Australian Broker Call

Shaw and Partners rates ACF as Buy (1) -

Shaw and Partners, having visited several sites where Acrow Formwork and Construction Services is conducting work across Sydney, is attracted to the stock given the quality of its management and the strong macro outlook for the sectors in which it operates.

The business appears ideally positioned for long-term and profitable growth. Progress is continuing with earnings momentum, balance sheet optimisation and enhancing operating scale.

The stock also trades at a significant discount to listed contracting peers. Buy rating maintained. Target is $1.05.

Target price is $1.05 Current Price is $0.79 Difference: $0.26
If ACF meets the Shaw and Partners target it will return approximately 33% (excluding dividends, fees and charges).

Current consensus price target is $0.98, suggesting upside of 20.6% (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

Macquarie rates AFG as Neutral (3) -

Australian Finance Group March quarter lodgements tracked below $20bn for the first time in eight quarters, Macquarie notes, falling -11.7%. Lodgement mix continued to shift away from the higher margin AFG Home Loan product.

Competition in the prime segment from the major banks, supported by bank deposit franchises, drove a shift in share towards banks.

The broker believes confidence in AFG earning should improve as competition eases. Neutral and $1.67 target retained.

Target price is $1.67 Current Price is $1.59 Difference: $0.085
If AFG meets the Macquarie target it will return approximately 5% (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

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

Morgan Stanley believes the acquisition of OZ Minerals ((OZL)) is "sensible", given the renewed focus by BHP Group on copper as a future facing commodity.

OZ Minerals will seek approval of the scheme in the Federal Court with the scheme expected to become effective on April 18. 

Net debt is expected to be in the upper half of the company's US$5-15bn range post completion and, the broker warns, adding current provisions of US$3.3bn could affect its ability to pay dividends that are higher than the minimum of 50% EPS in the future when these provisions eventuate.

The Equal-weight rating and $41.35 target are unchanged. Sector view is Attractive.

Target price is $41.35 Current Price is $46.45 Difference: minus $5.1 (current price is over target).
If BHP 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 $44.33, suggesting downside of -4.7% (ex-dividends)

The company's fiscal year ends in June.

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: 0.2

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

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

Bank of Queensland has pre-announced its first half cash profit, capital ratio and dividend. Cash profit of $256m is below Morgan Stanley's forecast as is the interim dividend of 20c. The CET1 ratio is better that forecast at 10.71%.

The broker is disappointed by the cut to the dividend and, with no detail on the reasons for the miss to expectations, suspects the share price will fall.

The Equal-weight rating is unchanged. Target is reduced to $6.70 from $7.00. Industry view: In-Line.

Target price is $6.70 Current Price is $6.43 Difference: $0.27
If BOQ meets the Morgan Stanley target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $6.88, suggesting upside of 8.3% (ex-dividends)

The company's fiscal year ends in August.

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

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

Bank of Queensland pre-released 1H profit figures around -3% below the consensus expectation and proposed a 1H dividend of 20cps (fully franked) when the market was expecting 24cps, observes Morgans.

Management also announced a -$200m goodwill write-down and a -$60m pre-tax charge for a program to “strengthen its commitment to risk management”.

The broker lowers its rating to Hold from Add partly to reflect a diminishing net interest margin (NIM) and increased expected credit loss expensing, and partly to reflect the views of a new analyst.

Morgans new target of $6.75, down from $11.00 is based on an outlook for slower credit growth, NIM pressure and cost growth after the bank missed its FY26 cost-to-income and return on equity (ROE) targets.

The analyst is also concerned about a number of issues including recent management turmoil and investor caution around smaller banks post offshore bank issues.

Target price is $6.75 Current Price is $6.43 Difference: $0.32
If BOQ meets the Morgans target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $6.88, suggesting upside of 8.3% (ex-dividends)

The company's fiscal year ends in August.

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 BOQ as Accumulate (2) -

Ahead of the full first half results, Bank of Queensland has announced a $200m write-down of goodwill plus a $60m pre-tax provision to cover costs of uplifting non-financial risk controls over the next three years.

The goodwill write-down is of little consequence, Ord Minnett asserts, and spending on risk is noteworthy. While the announcement of net profit for the first half was softer than expected, the broker suspects this was from net interest margins not recovering as much as was hoped, given intense competition for both customer deposits and home loans.

The broker reduces the FY23 dividend forecast amid a lower earnings forecast and lower first-half pay-out. Accumulate maintained. Target is $8.80.

Target price is $8.80 Current Price is $6.43 Difference: $2.37
If BOQ meets the Ord Minnett target it will return approximately 37% (excluding dividends, fees and charges).

Current consensus price target is $6.88, suggesting upside of 8.3% (ex-dividends)

The company's fiscal year ends in August.

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 BOQ as Sell (5) -

Bank of Queensland has pre-announced some key numbers ahead of the first half results on April 20. Significantly, the bank will undertake an integrated risk program at a cost of $60m and is writing down $200m in goodwill.

UBS suspects the market will welcome the investment to strengthen risk management capabilities and the CET1 position. The broker considers the success of the bank's investment case will hinge around delivering digital capabilities and driving down unit costs.

UBS maintains a Sell rating with a $6 target.

Target price is $6.00 Current Price is $6.43 Difference: minus $0.43 (current price is over target).
If BOQ meets the UBS target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $6.88, suggesting upside of 8.3% (ex-dividends)

The company's fiscal year ends in August.

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 BPT as Downgrade to Neutral from Buy (3) -

Following what Citi analysts describe as a "soft" quarterly update from Beach Energy, the decision has been taken to downgrade to Neutral from Buy.

Citi analysts see few catalysts on the horizon for the company and now shift their sector preference to Santos ((STO)). Target has fallen to $1.70 from $1.76.

Forecasts have been reduced.

Target price is $1.70 Current Price is $1.51 Difference: $0.195
If BPT meets the Citi target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $1.89, suggesting upside of 26.3% (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

Bell Potter rates BRB as Downgrade to Sell from Buy (5) -

Breaker Resources has received an all-scrip takeover offer from Ramelius Resources ((RMS)), at 2.82 shares for every Ramelius share. Bell Potter makes no fundamental changes to its valuation with the announcement of the recommended offer yet now views the implied offer price, at around $0.40 a share, as the overriding valuation metric.

As the broker has no formal valuation, financial forecasts or recommendation for Ramelius Resources and a strong appreciation in the Breaker Resources share price, Bell Potter recommends selling into the deal and downgrades to Sell from Speculative Buy. Target is reduced to $0.53 from $0.62.

Target price is $0.53 Current Price is $0.52 Difference: $0.015
If BRB meets the Bell Potter target it will return approximately 3% (excluding dividends, fees and charges).

Market Sentiment: -1.0

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

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

As the share price of Credit Corp has moved through a trigger level Ord Minnett downgrades to Accumulate from Buy. Target is $28.

Target price is $28.00 Current Price is $17.72 Difference: $10.28
If CCP meets the Ord Minnett target it will return approximately 58% (excluding dividends, fees and charges).

Current consensus price target is $24.40, suggesting upside of 40.1% (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

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

Evolution Mining has quantified the weather impact on Ernest Henry, pre-reported March quarter performance and provided lower FY23 guidance.

FY23 production guidance was lowered to around 660,000oz and all-in sustaining costs (AISC) increased by circa $195/oz to $1,390/oz, with copper production at around 48,000t.

The broker lowers its rating to Hold from Add after both the revised guidance and recent share price rally, along with allowing for production challenges at Red Lake.

The $3.70 target price is unchanged.

Target price is $3.70 Current Price is $3.64 Difference: $0.06
If EVN meets the Morgans target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $3.15, suggesting downside of -11.8% (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 GQG as Outperform (1) -

GQG Partners delivered March quarter net inflows of $5bn, $2bn of which were in the month of March. But GQG did caution against extrapolating these flows as there may have been first quarter seasonality and the lagged benefit from strong 2022 investment performance, which has moderated in recent months, Macquarie notes.

Relative performance metrics have been weaker since November, which will likely result in a slowdown in net flows.

However GQG’s performance history and recent flow performance relative to listed peers warrant a premium multiple for GQG, Macquarie suggests. Outperform and $2.05 target retained.

Target price is $2.05 Current Price is $1.44 Difference: $0.61
If GQG meets the Macquarie target it will return approximately 42% (excluding dividends, fees and charges).

Current consensus price target is $2.04, suggesting upside of 40.4% (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: 1.0

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

UBS rates IAG as Sell (5) -

UBS reduces earnings forecasts to reflect higher motor claims, Cyclone Gabrielle and lower running yields in the second half. This is partially offset by hardening pricing and comparatively benign perils in Australia.

Insurance Australia Group is the broker's least preferred general insurer because of greater downside risk to earnings and an expensive valuation. Sell rating and $4.30 target maintained.

Target price is $4.30 Current Price is $5.01 Difference: minus $0.71 (current price is over target).
If IAG meets the UBS target it will return approximately minus 14% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.15, suggesting upside of 4.6% (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 MFG as Neutral (3) -

Magellan Financial experienced net outflows of -$3.9bn in the March quarter. Retail outflows were stable while Institutional outflows increased, albeit the bulk of Institutional outflows related to Australian Equities (Airlie) following the retirement of John Sevior, Macquarie notes.

The broker expects retail outflows to persist at current levels until we see sustained improvement in performance metrics. Institutional outflows are likely to be less material going forward, with the most immediate risk being additional mandate losses.

Neutral retained, with valuation not stretched. Target falls to $7.50 from $9.60 on sector de-rating.

Target price is $7.50 Current Price is $7.69 Difference: minus $0.19 (current price is over target).
If MFG meets the Macquarie target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $9.12, suggesting upside of 17.1% (ex-dividends)

The company's fiscal year ends in June.

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

Ord Minnett rates MGR as Buy (1) -

Ord Minnett suspects it will take time for Mirvac Group and the liquidator for collapsed builder Porter Davis to resolve any issues but anticipates minimal impact for Mirvac.

While the company outsources some construction to third parties the broker understands the residential lots in question were at early stages and some had not even commenced.

Meanwhile, the volume of demand for housing is likely to rise substantially and the company appears well-placed to meet this via its build-to-sell houses and apartments and apartments in the build-to-rent segment.  Buy rating with a $3.10 target maintained.

Target price is $3.10 Current Price is $2.22 Difference: $0.88
If MGR meets the Ord Minnett target it will return approximately 40% (excluding dividends, fees and charges).

Current consensus price target is $2.50, suggesting upside of 10.6% (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

Ord Minnett rates MTS as Hold (3) -

Ord Minnett notes hardware retail sales growth has softened significantly in recent months. Yet growth in food and liquor sales, which account for close to 60% of Metcash operating profit, have accelerated, underpinned by  inflation.

This is expected to offset softer hardware sales in the second half of 2023. Amid stronger first half trading the broker expects group sales to increase by around 6% in FY23. Hold maintained. Target is $3.80.

Target price is $3.80 Current Price is $4.00 Difference: minus $0.2 (current price is over target).
If MTS meets the Ord Minnett target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.45, suggesting upside of 11.5% (ex-dividends)

The company's fiscal year ends in April.

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 QBE as Buy (1) -

UBS reduces earnings forecasts to reflect higher motor claims, Cyclone Gabrielle and lower running yields in the second half. This is partially offset by hardening pricing and comparatively benign perils in Australia.

QBE Insurance remains the preferred name as the business simplifies and turns around the profitability of its global operations. Buy rating and $18 target maintained.

Target price is $18.00 Current Price is $14.99 Difference: $3.01
If QBE meets the UBS target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $16.19, suggesting upside of 9.4% (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

Morgan Stanley rates SIG as Underweight (5) -

Sigma Healthcare brands and hospitals revealed good growth in FY23 while the main distribution business appears challenged, in Morgan Stanley's opinion. Profitability deteriorated amid ongoing cost pressures.

The company provided first time FY24  EBIT guidance at its results of $26-31m, materially lower than Morgan Stanley's prior expectations. The broker reduces estimates for FY24 and FY25 by -53% and --48%, respectively.

Underweight maintained. Target is reduced to $0.38 fromm $0.43. Industry view is In-Line.

Target price is $0.38 Current Price is $0.71 Difference: minus $0.33 (current price is over target).
If SIG meets the Morgan Stanley target it will return approximately minus 46% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $0.58, suggesting downside of -17.5% (ex-dividends)

The company's fiscal year ends in January.

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

Ord Minnett rates STX as Initiation of coverage with Hold (3) -

Ord Minnett initiates coverage of Strike Energy with a Hold ratting and $0.45 target. The broker considers the company's plans ambitious, given there is no earnings history.

The company is the largest holder of gas resources in the Perth Basin and exploration drilling has been rapid and ongoing. The main issue is how effectively Strike Energy will be able to monetise its gas position. The broker forecasts annual group gas output reaching around 55PJ by FY27.

Target price is $0.45 Current Price is $0.50 Difference: minus $0.05 (current price is over target).
If STX 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 $0.44, suggesting downside of -12.0% (ex-dividends)

The company's fiscal year ends in June.

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

UBS rates SUN as Buy (1) -

UBS reduces earnings forecasts to reflect higher motor claims, Cyclone Gabrielle and lower running yields in the second half. This is partially offset by hardening pricing and comparatively benign perils in Australia.

The broker observes Suncorp Group is restoring profitability but should remain a "binary prospect" until the bank sale is finalised. Buy rating and $15 target maintained.

Target price is $15.00 Current Price is $12.46 Difference: $2.54
If SUN meets the UBS target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $14.59, suggesting upside of 17.1% (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 TLC as Upgrade to Hold from Lighten (3) -

As the share price of Lottery Corp has moved through the trigger level Ord Minnett upgrades to Hold from Lighten. Target is $4.70.

Target price is $4.70 Current Price is $5.00 Difference: minus $0.3 (current price is over target).
If TLC meets the Ord Minnett target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.31, suggesting upside of 5.8% (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

Ord Minnett rates VEA as Hold (3) -

Ord Minnett has now incorporated the takeover of OTR. Forecasts for 2023 a little changed, given the transaction is unlikely to be completed until the end of the year.

The impact on fair value is considered muted as higher earnings are coming on the back of employing more debt. Still, the broker believes the acquisition makes sense strategically, growing Viva Energy's convenience business to more than 700 stores. Hold maintained. Target is $3.35.

Target price is $3.35 Current Price is $3.21 Difference: $0.14
If VEA meets the Ord Minnett target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $3.36, suggesting upside of 5.3% (ex-dividends)

The company's fiscal year ends in December.

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

Morgans rates WHC as Add (1) -

Morgans explains an -11% downgrade by management at Whitehaven Coal to FY23 earnings (EBITDA) is driven by an -8% reduction in FY23 sales and a -5% uplift in cost estimates.

Persistent staffing challenges look likely to impact FY24 performance, yet the analyst feels these issues are more than priced in to the Whitehaven share price. 

More positively, a recent rise in the spot Newcastle coal price/activity is the first step for a re-rating of the company's shares, according to the broker.

The target falls to $9.85 from $10.35. Add.

Target price is $9.85 Current Price is $6.87 Difference: $2.98
If WHC meets the Morgans target it will return approximately 43% (excluding dividends, fees and charges).

Current consensus price target is $9.74, suggesting upside of 42.9% (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