Australian Broker Call

Ord Minnett rates ABC as Hold (3) -

Positively for AdBri, Ord Minnett believes the underlying backlog of work remains strong.

The broker points out housing makes up 42% of group sales. Recent data show the total value of building work approved increased 19% year-on-year to $14.2bn in February, an acceleration from January.

The Hold rating and $3.30 target price are maintained.

Target price is $3.30 Current Price is $3.03 Difference: $0.27
If ABC meets the Ord Minnett target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $3.61, suggesting upside of 19.0% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.4

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

Macquarie rates AIZ as Underperform (5) -

Macquarie estimates material EPS and valuation dilution from a recapitalisation package announced by Air New Zealand. Also, management's FY25 target for earnings was estimated to be below the consensus forecast.

The broker finds the valuation unappealing and retains its Underperform rating, while the target price falls to NZ$0.75 from NZ$1.15. 

Meanwhile, dividends, which previously formed a part of the the analyst's investment case, are now unlikely until FY26.

Current Price is $1.20. Target price not assessed.

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

This company reports in NZD. 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 ANZ as Outperform (1) -

Macquarie expects the Bank sector to consolidate at current levels given near-term results are likely to disappoint due to weaker margins. While volume growth remains solid, it is slowing, and competitive pressures are expected to remain intense.

Mortgage competition has shifted to variable rates due to higher rates, explains the analyst. Also, higher term deposit costs and
switching are expected to limit the upside from those higher rates.

ANZ Bank is among the broker's preferred bank exposures. The Outperform rating and $29.50 target are retained.

Target price is $29.50 Current Price is $27.60 Difference: $1.9
If ANZ meets the Macquarie target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $30.05, suggesting upside of 10.4% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.8

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

Morgan Stanley rates ANZ as Overweight (1) -

Morgan Stanley believes the margin benefit of cash rate rises in Australia and New Zealand will be partly offset by higher term deposit rates. Some reversal of the recent mix shift to term deposits is also expected to act as an offset.

ANZ Bank has the most exposure to term deposits, given its larger New Zealand  business, notes the analyst.

The Overweight rating and $30.30 target are retained. Industry view: Attractive.

Target price is $30.30 Current Price is $27.60 Difference: $2.7
If ANZ meets the Morgan Stanley target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $30.05, suggesting upside of 10.4% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.8

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

Macquarie rates BEN as Outperform (1) -

Macquarie expects the Bank sector to consolidate at current levels given near-term results are likely to disappoint due to weaker margins. While volume growth remains solid, it is slowing, and competitive pressures are expected to remain intense.

Mortgage competition has shifted to variable rates due to higher rates, explains the analyst. Also, higher term deposit costs and
switching are expected to limit the upside from those higher rates.

Bendigo & Adelaide Bank is among the broker's preferred bank exposures. Regional banks are thought to be clear outperformers with above system housing loan growth. The Outperform rating and $11 target are retained.

Target price is $11.00 Current Price is $10.29 Difference: $0.71
If BEN meets the Macquarie target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $10.31, suggesting upside of 0.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.4

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

Macquarie rates BOQ as Downgrade to Neutral from Outperform (3) -

Macquarie downgrades its rating for Bank of Queensland to Neutral from Outperform due to increased competition and because lower deposit pricing has resulted in very slow deposit growth. It's also felt the bank has relatively lower leverage to higher rates.

The target price falls to $9 from $9.25 as the broker sees increasing risk of mortgage margin impacts and a deposit cost blowout as the bank's funding gap widens.

For the overall sector, Macquarie expects the Bank sector to consolidate at current levels given near-term results are likely to disappoint due to weaker margins. While volume growth remains solid, it is slowing, and competitive pressures are expected to remain intense.

Mortgage competition has shifted to variable rates due to higher rates, explains the analyst. Also, higher term deposit costs and
switching are expected to limit the upside from those higher rates.

Target price is $9.00 Current Price is $8.68 Difference: $0.32
If BOQ meets the Macquarie target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $10.32, suggesting upside of 21.4% (ex-dividends)

The company's fiscal year ends in August.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.8

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

Macquarie rates CBA as Underperform (5) -

Macquarie expects the Bank sector to consolidate at current levels given near-term results are likely to disappoint due to weaker margins. While volume growth remains solid, it is slowing, and competitive pressures are expected to remain intense.

Mortgage competition has shifted to variable rates due to higher rates, explains the analyst. Also, higher term deposit costs and
switching are expected to limit the upside from those higher rates.

The $90 target and Underperform rating are retained for CommBank as growth momentum appears to be decelerating.

Target price is $90.00 Current Price is $105.77 Difference: minus $15.77 (current price is over target).
If CBA meets the Macquarie target it will return approximately minus 15% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $92.45, suggesting downside of -11.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: -0.6

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

Macquarie rates CGC as Outperform (1) -

Macquarie could see the importance of attending the Guyra tomato glasshouse site tour, given the Tomato segment represented 10% of group revenue in 2021.

Production capacity has been expanded with a new 10ha glasshouse and 2.5ha nursery. The analyst notes healthy snacking products (eg. tomatoes) provide an opportunity via branded and private label products.

The Outperform rating and target price of $3.80 are retained.

Target price is $3.80 Current Price is $3.18 Difference: $0.62
If CGC meets the Macquarie target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $3.64, suggesting upside of 14.4% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.5

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

Morgan Stanley rates CPU as Overweight (1) -

Morgan Stanley anticipates more servicing opportunities arising for Computershare as more loans shift to non-performing in the US. This comes as forebearance programs are ending and interest rates are climbing, explains the analyst.

Recent data show US mortgage refinancing applications were down -60% year-on-year in March, which supports revenues and protects the value of Computershare's Mortgage Servicing Rights, believes the broker.

The Overweight rating and $25 target are retained. Industry view: Attractive.

Target price is $25.00 Current Price is $24.70 Difference: $0.3
If CPU meets the Morgan Stanley target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $23.48, suggesting downside of -4.8% (ex-dividends)

The company's fiscal year ends in June.

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: 0.3

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

Ord Minnett rates CSR as Accumulate (2) -

Positively for CSR, Ord Minnett believes the underlying backlog of work remains strong.

The broker points out housing makes up 72% of the company's building products sales. Recent data show the total value of building work approved increased 19% year-on-year to $14.2bn in February, an acceleration from January.

The Accumulate rating and $6.15 target price are maintained.

Target price is $6.15 Current Price is $6.15 Difference: $0
If CSR meets the Ord Minnett target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $6.60, suggesting upside of 8.5% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.9

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

Citi rates GUD as Buy (1) -

Ahead of G.U.D. Holdings' investor day next week, Citi considers the impact of the recent AutoPacific Group acquisition. The broker finds AutoPacific Group to be more favourably exposed to a consumer shift towards 4x4s and SUVs and less dependent on internal combustion engines. 

G.U.D. Holdings maintains full year earnings guidance of $155-160m, but the broker notes rumoured delays in the Ford Ranger launch could push earnings into FY23. Further, there is little detail around available stock which could be impacted by semiconductor chip shortages. 

The Buy rating and target price of $15.60 are retained.

Target price is $15.60 Current Price is $11.60 Difference: $4
If GUD meets the Citi target it will return approximately 34% (excluding dividends, fees and charges).

Current consensus price target is $15.65, suggesting upside of 37.3% (ex-dividends)

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

UBS rates IPL as Buy (1) -

Incitec Pivot looks to benefit from continuing fertiliser price rallies, with di-ammonium phosphate, ammonia and urea up 10%, 46% and 5% respectively in the last three months, supported by supply constraints as noted by UBS. 

The broker has upgraded its earnings per share forecasts 58% and 44% for FY22 and FY23, noting Incitec Pivot is particularly sensitive to di-ammonium phosphate and ammonia pricing.

The company's Waggaman ammonia plant is also set to restart production in April, which UBS notes should allow production to command a record ammonia contract price of US$1,625/Mt from May.

The Buy rating is retained and the target price increases to $4.50 from $3.95.

Target price is $4.50 Current Price is $3.79 Difference: $0.71
If IPL meets the UBS target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $4.03, suggesting upside of 5.1% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.8

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

Macquarie rates JDO as Neutral (3) -

Macquarie expects the Bank sector to consolidate at current levels given near-term results are likely to disappoint due to weaker margins. While volume growth remains solid, it is slowing, and competitive pressures are expected to remain intense.

Mortgage competition has shifted to variable rates due to higher rates, explains the analyst. Also, higher term deposit costs and
switching are expected to limit the upside from those higher rates.

The broker retains its Neutral rating and $2.10 target price for Judo Capital.

Target price is $2.10 Current Price is $1.74 Difference: $0.36
If JDO meets the Macquarie target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $2.42, suggesting upside of 41.3% (ex-dividends)

The company's fiscal year ends in June.

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 LLC as Outperform (1) -

Lendlease Group has divested a -24.9% interest in its Retirement Living Trust for $490m, demonstrating to Macquarie the levers available to the company to fund capital requirements.

The transaction will help fund the development pipeline and increase exposure to investments, explains the analyst. The Outperform rating is retained, while the target slips by -0.5% to $12.32.

Target price is $12.32 Current Price is $11.20 Difference: $1.12
If LLC meets the Macquarie target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $12.64, suggesting upside of 14.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.7

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

Ord Minnett rates LLC as Accumulate (2) -

In anticipation of a ramp-up in development work-in-progress, according to Ord Minnett, Lendlease Group has divested a -24.9% stake (25.1% retained) in its Australian Retirement Living business for $490m.

The Accumulate rating and $12.50 target are maintained.

Target price is $12.50 Current Price is $11.20 Difference: $1.3
If LLC meets the Ord Minnett target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $12.64, suggesting upside of 14.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.7

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

Morgans rates MVF as Add (1) -

Monash IVF continues to expand its genetics capabilities and offerings, supported by a $95.6m funding commitment from the Federal Government, which Morgans notes should provide opportunity to engage with patients not otherwise considering IVF treatments. 

The company has launched its home genetic carrier screening test, allowing couples to pre-screen DNA to evaluate the likelihood of conceiving a child with a significant medical condition. 

Morgans also notes cycles were down -16% on the previous comparable period in February, but expects volume is more likely deferred than lost.

The Add rating is retained and the target price increases to $1.29 from $1.20. 

Target price is $1.29 Current Price is $1.19 Difference: $0.1
If MVF meets the Morgans target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $1.25, suggesting upside of 4.8% (ex-dividends)

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 NAB as Outperform (1) -

Macquarie expects the Bank sector to consolidate at current levels given near-term results are likely to disappoint due to weaker margins. While volume growth remains solid, it is slowing, and competitive pressures are expected to remain intense.

Mortgage competition has shifted to variable rates due to higher rates, explains the analyst. Also, higher term deposit costs and
switching are expected to limit the upside from those higher rates.

National Australia Bank is among the broker's preferred bank exposures. The Outperform rating and $32.50 target are retained.

Target price is $32.50 Current Price is $32.35 Difference: $0.15
If NAB meets the Macquarie target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $31.99, suggesting downside of -1.4% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.4

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

Ord Minnett rates QAN as Buy (1) -

Ord Minnett commends the disclosure and ambitions of Qantas Airways in regard to its net zero emission targets, and notes companies that have improved their profile in this area have outperformed laggards.

Among several company initiatives, the broker likes the commitment to refresh the fleet by introducing more fuel-efficient aircraft and the increased adoption of sustainable fuels. 

The Buy rating and $5.95 target price are retained.

Target price is $5.95 Current Price is $5.21 Difference: $0.74
If QAN meets the Ord Minnett target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $5.86, suggesting upside of 11.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.5

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

Macquarie rates RIO as Outperform (1) -

While making no changes to earnings forecasts for Rio Tinto, Macquarie notes iron ore prices underpin strong earnings upgrade momentum.

Separately, the broker believes the company needs to increase its initial cash offer for Turquoise Hill Resources to secure shareholder approval for the all cash offer for the remaining 49.2% of the company.

The Outperform rating and $140 target price are maintained.

Target price is $140.00 Current Price is $119.11 Difference: $20.89
If RIO meets the Macquarie target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $119.50, suggesting downside of -0.5% (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: 0.4

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

UBS rates SGM as Downgrade to Neutral from Buy (3) -

Sims has outlined opportunities to diversify from traditional metals recycling into a broader ESG strategy, but UBS notes pursuing this will take time and capital expenditure, and in the near-term scrap pricing and volumes will continue to drive earnings. 

Given a settling of scrap metal pricing at higher levels the broker anticipates pricing declines from the first half of FY23. On company guidance, UBS notes volumes look unlikely to offset lower pricing.

Based on the limited opportunity for organic growth seen by the broker, the rating is downgraded to Neutral from Buy and the target price increases to $22.00 from $20.30. 

Target price is $22.00 Current Price is $21.56 Difference: $0.44
If SGM meets the UBS target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $20.68, suggesting downside of -4.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.5

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

Morgan Stanley rates STO as Overweight (1) -

Following a climate plan presentation by Santos, Morgan Stanley highlights some potentially game changing new revenue opportunities via managing and storing emissions for other companies.

This will be enabled by carbon capture, explains the analyst, who notes the company's recently sanctioned Moomba carbon capture project. It's felt Santos is well placed to implement its carbon capture strategy in the Cooper Basin.

Price target remains at $10.40. Overweight. Industry view Attractive.

Target price is $10.40 Current Price is $7.74 Difference: $2.66
If STO meets the Morgan Stanley target it will return approximately 34% (excluding dividends, fees and charges).

Current consensus price target is $9.47, suggesting upside of 19.8% (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: 0.8

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

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

Tabcorp's Demerger Scheme Booklet disclosed better than anticipated operational expenditure and net debt allocation according to Credit Suisse. The broker's target price now incorporates $4.95 per share for The Lottery Corp and $1.25 per share for the new Tabcorp.

The Scheme booklet also warned of potential litigation risk, but the broker expects this offers opportunity to harmonise wagering industry fee structures. The broker assumes a -7 cents per share impact from litigation settlement.

The broker also noted a 10% lottery revenue increase in the March quarter, driving a target price increase and a suggested return of more than 15% in the next year. 

The rating is upgraded to Outperform from Neutral and the target price increases to $6.20 from $5.70.

Target price is $6.20 Current Price is $5.34 Difference: $0.86
If TAH meets the Credit Suisse target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $5.79, suggesting upside of 5.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.8

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

Ord Minnett rates TAH as Hold (3) -

Ord Minnett notes Tabcorp's demerger plan, to be voted upon at the shareholder meeting on May 12 (just approved by the courts), will split the company into two separately listed companies.

'NewTabcorp’, will hold the wagering and media assets, along with the gaming services divisions, while ‘The Lottery Corporation’ will own the lotteries and keno assets.

The broker advises investors to contemplate the value of the media business within 'New Tabcorp', before disposing of the wagering and media arm. The Hold rating and $4.90 target price are maintained.

Target price is $4.90 Current Price is $5.34 Difference: minus $0.44 (current price is over target).
If TAH 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 $5.79, suggesting upside of 5.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.8

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

Ord Minnett rates URW as Sell (5) -

Following an investor day, Ord Minnett notes management's updated FY24 guidance for European retail net rental income and operating earnings (EBITDA) was better than expected. Those metrics are expected to recover to 2019 levels by that time.

In-line with the analyst's expectation, dividends will be reinstated from 2023. Meanwhile, the current loan-to-value ratio was worse than anticipated.

In an interesting aside, the broker now has the feeling a good slice of future growth will come from commercial partnerships with
media advertising and mixed-use development. Clearly this is outside the traditional shopping centre business.

Target price is $4.70 Current Price is $5.04 Difference: minus $0.34 (current price is over target).
If URW meets the Ord Minnett target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

This company reports in EUR. 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

Macquarie rates WBC as Neutral (3) -

Macquarie expects the Bank sector to consolidate at current levels given near-term results are likely to disappoint due to weaker margins. While volume growth remains solid, it is slowing, and competitive pressures are expected to remain intense.

Mortgage competition has shifted to variable rates due to higher rates, explains the analyst. Also, higher term deposit costs and
switching are expected to limit the upside from those higher rates.

The broker retains its Neutral rating and $22.50 target for Westpac.

Target price is $22.50 Current Price is $24.24 Difference: minus $1.74 (current price is over target).
If WBC meets the Macquarie target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $25.16, suggesting upside of 5.0% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.4

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