Australian Broker Call

Morgan Stanley rates 360 as Overweight (1) -

Since the launch of membership pricing in Canada in November 2021, average revenue per paying circle (ARPPC) has risen 120% and total revenue is up 72% for Life360.

With international ARPPC currently US$51, or 36% of US ARPPC of US$141, Morgan Stanley envisages scope for a similar uplift with the introduction of membership into other markets.

The broker also expects the 5% increase year-on-year in subscription gross margins to continue. The main catalyst will be the third quarter trading update in mid-November. Overweight rating and $10.50 target. Industry view: In Line.

Target price is $10.50 Current Price is $8.68 Difference: $1.82
If 360 meets the Morgan Stanley target it will return approximately 21% (excluding dividends, fees and charges).

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: 1.0

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

Morgan Stanley rates ANZ as Upgrade to Overweight from Equal-weight (1) -

Morgan Stanley reasserts its preference for ANZ Bank among the majors because of the business mix, improved operating performance and valuation support.

All banks face revenue headwinds over the next year but the broker believes ANZ Bank will have growth at the top end of its peer group over the three years to FY25. This reflects an improved performance in Australian mortgages, as well as opportunities for market share gains in institutional payments and cash management.

The swing factor is margin, with Morgan Stanley forecasting this will fall by -6 basis points half on half to 1.69% in the second half of FY23.

Despite walking away from its "cost ambition" the bank has a sound track record on cost control, the broker adds. Rating is upgraded to Overweight from Equal-weight and the target lifted to $27.00 from $26.20. Industry View: In-Line.

Target price is $27.00 Current Price is $25.20 Difference: $1.8
If ANZ meets the Morgan Stanley target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $26.77, suggesting upside of 5.1% (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 ANZ as Accumulate (2) -

Ord Minnett asserts, as interest margins soften and bad debts rise, investors could take comfort in banks sitting on surplus capital.

At present all majors comfortably exceed the regulatory requirements of 10.25%, although APRA expects a buffer to be maintained and therefore the banks have set their own targets of 11-11.5%.

The broker asserts this surplus capital position could be under threat if APRA decides to "shake up the hybrid market".

The regulator is seeking feedback on improving the effectiveness of hybrid capital bonds and the broker suspects it likely product terms will be changed in attempt to make it clear that, in times of financial stress, there is a chance distributions will be missed.

Ord Minnett believes the review is likely to be a modest irritant to the major banks and Westpac and ANZ Bank reflect the best value, retaining an Accumulate rating and $31 target for the latter.

Target price is $31.00 Current Price is $25.20 Difference: $5.8
If ANZ meets the Ord Minnett target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $26.77, suggesting upside of 5.1% (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

Citi rates BKW as Buy (1) -

Upon initial assessment post today's market update, it seems Brickworks' underlying FY23 net profit missed market consensus by circa -6%, according to analysts at Citi.

Key responsibles are the property division and investments, while building products performed broadly in line with expectations, point out the analysts.

While the company traditionally does not provide forward-looking guidance, Citi picked up today's commentary provided seems to guide the market towards a weaker performance ahead for both property and building products.

Buy. Target $28.50.

Target price is $28.50 Current Price is $25.72 Difference: $2.78
If BKW meets the Citi target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $27.44, suggesting upside of 14.0% (ex-dividends)

The company's fiscal year ends in July.

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

Bell Potter rates BOE as Speculative Hold (3) -

Boss Energy will restart production in December at its Honeymoon project and Bell Potter notes an increased interest in nuclear energy and uranium means a premium may be warranted for re-starting projects with proven track records in stable jurisdictions.

The broker updates valuation to account for this, raising the target to $5.53 from $3.90. A Speculative Hold rating is maintained.

Target price is $5.53 Current Price is $4.76 Difference: $0.77
If BOE meets the Bell Potter target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $4.14, suggesting downside of -12.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.3

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

Ord Minnett rates CBA as Hold (3) -

Ord Minnett asserts, as interest margins soften and bad debts rise, investors could take comfort in banks sitting on surplus capital.

At present all majors comfortably exceed the regulatory requirements of 10.25%, although APRA expects a buffer to be maintained and therefore the banks have set their own targets of 11-11.5%.

The broker asserts this surplus capital position could be under threat if APRA decides to "shake up the hybrid market".

The regulator is seeking feedback on improving the effectiveness of hybrid capital bonds and the broker suspects it likely product terms will be changed in attempt to make it clear that, in times of financial stress, there is a chance distributions will be missed.

Ord Minnett believes the review is likely to be a modest irritant to the major banks while highlighting CommBank remains an "expensive outlier" to its $90 fair value estimate. Hold.

Target price is $90.00 Current Price is $100.53 Difference: minus $10.53 (current price is over target).
If CBA meets the Ord Minnett target it will return approximately minus 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $91.08, suggesting downside of -8.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: -0.5

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

Bell Potter rates COG as Initiation of coverage with Buy (1) -

Bell Potter initiates coverage on COG Financial Services with a Buy rating and $1.73 target. This is an intermediate commercial lending business to small-medium enterprises.

The broker network is Australia's largest provider of asset finance aggregation and sales and currently holds a 21% market share.

The company recently acquired United Financial Services and National Finance Choice from McMillan Shakespeare ((MMS)) and together these platforms will add an additional 182 broker firms across the car and lifestyle markets.

As a result Bell Potter expects an uplift of $833m in total funding volumes.

Target price is $1.73 Current Price is $1.35 Difference: $0.38
If COG meets the Bell Potter target it will return approximately 28% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 1.0

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

Macquarie rates FBU as Outperform (1) -

NZ building consents for August are due and Macquarie assesses the potential for consents by value to likely fall -27%. This compares with a fall of -6% over 2023 to date and the broker suspects the Australasian construction markets will continue to operate under constraints.

Macquarie increases its estimates for Fletcher Building's silica-related personal injury claim costs to -$91m compared with FY23 provisioning of -$7m. The stock has materially de-rated and the broker highlights the lack of clarity regarding the depth of the cycle stop

Outperform rating retained. Target price falls to NZ$6.70 from NZ$7.20.

Current Price is $4.25. Target price not assessed.

Current consensus price target is $5.30, suggesting upside of 23.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

This company reports in NZD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: 0.6

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

Macquarie rates MEI as Outperform (1) -

Meteoric Resources' metallurgical test results for Caldeira showed strong recoveries, Macquarie comments. Further metallurgical tests and studies on impurities and product precipitation are underway.

Macquarie asserts advancing Caldeira to a scoping study is the next catalyst, anticipating material upside through exploration success. Outperform retained. Target is $0.45.

Target price is $0.45 Current Price is $0.25 Difference: $0.2
If MEI meets the Macquarie target it will return approximately 80% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 1.0

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

UBS rates MIN as Sell (5) -

Mineral Resources will issue, subject to demand, up to US$850m in senior unsecured notes due in 2028 and the proceeds will be used for general corporate purposes.

UBS considers the bond issue a means to de-risk capital expenditure funding in what will be an intense construction period for the company.

Increased balance-sheet participation will naturally increase leverage to potentially weaker commodity prices, the broker adds, and a Sell rating and $64 target are maintained.

Target price is $64.00 Current Price is $66.00 Difference: minus $2 (current price is over target).
If MIN meets the UBS target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $78.57, suggesting upside of 17.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.4

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

Ord Minnett rates NAB as Hold (3) -

Ord Minnett asserts, as interest margins soften and bad debts rise, investors could take comfort in banks sitting on surplus capital.

At present all majors comfortably exceed the regulatory requirements of 10.25%, although APRA expects a buffer to be maintained and therefore the banks have set their own targets of 11-11.5%.

The broker asserts this surplus capital position could be under threat if APRA decides to "shake up the hybrid market".

The regulator is seeking feedback on improving the effectiveness of hybrid capital bonds and the broker suspects it likely product terms will be changed in attempt to make it clear that, in times of financial stress, there is a chance distributions will be missed.

Ord Minnett believes the review is likely to be a modest irritant to the major banks and considers National Australia Bank is fairly valued against its $30 fair value estimate. Hold.

Target price is $30.00 Current Price is $29.04 Difference: $0.96
If NAB meets the Ord Minnett target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $27.40, suggesting downside of -5.1% (ex-dividends)

The company's fiscal year ends in September.

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 NSR as Initiation of coverage with Neutral (3) -

UBS initiates coverage of National Storage REIT in order to expand coverage of alternative real estate.

The broker points out investors view self storage favourably, given the inflation protection provided by frequent rent escalations, of which the company was a beneficiary during the pandemic.

Occupancy is likely to decline from current levels yet not all benefits of the pandemic are expected to reverse. The broker suspects the company will pursue a strategy to drive growth through ongoing acquisitions and developments, which increases operating risk.

A Neutral rating is applied along with a $2.34 target.

Target price is $2.34 Current Price is $2.17 Difference: $0.17
If NSR meets the UBS target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $2.32, suggesting upside of 7.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.0

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

Bell Potter rates PDN as Downgrade to Speculative Hold from Buy (3) -

Ahead of the re-start of Langer Heinrich, Bell Potter updates its valuation on Paladin Energy, arguing that operations like this should trade at a premium in the current market, given the relatively low risk versus greenfield developments and increased liquidity versus smaller cap peers.

There is also the potential for strategic consolidation. Langer Heinrich is a proven asset in a known jurisdiction for uranium mining and at full capacity will be a top 10 producer. Rating is downgraded to Speculative Hold from Speculative Buy. Target is raised to $1.31 from $1.12.

Target price is $1.31 Current Price is $1.10 Difference: $0.21
If PDN meets the Bell Potter target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $1.19, suggesting upside of 9.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: 0.7

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

Citi rates PMV as Neutral (3) -

Premier Investments released its FY23 financials this morning and Citi analysts, upon first glance, spot larger-than-expected margin compression, but overall a performance that slightly beat expectations on better cost control.

The retailer had pre-announced the key financial metrics in mid-August already. Today's newly shared items are not a 100% good news show, or so it appears.

Citi highlights global sales declined by -2% for the first six weeks but its own forecast is for -6% decline for 1H24. The company declared a final dividend of 60 cps, below consensus expectations.

 Neutral. Target price $24.70.

Target price is $24.70 Current Price is $24.71 Difference: minus $0.01 (current price is over target).
If PMV meets the Citi target it will return approximately minus 0% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $25.20, suggesting upside of 2.5% (ex-dividends)

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

UBS rates STO as Buy (1) -

Freshly returned from an Alaskan site tour organised by Santos, UBS analysts report they are incrementally positive on the depth of experience and the capability of the team on the ground.

The broker is equally positive on the State Government support for the Pikka oil development on the North Slope in Alaska, also adding some 47% of Alaska's 2022 State revenue comes from oil & gas royalties.

There are technical risks associated with the project and UBS believes Santos is still looking to sell -15% of equity in the project, estimated to generate circa US$250m in proceeds.

Estimates have been updated for the PNG LNG sell-down. Valuation/target $8.80 (was $8.70). Buy. The broker points out the current share price implies oil priced at US$65/bbl only.

Target price is $8.80 Current Price is $7.66 Difference: $1.14
If STO meets the UBS target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $9.49, suggesting upside of 20.0% (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: 0.8

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

Macquarie rates STX as Outperform (1) -

Gas from Walyering has been successfully delivered to the Pamelia pipeline, the first commercial gas production for Strike Energy. Macquarie expects confirmation of the commissioning phase will be well received by the market, given the delays.

While a comparatively small project, the broker notes the economics are robust with low capital and operating expenditure requirements.

Proving up the reserve base at South Erregulla is now the next catalyst with a strong uplift in 2P volumes being the key, the broker adds. Outperform retained. Target is $0.59.

Target price is $0.59 Current Price is $0.41 Difference: $0.185
If STX meets the Macquarie target it will return approximately 46% (excluding dividends, fees and charges).

Current consensus price target is $0.54, suggesting upside of 35.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.7

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

Ord Minnett rates WBC as Accumulate (2) -

Ord Minnett asserts, as interest margins soften and bad debts rise, investors could take comfort in banks sitting on surplus capital.

At present all majors comfortably exceed the regulatory requirements of 10.25%, although APRA expects a buffer to be maintained and therefore the major banks have set  their own targets of 11-11.5%.

The broker asserts this surplus capital position could be under threat if APRA decides to "shake up the hybrid market".

The regulator is seeking feedback on improving the effectiveness of hybrid capital bonds and the broker suspects it likely product terms will be changed in attempt to make it clear that, in times of financial stress, there is a chance distributions will be missed.

Ord Minnett believes the review is likely to be a modest irritant to the major banks and believes ANZ Group and Westpac reflect the best value among the majors, retaining an Accumulate rating and $28 target for the latter.

Target price is $28.00 Current Price is $21.19 Difference: $6.81
If WBC meets the Ord Minnett target it will return approximately 32% (excluding dividends, fees and charges).

Current consensus price target is $22.45, suggesting upside of 6.2% (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