Australian Broker Call

Ord Minnett rates ACF as Initiation of coverage with Buy (1) -

Ord Minnett has enlarged its coverage with Acrow Formwork and Construction Services which received a maiden Buy rating alongside a price target of 83c.

Acrow was once owned by Boral ((BLD)), reminds the broker, with the company since increasing its presence in Formwork and expanding into the less cyclical Industrial Services.

Ord Minnett believes there is a significant runway for growth, medium-term.

Target price is $0.83 Current Price is $0.65 Difference: $0.185
If ACF meets the Ord Minnett target it will return approximately 29% (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

Citi rates ANZ as Buy (1) -

Banking analysts at Citi have started 2023 with a positive view on Australian banks, but the finer details reveal this is predominantly focused on ANZ Bank (the new sector favourite) and Westpac.

Citi has lowered forecasts for regional lenders and sees stronger headwinds on the horizon for National Australia Bank and CommBank.

Forecasts underpinning the team's positive thesis include Net Interest Margins not peaking until H2 this year and asset quality decline occurring slowly.

Price target $29.25 with a Buy rating.

Target price is $29.25 Current Price is $23.72 Difference: $5.53
If ANZ meets the Citi target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $27.54, suggesting upside of 14.7% (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

Credit Suisse rates ANZ as Outperform (1) -

In a general update on the local banking sector, Credit Suisse expresses the view that sector earnings will likely be supported in the initial stages of 2023, with some further margin benefit to come through and thus with moderate earnings risk to the upside.

As the rest of the Australian market is potentially facing an earnings recession, Credit Suisse finds this may well result in the sector being well supported versus others in the early stages of 2023.

However, after "sugar" comes "vinegar" with the post-Christmas hangover and higher rates and inflation making their impact on consumer spending. This, argues the broker, is likely to flow through on credit growth and asset quality (potentially).

Target price is $29.00 Current Price is $23.72 Difference: $5.28
If ANZ meets the Credit Suisse target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $27.54, suggesting upside of 14.7% (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

Credit Suisse rates AUB as Outperform (1) -

Accounting for the company's latest market update, released in December, Credit Suisse has updated its modeling with only minor amendments made.

The Outperform rating is retained and the target price remains at $25.65. This update was released on January 10th.

Target price is $25.65 Current Price is $22.88 Difference: $2.77
If AUB meets the Credit Suisse target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $25.24, suggesting upside of 10.7% (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

Citi rates AX1 as Upgrade to Buy from Neutral (1) -

Citi has upgraded to Buy from Neutral on the view that market consensus is too bearish on growth prospects of Accent Group.

Longer term, the broker does acknowledge it is important Accent successfully proves up and develops some of its newer retail banners.

EPS estimates have been reduced in reflection of higher costs for doing business. The new price target of $1.95 is a result of the broker removing its prior -15% valuation discount and instead applying a 15% premium.

The premium is explained by the broker through Accent Group now expected to outperform its retail peers in Australia with more exposure to housing.

Target price is $1.95 Current Price is $1.78 Difference: $0.175
If AX1 meets the Citi target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $1.90, suggesting upside of 3.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.8

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

Citi rates BEN as Neutral (3) -

Banking analysts at Citi have started 2023 with a positive view on Australian banks, but the finer details reveal this is predominantly focused on ANZ Bank (the new sector favourite) and Westpac.

Citi has lowered forecasts for regional lenders and sees stronger headwinds on the horizon for National Australia Bank and CommBank.

Forecasts underpinning the team's positive thesis include Net Interest Margins not peaking until H2 this year and asset quality decline occurring slowly.

Bendigo & Adelaide Bank is rated Neutral with a $10 price target.

Target price is $10.00 Current Price is $9.92 Difference: $0.08
If BEN meets the Citi target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $10.15, suggesting upside of 2.6% (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

Citi rates BKL as Upgrade to Buy from Sell (1) -

Citi believes Blackmores will be a beneficiary from China re-opening and industry feedback backs up that thesis. On this realisation, the broker's rating for the shares has been upgraded to Buy from Sell (double upgrade).

Increased forecasts, against the background of a sound looking longer-term growth trajectory (Asia), have lifted Citi's price target to $84 (was $58.85).

Target price is $84.00 Current Price is $73.22 Difference: $10.78
If BKL meets the Citi target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $79.08, suggesting upside of 5.3% (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 BOQ as Neutral (3) -

Banking analysts at Citi have started 2023 with a positive view on Australian banks, but the finer details reveal this is predominantly focused on ANZ Bank (the new sector favourite) and Westpac.

Citi has lowered forecasts for regional lenders and sees stronger headwinds on the horizon for National Australia Bank and CommBank.

Forecasts underpinning the team's positive thesis include Net Interest Margins not peaking until H2 this year and asset quality decline occurring slowly.

Bank of Queensland is rated Neutral with a price target of $7.30.

Target price is $7.30 Current Price is $6.90 Difference: $0.4
If BOQ meets the Citi target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $7.55, suggesting upside of 9.3% (ex-dividends)

The company's fiscal year ends in August.

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 BRI as Initiation of coverage with Buy (1) -

Ord Minnett has enlarged its coverage with Big River Industries which received a maiden Buy rating alongside a price target of $2.95.

Ord Minnett believes there is a significant runway for growth, medium-term, while also considering the company well-placed to increase market share, including through acquisitions.

Target price is $2.95 Current Price is $2.12 Difference: $0.83
If BRI meets the Ord Minnett target it will return approximately 39% (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

Citi rates CBA as Sell (5) -

Banking analysts at Citi have started 2023 with a positive view on Australian banks, but the finer details reveal this is predominantly focused on ANZ Bank (the new sector favourite) and Westpac.

Citi has lowered forecasts for regional lenders and sees stronger headwinds on the horizon for National Australia Bank and CommBank.

Forecasts underpinning the team's positive thesis include Net Interest Margins not peaking until H2 this year and asset quality decline occurring slowly.

Target price is $85.50 Current Price is $103.32 Difference: minus $17.82 (current price is over target).
If CBA meets the Citi target it will return approximately minus 17% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $93.43, suggesting downside 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 FCL as Outperform (1) -

Duck Creek Technologies, a competitor for Fineos Corp, will be taken private by Vista Equity Partners with the transaction receiving the green light from the company's board of directors.

Macquarie points out, on multiples that characterise the deal, Fineos Corp shares look -68% undervalued.

The broker retains its Outperform rating having already concluded in prior updates the shares are trading at an excessive discount to valuations in place for competitors elsewhere. Target $2.17.

Target price is $2.17 Current Price is $1.80 Difference: $0.37
If FCL meets the Macquarie target it will return approximately 21% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

This company reports in EUR. 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 IAG as Outperform (1) -

Credit Suisse has updated its forecasts for Insurance Australia Group which resulted in minor reductions for FY23 and FY24. The price target has been adjusted to $5.77 (was $5.74).

The broker retains a positive view on general insurers generally with the sector seen trading on undemanding multiples and with robust premium increases and higher investment yields compensating for operational headwinds such as more pricey reinsurance.

This update was communicated on January 10th.

Target price is $5.77 Current Price is $4.63 Difference: $1.14
If IAG meets the Credit Suisse target it will return approximately 25% (excluding dividends, fees and charges).

Current consensus price target is $5.17, suggesting upside of 7.8% (ex-dividends)

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 IAG as Underweight (5) -

Morgan Stanley analysts retain the view Insurance Australia Group is able to protect its margins from inflation and tougher reinsurance coverage.

The broker observes IAG's price increases have been below market increases generally, likely in an attempt to stem market share losses.

Underweight. Target $4.20. Industry view In-Line.

Target price is $4.20 Current Price is $4.63 Difference: minus $0.43 (current price is over target).
If IAG meets the Morgan Stanley target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.17, suggesting upside of 7.8% (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

Macquarie rates KLS as Outperform (1) -

Kelsian Group has been successful in tendering for contracts in Sydney, but missed out in Manchester. You win some, you lose some, is Macquarie's response.

The broker highlights there remain plenty of more opportunities for tendering with New Zealand and Singapore the next locations in focus.

The broker has implemented minor amendments to forecasts. Target price loses -10c to $8.10. Outperform retained with the broker highlighting the defensive nature of the company's earnings.

Target price is $8.10 Current Price is $5.83 Difference: $2.27
If KLS meets the Macquarie target it will return approximately 39% (excluding dividends, fees and charges).

Current consensus price target is $7.87, suggesting upside of 35.3% (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

Citi rates NAB as Neutral (3) -

Banking analysts at Citi have started 2023 with a positive view on Australian banks, but the finer details reveal this is predominantly focused on ANZ Bank (the new sector favourite) and Westpac.

Citi has lowered forecasts for regional lenders and sees stronger headwinds on the horizon for National Australia Bank and CommBank.

Forecasts underpinning the team's positive thesis include Net Interest Margins not peaking until H2 this year and asset quality decline occurring slowly.

Citi has a Neutral rating for National Australia Bank with a price target of $32.75.

Target price is $32.75 Current Price is $29.93 Difference: $2.82
If NAB meets the Citi target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $32.12, suggesting upside of 6.8% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.1

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

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

Following a serious correction in the share price, Citi has upgraded Pilbara Minerals to Buy from Neutral with an unchanged price target of $4.70.

While acclaiming the share price action is "overdone", the analysts also highlight the fact that, on current estimates, Pilbara Minerals looks set to make more cash in FY23/24 than any other stock in the broker's gold/metals coverage universe.

Target price is $4.70 Current Price is $3.87 Difference: $0.83
If PLS meets the Citi target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $4.63, suggesting upside of 15.3% (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

Macquarie rates PMT as Initiation of coverage with Outperform (1) -

Macquarie has initiated coverage of Patriot Battery Metals with an Outperform rating and $1.20 price target (CAD11.10 for the listed shares in Canada).

The broker believes the company's Corvette spodumene project in northern Quebec is shaping up as one of the largest spodumene discoveries in the lithium industry. A maiden resource assessment is scheduled for release in March.

Target price is $1.20 Current Price is $0.86 Difference: $0.34
If PMT meets the Macquarie target it will return approximately 40% (excluding dividends, fees and charges).

The company's fiscal year ends in March.

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

Credit Suisse rates PTM as Neutral (3) -

According to Credit Suisse, Platinum Asset Management's December market update included a 1% beat on funds under management due to lower outflows.

Performance fees were not meaningful and that is in line with expectations, comments the broker. Credit Suisse welcomes the market update as a positive development.

The broker sees potential for upside surprise over the coming six months. Forecasts have been amended, with 3%-7% increases for FY24/25.

Target price lifts to $1.90 from $1.75. Neutral.

This update was communicated on January 10th.

Target price is $1.90 Current Price is $2.01 Difference: minus $0.11 (current price is over target).
If PTM meets the Credit Suisse target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $1.89, suggesting downside of -8.8% (ex-dividends)

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

Credit Suisse rates QBE as Outperform (1) -

Credit Suisse has updated its forecasts for QBE Insurance which resulted in a cut by -6.4% to the broker's FY23 cash EPS estimate. The price target has been adjusted to $16.60 (was $16.94).

The broker retains a positive view on general insurers generally with the sector seen trading on undemanding multiples and with robust premium increases and higher investment yields compensating for operational headwinds such as more pricey reinsurance.

QBE Insurance is Credit Suisse's favourite exposure among ASX-listed general insurers.

This update was communicated on January 10th.

Target price is $16.60 Current Price is $12.77 Difference: $3.83
If QBE meets the Credit Suisse target it will return approximately 30% (excluding dividends, fees and charges).

Current consensus price target is $15.98, suggesting upside of 24.1% (ex-dividends)

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 STO as Overweight (1) -

On Morgan Stanley's analysis, the direct correlation between Santos and the Brent oil price has strengthened since the tie-in with Oil Search in late 2021.

The broker explains some 70%-80% of the company's production is contractually linked to Brent, with the remainder at least directionally influenced by Brent.

The Overweight rating and $9.31 target are retained. Industry view: Attractive.

Target price is $9.31 Current Price is $7.05 Difference: $2.26
If STO meets the Morgan Stanley target it will return approximately 32% (excluding dividends, fees and charges).

Current consensus price target is $9.21, suggesting upside of 30.4% (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: 1.0

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

Credit Suisse rates SUN as Outperform (1) -

Credit Suisse has updated its forecasts for Suncorp Group which resulted in small reductions for FY23, FY24 and FY25. The price target has been adjusted to $13.16 (was $13.90).

The broker retains a positive view on general insurers generally with the sector seen trading on undemanding multiples and with robust premium increases and higher investment yields compensating for operational headwinds such as more pricey reinsurance.

This update was communicated on January 10th.

Target price is $13.16 Current Price is $11.82 Difference: $1.34
If SUN meets the Credit Suisse target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $13.37, suggesting upside of 14.7% (ex-dividends)

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.8

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

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

Morgan Stanley observes Suncorp Group's price increases for motor and home insurances seem above peers.

With La Nina conditions retreating, the broker believes the insurer should be in a better position to counter claims inflation and higher reinsurance pricing.

The broker retains its Equal-weight rating and $11.30 target. Industry View: In-Line. 

Target price is $11.30 Current Price is $11.82 Difference: minus $0.52 (current price is over target).
If SUN meets the Morgan Stanley target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $13.37, suggesting upside of 14.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.8

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

Ord Minnett rates SWM as Upgrade to Accumulate from Lighten (2) -

Ord Minnett has switched to Morningstar research and the immediate effect has been an increase in price target; to 62c from 40c. The rating for Seven West Media has been lifted to Accumulate from Lighten.

The upgrade follows the observation that the shares are trading well below the new target.

While forecasts have been trimmed, the analyst does make the point the balance sheet is in much better position versus previous cycles, while also highlighting several positives, including new content agreements that benefit 7plus.

The previous assumption Seven West Media would start paying a dividend from FY24 onwards has been removed.

Target price is $0.62 Current Price is $0.45 Difference: $0.175
If SWM meets the Ord Minnett target it will return approximately 39% (excluding dividends, fees and charges).

Current consensus price target is $0.66, suggesting upside of 45.8% (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

Ord Minnett rates TYR as Downgrade to Accumulate from Buy (2) -

Ord Minnett had only resumed coverage in December but now, having made the switch to Morningstar research, the recommendation has been pulled back to Accumulate from Buy.

Target price has been pulled back to $2.60 from $2.80. The analyst has decided to lower the anticipated progress on market share gains for the company in core verticals health, hospitality and retail.

While retaining scepsis about cost cutting and whether this might actually help larger competitors (banks) to narrow the gap with Tyro Payments, the underlying thesis of achieving profitability and free cash flows from 2025 onwards remains in place.

The broker points out the above is not in line with management's guidance this can be achieved in FY23 (positive free cash flow).

Target price is $2.60 Current Price is $1.36 Difference: $1.245
If TYR meets the Ord Minnett target it will return approximately 92% (excluding dividends, fees and charges).

Current consensus price target is $1.88, suggesting upside of 38.2% (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

Citi rates WBC as Buy (1) -

Banking analysts at Citi have started 2023 with a positive view on Australian banks, but the finer details reveal this is predominantly focused on ANZ Bank (the new sector favourite) and Westpac.

Citi has lowered forecasts for regional lenders and sees stronger headwinds on the horizon for National Australia Bank and CommBank.

Forecasts underpinning the team's positive thesis include Net Interest Margins not peaking until H2 this year and asset quality decline occurring slowly.

Westpac is rated Buy alongside a price target of $30.

Target price is $30.00 Current Price is $23.41 Difference: $6.59
If WBC meets the Citi target it will return approximately 28% (excluding dividends, fees and charges).

Current consensus price target is $25.87, suggesting upside of 11.0% (ex-dividends)

The company's fiscal year ends in September.

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

Morgan Stanley rates WDS as Overweight (1) -

Morgan Stanley believes the relationship between Woodside Energy and Brent oil prices was reset in 2022 following the inclusion of BHP Petroleum, which doubled production for the company.

Some 80% of Woodside Energy's production is contractually linked to Brent oil prices, points out the broker, while the linkage to gas hub prices will increase from 10% now to 20% from 2027 onwards.

The broker's Overweight rating is maintained and the target remains at $41.00. Industry View is Attractive. 

Target price is $41.00 Current Price is $35.01 Difference: $5.99
If WDS meets the Morgan Stanley target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $37.69, suggesting upside of 6.3% (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