Australian Broker Call

Morgans rates AFG as Add (1) -

Morgans sees upside risk to FY23 forecast earnings as a result of an announced strategic alliance with neobank Volt Corporation, which involves a -$15m investment and 7.6% shareholding in Volt.

The broker expects access to the digital banking services and technology platform will assist Australian Finance Group's credit decisions. A company-branded Volt-funded digital mortgage product is expected to be made available in the first quarter of 2022.

The add rating and $2.90 target are unchanged.

Target price is $2.90 Current Price is $2.77 Difference: $0.13
If AFG meets the Morgans target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $3.12

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

Morgans rates ART as Upgrade to Add from Hold (1) -

Morgans upgrades the rating on Airtasker to Add from Hold and lifts the target price to $1.29 from $1.23. Early traction in the US, and continued development in the UK, has seen plans sped up, versus the broker's expectation, to attack the international opportunity. 

The company has acquired ‘Zaarly’, a marketplace that brings with it an established tasker and user base in two US cities. A $21m capital raise provides an additional $12m (post acquisition costs and cost base) to invest in sales and marketing, explains the analyst.

Target price is $1.29 Current Price is $1.14 Difference: $0.15
If ART meets the Morgans target it will return approximately 13% (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

Ord Minnett rates ASX as Hold (3) -

The main positive Ord Minnett found in the May update was in derivatives, where volumes have stabilised.

While volumes are low they could increase at some point, the broker suggests, particularly if there are any prospects of an unwinding of yield curve control measures by the Reserve Bank.

Cash market value showed a decline, which was expected, although listings held up. Hold rating maintained. Target rises to $71.53 from $70.38.

Target price is $71.53 Current Price is $75.60 Difference: minus $4.07 (current price is over target).
If ASX 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 $70.63

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

UBS rates ASX as Neutral (3) -

UBS makes small earnings changes after trading statistics were released for May. The broker makes downgrades to FY22 estimates and upgrades beyond that year.

Daily cash equity turnover at $6.4bn is broadly in line with forecasts. Derivatives volumes appear to have been re-based and remain robust compared with April.

Any slowdown ahead in the 10-year bond is considered the main risk. Cash margins are in line with expectations. Neutral rating and $70 target maintained.

Target price is $70.00 Current Price is $75.60 Difference: minus $5.6 (current price is over target).
If ASX 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 $70.63

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

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

US Ig distribution volumes are down for two consecutive months for the first time since July/August 2014, and at -13.4%, this is the largest decline since at least 2008.

As of May 27, 2021 Morgan Stanley estimates there were 970 plasma collection centers in the US, up 13% since May 2020. Despite continued rollouts, plasma donations are considered to remain a near-term risk.

Once the US has "reopened", Morgan Stanley expects collections will be easy to grow, and Ig availability will rise markedly from low levels, running a risk of oversupply. A rebound in FY23 is forecast, given that the industry is going into the shortest Ig market on record.

The broker feels it could be followed by the longest market on record (along with the rich valuation). This uncertainty keeps the rating at Equal-weight. The target of $267 is unchanged. Industry view: In-Line.

Target price is $267.00 Current Price is $291.37 Difference: minus $24.37 (current price is over target).
If CSL meets the Morgan Stanley target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $300.19, suggesting upside of 2.8% (ex-dividends)

The company's fiscal year ends in June.

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: 0.7

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

Credit Suisse rates CWY as Downgrade to Underperform from Neutral (5) -

Credit Suisse assesses the clearance risk regarding the Suez Sydney acquisition is modest as Cleanaway Waste does not own any putrescible landfills in Sydney.

The broker includes the acquisition in forecasts from the end of FY22. Recent guidance for a lower earnings contribution from the New Chum landfill is interpreted to mean management believes FY22 consensus forecasts are too high.

The broker would prefer more evidence of a post-pandemic recovery and success with the Suez Sydney deal before incorporating additional value and downgrades to Underperform from Neutral. Target is reduced to $2.40 from $2.50.

Target price is $2.40 Current Price is $2.73 Difference: minus $0.33 (current price is over target).
If CWY meets the Credit Suisse target it will return approximately minus 12% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.58

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.2

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

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

Morgans lowers the rating for Fortescue Metals Group to Reduce from Add and decreases the target price to $18.70 from $21.10. It's considered a mass-scale low-grade pure iron ore producer will be particularly sensitive to a maturing iron ore cycle. 

The broker also highlights cost pressures are surging in WA, which could lead to a softer fourth quarter sales/cost performance and potential further Iron Bridge downgrades.

The analyst upgrades short-term iron ore forecasts, while also increasing operating cost assumptions and reducing the company’s multiple closer to its peak cycle level.

Target price is $18.70 Current Price is $22.97 Difference: minus $4.27 (current price is over target).
If FMG meets the Morgans target it will return approximately minus 19% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $21.31, suggesting downside of -6.1% (ex-dividends)

The company's fiscal year ends in June.

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: 0.1

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

Morgan Stanley rates GPT as Underweight (5) -

Morgan Stanley does an analysis of shopping malls by postcode/region to assess exposure to above-average mortgage delinquency areas. This comes after Moody's late April report suggesting home loan arrears will increase moderately in an uneven recovery.

The broker believes REITs with malls in areas of high mortgage delinquencies may be at risk of underperforming, with shoppers perhaps having less discretionary income to spend on fashion, dining etc.

The analysts conclude that GPT Group, with 100% of malls located in regions where the over 30 days mortgage arrears rate is less than 2%, comes out on top on a peer comparison. Underweight rating and target of $4.37 are retained. Industry view is In-Line.

Target price is $4.37 Current Price is $4.65 Difference: minus $0.28 (current price is over target).
If GPT meets the Morgan Stanley target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.69, suggesting downside of -0.4% (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 MGR as Overweight (1) -

Morgan Stanley does an analysis of shopping malls by postcode/region to assess exposure to above-average mortgage delinquency areas. This comes after Moody's late April report suggesting home loan arrears will increase moderately in an uneven recovery.

The broker believes REITs with malls in areas of high mortgage delinquencies may be at risk of underperforming, with shoppers perhaps having less discretionary income to spend on fashion, dining etc.

In a peer comparison, analysts conclude that Mirvac Group's malls are in areas where mortgage arrears are the lowest. The group has 95% of malls located in regions where the over 30 days mortgage arrears rate is less than 2%.

The Overweight rating and $3.15 target are retained. Industry view is In-Line.

Target price is $3.15 Current Price is $2.91 Difference: $0.24
If MGR meets the Morgan Stanley target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $2.77, suggesting downside of -5.7% (ex-dividends)

The company's fiscal year ends in June.

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

UBS rates MP1 as Buy (1) -

The SD-WAN partnerships are building momentum with the four partnerships to date representing a 49% share of the traditional markets, UBS observes.

The broker now has some indication of the potential share of revenue for Megaport and the main unknown is the speed of customer uptake.

While remaining positive, UBS requires a sign that the new sales initiatives are in place and driving stronger port growth. Buy rating and $17.10 target maintained.

Target price is $17.10 Current Price is $14.92 Difference: $2.18
If MP1 meets the UBS target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $15.48, suggesting upside of 1.7% (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

Morgans rates POS as Initiation of coverage with Hold (3) -

The Golden Swan discovery at Poseidon Nickel’s Black Swan Project has seen the company refocus its efforts on becoming a near-term nickel producer, from the low-grade open pit resource. Although exploring since 2006, low nickel prices have hampered a restart.

Morgans notes resource drilling is underway and with processing infrastructure in place, revenue from Golden Swan could allow the company to quickly resume large-scale production at the right nickel price. Morgans sets a Hold rating and $0.076 target price.

Target price is $0.08 Current Price is $0.08 Difference: minus $0.004 (current price is over target).
If POS meets the Morgans target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Market Sentiment: 0.0

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

Macquarie rates RHC as Outperform (1) -

Macquarie reviews the company's capital position following the proposed acquisition of Spire. The broker remains positive about the outlook for the medium term and considers the strategic rationale for the acquisition sound.

Some uncertainty could weigh in the short term regarding the capital position, yet there are a range of options available to Ramsay Health which Macquarie assesses can reduce leverage. Outperform maintained. Target is reduced to $74.75 from $74.85.

Target price is $74.75 Current Price is $63.72 Difference: $11.03
If RHC meets the Macquarie target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $70.12

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

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

Morgan Stanley does an analysis of shopping malls by postcode/region to assess exposure to above-average mortgage delinquency areas. This comes after Moody's late April report suggesting home loan arrears will increase moderately in an uneven recovery.

The broker believes REITs with malls in areas of high mortgage delinquencies may be at risk of underperforming, with shoppers perhaps having less discretionary income to spend on fashion, dining etc.

In a peer comparison, the analysts conclude over 80% of malls owned by Scentre Group are in localities (i.e. postcodes) where the over 30 days mortgage delinquency rates are low at less than 2%. The Equal-weight rating and $2.98 target are retained. Industry view: In-line.

Target price is $2.98 Current Price is $2.80 Difference: $0.18
If SCG meets the Morgan Stanley target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $2.84, suggesting upside of 2.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: -0.2

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

Morgan Stanley rates SGP as Overweight (1) -

Morgan Stanley does an analysis of shopping malls by postcode/region to assess exposure to above-average mortgage delinquency areas. This comes after Moody's late April report suggesting home loan arrears will increase moderately in an uneven recovery.

The broker believes REITs with malls in areas of high mortgage delinquencies may be at risk of underperforming, with shoppers perhaps having less discretionary income to spend on fashion, dining etc.

In a peer comparison, the analysts conclude over 80% of malls owned by Stockland are in localities (i.e. postcodes) where the over 30 days mortgage delinquency rates are low at less than 2%. Overweight rating. Target is $5. Industry view: In-line.

Target price is $5.00 Current Price is $4.74 Difference: $0.26
If SGP meets the Morgan Stanley target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $4.63, suggesting downside of -2.4% (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

Ord Minnett rates SZL as Buy (1) -

Sezzle has a three-year contract with Target Corp, which Ord Minnett notes will be a significant addition to the company's retail base. The broker considers the contract is a validation of the company's strategy to offer a slightly differentiated product.

Target is a top 10 retailer in the US and could be a game changer for the company, Ord Minnett asserts. The contribution increases the broker's 2022 revenue estimates by 11%. Buy retained. Target is $11.90.

Target price is $11.90 Current Price is $8.80 Difference: $3.1
If SZL meets the Ord Minnett target it will return approximately 35% (excluding dividends, fees and charges).

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: 1.0

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

Morgan Stanley rates TRS as Overweight (1) -

FY21 guidance was -2% lower than Morgan Stanley expected on lower foot traffic and higher freight costs though both are transitory with mitigatory factors into FY22.

The broker feels the company is in the "fix" stage on store format, location and product mix, which transitions to "grow" over the next few
years. Overweight with a target price of $10. Industry view: In-line.

Target price is $10.00 Current Price is $5.92 Difference: $4.08
If TRS meets the Morgan Stanley target it will return approximately 69% (excluding dividends, fees and charges).

Current consensus price target is $8.20, suggesting upside of 47.8% (ex-dividends)

The company's fiscal year ends in June.

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

Ord Minnett rates TRS as Downgrade to Hold from Buy (3) -

Ord Minnett observes the turnaround for the company's business remains in its infancy as the fixes to the store network, re-setting of the product range and renegotiation of leases will take time to produce results.

Sales revenue is expected to decline by -11% in the second half, affected by the cycling of comparable store sales growth and lower foot traffic in shopping centre locations.

The business will also be affected by lower gross margins in the second half. The decline in gross profit margins has been exacerbated in the broker's view by prior management locking in US dollar exposure at what turned out to be a disadvantage.

Rating is downgraded to Hold from Buy and the target is lowered to $5.70 from $10.34.

Target price is $5.70 Current Price is $5.92 Difference: minus $0.22 (current price is over target).
If TRS meets the Ord Minnett target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $8.20, suggesting upside of 47.8% (ex-dividends)

The company's fiscal year ends in June.

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

Morgan Stanley rates VCX as Underweight (5) -

Morgan Stanley does an analysis of shopping malls by postcode/region to assess exposure to above-average mortgage delinquency areas. This comes after Moody's late April report suggesting home loan arrears will increase moderately in an uneven recovery.

The broker believes REITs with malls in areas of high mortgage delinquencies may be at risk of underperforming, with shoppers perhaps having less discretionary income to spend on fashion, dining etc.

In a peer comparison, the analysts conclude that the assets of Vicinity Centres seem to be in localities where arrears are the highest.

Separately, Morgan Stanley has implicitly factored in the impact of the current Victorian lockdown situation in forecasts an there is no need to currently adjust forecasts. Underweight rating. The target is $1.59. Industry view: In-line.

Target price is $1.59 Current Price is $1.64 Difference: minus $0.05 (current price is over target).
If VCX meets the Morgan Stanley target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $1.63, suggesting downside of -0.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: -0.2

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