Australian Broker Call

Macquarie rates AIZ as Underperform (5) -

While New Zealand is set to open its borders to visitors from Australia as soon as April 13, and to the rest of the world from the beginning of May, Macquarie warns not to expect a quick capacity rebound for Air New Zealand.

Macquarie warns some lead time should be allowed to hire and train necessary crew, and for typically lengthy advance tourism bookings, but with competitor capacities trimmed recently does expect a profitable period for the airline among limited competition. 

The Underperform rating is retained and the target price increases to NZ$1.15 from NZ$1.10.

Current Price is $1.33. Target price not assessed.

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

This company reports in NZD. 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 ALL as Outperform (1) -

As Aristocrat Leisure moves into its September half, Credit Suisse notes the company has a period of difficult comparables ahead, but positively the company indicated new product Buffalo Link has set a record as its fastest scaling land-based game.

The broker anticipates better than forecast March half gaming operation revenue will be reported, with US commercial casino gaming revenue up 45% on the previous comparable period in the December quarter. Credit Suisse lifts full year gaming operations revenue 10%. 

The Outperform rating is retained and the target price decreases to $45.00 from $49.00.

Target price is $45.00 Current Price is $37.15 Difference: $7.85
If ALL meets the Credit Suisse target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $47.40, suggesting upside of 25.1% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.9

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

Macquarie rates BOE as No Rating (-1) -

Boss Energy has announced a $120.0m placement as well as an additional Share Purchase Plan which could equate to a further $5.0m. Macquarie notes funds are earmarked for an acceleration of the company's Honeymoon uranium project. 

The placement share price of $2.15 is an -11.2% discount to the previous close, as noted by Macquarie, while the Purchase Plan offers shareholders an option for up to an additional $20,000 in shares at the same price. 

Due to research restrictions Macquarie cannot advise its valuation at present.

Current Price is $2.42. Target price not assessed.

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

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

Macquarie rates CGC as Outperform (1) -

Despite seven of Costa Group's farms being exposed to above average rainfall in February and March, Macquarie notes it appears there will be material impact on crop production. Similar weather events at a number of locations have not previously impacted.

The broker finds agricultural risk largely captured in the current share price, which has declined -12% since the weather event began in late February. 

The Outperform rating and target price of $3.80 are retained.

Target price is $3.80 Current Price is $2.92 Difference: $0.88
If CGC meets the Macquarie target it will return approximately 30% (excluding dividends, fees and charges).

Current consensus price target is $3.64, suggesting upside of 23.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.5

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

Macquarie rates CHN as Outperform (1) -

Chalice Mining has completed four drill holes at the Julimar State Forest Hartog prospect, but restricted access is preventing drilling of the primary zone. Macquarie notes testing the primary zone is a key near-term catalyst for the company. 

An updated resource estimate for nearby Gonneville is expected in the fourth quarter, but the broker notes recent drilling has continued to extend mineralisation and provides upside risk to project forecasts. 

The Outperform rating and target price of $10.00 are retained.

Target price is $10.00 Current Price is $6.86 Difference: $3.14
If CHN meets the Macquarie target it will return approximately 46% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 1.0

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

UBS rates CLV as Downgrade to Neutral from Buy (3) -

Clover has reported 1H results with revenues a -5% miss versus the UBS forecast while profit was a -30% miss, driven by softer than forecast gross margins.

Margins suffered from significant raw material and freight cost inflation, explains the analyst, partially offset by margin benefits from a move into the Melody Dairies facility for some production.

The broker downgrades its rating to Neutral from Buy and believes some patience is required, with an eye on long-term growth opportunities. The target falls by -24% to $1.40.

Target price is $1.40 Current Price is $1.43 Difference: minus $0.03 (current price is over target).
If CLV meets the UBS target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

The company's fiscal year ends in July.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.5

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

UBS rates EML as Buy (1) -

UBS believes there could be significant positive medium-term implications from EML Payments providing its payment platform to Up Spain, one of the three largest providers in Spain.

The analyst notes the transaction provides entry into the $88bn employee benefits market in Europe and provides a base to sign up other Up Group geographies within and outside Europe.

Up Spain is a subsidiary of the Up Group, which offers employee benefits and incentive programs in 28 countries.

The broker maintains its Buy rating and $4.55 target.

Target price is $4.55 Current Price is $2.35 Difference: $2.2
If EML meets the UBS target it will return approximately 94% (excluding dividends, fees and charges).

Current consensus price target is $4.13, suggesting upside of 63.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 1.0

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 feels Insurance Australia Group is at risk of elevated catastrophe (CAT) budget increases for FY23, as aggregate cover is expected to be repriced up substantially and the group may retain more CAT exposure.

This outcome could further increase cost of capital, explains the analyst. The group last week increased its FY22 CAT costs expectations by $55m.

The Underweight rating and $3.90 target are unchanged. Industry view: Attractive.

Target price is $3.90 Current Price is $4.57 Difference: minus $0.67 (current price is over target).
If IAG meets the Morgan Stanley target it will return approximately minus 15% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.98, suggesting upside of 8.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.3

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

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

Macquarie initiates coverage on Jumbo Interactive, noting a recent marketing step-up and value add merger and acquisition opportunities could support upgrades to consensus forecasts. 

The broker highlights recent UK and Canada acquisitions have allowed for geographical diversification of earnings, expecting further acquisition is likely to support international growth. Macquarie predicts an 11% compound annual growth rate through to FY25 is achievable. 

The broker initiates with an Outperform rating and target price of $20.00.

Target price is $20.00 Current Price is $18.25 Difference: $1.75
If JIN meets the Macquarie target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $20.13, suggesting upside of 7.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.8

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

Macquarie rates LLC as Outperform (1) -

Lendlease is set to enter a capitally intensive period in a bid to achieve strategy targets, with the company intending to deploy an additional -$3bn in capital by FY26.

Macquarie notes leverage could increase above 20%, despite the company reaffirming a 10-20% target range. 

Macquarie suggests an asset sell down could keep gearing below 20%, assuming an additional $650 in capital would need to be generated from divestments. The broker also suggested the dividend payout ratio could be reduced to 10-30%.

The Outperform rating and target price of $12.30 are retained. 

Target price is $12.30 Current Price is $10.69 Difference: $1.61
If LLC meets the Macquarie target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $12.63, suggesting upside of 17.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.7

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

Macquarie rates LTR as Outperform (1) -

With Liontown Resources expecting to make a final investment decision on the Kathleen Valley project in the fourth quarter, Macquarie anticipates the company will secure at least one more offtake partner before the decision. 

Offtake agreements have already been made with Tesla and LG Energy Solution, accounting for 200,000 tonnes of spodumene in the first year and 300,00 tonnes in the second year or around 60% of Stage 1 forecast production. 

The Outperform rating and target price of $2.50 are retained.

Target price is $2.50 Current Price is $1.48 Difference: $1.02
If LTR meets the Macquarie target it will return approximately 69% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 1.0

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

Morgan Stanley rates MQG as Overweight (1) -

Morgan Stanley sees upside risk for Macquarie Group's commodity revenues due to increased energy market volatility.

The analyst points to near record levels in Morgan Stanley's US Regional Gas Price Differential Index.

The Overweight rating and $242 target price are retained. Industry view: Attractive.

Target price is $242.00 Current Price is $189.44 Difference: $52.56
If MQG meets the Morgan Stanley target it will return approximately 28% (excluding dividends, fees and charges).

Current consensus price target is $220.20, suggesting upside of 14.9% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.5

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

Citi rates SUN as Buy (1) -

Now that Suncorp Group has increased its estimate of FY22 natural hazard costs to a "potentially conservative" $1.1bn, Citi continues to focus on the positives that have underpinned its Buy rating for the stock.

Those positives, it seems, are related to pending interest rate hikes around the world as well as domestically by the RBA. Citi analysts do acknowledge there is potential for a further rise in reinsurance costs and hazards allowances over and above existing forecasts, but they take the view the positives will be of greater importance.

Short-term, FY22 EPS estimate has been lowered by -1.8%, with no changes made for subsequent years. As said, rating remains Buy with a price target of $13.60, unchanged.

Target price is $13.60 Current Price is $11.12 Difference: $2.48
If SUN meets the Citi target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $13.68, suggesting upside of 23.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.7

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

Credit Suisse rates SUN as Outperform (1) -

Recent major flooding events have prompted Suncorp Group to lift its natural hazards estimate for the year by -$25m. The lift brings the total natural hazards estimate to -$1.1bn, but with -$958m already accounted for, -$142m in funding remains. 

The insurer has already received 34,000 claims connected to flood events, equating to 25% of total industry claims, and expects this will reach 45,000. The company also noted flooding may impact on Aggregate Excess of Loss renewal pricing in the coming year. 

Credit Suisse downgrades its FY22 earnings per share forecast -1.6%. The Outperform rating is retained and the target price decreases to $13.90 from $14.00.

Target price is $13.90 Current Price is $11.12 Difference: $2.78
If SUN meets the Credit Suisse target it will return approximately 25% (excluding dividends, fees and charges).

Current consensus price target is $13.68, suggesting upside of 23.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.7

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 feels Suncorp Group is at risk of elevated catastrophe (CAT) budget increases for FY23, as aggregate cover is expected to be repriced up substantially and the group may retain more CAT exposure.

This outcome could further increase cost of capital , explains the analyst. This comes as the group increased its FY22 CAT costs expectations by -$25m to -$1.1bn.

The Equal-weight rating and $12.25 target are unchanged. Industry view: Attractive.

Target price is $12.25 Current Price is $11.12 Difference: $1.13
If SUN meets the Morgan Stanley target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $13.68, suggesting upside of 23.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.7

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

Morgans rates SUN as Add (1) -

Following an update by Suncorp Group on the impact of east coast floods, Morgans makes only minor FY22 EPS downgrades due to a slightly higher hazard budget. The target slips to $13.14 from $13.19.

The Add rating is kept as the broker sees upside on solid current underlying business momentum and the group's cost-out plan into FY23.

Target price is $13.14 Current Price is $11.12 Difference: $2.02
If SUN meets the Morgans target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $13.68, suggesting upside of 23.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.7

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

Macquarie rates TAH as Outperform (1) -

Macquarie anticipates lottery volumes reaching record highs in FY22, and has revised forecasts for Tabcorp Holdings accordingly. The broker expects domestic lottery volumes to increase at a 3% compound annual growth rate through to FY25. 

Tabcorp's demerger looks to complete in June 2022, and could be a catalyst for re-rating according to Macquarie. Earnings per share forecasts lift 1% and 5% in FY22 and FY23 respectively.

The Outperform rating is retained and the target price decreases to $5.95 from $6.15.

Target price is $5.95 Current Price is $5.05 Difference: $0.9
If TAH meets the Macquarie target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $5.67, suggesting upside of 13.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.5

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

Macquarie rates TCL as Outperform (1) -

While higher petrol prices can present risk of reduced traffic, Transurban Group has suggested it expects a low impact to traffic levels from high fuel prices. Macquarie reaffirms this, noting data shows impact will most likely be off-peak and weekend traffic. 

Elsewhere, the New South Wales tolling review looks to understand why tolls are increasing faster than wage growth, with the M2 tolls increasing 1.78x compared to wage growth of 1.38x  since 2010.

The Outperform rating is retained and the target price increases to $14.96 from $14.80.

Target price is $14.96 Current Price is $12.95 Difference: $2.01
If TCL meets the Macquarie target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $14.48, suggesting upside of 9.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.7

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

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

Morgan Stanley reviews the expense outlook for Westpac and concludes ongoing expense reduction is needed before the bank's FY24 target for an $8bn cost base in FY24 is seen as realistic.

The analyst's FY22 forecast for expenses ex notable items is around $10.4bn.

The Equal-Weight rating and $22 target are retained. Industry view: Attractive.

Target price is $22.00 Current Price is $23.69 Difference: minus $1.69 (current price is over target).
If WBC meets the Morgan Stanley target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $25.10, suggesting upside of 6.0% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.4

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