Australian Broker Call

Macquarie rates ALD as Outperform (1) -

Macquarie previews 1H22 earnings forecasts for Australian fuel retailers, Ampol and Viva Energy.

The broker will be looking for commentary on cost pressures, and expects that the weakening crude premia in the 2H22 to impact on margins for refining, while retail margins at the pump have increased.

Macquarie expects Ampol to be the dividend winner and considers the stock to be attractively priced at 10.4x FY23 earnings forecasts.

Ampol is due to report earnings on August 22.

An Outperform rating is maintained and the price target is lowered to $38.00 from $39.25.

Target price is $38.00 Current Price is $32.29 Difference: $5.71
If ALD meets the Macquarie target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $37.57, suggesting upside of 13.4% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.8

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

Citi rates ALL as Buy (1) -

Citi notes strong growth from Aristocrat Leisure's Lighting Link through July, up 11% year-on-year, while RAID bookings improved and grew 17% month-on-month, but remain down -8% year-on-year. 

The broker notes risk in Aristocrat Leisure's ability to perform to consensus expectations across Digital, but finds its land based business well positioned. 

The Buy rating and target price of $41.00 are retained.

Target price is $41.00 Current Price is $35.12 Difference: $5.88
If ALL meets the Citi target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $43.11, suggesting upside of 26.3% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.9

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

Ord Minnett rates AMP as Hold (3) -

Ord Minnett expects a short-term positive catalyst for AMP from asset sales, which could yield $1bn in capital returns to shareholders
through buybacks post debt repayment.

However, in the medium-term, the broker sees significant risk in executing a cost-reduction program to offset revenue margin pressures.

After making adjustments to numerous moving parts within forecasts, the analyst reduces the target to $1.10 from $1.25 and maintains a Hold rating. These adjustments include guided weakness across Australian Wealth Management and the Multi-Asset Group division.

Target price is $1.10 Current Price is $1.17 Difference: minus $0.07 (current price is over target).
If AMP meets the Ord Minnett target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $1.08, suggesting downside of -6.9% (ex-dividends)

The company's fiscal year ends in December.

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

Citi rates APX as Neutral (3) -

Citi notes Appen could be losing market share, according to read-throughs from competitor Telus International's June results.

Given Telus International reported it has not seen a slowdown in demand for its AI data solutions, the broker notes Appen's issues could be company or project specific. 

The broker expects Appen remains a merger and acquisition target. The Neutral rating and target price of $6.60 are retained.

Target price is $6.60 Current Price is $4.40 Difference: $2.2
If APX meets the Citi target it will return approximately 50% (excluding dividends, fees and charges).

Current consensus price target is $4.70, suggesting downside of -5.6% (ex-dividends)

The company's fiscal year ends in December.

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

Ord Minnett rates ASX as Downgrade to Lighten from Hold (4) -

Ord Minnett reduces its rating for the ASX to Lighten from Hold on valuation and concerns over July volumes which showed pressures that may be ongoing for a few months. The target also falls to $82.50 from $84.86.

These pressures are from expenses related to the CHESS replacement, explains the analyst. There's also concerns around a new management team and the regulator's own concerns about the IT rollouts.

The broker estimates any benefits from the block chain technology will be small and have been pushed further out.

Target price is $82.50 Current Price is $85.73 Difference: minus $3.23 (current price is over target).
If ASX 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 $82.25, suggesting downside of -2.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: -0.4

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

Citi rates AZJ as Neutral (3) -

In an initial response to Aurizon Holdings' full year, Citi notes a largely in line result with earnings of $1,467m a beat on consensus expectations.

The broker does highlight operationally the result was softer, but improved Other expenses drove the result, down -$35m year-on-year. Coal production declined for the third year in a row, and the broker notes negative operating leverage should concern investors. 

The Neutral rating and target price of $3.81 are retained.

Target price is $3.81 Current Price is $4.04 Difference: minus $0.23 (current price is over target).
If AZJ meets the Citi target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.76, suggesting downside of -3.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: -0.2

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

Ord Minnett rates BHP as Hold (3) -

In an initial review, Ord Minnett estimates BHP Group's US$5.8bn bid for OZ Minerals could provide an around 10% earnings (EBITDA) uplift in FY28.  A dividend payout ratio of 70% is now thought to be optimistic, given funds will be required for the takeover.

The board of OZ Minerals has rejected the bid, which the broker believes is full, representing a 32% premium to the last closing price. The bid is thought to make strategic sense on a number of fronts.

History shows Ord Minnett the first bid is normally not the last. Also, another party with a more positive view on long-term copper may be willing to pay more than BHP.

The analyst feels mid-cap copper companies in general may benefit from bullish sentiment following the bid, particularly in light of the recent market sell-off.

The Hold rating and $43 target price are maintained.

Target price is $43.00 Current Price is $38.81 Difference: $4.19
If BHP meets the Ord Minnett target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $42.36, suggesting upside of 8.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

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 BSL as Buy (1) -

Given a rapid decline in ferrous scrap prices, UBS assumes the scrap market returns to long-run average prices rather than settling at higher levels. 

For BlueScope Steel, the target price slips by -5% to $23.50 after the analyst factors-in more conservative future average selling prices. The Buy rating remains. It's noted the share price has underperformed key peers in the last six months.

The analyst still sees value on a one year basis.

Target price is $23.50 Current Price is $16.54 Difference: $6.96
If BSL meets the UBS target it will return approximately 42% (excluding dividends, fees and charges).

Current consensus price target is $21.79, suggesting upside of 29.9% (ex-dividends)

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.8

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

Macquarie rates CPU as Outperform (1) -

Macquarie points out Computershare grew its Unpaid Principal Balances (UPB) in the 4Q22 by 6.6%, according to  the US Mortgage Servicing report released by Inside Mortgage Finance.

The company grew UPB market share to 0.95%.

The analyst is encouraged by the growth and the strategy to develop a JV partnership.

Computershare is due to report FY22 results on August 9 and earnings forecasts remain unchanged.

The Outperform rating and $35.00 price target are retained.

Target price is $35.00 Current Price is $25.45 Difference: $9.55
If CPU meets the Macquarie target it will return approximately 38% (excluding dividends, fees and charges).

Current consensus price target is $28.56, suggesting upside of 13.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

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

Morgans rates DXI as Add (1) -

Morgans cuts its FY23/24 funds from operations (FFO) forecasts for Dexus Industria REIT by around -9-10%.

Forecasts fall after allowing for higher interest costs, June revaluations and shares on issue during the current buyback. The sale of Canterbury Rd, Kilsyth was also incorporated.

The target price falls to $3.28 from $3.65 and the Add rating is unchanged. 

FY22 results are due on August 10. 

Target price is $3.28 Current Price is $2.90 Difference: $0.38
If DXI meets the Morgans target it will return approximately 13% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.5

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

Morgans rates GDF as Add (1) -

Morgans feels FY22 results for Garda Property, which revealed funds from operations (FFO) and DPS of 8cps and 7cps, demonstrated leasing successes in the active development pipeline.

While the pipeline can be funded from existing facilities, management intends to sell two office asset in Melbourne (Botanicca 7 and 9) to further bolster the balance sheet.

FY23 guidance for FFO of $13.7-$14.3m and DPS of 7cps is in-line with the broker’s expectation. The Add rating is unchanged and the target falls to $2.03 from $2.07, largely due to the analyst’s increased interest cost forecast.

Target price is $2.03 Current Price is $1.55 Difference: $0.48
If GDF meets the Morgans target it will return approximately 31% (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

Morgan Stanley rates IPL as Upgrade to Overweight from Equal-weight (1) -

Morgan Stanley expects ongoing upside for ammonia prices, after a recent positive move. It's felt Incitec Pivot is ideally positioned to leverage the dislocation in global gas markets and subsequent favourable pricing across the nitrogen complex.

The analyst estimates that for every US$10/t rise for the ammonia price Incitec Pivot's earnings (EBIT) rise by around $7.7m.

The broker upgrades its rating to Overweight from Equal-weight and raises its target to $4.75 from $4.05. Industry view: In-Line.

Target price is $4.75 Current Price is $3.68 Difference: $1.07
If IPL meets the Morgan Stanley target it will return approximately 29% (excluding dividends, fees and charges).

Current consensus price target is $4.18, suggesting upside of 13.0% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.7

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

Macquarie rates IVC as Underperform (5) -

Macquarie considers the current higher death volumes in the 1H22 are attributable to the pandemic wave which is positive for InvoCare.

US trends suggest the rate of growth, some 10% above trend, will slow to longer term levels of 0-2% once the pandemic wave eases, leading to lower volume growth in the 2H22 and FY23.

Macquarie views earnings risks from covid impacts, absenteeism as well as supply chain problems and inflationary pressures, as well as future slowing volume growth.

InvoCare is due to report 1H22 results on August 29. Underperform rating with a $10.30 price target.

Target price is $10.30 Current Price is $11.11 Difference: minus $0.81 (current price is over target).
If IVC meets the Macquarie target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $12.30, suggesting upside of 13.4% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: -0.2

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

Citi rates LFG as Buy (1) -

With Liberty Financial's valuation at near historical lows, Citi anticipates company earnings and return on equity will decline in the coming two years as funding spreads rise, but finds the share price may have fallen further than necessary.

Citi's earnings per share forecasts reduce -5-12% across FY23 to FY26. 

The broker further highlighted a double-digit unfranked dividend yield should attract income-orientated investors back to the stock. The Buy rating is retained and the target price decreases to $5.40 from $6.00. 

Target price is $5.40 Current Price is $4.30 Difference: $1.1
If LFG meets the Citi target it will return approximately 26% (excluding dividends, fees and charges).

Current consensus price target is $5.40, suggesting upside of 23.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.7

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

UBS rates LOV as Downgrade to Neutral from Buy (3) -

UBS lifts its target price for Lovisa Holdings to $18.50 from $16.00 on greater forecast US store growth and a greater valuation from an increased trading multiple. As shares have rallied strongly, the rating is pulled back to Neutral from Buy.

The broker expects scale and price optimisation (promotions etc) will outweigh near-term headwinds from labour and supply chain costs.

Target price is $18.50 Current Price is $17.66 Difference: $0.84
If LOV meets the UBS target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $20.42, suggesting upside of 17.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.8

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

Credit Suisse rates MYX as Neutral (3) -

Prior to FY22 results for Mayne Pharma due on Friday August 25, Credit Suisse lowers its FY23 earnings (EBITDA) forecast by -20% as a result of lower retail generics forecasts.

Despite this, the analyst's target price increases to $0.32 from $0.27 (without explanation). The Neutral rating is maintained.

Target price is $0.32 Current Price is $0.34 Difference: minus $0.02 (current price is over target).
If MYX meets the Credit Suisse target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

The company's fiscal year ends in June.

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

Citi rates NEA as Buy (1) -

Citi anticipates Nearmap's new camera system will assist the company in further extending its market lead in aerial imagery. While the broker expects this will drive higher revenue growth and cost reductions, it does not expect these benefits to emerge until FY24. 

The broker expects this will support consensus expectations of an increase in annual contract value to $39m in FY24 from $33m in FY23.

The Buy rating and target price of $1.90 are retained.

Target price is $1.90 Current Price is $1.45 Difference: $0.45
If NEA meets the Citi target it will return approximately 31% (excluding dividends, fees and charges).

Current consensus price target is $1.70, suggesting upside of 14.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.7

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

Ord Minnett rates OZL as Upgrade to Accumulate from Lighten (2) -

In an initial review of the $25/share takeover bid by BHP Group, Ord Minnett raises its rating for OZ Minerals to Accumulate from Lighten. It's thought the sale process could yield a higher price and the broker raises its target above the bid price to $27.40 from $16.00.

In light of the recent copper price correction, the broker feels the bid is opportunistic, and notes the OZ Minerals board has rejected the offer.

The analyst sees large synergies in a combined entity due to BHP's Olympic Dam and Oak Dam assets in South Australia. By 2027 it's estimated OZ Minerals could add an additional 14% in earnings (EBITDA) for BHP.

Target price is $27.40 Current Price is $18.92 Difference: $8.48
If OZL meets the Ord Minnett target it will return approximately 45% (excluding dividends, fees and charges).

Current consensus price target is $20.75, suggesting downside of -18.9% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.4

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

Macquarie rates QBE as Outperform (1) -

Macquarie reviewed 2Q22 results for 24 global insurers, noting higher interest rates provide a "windfall" for earnings, flooding in Australia and South Africa and ongoing but slower Russia/Ukraine losses as indicators for QBE Insurance 1H22 results.

The analyst points to no earnings forecast changes at this stage.

Macquarie considers the 11.6% valuation discount to international insurance peers as excessive, compared to the 3-year average 8.9% discount.

An Outperform rating is retained with the potential for the valuation discount to narrow as QBE Insurance continues to remediate underperforming portfolios.

The target price remains at $14.00

Target price is $14.00 Current Price is $12.01 Difference: $1.99
If QBE meets the Macquarie target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $15.26, suggesting upside of 28.5% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

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

Citi rates RHC as Neutral (3) -

Citi notes possibility for the takeover bid for Ramsay Health Care to be reduced given the deterioration of the macroeconomic environment, highlighting a bid of $76.45 per share would provide investors the same 9.5% internal rate of return.

With Ramsay Health Care receiving an $88.00 per share takeover bid from KKR in April, Citi notes its revised bid represents a -13% decline, reflecting the rise of cost of capital and inflation since April. 

The Neutral rating and target price of $88.00 are retained.

Target price is $88.00 Current Price is $73.86 Difference: $14.14
If RHC meets the Citi target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $79.96, suggesting upside of 11.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.1

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

UBS rates SGM as Neutral (3) -

Given a rapid decline in ferrous scrap prices UBS assumes the scrap market returns to long run average prices rather than settling at higher levels. Long-term (FY25 onwards) volume assumptions are reduced by -2% per year compared to prior forecasts.

The broker's forecast F25-30 average earnings/tonne also falls to $25/t from $27/t which results in lower long-term earnings.

For Sims, the analyst adjusts EPS forecasts for FY22 and FY23 by 1% and -31%, and the target falls to $15.50 from $22.00. The Neutral rating is kept as price volatility is seen as a significant risk leading into guidance for the 1H of FY23.

Target price is $15.50 Current Price is $15.08 Difference: $0.42
If SGM meets the UBS target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $17.78, suggesting upside of 15.0% (ex-dividends)

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.5

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

Credit Suisse rates SQ2 as Outperform (1) -

Credit Suisse raises its earnings (EBITDA) estimates for Block following management's decision, revealed at 2Q results, to reduce non-GAAP operating expense growth to US$1.85 from US$2.1bn.

This reduction was partly achieved by removing longer-term and experimental sales & marketing and slowing hiring, explains the analyst.

The broker sees potential for a positive re-rate of shares given re-accelerating trends for Cash App, reduced Afterpay and Bitcoin expectations, and a long list of growth options. Shares are also considered to be trading on low multiples.

The Outperform rating and US$125 target price are retained.

Current Price is $118.30. Target price not assessed.

Current consensus price target is $97.00, suggesting downside of -23.5% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

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

Morgan Stanley rates SQ2 as Equal-weight (3) -

Morgan Stanley notes a more conservative tone on outlook and competition by management at Block's second quarter results and lowers its price target to US$85 from US$110. the Equal-weight rating is retained. Industry view: Attractive.

The results showed gross profit growth of 29%, which was slightly below the consensus estimate for 30.5%.

The broker continues to like the long-term opportunity for cash App and Afterpay though success will depend on management's ability to integrate both. The accelerated development and launch of new credit products and banking services is also considered vital.

Current Price is $118.30. Target price not assessed.

Current consensus price target is $97.00, suggesting downside of -23.5% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

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

Macquarie rates STO as Outperform (1) -

Santos is due to report 1H22 results on August 17 and Macquarie forecasts a dividend "surprise" with the company increasing the payout ratio.

The broker is forecasting a US13c dividend per share versus the consensus of US11c reflecting a 20% payout.

Operationally Macquarie noted the 1H22 production levels were below expectations but strong cashflow and 22.5% gearing levels are positive and supportive of higher dividends.

Dividend forecasts are raised 12% in FY22 and 14% in FY23, with the analyst highlighting Woodside Energy ((WDS)) is more likely to reduce the payout ratio to more sustainable levels.

Outperform rating and $10.00 target price retained.

Target price is $10.00 Current Price is $6.95 Difference: $3.05
If STO meets the Macquarie target it will return approximately 44% (excluding dividends, fees and charges).

Current consensus price target is $9.62, suggesting upside of 36.7% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

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

Macquarie rates TPW as Neutral (3) -

Macquarie considers the 2Q22 results for US Wayfair as a possible indication for the upcoming Temple & Webster results.

The broker views Temple & Webster as 5 years behind Wayfair in terms of active customer share and the 2Q22 update showed a -15% fall in revenues.

In contrast Macquarie forecasts 15% 2H22 revenue growth for Temple & Webster with risks from macro headwinds and demand pull through in the previous period being offset by increasing online demand and a strong balance sheet.

Temple & Webster are due to report FY22 results on August 16.

A Neutral rating and $3.60 price target are maintained.

Target price is $3.60 Current Price is $4.69 Difference: minus $1.09 (current price is over target).
If TPW meets the Macquarie target it will return approximately minus 23% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.86, suggesting upside of 28.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.5

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

Macquarie rates VEA as Outperform (1) -

Macquarie previews 1H22 earnings forecasts for Australian fuel retailers, Ampol and Viva Energy.

The broker will be looking for commentary on cost pressures, and expects the weakening crude premia in the 2H22 to impact on margins for refining, while retail margins at the pump have increased.

Macquarie adjusts earnings forecasts by -9% and -7% for FY22 and FY23, respectively for lower refining margins in the 2H22 and lower refinery utilisation in FY23.

Viva Energy is due to report earnings on August 25.

An Outperform rating is maintained and the price target is lowered to $3.35 from $3.50.

Target price is $3.35 Current Price is $2.53 Difference: $0.82
If VEA meets the Macquarie target it will return approximately 32% (excluding dividends, fees and charges).

Current consensus price target is $3.15, suggesting upside of 18.7% (ex-dividends)

The company's fiscal year ends in December.

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