Australian Broker Call

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

From a long-term management/investment perspective, Morgans considers the bringing forward of the deferred consideration payment is positive. However, the multiple is considered to imply a softer second half earnings performance versus expectations.

The broker lowers the rating to Hold from Add with the stock now within 10% of the target price. The target price is reduced to $4.46 from $4.50.

The analyst continues to forecast earnings will fall by circa -20% in FY22. This is based on the assumption that like-for-like (LFL) sales growth turns negative, gross margins ease off elevated levels and opex deleverage on the negative LFL sales growth assumption.

Target price is $4.46 Current Price is $4.06 Difference: $0.4
If ADH meets the Morgans target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $4.44, suggesting upside of 5.6% (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

Ord Minnett rates APT as Buy (1) -

For select app users, Afterpay is making its service available to a range of retailers using a one-time card. Ord Minnett sees the ability for Afterpay consumers to use Afterpay at more retailers of size in the US as significantly increasing the utility for their user base.

Upcoming catalysts are the August result and the September quarter launch of ‘Afterpay Money’ in Australia in September, notes the broker. The Buy rating and $150 target are retained.

Target price is $150.00 Current Price is $122.90 Difference: $27.1
If APT meets the Ord Minnett target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $120.90, suggesting downside of -7.3% (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

Credit Suisse rates APX as Neutral (3) -

Credit Suisse considers consensus estimates for Appen are lofty. With growth rates decreasing since FY18, the industry maturing (in sophistication) and expected ongoing reinvestment, the broker moderates forecasts and reduces the target price to $15 from $20.

The analyst also moderates revenue growth assumptions from 2022 and margin assumptions from 2023, as high rates of revenue growth will become increasingly challenging.

After 2022, the broker has increased margin compression on assumed reinvestment requirements and industry sophistication headwinds. The Neutral rating is maintained, given the supressed share price.

Target price is $15.00 Current Price is $14.16 Difference: $0.84
If APX meets the Credit Suisse target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $20.97, suggesting upside of 44.4% (ex-dividends)

The company's fiscal year ends in December.

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 AVN as Outperform (1) -

Aventus Group has upgraded guidance, to 19.4c per security for FY21. The upgrade was driven by a strong performance across the portfolio and a lower cost of debt.

Macquarie welcomes the news, particularly as the company has previously noted the potential for increased tenant competition. Aventus Group also reported a net valuation gain of $254m, or 12.4% half on half.

Macquarie suspects there is additional upside to come. Outperform. Target is raised to $3.23 from $3.15.

Target price is $3.23 Current Price is $3.12 Difference: $0.11
If AVN meets the Macquarie target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $3.01, suggesting downside of -3.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.6

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

Ord Minnett rates AVN as Hold (3) -

Aventus Group upgraded its FY21 funds from operations (FFO) to 19.4cps from 19.0cps. As a result, Ord Minnett raises the target price to $2.90 from $2.83. 

The broker believes management's announced $254m (12%) net valuation gain from an independent portfolio valuation is already priced-in by the market. The Hold rating is maintained.

A fall in gearing, resulting from the valuation gains, suggests to the analyst the group may be on the lookout for assets, which could be funded by either debt or equity.

Target price is $2.90 Current Price is $3.12 Difference: minus $0.22 (current price is over target).
If AVN meets the Ord Minnett target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.01, suggesting downside of -3.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.6

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

UBS rates AVN as Buy (1) -

Aventus Group has upgraded earnings guidance to 19.4c per security, reflecting 7% growth that is in line with UBS estimates.

The broker believes the company is well-positioned for growth to exceed retail A-REIT peers, reflecting a higher annual rent reviews and positive leasing spreads. Occupancy levels are also high.

Moreover, tailwinds for the household goods retail sector are strong as the upbeat housing cycle continues. Buy rating and $3 target maintained.

Target price is $3.00 Current Price is $3.12 Difference: minus $0.12 (current price is over target).
If AVN meets the UBS target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.01, suggesting downside of -3.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.6

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

Macquarie rates BGL as Outperform (1) -

Bellevue Gold has indicated increased throughput estimates will form the basis of stage 2 study. This will be based on 1.0mtpa throughput, up 33% from the original stage I estimate.

Lifting the milling rate to 1.0mtpa pushes Macquarie's production estimates to over 200,000 ounces per annum but shortens the assumed mine life.

The broker expects the economics will improve now, given the low capital intensity of the additional inventory. Outperform rating. Target is raised to $1.30 from $1.20.

Target price is $1.30 Current Price is $0.93 Difference: $0.37
If BGL meets the Macquarie target it will return approximately 40% (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

Macquarie rates BLD as Resume Coverage with Outperform (1) -

After a short period of restriction Macquarie now rates Boral as Outperform with a target of $7.80. The broker believes the company's transformation plan, a recovery in infrastructure activity and the prospect of significant capital returns are an attractive combination.

Corporate activity is an additional prospect. The company has sold almost $4.5bn in assets recently and will have $3bn in excess capital on the settlement of the US building products sale. Macquarie suspects the US construction materials segment will also be sold.

Target price is $7.80 Current Price is $7.16 Difference: $0.64
If BLD meets the Macquarie target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $6.82, suggesting downside of -1.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.6

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

Citi rates CGC as Neutral (3) -

While value neutral, Citi assesses the acquisition of the 2PH citrus assets is strategically sound and complements Costa Group's existing citrus assets. It's estimated the transaction is 4% EPS accretive in FY21 from a five-month contribution.

The analyst continues to see risk into the second half around citrus pricing for the around 80% of the crop that is yet to be harvested. Neutral rating with the target rising to $3.80 from $3.75.

Target price is $3.80 Current Price is $3.40 Difference: $0.4
If CGC meets the Citi target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $4.02, suggesting upside of 18.3% (ex-dividends)

The company's fiscal year ends in December.

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 CGC as Outperform (1) -

Costa Group has significantly increased its exposure to Australian citrus with the acquisition of 2PH, taking total citrus hectares to 4,500 from about 2,900. Credit Suisse believes it is an excellent strategic asset bought at fair value.

It is a high-quality citrus business, generating a revenue/tonne nearly double of that of Costa Group and achieving a 39% earnings (EBITDA-S) margin, explains the broker. The Outperform rating and $4.15 target are unchanged.

Target price is $4.15 Current Price is $3.40 Difference: $0.75
If CGC meets the Credit Suisse target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $4.02, suggesting upside of 18.3% (ex-dividends)

The company's fiscal year ends in December.

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 CGC as No Rating (-1) -

Costa Group will acquire 2PH Farms, a citrus grower, for $200m. The company will undertake a fully underwritten renounceable entitlement offer to raise $190m at $3 per share.

Macquarie suspects the market will be surprised by the size of the equity raising but also notes this leaves some capacity for future growth initiatives.

The acquisition is in line with the company's citrus acquisition program. The 2021 outlook is mixed and Costa Group expects operating earnings and net profit to be marginally ahead of the previous year.

Macquarie is under research restriction.

Current Price is $3.40. Target price not assessed.

Current consensus price target is $4.02, suggesting upside of 18.3% (ex-dividends)

The company's fiscal year ends in December.

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

Morgan Stanley rates IPL as Overweight (1) -

Fertiliser prices have increased and are now the highest level in more than five years. Historically, the correlation with the Incitec Pivot share price has been high, Morgan Stanley observes.

Hence, the current prices suggest there is further upside for the stock at this point. The Overweight rating and $2.85 target price are maintained. Industry view: In-Line.

Target price is $2.85 Current Price is $2.35 Difference: $0.5
If IPL meets the Morgan Stanley target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $2.90, suggesting upside of 20.0% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.7

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

Citi rates LFG as Buy (1) -

Citi assesses management's 10% guidance upgrade, prior to any determination of the collective provision, likely reflects the improving macro outlook for the non-bank sector. The Buy rating and $8.50 target are retained.

Funding costs remain a tailwind, actual credit losses remain subdued and activity has broadened in the mortgage market, explains the broker. There are expected FY22 benefits from collective provisions, recent compression in RMBS spreads and improving volume growth. 

Target price is $8.50 Current Price is $7.60 Difference: $0.9
If LFG meets the Citi target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $8.62, suggesting upside of 16.2% (ex-dividends)

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

Macquarie rates LFG as Outperform (1) -

Liberty Financial has upgraded FY21 net profit guidance to "in excess of $220m" compared with prior guidance which was "in excess of $200m". Macquarie raises estimates for earnings per share by 4.3% for FY21 and 7.9% for FY22.

The broker notes industry conditions in the second half has supported an acceleration in book growth and reduce credit risk. Further upside to earnings is considered possible from a one-off credit provision benefit following a review of asset quality with the full year result.

Macquarie retains an Outperform rating and reduces the target to $8.36 from $9.02 reflecting EPS changes that are offset by a change in the peer group that drives the target multiple.

Target price is $8.36 Current Price is $7.60 Difference: $0.76
If LFG meets the Macquarie target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $8.62, suggesting upside of 16.2% (ex-dividends)

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

Citi rates NUF as Buy (1) -

Conditions in North America and Europe continue to support Citi's forecasts for continued sales growth in the second half for both
geographies.

Corn and soybean planted acres in the US are expected to surprise to the upside, while winter crop yields have also been revised upwards in Europe on recent rainfall, explains the broker. It's felt this could drive incremental herbicide and fungicide demand in the second half.

Buy rating retained, alongside a $6 price target.

Target price is $6.00 Current Price is $4.55 Difference: $1.45
If NUF meets the Citi target it will return approximately 32% (excluding dividends, fees and charges).

Current consensus price target is $5.68, suggesting upside of 21.1% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.6

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

Morgans rates PME as Downgrade to Reduce from Hold (5) -

Morgans decreases the rating to Reduce from Hold after the share price has risen by over 35% in the last month to record highs. In the absence of news, it's felt this may be due to unwinding of short positions in the stock, (down to circa 3.5% from over 5% in January).

While the broker increases the target price to $49.69 from $41.30, current prices are considered unsustainable in the short term. The analyst suggests trimming heavily overweight positions and looking for a better entry point (below $45.00) into this quality name.

Morgans makes no changes to forecasts. The company will post its full year FY21 result in mid-August.

Target price is $49.69 Current Price is $53.20 Difference: minus $3.51 (current price is over target).
If PME meets the Morgans target it will return approximately minus 7% (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: -0.5

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

Ord Minnett rates QBE as Accumulate (2) -

As the US insurance market has been afflicted by reserving issues in recent years, Ord Minnett’s global research partners have analysed QBE Insurance Group's reserves.

While the broker remains a little cautious regarding trends in reserves, it's thought this should be more than offset by strong premium rate trends. The Accumulate rating and $12.11 target are retained.

Target price is $12.11 Current Price is $11.15 Difference: $0.96
If QBE meets the Ord Minnett target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $11.82, suggesting upside of 7.6% (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: 0.8

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

Macquarie rates SBM as Underperform (5) -

Macquarie incorporates 18 months of ore purchase feed into the Gwalia base case following the update from St Barbara. St Barbara has  executed an ore purchase agreement for FY22 and FY23 to help fill the 1.4mtpa mill, which is currently underutilised.

The company will start studies at Leonora to investigate a new/expanded process plant and the development of the Tower Hill and Harbour Lights resources. Macquarie suspects these studies may present material capital requirements.

Macquarie retains an Underperform rating and $1.70 target.

Target price is $1.70 Current Price is $1.76 Difference: minus $0.06 (current price is over target).
If SBM meets the Macquarie target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.33, suggesting upside of 32.4% (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 SGP as Overweight (1) -

Stockland has estimated a second half dividend of 13.3c, bringing the full year distribution to 26.4c, a 2.1% increase on FY20. The company has confirmed the trend continues "towards the top end" of FY21 guidance ranges.

Morgan Stanley expects settlements will remain strong but the processing of rental abatements and vacancy provisions could influence the results at the balance date.

Overweight rating. Target is $5. Industry view: In-line.

Target price is $5.00 Current Price is $4.73 Difference: $0.27
If SGP meets the Morgan Stanley target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $4.63, suggesting downside of -2.8% (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

Credit Suisse rates WOW as Upgrade to Neutral from Underperform (3) -

As Woolworths is to trade ex Endeavour Group from June 24, Credit Suisse lowers the target price to $32.92 from $37.98. The rating increases to Neutral from Underperform.

The broker explains the demerger results in Woolworths being an almost pure-play supermarket retailer and has the attraction
of negative working capital and relatively high return on invested capital (ROIC).

The analyst notes covid-19 travel restrictions did not appear to have a material negative impact on supermarkets in May, and therefore solid two year grwoth is likely in the fourth quarter.

Target price is $32.92 Current Price is $42.51 Difference: minus $9.59 (current price is over target).
If WOW meets the Credit Suisse target it will return approximately minus 23% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $41.69, suggesting upside of 10.4% (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