Australian Broker Call

Macquarie rates BRG as Outperform (1) -

As a read-through for Breville Group, Macquarie reviews 1Q results for peer De'Longhi, which reaffirmed positive trends for the segment required price increases to counter inflation.

De'Longhi maintained its FY22 guidance as revenue growth continued in all regions except for Europe, due to geopolitical tensions and tough comparatives to prior periods.

The broker maintains the Outperform rating and $34.80 target price for Breville Group.

Target price is $34.80 Current Price is $22.05 Difference: $12.75
If BRG meets the Macquarie target it will return approximately 58% (excluding dividends, fees and charges).

Current consensus price target is $32.53, suggesting upside of 50.0% (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

Morgan Stanley rates BTH as Overweight (1) -

Morgan Stanley expects Bigtincan Holdings' latest update will be well received by the market, particularly against the recent de-ratings of SaaS stocks, with the company guiding to earnings profitability in FY22 and free cash flow profitability in FY23.

The company also guided to annual recurring revenue of at least $119m in FY22. Morgan Stanley notes the company's leadership position underpins growth forecasts, anticipating the total addressable market to grow at a compound annual growth rate of more than 20%.

The Overweight rating is retained and the target price decreases to $1.60 from $2.10. Industry view: In-Line.

Target price is $1.60 Current Price is $0.58 Difference: $1.02
If BTH meets the Morgan Stanley target it will return approximately 176% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Market Sentiment: 1.0

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

Macquarie rates GMG as Outperform (1) -

Following today's 3Q operational update, Goodman Group upgraded its FY22 earnings (OEPS) growth guidance to 23% year-on-year from 20%. At first glance, Macquarie estimates the upgrade was broadly in-line with its forecasts and the consensus expectation.

The broker highlights like-for-like net property income (NPI) improved by around 30bps quarter-on-quarter, consistent with strong leasing fundamentals in Industrial globally.

Development work in progress (WIP) increased to $13.4bn as at March, up from $12.7bn last December. Taking into account the rise in expected earnings, higher NPI growth and a larger WIP balance, Macquarie expects consensus upgrades for FY22.

Management also reaffirmed DPS guidance of 30cps and noted rising interest rates may result in lower competition in its key markets, as more leveraged peers will be more exposed. The Outperform rating and $27.38 target are retained.

Target price is $27.38 Current Price is $19.67 Difference: $7.71
If GMG meets the Macquarie target it will return approximately 39% (excluding dividends, fees and charges).

Current consensus price target is $26.97, suggesting upside of 37.7% (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 HVN as Buy (1) -

Citi retains a positive view on the Retail sector despite depressed expectations due to increased fuel prices and the interest rate outlook.

While Harvey Norman has leverage to higher inflation it is also levered to negative housing impacts, explains the broker. As a result FY24 earnings estimates are cut by around -7% due to an expected decline in housing churn in response to falling house prices.

Nonetheless, the analyst upgrades FY22 and FY23 earnings forecasts by 3-4% on a better than expected consumer outlook for FY23
and a positive read-through from the recent strong JB Hi-Fi ((JBH)) trading update.

The target price falls to $5.00 from $5.90 and the Buy rating is unchanged.

Target price is $5.00 Current Price is $4.53 Difference: $0.47
If HVN meets the Citi target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $5.87, suggesting upside of 29.9% (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

Credit Suisse rates IDX as Neutral (3) -

Credit Suisse sees FY23 headwinds from a lower run rate performance of the New Zealand business, continued cost inflation and a drawn out elective surgery volume recovery in Victoria.

Nonetheless, recent acquisitions of Exact and Peloton will add to FY23 earnings, and after adjusting blended valuation multiples the broker increases its target price to $3.95 from $3.80. The Neutral rating is unchanged.

Target price is $3.95 Current Price is $3.70 Difference: $0.25
If IDX meets the Credit Suisse target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $4.41, suggesting upside of 17.9% (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

UBS rates IFM as Buy (1) -

Infomedia has confirmed it has received a takeover bid from a TA Associates-Viburnum Funds consortium at $1.70 per share.

UBS notes that while the company will consider the proposal it is also in preliminary discussions with other interested parties.

The broker anticipates Infomedia can continue to benefit from strong top line growth and operating leverage.

The Buy rating and target price of $2.15 are retained.

Target price is $2.15 Current Price is $1.28 Difference: $0.87
If IFM meets the UBS target it will return approximately 68% (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

Citi rates JBH as Neutral (3) -

Citi retains a positive view on the Retail sector despite depressed expectations due to increased fuel prices and the interest rate outlook.

The broker maintains its Neutral rating for JB Hi-Fi noting minimal correlation with house prices as compared to Harvey Norman ((HVN)). The target price is decreased to $53.00 from $55.00.

Target price is $53.00 Current Price is $48.53 Difference: $4.47
If JBH meets the Citi target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $57.31, suggesting upside of 19.1% (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

Morgan Stanley rates JIN as Overweight (1) -

While Morgan Stanley retains its $22 target price for Jumbo Interactive, stronger 2H jackpots are expected to underpin consensus
forecasts and lead to potential EPS upside.

The broker expects increased customers around recent large draws and the OzLotto game change should further de-risk FY23 estimates.

The Overweight rating is retained. Industry view: In-line.

Target price is $22.00 Current Price is $15.84 Difference: $6.16
If JIN meets the Morgan Stanley target it will return approximately 39% (excluding dividends, fees and charges).

Current consensus price target is $20.13, suggesting upside of 24.5% (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

Morgans rates MVF as Add (1) -

Monash IVF policy dictates patients who have contracted covid must defer treatment for eight weeks. While this policy, along with close contact requirements for staff and patients has negatively impacted trading, Morgans expects lost demand will be picked up in FY23.

Management reiterated the strong industry fundamentals. The broker retains an Add rating and lowers forecasts in-line with the trading update. The target price is reduced to $1.25 from $1.29.

Target price is $1.25 Current Price is $1.06 Difference: $0.19
If MVF meets the Morgans target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $1.23, suggesting upside of 22.1% (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 PMV as Upgrade to Buy from Neutral (1) -

Citi retains a positive view on the Retail sector despite depressed expectations due to increased fuel prices and the interest rate outlook.

The broker upgrades its rating for Premier Investments to Buy from Neutral, while the target price eases to $29.00 from $30.80. It is felt Smiggle and the fashion brands will be reopening beneficiaries, while Peter Alexander is expected to hold up well.

Target price is $29.00 Current Price is $23.05 Difference: $5.95
If PMV meets the Citi target it will return approximately 26% (excluding dividends, fees and charges).

Current consensus price target is $30.88, suggesting upside of 31.8% (ex-dividends)

The company's fiscal year ends in July.

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

UBS rates PXA as Buy (1) -

On the back of an update from PEXA Group, UBS considers both the company's UK rollout and PEXA Insights opportunity are yet to be priced into the stock at its current valuation.

The company highlighted it is on track for the launch of Refi in the UK in October, although Bank of England is slowing progress on the rollout. Positively, this could offer PEXA Group a two-year window to solidify its market position as the company targets 25-40% market share by 2025.

The Buy rating is retained and the target price decreases to $21.50 from $22.50.

Target price is $21.50 Current Price is $15.61 Difference: $5.89
If PXA meets the UBS target it will return approximately 38% (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

Macquarie rates SIQ as Neutral (3) -

In a trading update, Smartgroup Corp noted customers, leads and the pipeline are all trending positively. Meanwhile, revenue and earnings (EBITDA) are in-line with management's expectations and the previous corresponding period.

Macquarie leaves its earnings forecasts unchanged, despite the likelihood vehicle supply will remain a headwind during FY22. The Neutral rating and $8.31 target price are unchanged.

Target price is $8.31 Current Price is $8.36 Difference: minus $0.05 (current price is over target).
If SIQ 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 $8.66, suggesting upside of 3.4% (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

Citi rates SUL as Buy (1) -

Citi has revisited Australia's retail sector to account for fuel-price and interest-rate changes and broadly expects retail to prove resilient in FY2023 before hitting more resistance in FY24, at which point in the down-cycle stock clearances and margin erosion emerge.

Citi acknowledges risks to retail from rate rises and the resumption of travel, but expects normalisation of trade will more than compensate for this.

Citi notes 40% of mortgages are fixed, further ameliorating the impact, and notes consumers have ample room to cut savings compared with historical levels. The affect of petrol prices is difficult to ascertain at this stage, says the broker.

Buy rating retained for Super Retail Group. Target price falls to $14 from $14.40.

Target price is $14.00 Current Price is $10.00 Difference: $4
If SUL meets the Citi target it will return approximately 40% (excluding dividends, fees and charges).

Current consensus price target is $13.21, suggesting upside of 32.8% (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 UNI as Initiation of coverage with Buy (1) -

Citi initiates coverage on Universal Store, noting a number of growth drivers ahead for the retailer should support a 10% compound annual growth rate through to FY24.

With a current 73 stores across Australia and New Zealand, the company is targeting more than 100 stores. Citi finds this conservative, seeing potential for 110 stores, and notes once stores are mature they'll offer 37% upside to FY22 earnings forecasts.

Further, the broker expects the company can support a 100 basis point margin expansion between FY21-25 as stores reach maturity and brand penetration increases.

The broker initiates with a Buy rating and a target price of $5.83.

Target price is $5.83 Current Price is $4.50 Difference: $1.33
If UNI meets the Citi target it will return approximately 30% (excluding dividends, fees and charges).

Current consensus price target is $7.87, suggesting upside of 67.8% (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

Morgans rates VRT as Hold (3) -

Morgans lowers FY22 forecasts for Virtus Health by -20% after a trading update revealed lower cycle activity, however, the broker's main focus is upon the takeover bids by CapVest and BGH.

The broker sets the target price at the CapVest Scheme price of $8.15 although expects more developments in coming weeks. A scheme meeting is set for June 6 and the board is recommending voting in favour of the Scheme. Hold rating retained.

Target price is $8.15 Current Price is $8.12 Difference: $0.03
If VRT meets the Morgans target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $7.33, suggesting downside of -10.0% (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

Citi rates WES as Downgrade to Sell from Neutral (5) -

Citi has revisited Australia's retail sector to account for fuel-price and interest-rate changes and broadly expects retail to prove resilient in FY2023 before hitting more resistance in FY24, at which point in the down-cycle stock clearances and margin erosion emerge.

Citi acknowledges risks to retail from rate rises and the resumption of travel, but expects normalisation of trade will more than compensate for this.

On the rate front, Citi notes 40% of mortgages are fixed, further ameliorating the impact, and notes consumers have ample room to cut savings compared with historical levels. The affect of petrol prices is difficult to ascertain at this stage, says the broker.

Wesfarmers is downgraded to Sell from Neutral. Target price falls to $42 from $50.00.

Target price is $42.00 Current Price is $49.97 Difference: minus $7.97 (current price is over target).
If WES meets the Citi target it will return approximately minus 16% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $52.77, suggesting upside of 6.4% (ex-dividends)

The company's fiscal year ends in June.

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

Citi rates XRO as Buy (1) -

Lower than expected subscriber growth for Xero in the UK could be correlated with increased investment in the country by competitor Sage, according to Citi, but the broker anticipates Xero can continue to deliver strong growth in the region.

The broker also notes Making Tax Digital regulatory changes should support cloud adoption in the UK, something that was not recognised as a growth driver by Sage given its skew towards larger businesses.

The Buy rating and target price of $108 are retained.

Target price is $108.00 Current Price is $84.16 Difference: $23.84
If XRO meets the Citi target it will return approximately 28% (excluding dividends, fees and charges).

Current consensus price target is $110.50, suggesting upside of 25.7% (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: 0.5

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

UBS rates XRO as Sell (5) -

A solid top line performance from Xero saw the company deliver 29% full year revenue growth and beat UBS's expectations despite lower than anticipated subscriber growth in the second half.

Annual recurring revenue at the end of March of $1,231m reflected 12% growth on FY22's revenue, but the broker notes recent favourable foreign exchange movements could add upside of more than $50m, while at spot foreign exchange rates the broker anticipates revenue could grow to $1.4bn in FY23.

Despite the positives, the broker notes a lack of cash flow continues to challenge a more favourable outlook for the company. The Sell rating is retained and the target price decreases to $70.00 from $88.00.

Target price is $70.00 Current Price is $84.16 Difference: minus $14.16 (current price is over target).
If XRO meets the UBS target it will return approximately minus 17% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $110.50, suggesting upside of 25.7% (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: 0.5

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