Australian Broker Call

Macquarie rates 29M as Underperform (5) -

29Metals is now warning operations at its Capricorn asset will be suspended for three to four months, rather than the initially expected three to four weeks, with water management activities required on site following wet weather. 

While 29Metals has withdrawn its full year guidance for production from Capricorn, Macquarie has materially lowered its forecast and now predicts 6,000 tonnes of copper compared to a previous 19-23,000 tonnes. 

The Underperform rating is retained and the target price decreases to $1.00 from $1.30.

Target price is $1.00 Current Price is $1.19 Difference: minus $0.185 (current price is over target).
If 29M meets the Macquarie target it will return approximately minus 16% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $1.39, suggesting upside of 24.1% (ex-dividends)

The company's fiscal year ends in December.

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 29M as Underweight (5) -

On March 9, 29Metals reported extreme rainfall around the Capricorn Copper operations would impact overall production at 29Metals by -24%, with a greater impact on profit, due to diminished economies of scale.

The company suspended production and non-essential activities at the site, which was expected to last three to four weeks.

That time expectation has now blown out to three to four months on greater-than-expected impacts from the rain, and the company has withdrawn 2023 guidance for Capricorn Copper.

While Morgan Stanley sees a potential earnings (EBITDA) impact of around -$35-45m, the $1.50 target is retained. Underweight. Industry view: Attractive.

Target price is $1.50 Current Price is $1.19 Difference: $0.315
If 29M meets the Morgan Stanley target it will return approximately 27% (excluding dividends, fees and charges).

Current consensus price target is $1.39, suggesting upside of 24.1% (ex-dividends)

The company's fiscal year ends in December.

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 A11 as Outperform (1) -

First half exploration expenses from Atlantic Lithium were materially lower than Macquarie had anticipated, seeing the company deliver a lower cost half. Subsequently, the company delivered a -$3.9m earnings loss in a 61% beat to the broker's forecasts.

Macquarie sees potential for upside to Atlantic Lithium's resource given exploration drilling to date has focused on just 13 square kilometres of a total 560 square kilometres.

The Outperform rating and target price of $0.80 are retained.

Target price is $0.80 Current Price is $0.44 Difference: $0.36
If A11 meets the Macquarie target it will return approximately 82% (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

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

Morgan Stanley sees only modest direct risk for Australian banks from current banking woes in the US.

Australian bank liquidity, funding and capital were strengthened in the wake of the 2008 GFC crisis, note the analysts. Also, the broker points out domestic banks significantly reduce interest rate risk via hedging.

Separately, and despite these assurances, Morgan Stanley expects more margin headwinds in 2023 with deposit pricing and mix headwinds now emerging.

For ANZ Bank, the Equal-weight rating and $26.20 target are unchanged. Industry view: In-line.

Target price is $26.20 Current Price is $23.29 Difference: $2.91
If ANZ meets the Morgan Stanley target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $28.19, suggesting upside of 24.1% (ex-dividends)

The company's fiscal year ends in September.

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 APE as Buy (1) -

Ord Minnett found Eagers Automotive's latest result reflective of favourable market dynamics and strong operational momentum, and the company is guiding to full year revenue of $9.5-10.0bn with its BYD Auto joint venture expected to be a key driver of year-on-year growth.

Some new car supply has started to reach the market in the new year, and  a strong order book remains that Ord Minnett expects can offset any potential consumer downturn..

The Buy rating is retained and the target price increases to $15.30 from $14.93.

Target price is $15.30 Current Price is $13.34 Difference: $1.96
If APE meets the Ord Minnett target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $14.59, suggesting upside of 10.7% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.7

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

Macquarie rates AWC as Underperform (5) -

Operating stability challenges has seen production at the Portland Aluminium smelter immediately reduced by -25%, with Macquarie noting Alumina Ltd holds the asset in partnership with Alcoa.

Macquarie expects the smelter, which has a total capacity of 358ktpa, will operate at 75% capacity for four weeks, but this drives only minor changes to the broker's earnings forecasts given the company holds only a 22% equity share in the asset. 

The Underperform rating and target price of $1.00 are retained.

Target price is $1.00 Current Price is $1.44 Difference: minus $0.44 (current price is over target).
If AWC meets the Macquarie target it will return approximately minus 31% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $1.50, suggesting upside of 5.6% (ex-dividends)

The company's fiscal year ends in December.

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: 0.0

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

Morgan Stanley rates AWC as Overweight (1) -

Due to previous operational challenges at the Portland Aluminium smelter, Morgan Stanley forecast an operating rate of 90% for the 1H of 2023.

Yesterday, Alcoa announced an immediate reduction to 75% of capacity at the site due to operational instability and problems associated with the production of rodded anodes.

Despite the lower-than-expected operating capacity, the broker leaves its Overweight rating and $1.75 target in place for Alumina Ltd. Industry View: Attractive.

Target price is $1.75 Current Price is $1.44 Difference: $0.31
If AWC meets the Morgan Stanley target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $1.50, suggesting upside of 5.6% (ex-dividends)

The company's fiscal year ends in December.

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: 0.0

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

Macquarie rates BGL as Outperform (1) -

Macquarie describes a "productive" first half from Bellevue Gold, leaving construction of the company's million tonne per annum nameplate mill on schedule and budget, and first gold on track for the second half of 2023. 

Plant construction and underground development are either meeting or beating schedule, and during the period the company completed its camp. In a sensitive, pre-production year, Macquarie has lifted its loss expectations for the fiscal year by 29%. 

The Outperform rating and target price of $1.70 are retained.

Target price is $1.70 Current Price is $1.15 Difference: $0.55
If BGL meets the Macquarie target it will return approximately 48% (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

Morgan Stanley rates CBA as Underweight (5) -

Morgan Stanley sees only modest direct risk for Australian banks from current banking woes in the US.

Australian bank liquidity, funding and capital were strengthened in the wake of the 2008 GFC crisis, note the analysts. Also, the broker points out domestic banks significantly reduce interest rate risk via hedging.

Separately, and despite these assurances, Morgan Stanley expects more margin headwinds in 2023 with deposit pricing and mix headwinds now emerging.

For CommBank the Underweight rating and $85 target are retained. Industry view: In-line.

Target price is $85.00 Current Price is $95.40 Difference: minus $10.4 (current price is over target).
If CBA meets the Morgan Stanley target it will return approximately minus 11% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $91.66, suggesting downside of -3.8% (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

UBS rates CLV as Downgrade to Neutral from Buy (3) -

Despite a 1H sales beat of 26% by Clover compared to the UBS forecast, the broker lowers its rating to Neutral from Buy.

The analyst awaits further evidence of the company's ability to monetise its market opportunities and is cautious over timing uncertainties of customers achieving the GB Standard licensing requirements.

Guobiao Standards (GB) are food safety standards issued by the Standardised Administration of China (SAC).

FY23 sales guidance of $80-90m implies to the broker a smaller 2H skew than usual. The $1.35 target price is unchanged.

Target price is $1.35 Current Price is $1.30 Difference: $0.055
If CLV meets the UBS target it will return approximately 4% (excluding dividends, fees and charges).

The company's fiscal year ends in July.

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 CTM as Outperform (1) -

Pilot plant test results from Centaurus Metals' Jaguar asset have demonstrated over 94% sulphide nickel recovery to concentrate, in an update Macquarie finds positive. The broker highlights Jaguar remains a global top twenty nickel sulphide deposit with strong ESG credentials.

The company faced initial delays with the commencement of its testwork, but is now through two of four pilot plant phases. It does, however, push back delivery of its definitive feasibility study by six months as a result of the delay, and the study is now expected in the fourth quarter of 2023. 

The Outperform rating and target price of $1.60 are retained.

Target price is $1.60 Current Price is $0.86 Difference: $0.745
If CTM meets the Macquarie target it will return approximately 87% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

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

Morgan Stanley rates DTL as Overweight (1) -

In an ongoing series by Morgan Stanley on key small cap/mid cap ideas following the February reporting season, Data#3 is highlighted for its earnings visibility.

The broker likes the general resilience of IT spend and the reopening tailwinds resulting from the deferral of customer projects during covid.

The company also has a strong competitive position and an undemanding valuation, according to the analyst.

The Overweight rating and target price of $8.00 are retained. Industry view: In-Line. 

Target price is $8.00 Current Price is $7.36 Difference: $0.64
If DTL meets the Morgan Stanley target it will return approximately 9% (excluding dividends, fees and charges).

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

UBS rates KLS as Buy (1) -

Kelsian Group has launched a $135m placement and $143m entitlement offer priced at $5.55/share to help fund its -US$351m purchase of US-based All Aboard America! Holdings. Debt of $226m will also be drawn down to fund the transaction.

The acquired company is the fourth-largest motor coach operator in the US, which has more than 1,000 vehicles earning a high degree of recurring revenue, notes the analyst.

A US acquisition is in line with stated strategy, notes UBS, and this one has been planned for some time.

The broker forecasts solid high-single digit EPSA accretion on a pro forma 2022 basis and greater accretion moving forward.

The Buy rating and $8.10 target are unchanged.

Target price is $8.10 Current Price is $6.60 Difference: $1.5
If KLS meets the UBS target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $7.76, suggesting upside of 22.3% (ex-dividends)

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

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

Morgan Stanley sees only modest direct risk for Australian banks from current banking woes in the US.

Australian bank liquidity, funding and capital were strengthened in the wake of the 2008 GFC crisis, note the analysts. Also, the broker points out domestic banks significantly reduce interest rate risk via hedging.

Separately, and despite these assurances, Morgan Stanley expects more margin headwinds in 2023 with deposit pricing and mix headwinds now emerging.

For National Australia Bank, the Equal-weight rating and target price of $30.00 are retained. Industry View: In-Line.

Target price is $30.00 Current Price is $28.31 Difference: $1.69
If NAB meets the Morgan Stanley target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $31.20, suggesting upside of 11.8% (ex-dividends)

The company's fiscal year ends in September.

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 NST as Outperform (1) -

Northern Star Resources has discovered damage to the ball mill motor at its Pogo asset during a routine shutdown last week, with the company announcing a production half with repairs expected to take up to six weeks. 

Macquarie notes the shutdown is expected to have a -20-40,000 ounce impact on full year production. The company has retained its full year guidance. Macquarie, however, trims its production expectations -32,000 ounces. 

The Outperform rating and target price of $14.20 are retained.

Target price is $14.20 Current Price is $11.10 Difference: $3.1
If NST meets the Macquarie target it will return approximately 28% (excluding dividends, fees and charges).

Current consensus price target is $12.19, suggesting upside of 9.3% (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

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

Repairs are needed for a ball mill motor at the now-halted Pogo operations, and Morgan Stanley forecasts a -$40-75m earnings impact on Northern Star Resources. Activities are expected to resume within six weeks.

Management has maintained FY23 group production guidance.

Equal-Weight. Target $11.35. Industry View: Attractive.

Target price is $11.35 Current Price is $11.10 Difference: $0.25
If NST meets the Morgan Stanley target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $12.19, suggesting upside of 9.3% (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

UBS rates NST as Neutral (3) -

Northern Star Resources has reduced FY23 production guidance for its Pogo operations by -20-40koz due to unplanned ball mill repairs (for around six weeks), though overall group production guidance is unchanged.

The broker lowers its FY23 Pogo production forecast and reduces its target price for Northern Star Resources to $11.30 from $11.50. Neutral.

Target price is $11.30 Current Price is $11.10 Difference: $0.2
If NST meets the UBS target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $12.19, suggesting upside of 9.3% (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 SGM as Sell (5) -

Despite rapid improvement in US hot rolled coil prices, Citi continues to see better exposure to the trend outside of Sims. The broker highlights steel prices, and subsequently scrap prices, continue to move up sharply, and US hot rolled coil now appears stable at a little over US$1,200 per tonne. 

The broker expects to see upward pressure on Turkish scrap prices in the near-term, given the large discount to US prices, and for demand for both Turkish and China scrap to increase given constrained supply. 

The Sell rating and target price of $14.30 are retained.

Target price is $14.30 Current Price is $15.03 Difference: minus $0.73 (current price is over target).
If SGM meets the Citi target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $14.84, suggesting upside of 0.9% (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

Morgan Stanley rates WBC as Overweight (1) -

Morgan Stanley sees only modest direct risk for Australian banks from current banking woes in the US.

Australian bank liquidity, funding and capital were strengthened in the wake of the 2008 GFC crisis, note the analysts. Also, the broker points out domestic banks significantly reduce interest rate risk via hedging.

Separately, and despite these assurances, Morgan Stanley expects more margin headwinds in 2023 with deposit pricing and mix headwinds now emerging.

For Westpac, the Overweight rating and $23.70 target are unchanged. Industry View: In-Line.

Target price is $23.70 Current Price is $21.65 Difference: $2.05
If WBC meets the Morgan Stanley target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $26.20, suggesting upside of 23.6% (ex-dividends)

The company's fiscal year ends in September.

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

Morgan Stanley rates XRO as Overweight (1) -

Morgan Stanley considers the recent announcement by Xero to target better profits and free cash flow over revenue growth is incrementally positive, and raises its target to $100 from $95.

The broker also believes the sharemarket is underestimating potential subscriber, revenue and free cash flow growth in the company's core A&NZ markets.

Overweight. Industry view is Attractive.

Target price is $100.00 Current Price is $88.47 Difference: $11.53
If XRO meets the Morgan Stanley target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $89.59, suggesting upside of 1.3% (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: 0.3

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