Australian Broker Call

Credit Suisse rates ALL as Outperform (1) -

Credit Suisse asserts real money gambling is going digital in the US, and fast. Originally, the broker assessed this would be a narrow content adjacency for Aristocrat Leisure but it appears to have gone the other way and is now a systems market critical to the future.

The broker believes the company should act and perhaps sacrifice short-term returns for a strong market position in real money internet gaming.

The broker incorporates $1bn for an acquisition and upgrades long-term cash net profit growth in its forecasts. Outperform maintained. Target rises to $30 from $28.

Target price is $30.00 Current Price is $28.29 Difference: $1.71
If ALL meets the Credit Suisse target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $30.52, suggesting upside of 4.4% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.9

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

Credit Suisse rates CGF as Upgrade to Outperform from Neutral (1) -

Credit Suisse assesses Challenger is trading at a significant discount to book value. While there may be some downside risk to FY21 earnings and the first half is likely to be challenging, there is significant valuation support.

Moreover, the broker notes potential for a positive catalyst with the government's retirement income review, possibly due around the budget in October.

Rating is upgraded to Outperform from Neutral. Target is steady at $4.25.

Target price is $4.25 Current Price is $3.63 Difference: $0.62
If CGF meets the Credit Suisse target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $4.35, suggesting upside of 14.9% (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 CSL as Outperform (1) -

Credit Suisse believes the pandemic will promote a sustained increase in flu vaccination rates over the next 2-3 years.

The broker calculates industry volume growth of 10% in FY21 and Seqirus should gain share, with seasonal vaccine volume growth of 14% and revenue growth of 19%.

CSL is launching Fluad QIV in the US in FY21, in Europe in FY22, and a significant shift to this version is considered likely, aiding margin. Credit Suisse retains an Outperform rating and $333 target.

Target price is $333.00 Current Price is $287.24 Difference: $45.76
If CSL meets the Credit Suisse target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $310.39, suggesting upside of 6.6% (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 HLS as Outperform (1) -

Macquarie reviews the pathology margins, noting these have declined over time but expansion is now likely to FY23.

Contributions from Covid-19 testing as well as a recovery in base volumes are positive indicators going forward. There are also opportunities for growth, given an improved balance sheet.

A demonstration of operating leverage within pathology will be a catalyst for a multiple re-rating, in the broker's view. Outperform retained. Target rises to $3.80 from $3.70.

Target price is $3.80 Current Price is $3.33 Difference: $0.47
If HLS meets the Macquarie target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $3.51, suggesting upside of 4.9% (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 JBH as Upgrade to Outperform from Neutral (1) -

Consumer spending was elevated over the September quarter as durables benefited from constraints on travel and services. Moreover, Macquarie points out a new 5G handset and console launches will create interest going into Christmas.

The broker's research suggests the online offering from JB Hi-Fi handled demand better over the second half compared with many peers.

Consumer durable expenditure is likely to remain elevated for the rest of 2020 and provide upside for the short term. Hence, the broker upgrades to Outperform from Neutral. Target is raised to $53.70 from $48.80.

Target price is $53.70 Current Price is $46.76 Difference: $6.94
If JBH meets the Macquarie target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $48.18, suggesting upside of 1.1% (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

Morgan Stanley rates LLC as Resume coverage with Equal-weight (3) -

Morgan Stanley believes the focus on urbanisation will appeal. However, the timing of the ramp up may depend on securing tenant pre-commitments and this will not be easy in the short term.

The financial close of the sale of engineering means Lendlease is now a cleaner business with a sharp focus on property development, while the business plan is attractive in the broker's view.

Morgan Stanley resumes coverage with an Equal-weight rating and $13.55 target. Industry view: In-line.

Target price is $13.55 Current Price is $11.90 Difference: $1.65
If LLC meets the Morgan Stanley target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $13.89, suggesting upside of 17.5% (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 OPC as Hold (3) -

Uniti Group ((UWL)) has revised its OptiComm offer to $5.85, which consists of $4.835 in cash (including the $0.10 dividend) plus 0.80537 Uniti Group shares per 1 OptiComm share. The Uniti Group share component was valued at $1.01 (using a $1.26 Uniti Group share price).

First State Super (FSS) has until 18 September to make a formal offer, its current one being highly conditional.

The OptiComm board recommends in favour of Uniti Group.

Morgans continues to recommend holding to see what happens next. The broker notes the Uniti Group's 19.5% stake in OptiComm will make thinks harder for First State Super. An increase in Uniti Group's share price increases the offer price.

The Hold rating is unchanged and the target price is increased to $5.85 from $5.10.

Target price is $5.85 Current Price is $6.00 Difference: minus $0.15 (current price is over target).
If OPC meets the Morgans target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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

Ord Minnett rates OPC as Hold (3) -

Under the revised scheme of arrangement Uniti Group ((UWL)) has included a larger cash component. This implies a 15% premium to the prior cash option.

The company has acquired a 19.5% beneficial interest in OptiComm shares, creating a blocking position which Ord Minnett suggests makes a competing bid more challenging.

Ord Minnett maintains its Hold rating with a target price of $5.42 as the process continues.

Current Price is $6.00. Target price not assessed.

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

Ord Minnett rates QBE as Accumulate (2) -

In a test case brought by the UK Financial Conduct Authority against insurers regarding business interruption claims, the High Court appears to have largely ruled in favour of the insured.

Ord Minnett notes QBE Insurance appears to have adverse findings for one policy type and more favourable findings for two others.

Pending further clarity, the broker retains an Accumulate rating and $12 target.

Target price is $12.00 Current Price is $9.28 Difference: $2.72
If QBE meets the Ord Minnett target it will return approximately 29% (excluding dividends, fees and charges).

Current consensus price target is $11.45, suggesting upside of 24.4% (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: 0.6

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

Morgans rates RED as Add (1) -

Red 5 has released the King of the Hills (KOTH) feasibility study, outlining a 16-year mine life producing 2.35Moz of gold at an average all-in sustaining cost (AISC) of $1,415/oz. The project development capital is estimated at $226m.

These results appear very positive to Morgans and show a pathway for the company to become a 250koz per annum producer by FY23. The updated ore reserve is also considered to underpin production.

The broker expects the company has sufficient cash reserves to develop KOTH if it can secure $165m of debt funding, which management is currently working toward.

The Add rating is unchanged and the target price is increased to $0.524 from $0.502.

Target price is $0.52 Current Price is $0.33 Difference: $0.194
If RED meets the Morgans target it will return approximately 59% (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

Ord Minnett rates SCG as Hold (3) -

Ord Minnett notes a report Scentre Group is proposing to issue subordinated notes. The hybrids would be issued in the US and Europe.

The broker expects the market to view such a move favourably, given uncertainty as to whether the balance sheet could handle further devaluations.

The hybrid issue would alleviate a lot of concerns, presuming it is treated as equity in gearing calculations.

Ord Minnett maintains its Hold recommendation with a $2.20 target price.

Target price is $2.20 Current Price is $2.21 Difference: minus $0.01 (current price is over target).
If SCG meets the Ord Minnett target it will return approximately minus 0% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.34, suggesting upside of 2.9% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.2

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

Macquarie rates SDF as Outperform (1) -

Macquarie assesses Steadfast Group is trading at a discount to comparable historical valuation. Guidance for FY21 implies growth in operating earnings (EBITA) of 7.3% and, in the broker's view, supports 5-10% growth in earnings per share.

The long track record of EPS growth around 10% suggests the current discount is not justified, and Macquarie retains an Outperform rating and $3.90 target.

Target price is $3.90 Current Price is $3.28 Difference: $0.62
If SDF meets the Macquarie target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $3.96, suggesting upside of 18.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.9

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

Ord Minnett rates UWL as Buy (1) -

Uniti Group has increased its offer for OptiComm ((OPC)) by 15%, raising the cash portion of the offer. Ord Minnett believes this provides a differentiating factor for those investors looking to benefit from the combined synergies.

The company has also purchased a 19.5% blocking interest which establishes a meaningful stake against potentially an increase in the competing offer.

Ord Minnett forecasts accretion of 17% under the revised terms and maintains a Buy rating. Target is reduced to $1.94 from $2.03.

Target price is $1.94 Current Price is $1.42 Difference: $0.52
If UWL meets the Ord Minnett target it will return approximately 37% (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 VEA as Overweight (1) -

Morgan Stanley assesses fuel volumes are likely to recover in late 2020 as Victoria comes out of lockdown, while retail margins continue to outperform forecasts and compensate for lower volumes.

The broker estimates more leverage for Viva Energy from higher margins, with the Australian government's fuel package expected to be supportive.

Overweight retained. Target is $2.55. Industry view is Cautious.

Target price is $2.55 Current Price is $1.59 Difference: $0.96
If VEA meets the Morgan Stanley target it will return approximately 60% (excluding dividends, fees and charges).

Current consensus price target is $2.09, suggesting upside of 29.0% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.4

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