Australian Broker Call

Credit Suisse rates APM as Initiation of coverage with Outperform (1) -

Credit Suisse initiates coverage of APM Human Services International with an Outperform rating and $4.15 target price. APM is a leading provider of health and human services across ten countries, with strong market positions in Australia, the UK, and Canada.

APM’s core markets are Employment Services (73% of revenue) and Health & Wellbeing (18%) where it supports those experiencing disadvantage, injury, illness or disability to find sustainable employment and delivers government programs focused on allied health & rehabilitation.

The company has a strong track record, the broker notes, of successfully fulfilling contracts with some of the highest Star Ratings
amongst large-scale providers, providing it with an opportunity to gain share and win new contracts from governments.

Target price is $4.15 Current Price is $2.47 Difference: $1.68
If APM meets the Credit Suisse target it will return approximately 68% (excluding dividends, fees and charges).

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

Macquarie rates BOQ as Outperform (1) -

Bank of Queensland's AGM trading update pleased Macquarie, management reiterating JAWS guidance for FY22.

Macquarie says the bank appears to be weathering industry margin pressure well compared to peers, and will continue to do so, thanks to a strong funding outlook, expense management and elevated deposit pricing across both brands.

EPS forecasts rise 0.2%, 0.4% and 1.3% across FY22, FY23 and FY24.

Outperform rating and $10 target price retained.

Target price is $10.00 Current Price is $7.92 Difference: $2.08
If BOQ meets the Macquarie target it will return approximately 26% (excluding dividends, fees and charges).

Current consensus price target is $10.42, suggesting upside of 31.5% (ex-dividends)

The company's fiscal year ends in August.

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

Morgan Stanley rates BOQ as Overweight (1) -

Morgan Stanley says a trading update by Bank of Queensland implies proforma FY22 pre-provision profit growth of more than 3.5%. This represents a 1% beat on the broker's expectation but a -1.5% miss on consensus forecasts.

This may provide relief to a share price that has cratered -18% since the publication of FY21 results, which caused investors to fear a profit warning, explains the analyst.

Overweight rating and $10.40 target price are unchanged. Industry view: In-line.

Target price is $10.40 Current Price is $7.92 Difference: $2.48
If BOQ meets the Morgan Stanley target it will return approximately 31% (excluding dividends, fees and charges).

Current consensus price target is $10.42, suggesting upside of 31.5% (ex-dividends)

The company's fiscal year ends in August.

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

Ord Minnett rates BOQ as Accumulate (2) -

Following a trading update by Bank of Queensland, Ord Minnett reduces net profit forecasts by -1% over the FY22–24 period, with lower revenue more than offsetting lower costs. Management reaffirmed guidance. The target price falls to $9.80 from $10.

The broker feels the shares are too cheap and still sees strong growth over three years via cost synergies from the ME Bank acquisition. Accumulate rating is maintained.

Target price is $9.80 Current Price is $7.92 Difference: $1.88
If BOQ meets the Ord Minnett target it will return approximately 24% (excluding dividends, fees and charges).

Current consensus price target is $10.42, suggesting upside of 31.5% (ex-dividends)

The company's fiscal year ends in August.

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

Credit Suisse rates BXB as Outperform (1) -

Brambles reports in USD but has exposures to many currencies through its global operations, Credit Suisse notes. The broker adjusts earnings forecast down to reflect recent USD strength.

But having fallen more than -14% since its investor day on concerns over pallet contagion and increased spending for earnings growth, Brambles offers an attractive entry point, the broker believes, before the focus moves to FY23 and beyond earnings growth.

Outperform rating and $13.25 target price retained.

Target price is $13.25 Current Price is $10.50 Difference: $2.75
If BXB meets the Credit Suisse target it will return approximately 26% (excluding dividends, fees and charges).

Current consensus price target is $12.48, suggesting upside of 19.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

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 CAR as Neutral (3) -

Carsales reaffirmed its FY22 outlook at its investor day before switching its focus to longer term opportunities both domestically and for key international assets, Credit Suisse reports.

For Encar, the broker suggests the Guarantee product will be the near-term growth driver while domestically, management highlights a total addressable market of roughly $400m for new products.

Neutral and $25.80 target retained.

Target price is $25.80 Current Price is $25.06 Difference: $0.74
If CAR meets the Credit Suisse target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $24.32, suggesting downside of -7.9% (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

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

While Morgan Stanley assumes a return to pre-pandemic plasma collections for CSL in the March 2022 quarter, this assumption appears increasingly at risk, despite data showing US and EU collection centre openings rose 12% year-on-year.

The company recently highlighted plans to open 40 new centres in FY22, up from 25 in FY21. Equal-weight rating and $280 target price are retained. Industry view: In line.

Target price is $280.00 Current Price is $301.79 Difference: minus $21.79 (current price is over target).
If CSL 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 $311.23, suggesting upside of 2.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

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

Market Sentiment: 0.3

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

Ord Minnett rates CWN as Buy (1) -

Ord Minnett expects Crown Resorts' upcoming investor day will reveal catalysts leading to upgraded consensus estimates. It's felt Barangaroo's main gaming floor could achieve $40m in yearly earnings (EBITDA) providing 6% upside to consensus forecasts.

The analyst also adjusts FY22 forecasts to reflect an earlier-than-expected easing of Melbourne's covid restrictions. Buy rating and $15 target price are retained.

Target price is $15.00 Current Price is $11.33 Difference: $3.67
If CWN meets the Ord Minnett target it will return approximately 32% (excluding dividends, fees and charges).

Current consensus price target is $13.40, suggesting upside of 17.6% (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

UBS rates EBO as Buy (1) -

EBOS Group appears set for growth within both the Chemist Warehouse and TerryWhite brands, which collectively account for about 45% of the group's community pharmacy revenue capable of growing market share, according to UBS.

EBOS Group suggests Chemist Warehouse could add another 150 stores, alongside TerryWhite's expansion from 465 to 600 stores in the longer-term. EPS forecasts increase 2%, 4% and 5% through to FY24 on strong community pharmacy revenue.

Buy rating retained. Target price increases to NZ$38.90 from NZ$35.40.

Current Price is $34.42. Target price not assessed.

Current consensus price target is $34.25, suggesting downside of -1.3% (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

UBS rates EVN as Upgrade to Neutral from Sell (3) -

UBS resumes coverage on Evolution Mining. Having bought out Glencore Australia for $1bn, Evolution Mining now owns 100% of the Ernest Henry project, increasing copper to 25% of group revenue and adding 380,000 ounces of gold equivalent per annum to production. 

The broker expects weaker near-term cash flow as the company enters reinvestment, committing $600m capital expenditure to developing Cowal over three years. This follows a two-year cash burn from Red Lake production despite the attractive 11m ounce resource.

Coverage resumes with an upgraded Neutral rating. Target price increases to $3.95 from $3.90.

Target price is $3.95 Current Price is $3.89 Difference: $0.06
If EVN meets the UBS target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $4.31, suggesting upside of 7.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.2

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

Citi rates IAG as Buy (1) -

While lacking new information, Citi believes Insurance Australia Group's business update should help reassure investors a recovery is on track. Further required top-ups to reserves are considered by management to be likely "quite modest".

The company is utilising its scale to target $400m of value via increased claims and supply-chain effectiveness, explains the analyst. Buy rating and $5.60 target price are retained.

Target price is $5.60 Current Price is $4.36 Difference: $1.24
If IAG meets the Citi target it will return approximately 28% (excluding dividends, fees and charges).

Current consensus price target is $5.17, suggesting upside of 15.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.6

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

Macquarie rates IAG as Outperform (1) -

Insurance Australia Group's investor day and trading update reiterated FY22 guidance for margins of 10% to 12% and low single-digit gross written premium growth; guided to flat-to-lower gross expenses over two years; and foreshadowed $400m in supply-chain and claims cost reduction (five-year run rate).

Marking to market, Macquarie cuts EPS forecasts -4.1% for FY22, -0.3% for FY23 and -1.8% onwards.

Outperform rating retained, despite the broker acknowledging short-term risks. Target price is $5.20.

Target price is $5.20 Current Price is $4.36 Difference: $0.84
If IAG meets the Macquarie target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $5.17, suggesting upside of 15.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.6

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

Morgan Stanley rates IAG as Underweight (5) -

While Morgan Stanley believes Insurance Australia Group will maintain a capital buffer for an extended period, management has stated the capital position will be reviewed in the first-half of 2022. This follows the business interruption test case.

The analyst reviews a range of buyback scenarios between $0.2bn and $0.8bn in FY23, and estimates accretion at 8cps and 32cps, respectively. 

Management notes Australian motor insurance is seeing some claims inflation but hopes the industry will incorporate this into pricing. Underweight rating and $3.75 target are retained. Industry view: In-Line.

Target price is $3.75 Current Price is $4.36 Difference: minus $0.61 (current price is over target).
If IAG meets the Morgan Stanley target it will return approximately minus 14% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.17, suggesting upside of 15.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.6

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

Morgans rates IAG as Add (1) -

Morgans broadly retains its earnings forecasts and valuation for Insurance Australia Group after the company's business update, which focused on its five-year strategy.

The broker recommends the stock to the patient investor on valuation and given forecast insurance price increases.

Management's medium-term targets are unchanged and guidance was reaffirmed. Add rating retained. Target price eases to $5.31 from $5.36.

Target price is $5.31 Current Price is $4.36 Difference: $0.95
If IAG meets the Morgans target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $5.17, suggesting upside of 15.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.6

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

Ord Minnett rates IAG as Buy (1) -

Insurance Australia Group announced at its investor day that should business interruption rulings remain favourable, a capital return in the first half of calendar 2022 will be announced. Ord Minnett retains its Buy rating and $5.35 target.

Management is targeting medium term reported margins of 15%-17%, driven by an improvement of at least $250m of insurance profits in the intermediated segment.

Target price is $5.35 Current Price is $4.36 Difference: $0.99
If IAG meets the Ord Minnett target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $5.17, suggesting upside of 15.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.6

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

Morgans rates NCM as Add (1) -

Morgans integrates Newcrest Mining's updated operational and capital-expenditure figures and production figures into forecasts, along with the recent acquisition of Pretium’s Brucejack mine in Canada.

The analyst's capital estimates rise materially from previous assumptions though operating cost estimates fall sharply.

Target price falls to $27.18 from $30.43 accordingly. Add rating retained.

Target price is $27.18 Current Price is $23.30 Difference: $3.88
If NCM meets the Morgans target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $28.74, suggesting upside of 22.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

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

Market Sentiment: 0.9

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

UBS rates NCM as Buy (1) -

UBS resumes coverage on Newcrest Mining, noting the company has acquired the US$2.8bn Pretium Brucejack project since the broker's last update, continuing diversification away from the Oceania region.

The broker likes the exploration upside and mine-life extension confidence with Brucejack, but remains cautious given increasing mining rates can result in lower grade production.

The broker appreciates the long-term production profile, noting potential to increase production growth by up to 30% by 2030, while copper credits drive low costs compared to peers. 

Coverage resumes with a Buy rating. Target price decreases to $27.00 from $33.20.

Target price is $27.00 Current Price is $23.30 Difference: $3.7
If NCM meets the UBS target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $28.74, suggesting upside of 22.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

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

Market Sentiment: 0.9

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

Macquarie rates OSH as No Rating (-1) -

Macquarie ceases coverage of Oil Search after shareholders approved the merger with Santos (95% in favour).

The deal remains subject to PNG court approval and a hearing is scheduled for December 9 and the stock should be de-listed on December 10. New Santos shares start trading on Monday 13.

Current Price is $4.11. Target price not assessed.

Current consensus price target is $5.04, suggesting upside of 20.0% (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: 0.5

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

Morgan Stanley rates PSQ as Overweight (1) -

Morgan Stanley raises its target price to $3.40 from $3.20 after Pacific Smiles Group outlined a strong pipeline of demand for the remainder of FY22 at its annual general meeting. The broker was positively surprised by the strength and detail of guidance.

The analyst expects upside to consensus forecasts despite the earnings drag from a re-acceleration of the practice rollout.

Overweight rating retained. Industry view: In-Line.

Target price is $3.40 Current Price is $2.73 Difference: $0.67
If PSQ meets the Morgan Stanley target it will return approximately 25% (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

Macquarie rates RIO as Outperform (1) -

Macquarie attended a roundtable with Chief Executive RIO Tinto Aluminium (a high emissions business) Ivan Vella. Management reaffirms its commitment to decarbonisation but says it will take a staged approach "without compromising business competitiveness", says the broker.

The company revealed no plans for divestment of high emission assets and the broker says the company's critical challenge is to repower its eastern Australian assets.

The company reports its Elysis pilot plant in Canada, which uses anode technology, has been successful and is on track for 2024 commercial scale production, but it's early days yet.

Otherwise, Macquarie says the aluminium division will be a key contributor to earnings over the next five years, and that the company will benefit from strong North American demand and market interest in low-carbon products.

Outperform rating and $133 target price retained.

Target price is $133.00 Current Price is $94.65 Difference: $38.35
If RIO meets the Macquarie target it will return approximately 41% (excluding dividends, fees and charges).

Current consensus price target is $105.71, suggesting upside of 9.3% (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: 0.3

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

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

In discussions with Rio Tinto's management, Morgan Stanley gleans that the fundamentals for aluminum have significantly changed due to global decarbonisation, with the US a key demand driver going forward.

Electric vehicles (EV) and packaging remain key growth markets though there's some risk to EV-related demand from green steel. Morgan Stanley retains an Equal-weight rating, $101 target and In-Line industry view.

Target price is $101.00 Current Price is $94.65 Difference: $6.35
If RIO meets the Morgan Stanley target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $105.71, suggesting upside of 9.3% (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: 0.3

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

Macquarie rates S32 as Outperform (1) -

Macquarie reviews South32's manganese business to reflect the business's rising power as a driver of group earnings (estimated at 17% of FY22 EBIDTA and 22% of free cash flow pre the Sierra Gorda purchase).

The broker believes GEMCO's short mine life is a big risk but has extended mine-life forecasts to 2030 after rolling in Eastern Leases production.

Otherwise, Macquarie paints a rosy picture, noting strong earnings upgrade momentum and boasting strong free-cash-flow yields for FY23 to FY26 (based on spot).

FY22 EPS forecasts rise 1%, and are fairly steady thereafter until FY27, which increases 22% thanks to the GEMCO asset-life extension.

Outperform rating retained. Target price rises to $5.20 from $5.

Target price is $5.20 Current Price is $3.67 Difference: $1.53
If S32 meets the Macquarie target it will return approximately 42% (excluding dividends, fees and charges).

Current consensus price target is $4.47, suggesting upside of 18.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

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

Market Sentiment: 0.9

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

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

Sigma Healthcare cuts FY22 earnings (EBITDA) guidance -10%, causing Morgan Stanley to reduce its target price to 48c from 63c.

Management's guidance implies second-half FY22 earnings will now be -27% lower than flat guidance three months ago, says the broker.

Morgan Stanley now doubts whether the FY23 earnings target is achievable.

Equal-weight rating is retained given the company's woes are already reflected in the share price.

The sharp drop in earnings is considered a contrast to 10% earnings growth for competitor Ebos Group ((EBO)).

In-Line industry view. 

Target price is $0.48 Current Price is $0.46 Difference: $0.02
If SIG meets the Morgan Stanley target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $0.54, suggesting upside of 22.7% (ex-dividends)

The company's fiscal year ends in January.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.0

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

Macquarie rates TLS as No Rating (-1) -

Telstra reaffirms plans to drive growth through sustainability and its ambition to become a top-5 energy retailer by 2025 at its 2021 Sustainability Roundtable.

The company has announced new scope 3 (supply-chain emissions) targets, aiming for a reduction of 50% by 2030 from 2019.

Macquarie says the bulk of the company's scope 3 emissions are derived from products sold, such as modems; and from its suppliers.

When it comes to scope 1 (direct emissions), the broker says Telstra plans to adopt energy-efficiency initiatives such as optimising infrastructure and equipment efficiency, and decommissioning energy-intensive legacy technology.

The broker says Telstra will also apply a pilot shadow carbon price to its capital-expenditure decision-making process, averaging $40 a tonne.

It also highlighted its digital focus, particularly to regional Australia, and rising cybersecurity risk.

Macquarie is on research restriction and cannot provide a rating or target at present.

Current Price is $4.01. Target price not assessed.

Current consensus price target is $4.41, suggesting upside of 8.6% (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

UBS rates Z1P as Upgrade to Neutral from Sell (3) -

Recent share price weakness has improved Zip Co's risk-reward profile says UBS, despite first-half total transaction value tracking below the broker's expectations. 

Previously above consensus, the broker reduces first-half total transaction value forecasts to $4.49bn from $4.81bn on market updates. UBS says US growth may be slowing but it is still expected to surpass Australia and New Zealand as the company's largest market. 

UBS upgrades to Neutral from Sell. Target price decreases to $5.20 from $5.50.

Target price is $5.20 Current Price is $4.77 Difference: $0.43
If Z1P meets the UBS target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $7.27, suggesting upside of 37.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.1

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