Australian Broker Call

Morgan Stanley rates CAR as Overweight (1) -

Morgan Stanley believes the company's online display advertising division could be reaching an inflection point, as new car sales volumes have turned positive in 2021 and this will boost revenue and the share price.

Overweight rating. Target price is $23. Industry view: Attractive.

Target price is $23.00 Current Price is $17.94 Difference: $5.06
If CAR meets the Morgan Stanley target it will return approximately 28% (excluding dividends, fees and charges).

Current consensus price target is $22.12, suggesting upside of 20.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.3

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

Citi rates CSL as Upgrade to Buy from Neutral (1) -

Citi upgrades CSL to Buy from Neutral after a long period of share price underperformance and expects the decline in plasma collections will likely normalise after the covid vaccine rollout in the US. 

The broker leaves earnings forecasts unchanged and retains the $310 target price after assuming plasma donations are back to normal by July 2020 and that mid-term plasma product demand remains unchanged.

Target price is $310.00 Current Price is $250.16 Difference: $59.84
If CSL meets the Citi target it will return approximately 24% (excluding dividends, fees and charges).

Current consensus price target is $302.01, suggesting upside of 19.4% (ex-dividends)

The company's fiscal year ends in June.

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: 0.3

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

Citi rates EVT as Buy (1) -

Citi analysts observe how cinemas in major box office markets have started to re-open, which feeds into expectations that, soon, major blockbuster movies will be released by Hollywood.

Cinemas represent around 66% of the company's annual revenues (taking guidance from pre-covid 2019), point out the analysts, and thus the immediate conclusion is this reduces further downside risk, probably by a significant degree.

Citi acknowledges it'll probably require an extended period of time before this company's operations will be back to "normal", but the crisis has forced management into unlocking value through property, hence there is good reason to see upside to the share price, suggests the broker.

Buy rating and $12.25 price target left intact.

Target price is $12.25 Current Price is $11.11 Difference: $1.14
If EVT meets the Citi target it will return approximately 10% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 1.0

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

Morgan Stanley rates GXY as Underweight (5) -

Galaxy Resources has announced the results of its assessment of the James Bay project. The assessment is in line with Morgan Stanley's expectations.

The company intends to integrate the upstream James Bay by partnering with a lithium chemical producer. Key will be finding a downstream conversion partner, in Morgan Stanley's view, given spare conversion capacity is currently located in China.

Underweight retained on valuation and heightened construction risks. Target is $1.50. Industry view: Attractive.

Target price is $1.50 Current Price is $2.29 Difference: minus $0.79 (current price is over target).
If GXY meets the Morgan Stanley target it will return approximately minus 34% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.40, suggesting upside of 9.6% (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: -0.3

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

UBS rates GXY as Buy (1) -

The James Bay lithium mine project in northern Quebec is expected to have a life of 18 years based on an average production rate of 330,000tpa. Initial capital expenditure of US$241m is required to build the mine.

UBS assumes of a US$700/t long-term spodumene price and a -10% nominal discount rate and calculates the project should deliver an internal rate of return of 27.8%. Buy rating retained. Target is reduced to $3.60 from $3.90.

Target price is $3.60 Current Price is $2.29 Difference: $1.31
If GXY meets the UBS target it will return approximately 57% (excluding dividends, fees and charges).

Current consensus price target is $2.40, suggesting upside of 9.6% (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: -0.3

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

Macquarie rates IAP as Outperform (1) -

Irongate Group acquired 153 Main Beach Road, Pinkenba in Queensland for circa $24.8m. Given an initial yield of 5.3%, Macquarie estimates the acquisition is 0.9% accretive to the group's FY22 funds from operations.

Income exposure is attractive, notes the broker, with circa 20% of the tenant base government entities, about 24% foreign listed and circa 23% Australian corporates.

Outperform rating with the target rising slightly to $1.38 from $1.37.

Target price is $1.38 Current Price is $1.27 Difference: $0.11
If IAP meets the Macquarie target it will return approximately 9% (excluding dividends, fees and charges).

The company's fiscal year ends in March.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.5

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

Morgans rates MAI as Add (1) -

Mainstream Group has entered into a Scheme Implementation Deed (SID) with Vistra, allowing Vistra to acquire 100% of the company's shares for $1.20 by way of a scheme of arrangement. The board supports the scheme.

Morgans is underwhelmed by the 10% premium to the last close and sees potential for higher bids though the "matching rights" given to Vistra under the “go shop” proposal could deter other bidders.

The broker lowers the target price to the current bid price of $1.20 from $1.22 and retains the Add rating.

Target price is $1.20 Current Price is $1.22 Difference: minus $0.02 (current price is over target).
If MAI meets the Morgans 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 FY21:

Forecast for FY22:

Market Sentiment: 1.0

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

Morgan Stanley rates NEC as Overweight (1) -

A cyclical rebound in the television advertising market underpins Morgan Stanley's Overweight rating on Nine Entertainment.

Recent data signals a recovery is underway and the broker assesses the outlook is positive for 2021. Target is $3.42. Industry view: Attractive.

Target price is $3.42 Current Price is $3.00 Difference: $0.42
If NEC meets the Morgan Stanley target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $3.36, suggesting upside of 11.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.8

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

Ord Minnett rates QAN as Upgrade to Buy from Hold (1) -

The global recovery is taking shape and Ord Minnett (courtesy of JPMorgan) believes Qantas is well-positioned to come out on the other end in a better shape, with both its balance sheet and competitive position underpinning that view.

Qantas has drastically reduced costs and the broker predicts -$1bn per annum less in costs will be carried forward (as permanent operational savings) from FY23 and onwards.

Price target has lifted to $6 from $5.50 while the rating is upgraded to Buy from Hold. Qantas should be making $1.6bn in profits before tax again in FY24 predicts the broker, as a base-case proposition.

On current projections, shareholders have to wait until FY23 to see the return of dividends.

Target price is $6.00 Current Price is $5.14 Difference: $0.86
If QAN meets the Ord Minnett target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $5.46, suggesting upside of 5.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.3

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

UBS rates QAN as Buy (1) -

From its survey, UBS believes the issues for Qantas are now firmly down to two main drivers in 2021. These are rational domestic behaviour, in terms of capacity and price, and Qantas achieving its cost reduction program worth $1bn.

Both of these features appear to be happening. As a result, operating leverage could surprise and result in the balance sheet gearing getting back to the target by the end of FY22.

UBS retains a Buy rating and $6.20 target.

Target price is $6.20 Current Price is $5.14 Difference: $1.06
If QAN meets the UBS target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $5.46, suggesting upside of 5.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.3

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

Macquarie rates SLK as Upgrade to Outperform from Neutral (1) -

Macquarie upgrades its rating to Outperform from Neutral with the target rising to $9.50 from $8.70.

The broker upgrades its FY22-23 earnings forecasts for SeaLink Travel Group by 7-10% to reflect permanent operational changes in the marine & tourism segment, along with the realisation of synergies.

The on-time running of transit systems across both regions 3 and 6 have been sustained, highlights Macquarie, with tender opportunities available in Sydney and Melbourne.

Target price is $9.50 Current Price is $8.69 Difference: $0.81
If SLK meets the Macquarie target it will return approximately 9% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 1.0

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

Morgan Stanley rates TYR as Overweight (1) -

Morgan Stanley notes the volume of downloads in the company's mobile app has increased recently, recovering to levels before the terminal outage. This also coincides with new merchant application growth.

The broker estimates the Tyro Payments app has a 30-40% penetration rate amongst its merchants. Hence, the weekly app download is considered a useful indicator of merchant acquisitions and this is critical to the broker's thesis.

Overweight rating. Target price is $4.10. Industry view is Attractive.

Target price is $4.10 Current Price is $3.22 Difference: $0.88
If TYR meets the Morgan Stanley target it will return approximately 27% (excluding dividends, fees and charges).

Current consensus price target is $3.75, suggesting upside of 17.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.3

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

Credit Suisse rates VOC as No Rating (-1) -

Vocus Group confirmed the offer from MIRA has now translated into an agreed scheme implementation deed. Importantly, the transaction is not subject to due diligence, seen by Credit Suisse as a key hurdle to prior offers for Vocus.

Credit Suisse is restricted from providing a rating and target at present.

Current Price is $5.43. Target price not assessed.

Current consensus price target is $4.98, suggesting downside of -8.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.0

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

UBS rates VOC as Neutral (3) -

Vocus Communications has entered a scheme implementation deed for 100% of the stock with MIRA/Aware at $5.50 cash a share. The scheme has been unanimously recommended by the board.

UBS suggests there is a possibility of another bidder and a break fee of $35m has been disclosed. Neutral rating and $5.50 target retained.

Target price is $5.50 Current Price is $5.43 Difference: $0.07
If VOC meets the UBS target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $4.98, suggesting downside of -8.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.0

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

Macquarie rates WAF as Outperform (1) -

West African Resources’ 2021 guidance for Sanbrado has been set at 250-280koz at a cost of US$720-800/oz. The company also expects the high-grade M1S underground operation to continue to ramp-up over the year.

Incorporating the upgraded guidance and updated production outlook leads Macquarie to reduce its earnings by -27% in 2022 while lifting them by 22% in 2023. This is a mixed bag and the broker makes no changes to the existing target price.

Outperform rating with a target of $1.05.

Target price is $1.05 Current Price is $0.78 Difference: $0.27
If WAF meets the Macquarie target it will return approximately 35% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 1.0

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

Citi rates WSA as Neutral (3) -

Western Areas' decision to raise -$100m has come as a surprise to Citi analysts. They believe management is showing its caution on free cash flow potential from Forrestania.

Management has expressed the intention to maintain an annual -$15m spend on exploration, points out the broker. Target price $2.65. Neutral.

On the broker's modeling, the additional circa 46m shares dilutes Net Asset Value by -7% to $2.70.

Target price is $2.65 Current Price is $2.36 Difference: $0.29
If WSA meets the Citi target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $2.72, suggesting upside of 33.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.4

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

Macquarie rates WSA as Outperform (1) -

Western Areas' is raising a total of $100m in capital via a fully underwritten institutional placement and a share-purchase plan (SPP). The proceeds will be used to complete mine development and surface infrastructure for the Cosmos project.

Macquarie believes the company will need to draw on its $75m debt facility for Cosmos despite the capital raising. On the bright side, the broker notes the development of Cosmos remains on track, with the first production expected in 2023.

Outperform rating with the target falling to $2.60 from $3.

Target price is $2.60 Current Price is $2.36 Difference: $0.24
If WSA meets the Macquarie target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $2.72, suggesting upside of 33.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.4

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

Morgan Stanley rates WSA as Overweight (1) -

Western Areas will raise $100m at $2.15 a share. Around $70m will be allotted to Odysseus for completion while $15-30m will be further exploration and expansion.

Morgan Stanley considers this a conservative step as a capital raising was not envisaged necessary in order to complete Odysseus.

Target is $2.95. Overweight rating. Industry view: Attractive.

Target price is $2.95 Current Price is $2.36 Difference: $0.59
If WSA meets the Morgan Stanley target it will return approximately 25% (excluding dividends, fees and charges).

Current consensus price target is $2.72, suggesting upside of 33.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.4

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

Morgans rates WSA as Downgrade to Hold from Add (3) -

The company announced a $100m capital raising ($85m placement/$15m SPP) at a minimum price of $2.15. This implies to Morgans more risk remaining to production volumes at Forrestania than forecast and the analyst reduces expected production and revenue. 

This raising exceeds Morgans expectation of $50m and at a weaker price than forecast. The funds will be used in construction at Cosmos/Odysseus ($70m) and $30m to exploration and organic growth.

The broker lowers the rating to Hold from Add and decreases the target to $2.57 from $2.91.

Target price is $2.57 Current Price is $2.36 Difference: $0.21
If WSA meets the Morgans target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $2.72, suggesting upside of 33.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.4

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

UBS rates Z1P as Downgrade to Sell from Neutral (5) -

Australasian customer growth surpassed rival Afterpay ((APT)) in the first half and UBS expects cash operating earnings to be at breakeven in FY21.

The broker remains positive about the short-term growth profile but envisages significant execution risks while capital requirements will continue to increase.

Higher bond rates may also affect the cost of funding and valuation. UBS downgrades to Sell from Neutral on valuation grounds and raises the target to $6.40 from $5.70. 

Target price is $6.40 Current Price is $8.78 Difference: minus $2.38 (current price is over target).
If Z1P meets the UBS target it will return approximately minus 27% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $9.31, suggesting upside of 10.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: -0.1

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