Australian Broker Call

Citi rates ANZ as Neutral (3) -

It is Citi's observation Aussie banks have outperformed in 2021-2023 on the back of excess liquidity to battle covid but the outlook for the sector is now seen deteriorating as liquidity is withdrawn and loan growth slows.

While share market optimism in relation to the soft landing narrative continues to support share prices, Citi argues deterioration in underlying profitability makes it hard to see the sector outperforming from here.

The broker is recommending a portfolio underweight allocation for the sector. Its order of preference is Westpac first, followed by ANZ Bank, CommBank, National Australia Bank, then 'Bendelaide', and Bank of Queensland last.

No changes have been made to ANZ Bank's forecasts, Neutral rating or $26 price target.

Target price is $26.00 Current Price is $26.06 Difference: minus $0.06 (current price is over target).
If ANZ meets the Citi target it will return approximately minus 0% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $26.15, suggesting upside of 1.0% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.3

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

Morgans rates AVH as Add (1) -

Avita Medical released preliminary FY23 results, alongside guidance for FY24 and a distribution agreement with Stedical Scientific.

In response, Morgans has upgraded its forecasts, positioning around the lower end of company's guidance, but Ebitda forecasts have moved higher for both FY24 and FY25.

As sales and marketing costs are expected to pick up, the company is likely to continue reporting losses for the years ahead.

Morgans sticks with its Add rating, while the valuation/price target has increased to $6.40 from $5.90.

Target price is $6.40 Current Price is $4.56 Difference: $1.84
If AVH meets the Morgans target it will return approximately 40% (excluding dividends, fees and charges).

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: 0.8

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

Citi rates BEN as Downgrade to Sell from Neutral (5) -

It is Citi's observation Aussie banks have outperformed in 2021-2023 on the back of excess liquidity to battle covid but the outlook for the sector is now seen deteriorating as liquidity is withdrawn and loan growth slows.

While share market optimism in relation to the soft landing narrative continues to support share prices, Citi argues deterioration in underlying profitability makes it hard to see the sector outperforming from here.

The broker is recommending a portfolio underweight allocation for the sector. Its order of preference is Westpac first, followed by ANZ Bank, CommBank, National Australia Bank, then 'Bendelaide', and Bank of Queensland last.

Citi's sector update includes a downgrade in rating for Bendigo & Adelaide Bank, to Sell from Neutral, with a revised price target of $8.85 (was $9.25).

Target price is $8.85 Current Price is $9.77 Difference: minus $0.92 (current price is over target).
If BEN meets the Citi target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $9.09, suggesting downside of -6.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: -0.3

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

Citi rates BOQ as Downgrade to Sell from Neutral (5) -

It is Citi's observation Aussie banks have outperformed in 2021-2023 on the back of excess liquidity to battle covid but the outlook for the sector is now seen deteriorating as liquidity is withdrawn and loan growth slows.

While share market optimism in relation to the soft landing narrative continues to support share prices, Citi argues deterioration in underlying profitability makes it hard to see the sector outperforming from here.

The broker is recommending a portfolio underweight allocation for the sector. Its order of preference is Westpac first, followed by ANZ Bank, CommBank, National Australia Bank, then 'Bendelaide', and Bank of Queensland last.

Citi's sector update includes a downgrade in rating for Bank of Queensland, to Sell from Neutral, with unchanged price target of $5.20.

Target price is $5.20 Current Price is $6.10 Difference: minus $0.9 (current price is over target).
If BOQ meets the Citi target it will return approximately minus 15% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.57, suggesting downside of -7.0% (ex-dividends)

The company's fiscal year ends in August.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: -0.5

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

Citi rates CBA as Sell (5) -

It is Citi's observation Aussie banks have outperformed in 2021-2023 on the back of excess liquidity to battle covid but the outlook for the sector is now seen deteriorating as liquidity is withdrawn and loan growth slows.

While share market optimism in relation to the soft landing narrative continues to support share prices, Citi argues deterioration in underlying profitability makes it hard to see the sector outperforming from here.

The broker is recommending a portfolio underweight allocation for the sector. Its order of preference is Westpac first, followed by ANZ Bank, CommBank, National Australia Bank, then 'Bendelaide', and Bank of Queensland last.

Sell rating retained for CommBank  with an $84 price target.

Target price is $84.00 Current Price is $113.60 Difference: minus $29.6 (current price is over target).
If CBA meets the Citi target it will return approximately minus 26% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $90.45, suggesting downside of -20.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: -0.5

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

Bell Potter rates CRN as Buy (1) -

Bell Potter believes bad weather may have impacted on Coronado Global Resources' Bowen Basin activity during the December quarter. As such, the broker would not be surprised if the next quarterly update disappoints.

Bell Potter has pared back its forecasts, somewhat, but also warns: adverse weather conditions at Curragh may continue into the March quarter.

Today's update also includes the latest mark-to-market for hard coking coal prices, which proved 11% higher than forecast in Q4. The 2024 forecast has been increased to US$269/tonne, up 2% from the prior assumption.

EPS forecasts (in AUD) have noticeably increased. Bell Potter remains positive on the outlook for met coal prices, hence why that Buy rating remains firmly in place. Target gains 15c to $2.15.

Target price is $2.15 Current Price is $1.77 Difference: $0.38
If CRN meets the Bell Potter target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $2.13, suggesting upside of 21.7% (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: 0.9

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

Macquarie rates CXO as Neutral (3) -

The strategic review at Core Lithium has led to the suspension of all activity at its Grants Open Pit mine until lithium prices recover. Meanwhile, there are 280kt in stockpiles that will last until mid-year.

No surprise, the impact on Macquarie's forecasts is substantially negative. Management at Core Lithium has flagged there will be an impairment charge.

The broker's target price tumbles to 20c from 32c. Neutral rating retained, with the analyst commenting preserving cash gives management at the firm optionality including "exploration in a suppressed lithium price environment".

Target price is $0.20 Current Price is $0.20 Difference: $0
If CXO meets the Macquarie target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $0.25, suggesting upside of 17.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: -0.3

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

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

The Healius share price has moved higher but Morgan Stanley continues to see ongoing earnings uncertainty. Downgrade to Underweight from Equal-weight.

The broker finds the company's FY24 guidance looks too rosy. It's not like management has a favourable track record to overcome the broker's concern.

$1.30 price target remains unaffected. Industry view In-Line.

Target price is $1.30 Current Price is $1.58 Difference: minus $0.28 (current price is over target).
If HLS meets the Morgan Stanley target it will return approximately minus 18% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $1.83, suggesting upside of 25.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.0

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

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

We believe Morgan Stanley has downgraded Insignia Financial to Underweight from Equal-weight.

Target price is $2.85 Current Price is $2.38 Difference: $0.47
If IFL meets the Morgan Stanley target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $2.59, suggesting upside of 12.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.0

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

Citi rates NAB as Sell (5) -

It is Citi's observation Aussie banks have outperformed in 2021-2023 on the back of excess liquidity to battle covid but the outlook for the sector is now seen deteriorating as liquidity is withdrawn and loan growth slows.

While share market optimism in relation to the soft landing narrative continues to support share prices, Citi argues deterioration in underlying profitability makes it hard to see the sector outperforming from here.

The broker is recommending a portfolio underweight allocation for the sector. Its order of preference is Westpac first, followed by ANZ Bank, CommBank, National Australia Bank, then 'Bendelaide', and Bank of Queensland last.

National Australia Bank is rated Sell with a $25.75 price target.

Target price is $25.75 Current Price is $30.97 Difference: minus $5.22 (current price is over target).
If NAB meets the Citi target it will return approximately minus 17% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $27.48, suggesting downside of -10.9% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: -0.5

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

Macquarie rates PNI as Outperform (1) -

Pinnacle Investment Management's market update surprised positively through higher-than-anticipated performance fees, but Macquarie's forecasts now also incorporate higher costs and a one-off charge related to OpenInvest.

The end result is for minuscule adjustments to forecasts. The broker's price target loses -1c to $10.75. Outperform.

Pinnacle Investment Management is scheduled to release interim financials on February 1.

Target price is $10.75 Current Price is $10.03 Difference: $0.72
If PNI meets the Macquarie target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $9.58, suggesting downside of -4.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.5

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

Citi rates WBC as Neutral (3) -

It is Citi's observation Aussie banks have outperformed in 2021-2023 on the back of excess liquidity to battle covid but the outlook for the sector is now seen deteriorating as liquidity is withdrawn and loan growth slows.

While share market optimism in relation to the soft landing narrative continues to support share prices, Citi argues deterioration in underlying profitability makes it hard to see the sector outperforming from here.

The broker is recommending a portfolio underweight allocation for the sector. Its order of preference is Westpac first, followed by ANZ Bank, CommBank, National Australia Bank, then 'Bendelaide', and Bank of Queensland last.

Sector-favourite Westpac has a Neutral rating with a $22.25 price target.

Target price is $22.25 Current Price is $23.24 Difference: minus $0.99 (current price is over target).
If WBC 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 $22.36, suggesting downside of -3.6% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: -0.1

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

Bell Potter rates WHC as Sell (5) -

Forecasts for Whitehaven Coal have been updated for lower-than-expected thermal coal pricing in the December quarter, as well as moves on the currency front.

Bell Potter has slightly increased its forecast for hard coking coal. The end result is for a -3% cut to the FY24 EPS estimate, no change to the FY25 number and a 9% lift for the FY26 EPS forecast.

The price target lifts to $7.25 from $6.50, but remains below the share price. Hence why the rating remains Sell.

Target price is $7.25 Current Price is $8.05 Difference: minus $0.8 (current price is over target).
If WHC meets the Bell Potter target it will return approximately minus 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $7.81, suggesting downside of -2.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.4

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

Citi rates WOR as Buy (1) -

Shares in Worley rallied 16% in 2023, but have fallen this week on the back of corruption in Ecuador revelations. Citi analysts have been positive on the company for a while, and they reiterate their bullish stance.

In their view, the release of financial results in February, as well as the strategy day in May, might prove a positive catalyst for the shares.

Key risk seems to be concentrated around the CP2 LNG project in the US with the analysts highlighting if this project continues to experience delays to FID, earnings growth might underwhelm in FY25.

Target $20.50 (unchanged). Buy.

Target price is $20.50 Current Price is $16.20 Difference: $4.3
If WOR meets the Citi target it will return approximately 27% (excluding dividends, fees and charges).

Current consensus price target is $18.78, suggesting upside of 17.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.5

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