Australian Broker Call

Ord Minnett rates AGL as Accumulate (2) -

While acknowledging downside risk to estimates at current prices, both spot and forward, Ord Minnett asserts current wholesale electricity prices are unsustainable. The broker assesses AGL Energy as a cyclical stock with earnings primarily driven by commodity prices.

Nevertheless, the current environment provides opportunities to invest in AGL at a cyclical low in electricity prices, suggest the broker. Hence, an Accumulate rating is maintained while the target is trimmed to $17.30 from $18.00.

Target price is $17.30 Current Price is $13.62 Difference: $3.68
If AGL meets the Ord Minnett target it will return approximately 27% (excluding dividends, fees and charges).

Current consensus price target is $14.84, suggesting upside of 8.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: -0.2

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

Macquarie rates ALL as Outperform (1) -

Aristocrat Leisure's virtual management roundtable did not provide any trading update but stated 90% of North American casinos have re-opened and Aristocrat's game performance is stronger than ever. The game RAID is annualising at around US$350m aided by the pandemic.

The company is investing in both land-based and digital products, with D&D technology being the focus of land-based products.

Overall, Macquarie considers Aristocrat well-placed from a liquidity perspective. The faster recovery in land-based casinos and digital segment supports cash generation, the broker adds. 

Outperform rating maintained. Target is unchanged at $29.50.

Target price is $29.50 Current Price is $29.97 Difference: minus $0.47 (current price is over target).
If ALL meets the Macquarie target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $32.61, suggesting upside of 6.4% (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

Citi rates AMC as Buy (1) -

Amcor is targeting long-term growth of 10-15% and is emphasised its value creation model. Organic profit growth is expected to come from growing end markets and an improving mix as well as product innovation.

Management has also sought to dispel the myth the multilayer film is not recyclable and reiterated an intention for 100% recyclable or reusable packaging by 2025.

Citi believes Amcor is well-positioned for the future of plastic and retains a Buy rating, decreasing the target to $17.10 from $17.25.

Target price is $17.10 Current Price is $15.33 Difference: $1.77
If AMC meets the Citi target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $16.87, suggesting upside of 8.4% (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: 0.6

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

Macquarie rates AMC as Outperform (1) -

In its investor day briefing, Amcor announced it was on track for its products to be fully recyclable by 2025.

The company recently released a new Am-Lite HeatFlex product, the world’s first recyclable flexible retort pouch, combining recyclability with the ability to withstand heat-sterilisation. This also reduces the carbon footprint of Amcor's existing product by -60%.

The company asserts it has the financial capacity to pursue further disciplined M&A. Macquarie believes speciality containers and global closures are potential target M&A areas.

Despite the Bemis acquisition, Macquarie points out North America and European flexibles markets remain fragmented, implying the potential for bolt-on acquisitions in core flexibles.

Macquarie retains its Outperform rating with a target price of $17.

Target price is $17.00 Current Price is $15.33 Difference: $1.67
If AMC meets the Macquarie target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $16.87, suggesting upside of 8.4% (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: 0.6

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

Morgan Stanley rates AMC as Overweight (1) -

Morgan Stanley highlights Amcor's investor day showed a technology-enabled path towards its sustainability goals along with noting the Bemis integration was performing well.

Amcor enjoys market leadership positions in most markets it operates, reminds the broker, while pointing out this has resulted in achieving benefits of scale and an opportunity to leverage this platform to drive technological development.

The broker views Amcor as a high-quality defensive exposure expected to generate modest but consistent earnings growth. Also, the company offers a dividend yield of 4.5% which is becoming increasingly scarce under the present environment.

Overweight reiterated with a target price of $18.00. Industry view: Cautious.

Target price is $18.00 Current Price is $15.33 Difference: $2.67
If AMC meets the Morgan Stanley target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $16.87, suggesting upside of 8.4% (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: 0.6

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

Ord Minnett rates AMC as Accumulate (2) -

Amcor envisages growth across both rigid and flexible packages and Ord Minnett agrees the company should benefit from growing markets, a favourable shift in mix and the end user desire for more sustainable packaging.

However, the broker is reluctant to factor in more sales growth until top-line organic growth is fully in evidence. Ord Minnett maintains its Accumulate rating with a target price of $17.50.

Target price is $17.50 Current Price is $15.33 Difference: $2.17
If AMC meets the Ord Minnett target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $16.87, suggesting upside of 8.4% (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: 0.6

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

UBS rates AMC as Neutral (3) -

Amcor discussed sustainability and the Bemis merger on its global investor day. The company reiterated its pledge to have 100% recyclable packaging products by 2025 and noted the integration of Bemis to be progressing well.

UBS is attracted to Amcor's leading position across key global consumer packaging markets. Noting the defensive nature of these markets is supporting the company's earnings and cash flows, UBS retains its Neutral rating with a target price of $15.90.

Target price is $15.90 Current Price is $15.33 Difference: $0.57
If AMC meets the UBS target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $16.87, suggesting upside of 8.4% (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: 0.6

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

Credit Suisse rates AST as Neutral (3) -

The Australian Energy Regulator has granted AusNet Services accelerated depreciation for the SCAD/network control assets, meaning a higher return of capital than Credit Suisse estimated.

This increases near-term operating earnings (EBITDA) as do slightly higher efficiency benefit payments. Nevertheless, the outcome of the determination is neutral to valuation and the broker retains a Neutral rating and $1.90 target.

Target price is $1.90 Current Price is $1.88 Difference: $0.02
If AST meets the Credit Suisse target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $1.80, suggesting downside of -5.7% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: -0.1

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

Ord Minnett rates ASX as Lighten (4) -

ASX has signalled a further delay in the distributed ledger technology replacement timeline. ASX has indicated users want more functionality and a key market infrastructure provider will not be ready in time for the current schedule.

A revised timetable will be provided shortly. Meanwhile, Ord Minnett notes the pipeline for IPOs is looking better. Lighten rating maintained. Target is $78.07.

Target price is $78.07 Current Price is $81.02 Difference: minus $2.95 (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 $72.20, suggesting downside of -11.1% (ex-dividends)

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

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

Credit Suisse increases estimates for China's steel consumption to around 1bn tonnes per year until 2022. This drives a more constructive view on iron ore and iron ore price forecasts are revised up by 30% and 18% for 2021 and 2022, respectively. The broker also has a more constructive view on coking coal.

BHP Group remains the broker's preferred pick compared with Rio Tinto ((RIO)) as the valuation premium is likely to widen, given a more balanced materials portfolio and less public focus on ESG issues.

Moreover, unlike Rio Tinto there is no uncertainty about the management team and there is less potential public pressure to limit dividends. Rating is upgraded to Outperform from Neutral and the target lifted to $39 from $37.

Target price is $39.00 Current Price is $35.60 Difference: $3.4
If BHP meets the Credit Suisse target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $40.83, suggesting upside of 12.5% (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: 0.6

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

Credit Suisse rates CRN as Outperform (1) -

Credit Suisse has modestly lifted metallurgical coal prices, to US$135/t in the fourth quarter and by 6% for 2021, as the market has started to show signs of improvement.

The company has the leverage to outperform on the back of what appears to be a tightening seaborne market, in the broker's view. Outperform rating and $1.60 target retained.

Target price is $1.60 Current Price is $0.96 Difference: $0.64
If CRN meets the Credit Suisse target it will return approximately 67% (excluding dividends, fees and charges).

Current consensus price target is $1.40, suggesting upside of 47.4% (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: 1.0

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

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

The potential acquisition of Momenta by J&J and the risk to CSL Ig franchise from Momenta's hypersialylated immunoglobulin (hsIGg) or M254 pipeline (if commercially viable) is examined by Morgan Stanley. 

The broker points out according to pre-clinical data, M254 - hypersialylated immunoglobulin (hsIGg) - leads to enhancement of activity by 10 times. Phase 2 is in its early stage of development but dosage data suggests hsIgG dosage volume is 12-25% of IG.

If hsIgG is successful and manages to displace immunoglobulin completely (which the broker thinks is unlikely to happen), the broker estimates a potential -22% reduction in industry plasma requirements.

The broker speculates if CSL partners on the Momenta/J&J program and swaps out all its Ig for hsIgG, there could follow an increase of circa 14% to its operating income. On the flip side, if CSL does not partner with J&J, CSL's operating income may decline by -27% (assuming albumin fractionation continued).

Equal-weight rating with a target price of $282. Industry view: In-line.

Target price is $282.00 Current Price is $287.00 Difference: minus $5 (current price is over target).
If CSL meets the Morgan Stanley target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $310.39, suggesting upside of 7.8% (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

Ord Minnett rates CTD as Downgrade to Accumulate from Buy (2) -

The purchase of Travel & Transport for $275m and associated $380m capital raising highlights the difficult corporate travel industry, in Ord Minnett's view.

The target was obvious given its scale, while the price on face value represents an aggressive move in the current climate. Nevertheless, Ord Minnett considers this a once in a lifetime opportunity for Corporate Travel to build scale on reduced acquisition multiples.

The broker downgrades to Accumulate from Buy as the key catalysts that were envisaged have largely played out. Target is raised to $19.04 from $15.51.

Target price is $19.04 Current Price is $17.23 Difference: $1.81
If CTD meets the Ord Minnett target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $16.22, suggesting downside of -6.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.6

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

Credit Suisse rates FMG as Upgrade to Neutral from Underperform (3) -

Credit Suisse increases estimates for China's steel consumption to around 1bn tonnes per year until 2022. This drives a more constructive view on iron ore and iron ore price forecasts are revised up by 30% and 18% for 2021 and 2022, respectively.

Hence, the broker lifts earnings estimates 64-70% over the next two financial years and upgrades to Neutral from Underperform. Credit Suisse also assesses the yield might be enough for investors to start reconsidering entry points in the stock. Target is raised to $16.50 from $15.00.

Target price is $16.50 Current Price is $16.30 Difference: $0.2
If FMG meets the Credit Suisse target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $17.24, suggesting upside of 3.2% (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

Morgans rates HUB as Downgrade to Hold from Add (3) -

Morgans continues to be attracted to the long-term growth in Hub24 but considers the current valuation is full and is looking for a more attractive entry price. Rating is downgraded to Hold from Add.

Nevertheless, the broker continues to believe the business can deliver the expected step change in earnings over the next three years. Target is raised to $18.10 from $16.60.

Target price is $18.10 Current Price is $18.50 Difference: minus $0.4 (current price is over target).
If HUB meets the Morgans target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $16.21, suggesting downside of -12.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.2

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

Ord Minnett rates JHX as Downgrade to Accumulate from Buy (2) -

Ord Minnett interprets the update by Louisiana Pacific as positive for James Hardie, boding well for the exteriors business.

James Hardie was targeting 7-11% volume growth for North America exteriors in the September quarter.

Based on valuation, the broker downgrades to Accumulate from Buy. Target is steady at $34.

Target price is $34.00 Current Price is $33.14 Difference: $0.86
If JHX meets the Ord Minnett target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $34.88, suggesting upside of 1.9% (ex-dividends)

The company's fiscal year ends in March.

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: 0.8

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

Morgan Stanley rates JIN as Overweight (1) -

Jumbo Interactive signed a term sheet to provide Lotterywest with its SaaS solution. Morgan Stanley notes there are near term headwinds on price harmonisation with -$2.3-$2.6m in revenue headwinds, partially offset due to reduced marketing and merchant costs.

In the long term, the broker believes there is upside from the shift to SaaS.  

Morgan Stanley reiterates its Overweight rating with a target price of $14.30. Industry view: In-line.

Target price is $14.30 Current Price is $12.50 Difference: $1.8
If JIN meets the Morgan Stanley target it will return approximately 14% (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

Morgans rates JIN as Add (1) -

Jumbo Interactive and Lotterywest have signed an agreement whereby customers from Western Australia will be move to a white label Lotterywest product that will use the Powered by Jumbo platform.

Morgans expects the revenue margin will result in a lower return for Jumbo Interactive but there is scope for it to administer the digital sales, around $120m currently.

The broker also suggested the deal should help in discussions overseas with other lottery operators. Add retained. Target is reduced to $13.89 from $13.91.

Target price is $13.89 Current Price is $12.50 Difference: $1.39
If JIN meets the Morgans target it will return approximately 11% (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

Credit Suisse rates NHC as Neutral (3) -

Credit Suisse has upgraded its outlook for thermal coal prices as the market has started to show signs of improvement. The bounce back to the high US$50/t potentially suggests the worst might be behind the market.

On the supply side swing tonnage has exited the market in several countries enabling the price to find a bottom, says the analyst. The broker's long-term price of US$75/t is based on a view that current prices are unlikely to be sustained as opposed to a strong conviction on the demand side. Neutral rating and $1.40 target retained.

Target price is $1.40 Current Price is $1.29 Difference: $0.11
If NHC meets the Credit Suisse target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $1.28, suggesting upside of 1.8% (ex-dividends)

The company's fiscal year ends in July.

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

Morgans rates NWL as Hold (3) -

Morgans believes the strong structural shift occurring in the wealth management industry will support net inflows for the medium term. Netwealth has provided FY21 net inflows guidance of $8bn with a high degree of confidence.

The broker retains a Hold rating as the valuation is considered full although the business seems well-positioned to deliver consistent growth. Target is raised to $13.15 from $12.45.

Target price is $13.15 Current Price is $15.18 Difference: minus $2.03 (current price is over target).
If NWL meets the Morgans target it will return approximately minus 13% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $10.83, suggesting downside of -30.1% (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

UBS rates NWS as Buy (1) -

News Corp owns 61.6% of the separately listed REA Group ((REA)). Looking at both REA's last share price and News Corp's B class last share price, UBS estimates REA makes up about 71-79% of News Corp's market value (versus the peak of 88% on June 22). 

The broker thinks this could imply the market is pricing News Corp's 'stub' asset at a valuation lower than the broker's.

UBS retains its Buy rating with a target price of $25, pointing out REA Group accounts for about $13.30 of its valuation with the rest attributable to News Corp.

Target price is $25.00 Current Price is $19.08 Difference: $5.92
If NWS meets the UBS target it will return approximately 31% (excluding dividends, fees and charges).

Current consensus price target is $24.72, suggesting upside of 25.4% (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: 0.5

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

Credit Suisse rates RIC as Neutral (3) -

FY20 normalised operating earnings (EBITDA) were $54.7m, up 8.1%. No final dividend was declared with the company opting to re-pay debt.

Credit Suisse believes Ridley Corp has executed well on its optimisation and restructuring. The feed business has also proven resilient.

The broker considers the stock cheap and notes management's conviction in the growth outlook beyond cost reductions. Fulfilment of the growth view will be required to generate a re-rating, the broker asserts. Neutral maintained. Target is reduced to $0.85 from $0.95.

Target price is $0.85 Current Price is $0.82 Difference: $0.03
If RIC meets the Credit Suisse target it will return approximately 4% (excluding dividends, fees and charges).

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

Credit Suisse rates RIO as Upgrade to Neutral from Underperform (3) -

Credit Suisse increases estimates for China's steel consumption to around 1bn tonnes per year until 2022. This drives a more constructive view on iron ore and iron ore price forecasts are revised up by 30% and 18% for 2021 and 2022, respectively.

This should flow to large earnings increases for Rio Tinto. The broker believes Rio Tinto will be able to generate free cash flow yields of over 10% in 2021.

Credit Suisse envisages capacity for a "fruitful" dividend in February although acknowledges there are plenty of unknowns including the next CEO and the potential changes in the aftermath of the Juukan Gorge incident.

Rating is upgraded to Neutral from Underperform and the target raised to $95 from $88.

Target price is $95.00 Current Price is $94.32 Difference: $0.68
If RIO meets the Credit Suisse target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $107.79, suggesting upside of 12.8% (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: 0.4

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

Credit Suisse rates S32 as Outperform (1) -

Credit Suisse has modestly upgraded its outlook for thermal coal prices as the market has started to show signs of improvement. The bounce back to the high US$50/t potentially suggests the worst might be behind the market, suggests the broker.

On the supply side swing tonnage has exited the market in several countries enabling the price to find a bottom, according to Credit Suisse.

The broker's long-term price of US$75/t is based on a view that current prices are unlikely to be sustained as opposed to a strong conviction on the demand side.

Credit Suisse continues to assume a 40% dividend payout-out but understands there is capacity for greater returns once the divestment of South African Energy Coal is completed. Outperform rating and $2.60 target retained.

Target price is $2.60 Current Price is $2.04 Difference: $0.56
If S32 meets the Credit Suisse target it will return approximately 27% (excluding dividends, fees and charges).

Current consensus price target is $2.63, suggesting upside of 25.2% (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: 0.6

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

Credit Suisse rates SKI as Outperform (1) -

The Australian Energy Regulator has reported that VPN overstated demand growth to support replacement expenditure, noting the peak demand has been stable in Victoria for the past decade and forecasts for growth have not eventuated.

As a result, Credit Suisse revises revenue forecasts for VPN in 2021-26 down by -6.9% with the forecast operating expenditure allowance decreased by -13%. Neutral rating and $2.65 target.

Target price is $2.65 Current Price is $2.05 Difference: $0.6
If SKI meets the Credit Suisse target it will return approximately 29% (excluding dividends, fees and charges).

Current consensus price target is $2.29, suggesting upside of 8.9% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.3

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

Macquarie rates SKI as Outperform (1) -

The Australia Energy Regulator (AER) rejected most of the Victoria Power Networks (comprising CitiPower and Powercor) application in a draft outcome. The regulator rejected 27% of the capital expenditure and 12% of the operating cost.

Macquarie thinks justification by Spark Infrastructure Group of both the operating cost and capital expenditure, while presenting a clearer view around the pandemic recovery may result in a better final outcome.

Noting the possibility of the final decision being better, Macquarie maintains its Outperform rating with a target price of $2.28.

Target price is $2.28 Current Price is $2.05 Difference: $0.23
If SKI meets the Macquarie target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $2.29, suggesting upside of 8.9% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.3

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

Macquarie rates STO as Neutral (3) -

The NSW Independent Planning Commission (IPC) has given its approval to a phased development of Santos’ Narrabri gas project, subject to 134 conditions.

Macquarie observes conditions have been imposed on many areas including land use, community distancing, water/salt management & groundwater monitoring. However, the broker acknowledges Santos' growth appeal has been enhanced due to the certainty at Narrabri.

Keeping in mind Narrabri represents 5% of Macquarie's valuation of Santos, the broker holds onto its Neutral rating with a target price of $5.40. 

Target price is $5.40 Current Price is $4.88 Difference: $0.52
If STO meets the Macquarie target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $6.53, suggesting upside of 31.7% (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: 0.8

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

Ord Minnett rates STO as Accumulate (2) -

The NSW Independent Planning Commission has announced a phased approval for the Narrabri gas project. This still subjects the project to a number of groundwater assessments and emissions offsetting requirements.

Ord Minnett notes the long-dated nature of development could mean first gas is not available until 2026-27. Santos has indicated an investment decision would not be made until 2022.

Ord Minnett calculates a price of at least $8-10/GJ would be required to achieve an economic return on investment, assuming well performance, capital and operating costs similar to coal seam gas (CSG) fields in Queensland. Accumulate rating and $7.50 target retained.

Target price is $7.50 Current Price is $4.88 Difference: $2.62
If STO meets the Ord Minnett target it will return approximately 54% (excluding dividends, fees and charges).

Current consensus price target is $6.53, suggesting upside of 31.7% (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: 0.8

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

UBS rates STO as Buy (1) -

The NSW Independent Planning Commission (IPC) approved Santos' Environmental Impact Statement (EIS) for the Narrabri Gas Project, as expected by UBS. Subject to final regulatory approval, the broker expects Santos to make the final investment decision in 2022.

The broker highlights this decision is the first of a number of positive catalysts expected over the next 12 months for the company.

Considering Santos as its most preferred energy exposure stock, UBS reaffirms its Buy rating with a target price of $6.50.

Target price is $6.50 Current Price is $4.88 Difference: $1.62
If STO meets the UBS target it will return approximately 33% (excluding dividends, fees and charges).

Current consensus price target is $6.53, suggesting upside of 31.7% (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: 0.8

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

Macquarie rates WAF as Upgrade to Outperform from Neutral (1) -

West African Resources' first round of drilling at Sanbrado’s M1S deposit produced strong results, extending known mineralisation about 400m below current underground reserves.

The results lead Macquarie to lift its M1S underground inventory to 50% above current reserves, translating to an additional circa 2-years of underground life.

Based on the improved mine life assumptions, the broker upgrades its rating to Outperform from Neutral. Target rises to $1.30 from $1.20.  

Target price is $1.30 Current Price is $1.07 Difference: $0.23
If WAF meets the Macquarie target it will return approximately 21% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

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

Credit Suisse rates WHC as Outperform (1) -

Credit Suisse has modestly upgraded its outlook for thermal coal prices as the market has started to show signs of improvement. The bounce back to the high US$50/t potentially suggests the worst might be behind the market, according to Credit Suisse.

On the supply side swing tonnage has exited the market in several countries enabling the price to find a bottom, observes the analyst. The broker's long-term price of US$75/t is based on a view that current prices are unlikely to be sustained as opposed to a strong conviction on the demand side.

The broker suggests any lingering concerns regarding Whitehaven Coal's balance sheet should be easing. Outperform rating and $1.95 target retained.

Target price is $1.95 Current Price is $1.05 Difference: $0.9
If WHC meets the Credit Suisse target it will return approximately 86% (excluding dividends, fees and charges).

Current consensus price target is $1.48, suggesting upside of 35.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.4

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