Australian Broker Call

Morgan Stanley rates 360 as Overweight (1) -

While Life360's FY22 results were largely pre-guided, Morgan Stanley expects details on cash flows will be well received by the market,

The broker implies from organic investing cash flow in FY22 that the company will become free cash flow positive by the 2Q of 2023.

While management's FY23 revenue guidance for US$300-310m was in line with the broker's US$300m forecast, cost-out is expected to pull forward the cash flow positive date.

The analyst suggests concerns regarding churn after a price rise will be more than offset by further leverage from 2Q Android pricing changes and bundles.

Overweight rating and $8.50 retained. Industry view: In Line.

Target price is $8.50 Current Price is $4.95 Difference: $3.55
If 360 meets the Morgan Stanley target it will return approximately 72% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

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 AGL as Outperform (1) -

After a two-year period of research restriction, Macquarie resumes coverage of AGL Energy with an Outperform rating and $8.31 target.

The company is trading at an attractive net present value and sum-of-the-parts valuation, according to the broker, as well as trading at a price earnings discount relative to the market.

The core earnings driver for the company is the merchant energy business with 23TWh of leverage to a higher electricity price, explains the analyst.

Macquarie also points out the 2030 renewable/firm program of 5GW can be comfortably funded by cashflow without recourse to additional debt.

Target price is $8.31 Current Price is $6.87 Difference: $1.44
If AGL meets the Macquarie target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $8.75, suggesting upside of 23.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.7

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

Macquarie rates AIA as Outperform (1) -

Macquarie points out the announced capex program for the integrated domestic and international terminal project is broadly consistent with Auckland International Airport's earlier guidance.

That earlier guidance was for aeronautical capex of around $6bn over 10 years, averaging circa $600m/annum, which leaves an additional $2.1bn to be spent on as yet unannounced projects.

Concerns remain over the the company's ability to fund all this capex, notes the analyst, and management retains flexibility to consider an equity raise if necessary.

The Overweight rating and NZ$9.23 price target are unchanged.

Current Price is $8.27. Target price not assessed.

Current consensus price target is $7.93, suggesting downside of -2.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

This company reports in NZD. 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

UBS rates AIA as Sell (5) -

Auckland International Airport has unveiled its capital expenditure plan for its new integrated domestic terminal building and associated aeronautical projects, outlining a total expected cost of $3.9bn over the coming 5-6 years. 

While this is a 15% beat to UBS's anticipated aeronautical spend through to FY29, it reflects higher spend on the terminal building and lower spend on other projects.The broker looks forward to further exciting news in the Airport's future, including an announcement from the Commerce Commission on draft regulatory building blocks, and a new dividend policy. 

The Sell rating is retained and the target price price increases to NZ$7.00 from NZ$6.70.

Current Price is $8.27. Target price not assessed.

Current consensus price target is $7.93, suggesting downside of -2.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

This company reports in NZD. 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

Citi rates ALL as Buy (1) -

December quarter data suggests Aristocrat Leisure has extended its performance gap to peers, in a period where revenues remained strong across the industry, says Citi, with casino revenue in the US up 9% year-on-year and 35% pre-covid in the period. 

The company also maintained its market leading position in the premium-leased category as its Dragon Link title continued to  lead by a wide margin. The game has seen an increase of 700 installed units over the last year. 

The Buy rating is retained and the target price increases to $42.80 from $41.20.

Target price is $42.80 Current Price is $34.71 Difference: $8.09
If ALL meets the Citi target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $41.49, suggesting upside of 20.2% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.9

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

UBS rates ALQ as Neutral (3) -

ALS has recently divested its Asset Care business to SRG Global ((SRG)), in a move UBS finds in line with with the company's strategic approach to further focus on core business and end markets. 

The broker highlights the transaction is immaterial to ALS, equating to around 1% of the enterprise value. The divestment has seen UBS lower its earnings per share forecasts -1% for FY24 and FY25. 

The Neutral rating is retained and the target price decreased to $12.30 from $13.25.

Target price is $12.30 Current Price is $11.12 Difference: $1.18
If ALQ meets the UBS target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $13.16, suggesting upside of 17.2% (ex-dividends)

The company's fiscal year ends in March.

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 COG as Buy (1) -

COG Financial Services has announced it will acquire Paywise, an established salary packaging and novated leasing business servicing government and private sector customers, at a cost of $30m. 

Inclusive of synergies, Ord Minnett expects the purchase can contribute $5m to earnings in the next fiscal year. The offer is expected to settle simultaneously with the company's $15m sale of an 18% stake in FleetNetwork. The additional $15m is expected to be paid in early April, funded by existing corporate debt facilities. 

The Buy rating is retained and the target price decreases to $1.90 from $1.93.

Target price is $1.90 Current Price is $1.34 Difference: $0.56
If COG meets the Ord Minnett target it will return approximately 42% (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 EDV as Outperform (1) -

Macquarie suggests the regulatory risk that has weighed on Endeavour Group's share price should ease after the NSW election.

Separately, hotels have experienced a rebound in sales after covid as consumers shift spending toward services, and the broker sees significant opportunity for the group to reinvest in its Hotel network.

Positively, the average age of Endeavour's gaming fleet has fallen to 6.6 years from 7.9 years since the IPO, notes the broker.

The Outperform rating and $7.40 target are unchanged.

Target price is $7.40 Current Price is $6.65 Difference: $0.75
If EDV meets the Macquarie target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $6.85, suggesting upside of 4.9% (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 KAR as Initiation of coverage with Hold (3) -

Ord Minnett initiates coverage on Karoon Energy while the company is in the process of doubling the annual output of its Bauna oil field through interventions and new developments. 

The broker does point out Bauna is likely past its prime, but the asset is well located and maintains life and growth potential. Despite this, the broker finds Karoon Energy, as a one asset company, to be uncertain, noting it anticipates the company to make a further US$155m in deferred acquisition payments for Bauna by 2026.  

The broker initiates coverage with a Hold rating and target price of $2.30.

Target price is $2.30 Current Price is $2.07 Difference: $0.23
If KAR meets the Ord Minnett target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $2.94, suggesting upside of 52.2% (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: 0.8

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

Citi rates LNK as Neutral (3) -

Citi anticipates investors will warm to the announcement that Link Administration is selling its BCM operations, despite the price tag of EUR30m being lower than earlier bids. Given the broker had expected BCM to continue to be loss making, the sale, targeted for completion in the second quarter of 2023, improves earnings per share. 

The broker expects the eventual details of the company's Link Fund Solutions sales to be of more interest, with negotiation ongoing but a resolution targeted by end of March. It expects successful execution to be materially beneficial to the share price. 

The Neutral rating is retained and the target price increases to $2.20 from $2.10.

Target price is $2.20 Current Price is $2.08 Difference: $0.12
If LNK meets the Citi target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $2.13, suggesting upside of 4.4% (ex-dividends)

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

Credit Suisse rates LNK as Neutral (3) -

Link Administration has announced the sale of Banking & Credit Management (BCM) at a price broadly in line with book value. Credit Suisse views this as a positive development with the sale proceeds above the broker's zero valuation for BCM.

It also sees Link divest a loss making business which had little prospect of turning around in the near term, the broker adds.

Earnings forecasts have been upgraded to account for the sale. Neutral and $2.20 target retained.

Target price is $2.20 Current Price is $2.08 Difference: $0.12
If LNK meets the Credit Suisse target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $2.13, suggesting upside of 4.4% (ex-dividends)

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

Citi rates MIN as Neutral (3) -

Citi has adjusted its forecasts for Mineral Resources, marking to market iron ore price forecasts for 2023 and reduced Wodgina ownership to 50% from the end of the March quarter.

The Neutral rating and target price of $94.00 are retained.

Target price is $94.00 Current Price is $80.31 Difference: $13.69
If MIN meets the Citi target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $95.61, suggesting upside of 23.8% (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

Ord Minnett rates NHC as Downgrade to Hold from Accumulate (3) -

Ord Minnett highlights New Hope will be required to sell some coal into the domestic market at capped prices, as per the New South Wales government's recently introduced Coal Reservation Scheme. 

While this does see the broker modestly reduce its valuation for the company, it continues to expect thermal coal prices to remain well above the marginal cost of production through to 2025. 

The rating is downgraded to Hold from Accumulate and the target price decreases to $6.30 from $6.50.

Target price is $6.30 Current Price is $5.19 Difference: $1.11
If NHC meets the Ord Minnett target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $5.93, suggesting upside of 20.8% (ex-dividends)

The company's fiscal year ends in July.

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

Ord Minnett rates SCG as Upgrade to Accumulate from Hold (2) -

Having delivered a strong earnings rebound in 2022 as pandemic impacts faded, Ord Minnett expects Scentre Group will face slower than historical income growth due to online competition. 

The broker highlights the company's shopping centres continue to lead their catchments thanks to their size, location and access to parking and transport infrastructure. 

The rating is upgraded to Accumulate from Hold and the target price of $3.30 is retained.

Target price is $3.30 Current Price is $2.87 Difference: $0.43
If SCG meets the Ord Minnett target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $3.19, suggesting upside of 15.5% (ex-dividends)

The company's fiscal year ends in December.

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 SM1 as Downgrade to Underperform from Neutral (5) -

Macquarie suggests challenges may persist for Synlait Milk with questions around long-term recovery and return on capital weighing.

The analyst forms this view after management materially downgraded its outlook for FY23 due to lower forecast demand for Advanced Nutrition products, as well as cost and SAP software challenges.

The broker downgrades its rating to Underperform from Neutral and lowers its FY23-25 EPS forecasts by -57%, -35% and -24%, respectively.

The target price falls to NZ$$2.61 from NZ$3.41 on the lower earnings forecast, a lower long-term return on capital employed (ROCE) assumption and a higher risk free rate, explains the analyst.

Current Price is $2.67. Target price not assessed.

The company's fiscal year ends in July.

Forecast for FY23:

Forecast for FY24:

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

Credit Suisse rates TWE as Neutral (3) -

Treasury Wine Estates' investor day revealed the Australian-sourced 19Crimes brand has struggled with continued softening in the lower-end premium category.

Credit Suisse models earnings stabilisation after a marketing refresh starting FY24.

A flat outlook for the 19Crimes brand implies the Americas luxury portfolio must grow 15%-plus to hit the broker's FY26 forecast.

Neutral and $13.80 target retained.

Target price is $13.80 Current Price is $12.91 Difference: $0.89
If TWE meets the Credit Suisse target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $14.27, suggesting upside of 13.0% (ex-dividends)

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