Australian Broker Call

Credit Suisse rates ABB as Neutral (3) -

Credit Suisse incorporates Over The Wire Holdings ((OTW)) into forecasts on the assumption of a 60/40 cash/scrip ratio after Aussie Broadband announced the 100% acquisition for -$344m. The target price rises to $5.40 from $5.15 and the Neutral rating is unchanged.

The broker likes the additional scale in the business/enterprise market from the acquisition, given the target's prevalence in the Voice, Cloud and Security segments. It's estimated the transaction will be around 14% EPS accretive in FY23.

Target price is $5.40 Current Price is $5.21 Difference: $0.19
If ABB meets the Credit Suisse target it will return approximately 4% (excluding dividends, fees and charges).

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

Ord Minnett rates ABB as Buy (1) -

Considering the opportunity for synergies, Ord Minnett likes Aussie Broadband's formal takeover offer for 100% of Over the Wire Holdings ((OTW)) for $5.75/share. It's believed the transaction would accelerate the company's business market ambitions.

The transaction would fill current gaps in security, cloud and managed service segments of the business markets, according to the analyst. The target price jumps to $5.91 from $5.60 and the Buy rating is unchanged.

Target price is $5.91 Current Price is $5.21 Difference: $0.7
If ABB meets the Ord Minnett target it will return approximately 13% (excluding dividends, fees and charges).

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 API as No Rating (-1) -

Australian Pharmaceutical Industries has signalled the new bid from Woolworths ((WOW)), at a 13% premium to the prior bid from Wesfarmers ((WES)), is "reasonably capable of being implemented" and due diligence is underway.

Macquarie is on research restriction.

Current Price is $1.74. Target price not assessed.

Current consensus price target is $1.49, suggesting downside of -14.7% (ex-dividends)

The company's fiscal year ends in August.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.0

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

Morgan Stanley rates BHP as No Rating (-1) -

BHP Group has provided further detail on the merging of its dual listed company structure, commenting that unification will simplify structure, streamline dividend payments, and result in a single share trading on a higher valuation.  

Morgan Stanley expects the unification, alongside a potential petroleum de-merger and exit from thermal coal, to benefit the company's structure and ESG credentials. BHP Group is targeting unification process completion by end of January.

Morgan Stanley is currently unable to provide a rating or target price on BHP Group. Industry view: In-Line.

Current Price is $39.71. Target price not assessed.

Current consensus price target is $43.80, suggesting upside of 8.9% (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: 0.5

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

UBS rates BHP as Neutral (3) -

BHP Group will rid itself of its dual listed structure and unify under BHP Group Limited. Shares in London are scheduled to cease trading on 28th January, 2022 and UBS estimates the market is already pricing unification.

The Neutral rating and $38 target price are retained.

Target price is $38.00 Current Price is $39.71 Difference: minus $1.71 (current price is over target).
If BHP meets the UBS target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $43.80, suggesting upside of 8.9% (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: 0.5

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

UBS rates BWX as Initiation of coverage with Buy (1) -

UBS initiates coverage on BWX Ltd with a Buy rating and $5.50 target price. The natural beauty and wellness company runs the Sukin, Andalou, Mineral Fusion and Go-To Skincare brands. The former makes up around 38% of pro forma FY21 sales, points out the analyst.

The company also operates pure-online platforms called Nourished Life and Flora & Fauna. The broker feels the ability to execute a global expansion is demonstrated by recent major retailer wins, namely Walmart US/Canada, Woolworths and Chemist Warehouse.

In recognition of the competitive nature of the industry, UBS incorporates only limited margin expansion into its forecasts.

Target price is $5.50 Current Price is $4.21 Difference: $1.29
If BWX meets the UBS target it will return approximately 31% (excluding dividends, fees and charges).

Current consensus price target is $5.73, suggesting upside of 35.2% (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

Macquarie rates CHN as Outperform (1) -

Chalice Mining has discovered a new zone of mineralisation to the west of Gonneville which Macquarie believes presents the potential for an extension of Hartog outside the State Forest.

The broker makes no changes to its development base case for Gonneville nor earnings forecasts but does lift its value for regional exploration potential by 50% to reflect the discovery of the new mineralised zone.

Macquarie believes it has significantly increased the likelihood of economic mineralisation being discovered at Hartog. Target rises to $10.70 from $9.80, Outperform retained.

Target price is $10.70 Current Price is $9.46 Difference: $1.24
If CHN meets the Macquarie target it will return approximately 13% (excluding dividends, fees and charges).

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

Morgan Stanley rates CSL as Equal-weight (3) -

Media commentary has indicated CSL is in discussions for a $10bn acquisition of pharmaceutical company Vifor. Depending on the equity to debt funding mix for the potential transaction, Morgan Stanley expects it could be 3.4-4.3% accretive to FY22 earnings per share.

The broker's view is that material cost and revenue synergies would be required to generate meaningful earnings benefit, and further considers CSL's collection centre to be underutilised and an area for potential improvement.

The Equal-weight rating and target price of $280.00 are retained. Industry view: In line.

Target price is $280.00 Current Price is $305.30 Difference: minus $25.3 (current price is over target).
If CSL meets the Morgan Stanley target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $311.23, suggesting upside of 4.6% (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 IVC as Hold (3) -

Ord Minnett concludes the Australian Competition & Consumer Commission (ACCC) report on the Australian funeral industry doesn't provide recommendations for material changes to the sector.

The broker retains its Hold rating and $12 target price.

Target price is $12.00 Current Price is $11.33 Difference: $0.67
If IVC meets the Ord Minnett target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $11.53, suggesting upside of 2.2% (ex-dividends)

The company's fiscal year ends in December.

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

Ord Minnett rates OSH as Buy (1) -

While still subject to a vote by Oil Search shareholders, Ord Minnett estimates the merger would be 7% value accretive, though also -7–8% EPS-dilutive for Santos ((STO)).

The broker forecasts production would increase to 167m barrels of oil equivalent (mmboe) by 2027, with revenue divided broadly between
LNG, domestic gas, crude oil and (to a lesser extent) LPG.  The Buy rating and $5.15 target are retained.

Target price is $5.15 Current Price is $3.84 Difference: $1.31
If OSH meets the Ord Minnett target it will return approximately 34% (excluding dividends, fees and charges).

Current consensus price target is $5.04, suggesting upside of 27.9% (ex-dividends)

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: 0.5

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

Morgans rates OTW as Hold (3) -

After conducting due diligence, Aussie Broadband ((ABB)) has offered $5.75 in cash or 1.15 Aussie Broadband shares for Over The Wire Holdings. This assumes a $5 Aussie Broadband share price or a combination of cash and shares, highlights Morgans.

The broker notes Aussie Broadband shares closed yesterday at $5.20, which implies slightly more upside for Over The Wire Holdings shareholders. Additionally, if shareholders elect the share consideration, it's thought they may participate in some synergy-related upside.

Morgans retains its Hold rating and $5.75 target price.

Target price is $5.75 Current Price is $5.69 Difference: $0.06
If OTW meets the Morgans target it will return approximately 1% (excluding dividends, fees and charges).

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

Ord Minnett rates OTW as Downgrade to Accumulate from Buy (2) -

Over The Wire Holdings has agreed to be taken over by Aussie Broadband ((ABB)) for $5.75 in cash or 1.15 Aussie Broadband shares, or a combination of both. Ord Minnett lowers its rating to Accumulate from Buy and reduces its target price to $5.75 from $5.80.

The analyst estimates cost synergies of $8-12m over the next two to three years will provide potential upside for investors who choose Aussie Broadband scrip as part, or all of the consideration.

Target price is $5.75 Current Price is $5.69 Difference: $0.06
If OTW meets the Ord Minnett target it will return approximately 1% (excluding dividends, fees and charges).

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

Citi rates PMV as Neutral (3) -

The potential threat of the omicron variant is hanging over Citi's forecasts for Premier Investments despite the company reporting comparable sales growth of 10.1% for the three weeks to November 27.

The broker notes elevated demand post-lockdowns and sales momentum leading into the peak trading period, as well as a strong inventory position, could indicate upside risk to forecasts but has not upgraded forecasts given concern omicron will deter customers. 

The Neutral rating and target price of $33.20 are retained.

Target price is $33.20 Current Price is $29.98 Difference: $3.22
If PMV meets the Citi target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $31.21, suggesting upside of 1.2% (ex-dividends)

The company's fiscal year ends in July.

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

Credit Suisse rates PMV as Neutral (3) -

Credit Suisse assesses a trading update by Premier Investments was marginally positive and suggests a material uplift in sales will result from the lifting of covid restrictions and store re-openings. The Neutral rating is unchanged and the target falls to $28.71 from $28.74.

The analyst highlights the strength of online sales during lockdowns resulted in a less negative sales impact overall than originally forecast. Sales for the first 17 weeks of FY22 declined -3.5% year-on-year, an improvement on the -9.5% decline in the first 7 weeks.

Target price is $28.71 Current Price is $29.98 Difference: minus $1.27 (current price is over target).
If PMV meets the Credit Suisse target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $31.21, suggesting upside of 1.2% (ex-dividends)

The company's fiscal year ends in July.

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

Morgan Stanley rates PMV as Equal-weight (3) -

Strong post-lockdown sales growth rebound has kept Premier Investments on track for first half year-on-year growth forecasts of 3.9% despite store closures driving the company's retail sales down -3.5% in the first 17 weeks of FY22, according to Morgan Stanley.

The broker expects pent up demand could drive continued sales elevation and offer upside risk to forecasts.

The Equal-weight rating and target price of $26.75 are retained. Industry view: In-Line.

Target price is $26.75 Current Price is $29.98 Difference: minus $3.23 (current price is over target).
If PMV meets the Morgan Stanley target it will return approximately minus 11% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $31.21, suggesting upside of 1.2% (ex-dividends)

The company's fiscal year ends in July.

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 PMV as Accumulate (2) -

Ord Minnett increases its FY22 retail earnings forecast for Premier Investments after a trading update revealed sales growth has recovered to a 10% run-rate over the past three weeks as stores have reopened.

While management provided no gross margin commentary, the analyst expects 1H22 gross margins to be broadly in-line with 1H21. The broker retains its Accumulate rating and increases its target price to $33.60 from $32.

Target price is $33.60 Current Price is $29.98 Difference: $3.62
If PMV meets the Ord Minnett target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $31.21, suggesting upside of 1.2% (ex-dividends)

The company's fiscal year ends in July.

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

UBS rates PMV as Buy (1) -

A trading update by Premier Investments revealed sales growth for the first 20 weeks of FY22 was down -3.5% yet improved compared to the first seven weeks (-9.5%). UBS points to an improving trend from reopenings in Australia though notes ongoing closures in Auckland.

The broker lifts its target price to $32 from $30 and retains its Buy rating.

Target price is $32.00 Current Price is $29.98 Difference: $2.02
If PMV meets the UBS target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $31.21, suggesting upside of 1.2% (ex-dividends)

The company's fiscal year ends in July.

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

Credit Suisse rates QBE as Outperform (1) -

Credit Suisse views strong crop peer results as positive read-throughs for QBE Insurance Group with a strong harvest and yields above historical averages. In short, a likely in-line outcome for crop is thought to increase the probability of another ‘clean’ result.

US crop is a material portfolio for the group. The broker retains its Outperform rating and $15.60 target price.

Target price is $15.60 Current Price is $11.69 Difference: $3.91
If QBE meets the Credit Suisse target it will return approximately 33% (excluding dividends, fees and charges).

Current consensus price target is $14.15, suggesting upside of 17.8% (ex-dividends)

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: 0.8

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

Morgan Stanley rates QBE as Overweight (1) -

Morgan Stanley notes commercial pricing increases in the US during the September quarter are supportive of QBE Insurance Group's margin expansions.

Notably, large accounts improved 10.4% and medium by 10.1% during the period, while all lines, except Workers' Compensation, were higher with Cyber pricing up 27.6%. 

The Overweight rating and target price of $14.00 are retained. Industry View: In-Line.

Target price is $14.00 Current Price is $11.69 Difference: $2.31
If QBE meets the Morgan Stanley target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $14.15, suggesting upside of 17.8% (ex-dividends)

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: 0.8

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

UBS rates REP as Initiation of coverage with Buy (1) -

UBS initiates coverage on RAM Essential Services Property Fund with a Buy rating and a $1.09 target price. The broker likes niche real estate sectors (healthcare), given the secure nature of the income and difficulties for competition to attain scale.

The broker estimates the development pipeline drives FY23-26 funds from operations (FFO) growth of 4.5%. The REIT has a
$706m portfolio with a weighted average cap rate of 5.85%, occupancy of 99.1% and a weighted average lease expiry of 7.1 years.

UBS notes growth is supported by annual escalations averaging around 2.2%, and a track record of off-market healthcare acquisitions.

Target price is $1.09 Current Price is $1.00 Difference: $0.09
If REP meets the UBS target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $1.09, suggesting upside of 9.3% (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

Citi rates RIO as Buy (1) -

Rio Tinto remains Citi's preferred pick in big diversified mining, noting the a higher proportion of hydro-powered, low carbon aluminum smelters should provide competitive advantage over peers as markets begin to price carbon costs into valuations. 

Already making use of hydro power to reduce carbon emissions, Rio Tinto is also seeking commercialisation of the ELYSIS smelting process in 2024, in which inert anodes replace carbon anodes, emitting oxygen instead of carbon.

A joint venture with Alcoa, the ELYSIS process is expected to reduce operating costs -15%, increase anode life thirty times, and can be retrofitted to existing smelters.

The Buy rating and target price of $115.00 are retained.

Target price is $115.00 Current Price is $94.20 Difference: $20.8
If RIO meets the Citi target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $107.29, suggesting upside of 12.3% (ex-dividends)

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: 0.4

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

Credit Suisse rates SCP as Neutral (3) -

While SCA Property Group is looking to deploy funds, Credit Suisse doesn't incorporate any unannounced transactions in its forecasts. This comes as the group announced a new joint venture with Singaporean investment house GIC, with an initial target of $750m of assets.

The broker notes the recently announced acquisition of Delacombe (Victoria) is not included on the group's unchanged funds from operations (FFO) guidance. This is despite the transaction being considered earnings accretive.

The target rises to $2.83 from $2.73. The Neutral rating is unchanged.

Target price is $2.83 Current Price is $2.76 Difference: $0.07
If SCP meets the Credit Suisse target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $2.94, suggesting upside of 6.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.2

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

Macquarie rates SCP as Neutral (3) -

Shopping Centres Property has entered a JV with property investor GIC to invest in metropolitan convenience retail centres, seeded by seven assets from Shopping Centres' portfolio. GIC will hold 80% but Shopping Centres will collect management and other fees.

The JV will be 1% earnings accretive in the medium term, the broker estimates, and the seed asset sales at 9% premium to book value suggests upside potential for net tangible asset valuation.

Neutral retained, target rises to $2.95 from $2.94.

Target price is $2.95 Current Price is $2.76 Difference: $0.19
If SCP meets the Macquarie target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $2.94, suggesting upside of 6.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.2

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

Morgan Stanley rates SCP as Equal-weight (3) -

Shopping Centres Australasia Property Group will commence a joint venture with the Government of Singapore Investment Corporation (GIC) with the intention of holding neighbourhood mall assets across Australia.

A seed investment of $284.5m worth of assets will be provided by Shopping Centres Australasia Property Group, with the fund targeting $750m, and will initially cause an annual -$14m income loss for the company. 

The Equal-weight rating and target price of $2.95 are retained. In-Line industry view.

Target price is $2.95 Current Price is $2.76 Difference: $0.19
If SCP meets the Morgan Stanley target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $2.94, suggesting upside of 6.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.2

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

UBS rates SCP as Buy (1) -

UBS believes the platform value contained within SCA Property Group is demonstrated by the announced joint venture partnership with Singaporean investment house GIC. The broker lifts its target price to $3.06 from $3 and retains its Buy rating.

If the analyst assumes the joint venture fully invests $750m, there is no effect upon earnings estimates. However, it's estimated the transaction will allow $130m of extra balance sheet capacity via assets sold to the joint venture, thus reducing gearing to 31% from 35%.

Target price is $3.06 Current Price is $2.76 Difference: $0.3
If SCP meets the UBS target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $2.94, suggesting upside of 6.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.2

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

Ord Minnett rates STO as Buy (1) -

While still subject to a vote by Oil Search ((OSH)), shareholders, Ord Minnett estimates the merger would be 7% value accretive, though also -7–8% EPS-dilutive for Santos.

The broker forecasts production would increase to 167m barrels of oil equivalent (mmboe) by 2027, with revenue divided broadly between
LNG, domestic gas, crude oil and (to a lesser extent) LPG.  The Buy rating and $7.90 target are retained.

Target price is $7.90 Current Price is $6.26 Difference: $1.64
If STO meets the Ord Minnett target it will return approximately 26% (excluding dividends, fees and charges).

Current consensus price target is $8.59, suggesting upside of 35.0% (ex-dividends)

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: 0.7

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

Citi rates TWE as Buy (1) -

Aiming to overcome impacts of China tariffs, Treasury Wine Estates' Penfolds brand is shifting strategy away from Australian wine. Citi notes Penfolds is looking to launch its French collection to the China market in August 2022, given positive reception to Californian wines.

Elsewhere, the Penfolds brand is optimistic about discussions on European distribution. With Europe, the Middle East and Africa representing an $18bn luxury wine market Citi notes potential for significant growth opportunity. 

The Buy rating and target price of $13.80 are retained. 

Target price is $13.80 Current Price is $11.74 Difference: $2.06
If TWE meets the Citi target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $13.45, suggesting upside of 14.1% (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

Citi rates WOW as Neutral (3) -

Woolworths Group has announced a non-binding proposal for the acquisition of Australian Pharmaceuticals Company ((API)) at $1.75 per share, which Citi notes is a beat of Wesfamers' previous $1.55 per share bid.

Australian Pharmaceuticals Company has headroom for retail performance improvement having underperformed industry sales since FY17, and Citi expects Woolworths Group's retail capabilities would benefit company performance.

Despite this, Wesfarmers appears primed for bid success given its 19.3% stake in Australian Pharmaceuticals Company and an existing Scheme Implementation Deed.

The Neutral rating and target price of $39.50 are retained.

Target price is $39.50 Current Price is $39.99 Difference: minus $0.49 (current price is over target).
If WOW meets the Citi target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $38.17, suggesting downside of -3.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: -0.2

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

Credit Suisse rates WOW as Underperform (5) -

Woolworths Group has entered the fray in the battle to acquire Australian Pharmaceutical Industries ((API)) with a $1.75/share bid, which exceeds the $1.55/share offered by Wesfarmers ((WES)).

The analyst asks investors to ponder the group's inglorious past attempts with portfolio expansion though notes the estimated -$990m cost is not material. The broker retains its Underperform rating and $31.84 target price.

Target price is $31.84 Current Price is $39.99 Difference: minus $8.15 (current price is over target).
If WOW meets the Credit Suisse target it will return approximately minus 20% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $38.17, suggesting downside of -3.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: -0.2

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

Ord Minnett rates WOW as Accumulate (2) -

Ord Minnett believes meaningful synergies could be realised from Woolworths Group's non-binding bid to acquire Australian Pharmaceutical Industries ((API)) for $1.75/share in cash.

Capabilities across data, digital, loyalty, supply chain, buying and store operations would be leveraged by the transaction, believes the analyst. It's estimated the deal would be 2-3% EPS-accretive. The $43 target price and the Accumulate rating are unchanged.

Target price is $43.00 Current Price is $39.99 Difference: $3.01
If WOW meets the Ord Minnett target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $38.17, suggesting downside of -3.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: -0.2

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