Australian Broker Call *Extra* Edition – Sep 30, 2020

Daily Market Reports | Sep 30 2020

An additional news report on the recommendation, valuation, forecast and opinion changes for ASX-listed equities.

In addition to The Australian Broker Call Report, which is published and updated daily (Mon-Fri), FNArena has now added The Australian Broker Call *Extra* Edition, featuring additional sources of research and insights on ASX-listed stocks, also enlarging the number of stocks that make up the FNArena universe.

One key difference is the *Extra* Edition will not be updated daily, but merely "regularly" depending on availability of suitable quality content. As such, the *Extra* Edition tries to build a bridge between daily updates via the Australian Broker Call Report and ad hoc news stories, that are not always timely for investors hungry for the next information update.

Investors using the *Extra* Edition as a source of input for their own share market research should thus take into account that information after publication may not be up to date, or yet awaiting another update by FNArena's team of journalists.

Similar to The Australian Broker Call Report, this *Extra* Edition includes concise but limited reviews of research recently published by Stockbrokers and other experts, which should be considered as information concerning likely market behaviour rather than advice on the securities mentioned. Do not act on the contents of this Report without first reading the important information included at the end of this Report.

The Australian Broker Call *Extra* Edition is a summary that has been prepared independently of the sources identified. Readers will check the full text of the recommendations and consult a Licenced Advisor before making any investment decision.

The copyright of this Report is owned by the publisher. Readers will not copy, forward or disseminate this Report to any other person. For more vital information about the sources included, see the bottom of this Report.

COMPANIES DISCUSSED IN THIS ISSUE

Click on a symbol for fast access.
The number next to the symbol represents the number of brokers covering it for this report -(if more than 1)

360   A2M   AHX   AMA   APT   AQR   ARX   ASB   ASG (2)   AT1   BVS   CDP   CGC   CQR   D2O   GNC   GNG   HLO   IEL   IFL   MTO   MWY (2)   NEA   NXT   OSL (2)   PCK   PME (3)   PRN   PWG   PXS   RMD   SNL   SPL   ST1   SXE   TPW   VTH   WZR  

AHX    APIAM ANIMAL HEALTH LTD

Medical Equipment & Devices - Overnight Price: $0.64

Shaw and Partners rates ((AHX)) as Buy (1) -

Shaw and Partners notes, despite the extremely difficult backdrop, Apiam Animal Health has continued to increase its profit since listing. The company expects growth conditions will improve and become favourable, including better weather and a decrease in input prices.

The broker expects dairy heads to rise by 1% and production by 1-3% in 2020.

As the company is a market leader in a consolidating sector, the broker expects both distributions and cash flows to continue to rise.

Shaw and Partners reinitiates its coverage on the stock with a Buy recommendation and a target price of $0.79.

This report was published on September 10, 2020.

Target price is $0.79 Current Price is $0.64 Difference: $0.15
If AHX meets the Shaw and Partners target it will return approximately 23% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY21:

Shaw and Partners forecasts a full year FY21 dividend of 1.50 cents and EPS of 5.90 cents.
At the last closing share price the estimated dividend yield is 2.34%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 10.85.

Forecast for FY22:

Shaw and Partners forecasts a full year FY22 dividend of 2.00 cents and EPS of 7.50 cents.
At the last closing share price the estimated dividend yield is 3.13%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 8.53.

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

AQR    APN CONVENIENCE RETAIL REIT

REITs - Overnight Price: $3.88

Moelis rates ((AQR)) as Buy (1) -

APN Convenience Retail REIT will be acquiring a service station in Perth for $6.15m. The Shell station is tenanted by Viva Energy ((VEA)) and the deal is expected to settle by the end of October.

Moelis considers this a relatively small acquisition for the REIT, estimated to lead to a 0.8% increase in the group’s FY22 earnings forecast.

The REIT has guided toward funds from operations (FFO) and dividend range of 21.8-22c in FY21. The broker believes a handful of similar acquisitions could result in upward earnings revision to the guidance range. 

Hold rating retained. Target price is $4.05.

This report was published on September 10, 2020.

Target price is $4.05 Current Price is $3.88 Difference: $0.17
If AQR meets the Moelis target it will return approximately 4% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY21:

Moelis forecasts a full year FY21 dividend of 21.90 cents and EPS of 22.00 cents.
At the last closing share price the estimated dividend yield is 5.64%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 17.64.

Forecast for FY22:

Moelis forecasts a full year FY22 dividend of 22.40 cents and EPS of 22.70 cents.
At the last closing share price the estimated dividend yield is 5.77%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 17.09.

Market Sentiment: 0.8
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

ARX    AROA BIOSURGERY LIMITED

Pharmaceuticals & Biotech/Lifesciences - Overnight Price: $1.35

Wilsons rates ((ARX)) as Overweight (1) -

Wilsons explains Aroa Biosurgery’s exclusive marketing partner for OviTex, called Tela Bio, could accelerate market share gains in the short term.

As a biologic/synthetic hybrid, OviTex is an alternative to biologic mesh.

The broker understands a key competitor of Tela Bio has not been re-contracted to supply biologic mesh across a broad range of hospitals. It’s considered Tela Bio may step into the breach.

Separately, Wilsons has collected very favourable clinical feedback on Aroa’s MYRIAD product for dermal soft tissue reconstruction.

The Overweight rating is unchanged and the target price is increased to $2 from $1.91.

This report was published on September 7, 2020

Target price is $2.00 Current Price is $1.35 Difference: $0.65
If ARX meets the Wilsons target it will return approximately 48% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY21:

Wilsons forecasts a full year FY21 dividend of 0.00 cents and EPS of minus 3.10 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 43.55.

Forecast for FY22:

Wilsons forecasts a full year FY22 dividend of 0.00 cents and EPS of minus 1.80 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 75.00.

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

ASB    AUSTAL LIMITED

Commercial Services & Supplies - Overnight Price: $3.31

Goldman Sachs rates ((ASB)) as Buy (1) -

The Congressional Research Service (CRS) released an update on the Navy Force Structure report for the US.

Goldman Sachs summarises this represent a 10% and 80% upgrade to the vessel count for manned and unmanned ships, respectively, versus current ship fleet plans.

This could meaningfully increase the group of programs Austal can realistically bid on, and thus the shipbuilders long-run US Navy total addressable market, assesses the broker.

Coupled with recent US Navy funding for the company's steel capacity expansion, Goldman Sachs has increased confidence in the company's post-Littoral Combat Ship (LCS) program future.

The Buy rating and target price of $4.35 are unchanged

This report was published on September 7, 2020.

Target price is $4.35 Current Price is $3.31 Difference: $1.04
If ASB meets the Goldman Sachs target it will return approximately 31% (excluding dividends, fees and charges).
Current consensus price target is $3.97, suggesting upside of 18.8%(ex-dividends)
The company's fiscal year ends in June.

Forecast for FY21:

Goldman Sachs forecasts a full year FY21 dividend of 9.00 cents and EPS of 25.00 cents.
At the last closing share price the estimated dividend yield is 2.72%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 13.24.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 23.9, implying annual growth of -4.4%.
Current consensus DPS estimate is 8.9, implying a prospective dividend yield of 2.7%.
Current consensus EPS estimate suggests the PER is 14.0.

Forecast for FY22:

Goldman Sachs forecasts a full year FY22 dividend of 9.00 cents and EPS of 25.00 cents.
At the last closing share price the estimated dividend yield is 2.72%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 13.24.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 24.1, implying annual growth of 0.8%.
Current consensus DPS estimate is 8.8, implying a prospective dividend yield of 2.6%.
Current consensus EPS estimate suggests the PER is 13.9.

Market Sentiment: 0.3
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

AT1    ATOMO DIAGNOSTICS LIMITED

Medical Equipment & Devices - Overnight Price: $0.37

Canaccord Genuity rates ((AT1)) as Buy (1) -

Atomo Diagnostics’ first full-year result post its IPO did not disappoint Canaccord Genuity, with revenue ahead of the broker's forecast and operating loss less half of what was expected.

The company earned revenue from four products, a feat which the broker takes as proof the business is broader than the pandemic. Working capital is a drag on cash flow but the company is expected to turn cash flow positive in the second half of FY21.

With the pending launch of the US business via its partner Access Bio and the development of a digital eHealth solution to facilitate regulatory approval for the covid-19 product as a self-test for consumers, FY21 is expected to be even stronger.

Canaccord Genuity maintains its Buy recommendation with the target price increasing to $0.78 from $0.65.

This report was published on August 31, 2020.

Target price is $0.78 Current Price is $0.37 Difference: $0.41
If AT1 meets the Canaccord Genuity target it will return approximately 111% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY21:

Canaccord Genuity forecasts a full year FY21 dividend of 0.00 cents and EPS of 0.60 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 61.67.

Forecast for FY22:

Canaccord Genuity forecasts a full year FY22 dividend of 0.00 cents and EPS of 2.90 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.76.

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


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