Australian Broker Call

Morgan Stanley rates ALL as Overweight (1) -

Morgan Stanley notes data that indicates first half digital revenues were up 22%. Growth was robust in March and the RAID game remains strong, generating monthly revenue well ahead of all prior Aristocrat Leisure games at the same stage of development.

EverMerge now accounts for around 10% of revenue and is also well ahead of most previous game launches. Morgan Stanley retains an Overweight rating and $38 target. There is no industry rating.

Target price is $38.00 Current Price is $35.85 Difference: $2.15
If ALL meets the Morgan Stanley target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $37.20, suggesting upside of 1.6% (ex-dividends)

The company's fiscal year ends in September.

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

Ord Minnett rates ALL as Accumulate (2) -

After a detailed review of game performance, Ord Minnett lifts the FY21 earnings forecast by 5.8% while also raising the Australian dollar estimate to 75 cents (up 1.7%) in FY21 and 71 cents (up 4.4%) in FY22.

The broker sees further digital growth and capital management opportunities, coupled with strong execution by management. Ord Minnett retains an Accumulate rating and lifts the target price to $39 from $36.90.

Target price is $39.00 Current Price is $35.85 Difference: $3.15
If ALL meets the Ord Minnett target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $37.20, suggesting upside of 1.6% (ex-dividends)

The company's fiscal year ends in September.

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

Ord Minnett rates AMC as Buy (1) -

Based on recent independent data for the four weeks to 27 March, Ord Minnett feels the near-term outlook for Amcor has turned more negative as tougher comparable numbers for food and beverage packaging begin.

Also, the broker highlights demand for healthcare packaging may remain subdued as covid-19 weighs on demand for medical devices and pharmaceutical products. In addition, input costs are considered likely to remain a temporary headwind.

The Accumulate rating and $17 target price are maintained as Ord Minnett sees valuation support and exposure to low-risk end markets.

Target price is $17.00 Current Price is $15.41 Difference: $1.59
If AMC meets the Ord Minnett target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $17.00, suggesting upside of 11.6% (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: 0.7

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

Ord Minnett rates ANN as Accumulate (2) -

Ord Minnett analysts have incorporated revised currency rates into financial models for healthcare sector companies. For the US dollar-reporting companies the stronger US dollar had a negative impact though valuations were supported by a -2 cent Australian dollar fall.

For Ansell, Ord Minnett retains its Accumulate rating and increases the target to $46 from $45.

Target price is $46.00 Current Price is $39.30 Difference: $6.7
If ANN meets the Ord Minnett target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $44.32, suggesting upside of 14.0% (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 APT as Overweight (1) -

Morgan Stanley assesses the entry of Commonwealth Bank ((CBA)) into the Australian BNPL market has put the focus on price competition. As a result, Australian merchant fee estimates are reduced for Afterpay.

Nevertheless, the company is expected to maintain a premium to other payment methods, as while its fees are high for a payment solution they are low for a marketplace.

Group merchant margins are reduced by -13 basis points for FY23 estimates and Australian merchant margins by -60 basis points. Target is reduced to $149 from $159. Overweight rating retained. Industry view: In-Line.

Target price is $149.00 Current Price is $118.48 Difference: $30.52
If APT meets the Morgan Stanley target it will return approximately 26% (excluding dividends, fees and charges).

Current consensus price target is $121.44, suggesting upside of 1.1% (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

Ord Minnett rates CSL as Hold (3) -

Ord Minnett analysts have incorporated revised currency rates into financial models for healthcare sector companies. For the US dollar-reporting companies the stronger US dollar had a negative impact though valuations were supported by a -2 cent Australian dollar fall.

For CSL, Ord Minnett retains its Hold rating and increases the target to $266.20 from $261.

Target price is $266.20 Current Price is $262.99 Difference: $3.21
If CSL meets the Ord Minnett target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $298.04, suggesting upside of 12.4% (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 CWY as Neutral (3) -

Cleanaway Waste Management has agreed to acquire Suez R&R Australia for $2.52bn. Credit Suisse believes if Cleanaway Waste funds a third of the deal with debt, then the deal could be 14% earnings accretive on an FY21 pro forma basis along.

The company also expects $70m in targeted synergies although this is expected to be achieved in FY25.

In Credit Suisse's view, while Cleanaway Waste looks relatively certain to get the Sydney post collections, there may be more risk around getting the rest of Suez R&R Australia. 

Neutral rating with the target rising to $2.50 from $2.30.

Target price is $2.50 Current Price is $2.43 Difference: $0.07
If CWY meets the Credit Suisse target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $2.48, suggesting downside of -0.7% (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

UBS rates CWY as Neutral (3) -

Cleanaway Waste has announced the potential acquisition of the Suez Groupe recycling & recovery business in Australia for $2.52bn. The transaction is conditional and Suez may terminate the transaction by April 26 if a superior offer is received.

A separate transaction has been negotiated for the acquisition of two landfills and five transfer stations in Sydney for $501m. UBS believes the smaller acquisition will fill a gap in the post collections portfolio across NSW.

The broker suspects Cleanaway may need to use $1.5bn in new equity funding to keep its leverage under a target of 3x for the main acquisition. In terms of the smaller one, debt is likely to fund the transaction. Neutral rating and $2.35 target retained.

Target price is $2.35 Current Price is $2.43 Difference: minus $0.08 (current price is over target).
If CWY 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 $2.48, suggesting downside of -0.7% (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

Macquarie rates EML as Outperform (1) -

EML Payments has acquired Sentenial Group for $108.6m along with an earn-out component that is contingent on Nuapay achieving a revenue target of EUR30m in 2023.

Macquarie believes there is a strong structural growth story with open banking but also highlights there are the risks in the material growth assumptions of EML Payments.

The company's existing clients - Worldpay and Cybersource - give the broker some confidence the forecasts are achievable,

Outperform retained, target rises to $6.20 from $5.70.

Target price is $6.20 Current Price is $5.42 Difference: $0.78
If EML meets the Macquarie 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

Ord Minnett rates IAG as Accumulate (2) -

Insurance Australia Group estimates the net cost of recent flooding at -$135m post quota share (QS). The net cost will be capped at -$169m if claims rise further.

Ord Minnett downgrades profit estimates for FY21 by -5% though believes there is potential upside to the valuation. The target price is raised to $5.15 from $5.

Management now expects net perils for FY21 to come in within a range of -$660–700m versus its allowance of $658m. The broker retains the Accumulate rating due to good protection in the near term for business interruption risk.

Target price is $5.15 Current Price is $4.83 Difference: $0.32
If IAG meets the Ord Minnett target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $5.39, suggesting upside of 9.8% (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 NAN as Hold (3) -

Ord Minnett analysts have incorporated revised currency rates into financial models for healthcare sector companies. For the US dollar-reporting companies the stronger US dollar had a negative impact though valuations were supported by a -2 cent Australian dollar fall.

For Nanosonics, Ord Minnett retains the Hold rating and increases the target to $5.40 from $5.30 as the company is a large beneficiary given the weighting of sales to the US.

Target price is $5.40 Current Price is $5.86 Difference: minus $0.46 (current price is over target).
If NAN meets the Ord Minnett target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.85, suggesting downside of -0.6% (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

Ord Minnett rates PPH as Upgrade to Hold from Lighten (3) -

Ord Minnett upgrades the rating to Hold from Lighten. The target price is lowered to $1.95 from $4.45 due to caution over one-off benefits of covid-19 and front book growth in FY22 and beyond. New customer acquisition is expected to become more difficult.

The analyst highlights total customers remained flat between FY20 and 1H FY21 and suspects that competitor offerings are closing the
gap, particularly in the small and medium church segments.

One positive is that sell-downs from several key holders have now largely completed removing an overhang of stock, explains the broker.

Target price is $1.95 Current Price is $1.90 Difference: $0.05
If PPH meets the Ord Minnett target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $1.95, suggesting upside of 2.6% (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: 0.3

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

Ord Minnett rates RHC as Accumulate (2) -

Ord Minnett analysts have incorporated revised currency rates into financial models for healthcare sector companies. For the US dollar-reporting companies the stronger US dollar had a negative impact though valuations were supported by a -2 cent Australian dollar fall.

For Ramsay Health Care, Ord Minnett retains the Accumulate rating and reduces the target to $74.20 from $75.

Target price is $74.20 Current Price is $67.98 Difference: $6.22
If RHC meets the Ord Minnett target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $68.95, suggesting upside of 2.3% (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

Ord Minnett rates RMD as Lighten (4) -

Ord Minnett analysts have incorporated revised currency rates into financial models for healthcare sector companies. For the US dollar-reporting companies the stronger US dollar had a negative impact though valuations were supported by a -2 cent Australian dollar fall.

For ResMed, Ord Minnett retains the Lighten rating and increases the target to $25.80 from $25.20.

Target price is $25.80 Current Price is $26.08 Difference: minus $0.28 (current price is over target).
If RMD meets the Ord Minnett target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $28.18, suggesting upside of 8.5% (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: 0.3

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

Macquarie rates RMS as Outperform (1) -

According to a preliminary production update for the third quarter, Ramelius Resources produced 66koz of gold across the group and was within the guidance range despite unplanned downtime at the Edna May mine.

Net cash also grew by $9.1m over the last quarter post a -$20.3m tax payment and -$9.3m in acquisitions.

Macquarie is pleased with the update with the closing net cash broadly in line with expectations despite the higher-than-expected tax payments. Given Ramelius's strong track record, the broker expects a solid end to FY21.

Outperform rating and $1.80 target.

Target price is $1.80 Current Price is $1.63 Difference: $0.17
If RMS meets the Macquarie target it will return approximately 10% (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 RSG as Upgrade to Neutral from Underperform (3) -

Macquarie upgrades its rating on Resolute Mining to Neutral from Underperform with the target rising to $0.50 from $0.45.

Resolute Mining's updated life of mine (LOM) plan for the Syama operation shows expected production to be 176kozpa over the next 11 years.

The miner expects production from the Tabakoroni underground mine from 2024-30. Production from the mine is expected to replace oxide production from 2024 onwards and is better than Macquarie expected.

Target price is $0.50 Current Price is $0.48 Difference: $0.02
If RSG meets the Macquarie target it will return approximately 4% (excluding dividends, fees and charges).

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 SHL as Hold (3) -

Ord Minnett analysts have incorporated revised currency rates into financial models for healthcare sector companies. For the US dollar-reporting companies the stronger US dollar had a negative impact though valuations were supported by a -2 cent Australian dollar fall.

For Sonic Healthcare, Ord Minnett retains the Hold rating and $36 target price.

Target price is $36.00 Current Price is $36.31 Difference: minus $0.31 (current price is over target).
If SHL meets the Ord Minnett target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $37.38, suggesting upside of 4.5% (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 SUN as Hold (3) -

Management estimates the net cost of recent flooding is -$230–250m and the worst-case outcome is capped at -$250m under the catastrophe program. The group's allowance for FY21 is $950m, with incurred losses of -$561m at the first half result.

The broker downgrades profit estimates for FY21 by -5% though believes there is potential upside to the valuation. The Hold rating is maintained and the target reduces to $11 from $12. 

Target price is $11.00 Current Price is $10.32 Difference: $0.68
If SUN meets the Ord Minnett target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $11.53, suggesting upside of 12.0% (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

Ord Minnett rates TWE as Hold (3) -

Based on recent independent data for the four weeks to 27 March, Ord Minnett assesses Treasury Wine Estates outperformed the US wine market by value, led by its 19 Crimes and Matua brands. 

Premiumisation remains a key industry theme with the company’s average pricing growth above market, explains the broker. 

Ord Minnett now has greater confidence that the reallocation of Penfolds bin and Icon range from China (25% of the global allocation) to other global markets can occur with modest earnings impact over a multi-year period. The Hold rating and $11.50 target are unchanged.

The limited access to the large and high-growth China market has moderated the P/E multiple expansion though this headwind is lessened due to a better business balance, explains the analyst.

Target price is $11.50 Current Price is $10.53 Difference: $0.97
If TWE meets the Ord Minnett target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $10.61, suggesting upside of 1.2% (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

Morgans rates VMY as Add (1) -

Morgans considers the wholly-owned Mulga Rock uranium project is robust though it requires long-term sales contracts. However, increased requests for expressions of interest from utilities is considered to imply that contract activity should stir in 2021.

Management anticipates that all approvals to commence site works will be in place by June 2021. The US$393m development is scheduled to produce 3.5mlbs per year U308 at an all-in sustaining cost of US$31.22/lb over the 15-year life from existing reserves.

Add rating and $0.17 target price are unchanged. Morgans highlights the spot uranium price has risen with major producers shutting production, much existing feedstock overhang removed and the current market in supply deficit.

Target price is $0.17 Current Price is $0.16 Difference: $0.01
If VMY meets the Morgans target it will return approximately 6% (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 WSA as Outperform (1) -

After attending the site tour to Western Areas' Cosmos project, Macquarie notes "strong" progress is being made on underground development and surface infrastructure. 

Further, the bulk of the shaft infrastructure is on site and sinking of the shaft is expected to commence in the next few months. Delivering Cosmos on time and on budget remains a key risk to the broker's base case assumptions.

Outperform rating with the target falling to $2.40 from $2.60.

Target price is $2.40 Current Price is $2.13 Difference: $0.27
If WSA meets the Macquarie target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $2.65, suggesting upside of 16.0% (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