Australian Broker Call
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March 19, 2021
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COMPANIES DISCUSSED IN THIS ISSUE
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The number next to the symbol represents the number of brokers covering it for this report -(if more than 1).
Last Updated: 05:00 PM
Your daily news report on the latest recommendation, valuation, forecast and opinion changes.
This report includes concise but limited reviews of research recently published by Stockbrokers, which should be considered as information concerning likely market behaviour rather than advice on the securities mentioned. Do not act on the contents of this Report without first reading the important information included at the end.
For more info about the different terms used by stockbrokers, as well as the different methodologies behind similar sounding ratings, download our guide HERE
Overnight Price: $84.52
Citi rates BKL as Sell (5) -
In this report, Citi highlights the Japanese cosmetics and nutritional supplements company Fancl and its partnership with Sinopharm which has considerably supported the former with regulatory certificates.
The broker thinks Blackmores could benefit from a similar partnership arrangement to help with regulatory/distribution capabilities and maximise its prospects of success in China. International travel restrictions have added to the challenge.
Sell rating with a target of $59.20.
Target price is $59.20 Current Price is $84.52 Difference: minus $25.32 (current price is over target).
If BKL meets the Citi target it will return approximately minus 30% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $73.95, suggesting downside of -11.0% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY21:
Citi forecasts a full year FY21 dividend of 54.00 cents and EPS of 179.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 170.4, implying annual growth of 64.6%. Current consensus DPS estimate is 85.1, implying a prospective dividend yield of 1.0%. Current consensus EPS estimate suggests the PER is 48.8. |
Forecast for FY22:
Citi forecasts a full year FY22 dividend of 73.00 cents and EPS of 243.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 249.7, implying annual growth of 46.5%. Current consensus DPS estimate is 136.6, implying a prospective dividend yield of 1.6%. Current consensus EPS estimate suggests the PER is 33.3. |
Market Sentiment: -0.2
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $4.73
Citi rates BWX as Buy (1) -
Citi's analysis of user engagement across Sukin, Mineral Fusion and Andalou on Instagram suggests a slowdown in activity during the six months to December 2020 versus last year.
While this may not have a significant impact on BWX’s short-term performance, Citi notes over the medium-long term increased social media engagement will likely be helpful for consumer awareness and trial.
Also, lower social media activity may also be offset by BWX's investment into retailer activity and activating local markets, which may have a more immediate payback, adds the broker.
City retains a Buy rating and $5.35 target.
Target price is $5.35 Current Price is $4.73 Difference: $0.62
If BWX meets the Citi target it will return approximately 13% (excluding dividends, fees and charges).
The company's fiscal year ends in June.
Forecast for FY21:
Citi forecasts a full year FY21 dividend of 4.30 cents and EPS of 11.80 cents. |
Forecast for FY22:
Citi forecasts a full year FY22 dividend of 6.40 cents and EPS of 17.10 cents. |
Market Sentiment: 1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $4.51
Credit Suisse rates GNC as Neutral (3) -
In a preview of Gaincorp's March 24 investor day, Credit Suisse expects a greater focus on growth opportunities though the broker cautions investors may initially react adversely to increased capital requirements.
February guidance of underlying earnings (EBITDA) of $230-270m and profit (NPAT) of $60-85m is unlikely to change as the main variables are dependent upon (pre-booked) export shipment timing and crush margins, explains the analyst.
Neutral rating and $5.06 target unchanged.
Target price is $5.06 Current Price is $4.51 Difference: $0.55
If GNC meets the Credit Suisse target it will return approximately 12% (excluding dividends, fees and charges).
Current consensus price target is $5.42, suggesting upside of 20.4% (ex-dividends)
The company's fiscal year ends in September.
Forecast for FY21:
Credit Suisse forecasts a full year FY21 dividend of 19.28 cents and EPS of 34.69 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 34.3, implying annual growth of -77.1%. Current consensus DPS estimate is 20.0, implying a prospective dividend yield of 4.4%. Current consensus EPS estimate suggests the PER is 13.1. |
Forecast for FY22:
Credit Suisse forecasts a full year FY22 dividend of 12.93 cents and EPS of 24.78 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 27.3, implying annual growth of -20.4%. Current consensus DPS estimate is 15.8, implying a prospective dividend yield of 3.5%. Current consensus EPS estimate suggests the PER is 16.5. |
Market Sentiment: 0.8
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
GXY GALAXY RESOURCES LIMITED
New Battery Elements
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Overnight Price: $2.64
Citi rates GXY as Neutral (3) -
Citi's visit to Galaxy Resources' Mt Cattlin site showed operations back at full capacity and with a quick turnaround. As observed by Citi, customers seem willing to accept lower spodumene grades if this unlocks more lithium units with better recovery.
An update to the Mt Cattlin site plan has led to a marginal lift in Citi's 2021 operating income forecast.
A Neutral rating is retained with the target rising to $3.10 from $3.
Target price is $3.10 Current Price is $2.64 Difference: $0.46
If GXY meets the Citi target it will return approximately 17% (excluding dividends, fees and charges).
Current consensus price target is $2.42, suggesting downside of -4.5% (ex-dividends)
The company's fiscal year ends in December.
Forecast for FY21:
Citi forecasts a full year FY21 dividend of 0.00 cents and EPS of 2.81 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 1.9, implying annual growth of N/A. Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A. Current consensus EPS estimate suggests the PER is 133.2. |
Forecast for FY22:
Citi forecasts a full year FY22 dividend of 0.00 cents and EPS of 4.21 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 3.3, implying annual growth of 73.7%. Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A. Current consensus EPS estimate suggests the PER is 76.7. |
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
Overnight Price: $4.78
Citi rates NUF as Buy (1) -
Citi notes prices for the fungicide ingredient tebuconazole have remained subdued into 2021. The broker expects prices will be kept in check in the longer-term via higher greenfield production capacity.
Given how important tebuconazole is for Nufarm's Century portfolio, the broker expects Nufarm’s European margins will benefit from the lower raw material costs in FY21 to the tune of circa $8m in operating income.
Even so, looking at the seasonality of production and the conversion cycle, Citi thinks this potential tailwind may be lagged to the second half.
Buy rating maintained with a price target of $5.40.
Target price is $5.40 Current Price is $4.78 Difference: $0.62
If NUF meets the Citi target it will return approximately 13% (excluding dividends, fees and charges).
Current consensus price target is $5.20, suggesting upside of 11.3% (ex-dividends)
The company's fiscal year ends in July.
Forecast for FY21:
Citi forecasts a full year FY21 dividend of 0.00 cents and EPS of 18.60 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 13.5, implying annual growth of N/A. Current consensus DPS estimate is 2.2, implying a prospective dividend yield of 0.5%. Current consensus EPS estimate suggests the PER is 34.6. |
Forecast for FY22:
Citi forecasts a full year FY22 dividend of 9.50 cents and EPS of 29.30 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 21.4, implying annual growth of 58.5%. Current consensus DPS estimate is 6.9, implying a prospective dividend yield of 1.5%. Current consensus EPS estimate suggests the PER is 21.8. |
Market Sentiment: 0.7
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
VHT VOLPARA HEALTH TECHNOLOGIES LIMITED
Medical Equipment & Devices
More Research Tools In Stock Analysis - click HERE
Overnight Price: $1.30
Morgans rates VHT as Add (1) -
Via the recent CRA Health acquisition, Volpara Health Technologies has announced its largest contract to date worth over US$400,000 per annum.
The broker adjusts financial model assumptions to better reflect the rising importance of the average revenue per user (ARPU) metric. In FY21 it's estimated (ex the CRA acquisition) a 27% market share in the US generates an ARPU of US$1.26.
This is represented by 12% under SaaS contracts with an ARPU of US$1.94 and 15% under the capital model, explains the analyst. The Add rating is maintained and the target price is increased to $1.94 from $1.92.
Target price is $1.94 Current Price is $1.30 Difference: $0.64
If VHT meets the Morgans target it will return approximately 49% (excluding dividends, fees and charges).
The company's fiscal year ends in March.
Forecast for FY21:
Morgans forecasts a full year FY21 dividend of 0.00 cents and EPS of minus 4.96 cents. |
Forecast for FY22:
Morgans forecasts a full year FY22 dividend of 0.00 cents and EPS of minus 2.43 cents. |
This company reports in NZD. All estimates have been converted into AUD by FNArena at present FX values.
Market Sentiment: 0.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $24.44
Morgan Stanley rates WBC as Overweight (1) -
Westpac will sell its lenders mortgage insurance (LMI) business to Arch Capital Group.
Morgan Stanley thinks the sale is consistent with the bank's "fix, simplify, perform" strategy and is part of a review of non-core operations in the specialist businesses division.
While the sale price is around the book value, the broker notes Westpac will incur a loss on the sale due to separation and transaction costs and an -$84m goodwill write-down.
Believing better mortgage performance, non-core asset sales and stronger capital will drive upside to earnings, Morgan Stanley retains its Overweight rating with a target of $25.30. Industry view: In-line.
Target price is $25.30 Current Price is $24.44 Difference: $0.86
If WBC meets the Morgan Stanley target it will return approximately 4% (excluding dividends, fees and charges).
Current consensus price target is $25.80, suggesting upside of 5.3% (ex-dividends)
The company's fiscal year ends in September.
Forecast for FY21:
Morgan Stanley forecasts a full year FY21 dividend of 110.00 cents and EPS of 161.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 174.3, implying annual growth of 140.4%. Current consensus DPS estimate is 122.9, implying a prospective dividend yield of 5.0%. Current consensus EPS estimate suggests the PER is 14.1. |
Forecast for FY22:
Morgan Stanley forecasts a full year FY22 dividend of 115.00 cents and EPS of 168.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 174.6, implying annual growth of 0.2%. Current consensus DPS estimate is 128.3, implying a prospective dividend yield of 5.2%. Current consensus EPS estimate suggests the PER is 14.0. |
Market Sentiment: 0.9
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Today's Price Target Changes
| Company | Last Price | Broker | New Target | Prev Target | Change | |
| GXY | Galaxy Resources | $2.53 | Citi | 3.10 | 3.00 | 3.33% |
| VHT | Volpara Health Technologies | $1.32 | Morgans | 1.94 | 1.92 | 1.04% |
Summaries
| BKL | Blackmores | Sell - Citi | Overnight Price $84.52 |
| BWX | BWX Ltd | Buy - Citi | Overnight Price $4.73 |
| GNC | Graincorp | Neutral - Credit Suisse | Overnight Price $4.51 |
| GXY | Galaxy Resources | Neutral - Citi | Overnight Price $2.64 |
| NUF | Nufarm | Buy - Citi | Overnight Price $4.78 |
| VHT | Volpara Health Technologies | Add - Morgans | Overnight Price $1.30 |
| WBC | Westpac Banking | Overweight - Morgan Stanley | Overnight Price $24.44 |
RATING SUMMARY
| Rating | No. Of Recommendations |
| 1. Buy | 4 |
| 3. Hold | 2 |
| 5. Sell | 1 |
Friday 19 March 2021
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