Australian Broker Call

Credit Suisse rates A2M as Neutral (3) -

Credit Suisse believes D11, China's biggest online shopping festival (similar to Black friday) on November 11, fell a bit flat this year with many platforms not broadcasting sales results.

More positively, a2 Milk Co seemed to gain share and compete for the number 2 infant formula sold on Tmall over the shopping holiday, after being number 3 last year.

The Neutral rating and $5.30 target are unchanged.

Target price is $5.30 Current Price is $6.29 Difference: minus $0.99 (current price is over target).
If A2M meets the Credit Suisse target it will return approximately minus 16% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.10, suggesting downside of -20.1% (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: -0.5

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

Macquarie rates ALX as Neutral (3) -

The French government has formalised 2023 toll price rises consistent with the CPI-linked formula. Frequent user discounts will increase to -40% from -30%, while a one-year -5% discount for EVs has been introduced.

It's positive news for Atlas Arteria, Macquarie suggests, as there was concern an increase may be deferred due to the runaway cost of living. France's economy is of greater concern, as well as a lower quality of dividend post-refinancing.

Macquarie's target price $7.03 nevertheless reflects the possibility of corporate activity. Neutral retained.

Target price is $7.03 Current Price is $6.82 Difference: $0.21
If ALX meets the Macquarie target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $6.59, suggesting downside of -4.6% (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

Macquarie rates BPT as No Rating (-1) -

Strike Energy's ((STX)) bid for Warrego Energy ((WGO)) has sent Beach Energy and Hancock Energy into a bidding war, Macquarie notes. Hancock's bid is currently in the lead, as it is inclusive of assets in Spain, which the latest Strike and Beach bids were not.

Beach has five days to counter.

Macquarie is on research restriction.

Current Price is $1.90. Target price not assessed.

Current consensus price target is $1.96, suggesting upside of 7.8% (ex-dividends)

The company's fiscal year ends in June.

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 COG as Buy (1) -

Following an AGM trading update by COG Financial Services, Ord Minnett assesses positive organic growth in addition to the contribution from recent acquisitions. It's felt the company should benefit from currently buoyant infrastructure market conditions.

Management announce 26% profit (NPATA) growth for the first four months of FY23, driven by funds under management (FUM) growth and contributions from several companies acquired during FY22.

The broker adopts a conservative stance to 2H earnings forecasts and the target drops to $2.06 from $2.11. Buy.

Target price is $2.06 Current Price is $1.57 Difference: $0.495
If COG meets the Ord Minnett target it will return approximately 32% (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 CTD as Outperform (1) -

Data show travel activity in the US softened over November. US corporate activity fell -9% to 65% of November 2019. This suggests downside risk to Macquarie's earnings forecasts for Corporate Travel Management, with North America representing 48% of revenue in 2019.

Yet the stock still looks attractive at current valuation, the broker suggests. Target falls to $19.95 from $21.50, Outperform retained.

Target price is $19.95 Current Price is $15.31 Difference: $4.64
If CTD meets the Macquarie target it will return approximately 30% (excluding dividends, fees and charges).

Current consensus price target is $22.52, suggesting upside of 48.3% (ex-dividends)

The company's fiscal year ends in June.

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

Morgans rates DMP as Add (1) -

Domino's Pizza Enterprises has recently exercised its put option over remaining shares in its German joint venture and made an associated $165m capital raise.

The dilution effect of the capital raise outweighs the accretive outcome of removing minority interests from forecasts, yet the broker's target rises to $90 from $88. The target takes into account a recent share price rally in the global quick service restaurants (QSR) sector.

The Add rating is unchanged and Morgans notes Domino's Pizza Enterprises is among its Best Ideas.

Target price is $90.00 Current Price is $67.08 Difference: $22.92
If DMP meets the Morgans target it will return approximately 34% (excluding dividends, fees and charges).

Current consensus price target is $75.03, suggesting upside of 9.8% (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

Macquarie rates FLT as Neutral (3) -

Data show travel activity in the US softened over November. US corporate activity fell -9% to 65% of November 2019. This suggests downside risk to Macquarie's earnings forecasts for Flight Centre, with the Americas representing 28% of revenue in FY22.

Target falls to $17.35 from $17.75, Neutral retained.

[Note Flight Centre is the second most shorted stock on the ASX.]

Target price is $17.35 Current Price is $15.78 Difference: $1.57
If FLT meets the Macquarie target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $16.12, suggesting upside of 5.4% (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

Citi rates IGO as Neutral (3) -

IGO expects mining to recommence in around two weeks following a fire at its Nova nickel-copper-cobalt operations that has damaged the power station operated by Zenith Energy ((ZEN)). 

Citi assumes stockpiles will be built in the interim. The broker trims its earnings forecasts but retains its Neutral rating and $15.20 target price.

Target price is $15.20 Current Price is $15.54 Difference: minus $0.34 (current price is over target).
If IGO meets the Citi target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $15.11, suggesting downside of -2.0% (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

Macquarie rates IGO as Outperform (1) -

Train 1 at IGO's Kwinana Lithium Hydroxide facility achieved commercial production in late November. But over the weekend, a fire at the Nova (nickel) power station is likely to see production halted, Macquarie notes.

The fire at Nova has caused extensive damage to the power station and is likely to impact operations into early 2024, Macquarie suggests, although production should resume at a reduced rate in a few weeks.

Otherwise, commercial production at Kwinana is a key milestone. Outperform and $21 target retained.

Target price is $21.00 Current Price is $15.54 Difference: $5.46
If IGO meets the Macquarie target it will return approximately 35% (excluding dividends, fees and charges).

Current consensus price target is $15.11, suggesting downside of -2.0% (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

UBS rates IGO as Neutral (3) -

UBS retains its $15.70 target despite media reports of a fire at the power station at IGO's Nova operations.

While restoring power may take several weeks, the power plant is owned and operated by Zenith Energy ((ZEN)), explains the analyst, and higher nickel and lithium prices are providing a buffer. Neutral.

Target price is $15.70 Current Price is $15.54 Difference: $0.16
If IGO meets the UBS target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $15.11, suggesting downside of -2.0% (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

Ord Minnett rates INR as Speculative Buy (1) -

Ord Minnett detected an upbeat vibe at ioneer's recent AGM and briefing, where guidance was reaffirmed for delivery of several milestones from the US government.

The broker retains its Speculative Buy rating and points out the lithium and boron markets are outperforming the weak year-to-date share price for the company. The 70c target price is unchanged.

Target price is $0.70 Current Price is $0.62 Difference: $0.08
If INR 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:

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

Morgan Stanley rates LFS as Initiation of coverage with Equal-weight (3) -

Morgan Stanley initiates coverage on consumer finance business Latitude Group with an Equal-weight rating, given current trading multiples appear to reflect both tailwinds and headwinds for the company.

The analyst explains tailwinds for the provider of credit cards, personal loans and auto loans (secured) include a volume recovery and an option to broaden the product suite.

Current headwinds arise from rising funding costs and price competition from the BNPL industry, notes the broker.

While the current dividend yield is attractive for FY22, Morgan Stanley expects the dividend will be cut due to the worsening macroeconomic environment.

A $1.35 price target is set. Industry View: In-line.

Target price is $1.35 Current Price is $1.31 Difference: $0.04
If LFS meets the Morgan Stanley target it will return approximately 3% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

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

Macquarie rates MFG as Neutral (3) -

In a first glance at Magellan Financial's funds under management (FUM) update for November, Macquarie highlights net outflows continued. Retail outflows increased to -$0.6bn from -$0.4bn in October, while Institutional outflows of -$1.9bn were broadly stable.

Quarter-to-date net outflows for Retail and Institutional have almost reached the broker's expectation for the full quarter.

The group's current FUM of $50.2bn decreased by -1.6% in November.

While the broker acknowledges value has emerged in the core funds management business, the investment performance remains under pressure. There's thought to be no obvious near-term catalyst for the share price to outperform its listed peers.

The Neutral rating and $10.25 target are retained.

Target price is $10.25 Current Price is $9.51 Difference: $0.74
If MFG meets the Macquarie target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $10.43, suggesting upside of 13.4% (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

Macquarie rates MPL as Neutral (3) -

Macquarie has updated its expectations for Medibank Private's fines, ransoms, credit monitoring, tech costs, customer class actions and  investor class actions. In the absence of an investor class action, the broker believes similar one-off costs will continue each half until 2H24.

Deloitte's review is now Macquarie's primary concern, seeing this as the cornerstone of any investor class action risk. Neutral retained
until the review is finalised. Target falls to $3.20 from $3.45.

Target price is $3.20 Current Price is $2.88 Difference: $0.32
If MPL meets the Macquarie target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $3.20, suggesting upside of 8.9% (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 MTS as Neutral (3) -

Metcash 's first half earnings (EBIT) were a 6% beat compared to Citi's forecast and the consensus expectation, due to resilient Hardware margins. Food earnings were a slight miss while earnings for Liquor were a slight beat.

The trading update for the first four weeks of the 2H showed a continuation of good performance, assesses the analyst, though management noted adverse building conditions were affecting the Independent Hardware Group.

Citi retains a Neutral rating on limited near-term upside as consumers reduce grocery spend in the current economic climate. It's also thought the impact from a (potential) downturn in housing may offset earnings growth from the Total Tools rollout.

The Neutral rating and $4.30 target are unchanged.

Target price is $4.30 Current Price is $4.24 Difference: $0.06
If MTS meets the Citi target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $4.61, suggesting upside of 8.0% (ex-dividends)

The company's fiscal year ends in April.

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

Credit Suisse rates MTS as Neutral (3) -

First half earnings (EBIT) of $255m for Metcash exceeded the forecasts of Credit Suisse and consensus for $241m and $239m, respectively. 

While the broker assesses a strong operating result, cash generation was at a low level due to growth in the Hardware business and  inflation (as the company typically has higher payables than inventory).

The analyst feels the declaration of an 11.5cps interim dividend provides some comfort and believes the 70% payout ration can be sustained.

The Neutral rating and $4.16 target are unchanged.

Target price is $4.16 Current Price is $4.24 Difference: minus $0.08 (current price is over target).
If MTS meets the Credit Suisse target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.61, suggesting upside of 8.0% (ex-dividends)

The company's fiscal year ends in April.

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

Macquarie rates MTS as Outperform (1) -

Metcash's first half result demonstrates ongoing demand for local shopping and market share gains across all pillars, Macquarie notes, with growth particularly strong in hardware.

Underlying demand for hardware looks strong into second half, management suggested, which is likely the basis for increased investment in working capital and a subsequent drop in cash realsiation, the broker believes. Such investment may impact on dividend policy.

Outperform retained, target rises to $4.70 from $4.60.

Target price is $4.70 Current Price is $4.24 Difference: $0.46
If MTS meets the Macquarie target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $4.61, suggesting upside of 8.0% (ex-dividends)

The company's fiscal year ends in April.

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 MTS as Buy (1) -

Ord Minnett assesses a mixed 1H result by Metcash with earnings for Total Tools surprising to the upside while cash conversion was weak as the company transitions to a more capital-intensive business.

As a result of inflation, explains the analyst, the company delivered flat margins and no underlying earnings growth. While some supply chain costs are expected to lessen over the next year margins are forecast to remain flat.

The broker retains its Buy rating and raises its target to $4.90 from $4.80.

Target price is $4.90 Current Price is $4.24 Difference: $0.66
If MTS meets the Ord Minnett target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $4.61, suggesting upside of 8.0% (ex-dividends)

The company's fiscal year ends in April.

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

UBS rates MTS as Buy (1) -

First half sales and underlying earnings (EBIT) for Metcash exceeded forecasts by consensus and UBS. Sales rose by 7.8% in the 1H and by 6.2% for the first four weeks of the 2H.

The analyst highlights Total Tools continues to enjoy strong growth as stores were opened and converted to Corporate and Joint Venture.

The broker explains cash realisation fell short of expectations for a number of reasons including inflation, divisional mix and shorter payment terms for smaller stores.

The Buy rating and target price of $5.00 are retained.

Target price is $5.00 Current Price is $4.24 Difference: $0.76
If MTS meets the UBS target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $4.61, suggesting upside of 8.0% (ex-dividends)

The company's fiscal year ends in April.

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 NHF as Accumulate (2) -

Ord Minnett sees no immediate risks for nib Holdings from the ACCC's recent report that looked at "anti-competitive and other practices" of health insurers in Australia.

The broker was concerned either the Department of Health (which collected data for the ACCC) or the ACCC would be dubious of the company's stated intention to not profit from the pandemic.

The ACCC said it “recognises the insurers have continued to return profits from covid19 restrictions”.

Ord Minnett retains its Accumulate rating and $7.50 target price.

Target price is $7.50 Current Price is $7.08 Difference: $0.42
If NHF meets the Ord Minnett target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $7.63, suggesting upside of 7.6% (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 PMV as Hold (3) -

A trading update by Premier Investments reflects ongoing strong sales trends, according to Ord Minnett and the broker's target rises to $25.60 from $24.60. Forecast earnings for FY23 are raised by 7.5%, with only minor changes for outer years.

The analyst sees potential downside risk for group margins and stays with a Neutral rating. It's noted the the company's level of discounting (particularly for apparel brands) is dependent on the inventory position of competitors.

Target price is $25.60 Current Price is $25.46 Difference: $0.14
If PMV meets the Ord Minnett target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $25.89, suggesting upside of 1.7% (ex-dividends)

The company's fiscal year ends in July.

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

Macquarie rates PNI as Outperform (1) -

The key takeaway from the Pinnacle Investment Management's AGM update was management highlighting “continued increase in base fees despite lower headline net inflows”, Macquarie suggests.

Marking to market for the equity market rally post the first quarter boosts funds under management by around 9%.

Target rises to $11.31 from $10.20, Outperform retained.

Target price is $11.31 Current Price is $9.37 Difference: $1.94
If PNI meets the Macquarie target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $10.80, suggesting upside of 19.6% (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

Macquarie rates PNV as Outperform (1) -

Following PolyNovo's recent capital raise and the ending of the broker's restriction period, Macquarie updates forecasts to capture updated revenue and opex assumptions.

The broker expects additional sales staff to drive revenue growth above previous forecasts, although with higher costs associated in the short-term, and additional manufacturing capacity will enable accelerated sales growth, with pipeline products to support growth over medium-longer term.

Target rises to $2.30 from $1.90, Outperform retained.

Target price is $2.30 Current Price is $1.94 Difference: $0.365
If PNV meets the Macquarie target it will return approximately 19% (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

Ord Minnett rates SKO as Buy (1) -

We had incorrectly assumed Ord Minnett was no longer actively covering Serko.

The broker continues with its Buy rating and lowers its target to $5.19 from $6.03, following 1H results showing higher-than-expected staff costs and general inflationary impacts.

The 1H normalised net loss of -$19.7m exceeded the analyst's -$17.4m forecast, as additional staff costs were incurred (for growth) via implementation of the Booking.com deal.

Management re-iterated guidance of a doubling in revenue in FY23 and expect to turn cashflow positive in FY25.

Ord Minnett maintains confidence in a positive execution of the Booking deal.

Target price is $5.19 Current Price is $2.50 Difference: $2.69
If SKO meets the Ord Minnett target it will return approximately 108% (excluding dividends, fees and charges).

Current consensus price target is $4.42, suggesting upside of 76.8% (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: 0.7

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

Credit Suisse rates TWE as Downgrade to Neutral from Outperform (3) -

As Treasury Wine Estates share price has rallied in recent months, alongside other China-exposed stocks, and is currently above Credit Suisse's $13.80 target, the broker's rating is downgraded to Neutral from Outperform.

Separately, the broker notes feels the benefit from a falling Australian dollar is likely muted considering the company's hedging policy and the prospect of additional cost inflation.

Target price is $13.80 Current Price is $14.07 Difference: minus $0.27 (current price is over target).
If TWE meets the Credit Suisse target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $14.22, suggesting upside of 2.0% (ex-dividends)

The company's fiscal year ends in June.

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

Morgan Stanley rates WDS as Overweight (1) -

Morgan Stanley believes gas production underpins investor appeal for Woodside Energy. Management flagged at its investor day an intention to increase gas hub pricing over time, which is expected to occur as oil-linked NW Shelf contracts expire.

Management reiterated it capital budgeting framework and confirmed key projects (Sangomar and Scarborough) are on-track.

The broker's Overweight rating is maintained and the target decreased to $41.00 from $42.30. Industry View is Attractive. 

Target price is $41.00 Current Price is $36.41 Difference: $4.59
If WDS meets the Morgan Stanley target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $37.54, suggesting upside of 2.7% (ex-dividends)

The company's fiscal year ends in December.

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: 0.4

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