Australian Broker Call *Extra* Edition – May 18, 2022

Daily Market Reports | May 18 2022

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)

AHX   ALL   AVH   BLX   BTH   CBR   CGC   CTD   CXL   DHG   EDV   FZO   GNC   GT1   IRI   JHG   JHX   JRV   NEC   NWS   OML   PPG   PPH   REA   SND   SWM   TOY   WZR   XRO (2)  

AHX    APIAM ANIMAL HEALTH LIMITED

Healthcare services - Overnight Price: $0.74

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

Shaw and Partners considers the trading update "solid" and the business is on track to exceed forecasts. The company has also won a number of grants for animal vaccines.

The broker suspects the company could achieve a doubling of revenues to $300m in FY24 on a combination of organic growth, the roll-out of new clinics and acquisitions.

In particular, a successful roll-out of greenfield clinics could be generating $5-6m in EBITDA by FY24 and acquisitions contribute $15m. The broker also envisages potential for a re-rating over time, retaining a Buy rating with a $1.26 target.

This report was published on May 17, 2022.

Target price is $1.26 Current Price is $0.74 Difference: $0.52
If AHX meets the Shaw and Partners target it will return approximately 70% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY22:

Shaw and Partners forecasts a full year FY22 dividend of 2.20 cents and EPS of 5.00 cents.
At the last closing share price the estimated dividend yield is 2.97%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.80.

Forecast for FY23:

Shaw and Partners forecasts a full year FY23 dividend of 3.10 cents and EPS of 6.80 cents.
At the last closing share price the estimated dividend yield is 4.19%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 10.88.

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

ALL    ARISTOCRAT LEISURE LIMITED

Gaming - Overnight Price: $31.20

Jarden rates ((ALL)) as Overweight (2) -

Jarden notes several delays to popular console/PC gaming titles, likely because of a combination of supply chain issues and console shortages. The extent to which competition for game developments and disruption in key developer markets in Russia and Ukraine are affecting the sector is unknown but considered likely.

The broker highlights the Aristocrat Leisure share price is factoring in consensus earnings downgrades stemming from either the Pixel United revenue risk or heightened expense from the entry into real money gaming, but not both.

Hence including both pending earnings downgrades may weigh negatively on the share price in the absence of fresh capital management, the broker suggests.

Overweight. Target is reduced to $37.66 from $39.23.

This report was published on May 13, 2022.

Target price is $37.66 Current Price is $31.20 Difference: $6.46
If ALL meets the Jarden target it will return approximately 21% (excluding dividends, fees and charges).
Current consensus price target is $46.25, suggesting upside of 48.2%(ex-dividends)
The company's fiscal year ends in September.

Forecast for FY22:

Jarden forecasts a full year FY22 dividend of 58.00 cents and EPS of 144.60 cents.
At the last closing share price the estimated dividend yield is 1.86%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 21.58.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 153.4, implying annual growth of 19.7%.
Current consensus DPS estimate is 58.8, implying a prospective dividend yield of 1.9%.
Current consensus EPS estimate suggests the PER is 20.3.

Forecast for FY23:

Jarden forecasts a full year FY23 dividend of 62.00 cents and EPS of 156.00 cents.
At the last closing share price the estimated dividend yield is 1.99%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 20.00.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 177.5, implying annual growth of 15.7%.
Current consensus DPS estimate is 70.3, implying a prospective dividend yield of 2.3%.
Current consensus EPS estimate suggests the PER is 17.6.

Market Sentiment: 0.9
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

AVH    AVITA MEDICAL INC

Pharmaceuticals & Biotech/Lifesciences - Overnight Price: $1.57

Wilsons rates ((AVH)) as Underweight (5) -

First quarter results showed progress in core accounts for Avita Medical. Wilsons acknowledges the potential clinical catalysts from trials in 2022 which may give the share price a boost and facilitate a "better exit" compared to current levels.

The broker expects RECELL to show positive results in vitiligo but then fail as a product. The main issue, Wilsons asserts, is the business has misjudged its product category and failed to create a profit base to support other indications. Underweight retained. Target is $1.27.

This report was published on May 16, 2022.

Target price is $1.27 Current Price is $1.57 Difference: minus $0.3 (current price is over target).
If AVH meets the Wilsons target it will return approximately minus 19% (excluding dividends, fees and charges - negative figures indicate an expected loss).
The company's fiscal year ends in June.

Forecast for FY22:

Wilsons forecasts a full year FY22 dividend of 0.00 cents and EPS of minus 209.27 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 0.75.

Forecast for FY23:

Wilsons forecasts a full year FY23 dividend of 0.00 cents and EPS of minus 185.28 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 0.85.

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

BLX    BEACON LIGHTING GROUP LIMITED

Furniture & Renovation - Overnight Price: $2.10

Jarden rates ((BLX)) as Overweight (2) -

Jarden's AIB Construction Activity Survey suggests 4% growth in new contracts in the six months, vs a -1% decline in the previous survey, and backlogs have extends to 1.5 years from one year, underpinning near-term earnings, says the broker.

The survey also reveals a skew to larger national contractors with turnover in excess of $100m.

Steel product pricing strength proved the standout, Jarden tipping a potential 10% rise in prices.

Project costs jumped 10% but the respondents reported a greater willingness for customers to share the impost compared with the previous survey. The broker surmises improved profitability for construction companies could erode margins for developers such as Mirvac Group ((MGR)) and labour shortages are also expected to bite.

The survey suggests demand for fibre cement has risen at the expense of brick most likely due to a widening price differential, says the broker.

Jarden says rates remain a risk for the medium term and that rate rises traditionally lead building approvals by three months (the broker is tipping a -15% to -20% fall) and prefers building material companies with potential for market share gain such as James Hardie Industries ((JHX)) and Bluescope Steel ((BSL)).

On the distribution front, Jarden notes Total Tools, James Hardie Industries ((JHX)) and Beacon Lighting are all improving penetration but Bunnings ((WES)) remains the clear leader with Metcash ((MTS)) the main beneficiary from contract wins.

Overweight rating retained for Beacon Lighting Group. Target price is $2.60, which compares to the last entry in the FNArena database in January of $2.80.

This report was published on May 9, 2022.

Target price is $2.60 Current Price is $2.10 Difference: $0.5
If BLX meets the Jarden target it will return approximately 24% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY22:

Jarden forecasts a full year FY22 dividend of 10.10 cents and EPS of 16.00 cents.
At the last closing share price the estimated dividend yield is 4.81%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 13.13.

Forecast for FY23:

Jarden forecasts a full year FY23 dividend of 7.80 cents and EPS of 12.90 cents.
At the last closing share price the estimated dividend yield is 3.71%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 16.28.

Market Sentiment: 1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

BTH    BIGTINCAN HOLDINGS LIMITED

Cloud services - Overnight Price: $0.54

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

An unexpected market update from Bigtincan Holdings saw the company reiterate annualised recurring revenue guidance of more than $119m and revenue guidance of more than $109m, with Canaccord Genuity noting the update was likely to reassure investors that guidance would not be downgraded. 

The Bigtincan Holdings share price has declined -67% since August, suggesting market concern, but the company also announced a cash flow breakeven target in FY23, a large beat to consensus and suggesting sizeable operating leverage improvement in the next year.

The Buy rating and target price of $1.50 are retained.

This report was published on May 17, 2022.

Target price is $1.50 Current Price is $0.54 Difference: $0.96
If BTH meets the Canaccord Genuity target it will return approximately 178% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY22:

Canaccord Genuity forecasts a full year FY22 dividend of 0.00 cents and EPS of minus 0.90 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 60.00.

Forecast for FY23:

Canaccord Genuity forecasts a full year FY23 dividend of 0.00 cents and EPS of minus 0.20 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 270.00.

Market Sentiment: 1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

CBR    CARBON REVOLUTION LIMITED

Automobiles & Components - Overnight Price: $0.49

Bell Potter rates ((CBR)) as Downgrade to Hold from Buy (3) -

A pull forward of sales in the previous quarter saw Carbon Revolution report a -11.2% year-on-year sales revenue decline in the third quarter, while wheel sales declined -6.6% year-on-year, although sales were slightly ahead of Bell Potter's forecast.

While the announced $12m government grant adds to cash, the broker notes sales growth and delays to new program timelines continue to challenge its investment thesis, with the mega-line program delayed and now not expected to commence production until the second half of FY24.

The rating is downgraded to Speculative Hold from Speculative Buy and the target price decreases to $0.70 from $1.55.

This report was published on May 13, 2022.

Target price is $0.70 Current Price is $0.49 Difference: $0.21
If CBR meets the Bell Potter target it will return approximately 43% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY22:

Bell Potter forecasts a full year FY22 dividend of 0.00 cents and EPS of minus 19.30 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 2.54.

Forecast for FY23:

Bell Potter forecasts a full year FY23 dividend of 0.00 cents and EPS of minus 15.10 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 3.25.

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


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