Australian Broker Call
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October 02, 2023
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COMPANIES DISCUSSED IN THIS ISSUE
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The number next to the symbol represents the number of brokers covering it for this report -(if more than 1).
Last Updated: 05:00 PM
Your daily news report on the latest recommendation, valuation, forecast and opinion changes.
This report includes concise but limited reviews of research recently published by Stockbrokers, 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.
For more info about the different terms used by stockbrokers, as well as the different methodologies behind similar sounding ratings, download our guide HERE
Overnight Price: $5.74
Morgan Stanley rates BOQ as Underweight (5) -
Bank of Queensland's full year result will include -$125m in one-off, pre-tax charges, mostly related to restructuring and integration costs.
With Morgan Stanley's earlier modeling assuming -$30m in restructuring and integration costs, the broker expects the additional costs to lower profit -29%.
The broker continues to see a turnaround as challenged by weak mortgage growth, downward pressure on margins, and the need for re-investment.
The Underweight rating and target price of $5.60 are retained. Industry view: In-Line.
Target price is $5.60 Current Price is $5.74 Difference: minus $0.14 (current price is over target).
If BOQ meets the Morgan Stanley target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $6.37, suggesting upside of 11.3% (ex-dividends)
The company's fiscal year ends in August.
Forecast for FY23:
Morgan Stanley forecasts a full year FY23 dividend of 40.00 cents and EPS of 63.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 63.0, implying annual growth of -4.9%. Current consensus DPS estimate is 41.4, implying a prospective dividend yield of 7.2%. Current consensus EPS estimate suggests the PER is 9.1. |
Forecast for FY24:
Morgan Stanley forecasts a full year FY24 dividend of 40.00 cents and EPS of 47.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 55.9, implying annual growth of -11.3%. Current consensus DPS estimate is 42.4, implying a prospective dividend yield of 7.4%. Current consensus EPS estimate suggests the PER is 10.2. |
Market Sentiment: -0.2
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
CYC CYCLOPHARM LIMITED
Medical Equipment & Devices
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Overnight Price: $2.55
Bell Potter rates CYC as Buy (1) -
Cyclopharm's Technegas has received FDA approval, allowing the company to commence commercialisation in the large US medical market. Bell Potter points out the label is broad, which should assist in broader use of the system.
The company is targeting 20 generators placed in high volume sites to be in place by the end of the calendar year, and 300 by December 2024, looking at generating revenue of US$140 per exam.
The Buy rating is retained and the target price increases to $4.25 from $3.25.
Target price is $4.25 Current Price is $2.55 Difference: $1.7
If CYC meets the Bell Potter target it will return approximately 67% (excluding dividends, fees and charges).
The company's fiscal year ends in December.
Forecast for FY23:
Bell Potter forecasts a full year FY23 dividend of 1.00 cents and EPS of minus 6.10 cents. |
Forecast for FY24:
Bell Potter forecasts a full year FY24 dividend of 1.00 cents and EPS of minus 2.00 cents. |
Market Sentiment: 1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
LTR LIONTOWN RESOURCES LIMITED
New Battery Elements
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Overnight Price: $2.94
Citi rates LTR as Neutral (3) -
Citi expects capital and operational expenditure increases outlined by Liontown Resources for its Kathleen Valley project are unlikely to impact on Albemarle's $3.00 per share bid for the company.
Capital expenditure for the project now sits at -$951m, with Citi estimating operational expenditure of -$660 per tonne over the first ten years. Currently, Liontown Resources needs $450m to cover costs until cashflow is positive, totaling gross debt of $750m.
The Neutral rating is retained, as is the target price of $3.00.
Target price is $3.00 Current Price is $2.94 Difference: $0.06
If LTR meets the Citi target it will return approximately 2% (excluding dividends, fees and charges).
Current consensus price target is $3.03, suggesting upside of 2.0% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY24:
Citi forecasts a full year FY24 dividend of 0.00 cents and EPS of minus 1.20 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is -0.9, implying annual growth of N/A. Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A. Current consensus EPS estimate suggests the PER is N/A. |
Forecast for FY25:
Current consensus EPS estimate is N/A, implying annual growth of N/A. Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A. Current consensus EPS estimate suggests the PER is N/A. |
Market Sentiment: 0.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
PFP PROPEL FUNERAL PARTNERS LIMITED
Consumer Products & Services
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Overnight Price: $4.30
Morgan Stanley rates PFP as Overweight (1) -
Off the back of the reporting season, Morgan Stanley has named Propel Funeral Partners one of its key picks. The broker likes that the company benefits from defensive and predictable earnings, anticipating low volatility in the death rate long-term.
With close competitor InvoCare Limited ((IVC)) currently fielding a bid at 17x earnings despite a recent full year earnings miss, the broker is confident that shareholders would be insulated even in the case of poor operating performance.
The Overweight rating and target price of $6.10 are retained. Industry view: In-Line.
Target price is $6.10 Current Price is $4.30 Difference: $1.8
If PFP meets the Morgan Stanley target it will return approximately 42% (excluding dividends, fees and charges).
The company's fiscal year ends in June.
Forecast for FY24:
Morgan Stanley forecasts a full year FY24 EPS of 19.00 cents. |
Forecast for FY25:
Morgan Stanley forecasts a full year FY25 EPS of 21.00 cents. |
Market Sentiment: 1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
PIQ PROTEOMICS INTERNATIONAL LABORATORIES LIMITED
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Overnight Price: $1.11
Morgans rates PIQ as Speculative Buy (1) -
Proteomics International Laboratories' PromarkerD test has received a preliminary pricing guide of US$390, a significant jump on the company's previous guidance of US$150. This strong reimbursement price demonstrates the value of the test, says Morgans, but could be an impediment to private payor coverage.
In a minor setback for Australian operations, the Therapeutic Goods Administration (TGA) has requested a resubmission of its application, but the broker highlights this will have no impact on US commercialisation or European approval.
The Speculative Buy rating is retained and the target price increases to $2.42 from $1.66.
Target price is $2.42 Current Price is $1.11 Difference: $1.31
If PIQ meets the Morgans target it will return approximately 118% (excluding dividends, fees and charges).
The company's fiscal year ends in June.
Forecast for FY24:
Morgans forecasts a full year FY24 dividend of 0.00 cents and EPS of minus 5.70 cents. |
Forecast for FY25:
Morgans forecasts a full year FY25 dividend of 0.00 cents and EPS of minus 2.60 cents. |
Market Sentiment: 1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $21.15
Morgan Stanley rates WBC as Equal-weight (3) -
Despite some improvement in franchise performance for Westpac, Morgan Stanley considers a turnaround for the bank to be more challenging thanks to competition and inflation.
The broker is expecting Westpac's revenue growth to lag behind major peers through to FY25. Further, the bank looks unlikely to narrow its return on equity and cost to income ratio gaps to these same peers.
The Equal-Weight rating is retained and the target price decreases to $20.10 from $20.60.
Target price is $20.10 Current Price is $21.15 Difference: minus $1.05 (current price is over target).
If WBC meets the Morgan Stanley target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $22.36, suggesting upside of 5.9% (ex-dividends)
The company's fiscal year ends in September.
Forecast for FY23:
Morgan Stanley forecasts a full year FY23 dividend of 140.00 cents and EPS of 202.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 205.9, implying annual growth of 28.8%. Current consensus DPS estimate is 140.0, implying a prospective dividend yield of 6.6%. Current consensus EPS estimate suggests the PER is 10.3. |
Forecast for FY24:
Morgan Stanley forecasts a full year FY24 dividend of 140.00 cents and EPS of 168.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 185.0, implying annual growth of -10.2%. Current consensus DPS estimate is 141.0, implying a prospective dividend yield of 6.7%. Current consensus EPS estimate suggests the PER is 11.4. |
Market Sentiment: 0.1
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Today's Price Target Changes
| Company | Last Price | Broker | New Target | Prev Target | Change | |
| CYC | Cyclopharm | $2.83 | Bell Potter | 4.25 | 3.25 | 30.77% |
| LTR | Liontown Resources | $2.97 | Citi | 3.00 | 2.80 | 7.14% |
| PFP | Propel Funeral Partners | $4.30 | Morgan Stanley | 6.10 | 5.85 | 4.27% |
| PIQ | Proteomics International Laboratories | $1.15 | Morgans | 2.42 | 1.66 | 45.78% |
| WBC | Westpac | $21.11 | Morgan Stanley | 20.10 | 20.60 | -2.43% |
Summaries
| BOQ | Bank of Queensland | Underweight - Morgan Stanley | Overnight Price $5.74 |
| CYC | Cyclopharm | Buy - Bell Potter | Overnight Price $2.55 |
| LTR | Liontown Resources | Neutral - Citi | Overnight Price $2.94 |
| PFP | Propel Funeral Partners | Overweight - Morgan Stanley | Overnight Price $4.30 |
| PIQ | Proteomics International Laboratories | Speculative Buy - Morgans | Overnight Price $1.11 |
| WBC | Westpac | Equal-weight - Morgan Stanley | Overnight Price $21.15 |
RATING SUMMARY
| Rating | No. Of Recommendations |
| 1. Buy | 3 |
| 3. Hold | 2 |
| 5. Sell | 1 |
Monday 02 October 2023
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