Australian Broker Call

Morgan Stanley rates 360 as Overweight (1) -

Due to  new US shareholder structure, Life360 released some compliance reporting that included a reiteration of all elements of FY22 guidance.

As part of the new reporting requirements, US$16m of the around US$20m working capital adjustment relating to the Tile acquisition was reclassified away from operating cash flow (which originally created uncertainty), explains the analyst.

The reclasiification and guidance for a year-end cash balance of US$65-70m should now provide greater certainty, in the broker's view. The Overweight rating and $5.50 target are maintained. Industry view: In-line.

Target price is $5.50 Current Price is $2.80 Difference: $2.7
If 360 meets the Morgan Stanley target it will return approximately 96% (excluding dividends, fees and charges).

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: 1.0

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

Credit Suisse rates ANZ as Outperform (1) -

In the past week, the bank index is down around -8% versus the broader market fall of -7%.

For the majors, the retail banks have fared worse with Westpac Bank down -15% and CommBank -13%, and National Australia Bank and ANZ Bank down -11% and -10% respectively by Monday.

Going forward, Credit Suisse prefers business banks over retail banks from a relative asset growth perspective (business being robust and housing slowing).

ANZ Bank is the broker's most preferred of the four majors. The Outperform rating and $30.80 target price are retained.

Target price is $30.80 Current Price is $22.00 Difference: $8.8
If ANZ meets the Credit Suisse target it will return approximately 40% (excluding dividends, fees and charges).

Current consensus price target is $29.18, suggesting upside of 34.9% (ex-dividends)

The company's fiscal year ends in September.

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 BRG as Buy (1) -

An increasingly challenging outlook from the consumer perspective as well as negative industry feedback causes UBS to reduce estimates for earnings per share in FY23 by -10%, with a further -8% cut to FY24 and -6% to FY25.

The broker believes Breville Group can pull back on incremental discretionary cost investment amid a softer top line and now forecasts 7% sales growth in FY23, which includes 4% from the LELIT acquisition.

Sales are expected to accelerate from FY24 and the broker believes current macro headwinds will be short-term while the company's medium-term strategy is intact. Target is reduced to $25 from $34 and the Buy rating is maintained.

Target price is $25.00 Current Price is $17.93 Difference: $7.07
If BRG meets the UBS target it will return approximately 39% (excluding dividends, fees and charges).

Current consensus price target is $29.20, suggesting upside of 69.5% (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

Ord Minnett rates BXB as Buy (1) -

Ord Minnett believes Brambles' focus on defensive industries should mean it can withstand higher inflation. Moreover, pricing power and ability to pass through higher input costs are valuable characteristics in the current environment.

The broker reviews earnings forecasts and the ability to better pass through the input costs, which drives a 3-5% increase in EBIT forecasts over FY22-24.

Buy rating maintained. Target rises to $13.50 from $12.70.

Target price is $13.50 Current Price is $10.50 Difference: $3
If BXB meets the Ord Minnett target it will return approximately 29% (excluding dividends, fees and charges).

Current consensus price target is $12.11, suggesting upside of 13.1% (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: 0.4

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

Credit Suisse rates CBA as Neutral (3) -

In the past week, the bank index is down around -8% versus the broader market fall of -7%.

For the majors, the retail banks have fared worse with Westpac Bank down -15% and CommBank -13%, and National Australia Bank and ANZ Bank down -11% and -10% respectively by Monday.

Going forward, Credit Suisse prefers business banks over retail banks from a relative asset growth perspective (business being robust and housing slowing).

ANZ Bank is the broker's most preferred of the four majors, while CommBank is least preferred. For the latter, the Neutral rating and $102.80 target price are retained.

Target price is $102.80 Current Price is $91.20 Difference: $11.6
If CBA meets the Credit Suisse target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $92.79, suggesting upside of 2.6% (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

Ord Minnett rates CPU as Upgrade to Accumulate from Hold (2) -

The strong increase in expectations for the yield curve raises the risk of demand reduction and rising corporate debt costs. In isolation, Ord Minnett points out, ignoring the possibility that earnings would eventually recover, higher interest rates could also reduce the appeal of shares versus bonds.

The broker highlights Computershare's greater sensitivity to benefits from rising interest rates versus the risks from rising expenses in an inflationary environment.

The stock is also benefiting from a decline in the value of the Australian dollar versus the US dollar. Hence, the broker upgrades to Accumulate from Hold, believing the interest-rate leverage should, on balance, be a positive. Target is raised to $26 from $25.

Target price is $26.00 Current Price is $23.53 Difference: $2.47
If CPU meets the Ord Minnett target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $26.28, suggesting upside of 7.8% (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 DEG as Initiation of coverage with Buy (1) -

UBS initiates coverage on De Grey Mining with a $1.20 target and Buy rating.The Malina project is heading for 10m ounces of reserves,  potentially able to produce at rates up to 500,000ozpa.

The broker considers the potential makes the project one of the most exciting gold discoveries globally in recent years. A prefeasibility study is due in September and the broker models a significantly enhanced project on the 2021 scoping study.

Target price is $1.20 Current Price is $1.00 Difference: $0.2
If DEG meets the UBS target it will return approximately 20% (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 IGO as Buy (1) -

Citi lowers its target price for IGO to $15.70 from $16.20 and retains the Buy rating following the implementation of the $1.3bn Western Areas ((WSA)) scheme acquisition.

The broker incorporates the new assets into forecasts from the 1H of FY23 and marks-to-market for June quarter copper and nickel prices.

Target price is $15.70 Current Price is $10.96 Difference: $4.74
If IGO meets the Citi target it will return approximately 43% (excluding dividends, fees and charges).

Current consensus price target is $12.58, suggesting upside of 18.1% (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 JHX as Outperform (1) -

Macquarie believes James Hardie Industries is positioned for a tough market. The broker has noted that almost every market participant is still battling constraints on meeting demand rather than focusing on the risks from higher rates and less discretionary expenditure.

There is still support for renovations activity, which tends to be less volatile. For James Hardie, the broker recognises the macro context may not support the stock over the short term but there is a meaningful opportunity once conditions settle.

Outperform rating maintained. Target is reduced to $56.35 from $56.60.

Target price is $56.35 Current Price is $32.47 Difference: $23.88
If JHX meets the Macquarie target it will return approximately 74% (excluding dividends, fees and charges).

Current consensus price target is $50.68, suggesting upside of 67.0% (ex-dividends)

The company's fiscal year ends in March.

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: 0.8

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

Macquarie rates LYC as Outperform (1) -

Lynas Rare Earths has signed a US$120m contract with the US Department of Defense to construct a commercial heavy rare earths plant in Texas.

Macquarie considers this a positive step in advancing the business to incorporate heavy rare earths products in addition to the light rare earths products. The facility is expected to be in production in FY25. Outperform rating and $12.80 target maintained.

Target price is $12.80 Current Price is $8.53 Difference: $4.27
If LYC meets the Macquarie target it will return approximately 50% (excluding dividends, fees and charges).

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

Credit Suisse rates NAB as Neutral (3) -

In the past week, the bank index is down around -8% versus the broader market fall of -7%.

For the majors, the retail banks have fared worse with Westpac Bank down -15% and CommBank -13%, and National Australia Bank and ANZ Bank down -11% and -10% respectively by Monday.

Going forward, Credit Suisse prefers business banks over retail banks from a relative asset growth perspective (business being robust and housing slowing).

ANZ Bank is the broker's most preferred of the four majors, followed by National Australia Bank. For the latter, the Neutral rating and $32.40 target price are retained.

Target price is $32.40 Current Price is $26.84 Difference: $5.56
If NAB meets the Credit Suisse target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $33.14, suggesting upside of 25.8% (ex-dividends)

The company's fiscal year ends in September.

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

Morgans rates NAN as Add (1) -

Morgans expects business at Nanosonics will be on a more normal footing from FY23. Forecasts for FY23 and FY24 are downgraded after an increase in cost assumptions to be more in-line with guidance and a decrease in forecast European growth rates.

The broker also defers the revenue contribution from the new CORIS product to FY24 from FY23. While the target price falls to $4.86 from $5.43, the Add rating is retained after a significant share price fall.

Target price is $4.86 Current Price is $3.09 Difference: $1.77
If NAN meets the Morgans target it will return approximately 57% (excluding dividends, fees and charges).

Current consensus price target is $4.04, suggesting upside of 35.0% (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 RMD as Buy (1) -

The US$1bn acquisition of German SaaS solutions provider Medifox Dan by ResMed will be EPS accretive in FY23, notes management. The company also highlighted the opportunity to now expand the company's SaaS business footprint outside the US.

While Citi understands the European expansion strategy, this transaction is return on invested capital (ROIC) dilutive, as
was the MatrixCare deal. That transaction (in November 2018) is considered to have been unsuccessful.

The Buy rating and $35.50 target price are unchanged.

Target price is $35.50 Current Price is $29.75 Difference: $5.75
If RMD meets the Citi target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $35.44, suggesting upside of 22.2% (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: 0.8

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

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

ResMed is to acquire German SaaS business Medifox Dan for -US$1bn. The company provides software and services to providers within the German healthcare system.

Morgan Stanley estimates the transaction will be accretive to diluted EPS. The Equal-weight rating and $26.90 target price are retained. Industry View: In-Line.

Target price is $26.90 Current Price is $29.75 Difference: minus $2.85 (current price is over target).
If RMD meets the Morgan Stanley target it will return approximately minus 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $35.44, suggesting upside of 22.2% (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: 0.8

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

UBS rates SDF as Buy (1) -

UBS observes the growth prospects are intact as Steadfast Group plans to take its existing network and insurance technology capability offshore. This should alleviate medium-term risks from the expected turn in the premium rate cycle as well as the reduced potential for domestic acquisitions.

The growth drivers require limited capital outlay and, the broker believes, uniquely differentiate the company's options compared with peers. UBS considers the opportunities material yet largely ignored by the market and maintains a Buy rating, raising the target to $7.00 from $5.60.

Target price is $7.00 Current Price is $4.63 Difference: $2.37
If SDF meets the UBS target it will return approximately 51% (excluding dividends, fees and charges).

Current consensus price target is $5.90, suggesting upside of 26.1% (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

Credit Suisse rates WBC as Neutral (3) -

In the past week, the bank index is down around -8% versus the broader market fall of -7%.

For the majors, the retail banks have fared worse with Westpac Bank down -15% and CommBank -13%, and National Australia Bank and ANZ Bank down -11% and -10% respectively by Monday.

Going forward, Credit Suisse prefers business banks over retail banks from a relative asset growth perspective (business being robust and housing slowing).

ANZ Bank is the broker's most preferred of the four majors, with Westpac coming in third. For the latter, the Neutral rating and $24.40 target price are retained.

Target price is $24.40 Current Price is $20.07 Difference: $4.33
If WBC meets the Credit Suisse target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $25.34, suggesting upside of 28.6% (ex-dividends)

The company's fiscal year ends in September.

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 WGX as Outperform (1) -

Westgold Resources has made a strong start to the fourth quarter and, following production of 24,000 ounces and 25,100 ounces for April and May, remains on track for FY22 guidance.

Macquarie notes the company is now well funded to execute on growth plans and the timing and exact nature of growth projects will become clearer over the next year. Outperform rating and $2.30 target maintained.

Target price is $2.30 Current Price is $1.21 Difference: $1.09
If WGX meets the Macquarie target it will return approximately 90% (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

Ord Minnett rates WTC as Accumulate (2) -

Ord Minnett notes container prices reached new peaks in May while volumes were soft and likely affected by short-term supply issues.

While traffic to the company's CargoWise platform took a hit in May, following a record start to 2022, the trend still remains positive, the broker notes, reflecting continued adoption of the platform.

Accumulate rating and $52 target retained.

Target price is $52.00 Current Price is $36.64 Difference: $15.36
If WTC meets the Ord Minnett target it will return approximately 42% (excluding dividends, fees and charges).

Current consensus price target is $48.34, suggesting upside of 37.7% (ex-dividends)

The company's fiscal year ends in June.

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 XRO as Buy (1) -

Xero has announced price rises across several subscription plans in Australasia and the UK. Ord Minnett assesses the move to increase prices on the lowest tiers is a positive for growth in average revenue per user, and forecasts 7% ARPU growth by the end of FY23.

The broker highlights the maintenance of the existing price structure in North America, as the company continues to chase market share. Buy rating and $97 target maintained.

Target price is $97.00 Current Price is $81.90 Difference: $15.1
If XRO meets the Ord Minnett target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $100.60, suggesting upside of 30.1% (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: 0.4

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