Australian Broker Call

UBS rates AMC as Buy (1) -

UBS highlights the covid-influenced shift towards greater at-home consumption has been a positive for consumer packaging companies such as Amcor and analysis shows this trend has continued into the third quarter FY21.

Above average volume trends are supporting the organic growth outlook and helping offset short-term raw material headwinds, explains the broker. The Buy rating and $16.60 target are retained.

Third quarter FY21 earnings will be reported in early May. The analyst expects the company to at least reiterate its FY21 guidance of 10-14% EPS growth. This is considered underpinned by solid organic volume growth, merger synergies and buy-back accretion.

Target price is $16.60 Current Price is $15.20 Difference: $1.4
If AMC meets the UBS target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $17.00, suggesting upside of 11.4% (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: 0.7

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

Morgan Stanley rates ANZ as Overweight (1) -

The major banks have strong capital levels and Morgan Stanley forecasts buybacks to commence at Commonwealth Bank of Australia ((CBA)), National Australia Bank ((NAB)) and Westpac Bank ((WBC)) in FY22.

The major banks' December 2020 CET1 ratios were an average of greater than 40 basis points better than the broker's forecasts due to lower risk-weighted assets in the quarter.

Morgan Stanley retains the Overweight rating and $26.20 target for ANZ Bank, but offers no explanation at this stage as to why no buyback is forecast. Industry view: In-Line.

Target price is $26.20 Current Price is $28.17 Difference: minus $1.97 (current price is over target).
If ANZ meets the Morgan Stanley target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $28.56, suggesting upside of 1.8% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.9

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

Macquarie rates AWC as Upgrade to Neutral from Underperform (3) -

Macquarie upgrades to Neutral from Underperform as rallying prices and demand for aluminium have transformed the earnings outlook.

The broker notes Alumina Ltd is trading at a free cash flow yield of around 10% at spot prices. Target is raised to $1.70 from $1.50.

Target price is $1.70 Current Price is $1.73 Difference: minus $0.03 (current price is over target).
If AWC 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 $1.92, suggesting upside of 8.3% (ex-dividends)

The company's fiscal year ends in December.

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: 0.7

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

Macquarie rates BHP as Outperform (1) -

Macquarie incorporates stronger demand and prices, upgrading 2021 iron ore, manganese and thermal coal forecasts by 18%, 22% and 17% respectively.

The broker's preference for BHP Group over Rio Tinto ((RIO)) has narrowed. Outperform rating reiterated. Target is raised to $57 from $55.

Target price is $57.00 Current Price is $45.07 Difference: $11.93
If BHP meets the Macquarie target it will return approximately 26% (excluding dividends, fees and charges).

Current consensus price target is $48.18, suggesting upside of 4.7% (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

Citi rates CBA as Neutral (3) -

Citi believes that by launching the new BNPL product, the bank has sought to defend its share of millennials, challenge a disrupter in Afterpay ((APT)) and raised a conundrum for the RBA, who have thus far left BNPL largely unregulated.

The broker believes the decline of credit card profitability is overstated (though real) in the context of other banking products and more attributable to the rise of debit, not BNPL. The price target for Commonwealth Bank of $82.50 and Neutral rating are unchanged.

Target price is $82.50 Current Price is $86.00 Difference: minus $3.5 (current price is over target).
If CBA 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 $80.71, suggesting downside of -5.7% (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

Morgan Stanley rates CBA as Underweight (5) -

The major banks have strong capital levels and Morgan Stanley forecasts buybacks to commence at Commonwealth Bank of Australia, National Australia Bank ((NAB)) and Westpac Bank ((WBC)) in FY22.

The major banks' December 2020 CET1 ratios were an average of greater than 40 basis points better than the broker's forecasts due to lower risk-weighted assets in the quarter. The Underweight rating and $79 target are retained. Industry view: In-line.

Target price is $79.00 Current Price is $86.00 Difference: minus $7 (current price is over target).
If CBA meets the Morgan Stanley target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $80.71, suggesting downside of -5.7% (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

Macquarie rates CMM as Upgrade to Neutral from Underperform (3) -

Macquarie upgrades to Neutral from Underperform following recent weakness in the share price.

A modest strengthening in the Australian dollar drives reductions in gold earnings estimates. Target is $1.60.

Target price is $1.60 Current Price is $1.52 Difference: $0.08
If CMM meets the Macquarie target it will return approximately 5% (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

Macquarie rates CNU as Neutral (3) -

Chorus has submitted an initial asset value model to the NZ Commerce Commission identifying an initial asset base of NZ$5.5bn. Macquarie expects some remediation of the current outcomes as the regulatory process continues.

Nevertheless, the broker suspects uncertainty is likely to affect sentiment, particularly in the case of the key plank of the investment thesis regarding free cash flow generation and the associated dividend trajectory. Target is NZ$8.01. Neutral rating retained.

Current Price is $6.71. Target price not assessed.

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

This company reports in NZD. 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

UBS rates CNU as Sell (5) -

UBS maintains a Sell rating and NZ$7.00 target price and believes a lower than expected regulated asset base (RAB) and increasing wireless broadband competition pose a threat to medium-term dividends.

The initial RAB estimate is NZ$5.5bn or around -10% below the UBS forecast due to circa 50 basis points higher risk free rates, lower
estimates of shared assets (NZ$200m versus UBS NZ$275m) and higher capital contributions.

Current Price is $6.71. Target price not assessed.

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

This company reports in NZD. 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

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

Morgans lowers the rating to Hold from Add and the target to $0.30 from $0.39 given short-term uncertainty around the path to reaching nameplate at Sole. The broker expects near-term underperformance while APA Group ((APA)) aims to lift production and capital works.

While taking a conservative stance, the broker remains confident in the long-term outlook and intrinsic value in the Gippsland and Otway Basin assets. 

Target price is $0.30 Current Price is $0.28 Difference: $0.02
If COE meets the Morgans target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $0.36, suggesting upside of 27.9% (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 FMG as Outperform (1) -

Macquarie incorporates stronger demand and prices, upgrading 2021 iron ore, manganese and thermal coal forecasts by 18%, 22% and 17% respectively.

Outperform reiterated. Target is reduced to $23.00 from $25.50 on rolling forward to FY22 earnings multiples.

Target price is $23.00 Current Price is $20.15 Difference: $2.85
If FMG meets the Macquarie target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $23.02, suggesting upside of 11.2% (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

Ord Minnett rates FMG as Buy (1) -

Fortescue Metals chairman Andrew Forrest has briefed analysts regarding the Fortescue Future Industries, a wholly-owned subsidiary. Its purpose is to build a portfolio of hydro, geothermal, solar and wind power assets to support hydrogen production.

Ord Minnett suggests this represents a turning point in the Fortescue Metal strategy as the future focus on growth will be about renewable energy and breakthrough technology.

The broker does not expect the initiatives will be value destructive but no specific details have been provided as yet. Following a -20% sell-off in the stock, the broker reiterates a Buy rating and $30 target.

Target price is $30.00 Current Price is $20.15 Difference: $9.85
If FMG meets the Ord Minnett target it will return approximately 49% (excluding dividends, fees and charges).

Current consensus price target is $23.02, suggesting upside of 11.2% (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

Citi rates FNP as No Rating (-1) -

Citi no longer assigns a target price or High Risk rating for Freedom Foods given a lack of visibility surrounding the magnitude of future dilutionary events arising from the company’s recapitalisation plans and the company’s turnaround prospects.

Additionally, the outcomes of the Blue Diamond legal dispute and the ASIC investigation are creating uncertainty for the broker.

Citi makes significant revisions to both historical and forecast earnings, reflecting the incorporation of the FY20 and 1H21 results released during the trading halt and incorporation of the heavily-restated FY19 results.

The broker also has to incorporate the qualitative outlook provided for the Dairy & Nutritional Ingredients and Plant-based Beverages
businesses, and the sale of the Cereals & Snacks business.

Current Price is $0.51. Target price not assessed.

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

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

Ord Minnett rates GXY as Upgrade to Buy from Hold (1) -

Ord Minnett updates production profiles amidst a recovery in demand and pricing for lithium chemicals. As the market tightens, sourcing lithium units is being prioritised over grades.

As the share price has pulled back somewhat, the broker envisages opportunities in the sector and upgrades Galaxy Resources to Buy from Hold. Target is raised to $3.70 from $2.70.

Target price is $3.70 Current Price is $2.41 Difference: $1.29
If GXY meets the Ord Minnett target it will return approximately 54% (excluding dividends, fees and charges).

Current consensus price target is $2.60, suggesting upside of 2.4% (ex-dividends)

The company's fiscal year ends in December.

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: -0.2

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

Credit Suisse rates HLS as Outperform (1) -

Credit Suisse highlights trends across all diagnostic services improved in February relative to a weak January, which was impacted by covid lockdowns. Covid-19 testing (microbiology) remains strong while pathology outlays were up 6.7% year-on-year in February.

There is increasing evidence of pent-up demand for healthcare services as people delayed seeking healthcare at the beginning of the pandemic, explains the broker. The Outperform rating and $4.25 target are retained for Healius.

The analyst expects above historical growth rates (relative to pre-covid levels) in 2021 as the vaccine roll-out continues, economies open-up, confidence increases, physician visits return and covid testing remains robust.

Target price is $4.25 Current Price is $4.22 Difference: $0.03
If HLS meets the Credit Suisse target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $4.26, suggesting upside of 3.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.5

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

Morgan Stanley rates HVN as Overweight (1) -

Morgan Stanley opts for a more cautious stance within the household goods space due to harder comparisons and the vaccine rollout. The broker continues to favour Harvey Norman over JB Hi-Fi ((JBH)).

The latter is retesting all-time highs and has outperformed the ASX200 by 39% since the February 20, 2020 market peak, whilst Harvey Norman is back to 2007 levels, outperforming by 28%, calculates the analyst.

The broker raises the target price to $6.40 from $6 and retains the Overweight rating with a positive view on Australian housing and regional Australia. Industry view is Attractive.

Target price is $6.40 Current Price is $5.95 Difference: $0.45
If HVN meets the Morgan Stanley target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $5.86, suggesting downside of -1.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.7

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

Citi rates IAG as Buy (1) -

Citi assesses only a modest overrun to the FY21 perils allowance following recent floods and storms. It's considered the impact on EPS should also be partly mitigated by RACV’s share of the losses.

The broker retains the Buy rating, though introduces a -5% discount between valuation and target price to reflect current uncertainty. The target reduces to $5.60 from $5.90. 

The analyst notes it is feasible that further events could see the group go through the top of its stop loss, with still some way to go
before the aggregate deductible is eroded. This suggests risk of up to a further circa -8% downgrade in the case of another large event.

Target price is $5.60 Current Price is $4.79 Difference: $0.81
If IAG meets the Citi target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $5.44, suggesting upside of 15.2% (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

Morgans rates IAG as Upgrade to Add from Hold (1) -

Morgans downgrades FY21 EPS forecasts by -8% and lowers the target price to $5.35 from $5.68 on revised management claims guidance as a result of the NSW/QLD floods. However, the rating is raised to Add from Hold with the share price at seven year lows.

The company's reinsurance will cap the maximum event loss at -$165m though the company is estimating around -$135m. The broker views the flood impact as relatively contained.

Target price is $5.35 Current Price is $4.79 Difference: $0.56
If IAG meets the Morgans target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $5.44, suggesting upside of 15.2% (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

UBS rates IAG as Buy (1) -

If Insurance Australia Group is to incur a large event in the June quarter, UBS estimate's -9-13% downside earnings risk for FY21.This comes after the group provided a natural perils update following recent flooding across NSW and QLD.

The -$125m gross cost of un-named events in January and February was well above the -$82m announced by Suncorp Group ((SUN)). This increases the forecast earnings downside risk for IAG in FY21, when compared to a prior UBS estimate, explains the analyst.

The broker highlights the group is trading at a -17% PE discount to the market, below the -10% discount to a 20% premium range that it has traded at over the last five years. Buy. Target $6.

Target price is $6.00 Current Price is $4.79 Difference: $1.21
If IAG meets the UBS target it will return approximately 25% (excluding dividends, fees and charges).

Current consensus price target is $5.44, suggesting upside of 15.2% (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

Ord Minnett rates ILU as Upgrade to Buy from Hold (1) -

Ord Minnett adds stage 2 of the Eneabba project and stronger mineral sands prices to its financial modelling for Iluka Resources. As a result estimated value increases by 25%.

Little new supply is expected in the short term and strength in demand continues for mineral sands and rare earths.

Incorporating higher prices and adding stage 2 significantly improves cash flow and Ord Minnett upgrades to Buy from Hold. Target is raised to $8.10 from $6.60.

Target price is $8.10 Current Price is $6.77 Difference: $1.33
If ILU meets the Ord Minnett target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $6.61, suggesting downside of -9.1% (ex-dividends)

The company's fiscal year ends in December.

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

Citi rates ING as Buy (1) -

CEO Jim Leighton has resigned and will return to the US. Current non-executive director Andrew Reeves will take over. While a CEO departure is to be treated with caution, Citi asserts the calibre of Andrew Reeves as a replacement reduces the risk.

The main issue is whether Inghams Group can maintain stability in senior management ranks. Moreover, the Woolworths ((WOW)) contract is being negotiated and this remains a concern.

Nevertheless, Citi reiterates a Buy rating, although acknowledges clarity about the company's direction from the new CEO will be needed before the stock can re-rate. Target is $4.40.

Target price is $4.40 Current Price is $3.60 Difference: $0.8
If ING meets the Citi target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $3.92, suggesting upside of 14.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.7

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

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

Morgan Stanley opts for a more cautious stance within the household goods space due to harder comparisons and the vaccine rollout. The broker lowers the rating to Underweight from Equal-weight and the target to $46 from $52. Industry view is Attractive.

The consumer electronics sub-category was an early beneficiary of 'panic-buying' from March 2020 and will therefore face tougher comps earlier than others in March/April, explains the analyst.

Compared to Harvey Norman ((HVN), Morgan Stanley sees more limited underlying upside associated with housing and regional strength. Also, the share price is retesting all-time highs and has outperformed the ASX200 by 39% since the February 20, 2020 market peak.

Target price is $46.00 Current Price is $53.96 Difference: minus $7.96 (current price is over target).
If JBH meets the Morgan Stanley target it will return approximately minus 15% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $51.85, suggesting downside of -0.4% (ex-dividends)

The company's fiscal year ends in June.

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

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

Macquarie points out Jupiter Mines was South Africa's largest exporter of manganese in FY21, at 3.4mtpa. The broker expects a 2c final dividend, bringing the full year dividend yield to 10%.

Stronger manganese prices are driving the upside and the impact of weather has been offset by improvements in logistics. Rating is upgraded to Outperform from Neutral. $0.35 target retained.

Target price is $0.35 Current Price is $0.31 Difference: $0.04
If JMS meets the Macquarie target it will return approximately 13% (excluding dividends, fees and charges).

The company's fiscal year ends in February.

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

Ord Minnett rates MCP as Downgrade to Hold from Buy (3) -

An unconditional on-market takeover offer has been lodged by Gallin at $1.34 a share. Ord Minnett notes the offer price represents a 9.8% premium to the pre-bid market and a -7.6% discount to its DCF-based valuation.

The lack of a takeover premium is indicative of the opportunistic nature of the offer and also explained by sub-standard capital allocation decisions during FY21, in the broker's view.

The broker suspects incremental demand may be forthcoming from third-party bidders, given strong levels of brand equity and category leadership in core products. Rating is downgraded to Hold from Buy. Target is $1.45.

Target price is $1.45 Current Price is $1.46 Difference: minus $0.01 (current price is over target).
If MCP meets the Ord Minnett target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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

Macquarie rates MCR as Outperform (1) -

Mincor Resources has completed the last stage of the re-start of Kambalda, securing funding with a $55m syndicated debt facility. The Cassini and Durkin North projects are also progressing.

Macquarie expects the company will retain at least $30m in surplus cash through the development phase, enabling a strong commitment to exploration ahead of production ramping up through 2022. Outperform maintained. Target is reduced to $1.30 from $1.40.

Target price is $1.30 Current Price is $0.97 Difference: $0.33
If MCR meets the Macquarie target it will return approximately 34% (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

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

Macquarie incorporates stronger demand and prices, upgrading 2021 iron ore, manganese and thermal coal forecasts by 18%, 22% and 17% respectively.

Mount Gibson is upgraded to Outperform from Neutral, having materially underperformed its peers in the year to date. The completion of Koolan Island cutback is a key development for the company. Target is raised to $1.00 from $0.95.

Target price is $1.00 Current Price is $0.77 Difference: $0.23
If MGX meets the Macquarie target it will return approximately 30% (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

Ord Minnett rates MIN as Hold (3) -

Ord Minnett updates production profiles amidst a recovery in demand and pricing for lithium chemicals. As the market tightens, sourcing lithium units is being prioritised over grades.

The broker retains a Hold rating on Mineral Resources ahead of developments in its iron ore projects. Target is raised to $41.60 from $41.40.

Target price is $41.60 Current Price is $37.00 Difference: $4.6
If MIN meets the Ord Minnett target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $42.18, suggesting upside of 11.2% (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

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

The major banks have strong capital levels and Morgan Stanley forecasts buybacks to commence at National Australia Bank, Commonwealth Bank of Australia ((CBA)) and Westpac Bank ((WBC)) in FY22.

The major banks' December 2020 CET1 ratios were an average of greater than 40 basis points better than the broker's forecasts due to lower risk-weighted assets in the quarter.

The broker also thinks the National Australia Bank could provide more clarity on its medium-term approach to capital management at its first half result on May 6. 

This could include a target CET1 ratio range of circa 11-11.5%, as well as a target dividend payout ratio range of around 65-70%, based on "capital neutral payout ratio scenarios". The Equal-weight rating and target of $25.30 are retained. Industry view: In-line.

Target price is $25.30 Current Price is $26.17 Difference: minus $0.87 (current price is over target).
If NAB meets the Morgan Stanley target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $26.41, suggesting upside of 1.1% (ex-dividends)

The company's fiscal year ends in September.

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

Morgan Stanley rates NWS as Overweight (1) -

Morgan Stanley raises the target price to US$31 from US$30 after assessing the -US$275m deal for business news site/app IBD makes strategic and financial sense. The operator of the Investors.com website is 90% digital, mostly subscription and growing at double digits.

It also makes the broker contemplate what the company's Dow Jones unit could be worth if it became 100% digital. Hypothetically it could be US$7-10bn, or US$12-16 per share, calculates the analyst. The Overweight rating is retained. Industry view: Attractive.

In short, the more digital and subscription-oriented (read recurring revenue) the Dow Jones business becomes, the more potential value upside Morgan Stanley sees.

Current Price is $32.12. Target price not assessed.

Current consensus price target is $34.17, suggesting upside of 9.6% (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: 1.0

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

UBS rates ORA as Neutral (3) -

UBS highlights the covid-influenced shift towards greater at-home consumption has been a positive for consumer packaging companies such as Orora and analysis shows this trend has continued into the third quarter FY21.

The broker thinks the company has been a beneficiary of increased Australian liquor demand and forecasts FY21 beverage can volume growth of 13% versus the pcp.

Also, the company has recently demonstrated improved performance in the US Packaging Distribution (OPS) business where it delivered first half revenue growth of 3% versus the pcp (constant FX). The Neutral rating and $2.90 target are unchanged.

Target price is $2.90 Current Price is $3.14 Difference: minus $0.24 (current price is over target).
If ORA meets the UBS target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.01, suggesting downside of -2.4% (ex-dividends)

The company's fiscal year ends in June.

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 ORE as Upgrade to Buy from Hold (1) -

Ord Minnett updates production profiles amidst a recovery in demand and pricing for lithium chemicals. As the market tightens, sourcing lithium units is being prioritised over grades.

Share prices have pulled back a little and the broker envisages more opportunities in the sector and upgrades Orocobre to Buy from Hold. Target is raised to $5.50 from $5.40.

Target price is $5.50 Current Price is $4.70 Difference: $0.8
If ORE meets the Ord Minnett target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $5.16, suggesting upside of 7.4% (ex-dividends)

The company's fiscal year ends in June.

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

Macquarie rates ORG as Neutral (3) -

A rally in Brent oil has boosted expectations for FY22 APLNG earnings. Around 62% of Origin Energy's value and 77% of the equity value Macquarie believes can be attributed to APLNG and its significance has grown in the past three years.

The surge in such income will mitigate the ongoing pressure on the electricity contribution. The broker suggests a cyclical low is now being witnessed in pricing but it is less clear where the impetus will come from without further moves in the oil price or a corporate restructure.

Neutral rating retained. Target is reduced to $5.21 from $5.44.

Target price is $5.21 Current Price is $4.73 Difference: $0.48
If ORG meets the Macquarie target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $5.19, suggesting upside of 10.4% (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

Macquarie rates OSH as Upgrade to Neutral from Underperform (3) -

Macquarie raises Brent oil price assumptions by 20% for 2021 and by 7% for 2022, expecting prices will peak at US$72/bbl in the third quarter of 2021.

The broker notes the sell down in Alaska is now critical for Oil Search as this has the potential to reduce net capital expenditure exposure and provide upfront funding.

Rating is upgraded to Neutral from Underperform. Target rises to $4.40 from $4.10.

Target price is $4.40 Current Price is $4.22 Difference: $0.18
If OSH meets the Macquarie target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $4.43, suggesting upside of 5.9% (ex-dividends)

The company's fiscal year ends in December.

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: 0.0

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

Ord Minnett rates PLS as Sell (5) -

Ord Minnett updates production profiles amidst a recovery in demand and pricing for lithium chemicals. As the market tightens, sourcing lithium units is being prioritised over grades.

The broker retains a Sell rating for Pilbara Minerals as the valuation is stretched. Target is raised to $0.75 from $0.65.

Target price is $0.75 Current Price is $1.03 Difference: minus $0.28 (current price is over target).
If PLS meets the Ord Minnett target it will return approximately minus 27% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $0.93, suggesting downside of -10.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: -0.5

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

Ord Minnett rates PNV as Accumulate (2) -

Poloynovo has signed Premier Inc, a group purchasing organisation in the US market. Premier will make available the company's BTM dermal scaffold to over 4100 health facilities.

Ord Minnett considers this a mid-to long-term opportunity, given the potential challenges surrounding the pandemic in the short term.

The broker envisages additional agreements are very likely, as the top five group purchasing organisations, of which Premier is one, provide access to around 90% of the US market. Accumulate retained. Target rises to $3.10 from $2.55.

Target price is $3.10 Current Price is $2.85 Difference: $0.25
If PNV meets the Ord Minnett target it will return approximately 9% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.8

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

Credit Suisse rates RHC as Neutral (3) -

Credit Suisse highlights trends across all diagnostic services improved in February relative to a weak January which was impacted by covid lockdowns. Covid-19 testing (microbiology) remains strong while pathology outlays were up 6.7% year-on-year in February.

There is increasing evidence of pent-up demand for healthcare services as people delayed seeking healthcare at the beginning of the pandemic, explains the broker. The Neutral rating and $71 target are retained for Ramsay Health Care.

The analyst expects above historical growth rates (relative to pre-covid levels) in 2021 as the vaccine roll-out continues, economies open-up, confidence increases, physician visits return and covid testing remains robust.

Target price is $71.00 Current Price is $67.59 Difference: $3.41
If RHC meets the Credit Suisse target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $69.35, suggesting upside of 3.3% (ex-dividends)

The company's fiscal year ends in June.

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

Credit Suisse rates RIO as Outperform (1) -

Creit Suisse considers the new management team clearly wants a re-set post Juukan Gorge though the tenor of the recent 'Community and Social performance' briefing was more about drawing a line in the sand.

The company is still bedding down its new social performance function and strategy and with a big step-up in funding for social performance there will be more news to follow, suggests the broker. The Outperform rating and $124 target are retained.

Target price is $124.00 Current Price is $110.33 Difference: $13.67
If RIO meets the Credit Suisse target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $128.71, suggesting upside of 14.4% (ex-dividends)

The company's fiscal year ends in December.

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 RIO as Outperform (1) -

Macquarie incorporates stronger demand and prices, upgrading 2021 iron ore, manganese and thermal coal forecasts by 18%, 22% and 17% respectively.

Outperform rating reiterated. Target is reduced to $140 from $142 to reflect movements in exchange rates.

Target price is $142.00 Current Price is $110.33 Difference: $31.67
If RIO meets the Macquarie target it will return approximately 29% (excluding dividends, fees and charges).

Current consensus price target is $128.71, suggesting upside of 14.4% (ex-dividends)

The company's fiscal year ends in December.

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 S32 as Upgrade to Outperform from Neutral (1) -

Macquarie upgrades to Outperform from Neutral as rallying prices and demand for manganese and aluminium have transformed the earnings outlook.

The broker notes South32 is trading at a free cash flow yield of around 10% at spot prices. Target is raised to $3.10 from $2.90.

Target price is $3.10 Current Price is $2.75 Difference: $0.35
If S32 meets the Macquarie target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $3.04, suggesting upside of 7.1% (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: 0.9

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

Credit Suisse rates SHL as Outperform (1) -

Credit Suisse highlights trends across all diagnostic services improved in February relative to a weak January which was impacted by covid lockdowns. Covid-19 testing (microbiology) remains strong while pathology outlays were up 6.7% year-on-year in February.

There is increasing evidence of pent-up demand for healthcare services as people delayed seeking healthcare at the beginning of the pandemic, explains the broker. The Outperform rating and $40 target are retained for Sonic Healthcare.

The analyst expects above historical growth rates (relative to pre-covid levels) in 2021 as the vaccine roll-out continues, economies open-up, confidence increases, physician visits return and covid testing remains robust.

Target price is $40.00 Current Price is $35.84 Difference: $4.16
If SHL meets the Credit Suisse target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $37.36, suggesting upside 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

Ord Minnett rates STG as Buy (1) -

Ord Minnett assumes coverage of Straker Translations after transferring from Baillieu, with a Buy rating and $2.10 target.

The broker notes M&A activity continues to be a driver of growth in the translation services sector and there has been consolidation on the customer side as companies move towards fewer, larger contracts.

Scale is increasingly important and the broker believes Straker Translations is well-positioned for strong growth.

Target price is $2.10 Current Price is $1.58 Difference: $0.52
If STG meets the Ord Minnett target it will return approximately 33% (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 TPG as Neutral (3) -

Credit Suisse feels it is unlikely the strategy will change after the surprise announcement that David Teoh has resigned from his position as a director and chairman of the company, effective immediately. The Neutral rating and $7.05 target are unchanged.

However, the resignation creates a potential share overhang with David Teoh and his family and associates holding a 17.1% interest in TPG Telecom (80% of that holding is subject to an escrow until the end of June 2022), explains the broker.

The analyst notes that historically David Teoh was seen as driving the strategy. There's considered a risk that other shareholders who are close to him may look to exit their holdings. Any potential sell-down could create a better entry point into the stock, concludes the analyst.

Target price is $7.05 Current Price is $6.41 Difference: $0.64
If TPG meets the Credit Suisse target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $8.00, suggesting upside of 26.4% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.7

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

UBS rates TPG as Buy (1) -

UBS retains the Buy rating and $7.50 target despite describing the departure of Chairman David Teoh as a loss for the company and the industry. It's considered unlikely to change the company's short-to-medium term strategy.

There is investor concern about a share overhang. UBS highlights that for the debt jointly held by Vodafone & HTA outside of TPG Telecom to be fully paid off via the sale of TPG Telecom shares, the share price would need to be above around $8.40.

Target price is $7.50 Current Price is $6.41 Difference: $1.09
If TPG meets the UBS target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $8.00, suggesting upside of 26.4% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.7

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

Ord Minnett rates TWE as Hold (3) -

China has announced tariffs on Australian wine for the next five years at a slightly higher rate than the interim anti-dumping duties. Ord Minnett makes no changes to earnings estimates, having assumed an elevated tariff would continue.

The broker remains confident in the re-allocation of luxury Penfolds product and believes Treasury Wine is executing well in the US. Hold rating and $11.50 target retained.

Target price is $11.50 Current Price is $10.78 Difference: $0.72
If TWE meets the Ord Minnett target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $10.61, suggesting downside of -0.1% (ex-dividends)

The company's fiscal year ends in June.

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

Morgan Stanley rates WBC as Overweight (1) -

The major banks have strong capital levels and Morgan Stanley forecasts buybacks to commence at Westpac Bank (the broker's preferred major), Commonwealth Bank of Australia ((CBA)) and National Australia Bank ((NAB)) in FY22.

The major banks' December 2020 CET1 ratios were an average of greater than 40 basis points better than the broker's forecasts due to lower risk-weighted assets in the quarter.

In a separate review the broker believes the bank's credible cost reduction strategy and non-core asset sales will help deliver better earnings, return on equity (ROE) and dividend outcomes for the bank.

Morgan Stanley forecasts a -10% reduction in expenses, the buyback referred to above and a strong dividend recovery. The Overweight rating is retained and the target raised to $27.20 from $25.30. Industry view: In-line.

Target price is $27.20 Current Price is $24.34 Difference: $2.86
If WBC meets the Morgan Stanley target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $26.11, suggesting upside of 7.0% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.7

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

Macquarie rates WPL as Outperform (1) -

Macquarie raises Brent oil price assumptions by 20% for 2021 and by 7% for 2022, expecting prices will peak at US$72/bbl in the third quarter of 2021.

With higher oil prices, the broker believes it will now be easier to execute on transactions. This should help Woodside Petroleum in selling down a -30% stake in Senegal.

Woodside remains a preference in the large cap sector. Outperform retained. Target is raised to $29.50 from $28.20.

Target price is $29.50 Current Price is $24.54 Difference: $4.96
If WPL meets the Macquarie target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $27.90, suggesting upside of 13.9% (ex-dividends)

The company's fiscal year ends in December.

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: 0.7

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

Morgan Stanley rates XRO as Overweight (1) -

Morgan Stanley considers the risk/return attractive after the recent pullback in share price though expects bond-related headwinds to remain.

Data checks and industry feedback point to continuing SME subscriber growth and the two recent bolt-on deals (Planday and Tickstar) increase the broker's conviction in long-term subscriber, revenue and earnings targets.

Morgan Stanley retains its Overweight rating and increases the target price to $140 from $132. Industry view: Attractive.

Target price is $140.00 Current Price is $127.20 Difference: $12.8
If XRO meets the Morgan Stanley target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $114.75, suggesting downside of -7.0% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY21:

Forecast for FY22:

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