Australian Broker Call

Macquarie rates 29M as Outperform (1) -

Macquarie lowers its zinc price forecasts by -11-15% for the next 18 months and lowers its copper price forecasts by -5-15% over 2022-2024 on a softening demand outlook.

These changes drive material cuts to forecast earnings for several zinc/copper-exposed stocks under the broker's coverage. 

For 29Metals the lower copper price forecasts reduce the analyst's target price to $2.50 from $3.00, while the zinc changes further reduce the target to $2.30. The Outperform rating is unchanged.

Target price is $2.30 Current Price is $1.92 Difference: $0.38
If 29M meets the Macquarie target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $2.03, suggesting upside of 8.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.3

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

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

Following broadly in-line FY22 results for Allkem, Morgan Stanley raises its target to $13.00 from $12.55 after allowing for FY23 pricing/cost guidance, and a delayed ramp-up at Naraha and James Bay.

While Mt Cattlin FY23 production guidance was lowered due to a delay in pre-stripping activities, the sale of some lower-grade spodumene concentrate should largely provide an offset, notes the analyst.

The Equal-weight rating is maintained. Industry View: Attractive.

Target price is $13.00 Current Price is $13.67 Difference: minus $0.67 (current price is over target).
If AKE meets the Morgan Stanley target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $15.76, suggesting upside of 19.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.6

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

Macquarie rates AMI as Outperform (1) -

Macquarie lowers its zinc price forecasts by -11-15% for the next 18 months on a softening demand outlook, which drives material cuts to forecast earnings for several zinc-exposed stocks under coverage. Medium-term forecasts are largely unchanged.

Forecast earnings for Aurelia Metals for FY23 and FY24 fall by -43% and -44% and by -5-10% for FY25-27 to reflect the weaker outlook for zinc and recent downgrades to the broker's copper price forecasts.

The target falls to $0.36 from $0.40 and the Outperform rating is unchanged.

Target price is $0.36 Current Price is $0.25 Difference: $0.11
If AMI meets the Macquarie target it will return approximately 44% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

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

Macquarie rates APX as Underperform (5) -

In a review of technology shares under coverage in the wake of the August reporting season, Macquarie rates Appen as its least preferred sector pick.

The Underperform rating and $3.30 target are maintained.

Target price is $3.30 Current Price is $3.60 Difference: minus $0.3 (current price is over target).
If APX meets the Macquarie target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.57, suggesting downside of -0.9% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: -1.0

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

Morgans rates BCB as Initiation of coverage with Add (1) -

Morgans believes shares of Bowen Coking Coal deserve to trade at a premium on corporate appeal and management's track record of acquisitions, and initiates coverage with a Speculative Buy rating and $0.55 target.

The company could become a corporate target or utilise its cash flows/equity value for accretive acquisitions, suggests the analyst.

Increasing coal sales from Bluff and Broadmeadow will comfortably fund refurbishments at the flagship asset Burton, which accounts for around 60% of the broker's overall asset valuation.

The company offers scarcity value in a hot coal market, notes Morgans, and has higher valuation leverage to price compared to its ASX-listed peers.

Target price is $0.55 Current Price is $0.39 Difference: $0.16
If BCB meets the Morgans target it will return approximately 41% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 1.0

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

Macquarie rates BHP as Outperform (1) -

Macquarie lowers its zinc price forecasts by -11-15% for the next 18 months and lowers its copper price forecasts by -5-15% over 2022-2024 on a softening demand outlook.

These changes drive material cuts to forecast earnings for several zinc/copper-exposed stocks under the broker's coverage. 

BHP Group forecasts are left relatively unscathed by the zinc forecast changes, with the analyst's earnings estimates moving by less than 1% for FY23-27. However, the group's forecast earnings decline by -3-11% for FY23-FY25 due to the changed copper forecasts.

The target price falls to $40 from $44 and the Outperform rating is maintained.

Target price is $40.00 Current Price is $37.51 Difference: $2.49
If BHP meets the Macquarie target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $40.41, suggesting upside of 9.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: 0.3

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

Macquarie rates CVN as Outperform (1) -

Carnarvon Energy did release an FY22 update showing cash of $112m but Macquarie observes the share price has kept weakening since because the final go-ahead for the Dorado project has been postponed, and this creates overwhelming uncertainty.

It is Macquarie's view that Dorado remains a high quality asset. Dorado also remains strategically important to operator Santos ((STO)) but when it comes to allocating cash for investment, Dorado simply "lost the race with Alaska in 2022".

While estimates have been reduced, the target remains at 24c. Outperform rating retained.

Target price is $0.24 Current Price is $0.15 Difference: $0.09
If CVN meets the Macquarie target it will return approximately 60% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

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

Macquarie rates DCN as Neutral (3) -

Dacian Gold released FY22 financials revealing a larger-than-projected loss, but remove D&A and the underlying result marked a 6% "beat", says Macquarie.

Cash flows were in line and that recent capital raising should allow for further exploration while production scales down, suggests the broker.

Target remains 10c and Macquarie reminds investors there remains the merger-intention with Genesis Minerals ((GMD)), labeled as a take-over offer by the broker.

Neutral rating retained.

Target price is $0.10 Current Price is $0.10 Difference: $0
If DCN meets the Macquarie target it will return approximately 0% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.0

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

UBS rates DGL as Neutral (3) -

With DGL Group's FY22 result largely pre-guided, UBS has integrated five recent acquisitions into its outlook for the company, noting the purchases look to provide a $5m earnings benefit in the coming year, but FY23 forecasts are largely unchanged as reduced organic earnings growth expectations offset. 

The broker noted the company has suggested organic growth will flatten in the coming year, off the back of almost 100% organic growth in FY22. The broker lowers its net profit forecasts -5% and -8% for FY23 and FY24. 

The Neutral rating is retained and the target price decreases to $2.00 from $4.20.

Target price is $2.00 Current Price is $1.55 Difference: $0.45
If DGL meets the UBS target it will return approximately 29% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.0

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

Macquarie rates EVN as Neutral (3) -

Macquarie lowers its copper price forecasts by -5-15% over 2022-2024 on a softening demand outlook, which has an impact on near-term earnings forecasts for companies under coverage that produce copper by-products.

The broker's earnings forecasts for Evolution Mining fall by -8-31% for FY23-FY25 and the target price slips to $2.60 from $2.70. Neutral.

Target price is $2.60 Current Price is $2.19 Difference: $0.41
If EVN meets the Macquarie target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $2.79, suggesting upside of 29.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.2

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

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

Ord Minnett saw Harmoney Corp releasing FY22 financials largely in line. Cash flow milestones have been reached during H2 and the broker is banking on further cash flow improvements.

Also, now that the loan book has reached a greater point of scale in Australia, Ord Minnett is forecasting operating costs as a share of revenues to fall to circa 20%, adding: this should support adjusted profit growth.

As investors are anticipating further rate rises, multiples for the sector are de-rating, with the broker pulling back its target for Harmoney to $1.02 from $2.19 (not a typo).

The stock has been downgraded to Accumulate from Buy. Note: the broker publishes "normalised EPS" forecasts which are better-looking than the reported financials.

Target price is $1.02 Current Price is $0.66 Difference: $0.36
If HMY meets the Ord Minnett target it will return approximately 55% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.5

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

Ord Minnett rates HVN as Buy (1) -

Ord Minnett had reduced forecasts across the sector ahead of the August reporting season, which allowed Harvey Norman to release FY22 financials some 10% above those revised forecasts.

The broker reports strong results from Australia, New Zealand and Asia culminated in the "beat", with a full-year dividend of 37.5cps versus the forecast 34.0cps.

Ord Minnett remains cautious about the outlook, irrespectively. The broker notes the amount of inventory held at the supplier, franchisor and franchisee level should drive higher promotional intensity.

Estimates have been lifted, which pushes up the price target to $4.70 from $4.50. Buy rating retained.

Target price is $4.70 Current Price is $4.19 Difference: $0.51
If HVN meets the Ord Minnett target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $4.62, suggesting upside of 10.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.4

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

Macquarie rates IGO as Outperform (1) -

Macquarie lowers its copper price forecasts by -5-15% over 2022-2024 on a softening demand outlook, which has an impact on near-term earnings forecasts for companies under coverage that produce copper by-products.

The broker's earnings forecasts for IGO fall by around -1% for FY23-FY25 and the target price remains at $21.00. Outperform.

Target price is $21.00 Current Price is $13.01 Difference: $7.99
If IGO meets the Macquarie target it will return approximately 61% (excluding dividends, fees and charges).

Current consensus price target is $14.26, suggesting upside of 12.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.3

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

Macquarie rates MP1 as Outperform (1) -

In a review of technology shares under coverage in the wake of the August reporting season, Macquarie elevates Megaport to its preferred sector pick.

While the company missed FY22 expectations, the analyst feels the market under-appreciates the stickiness of the company's business model.

The Outperform rating and $11.00 target are unchanged.

Target price is $11.00 Current Price is $6.99 Difference: $4.01
If MP1 meets the Macquarie target it will return approximately 57% (excluding dividends, fees and charges).

Current consensus price target is $11.16, suggesting upside of 61.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.6

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

Morgan Stanley rates MQG as Overweight (1) -

In anticipation of 2Q results by Macquarie Group, Morgan Stanley upgrades FY23 earnings forecasts by 6.5% due to improving conditions in asset management and commodities. It's also felt the group could issue supportive 1H guidance. The target rises to $231 from $218.

The broker upgrades its FY23 commodity revenues (based on the 1H alone) by 10% due to ongoing high levels for US gas prices. The Overweight rating is retained. Industry View: Attractive.

Target price is $231.00 Current Price is $174.45 Difference: $56.55
If MQG meets the Morgan Stanley target it will return approximately 32% (excluding dividends, fees and charges).

Current consensus price target is $195.00, suggesting upside of 10.5% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.3

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

Macquarie rates NCM as Outperform (1) -

Macquarie lowers its copper price forecasts by -5-15% over 2022-2024 on a softening demand outlook, which has an impact on near-term earnings forecasts for companies under coverage that produce copper by-products.

The broker's earnings forecasts for Newcrest Mining fall by -4-28% for FY23-FY25 and the target price slips to $26 from $27. Outperform.

Target price is $26.00 Current Price is $17.01 Difference: $8.99
If NCM meets the Macquarie target it will return approximately 53% (excluding dividends, fees and charges).

Current consensus price target is $22.23, suggesting upside of 30.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: 0.4

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

Macquarie rates OZL as No Rating (-1) -

Macquarie lowers its copper price forecasts by -5-15% over 2022-2024 on a softening demand outlook, which has a material impact on near-term earnings forecasts for pure play copper names under coverage.

The broker's earnings forecasts for OZ Minerals fall  by -17-42% for 2022-2024.

Macquarie is currently on research restriction for the company and offers no target price or rating.

Current Price is $25.30. Target price not assessed.

Current consensus price target is $24.50, suggesting downside of -3.7% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.3

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

Macquarie rates PAN as Neutral (3) -

Macquarie lowers its copper price forecasts by -5-15% over 2022-2024 on a softening demand outlook, which has an impact on near-term earnings forecasts for companies under coverage that produce copper by-products.

The broker's earnings forecasts for Evolution Mining fall by -4-19% for FY23-FY25 and the target price slips to $0.23 from $0.24. Neutral.

Target price is $0.23 Current Price is $0.22 Difference: $0.01
If PAN meets the Macquarie target it will return approximately 5% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.5

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

Citi rates PRU as Buy (1) -

FY22 earnings (EBITDA) for Perseus Mining beat the forecasts of Citi and consensus by 9% and 3%, respectively. No FY23 guidance was provided. The final dividend of 1.64c is below the expected 1.9c.

After also allowing for Citi 's latest gold price and currency forecasts, FY23 and FY24 earnings forecasts are adjusted by 2% and -2%, respectively, and the target price of $2.10 remains. Buy.

Target price is $2.10 Current Price is $1.44 Difference: $0.66
If PRU meets the Citi target it will return approximately 46% (excluding dividends, fees and charges).

Current consensus price target is $1.98, suggesting upside of 38.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

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

Macquarie rates RIO as Neutral (3) -

Macquarie lowers its copper price forecasts by -5-15% over 2022-2024 on a softening demand outlook.

As a result, the broker's earnings forecasts for Rio Tinto fall by -2-4% for 2022-2024 and the price target falls to $97 from $100. The Neutral rating is unchanged.

In a separate update, Macquarie notes Rio Tinto now has agreement for full ownership of Turquoise Hill Resources.

Target price is $97.00 Current Price is $92.52 Difference: $4.48
If RIO meets the Macquarie target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $106.79, suggesting upside of 18.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: 0.6

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

Morgan Stanley rates RIO as Overweight (1) -

Rio Tinto has reached an in-principle agreement to acquire 49% of Turquoise Hill and has now reached full ownership. 

This agreement comes after the offer was increased by 7.5%, in a move that Morgan Stanley suggests would increase copper volumes for Rio Tinto by around 20% by 2026.

A special meeting is expected early in the fourth quarter of 2022 and, if approved, the transaction should close shortly thereafter, notes the analyst.

The Overweight rating and $113.50 target are retained. Industry view: Attractive.

Target price is $113.50 Current Price is $92.52 Difference: $20.98
If RIO meets the Morgan Stanley target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $106.79, suggesting upside of 18.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: 0.6

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

UBS rates RIO as Neutral (3) -

Rio Tinto has reached an in-principle agreement to acquire the remaining 49% stake of Turquoise Hill at a purchase price of US$43 per share, or a total US$3.3bn, subject to shareholder approval.

UBS notes the price represents a 67-125% premium to Turquoise Hill's pre-offer closing price, and Rio Tinto will assume the remaining development spend for the Oyu Tolgoi project which currently sits at US$1.9bn. 

The broker finds the purchase in line with Rio Tinto's bullish long-term outlook on copper. The Neutral rating and target price of $0.90 are retained.

Target price is $90.00 Current Price is $92.52 Difference: minus $2.52 (current price is over target).
If RIO meets the UBS target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $106.79, suggesting upside of 18.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: 0.6

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

Macquarie rates S32 as Outperform (1) -

Macquarie lowers its zinc price forecasts by -11-15% for the next 18 months and lowers its copper price forecasts by -5-15% over 2022-2024 on a softening demand outlook.

These changes drive material cuts to forecast earnings for several zinc/copper-exposed stocks under the broker's coverage. 

South32 forecasts are left relatively unscathed by the zinc forecast changes, with earnings estimates moving by less than 1% for FY23-27. Forecast earnings decline by -1-4% for FY23-FY25 due to the copper price forecast changes.

The Outperform rating and $5.60 target price are unchanged.

Target price is $5.60 Current Price is $4.06 Difference: $1.54
If S32 meets the Macquarie target it will return approximately 38% (excluding dividends, fees and charges).

Current consensus price target is $5.06, suggesting upside of 26.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: 1.0

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

Macquarie rates SFR as Outperform (1) -

Macquarie lowers its zinc price forecasts by -11-15% for the next 18 months and lowers its copper price forecasts by -5-15% over 2022-2024 on a softening demand outlook.

These changes drive material cuts to forecast earnings for several zinc/copper-exposed stocks under the broker's coverage. 

The analyst lowers its target price to $5.20 from $5.70 for Sandfire Resources on the copper forecast price changes and then to $5.00 after allowing for the lower zinc price forecast. The Outperform rating is maintained.

Target price is $5.00 Current Price is $4.06 Difference: $0.94
If SFR meets the Macquarie target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $5.54, suggesting upside of 43.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: 0.4

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

Morgan Stanley rates SHL as Overweight (1) -

July Medicare statistics show covid testing volumes are being maintained and diagnostic imaging is showing early signs of recovery, according to Morgan Stanley.

The broker prefers Sonic Healthcare for exposure to domestic health services.

The $38.60 target and Overweight rating are unchanged. Industry view: In-Line.

Target price is $38.60 Current Price is $33.72 Difference: $4.88
If SHL meets the Morgan Stanley target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $36.15, suggesting upside of 7.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.2

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

Morgans rates TRP as Speculative Buy (1) -

Morgans makes only minor forecast changes for Tissue Repair following in-line FY22 results which offered few surprises given recent quarterly reporting.

As shares are trading at around cash backing, the analyst has a Speculative Buy rating and a target of $0.80, up from $0.77, more than double the share price.

With a net cash balance of $25.5m, the company has sufficient funding to complete the chronic wounds clinical program and initial commercialisation of the aesthetic product, according to the broker.

Target price is $0.80 Current Price is $0.33 Difference: $0.47
If TRP meets the Morgans target it will return approximately 142% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

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