Australian Broker Call *Extra* Edition – Mar 02, 2022

This story features AVITA MEDICAL INC, and other companies. For more info SHARE ANALYSIS: AVH

An additional news report on the recommendation, valuation, forecast and opinion changes for ASX-listed equities.

In addition to The Australian Broker Call Report, which is published and updated daily (Mon-Fri), FNArena has now added The Australian Broker Call *Extra* Edition, featuring additional sources of research and insights on ASX-listed stocks, also enlarging the number of stocks that make up the FNArena universe.

One key difference is the *Extra* Edition will not be updated daily, but merely "regularly" depending on availability of suitable quality content. As such, the *Extra* Edition tries to build a bridge between daily updates via the Australian Broker Call Report and ad hoc news stories, that are not always timely for investors hungry for the next information update.

Investors using the *Extra* Edition as a source of input for their own share market research should thus take into account that information after publication may not be up to date, or yet awaiting another update by FNArena's team of journalists.

Similar to The Australian Broker Call Report, this *Extra* Edition includes concise but limited reviews of research recently published by Stockbrokers and other experts, which should be considered as information concerning likely market behaviour rather than advice on the securities mentioned. Do not act on the contents of this Report without first reading the important information included at the end of this Report.

The Australian Broker Call *Extra* Edition is a summary that has been prepared independently of the sources identified. Readers will check the full text of the recommendations and consult a Licenced Advisor before making any investment decision.

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COMPANIES DISCUSSED IN THIS ISSUE

Click on a symbol for fast access.
The number next to the symbol represents the number of brokers covering it for this report -(if more than 1)

AVH (2)   BRI   DTC   GDG   HLA   MCR   NSR   REH   WZR  

AVH    AVITA MEDICAL INC

Pharmaceuticals & Biotech/Lifesciences – Overnight Price: $3.23

Bell Potter rates ((AVH)) as Buy (1) –

Bell Potter notes AVITA Medical's second quarter reported revenue of $6.9m was a small miss on forecast but implied 36% growth on the previous comparable period.

Restricted hospital access was a key pressure, as well as higher nursing staff turnover requiring ongoing training. Expect resumed face-to-face time in hospitals will be a growth driver moving forward, as well as increased penetration in existing hospitals. 

Also an upcoming growth driver, the launch of Recell for outpatient burn treatment  has received recent funding approval. 

The Buy rating is retained and the target price decreases to $4.60 from $9.00. 

This report was published on March 2, 2022.

Target price is $4.60 Current Price is $3.23 Difference: $1.37
If AVH meets the Bell Potter target it will return approximately 42% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY22:

Bell Potter forecasts a full year FY22 dividend of 0.00 cents and EPS of minus 146.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 2.21.

Forecast for FY23:

Bell Potter forecasts a full year FY23 dividend of 0.00 cents and EPS of minus 100.60 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 3.21.

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

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Wilsons rates ((AVH)) as Downgrade to Underweight from Overweight (5) –

AVITA Medical delivered first half sales of US$14.0m, up 35% on the previous comparable period, but an earnings loss of -US$414.5m disappointed Wilsons' expectations. Covid continues to impact, and higher nurse turnover equates to consistent retraining. 

Wilsons notes AVITA Medical is vulnerable to sector compression given it remains several years from profitability. Recent regulatory wins in both the US and Japan are positives, but full year revenue guidance came in below forecasts and Wilsons reduces -12% accordingly. 

The rating is downgraded to Underweight with a target price of $2.50. 

This report was published on March 2, 2022.

Target price is $2.50 Current Price is $3.23 Difference: minus $0.73 (current price is over target).
If AVH meets the Wilsons target it will return approximately minus 23% (excluding dividends, fees and charges – negative figures indicate an expected loss).
The company's fiscal year ends in June.

Forecast for FY22:

Wilsons forecasts a full year FY22 dividend of 0.00 cents and EPS of minus 103.40 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 3.12.

Forecast for FY23:

Wilsons forecasts a full year FY23 dividend of 0.00 cents and EPS of minus 151.30 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 2.13.

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

BRI    BIG RIVER INDUSTRIES LIMITED

Building Products & Services – Overnight Price: $2.30

Moelis rates ((BRI)) as Buy (1) –

Big River Industries delivered a strong beat with its first half results, with earnings of $21.1m up 111% on the previous comparable period and 58% ahead of Moelis' forecast. Revenue grew 45% and margins reached 10.9% compared to a forecast 8.5%. 

The company guided to an second half easing of gross profit margins, but targets a sustained 10% margin moving forward. Results mark six consecutive strong growth periods, points out Moelis.

Earnings per share forecasts increase 53% and 40% for FY22 and FY23. The Buy rating is retained and the target price increases to $3.36 from $2.41.

This report was published on March 28, 2022.

Target price is $3.36 Current Price is $2.30 Difference: $1.06
If BRI meets the Moelis target it will return approximately 46% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY22:

Moelis forecasts a full year FY22 dividend of 11.00 cents and EPS of 19.80 cents.
At the last closing share price the estimated dividend yield is 4.78%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 11.62.

Forecast for FY23:

Moelis forecasts a full year FY23 dividend of 11.00 cents and EPS of 20.80 cents.
At the last closing share price the estimated dividend yield is 4.78%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 11.06.

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

DTC    DAMSTRA HOLDINGS LIMITED

Software & Services – Overnight Price: $0.20

Wilsons rates ((DTC)) as Upgrade to Market Weight from Underweight (3) –

Damstra Holding's stock price has declined -20% following the release of the company's first half result, driving a rerating from Wilsons given the stock now sits at the broker's target price. 

Looking ahead, the broker expects Damstra to focus on reducing customer concentration and gaining traction with a broader number of customers in the coming year. 

The rating is upgraded to Market Weight from Underweight and the target price of $0.20 is retained. 

This report was published on March 2, 2022.

Target price is $0.20 Current Price is $0.20 Difference: $0
If DTC meets the Wilsons target it will return approximately 0% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY22:

Wilsons forecasts a full year FY22 dividend of 0.00 cents and EPS of minus 2.20 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 9.09.

Forecast for FY23:

Wilsons forecasts a full year FY23 dividend of 0.00 cents and EPS of minus 7.80 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 2.56.

Market Sentiment: 0.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

GDG    GENERATION DEVELOPMENT GROUP LIMITED

Wealth Management & Investments – Overnight Price: $1.54

Moelis rates ((GDG)) as Buy (1) –

Generation Development delivered record inflows in the first half, with sales inflows of $341m up 107% on the previous comparable period and bringing total funds under management to $2.1bn. Moelis notes Lonsec also grew funds under management to $2.7bn, up 116%.

The company's Lonsec Group stake provided a $1m earnings benefit in the half, and looking ahead,the broker expects following an investment year in FY22 that Lonsec Group will grow earnings at a more than 15% compound annual growth rate through to FY25. 

The Buy rating is retained and the target price increases to $1.89 from $1.71.

This report was published on February 28, 2022.

Target price is $1.89 Current Price is $1.54 Difference: $0.35
If GDG meets the Moelis target it will return approximately 23% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY22:

Moelis forecasts a full year FY22 dividend of 2.00 cents and EPS of 3.20 cents.
At the last closing share price the estimated dividend yield is 1.30%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 48.13.

Forecast for FY23:

Moelis forecasts a full year FY23 dividend of 2.00 cents and EPS of 4.20 cents.
At the last closing share price the estimated dividend yield is 1.30%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 36.67.

Market Sentiment: 1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

HLA    HEALTHIA LIMITED

Healthcare services – Overnight Price: $1.95

Jarden rates ((HLA)) as Buy (1) –

Jarden saw Healthia delivering a "messy" interim report, heavily impacted by covid restrictions and disruptions. Underlying earnings missed the broker's forecasts by a mile.

While the short-term still looks messy, and below forecasts, Jarden also believes Healthia will start FY23 with an annualised portfolio of $40m underlying EBITDA, consistent with the broker's expectation.

Jarden remains of the view this company offers steady organic growth with M&A optionality, and remains atrracted to the strategy. Earnings estimates have been reduced.

Buy rating retained. Price target drops to $2.67 from $2.90.

This report was published on March 2, 2022.

Target price is $2.67 Current Price is $1.95 Difference: $0.72
If HLA meets the Jarden target it will return approximately 37% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY22:

Jarden forecasts a full year FY22 dividend of 5.00 cents and EPS of 11.30 cents.
At the last closing share price the estimated dividend yield is 2.56%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 17.26.

Forecast for FY23:

Jarden forecasts a full year FY23 dividend of 5.00 cents and EPS of 12.30 cents.
At the last closing share price the estimated dividend yield is 2.56%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 15.85.

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

MCR    MINCOR RESOURCES NL

Nickel – Overnight Price: $1.99

Bell Potter rates ((MCR)) as Downgrade to Hold from Buy (3) –

Mincor Resources disappointed Bell Potter's earnings and net profit forecasts in the first half. Reported earnings of -$11.9m compared to the broker's expected loss of -$9.0m, while net loss of -$13.9m compared to -$9.0m, with the miss attributed to higher exploration expenditure.

The company continues to develop the Kambalda Nickel Operations to first production, with first concentrate expected in the fourth quarter.

The broker notes the company has benefited from significant price improvement since December, with nickel spot pricing driving up value. 

The rating is downgraded to Hold from Buy and the target price increases to $1.95 from $1.35. 

This report was published on March 2, 2022.

Target price is $1.95 Current Price is $1.99 Difference: minus $0.04 (current price is over target).
If MCR meets the Bell Potter target it will return approximately minus 2% (excluding dividends, fees and charges – negative figures indicate an expected loss).
The company's fiscal year ends in June.

Forecast for FY22:

Bell Potter forecasts a full year FY22 dividend of 0.00 cents and EPS of minus 7.20 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 27.64.

Forecast for FY23:

Bell Potter forecasts a full year FY23 dividend of 0.00 cents and EPS of 17.70 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 11.24.

Market Sentiment: 0.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

NSR    NATIONAL STORAGE REIT

REITs – Overnight Price: $2.55

Jarden rates ((NSR)) as Sell (5) –

Significant upside potential exists to National Storage's net tangible assets according to Jarden, following the company's first half update. Noting occupancy, rate and revenue per square metre all continue to grow ahead of expectations, the broker sees further upside potential.

Looking forward, a growing pipeline  of development projects coupled with proven returns on completed projects looks attractive, and suggests further room to capitalise on inorganic growth. 

The rating is upgraded to Neutral from Underweight and the target price increases to $2.60 from $2.20. 

This report was published on February 25, 2022.

Target price is $2.60 Current Price is $2.55 Difference: $0.05
If NSR meets the Jarden target it will return approximately 2% (excluding dividends, fees and charges).
Current consensus price target is $2.54, suggesting downside of -0.4%(ex-dividends)
The company's fiscal year ends in June.

Forecast for FY22:

Jarden forecasts a full year FY22 dividend of 9.50 cents and EPS of 10.20 cents.
At the last closing share price the estimated dividend yield is 3.73%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 25.00.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 10.1, implying annual growth of -66.7%.
Current consensus DPS estimate is 9.7, implying a prospective dividend yield of 3.8%.
Current consensus EPS estimate suggests the PER is 25.2.

Forecast for FY23:

Jarden forecasts a full year FY23 dividend of 10.20 cents and EPS of 11.00 cents.
At the last closing share price the estimated dividend yield is 4.00%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 23.18.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 10.7, implying annual growth of 5.9%.
Current consensus DPS estimate is 10.3, implying a prospective dividend yield of 4.0%.
Current consensus EPS estimate suggests the PER is 23.8.

Market Sentiment: 0.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

REH    REECE LIMITED

Furniture & Renovation – Overnight Price: $20.19

JP Morgan rates ((REH)) as Underweight (5) –

While JP Morgan determines from 1H results that Reece is delivering price rises to cover raw material inflation and showing leverage to US housing demand, the fact remains the valuation is rich.

It's estimated shares are trading at a 70% average premium to building material peers.

The broker sees better value elsewhere in the sector and maintains its Underweight rating and lowers its price target to $17.60 from $18.

After trialing a few formats, the company has decided to roll out Reece-branded stores in the US.

This report was published on February 28, 2022.

Target price is $17.60 Current Price is $20.19 Difference: minus $2.59 (current price is over target).
If REH meets the JP Morgan target it will return approximately minus 13% (excluding dividends, fees and charges – negative figures indicate an expected loss).
Current consensus price target is $18.91, suggesting downside of -6.4%(ex-dividends)
The company's fiscal year ends in June.

Forecast for FY22:

JP Morgan forecasts a full year FY22 dividend of 25.00 cents and EPS of 57.00 cents.
At the last closing share price the estimated dividend yield is 1.24%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 35.42.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 56.6, implying annual growth of 28.0%.
Current consensus DPS estimate is 23.9, implying a prospective dividend yield of 1.2%.
Current consensus EPS estimate suggests the PER is 35.7.

Forecast for FY23:

JP Morgan forecasts a full year FY23 dividend of 29.00 cents and EPS of 66.00 cents.
At the last closing share price the estimated dividend yield is 1.44%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 30.59.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 64.7, implying annual growth of 14.3%.
Current consensus DPS estimate is 27.0, implying a prospective dividend yield of 1.3%.
Current consensus EPS estimate suggests the PER is 31.2.

Market Sentiment: -0.4
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

WZR    WISR LIMITED

Business & Consumer Credit – Overnight Price: $0.14

Moelis rates ((WZR)) as Buy (1) –

Wisr reported revenue of $26.2m in the first half, up 163% on the previous comparable period, and originations of $268m, up 21% on the previous half and driving a closing loan book of $565m. Moelis expects the company to achieve a $1bn loan book by December. 

Average interest yield declines and pressures on borrowing costs have seen a compression of the broker's medium term net interest margin expectations. The broker anticipates a 2.1% earnings margin in FY24, compared to the company's 3-4% margin guidance. 

The Buy rating is retained and the target price decreases to $0.27 from $0.39. 

This report was published on February 28, 2022.

Target price is $0.27 Current Price is $0.14 Difference: $0.13
If WZR meets the Moelis target it will return approximately 93% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY22:

Moelis forecasts a full year FY22 dividend of 0.00 cents and EPS of minus 0.80 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 17.50.

Forecast for FY23:

Moelis forecasts a full year FY23 dividend of 0.00 cents and EPS of 0.50 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 28.00.

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

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The content of this information does in no way reflect the opinions of FNArena, or of its journalists. In fact we don't have any opinion about the stock market, its value, future direction or individual shares. FNArena solely reports about what the main experts in the market note, believe and comment on. By doing so we believe we provide intelligent investors with a valuable tool that helps them in making up their own minds, reading market trends and getting a feel for what is happening beneath the surface. This document is provided for informational purposes only. It does not constitute an offer to sell or a solicitation to buy any security or other financial instrument. FNArena employs very experienced journalists who base their work on information believed to be reliable and accurate, though no guarantee is given that the daily report is accurate or complete. Investors should contact their personal adviser before making any investment decision.

As part of emerging new trends overseas, The Australian Broker Call *Extra* Edition also includes providers of sponsored research. Readers should bear in mind, sponsored research, while not necessarily of lower quality, has the embedded complication that the company that is the subject of the research has paid for this research. Providers of sponsored research that can potentially be included in this Report are Breakaway Research, Edison Investment Research, Independent Investment Research, NDF Research, Pitt Street Research, and TMT Analytics.

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