Australian Broker Call

Citi rates ALL as Buy (1) -

While digital industry bookings have flattened out over the last 12 months, explains Citi, growth in industry Social Casino bookings continued in June with Aristocrat Leisure titles outperforming.

The analyst views the company's Social Casino portfolio favourably given its relative stability. Citi's Buy rating is based not only on Social Casino but also the ongoing outperformance of the land-based business and the long-term prospects for real money gaming (RMG).

The $42.80 target is unchanged.

Target price is $42.80 Current Price is $38.82 Difference: $3.98
If ALL meets the Citi target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $44.00, suggesting upside of 11.7% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.9

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

Citi rates APX as Sell (5) -

According to Citi, website data points to weak trends across Appen's two largest customers (Facebook and Google) in June, and now there's potential for the expected lift in 2H revenue to not occur.

Moreover, key competitor Telus International has recently downgraded its guidance, citing weakness from large Technology customers.

The Sell rating and $2.40 target are unchanged.

Target price is $2.40 Current Price is $2.34 Difference: $0.06
If APX meets the Citi target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $1.99, suggesting downside of -12.4% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: -0.8

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

Citi rates AX1 as Neutral (3) -

Pressures from the likes of wages, rent and utilities continue to build, at the same time as foot traffic to Australian retail stores has further weakened, explains Citi.

As a result of this environment, the broker lowers its EPS forecasts for Accent Group and its target falls to $1.80 from $2.14.

The analysts note the company's new store formats are only having mixed success and suggest debt levels should be reduced during a time of slumping consumer demand. Greater disclosure around store rollout targets would also be appreciated. Neutral.

Target price is $1.80 Current Price is $1.73 Difference: $0.07
If AX1 meets the Citi target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $1.93, suggesting upside of 15.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.0

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

Shaw and Partners rates BC8 as Buy (1) -

Black Cat Syndicate has updated its pre-feasibility study for Kal East gold project. Capital expenditure has increased to $99m from $88m and AISC to $1618/oz from $1520/oz.

The company is intent on bringing Paulsens back into production over the next 12 months and Shaw and Partners notes, while a three-year mine life may seem short, this is an existing operation and additional resources are likely to extend the mine life.

Subsequently, attention will be on Kal East or Coyote. The broker points out the company is unlikely to develop Kal East until construction and accommodation conditions improve around Kalgoorlie. Buy rating and $0.83 target retained.

Target price is $0.83 Current Price is $0.44 Difference: $0.39
If BC8 meets the Shaw and Partners target it will return approximately 89% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

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

Morgans rates BHP as Add (1) -

With global inflationary pressures and volatile commodity pricing plaguing the Resources sector, Morgans considers BHP Group offers the best risk/reward proposition in the sector.

Ahead of the June operational result on July 20 and FY23 earnings result on August 22, the broker raises its target to $51.70 from $50.40 after allowing for the OZ Minerals acquisition. Lower iron ore pricing assumptions are also adopted and the financial model rolled forward.

The analyst expects healthy Pilbara shipments will be the key driver of the Q4 operational result. A special dividend is considered unlikely with the company still digesting the Oz Minerals acquisition. The Add rating is retained.

Target price is $51.70 Current Price is $45.52 Difference: $6.18
If BHP meets the Morgans target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $44.20, suggesting downside of -2.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

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

Market Sentiment: 0.2

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

Macquarie rates CNB as Outperform (1) -

Carnaby Resources has reported thick, high-grade copper/gold assays and pXRF results from Mount Hope and, Macquarie notes, remains well capitalised to continue exploration at Greater Duchess over 2023.

A maiden resource for Greater Duchess is expected in the September quarter which the broker estimates could exceed 300,000t of copper.

Continued exploration success has potential to provide upside to the broker's base case. Outperform. Target is $1.70.

Target price is $1.70 Current Price is $1.20 Difference: $0.5
If CNB meets the Macquarie target it will return approximately 42% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

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

Citi rates IGO as Neutral (3) -

As a result of today's update by IGO, Citi reduces its net asset value for the Cosmos mine by -$300m due to higher capex and opex estimates and lowers its target to $16.30 from $16.80. The Neutral rating is retained.

The broker was surprised by the -$880-980m non-cash impairment revealed by management for the Western Areas assets, which were acquired for -$1.3bn.

The analyst will have to wait until December, when external consultants will review the mine plan and capex, before getting a handle on how bad the situation is at Cosmos. 

The Western Area assets are risked at $380m (or 50cps) and the broker ascribes no value to the company's downstream nickel strategy, with a study due by mid-24.

Target price is $16.30 Current Price is $16.12 Difference: $0.18
If IGO meets the Citi target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $16.58, suggesting upside of 7.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.2

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

Macquarie rates KMD as Neutral (3) -

KMD Brands is guiding to second half operating earnings being down -24% as it endures weak Australasian winter trading for the Kathmandu brand.

This substantially misses forecasts and Macquarie remains cautious for FY24 amid ongoing macro pressures. Rip Curl and Kathmandu will cycle comparable sales growth of 13.9% and 48.8%, respectively, over the first half of FY24.

Neutral rating maintained. Target is reduced to 90c from 97c.

Target price is $0.90 Current Price is $0.88 Difference: $0.02
If KMD meets the Macquarie target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $0.98, suggesting upside of 9.6% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY23:

Forecast for FY24:

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

Market Sentiment: 0.3

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

Macquarie rates LLL as Outperform (1) -

Leo Lithium has awarded the mining services contract at Goulamina to Corica Mali for open pit operations, worth US$348m. The company continues to target first DSO shipment in the fourth quarter of 2023 with spodumene production in the first half of 2024.

Macquarie assesses, while the awarding of the services contract is a positive, the value is slightly higher than it expected. First DSO exports remain the key de-risking step. Outperform retained. Target is reduced to $1.55 from $1.60.

Target price is $1.55 Current Price is $1.19 Difference: $0.365
If LLL meets the Macquarie target it will return approximately 31% (excluding dividends, fees and charges).

The company's fiscal year ends in March.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

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

Citi rates LYC as Buy (1) -

Citi lowers its long-term NdPr price forecast to US$100 from US$105 in the expectation of a market surplus throughout 2023 (and as a result of a falling spot price. Consequently, the target for Lynas Rare Earths is lowered to $7.55 from $8.15.

Ongoing weak magnet purchasing activity and the production quota increase in the first half of 2023 have resulted in the market surplus, explain the analysts. Prices are expected to rally in Q4 and into 2024 ahead of the Chinese spring festival closures.

Citi likes the long-term outlook for Lynas Rare Earths but is wary around near-term production and pricing risks. Neutral.

Target price is $7.55 Current Price is $7.10 Difference: $0.45
If LYC meets the Citi target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $7.88, suggesting upside of 13.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.4

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

Citi rates MPL as Neutral (3) -

Citi likes the solid operational outlook for Medibank Private but concerns remain around risks of further impacts from prior cyber attacks.

APRA is set to conduct a targeted technology review of the company, with a particular focus on governance and risk culture, while class actions are still ongoing.

Nonetheless, the broker believes Medibank should meet guidance and potentially regain some of the market share previously lost.

The Neutral rating and $3.45 target are maintained.

Target price is $3.45 Current Price is $3.35 Difference: $0.1
If MPL meets the Citi target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $3.61, suggesting upside of 4.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.2

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

Citi rates MQG as Neutral (3) -

Citi believes renewed earnings momentum in the 1Q for Macquarie Group will be hard to achieve given the group will be cycling very strong contributions from both the Macquarie Asset Management and Macquarie Capital segments.

Moreover, oil & gas volatility was unusually quiet in the 1Q, which the analysts expect will impact upon the Commodities and Global Markets division.

All will be revealed at the group's AGM on July 27. The broker's Neutral rating and $175 target are unchanged.

Target price is $175.00 Current Price is $182.70 Difference: minus $7.7 (current price is over target).
If MQG meets the Citi target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $193.36, suggesting upside of 5.9% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.6

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

Ord Minnett rates PNR as Initiation of coverage with Speculative Buy (1) -

Ord Minnett initiates coverage on gold producer and explorer Pantoro with a Speculative Buy rating based on the company's strong balance sheet and exploration potential.

Pantoro has two operating assets in Western Australia: Halls Creek which is approaching the end of its operating life and Norseman
which is ramping up production in the Wiluna gold field region.

The broker highlights the success of other hub-and-spoke type mining operations in the Wiluna gold field, such as Ramelius Resources ((RMS)) and Silver Lake Resources ((SLR)).

The analyst forecasts Norseman will produce around 100koz at an average all-in sustaining cost (AISC) of circa $1,720/oz over six years. A 12c target is set.

Target price is $0.12 Current Price is $0.08 Difference: $0.039
If PNR meets the Ord Minnett target it will return approximately 48% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

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

Bell Potter rates PPT as Buy (1) -

Bell Potter expects Perpetual will update on funds under management (FUM) later in July and subsequently release its FY23 results on August 24.

The broker notes equity returns were strong in the second quarter and ahead of forecasts  and asset management FUM of $213.1bn is expected. Investment returns are expected to be 3% over the fourth quarter.

The broker continues to find stock attractive, with greater scale and diversity post the acquisition of Pendal. Buy rating retained. Target is raised to $32.00 from $30.60.

Target price is $32.00 Current Price is $25.90 Difference: $6.1
If PPT meets the Bell Potter target it will return approximately 24% (excluding dividends, fees and charges).

Current consensus price target is $30.69, suggesting upside of 18.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.8

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

Citi rates QBE as Buy (1) -

A change in reporting standards (AASB17) for QBE Insurance has been factored into Citi's forecasts resulting in only minimal changes and the $17.30 target and Buy rating are unchanged.

The broker notes premium rates are still likely strong across all key divisions and suggests the North America business will be key to
the future share price performance.

Target price is $17.30 Current Price is $14.99 Difference: $2.31
If QBE meets the Citi target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $16.55, suggesting upside of 10.0% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY23:

Forecast for FY24:

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

Market Sentiment: 0.7

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

Bell Potter rates RMY as Speculative Buy (1) -

RMA Global posted a solid fourth quarter update, in Bell Potter's view, relative to underlying market conditions. The broker eases back US subscriber assumptions because of heightened interest rate expectations in the US and the impact on sales volumes.

This results in FY24 and FY25 revenue downgrades of -6% and -9%, respectively. The broker retains a Speculative Buy rating based on early-stage success in penetrating the large US market. Target is reduced to $0.18 from $0.21.

Target price is $0.18 Current Price is $0.09 Difference: $0.09
If RMY meets the Bell Potter target it will return approximately 100% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

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

Citi rates WHC as Buy (1) -

Following today's Q4 production report by Whitehaven Coal, Citi highlights an improvement for realised pricing, with thermal coal sales achieving a 10% premium to the global coal NEWC index for thermal coal.

The broker notes the company achieved high premiums for the supply of high quality coal contracted in a tight supply environment.

Run-of-mine coal production for the quarter came in at the lower end of 18-19.2mt guidance on underperformance at Narrabri, while 16mt of managed coal sales were at the top end of guidance for 15.3-16mt.

Compared to the analyst's unit cost (pre royalties) forecast of $105/t, $103/t is now expected by management.

Target $7.80. Buy.

Target price is $7.80 Current Price is $6.65 Difference: $1.15
If WHC meets the Citi target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $7.91, suggesting upside of 16.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.7

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