policy papers with an eye to moving to zero emissions, highlighting targets  of -18% less gas production by 2030 and -64% by 2040. Not an immediate threat to APA Group, the broker notes, but gas represents 56% of earnings.

The risk is stacking up longer term, so APA is moving into renewables, but premiums being paid are lofty, the broker notes. The broker warns APA's recent rally on corporate activity may prove "illusory" amidst the uncertainty.

Neutral and $10.06 target retained.

Target price is $10.06 Current Price is $9.56 Difference: $0.5
If APA meets the Macquarie target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $10.55, suggesting upside of 9.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.6

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

Morgan Stanley rates APT as Overweight (1) -

Afterpay is launching Money by Afterpay pilot, with a full launch in Australia in October 2021 and more features to be announced over time.

Morgan Stanley thinks Money could almost double Afterpay's Australian revenues, increase engagement, reduce payment processing costs, while also boosting the company's overall shopping platform.

The Overweight rating and $145 target are retained. Industry view: In-Line.

Target price is $145.00 Current Price is $106.62 Difference: $38.38
If APT meets the Morgan Stanley target it will return approximately 36% (excluding dividends, fees and charges).

Current consensus price target is $121.57, suggesting upside of 14.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.4

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

Macquarie rates AWC as Underperform (5) -

Alumina Ltd has reported structural damage to a ship unloader at AWAC's Alumar refinery, in which Alumina has a 40% interest. As a result, the daily refinery run-rate has been reduced to one third of capacity until repairs can be completed.

The broker has trimmed its alumina production forecast but also remains bearish on alumina pricing ahead. Underperform and $1.30 target retained.

Target price is $1.30 Current Price is $1.54 Difference: minus $0.24 (current price is over target).
If AWC meets the Macquarie target it will return approximately minus 16% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $1.83, suggesting upside of 17.5% (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: 0.5

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

Citi rates BHP as Neutral (3) -

June quarter production was marginally ahead of Citi expectations. However, certain second half financial impacts (notably higher D&A) highlighted by management causes the broker to trim the FY21 profit forecast by -4%.

Higher broker-forecast commodity prices offsets lower than expected FY22 production guidance. Citi raises its price target to $50 from $47, after lifting FY22 forecasts for EPS and profit, and reducing the Australian dollar estimate. The broker maintains its Neutral rating.

Target price is $50.00 Current Price is $49.24 Difference: $0.76
If BHP meets the Citi target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $50.53, suggesting upside of 1.2% (ex-dividends)

The company's fiscal year ends in June.

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

Credit Suisse rates BHP as Neutral (3) -

June quarter production was ahead of expectations while FY22 guidance seems to Credit Suisse to be a little soft.

The iron ore division achieved another record year and as spot prices are running ahead of consensus expectations this should provide a buffer for any volume downside, in the broker's view.

Credit Suisse expects the focus will be on capital management and portfolio consolidation at the August results and retains a Neutral rating with a $46 target.

Target price is $46.00 Current Price is $49.24 Difference: minus $3.24 (current price is over target).
If BHP meets the Credit Suisse target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $50.53, suggesting upside of 1.2% (ex-dividends)

The company's fiscal year ends in June.

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

Macquarie rates BHP as Outperform (1) -

While volumes across BHP's commodity suite were either in-line or stronger in the June quarter, guidance for coal and copper production was weaker than expected. The broker has cut FY22-24 earnings forecasts by -5%.

But there's always iron ore. Despite cost pressures, upside remains for BHP from iron ore, as the broker relentlessly points out the wide gap from its forecast prices to current spot prices. Target falls to $60 from $63, Outperform retained.

Target price is $60.00 Current Price is $49.24 Difference: $10.76
If BHP meets the Macquarie target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $50.53, suggesting upside of 1.2% (ex-dividends)

The company's fiscal year ends in June.

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

Morgan Stanley rates BHP as Overweight (1) -

While BHP's reported numbers are in line with Morgan Stanley for both FY21 and FY22, Olympic dam FY22 numbers are weaker, due to major maintenance.

The broker notes all projects are in line with previous guidance, while financials adjustments imply a -3% impact on earnings per share, with cash flow impact of -$0.7bn.

The broker also notes BHP is also guiding for US$1.4bn cash dividend to minorities resulting in poorer cash conversion.

In addition, BHP is reportedly considering the exit of its Petroleum Business to accelerate its exit from fossil fuel commodities. Media suggest that business could be worth an estimated US$15bn or more. 

Morgan Stanley thinks that a fossil fuel exit could enhance the company's investment case and ESG credentials.

But the broker notes the company's management has consistently commented on the attractiveness of the oil & gas (O&G) business and its willingness to continue to invest in O&G opportunities to improve the division's returns.

Overweight rating. Industry view: Attractive. Target price increases to $51 from $50.95.

Target price is $51.00 Current Price is $49.24 Difference: $1.76
If BHP meets the Morgan Stanley target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $50.53, suggesting upside of 1.2% (ex-dividends)

The company's fiscal year ends in June.

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

Morgans rates BHP as Hold (3) -

Morgans assesses a good end to FY21 for BHP Group, with solid performances from iron ore, petroleum and metallurgical coal for the fourth quarter. It's felt tight labour market conditions were well navigated in WA iron ore, given unit cost guidance was maintained.

The company achieved FY21 guidance across its business. Petroleum volumes were slightly ahead and unit costs below guidance, explains the broker.

While the group's elevated share price appears justified, given the strength of its high quality earnings, returns appear limited to its attractive dividend profile, notes the analyst. Morgans retains its Hold rating and lowers its target price to $44.70 from $45.80.

Target price is $44.70 Current Price is $49.24 Difference: minus $4.54 (current price is over target).
If BHP meets the Morgans target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $50.53, suggesting upside of 1.2% (ex-dividends)

The company's fiscal year ends in June.

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

Ord Minnett rates BHP as Buy (1) -

All divisions ran ahead of Ord Minnett's forecasts in the June quarter production report. The company exceeded the broker's quarterly production forecasts for iron ore by 3% and FY22 guidance is incrementally higher.

The broker notes the stark contrast in operating results compared with Rio Tinto ((RIO)), whose shipments were down on the March quarter and achieved price -US$3/t below BHP Group's. Buy rating retained. Target rises to $60 from $59.

Target price is $60.00 Current Price is $49.24 Difference: $10.76
If BHP meets the Ord Minnett target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $50.53, suggesting upside of 1.2% (ex-dividends)

The company's fiscal year ends in June.

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 BHP as Neutral (3) -

BHP Group expects FY22 production will be flat or slightly higher. The company is still benefiting from high iron ore prices. Overall, production in the June quarter was in line with UBS estimates.

The broker expects iron ore prices will fall to US$75/t in 2024 as Chinese demand softens and Brazilian/Australian supply recovers. FY21 results will be released on August 17. Neutral and $42 target retained.

Target price is $42.00 Current Price is $49.24 Difference: minus $7.24 (current price is over target).
If BHP meets the UBS target it will return approximately minus 15% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $50.53, suggesting upside of 1.2% (ex-dividends)

The company's fiscal year ends in June.

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

Citi rates BKL as Sell (5) -

Citi sees the A&NZ business, estimated to represent over half of Blackmores FY21 earnings (EBIT), continuing to underperform over the short to medium term.

The broker is concerned over elevated competition, a slow recovery in the pharmacy channel, from a slower-than-expected vaccination program and a subdued 2021 cold and flu season. 

Additionally, there are supply chain pressures and the increasing focus on digital and direct to consumer (DTC) could increase channel conflict, explains the analyst. Citi retains its Buy rating and $55.50 target price.

Target price is $55.50 Current Price is $76.56 Difference: minus $21.06 (current price is over target).
If BKL meets the Citi target it will return approximately minus 28% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $73.83, suggesting downside of -4.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: -0.2

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

Morgans rates CCP as Upgrade to Add from Hold (1) -

In a review of FY21 results due on August 3, Morgans expects FY21 profit to be at the top-end of the guidance of $85-90m. Purchased debt ledger supply is considered to remain subdued in both Australia and the US though improvement is expected through FY22. 

Along with this positive, the broker expects the group to capitalise on the market share opportunity in the US and expects a rebound in consumer lending. As a result, Morgans lifts its rating to Add from Hold on a medium-term view, and maintains the $33.45 target price.

In the short term, the analyst suspects guidance may underwhelm, and extended lockdowns may see heightened share price volatility.

Target price is $33.45 Current Price is $27.63 Difference: $5.82
If CCP meets the Morgans target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $33.25, suggesting upside of 17.8% (ex-dividends)

The company's fiscal year ends in June.

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

Credit Suisse rates CGC as Outperform (1) -

Credit Suisse has reviewed the mushroom category following its review of sustainable plant-based foods solutions and believes there is an opportunity to derive higher frequency of mushroom purchases among those consumers already buying the product.

Volume growth of 5.9% is modelled in a market that has historically grown 2%. The broker also expects Costa Group to gain share, underpinned by its capacity at Monarto and advantage in supplying brown mushrooms which are growing even faster than the category.

Outperform rating and $4.15 target are unchanged.

Current Price is $3.35. Target price not assessed.

Current consensus price target is $4.07, suggesting upside of 22.6% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.3

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

Macquarie rates CKF as Initiation of coverage with Neutral (3) -

Collins Foods' KFC Australia franchise has had a stellar FY21, pulling forward two years' worth of growth, the broker suggests, thanks to covid. Momentum in sales growth is now waning.

Europe is well positoned for recovery and Taco Bell offers growth, but not in the short term. Collins Foods has outperfomed the index by some 40% since last year's covid low so the broker initiates coverage with a Neutral rating. Target $11.15.

Target price is $11.15 Current Price is $10.83 Difference: $0.32
If CKF meets the Macquarie target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $12.27, suggesting upside of 14.5% (ex-dividends)

The company's fiscal year ends in May.

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

Ord Minnett rates CSL as Hold (3) -

Ord Minnett suspects the rapid increase of the delta strain of coronavirus in the US could be a cause for concern given the potential to disrupt recovery in plasma collections.

The broker remains hopeful the high rate of vaccination in the US will provide adequate protection and also points out, in its date-by-state analysis, CSL is not overly exposed to those states with low vaccination rates. Hold rating and $280 target maintained.

Target price is $280.00 Current Price is $286.48 Difference: minus $6.48 (current price is over target).
If CSL meets the Ord Minnett target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $302.01, suggesting upside of 4.1% (ex-dividends)

The company's fiscal year ends in June.

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: 0.3

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

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

Domino's Pizza's long term growth story is intact, Macquarie suggests, but market expectations of FY21 success being sustained for longer are now under pressure. Apart from cycling FY21 comparables, Domino's enters FY22 facing a number of headwinds.

These include higher input costs, wage inflation, unfavourable exchange rates and an uplift in investment spending. Covid has pushed the stock's FY22 PE up to 46x, making it very sensitive to earnings disappointment, the broker warns.

Downgrade to Underperform from Neutral. Target falls to $103.50 from $108.50.

Target price is $103.50 Current Price is $121.13 Difference: minus $17.63 (current price is over target).
If DMP 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 $99.59, suggesting downside of -15.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: -0.3

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

Credit Suisse rates DRR as Outperform (1) -

The performance at Mining Area C was better than expected in the June quarter. This is principally based on a strong ramp up at South Flank.

The company will continue to offer organic volume growth and product quality improvement yet the broker notes little commentary on M&A opportunities.

Credit Suisse emphasises the share price has been materially lagging the Australian dollar iron ore price but acknowledges Deterra Royalties is probably less competitive on dividend yields against a backdrop where iron ore prices remain above US$200/t.

Outperform rating and $5 target maintained.

Target price is $5.00 Current Price is $4.52 Difference: $0.48
If DRR meets the Credit Suisse target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $5.01, suggesting upside of 7.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.8

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

Macquarie rates DRR as Outperform (1) -

June quarter iron ore production in Mining Area C was 22% up on the prior quarter and 16% ahead of the broker's forecast. The quarter also saw the South Flank development completed, and first ore shipped.

Buoyant iron ore prices continue to support earnings momentum. Outperform retained, target rises to $5.60 from $5.50.

Target price is $5.60 Current Price is $4.52 Difference: $1.08
If DRR meets the Macquarie target it will return approximately 24% (excluding dividends, fees and charges).

Current consensus price target is $5.01, suggesting upside of 7.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.8

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

Morgan Stanley rates DXS as Overweight (1) -

Dexus announced that it will fund Atlassian's new 75ksqm headquarters near Central Station in Sydney, for $1.4bn. Dexus will develop and retain a majority stake in the asset post-completion in 2026.

While Morgan Stanley believes the deal looks okay, the broker doesn't think it's resoundingly great from a value generation perspective.

On the face of it, it appears to the broker the building is worth circa $20k/sqm, versus the cost of $18.7k/sqm if its rental income is -30-35% below core CBD. However, the broker sees the long 15-year lease Atlassian has signed as a positive.

Overweight rating for Dexus, with a target of $11.75. Industry View: In-line.

Target price is $11.75 Current Price is $10.26 Difference: $1.49
If DXS meets the Morgan Stanley target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $10.62, suggesting upside of 1.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.3

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

Credit Suisse rates HLS as Outperform (1) -

Coronavirus testing rates in Australia have reached new highs with the Delta variant causing a prolonged lockdown in NSW as well as shorter lockdowns in other states.

Hence, the emergence of the Delta strain signals testing is likely to remain a core part of the company's earnings into FY22 despite the roll-out of vaccines.

Credit Suisse raises estimates for earnings per share by 4% for FY21 and 16% for FY22. The base business is also strong. The broker retains an Outperform rating and raises the target to $5.00 from $4.45.

Target price is $5.00 Current Price is $4.74 Difference: $0.26
If HLS meets the Credit Suisse target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $4.61, suggesting downside of -3.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.5

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

Citi rates HUB as Buy (1) -

While lowering profit estimates to reflect lower trading revenue and higher cost investment, Citi maintains its Buy rating. The cost investment is expected to help continue market share gains and deliver strong earnings.

The broker assesses a solid fourth quarter result, with funds under administration (FUA) 11% ahead of Citi's estimates. However, the key forward-looking metric is considered record adviser additions, given they typically transition existing clients to a new platform over time.

The broker upgrades FY22 FUA forecasts, and expects custody FUA to grow 24% year-on-year, 12% above midpoint of current guidance. The broker lifts its target to $29.80 from $27, reflecting upgrades to cash margins and long-term earnings (EBITDA) margins.

Target price is $29.80 Current Price is $25.40 Difference: $4.4
If HUB meets the Citi target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $28.32, suggesting upside of 16.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.5

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

Credit Suisse rates HUB as Outperform (1) -

Hub24 reported record flows in the June quarter with funds under administration up 16% to $41.5bn. This was ahead of Credit Suisse estimates. The broker considers the strength reflects the company's recent investment in distribution.

Around 15% of advisers are now using the platform, up from 9% at the same time last year. This suggests to Credit Suisse the FY22 target for FUA is too conservative and could be upgraded at the FY21 result or recast higher to an FY23 target.

Outperform reiterated. Target is reduced to $31.00 from $31.50.

Target price is $31.00 Current Price is $25.40 Difference: $5.6
If HUB meets the Credit Suisse target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $28.32, suggesting upside of 16.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.5

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

Macquarie rates HUB as Downgrade to Neutral from Outperform (3) -

Hub24 has reported a very strong June quarter, comments Macquarie, with funds under administration rising $7.2bn to $56.8bn. However, any earnings forecast increases Macquarie may have made as a result are offset by the company's commitment to invest in scale and innovation.

Trading volumes are also now normalising, and there remains uncertainty around costs. With the stock now trading near its new target price of $25.75, up from $25.50, Macquarie downgrades to Neutral from Outperform. 

Target price is $25.75 Current Price is $25.40 Difference: $0.35
If HUB meets the Macquarie target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $28.32, suggesting upside of 16.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.5

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

Morgans rates HUB as Downgrade to Hold from Add (3) -

Morgans lowers its rating to Hold from Add, on the potential for short term volatility after August 24 results, which may create a better entry point. Long-term, it's believed there will be a material market share increase, scale efficiencies and benefits from industry consolidation.

The company ended the fourth quarter with funds under administaration (FUA) of $58.6bn, up 14% for the quarter. FUA comprised $41.5bn for Platform and $17.2bn for Portfolio, Administration and Reporting Services (PARS), up 16% and 9%, respectively, quarter-on-quarter.

The analyst downgrades FY21-23 earnings (EBITDA) forecasts by -7.8%, -2.9% and -6.3%, respectively. Morgans increases its target price to $28.05 from $25.10.

Target price is $28.05 Current Price is $25.40 Difference: $2.65
If HUB meets the Morgans target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $28.32, suggesting upside of 16.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.5

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

Ord Minnett rates HUB as Accumulate (2) -

Momentum remains strong, Ord Minnett observes, with growth in funds under administration well above system. Importantly, the company is maintaining organic growth despite the integration of several acquisitions.

Ord Minnett retains an Accumulate rating and raises the target to $27 from $26.

Target price is $27.00 Current Price is $25.40 Difference: $1.6
If HUB meets the Ord Minnett target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $28.32, suggesting upside of 16.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.5

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

Citi rates IAG as Buy (1) -

Although the price looks a tad light and mildly EPS dilutive, Citi  feels investors may still welcome the cash from the likely sale of the group's interest in Malaysia.

Overall, the broker expects the underlying trends for the group's business are mostly favourable, with solid rate rises sufficient to at least offset inflation in most classes. Citi retains its Buy rating and $5.60 price target.

Target price is $5.60 Current Price is $4.83 Difference: $0.77
If IAG meets the Citi target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $5.37, suggesting upside of 11.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.6

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

Credit Suisse rates IAG as Outperform (1) -

Insurance Australia Group will sell its 49% stake in the Malaysian joint venture for $340m. The company will incur a loss of -$90m on the sale in FY21 but expects to increase regulatory capital by $150m at completion.

While the loss on the sale is disappointing, Credit Suisse welcomes the additional capital and also believes Insurance Australia could return some of the excess capital to shareholders through either a special dividend in FY22 post the sale or an on-market buyback.

Outperform reiterated. Target is steady at $5.60.

Target price is $5.60 Current Price is $4.83 Difference: $0.77
If IAG meets the Credit Suisse target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $5.37, suggesting upside of 11.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.6

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

Macquarie rates IAG as Neutral (3) -

Insurance Australia Group will sell its 49% stake in AmGeneral's Malaysian insurance business, subject to goverment and regulatory approvals. A sale would get IAG one step closer to exiting Asia, the broker notes.

The anticipated $340m proceeds could be used for a capital return, but likley not until completion in mid-FY22. The removal of the earnings contribution from Malaysia takes the broker's target down to $5.00 from $5.20. Neutral retained.

Target price is $5.00 Current Price is $4.83 Difference: $0.17
If IAG meets the Macquarie target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $5.37, suggesting upside of 11.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.6

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

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

In line with the group's strategy to sell down its Asian assets and focus on core markets, Insurance Australia Group has announced a proposed sale of its minority stake in Malaysian AmGeneral (49% stake) to Liberty.

Insurance Australia Group will receive $340m in cash, but report a -$90m loss on sale in FY21, and estimates $150m capital release at completion, expected during FY22.

The broker regards the $150m as a modest addition and also notes uncertainty on regulatory approvals.

The analyst's Equal-weight rating and target price of $4.85 are unchanged. Industry view: In-line.

Target price is $4.85 Current Price is $4.83 Difference: $0.02
If IAG meets the Morgan Stanley target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $5.37, suggesting upside of 11.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.6

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

UBS rates IAG as Buy (1) -

Insurance Australia Group has an agreement for the sale of its 49% interest in the Malaysian joint venture AmGeneral Holdings. The company's share of the proceeds is $340m. UBS assesses the sale multiples are underwhelming and dilutive.

The sale is consistent with the company's strategy to divest Asian businesses and represents the last major divestment.

UBS notes the capital position is strong and Insurance Australia should be well-placed to consider capital initiatives in a post-pandemic environment. Buy rating maintained. Target is reduced to $5.80 from $6.00.

Target price is $5.80 Current Price is $4.83 Difference: $0.97
If IAG meets the UBS target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $5.37, suggesting upside of 11.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.6

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

Citi rates JBH as Neutral (3) -

Pre-released FY21 results showed Citi that The Good Guys performance was a standout, where underlying like-for-like sales momentum rebounded whilst generating significant operating leverage. Group sales were in line with Citi, while earnings (EBIT) were a 5% beat. 

The broker expects The Good Guys performance to be mostly driven by gross margin and thus expects a dissipation over the next 12-18 months. Morgans retains its Neutral rating and lifts its target price to $54 from $53.

The analyst expects demand driven by investment in the home to partly offset normalisation in sales and earnings through to at least FY22.

Target price is $54.00 Current Price is $49.51 Difference: $4.49
If JBH meets the Citi target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $52.39, suggesting upside of 6.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.0

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

Credit Suisse rates JBH as Outperform (1) -

Growth in household goods expenditure shows no sign of abating, Credit Suisse asserts and JB Hi-Fi continues to bank cash, which in turn makes capital management increasingly possible. The broker acknowledges uncertainty created by the lockdowns makes this more of a 2022 probability.

Still, with extended restrictions on travel, household goods should be in a relatively better position compared with other areas of retail, even with the lockdowns.

Sales forecasts for FY22 are increased and this drives upgrades to earnings estimates as well as an increase to the target to $57.60 from $57.39. Outperform maintained.

Target price is $57.60 Current Price is $49.51 Difference: $8.09
If JBH meets the Credit Suisse target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $52.39, suggesting upside of 6.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.0

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

Macquarie rates JBH as Neutral (3) -

JB Hi-Fi continues to enjoy strong sales momentum despite cycling last year's bonanza. But this time it's about demand for higher margin home appliances rather than lower margin computer and IT equipment, the broker notes.

Hence while net sales were largely in line in the June quarter, margins drove a 7% beat on earnings forecasts. While the new lockdowns will prove a drag, the broker notes the company's "store-to-door" format worked well in Melbourne's last lockdown.

Neutral and $50.40 target retained.

Target price is $50.40 Current Price is $49.51 Difference: $0.89
If JBH meets the Macquarie target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $52.39, suggesting upside of 6.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.0

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

Morgans rates JBH as Hold (3) -

JB Hi-Fi provided a FY21 trading update, with revenue guidance largely in-line with Morgans estimate though earnings (EBIT) and profit beat by 7% and 8.7%, respectively. The key drivers were improved margins within JB Australia and The Good Guys, explains the broker.

Following FY21-23 EPS upgrades of 8.6%,11.1% and 5.6%, respectively, the broker forecasts FY22 profit will fall -25% on FY21, though the fourth quarter resilience suggests this may prove conservative. Morgans lifts its price target to $52.23 from $50. Hold rating unchanged.

Target price is $52.23 Current Price is $49.51 Difference: $2.72
If JBH meets the Morgans target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $52.39, suggesting upside of 6.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.0

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

Citi rates LGL as Initiation of coverage with Buy (1) -

Citi initiates coverage of Lynch Group Holdings with a Buy rating and $4.30 target price. The broker forecasts a 44% EPS compound annual growth rate (CAGR) to FY23, driven by expansion of the group's productive floriculture area in China.

Additionally, the analyst forecasts growth will arise from domestic customer wins following the VDB acquisition, and continued supermarket channel penetration in Australia, in which Lynch has 88% market share.

Cit expects the China business to contribute the majority (around 72%) of group earnings (EBITDA) growth beyond FY21. While there are risks around further China expansion and an escrowed share overhang, it's considered the stock is undervalued.

Target price is $4.30 Current Price is $3.62 Difference: $0.68
If LGL meets the Citi target it will return approximately 19% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

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: 1.0

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

Morgans rates M7T as Add (1) -

The fourth quarter result was broadly in-line with Morgans expectations. The broker's slightly revised FY22 revenue estimate shows solid growth is emerging though, in-line with management guidance, the FY21 revenue forecast is adjusted down.

The broker lowers it target price to $1.56 from $1.68 and retains its Add rating. The enterprise imaging sector continues to grow substantially, and the company's product offering is considered well placed to expand within the existing client base and attract new clients.

Target price is $1.56 Current Price is $0.91 Difference: $0.65
If M7T meets the Morgans target it will return approximately 71% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

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

Morgan Stanley rates MQG as Overweight (1) -

Morgan Stanley expects a flat to positive June quarter update at Macquarie Group's AGM, with strong gains on sale and commodities offsetting forex headwinds.

The broker also thinks fund raisings and new capital deployment looked healthy during the quarter.

At 18x one-year forward consensus P/E, Morgan Stanley thinks Macquarie Group is compelling value versus global alternative managers at 25.5x, with the group playing into tailwinds in private markets, infrastructure, and renewables.

The Overweight rating and $175 target price are maintained. Industry view in-line.

Target price is $175.00 Current Price is $153.21 Difference: $21.79
If MQG meets the Morgan Stanley target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $161.20, suggesting upside of 3.8% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.3

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

Macquarie rates OGC as Neutral (3) -

Preliminary June quarter numbers show OceanaGold's production and costs were in line with expectation. The broker now incorporates a one-off revenue boost of US$57m for sale of copper concentrate held at Didipio since 2019.

The key catalyst for OceanaGold is improved production metrics, the broker suggests. A full report is due on July 29.

Neutral and $2.70 target retained.

Target price is $2.70 Current Price is $2.50 Difference: $0.2
If OGC meets the Macquarie target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $2.37, suggesting downside of -2.6% (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: 0.3

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

Morgans rates OSH as Add (1) -

Santos ((STO)) has made an informal, indicative all-scrip merger offer to Oil Search, offering 0.589 new Santos shares for every Oil Search share, valuing the target company at $4.25 per share.

While not the largest premium, Morgans feels waning Oil Search investor sentiment boosts the appeal of the bid. A preliminary rough valuation of MergeCo is considered to support the move, as do strategic considerations.

Morgans retains its Add rating for Oil Search and its $4.70 target price.

Target price is $4.70 Current Price is $3.90 Difference: $0.8
If OSH meets the Morgans target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $4.47, suggesting upside of 10.6% (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: 0.3

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

Ord Minnett rates OSH as Buy (1) -

Santos ((STO)) has approached Oil Search with a merger proposal, a move Ord Minnett suggests is clearly opportunistic based on instability within the Oil Search business. The move makes sense, nevertheless, as Oil Search holds minority interests in the PNG assets.

The broker also notes the announcement by Oil Search indicating it was open to engaging on the proposal. There is also risk for Santos that JV partners in PNG also take an interest in acquiring Oil Search.

After a brief restriction the broker moves to a Buy rating and target of $5.60.

Target price is $5.60 Current Price is $3.90 Difference: $1.7
If OSH meets the Ord Minnett target it will return approximately 44% (excluding dividends, fees and charges).

Current consensus price target is $4.47, suggesting upside of 10.6% (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: 0.3

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

UBS rates OSH as Buy (1) -

Following complaints the Oil Search board found CEO Kieran Wulff's behaviour unacceptable and he has resigned as CEO.

The complaint also combined with the largest shareholder, Mubadala Investment, selling down a 4.5% stake and this may generate further negative sentiment until the motivation and chain of events are clarified, UBS asserts.

The announcement is incrementally negative, yet UBS believes the company can still progress financing and the sell down of the Alaskan oil project under the acting CEO from which point the stock can re-rate.

The broker believes the current share price undervalues the strategically attractive exposure to a top regional project in PNG LNG and Papua LNG. Buy rating and $4.60 target unchanged.

Target price is $4.60 Current Price is $3.90 Difference: $0.7
If OSH meets the UBS target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $4.47, suggesting upside of 10.6% (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: 0.3

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

Citi rates RHC as Buy (1) -

Previous increases to FY22-24 EPS forecasts are now reversed-out by Citi, after Ramsay Health Care announced the proposed Spire Healthcare acquisition will not proceed. The company was unable to secure the required 75% approval from Spire’s shareholders.

While the acquisition would have made strategic and financial sense, given the operational synergies, the analyst expects the company will continue to invest in its core Australian hospital business. This segment generates the highest return on capital.

Citi reduces its target to $69 from $76 and retains its Buy rating.

Target price is $69.00 Current Price is $63.97 Difference: $5.03
If RHC meets the Citi target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $70.45, suggesting upside of 9.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.4

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

Morgans rates RWC as Add (1) -

The company has agreed to acquire its main brass supplier in Australia, LCL Pty Ltd, for circa $37m. Morgans highlights this will give greater supply chain control, and provides efficiency and expansion opportunities over time.

LCL is one of Australia’s largest producers of copper-based alloys, and also recycles excess brass (swarf) arising from Reliance Worldwide’s product manufacturing activities.

The broker estimates the deal to be 2% accretive to FY23 underlying EPS. Morgans maintains its Add rating and increases its target price to $5.70 from $5.50. 

Target price is $5.70 Current Price is $5.21 Difference: $0.49
If RWC meets the Morgans target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $5.29, suggesting upside of 1.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.5

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

Ord Minnett rates RWC as Buy (1) -

Reliance Worldwide has acquired a key raw material supplier, LCL, for $37m. LCL is one Australia's largest producers of quality copper and bronze alloys.

This provides advantages to Reliance Worldwide for back integration and long-term supply security as well as offering scope for cost savings and efficiencies. As a result, Ord Minnett upgrades forecasts for FY22 and FY23.

Ord Minnett retains a Buy rating and raises the target to $5.90 from $5.80.

Target price is $5.90 Current Price is $5.21 Difference: $0.69
If RWC meets the Ord Minnett target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $5.29, suggesting upside of 1.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.5

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

Credit Suisse rates SHL as Outperform (1) -

Testing rates for the highly transmissible Delta variant have increased sharply in Australia, the UK, Switzerland and Belgium while the US and Germany have bucked the trend.

Credit Suisse envisages upside risk to its numbers if the more transmissible variants spread widely and cause an uptick in infections irrespective of vaccine status.

As a result the broker forecasts Sonic Healthcare will achieve more than -$1bn in debt reduction in FY21 and there could be $3bn in capacity on the balance sheet to pursue acquisitions. Outperform rating retained. Target rises to $43.50 from $40.00.

Target price is $43.50 Current Price is $39.59 Difference: $3.91
If SHL meets the Credit Suisse target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $37.99, suggesting downside of -5.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.4

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

Morgan Stanley rates STO as Overweight (1) -

Santos has confirmed a merger proposal for 0.59 new Santos shares for every Oil Search share held, reflecting a 12% premium to Oil Search's 24 June 2021 share price.

While the merger has been rejected by Oil Search's board, Morgan Stanley believes it remains to be seen whether Santos will increase
its offer or whether other players will get involved.

The broker thinks the proposed indicative ratio of 63% Santos and 37% Oil Search assumes close to nil value for Oil Search's Alaska asset.

In Morgan Stanley's view, it would be better for Santos to exit this asset on a successful merger given it would potentially dilute
Santos's ESG credentials. The broker also notes there is financial risk and Santos brings negligible experience in that part of the world.

Overweight rating is retained. Target is $8.60. Industry view: Attractive.

Target price is $8.60 Current Price is $6.49 Difference: $2.11
If STO meets the Morgan Stanley target it will return approximately 33% (excluding dividends, fees and charges).

Current consensus price target is $7.96, suggesting upside of 20.8% (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: 0.5

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

Morgans rates STO as Add (1) -

Santos has made an informal, indicative all-scrip merger offer to Oil Search ((OSH)), offering 0.589 new Santos shares for every Oil Search share, valuing the target company at $4.25 per share.

While not the largest premium, Morgans feels waning Oil Search investor sentiment boosts the appeal of the bid. A preliminary rough valuation of MergeCo is considered to support the move, as does strategic considerations.

Morgans retains its Add rating for Santos and its $8.70 target price.

Target price is $8.70 Current Price is $6.49 Difference: $2.21
If STO meets the Morgans target it will return approximately 34% (excluding dividends, fees and charges).

Current consensus price target is $7.96, suggesting upside of 20.8% (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: 0.5

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

UBS rates STO as Buy (1) -

UBS is supportive of the strategic rationale for Santos and Oil Search ((OSH)) to merge and believes the proposed merger would be both value and free cash flow (FCF) accretive.

But in the broker's view, to reach a mutually agreeable all-scrip deal, Santos’s share price would need to lift from the 20 July close ($6.49/sh) and/or the company may need to offer a higher scrip ratio.

UBS estimates that Santos could increase the scrip ratio up to 0.60 beyond which the merger economics would become value dilutive to the company's shareholders.

The key risks the broker sees from the proposed merger are potential value dilution if Santos proceeds at the current share price ($6.49/sh), and potential pushback from investors on how Pikka - a greenfield oil development in Alaska - fits into the company's net-zero by 2040 target and plan to be a ‘green gas company’ in 10 years.

The Buy rating and target price of $8.35 are both maintained.

Target price is $8.35 Current Price is $6.49 Difference: $1.86
If STO meets the UBS target it will return approximately 29% (excluding dividends, fees and charges).

Current consensus price target is $7.96, suggesting upside of 20.8% (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: 0.5

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

Citi rates SXY as Buy (1) -

Citi retains its Buy rating and $3.99 target price, after the fourth quarter was below consensus on outages at Roma North and Atlas
processing plants (which were forecast by the broker).

The broker's forecast was in-line with own-product sales though revenue was an -8% miss on lower realised pricing.

The analyst estimates the current share price values the base business and just 87% of Citi's risked Atlas exploration valuation.
This is considered to offer investors a free look at Roma Nth exploration and the remaining Bowen and Surat exploration assets.

Target price is $3.99 Current Price is $3.18 Difference: $0.81
If SXY meets the Citi target it will return approximately 25% (excluding dividends, fees and charges).

Current consensus price target is $3.81, suggesting upside of 21.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.7

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

Macquarie rates SXY as Neutral (3) -

Senex Energy's June quarter was weaker than expected on lower gas pricing. The broker has reduced its gas price forecasts.

Expansions to Roma North and Project Atlas are currently being considered for a final investment decision, with decarbonisation opportunities being explored.

However the broker needs more clarity on the quality of undeveloped resources outside the Atlas/Roma areas before re-rating can be considered. Neutral retained, target falls to $3.50 from $3.85.

Target price is $3.50 Current Price is $3.18 Difference: $0.32
If SXY meets the Macquarie target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $3.81, suggesting upside of 21.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.7

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

Morgans rates SXY as Add (1) -

Morgans assesses a steady end to the financial year for Senex Energy, with the fourth quarter results slightly below estimates. Production from the Surat CSG operations was estimated to be in-line with estimates, despite increased maintenance activities.

The analyst sees an appealing combination of oil and gas exposure, and highlights a steadily rising earnings platform, ramped up Surat gas production and progressing organic growth options. The broker maintains its $4.50 price target and Add rating.

Target price is $4.50 Current Price is $3.18 Difference: $1.32
If SXY meets the Morgans target it will return approximately 42% (excluding dividends, fees and charges).

Current consensus price target is $3.81, suggesting upside of 21.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.7

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

Ord Minnett rates SXY as Buy (1) -

June quarter production was slightly below Ord Minnett's expectations. The main negative was soft gas prices, attributed to the lag in the oil-linked Gladstone LNG contract and the fact management is targeting the term gas market rather than spot.

Still, the broker remains positive about the stock as there is strong production growth envisaged, a robust balance sheet and exposure to the east coast gas market. Buy rating and $4 target retained.

Target price is $4.00 Current Price is $3.18 Difference: $0.82
If SXY meets the Ord Minnett target it will return approximately 26% (excluding dividends, fees and charges).

Current consensus price target is $3.81, suggesting upside of 21.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.7

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

Macquarie rates SYD as Neutral (3) -

Sydney Airport's passenger throughput remains weak, with domestic now stalling again, the broker notes. Taking a long term view, the broker forecasts traffic to recover to -7% below pre-covid levels by 2030, beginning in 2022, which adds 40cps to valuation.

Re-gearing the balance sheet adds 30cps, lower bond yields $1.40, and there's still potential upside in the property book and aero repricing, while the broker does not see the Western Sydney Airport as a negative.

Neutral and $8.50 target retained.

Target price is $8.50 Current Price is $7.81 Difference: $0.69
If SYD meets the Macquarie target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $8.21, suggesting upside of 5.5% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.2

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

Morgans rates SYD as Hold (3) -

Morgans downgrades short-term forecasts after June passenger data were weaker than expected, impacted by recent lockdowns, though acknowledges takeover talks will be the main influence on the share price. The broker maintains its Hold rating and $8.25 target.

The analyst thinks it unlikely the bid consortium will walk away from the offer after the first rejection, or an alternative bidder emerges.

Target price is $8.25 Current Price is $7.81 Difference: $0.44
If SYD meets the Morgans target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $8.21, suggesting upside of 5.5% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.2

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

Ord Minnett rates SYD as Hold (3) -

Traffic in June dropped -71% compared with 2019 levels with domestic down -57% and international down -94%. The numbers reflect the impact of the Melbourne lockdown and a partial impact from the Sydney lockdown.

A broad-based recovery is expected in domestic passenger numbers in 2022, by which time the majority of the population is expected to be vaccinated. A recovery in international passengers is likely to be more prolonged.

Meanwhile, the board has rejected the offer from the IFM-led consortium and Ord Minnett believes the latter will return with a better price as it is rare that such a large potential privatisation would inhibit a bidder from making another offer. Hold rating and $8.25 target maintained.

Target price is $8.25 Current Price is $7.81 Difference: $0.44
If SYD meets the Ord Minnett target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $8.21, suggesting upside of 5.5% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.2

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

Credit Suisse rates WEB as Outperform (1) -

While the Delta variant is causing concerns, European booking momentum is improving. Credit Suisse notes US leisure data also appear strong, although Webjet has more exposure to Europe.

The main focus when the company reports its results for the year ending September will be if WebBeds can outperformed the market in Europe as it has done in the Americas.

Credit Suisse believes there is attractive upside risk to estimates in FY23, the year considered to be a "post restriction" year. Outperform maintained. Target is $5.20.

Target price is $5.20 Current Price is $4.69 Difference: $0.51
If WEB meets the Credit Suisse target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $5.53, suggesting upside of 16.6% (ex-dividends)

The company's fiscal year ends in March.

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