Australian Broker Call

Morgan Stanley rates ALL as Overweight (1) -

Morgan Stanley believes Aristocrat Leisure's strategy to grow and scale in online real money gaming (RMG) will be boosted by the announced acquisition of Roxor Gaming (a B2B online RMG supplier).

As part of the all-cash transaction (no amount specified) two in-house game development studios will also be acquired from Roxor. 

The analyst expects no material earnings impact and the Overweight rating and $45 target are retained. Industry View: In-Line.

Target price is $45.00 Current Price is $33.13 Difference: $11.87
If ALL meets the Morgan Stanley target it will return approximately 36% (excluding dividends, fees and charges).

Current consensus price target is $43.29, suggesting upside of 29.6% (ex-dividends)

The company's fiscal year ends in September.

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

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

Bendigo & Adelaide Bank has underperformed the majors by -20 percentage points since the day prior to the release of its full year result, and while it remains one of Ord Minnett's least preferred banks the broker has lifted its rating given the recent share price decline. 

The bank's guidance for the coming year disappointed the market, implying less leverage to rising rates than had been expected. Ord Minnett expects Bendigo & Adelaide Bank should be relatively defensive in an economic downturn.

The rating is upgraded to Hold from Lighten and the target price of $8.70 is retained.

Target price is $8.70 Current Price is $7.96 Difference: $0.74
If BEN meets the Ord Minnett target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $9.83, suggesting upside of 22.4% (ex-dividends)

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

UBS rates BXB as Buy (1) -

UBS has obtained data suggesting pooled pallet prices increased 8% in the twelve months to July in the UK and Europe, and the broker expects prices will continue to grow. Positively for Brambles, the broker finds the current environment conducive to further margin-lifting price increases.

Availability remains a key issue, with 79% of customers surveyed by the broker reporting availability issues in the last year. UBS considers FY23 to be a likely stepping stone to strong cash flow in FY24.

The Buy rating and target price of $14.10 are retained.

Target price is $14.10 Current Price is $11.58 Difference: $2.52
If BXB meets the UBS target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $13.24, suggesting upside of 15.3% (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

Citi rates LNK as Neutral (3) -

Link Administration shares have suffered a heavy sell off with the Dye and Durham deal off the table and the company facing the prospect of a -$574m FCA fine. At its new share price, Citi finds the stock better reflects a capital raising necessary to fund the potential FCA payment.

The company's Link Fund Solutions currently faces a -GBP50.0m penalty and a -GBP306.1m restitution payment, but Citi expects the FCA will allow a period in which Link Administration can attempt to resolve the case. 

Citi highlights Link Administration is yet to make a commitment to fund or support the payment. The Neutral rating is retained and the target price decreases to $3.25 from $4.60.

Target price is $3.25 Current Price is $3.05 Difference: $0.2
If LNK meets the Citi target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $4.03, suggesting upside of 34.4% (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

Morgans rates LNK as Hold (3) -

The Scheme Implementation Deed (SID) between Link Administration and Dye and Durham has been terminated following recent potential penalties being flagged by the Financial Conduct Authority (FCA)).

While Morgans feels the market is factoring maximum penalties from the FCA into the company's share price, the broker maintains its Hold rating, feeling there is still a bit to play out.

Separately, management has reaffirmed FY23 guidance and will pay a special dividend of 8cps (no 2H FY22 dividend was paid as part of the D&D transaction agreement).

Morgans lowers its FY23 and FY24 EPS forecasts by -10% and the target falls to $3.31 from $4.71.

Target price is $3.31 Current Price is $3.05 Difference: $0.26
If LNK meets the Morgans target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $4.03, suggesting upside of 34.4% (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 LNK as Accumulate (2) -

With Link Administration announcing takeover discussions with Dye and Durham will not proceed, Ord Minnett sees the company's near-term outlook now reliant on organic trends and resolution of the company's UK Financial Conduct Authority case.

The company reiterated guidance for low single-digit revenue growth in the coming year, and the broker considers establishing market confidence in guidance as key to the stock's near-term prospects. 

Ord Minnett also thinks it will be necessary for Link Administration to announce a decision as to its support for Link Fund Solutions in the face of the FCA payment. The Accumulate rating and target price of $4.20 are retained.

Target price is $4.20 Current Price is $3.05 Difference: $1.15
If LNK meets the Ord Minnett target it will return approximately 38% (excluding dividends, fees and charges).

Current consensus price target is $4.03, suggesting upside of 34.4% (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

Morgans rates MTO as Add (1) -

Management of Motorcycle Holdings estimates 18% accretion on FY22 pro forma earnings following the -$60m purchase of Mojo Group, a leading motorcycle, ATV and genuine spare parts importer and distributor.

Morgans feels the acquisition is a shrewd move to diversify the business, while adding potential new growth avenues via the ATV and agriculture market, as well as electric vehicles.

As half of the purchase price is via scrip, Mojo principals will hold 16% of Motorcycle Holdings post-acquisition, plus representation on the board.

The Add rating is unchanged, while the target rises to $3.42 from $3.12.

Target price is $3.42 Current Price is $2.44 Difference: $0.98
If MTO meets the Morgans target it will return approximately 40% (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

Citi rates OZL as Buy (1) -

OZ Minerals has approved its West Musgrave nickel copper project in a final investment decision largely expected by the market according to Citi. Annual processing capacity lifted 1.5m tonnes to 13.5m tonnes while capital expenditure increased $0.5bn with the investment decision. 

The broker also highlighted plans for the project include a leased 'living hub' mining camp, which looks to save -$100m. 

The Buy rating and target price of $22.50 are retained.

Target price is $22.50 Current Price is $25.46 Difference: minus $2.96 (current price is over target).
If OZL meets the Citi target it will return approximately minus 12% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $25.48, suggesting downside of -1.3% (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

Credit Suisse rates RHC as Neutral (3) -

Ramsay Health Care has confirmed that talks on a proposed acquisition by a KKR-led consortium have now terminated.

After a period of research restriction on Ramsay Health Care, Credit Suisse returns to reinstate a Neutral rating in recognition the shares are trading in line with pre-covid multiples, but in a weaker operating environment.

In addition, the analyst notes ongoing covid impacts and fails to see talks with other potential suitors progressing in the short term. A target price of $64 is set. 

Target price is $64.00 Current Price is $59.08 Difference: $4.92
If RHC meets the Credit Suisse target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $72.11, suggesting upside of 26.2% (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

Citi rates SIG as Sell (5) -

With Sigma Healthcare's turnaround taking longer than had been suggested, Citi has lowered earnings per share forecasts -54%, -31% and -11% through to FY25.

The company remains focused on stabilising business and regaining customer trust over an eighteen month turnaround, following ERP implementation issues, but Citi finds near-term visibility limited. 

Sigma Healthcare will target a longer-term earnings margin of 1.5-2.0% in the next 3-5 years. The Sell rating and target price of $0.52 are retained.

Target price is $0.52 Current Price is $0.66 Difference: minus $0.14 (current price is over target).
If SIG meets the Citi target it will return approximately minus 21% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $0.54, suggesting downside of -19.8% (ex-dividends)

The company's fiscal year ends in January.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: -0.8

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

Credit Suisse rates SIG as Downgrade to Underperform from Neutral (5) -

Credit Suisse lowers its rating for Sigma Healthcare to Underperform from Neutral on valuation concerns, given no sharp turnaround for earnings in the next 12-18 months is expected.

This follows 1H profits that were in line with the broker's forecast though a miss versus the consensus expectation. Apart from an improved cash performance, the overall results disappointed the analyst.

Credit Suisse raises its target price to $0.58 from $0.51 on an improved working capital position and lower net debt.

Target price is $0.58 Current Price is $0.66 Difference: minus $0.08 (current price is over target).
If SIG meets the Credit Suisse target it will return approximately minus 12% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $0.54, suggesting downside of -19.8% (ex-dividends)

The company's fiscal year ends in January.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: -0.8

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

Morgan Stanley rates SLC as Overweight (1) -

Morgan Stanley sees strategic and financial sense in what is expected to be an earnings accretive acquistion by Superloop of VostroNet for -$35m. The company delivers fibre internet services and WiFinetworks for multi dwelling and broadacre developments.

The broker observes Superloop will now have a market leading position in the student accommodation adjacency (meaning upstream or downstream exposures). It is also expected to provide on-net economics and options to move into new verticals, such as build to rent.

The Overweight rating and $1.05 target are retained.Industry view: In-Line.

Target price is $1.05 Current Price is $0.64 Difference: $0.41
If SLC meets the Morgan Stanley target it will return approximately 64% (excluding dividends, fees and charges).

Current consensus price target is $1.12, suggesting upside of 64.2% (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

Morgans rates SLC as Add (1) -

From a strategic and financial perspective, Morgans approves of Superloop's acquistion of VostroNet, which is a builder and supplier of high speed internet for residential and student accommodation.

The analyst points out the transaction will bolt onto and complement the company's managed WiFi and wholesale businesses. 

The Add rating and $1.00 target price are unchanged.

Target price is $1.00 Current Price is $0.64 Difference: $0.36
If SLC meets the Morgans target it will return approximately 56% (excluding dividends, fees and charges).

Current consensus price target is $1.12, suggesting upside of 64.2% (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

Ord Minnett rates SLC as Buy (1) -

Superloop will acquire internet provider VostroNet, building on Superloop's existing student accommodation managed network operations. VostroNet is a provider of high-speed fibre-to-the-premises (FTTP) infrastructure, signaling Superloop's entry into FTTP development.

Ord Minnett described the purchase as highly synergistic and supportive of expansion into new and attractive markets. 

The Buy rating is retained and the target price increases to $1.30 from $1.10.

Target price is $1.30 Current Price is $0.64 Difference: $0.66
If SLC meets the Ord Minnett target it will return approximately 103% (excluding dividends, fees and charges).

Current consensus price target is $1.12, suggesting upside of 64.2% (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

UBS rates SVW as Buy (1) -

UBS finds Seven Group's share price to reflect a -30% discount to value, which it attributes to moderating earnings growth from WesTrac and a less unique investment portfolio following the acquisition of Boral.

The broker sees potential for a re-rate, particularly given a likely acceleration of WesTrac's earnings growth in FY23. UBS estimates an increase in WesTrac's earnings growth rate to 10% could see the share price discount shrink to -14%. 

The Buy rating and target price of $25.40 are retained.

Target price is $25.40 Current Price is $16.91 Difference: $8.49
If SVW meets the UBS target it will return approximately 50% (excluding dividends, fees and charges).

Current consensus price target is $23.48, suggesting upside of 40.1% (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

Morgan Stanley rates TWE as Overweight (1) -

Morgan Stanley expects a positive 1Q trading update at Treasury Wine Estates' AGM on October 18, and wouldn't be surprised if additional capital management initiatives were also announced.

Management has previously stated 'opportunities to supplement' the current dividend policy with capital management in FY23 would be assessed.

Morgan Stanley retains its $13.80 target price. Industry view is In-Line.

Target price is $13.80 Current Price is $12.58 Difference: $1.22
If TWE meets the Morgan Stanley target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $14.22, suggesting upside of 11.6% (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

UBS rates UNI as Buy (1) -

Universal Store will acquire vintage-inspired youth apparel designer, wholesaler and retailer Cheap Thrills Cycles for -$52m, comprised a -$17.5m upfront payment, -$17.5m scrip, and a -$15-25m earn out based on earnings through to FY25.

UBS expects the acquisition to be strongly accretive given growth in the youth casual apparel market, and feels Cheap Thrills can offer access to a different customer. The broker lifts earning per share forecasts 9.4% 18.3% and 18.0% through to FY25.

The Buy rating is retained and the target price increases to $6.25 from $5.75.

Target price is $6.25 Current Price is $4.80 Difference: $1.45
If UNI meets the UBS target it will return approximately 30% (excluding dividends, fees and charges).

Current consensus price target is $5.65, suggesting upside of 11.2% (ex-dividends)

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 XRO as Buy (1) -

With Xero's competitor Sage announcing an intention to increasingly focus on both the accountant/bookkeeper segment and the sole trader/self-employed segment, Citi has flagged Sage could pose a threat to Xero's UK growth intentions. 

The broker considers the UK addressable market to be large, and at this point anticipates strong growth for Xero. Sage intends to launch a new tier aimed at sole traders, but unlike Xero's Xero Go platform this will operate as a simplified version of Sage Accounting.

The Buy rating and target price of $106.80 are retained.

Target price is $106.80 Current Price is $78.95 Difference: $27.85
If XRO meets the Citi target it will return approximately 35% (excluding dividends, fees and charges).

Current consensus price target is $97.01, suggesting upside of 21.4% (ex-dividends)

The company's fiscal year ends in March.

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: 0.3

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