Australian Broker Call *Extra* Edition – Jul 02, 2021

Daily Market Reports | Jul 02 2021

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)

ACL   ALU   ASX (2)   BCI (2)   DUB   ECF   EVS   GCY   HSN   IKE   LRK   LYL   MYX   NAB   OSL   PPE   QUB  

ACL    AUSTRALIAN CLINICAL LABS LIMITED

Healthcare services - Overnight Price: $3.49

Goldman Sachs rates ((ACL)) as Initiation of coverage with Buy (1) -

Goldman Sachs initiates coverage on Australian Clinical Labs, the third largest private pathology network in Australia. 

Goldman Sachs expects the company to benefit from a series of operational investments, with the broker highlighting investment in a unified Laboratory Information System and an upgraded central laboratory network as of particular interest.

Further, the broker points to forecast longer-term growth around the market of around 3-5% depending on how the company executes on growth strategies in New South Wales and Queensland. 

Australian Clinical Labs also experienced covid headwinds, with the company leveraged to case and testing trends as the only pure-play domestic provider.

Goldman Sachs initiates with a Buy rating and a target price of $4.80. 

This report was published on June 7, 2021. 

Target price is $4.80 Current Price is $3.49 Difference: $1.31
If ACL meets the Goldman Sachs target it will return approximately 38% (excluding dividends, fees and charges).

Forecast for FY21:

Goldman Sachs forecasts a full year FY21 dividend of 0.00 cents and EPS of 42.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 8.31.

Forecast for FY22:

Goldman Sachs forecasts a full year FY22 dividend of 10.00 cents and EPS of 17.00 cents.
At the last closing share price the estimated dividend yield is 2.87%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 20.53.

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

ALU    ALTIUM

Hardware & Equipment - Overnight Price: $36.25

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

Altium announced that Autodesk, a US-listed multi-national software company, has proposed an offer for the company valued at $38.50. Shaw and Partners lifts the target price to that level from $34 and maintains its Buy rating.

The broker views the offer as opportunistic given the depressed earnings base due to covid and the depressed multiple versus peers. Additionally, it's thought the price merely reflects historical trading ranges, rather than including a premium for synergies.

The analyst feels downside is limited and there is a reasonable chance of a revised offer from Autodesk, or even a competing bid from private equity or other trade buyers.

This report was published on June 8, 2021. 

Target price is $38.50 Current Price is $36.25 Difference: $2.25
If ALU meets the Shaw and Partners target it will return approximately 6% (excluding dividends, fees and charges).
Current consensus price target is $35.30, suggesting downside of -2.6%(ex-dividends)
The company's fiscal year ends in June.

Forecast for FY21:

Shaw and Partners forecasts a full year FY21 dividend of 73.46 cents and EPS of 46.43 cents.
At the last closing share price the estimated dividend yield is 2.03%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 78.08.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 44.9, implying annual growth of N/A.
Current consensus DPS estimate is 43.4, implying a prospective dividend yield of 1.2%.
Current consensus EPS estimate suggests the PER is 80.7.

Forecast for FY22:

Shaw and Partners forecasts a full year FY22 dividend of 77.87 cents and EPS of 52.58 cents.
At the last closing share price the estimated dividend yield is 2.15%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 68.94.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 54.0, implying annual growth of 20.3%.
Current consensus DPS estimate is 46.6, implying a prospective dividend yield of 1.3%.
Current consensus EPS estimate suggests the PER is 67.1.

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

ASX    ASX LIMITED

Wealth Management & Investments - Overnight Price: $77.24

Goldman Sachs rates ((ASX)) as Sell (5) -

Goldman Sachs assesses a slight increase in average daily contracts traded (versus May 2020 levels) is welcome though achieved from a very low base.

The May trading update revealed recent soft trends across products continued, points out the broker. While daily average volumes were down -16% and -6% on the pcp for 90-day bank bills and 3-year bonds, volumes in the 10-year bond product were up 17% on the pcp.

Meanwhile, OTC cleared value is tracking -81% below the pcp. Austraclear trends were more supportive, in line with trends highlighted in the 1H21 result, notes the analyst. The Sell rating and a $67.46 target price are retained.

This report was published on June 4, 2021.

Target price is $67.46 Current Price is $77.24 Difference: minus $9.78 (current price is over target).
If ASX meets the Goldman Sachs target it will return approximately minus 13% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $70.67, suggesting downside of -8.5%(ex-dividends)
The company's fiscal year ends in June.

Forecast for FY21:

Goldman Sachs forecasts a full year FY21 EPS of 249.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 31.02.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 246.5, implying annual growth of -4.3%.
Current consensus DPS estimate is 223.9, implying a prospective dividend yield of 2.9%.
Current consensus EPS estimate suggests the PER is 31.3.

Forecast for FY22:

Goldman Sachs forecasts a full year FY22 EPS of 246.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 31.40.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 251.6, implying annual growth of 2.1%.
Current consensus DPS estimate is 225.9, implying a prospective dividend yield of 2.9%.
Current consensus EPS estimate suggests the PER is 30.7.

Market Sentiment: -0.1
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources


Jarden rates ((ASX)) as Initiation of coverage with Underweight (2) -

Jarden initiates coverage on ASX Limited. While FY21 results are predicted to reveal an earnings per share decrease of -7%, the broker points to post-FY21 growth rate improvement forecasts.

Jarden notes post-FY21 a weaker cash equity outlook could contribute to earnings per share compound annual growth rate being constrained to 4.8% over the next three years.

The anticipated earnings per share decrease is notably the largest decline since FY09 which was impacted by the Global Financial Crisis.

ASX's largest segment, Derivative Revenues, is expected to fall -13% in FY21, but Jarden suggests that while volumes should bottom out in FY21, a 12% increase is predicted for FY22 and a 9-10% increase for FY23 through FY24. 

Jarden initiates with an Underweight rating and a target price of $75.35. 

This report was published on June 6, 2021. 

Target price is $75.35 Current Price is $77.24 Difference: minus $1.89 (current price is over target).
If ASX meets the Jarden target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $70.67, suggesting downside of -8.5%(ex-dividends)
The company's fiscal year ends in June.

Forecast for FY21:

Jarden forecasts a full year FY21 dividend of 229.90 cents and EPS of 245.80 cents.
At the last closing share price the estimated dividend yield is 2.98%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 31.42.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 246.5, implying annual growth of -4.3%.
Current consensus DPS estimate is 223.9, implying a prospective dividend yield of 2.9%.
Current consensus EPS estimate suggests the PER is 31.3.

Forecast for FY22:

Jarden forecasts a full year FY22 dividend of 241.10 cents and EPS of 255.50 cents.
At the last closing share price the estimated dividend yield is 3.12%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 30.23.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 251.6, implying annual growth of 2.1%.
Current consensus DPS estimate is 225.9, implying a prospective dividend yield of 2.9%.
Current consensus EPS estimate suggests the PER is 30.7.

Market Sentiment: -0.1
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

BCI    BCI MINERALS LIMITED

Iron Ore - Overnight Price: $0.56

Bell Potter rates ((BCI)) as Buy (1) -

Bell Potter assumes a scenario for benchmark iron ore prices for the Iron Valley mine at US$200/t for FY22 and US$150/t for FY23. If this occurs, it's estimated the new equity requirement to fund the Mardie Salt and SOP project's development falls by around -80%.

Via lower shareholder dilution alone, the broker estimates a 50% increase in the company's valuation. The broker raises the EPS forecast for FY21 to 8.6cps from 5.9cps, FY22 to 7.8cps from 2.8cps and FY23 to 1.5cps from 1.1cps.

Buy rated and target rises to $0.69 from $0.57. The analyst notes optimised Mardie Salt and SOP Project has the potential to add significant value and has appeal to ESG concerned debt and equity investors.

This report was published on June 7, 2021.

Target price is $0.69 Current Price is $0.56 Difference: $0.13
If BCI meets the Bell Potter target it will return approximately 23% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY21:

Bell Potter forecasts a full year FY21 dividend of 0.00 cents and EPS of 8.60 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 6.51.

Forecast for FY22:

Bell Potter forecasts a full year FY22 dividend of 0.00 cents and EPS of 8.90 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 6.29.

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


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

Canaccord Genuity maintains its Speculative Buy rating and lifts its target price to $0.70 from $0.60 on increased iron ore pricing assumptions. This increases the valuation of the Iron Valley royalty to $148m, a conservative valuation compared to similar iron ore peers, according to the broker.

A recent site visit to the Mardie Salt and SOP project' reinforced to the broker that early works are well underway (40 people onsite, civils commenced) and long-lead-time items ordered. It's felt the salt price is grinding higher, with the most recent prices in the US$42/t range, as demand recovers.

The analyst assesses the capital burden (-$913mn upfront) is high at Mardie, and so is the project gestation (around 3.5 years), but the economics of this highly strategic project are compelling, in the broker's opinion.

This report was published on June 8, 2021.

Target price is $0.70 Current Price is $0.56 Difference: $0.14
If BCI meets the Canaccord Genuity target it will return approximately 25% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY21:

Canaccord Genuity forecasts a full year FY21 EPS of 4.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.00.

Forecast for FY22:

Canaccord Genuity forecasts a full year FY22 EPS of 2.80 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 20.00.

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


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