Australian Broker Call

Macquarie rates BHP as Outperform (1) -

BHP Group held a climate change briefing. The company has a target of net zero (scope 1 and 2) emissions by 2050 and has now set a target of -30% lower greenhouse gas emissions by 2030.

This latter target will involve taking scope 3 actions and including links to the climate plan in executive remuneration.

Macquarie points out the emissions reduction will include the use of carbon credits and the company has stated that targets will be rebased  to exclude any divestments. The broker also highlights most of the company's operations in the core asset portfolio are in the lower quartile of estimated CO2 contributors.

Near-term steps to decarbonisation include moving to 100% renewable energy at Escondida and Spence by mid-2020, explains the analyst.

Macquarie makes no changes to EPS estimates.

The Outperform rating and target price are unchanged.

Target price is $44.00 Current Price is $36.98 Difference: $7.02
If BHP meets the Macquarie target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $40.29, suggesting upside of 10.3% (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: 0.5

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

Morgan Stanley rates BHP as Overweight (1) -

Morgan Stanley expects the iron ore market to be in surplus from the last quarter of 2020. However, the broker also expects stronger steel production in China and dismisses concerns about any buildup in China's port ore stocks. 

This also prompts Morgan Stanley to raise its fourth-quarter 2020 and 2021 iron ore price forecasts to US$100/t and US$81/t. Long-term projections remain unchanged.

Morgan Stanley prefers BHP Group due to the company's ability to generate free cash flow in a scenario where iron ore prices revert to a sustainable level of circa US$70/t.

On a different topic, BHP Group provided a more detailed view on the path to achieving 'Net Zero' by 2050. In the short term, the group aims at maintaining operational emissions at or below FY17 levels. 

Morgan Stanley notes management remuneration is being aligned with climate objectives with the aim of boosting the incentive to meet targets.

Morgan Stanley retains its Overweight rating with the target price increasing to $39.45 from $37.05. Industry view: Attractive.

Target price is $39.45 Current Price is $36.98 Difference: $2.47
If BHP meets the Morgan Stanley target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $40.29, suggesting upside of 10.3% (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: 0.5

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

Morgans rates BKW as Hold (3) -

Morgans reviews Brickworks ahead of the company's FY20 result for the July year-end on September 24.

The company's last trading update was for the four months February to May. The broker explains US building products peer updates showed a sequential improvement in sales from April to June. As a result, underlying sales volumes should have improved for the company  over June/July. However, Australian new residential construction remains soft.

Morgans raises underlying earnings (EBIT) estimates for FY20, FY21 and FY22 by 1.4%, 6.9% and 3.6%, respectively. This is due to the stronger-than-expected recent recovery in US residential construction activity and benefit of cost saving initiatives.

The analyst suggests the company's dividend yield of 3.2% and property tailwinds are likely to provide continued valuation support.

The Hold rating is unchanged and the target price is increased to $18.24 from $13.56.

Target price is $18.24 Current Price is $18.10 Difference: $0.14
If BKW meets the Morgans target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $18.23, suggesting upside of 1.9% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.8

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

Macquarie rates CLW as Outperform (1) -

Charter Hall Long WALE REIT has acquired a 50% stake in a Charter Hall Group ((CHC))-managed partnership holding 49% of 70 BP petrol station assets in New Zealand. The remaining stake in the fund will be held by Charter Hall Retail REIT ((CQR)).

The $121m acquisition will be $70m funded via an equity raise, with the remainder funded by debt.

While the REIT is disposed to raising equity, the broker explains there is a track record of earnings accretive transactions.

Macquarie notes the transaction is in-line with strategy and makes minimal changes to funds from operations (FFO) forecasts.

The Outperform rating is unchanged. The target price is $5.54

Target price is $5.54 Current Price is $5.03 Difference: $0.51
If CLW meets the Macquarie target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $5.26, suggesting upside of 6.4% (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 CLW as Hold (3) -

Charter Hall Long Wale REIT announced a circa $70 million equity raising to fund the acquisition of a 24.5% interest in the BP New Zealand service station portfolio. The REIT's interest is valued at NZ$131m, reports Ord Minnett.

This acquisition, notes the broker, represents the REIT's first exposure in New Zealand, and further diversifies its geographical exposure. The broker is pleased with the acquisition and forecasts it to be circa 1% accretive to the group's FY22 earnings.

While the stock remains attractive, the broker believes this has been priced into the share price and maintains its Hold rating with the target price raised to $4.82 from $4.73.

Target price is $4.82 Current Price is $5.03 Difference: minus $0.21 (current price is over target).
If CLW meets the Ord Minnett target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.26, suggesting upside of 6.4% (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 CQR as Outperform (1) -

Charter Hall Retail REIT is to acquire a 50% stake in a Charter Hall Group ((CHC))-managed partnership holding 49% of 70 BP petrol station assets in New Zealand. The remaining stake in the fund will be held by Charter Hall Long WALE REIT ((CLW)).

The acquisition is 0.8% accretive to FY21, given debt funding. Macquarie notes the balance sheet deployment may raise concern, but asset values have held to date and gearing remains below pre-covid-19 heights.

The broker remains attracted to strong tenant covenants and non-discretionary retail exposure.

The Outperform rating is unchanged. The target price is $3.86.

Target price is $3.86 Current Price is $3.35 Difference: $0.51
If CQR meets the Macquarie target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $3.38, suggesting downside of -0.7% (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

Ord Minnett rates CQR as Hold (3) -

Ord Minnett reports a partnership between Charter Hall Retail REIT and Charter Hall Long WALE REIT ((CLW)) has acquired a 49% interest in a portfolio of 70 service stations in New Zealand. This is as part of a sale and leaseback arrangement with BP.

Charter Hall Retail’s look-through interest amounts to $121m, and increases its exposure to service stations to about 16% of the total portfolio. Ord Minnett expects the acquisition will provide more stability to earnings given the portfolio’s long weighted average lease expiry (WALE) and triple-net (NNN) leases.

Hold retained with a target price of $3.50.

Target price is $3.50 Current Price is $3.35 Difference: $0.15
If CQR meets the Ord Minnett target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $3.38, suggesting downside of -0.7% (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

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

Morgan Stanley reports the US plasma industry collections were down by -2-3% March, reducing further by -65% in May. June saw some recovery with July down by -20%. No data has been released for August but Morgan Stanley estimates collections may be down -10%.

The shortfall in plasma collection, -44m litres in 2019 is expected to remain in 2020, necessitating the development of strategies like prioritising certain patients over others.

Equal-weight rating with a target price of $282. Industry view: In-line.

Target price is $282.00 Current Price is $282.00 Difference: $0
If CSL meets the Morgan Stanley target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $309.68, suggesting upside of 9.2% (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: 0.3

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

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

Morgan Stanley expects the iron ore market to be in surplus from the last quarter of 2020. However, the broker also expects stronger steel production in China and dismisses concerns about any buildup in China's port ore stocks. 

This also prompts Morgan Stanley to raise its fourth-quarter 2020 and 2021 iron ore price forecasts to US$100/t and US$81/t but long-term projections remain unchanged.

The broker notes some equity valuations are starting to look stretched like Fortescue Metals Group. This translates to a negative risk-reward skew, believes the broker, downgrading its rating to Underweight from Equal-weight.

The target price rises to $14.50 from $12.70. Industry view is Attractive.

Target price is $14.50 Current Price is $17.89 Difference: minus $3.39 (current price is over target).
If FMG meets the Morgan Stanley target it will return approximately minus 19% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $17.16, suggesting downside of -1.1% (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: 0.1

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

Credit Suisse rates ILU as Outperform (1) -

October 23 will see the much anticipated spin-off of Iluka Resources' Mining Area C royalties into a separately listed entity called Deterra Royalties. The broker expects the October 16 EGM will prove a mere formality.

The broker retains its Outperform and $10.00 target for Iluka going into the demerger. It is now up to the market to determine just what is the right price for Deterra, the broker suggests.

Target price is $10.00 Current Price is $9.99 Difference: $0.01
If ILU meets the Credit Suisse target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $9.94, suggesting upside of 3.9% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.5

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

Macquarie rates ILU as Outperform (1) -

The demerger of the Mining Area C royalty will be named Deterra Royalties ((DRR)), with a shareholder vote scheduled for 16 October.

Shareholders will receive 1 DRR share for every Iluka Resources share held and the company will maintain a 20% interest in DRR.

Iluka Resources will maintain its dividend policy of 40% of free cash flow, while DRR intends to payout 100% of profits (NPAT).

Due to research restrictions, Macquarie cannot advise its rating or valuation.

Current Price is $9.99. Target price not assessed.

Current consensus price target is $9.94, suggesting upside of 3.9% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.5

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

Morgan Stanley rates ILU as Overweight (1) -

Iluka Resources' received a favorable draft class ruling from the Australian Tax Office.

Deterra's dividend policy of 100% of the net profit will remain unchanged post demerger. Iluka Resources will have a net cash position of $89m and Morgan Stanley expects Iluka to have a small net debt balance by the end of the year.

Transaction costs include -$17.9m in separation costs with -$4.9m incurred prior to demerger. The shareholder vote is on 16 October and Iluka will be trading ex-Deterra from 23 October.

Morgan Stanley retains its Overweight rating with a target price of $10.10. Industry view: Attractive.

Target price is $10.10 Current Price is $9.99 Difference: $0.11
If ILU meets the Morgan Stanley target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $9.94, suggesting upside of 3.9% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.5

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

UBS rates ILU as Neutral (3) -

Iluka Resources’ released the demerger implementation scheme for Deterra Royalties and will be retaining 20% (up from the original proposal of 15%). Costs to de-merge amount to -$17.9m pre-tax plus a one-off separation cost of -$0.3m, reports UBS.

UBS notes if Iluka's timeline proceeds as planned, Deterra will list by October 2020 with final Australian Tax Office approval issued post-demerger completion. The dividend policy for Deterra remains 100% of the net profit but the broker believes this could evolve as the business matures.

UBS retains its Neutral rating with a target price of $10.

Target price is $10.00 Current Price is $9.99 Difference: $0.01
If ILU meets the UBS target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $9.94, suggesting upside of 3.9% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.5

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

Ord Minnett rates INR as Buy (1) -

Ioneer's plan of operations for its Rhyolite Ridge project was accepted by the US Bureau of Land Management, considered by Ord Minnett to be a key permitting milestone. The broker notes the project remains on track to start construction in the second quarter of 2021.

The broker remains confident in management securing a strategic partner by December end and make no model changes.

Noting the lithium price has likely bottomed, Ord Minnett reaffirms its Speculative Buy recommendation with a target price of $0.5.

Target price is $0.50 Current Price is $0.10 Difference: $0.4
If INR meets the Ord Minnett target it will return approximately 400% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 1.0

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

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

Morgan Stanley expects the iron ore market to be in surplus from the last quarter of 2020. However, the broker also expects stronger steel production in China and dismisses concerns about any buildup in China's port ore stocks. 

This also prompts Morgan Stanley to raise its fourth-quarter 2020 and 2021 iron ore price forecasts to US$100/t and US$81/t but long-term projections remain unchanged.

The broker notes valuation for Mineral Resources is starting to look stretched. This translates to a negative risk-reward skew, believes the broker, downgrading its rating to Underweight from Equal-weight. 

The target price rises to $23.50 from $21. Industry view: Attractive.

Target price is $23.50 Current Price is $27.85 Difference: minus $4.35 (current price is over target).
If MIN meets the Morgan Stanley target it will return approximately minus 16% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $26.40, suggesting downside of -2.4% (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

Citi rates MYR as Buy (1) -

For Citi's initial assessment Myer's FY20 release, see yesterday's Report. The analysts seem hellbent on retaining their Buy/High Risk rating, despite yet another tough year ahead for the shrinking department store operator.

Underpinning Citi's positive view are Myer's balance sheet plus the fact a new bank facility is in place. Myer is not expected to pay any dividend until FY23.

Key positives cited from the FY20 result were online, the clean inventory position and net cash balance sheet, on top of the mentioned recently refinanced bank facility.

Citi believes the current share price incorporates the risk of a dilutive equity raising. One the analysts do not think is inevitable. Price target $0.30.

Target price is $0.30 Current Price is $0.21 Difference: $0.09
If MYR meets the Citi target it will return approximately 43% (excluding dividends, fees and charges).

Current consensus price target is $0.29, suggesting upside of 36.5% (ex-dividends)

The company's fiscal year ends in July.

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

Ord Minnett rates MYR as Hold (3) -

Myer Holdings reported a net loss of -$11.3m for FY20 versus Ord Minnett’s estimated profit of $8m. The difference was mainly due to a worse-than-expected second-half gross margin contraction, with falling sales and rising costs. No final dividend was declared.

Ord Minnett considers the highlight to be online sales growth with Myer looking to use this to drive growth from $422m in FY20 to $1bn in the medium term.

Even with a turnaround underway and accelerating online growth, the broker considers the external environment challenging and the shape of the recovery uncertain.

Ord Minnett maintains its Hold rating with a target price of $0.20.

Target price is $0.20 Current Price is $0.21 Difference: minus $0.01 (current price is over target).
If MYR meets the Ord Minnett target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $0.29, suggesting upside of 36.5% (ex-dividends)

The company's fiscal year ends in July.

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

Morgan Stanley rates NCM as Overweight (1) -

Morgan Stanley notes drill results have confirmed large, high grade mineralisations at both Havieron and Red Chris. The broker expects resources planned for the December quarter and March quarter to be significant catalyst events for Newcrest Mining.

Given the scale of deposits at Havieron, the broker expects a caving operation but notes ore body inconsistencies may complicate mine design. For Red Chris, maiden resource is planned in the March quarter of FY21.

Morgan Stanley maintains its Overweight rating with a target price of $35.70. Industry view: Attractive.

Target price is $35.70 Current Price is $31.80 Difference: $3.9
If NCM meets the Morgan Stanley target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $34.83, suggesting upside of 11.5% (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: 0.2

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

Ord Minnett rates NCM as Accumulate (2) -

Ord Minnett notes Newcrest Mining’s growth projects results continue to impress. Havieron looks promising for a bulk underground mining operation with mineralisation confirmed. 

The broker believes the market will attribute further value to the Havieron and Red Chris projects as drilling, resources and studies are released over the next 3–12 months.

Ord Minnett maintains its Accumulate rating with a $35 target price.

Target price is $35.00 Current Price is $31.80 Difference: $3.2
If NCM meets the Ord Minnett target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $34.83, suggesting upside of 11.5% (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: 0.2

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

Macquarie rates NEA as Outperform (1) -

Nearmap is raising funds via an underwritten institutional share placement for $70m and non-underwritten SPP of $20m.

Macquarie suggests this will bolster the balance sheet and allows management to push ahead with growth plans in the US. It  will also enable the rolling out of HyperCamera3.

Overall, the company is targeting growth in three key verticals (insurance, government, roofing) to gain scale in North America.

The broker highlights trading for FY21 to-date is in-line with a recent update, with absolute growth similar to the same period in FY20. 

Macquarie raises Annualised Contract Value (ACV) estimates for FY21 and FY22 by 2% and 5%, respectively.

The Outperform rating is unchanged and the target price is increased to $3.20 from $2.75.

Target price is $3.20 Current Price is $2.89 Difference: $0.31
If NEA meets the Macquarie target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $3.07, suggesting upside of 24.2% (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

Morgan Stanley rates NEA as Overweight (1) -

Nearmap announced a $70m placement and a $20m share purchase plan. Morgan Stanley notes current trading is in line with expectations.

The broker's key concern is Nearmap was in a similar situation before in 2018 where it had committed to break even in FY19 and had raised $70m with $15m committed to growth initiatives.

The broker is concerned 50% of the proceeds are meant for growth initiatives. Noting there is less headroom in this raise than in 2018, the broker waits for more clarity on the issue.

The broker is overweight on the stock with a target price of $3. Industry view: In-line.

Target price is $3.00 Current Price is $2.89 Difference: $0.11
If NEA meets the Morgan Stanley target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $3.07, suggesting upside of 24.2% (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

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

Macquarie upgrades its rating of NextDC from Neutral to Outperform, as the share price has retraced around -12% from recent highs.

The broker explains it is one of the few companies benefiting both short and long term from covid-19, as enterprises globally accelerate digital transformation plans.

The target price is unchanged at $12.30.

Target price is $12.30 Current Price is $11.15 Difference: $1.15
If NXT meets the Macquarie target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $12.67, suggesting upside of 14.9% (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

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

Citi initiates coverage of Omni Bridgeway with a Buy.

The company is the global leader in dispute resolution finance. It provides external funding for clients to pursue legal claims and in turn receives a portion of the proceeds from successful cases.

The broker views the business as an attractive exposure to an asset class that is relatively under penetrated, with prospects for uncorrelated returns to equities.

The analyst expects the next circa two years to be a unique and supportive period where gross income can rise around two times as maturing investments are harvested. Thereafter, the company's transformation toward a more resilient earnings stream should also come to the fore.

Despite rising regulatory headwinds in Australia, Citi sees this as broadly manageable and could even be slightly positive.

 The target price is $5.00.

Target price is $5.00 Current Price is $3.97 Difference: $1.03
If OBL meets the Citi target it will return approximately 26% (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

UBS rates OSH as Buy (1) -

UBS reduces its price target to $3.70 from $4.30.

UBS assesses both the current low oil prices and the global LNG glut will delay final investment decisions for PNG LNG expansion by 2 years to 2023 and for Alaska by 1 year to 2022.

This and the reduction in up-front capex needed for the Alaskan development supports the broker's view Oil Search has sufficient liquidity to avoid raising capital until 2022.

Seeing few near-term catalysts, UBS considers Oil Search to be its least-preferred energy exposure under coverage. The broker retains its Buy rating.

Target price is $3.70 Current Price is $2.96 Difference: $0.74
If OSH meets the UBS target it will return approximately 25% (excluding dividends, fees and charges).

Current consensus price target is $3.57, suggesting upside of 24.9% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Forecast for FY21:

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

Market Sentiment: 0.6

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

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

Morgan Stanley expects the iron ore market to be in surplus from the last quarter of 2020. However, the broker also expects stronger steel production in China and dismisses concerns about any buildup in China's port ore stocks.

This also prompts Morgan Stanley to raise its fourth-quarter 2020 and 2021 iron ore price forecasts to US$100/t and US$81/t. Long-term projections remain unchanged.

While Rio Tinto is doing well on spot prices, the broker considers its valuation stretched. Also, Rio Tinto's more limited portfolio diversification is expected to lead to slightly inferior free cash flow yields of circa 5% in a US$70/t price environment.

Morgan Stanley retains an Equal-weight rating with the target price increasing to $99.50 from $92.50. Industry view: Attractive.

Target price is $99.50 Current Price is $100.45 Difference: minus $0.95 (current price is over target).
If RIO meets the Morgan Stanley target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $106.64, suggesting upside of 6.9% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Forecast for FY21:

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

Market Sentiment: 0.2

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

Macquarie rates RSG as Outperform (1) -

Resolute Mining has received a strike notice from the Local Union informing the company that a potential ten day strike has decided to be observed. The company has withdrawn CY20 production and cost guidance.

Macquarie notes the strike has the potential to impact production at Syama in the second half of CY20, particularly given the softness that was seen in the sulphide plant's metrics in the first quarter. This was following the most recent restart of the roaster in late 2019.

The broker does not expect the company to encounter balance sheet or hedge delivery stress. Despite the near-term risk of strike and current political instability in Mali, the broker believes the company's longer-term deleveraging story is intact.

The Outperform rating is unchanged and the target price is decreased to $1.40 from $1.60.

Target price is $1.40 Current Price is $1.00 Difference: $0.4
If RSG meets the Macquarie target it will return approximately 40% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 1.0

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

Citi rates SIG as Buy (1) -

Sigma Healthcare reported first half adjusted profit (NPAT) and adjusted earnings (EBITDA) that were largely in-line with Citi estimates.

The broker highlights the company pharmacy brands grew like-for-like sales by the very high number of 9.5%. Wholesale sales were up 15.1%, while hospital sales grew 22% (excluding Hep C), with market share approaching 10%.

No specific guidance was provided, but management stated the second half should be 'much stronger' than the first half. Citi forecasts FY23 earnings (EBITDA) of $109m vs the company target of greater than $100m.

Citi adjusts FY21, FY22 and FY23 EPS estimates by -12%, 0% and -3%.

The Buy rating is is unchanged and the target price is decreased to $0.75 from $0.8.

Target price is $0.75 Current Price is $0.65 Difference: $0.1
If SIG meets the Citi target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $0.68, suggesting upside of 6.3% (ex-dividends)

The company's fiscal year ends in January.

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 SIG as Upgrade to Outperform from Neutral (1) -

Sigma Healthcare's -8% fall in underlying earnings was a solid result under the circumstances, Credit Suisse suggests. No dividend was declared and no guidance offered.

The broker forecasts 21% compound earnings growth over FY20-23 driven by cost-outs, the full ramp-up of the Chemist Warehouse
contract and continued above-market growth in retail, aided by diminished regulatory headwinds. The end of the company's capex investment cycle leaves sufficient balance sheet capacity for growth.

Credit Suisse upgrades to Outperform from Neutral. Target rises to 70c from 64c.

Target price is $0.70 Current Price is $0.65 Difference: $0.05
If SIG meets the Credit Suisse target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $0.68, suggesting upside of 6.3% (ex-dividends)

The company's fiscal year ends in January.

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

UBS rates SIG as Neutral (3) -

Sigma Healthcare reported its first-half revenue was down -12.5% with operating income and net profit down by -6% and -5%.

Retail pharmacy wholesale revenue saw strong growth at 15.1%, which UBS notes is materially above market projections. No formal earnings guidance was provided but management noted the positive momentum in the first half had carried into the early second half of FY21.

UBS has downgraded its FY21-23 earnings forecasts.

UBS maintains its Neutral rating with the target price increasing to $0.67 from $0.66.

Target price is $0.67 Current Price is $0.65 Difference: $0.02
If SIG meets the UBS target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $0.68, suggesting upside of 6.3% (ex-dividends)

The company's fiscal year ends in January.

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

UBS rates STO as Upgrade to Buy from Neutral (1) -

UBS expects Santos to achieve its target free cash flow breakeven in 2020 which will help it reduce its gearing levels over FY20-22. The broker points out Santos has better access to existing infrastructure than its peers that will help it reduce its capex.

The company has three diversified growth projects that are near-term catalysts and provide Santos the best leverage to near-term growth, highlights the broker.

Considering Santos as its most preferred energy exposure stock, UBS upgrades its rating to Buy with the target price increasing to $6.50 from $6.

Target price is $6.50 Current Price is $5.13 Difference: $1.37
If STO meets the UBS target it will return approximately 27% (excluding dividends, fees and charges).

Current consensus price target is $6.62, suggesting upside of 30.4% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Forecast for FY21:

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 WPL as Buy (1) -

UBS believes processing Scarborough gas at the North West Shelf (NWS) is the most value accretive of the various approaches assessed. If Woodside Petroleum were to acquire an additional 33% equity in the NWS, the broker thinks this may allow the company to pivot towards the higher value Scarborough concept.

The broker reckons the market has oversold Woodside on growth capex concerns over the next 4 years. Noting the company offers the highest dividend yield of the Australian large-cap energy stocks, UBS maintains a Buy rating and reduces the target to $23.50 from $26.

Target price is $23.50 Current Price is $18.42 Difference: $5.08
If WPL meets the UBS target it will return approximately 28% (excluding dividends, fees and charges).

Current consensus price target is $23.27, suggesting upside of 28.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Forecast for FY21:

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

Market Sentiment: 0.7

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