Australian Broker Call

Credit Suisse rates AIZ as Underperform (5) -

Air New Zealand expects an underlying pre-tax loss of up to -NZ$120m in FY20. There was no update on current liquidity.

In the absence of a material capital injection Credit Suisse expects the airline would need to access the Crown loan facility early in FY21.

Significant one-off costs have occurred of NZ$600m. Importantly, under the re-based cost structure, the broker expects Air NZ will remain loss-making until its long-haul network re-opens, which may not be until FY22.

Underperform. Target is raised to NZ$0.85 from NZ$0.84.

Current Price is $1.45. Target price not assessed.

Current consensus price target is N/A

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

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 AIZ as Underperform (5) -

FY20 guidance for a loss of -NZ$120m is largely in line with Macquarie's forecasts. Domestic demand the travel of the June-August appears fairly robust and domestic business travel is starting to resume.

Macquarie incorporates an overall liquidity reduction to the second half of around -NZ$600m. Risks around a capital raising also overhang the stock. Underperform rating maintained. Target rises to NZ$1.05 from NZ$0.95.

Current Price is $1.45. Target price not assessed.

Current consensus price target is N/A

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

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

Ord Minnett rates ALD as Accumulate (2) -

Ampol has refrained from providing profit guidance for the first half of 2020 due to the pandemic-led disruption and volatility in the hydrocarbon markets. Ord Minnett has been taken aback as the broker notes covid-19 related issues were already acknowledged by the company and are not a new addition.

The broker also notes guidance was provided by peers like Viva Energy Group ((VEA)) and reintroduced by companies that had earlier withdrawn guidance during the early onset of the crisis.

The broker maintains its Accumulate rating with a target price of $30.

Target price is $30.00 Current Price is $28.07 Difference: $1.93
If ALD meets the Ord Minnett target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $28.39, suggesting downside of -0.5% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.1

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

Ord Minnett rates ANN as Hold (3) -

Ansell is expected to benefit from the pandemic, comments Ord Minnett, with the increase in demand for personal protective equipment (PPE) and related hygiene products more than offsetting any drop in demand for industrial gloves and safety products.

The broker expects more upside potential in case of a rapid economic recovery which will support manufacturing but waits for more evidence. 

FY20-21 earnings forecasts have been increased to reflect current demand.

Ord Minnett retains its Hold recommendation with a target price of $31.15.

Target price is $31.15 Current Price is $35.37 Difference: minus $4.22 (current price is over target).
If ANN meets the Ord Minnett target it will return approximately minus 12% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $32.30, suggesting downside of -7.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

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

Market Sentiment: 0.1

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

Credit Suisse rates BLD as Neutral (3) -

Credit Suisse considers the most important question regarding the US business is whether it can return to benchmark profitability.

Furthermore, analysis indicates that the asset base is too high, warranting a write-down.

Target is raised to $3.50 from $2.65, reflecting the restructuring value potential. Still, the broker is concerned about the earnings downside. Neutral retained.

Target price is $3.50 Current Price is $3.68 Difference: minus $0.18 (current price is over target).
If BLD meets the Credit Suisse target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.31, suggesting downside of -11.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.4

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

Ord Minnett rates CAR as Downgrade to Hold from Buy (3) -

FY20 guidance for Carsales.com points towards operating income between $228-$232m which indicates a growth of 5-6% over FY19. Ord Minnett finds this impressive in the face of volume disruptions and a challenging new car market.

There is also a rebound in dealer activity with lead volumes growing strongly between April 22 and June 16. Public transport restrictions are also acting as a catalyst, notes the broker.

Ord Minnett considers the company to be fully valued and downgrades to Hold from Buy with the target price increasing to $17.06 from $15.72.

Target price is $17.06 Current Price is $17.51 Difference: minus $0.45 (current price is over target).
If CAR meets the Ord Minnett target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $16.29, suggesting downside of -7.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.3

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

Citi rates MTS as Neutral (3) -

Metcash will report its FY20 result on June 22. Citi expects food & grocery will be a beneficiary of industry trends, noting Metcash delivered the strongest growth across the industry through the stockpiling in March.

Feedback suggests outperformance has continued in the first half of FY21. Hardware is expected to continue to underperform Bunnings ((WES)). Neutral rating and $2.95 target.

Target price is $2.95 Current Price is $2.85 Difference: $0.1
If MTS meets the Citi target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $2.99, suggesting upside of 5.8% (ex-dividends)

The company's fiscal year ends in April.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.4

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

Macquarie rates MTS as Neutral (3) -

Macquarie updates numbers ahead of the results. Channel checks point to strong sales at local supermarkets and liquor stores during the height of the pandemic.

The key for the share price to continue performing will be the ability of the business to cement newly-won retail customers as the economy returns to normal, in the broker's view. Neutral maintained. Target is $2.82.

Target price is $2.82 Current Price is $2.85 Difference: minus $0.03 (current price is over target).
If MTS meets the Macquarie target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.99, suggesting upside of 5.8% (ex-dividends)

The company's fiscal year ends in April.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.4

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

UBS rates NUF as Reinstate coverage with Neutral (3) -

UBS reinstates coverage on Nufarm with a Neutral rating and $5.19 target. The broker considers the stock is fair value and trading in line with its long-term average.

The return to Nufarm is part of the building out of the broker's Australian chemicals coverage.

After several years of adverse weather, UBS assesses agricultural conditions are quite favourable and should support the normalisation of global inventory channels.

Target price is $5.19 Current Price is $4.44 Difference: $0.75
If NUF meets the UBS target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $5.44, suggesting upside of 20.9% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.1

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

Macquarie rates PMV as Upgrade to Outperform from Neutral (1) -

In light of recent online sales growth, Macquarie is of the view that the company's businesses are well-placed in terms of both brand and sales channels. Peter Alexander, Just Jeans and Portmans performed well over May.

The broker continues to assume some short-term rental relief and wage subsidies. Still, Macquarie is cautious about foot traffic, particularly in the UK. Rating is upgraded to Outperform from Neutral and the target raised to $20.11 from $12.62.

Target price is $20.11 Current Price is $16.33 Difference: $3.78
If PMV meets the Macquarie target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $15.23, suggesting downside of -9.4% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.6

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

UBS rates SEK as Upgrade to Buy from Neutral (1) -

UBS upgrades earnings expectations, anticipating most of the weakness in employment is behind us and job volumes are likely to be flat to slightly ahead from now on.

The broker also envisages potential for some of the new base costs to hold into FY21. Relative to Australian online classified peers, the broker assesses price upside for Seek and upgrades to Buy from Neutral. Target is raised to $23.00 from $15.25.

Target price is $23.00 Current Price is $20.81 Difference: $2.19
If SEK meets the UBS target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $20.05, suggesting downside of -7.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.4

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

Macquarie rates TPW as Initiation of coverage with Outperform (1) -

Macquarie initiates coverage with an Outperform rating and $5.90 target. Temple & Webster sells furniture and homewares online and its high revenue growth rates have accelerated.

Macquarie considers current growth rates for online retailers are difficult to sustain as restrictions ease, yet the pandemic has likely delivered a step change in the trajectory of online expenditure.

The broker expects continued double-digit revenue growth will lead to materially higher earnings over the next five years.

Target price is $5.90 Current Price is $5.21 Difference: $0.69
If TPW meets the Macquarie target it will return approximately 13% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 1.0

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

Citi rates WPL as Buy (1) -

Chevron is investigating the sale of its interest in North West Shelf LNG. Citi notes Woodside Petroleum has indicated a desire to acquire additional equity and has pre-emptive rights.

Regardless of whether Woodside will eventually buy out Chevron, Citi would prefer management tolled Scarborough through the North West Shelf.

While this may come at a cost there are many benefits, in the broker's view. Buy/High Risk rating retained. Target is $27.97.

Target price is $27.97 Current Price is $21.75 Difference: $6.22
If WPL meets the Citi target it will return approximately 29% (excluding dividends, fees and charges).

Current consensus price target is $25.07, suggesting upside of 13.4% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Forecast for FY21:

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 WPL as Neutral (3) -

Chevron is contemplating selling its 16.67% stake in North West Shelf LNG after several approaches. This is consistent with the company's plans to divest US$5-10bn in assets between 2018-20.

Woodside Petroleum may be one of the bidders, although the company is yet to comment. Macquarie suggests the exit of Chevron would considerably improve Woodside Petroleum's negotiating position vis-a-vis backfill and further gas resource development.

All partners have pre-emptive rights, allowing them to match an outsider's bid in proportionate share. Neutral. Target is $23.50.

Target price is $23.50 Current Price is $21.75 Difference: $1.75
If WPL meets the Macquarie target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $25.07, suggesting upside of 13.4% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Forecast for FY21:

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