Australian Broker Call

Morgan Stanley rates ALQ as Overweight (1) -

The company has acquired Investiga, a small pharmaceutical testing business specialising in cosmetics and personal care. Morgan Stanley estimates the acquisition value is $45-55m.

The broker notes the life sciences division continues to show resilience while commodities are starting to benefit from the improving cycle as sample flows recover.

The company believes as long as the gold price is above US$1500/oz capital from explorers will continue to be invested, creating a positive backdrop for testing.

Overweight rating. Target is $10.70. Industry view: In-line.

Target price is $10.70 Current Price is $9.79 Difference: $0.91
If ALQ meets the Morgan Stanley target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $10.18, suggesting upside of 2.8% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.6

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

Ord Minnett rates AOF as Accumulate (2) -

Australian Unity Office has a conditional contract to sell 241 Adelaide Street Brisbane for $31.5m. This price is in line with Ord Minnett's expectations.

Proceeds will be used to fund the expenditure on existing buildings or restructure the swap book. The broker expects only minor dilution from FY22. Accumulate maintained. Target is reduced marginally to $2.31 from $2.32.

Target price is $2.31 Current Price is $2.26 Difference: $0.05
If AOF meets the Ord Minnett target it will return approximately 2% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.5

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

Citi rates BPT as Neutral (3) -

Citi upgrades its 2021 oil price deck by US$5 to US$64/bbl. This is 8% above consensus at US$59/bbl. 

The revision comes on the back of robust demand recovery, strong OPEC-Plus compliance and Saudi’s additional oil production cuts, all of which have led to a faster than expected depletion of crude stocks. Citi expects strong pricing will continue into the first quarter of FY22.

This leads the broker to upgrade its FY21-22 earnings forecasts for Beach Energy by 7% with a slight downgrade to the forecast for the December quarter of 2022.

Neutral. Target rises to $1.75 from $1.73.

Target price is $1.75 Current Price is $1.75 Difference: $0
If BPT meets the Citi target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $1.97, suggesting upside of 11.3% (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

Morgans rates CCL as Hold (3) -

The company continues to progress with Coca-Cola European Partners' (CCEP) takeover offer via a scheme of arrangement.

An Independent Expert’s report by Grant Samuel & Associates has concluded that the scheme is fair and reasonable and accordingly is in the best interests of independent shareholders.

Underlying value has been assessed at between $12.68-$14.01 per share by the IE. This valuation includes a premium for control. It is in line with CCEP’s offer price of $13.50 per share. The Hold rating is unchanged and the target price increases to $13.50 from $12.75.

Target price is $13.50 Current Price is $13.43 Difference: $0.07
If CCL meets the Morgans target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $12.67, suggesting downside of -5.7% (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 FLT as Downgrade to Underweight from Equal-weight (5) -

Morgan Stanley notes significant momentum in recent weeks amid the announcement from the federal government of a stimulus package for the broader tourism sector.

Nevertheless, the Flight Centre stock price is now 5% ahead of pre-pandemic levels, adjusting for the capital raising.

Morgan Stanley assesses fundamental upside from this point requires the view that earnings will materially improve post the pandemic.

The broker downgrades to Underweight from Equal-weight, partially stemming from a preference for Qantas ((QAN)) within the travel coverage. Target is $17.50. Industry view: Attractive.

Target price is $17.50 Current Price is $18.65 Difference: minus $1.15 (current price is over target).
If FLT 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 $17.57, suggesting downside of -4.7% (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

Macquarie rates KAR as Outperform (1) -

Macquarie assumes lower assumed contingent payments for Bauna by about -50%, based on disclosures by Karoon Energy.

The broker's earnings forecasts have been revised up by 5%-12% over FY21-FY22 on revised production forecasts. Macquarie prefers Karoon Energy and Senex Energy ((SXY)) in small-medium energy stocks.

The target price rises to $1.50 from $1.40. Outperform rating retained.

Target price is $1.50 Current Price is $1.18 Difference: $0.32
If KAR meets the Macquarie target it will return approximately 27% (excluding dividends, fees and charges).

Current consensus price target is $1.60, suggesting upside of 34.5% (ex-dividends)

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

Credit Suisse rates NEC as Outperform (1) -

Nine Entertainment has announced a new regional TV affiliation with WIN TV from July 1, 2021. This is a switch back to a previous partner after five years with Southern Cross Media ((SXL)).

Nine will benefit from increased coverage, specifically Tasmania and regional WA, and the potential for lower costs.

Credit Suisse maintains current earnings estimates but notes the new agreement limits the impact of any ad market downside. Outperform rating and $3.25 target.

Target price is $3.25 Current Price is $3.00 Difference: $0.25
If NEC meets the Credit Suisse target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $3.36, suggesting upside of 12.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.8

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

UBS rates NEC as Neutral (3) -

UBS anticipates the benefits of the return to an affiliate agreement with WIN TV from July 1 will be the uplift from commerical agreements in the WA and Tasmanian markets.

There will also be savings on regional news costs, which Nine Entertainment was previously providing to Southern Cross Media ((SXL)). Forecasts are lifted by 2-3% for FY22-23. Neutral rating and $3.00 target.

Target price is $3.00 Current Price is $3.00 Difference: $0
If NEC meets the UBS target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $3.36, suggesting upside of 12.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.8

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

Morgan Stanley rates NTO as Overweight (1) -

The company has guided to annualised recurring revenue of US$38-42m, which Morgan Stanley considers conservative, as with strong execution there is further upside amid several incremental growth levers.

Moreover, the broker calculates the FY21 second half performance would have to decline materially, even excluding flipping of maintenance to subscription.

Overweight rating. Target is raised to $3.70 from $3.50. Industry view: In-line.

Target price is $3.70 Current Price is $2.48 Difference: $1.22
If NTO meets the Morgan Stanley target it will return approximately 49% (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

UBS rates ORG as Buy (1) -

UBS lifts Brent oil price forecast for 2021 to US$65.50/bbl, from US$57/bbl, and 2022 to US$62/bbl from US$60/bbl.

UBS lifts estimates for FY21-22 by 5-26% to reflect the revised oil price forecasts and now expects around $650m in a cash distribution from APLNG over FY21.

Buy rating retained. Target rises to $5.60 from $5.50.

Target price is $5.60 Current Price is $4.66 Difference: $0.94
If ORG meets the UBS target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $5.21, suggesting upside of 10.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.4

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

Citi rates OSH as Neutral (3) -

Citi upgrades its 2021 oil price deck by US$5 to US$64/bbl. This is 8% above consensus at US$59/bbl. 

The revision comes on the back of robust demand recovery, strong OPEC-Plus compliance and Saudi’s additional oil production cuts, all of which have led to a faster than expected depletion of crude stocks. Citi expects strong pricing will continue into the first quarter of FY22.

With Oil Search most levered to oil, Citi expects the company's earnings will rise by 23% and considers Oil Search its top oil stock pick.

The target price rises to $4.47 from $4.35 with a Neutral rating.

Target price is $4.47 Current Price is $4.42 Difference: $0.05
If OSH meets the Citi target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $4.35, suggesting downside of -1.9% (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: -0.1

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

UBS rates OSH as Neutral (3) -

UBS lifts Brent oil price forecasts for 2021 to US$65.50/bbl, from US$57/bbl, and 2022 to US$62/bbl from US$60/bbl.

The higher oil prices lift the broker's earnings estimates by 10-51% through to 2022. Valuation is only lifted by 2-5% as the long-term oil price outlook is unchanged.

Oil Search is the broker's least preferred of the energy stocks as there are few near-term catalysts although it has the highest sensitivity to changes in the oil price. Targets raised to $4.60 from $4.40.

Target price is $4.60 Current Price is $4.42 Difference: $0.18
If OSH meets the UBS target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $4.35, suggesting downside of -1.9% (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: -0.1

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

Macquarie rates QAN as Upgrade to Outperform from Neutral (1) -

Macquarie expects vaccine rollouts in Qantas’ key international destinations to be largely completed by the end of 2021. Supported by border policies, government stimulus and the vaccine, the broker expects domestic capacity to overshoot pre-covid levels in the near term.

In the broker's view, Qantas has structurally improved the business through covid and has a higher skew towards the more attractive domestic and loyalty businesses and the cost-out which reduces downside risks within international.

The broker upgrades to Outperform from Neutral with the target rising to $6.35 from $5.05.

Target price is $6.35 Current Price is $5.30 Difference: $1.05
If QAN meets the Macquarie target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $5.79, suggesting upside of 5.5% (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

Credit Suisse rates RIC as Upgrade to Outperform from Neutral (1) -

Credit Suisse assesses Ridley is generating a reliable record of delivery on its strategy. Optimisation has started to yield benefits and the broker is also comfortable with the organic growth story. First half operating earnings were ahead of estimates, up 16.5%.

As the valuation is undemanding and there is increasing conviction in the medium-term growth profile, Credit Suisse upgrades to Outperform from Neutral and raises the target to $1.15 from 85c.

Target price is $1.15 Current Price is $1.06 Difference: $0.09
If RIC meets the Credit Suisse target it will return approximately 8% (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

Citi rates STO as Neutral (3) -

Citi upgrades its 2021 oil price deck by US$5 to US$64/bbl. This is 8% above consensus at US$59/bbl. 

The revision comes on the back of robust demand recovery, strong OPEC-Plus compliance and Saudi’s additional oil production cuts, all of which have led to a faster than expected depletion of crude stocks. Citi expects strong pricing will continue into the first quarter of FY22.

While Oil Search ((OSH)) remains Citi's stock poised to benefit from the bull scenario upside, as a long-term pick the broker prefers Santos amongst the large caps due to higher returning growth projects and a healthy balance sheet.

Neutral retained. Target rises to $7.42 from $7.35.

Target price is $7.42 Current Price is $7.22 Difference: $0.2
If STO meets the Citi target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $7.59, suggesting upside of 3.1% (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

UBS rates STO as Buy (1) -

UBS lifts Brent oil price forecast for 2021 to US$65.50/bbl, from US$57/bbl, and 2022 to US$62/bbl from US$60/bbl. Santos remains the preferred exposure across the energy sector with short-term growth catalysts.

Moreover, UBS believes the investment in carbon abatement via the Moomba CCS project aligns the company's business plan with the proposed energy transition. Buy rating retained. Target is raised to $8.20 from $7.90.

Target price is $8.20 Current Price is $7.22 Difference: $0.98
If STO meets the UBS target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $7.59, suggesting upside of 3.1% (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

UBS rates SXL as Buy (1) -

As UBS suspected Nine Entertainment ((NEC)) has moved its affiliate agreement, back to WIN TV.

While this had a negative impact on the Southern Cross Media stock price at the time of the announcement, the broker suggests an earnings neutral outcome is still possible and the share price reaction is overdone.

 Buy rating retained. Target is $2.50.

Target price is $2.50 Current Price is $1.98 Difference: $0.52
If SXL meets the UBS target it will return approximately 26% (excluding dividends, fees and charges).

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

Citi rates SXY as Buy (1) -

Citi upgrades its 2021 oil price deck by US$5 to US$64/bbl. This is 8% above consensus at US$59/bbl. 

The revision comes on the back of robust demand recovery, strong OPEC-Plus compliance and Saudi’s additional oil production cuts, all of which have led to a faster than expected depletion of crude stocks. Citi expects strong pricing will continue into the first quarter of FY22.

The oil price upgrade also leads Citi to increase Senex Energy's FY21-22 earnings forecasts by 8-11%. 

The Buy rating remains intact with the target price rising slightly to $0.44 from $0.43. 

Target price is $0.44 Current Price is $0.38 Difference: $0.06
If SXY meets the Citi target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $0.46, suggesting upside of 18.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.8

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

Citi rates WPL as Neutral (3) -

Citi upgrades its 2021 oil price deck by US$5 to US$64/bbl. This is 8% above consensus at US$59/bbl. 

The revision comes on the back of robust demand recovery, strong OPEC-Plus compliance and Saudi’s additional oil production cuts, all of which have led to a faster than expected depletion of crude stocks. Citi expects strong pricing will continue into the first quarter of FY22.

As a result of the oil price upgrade, Citi has revised its 2021-22 earnings forecasts for Woodside Petroleum by 5-14%.

Neutral rating retained with the target rising to $26.20 from $25.91.

Target price is $26.20 Current Price is $25.09 Difference: $1.11
If WPL meets the Citi target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $27.57, suggesting upside of 8.8% (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: 0.7

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

UBS rates WPL as Upgrade to Buy from Neutral (1) -

UBS lifts Brent oil price forecast for 2021 to US$65.50/bbl, from US$57/bbl, and 2022 to US$62/bbl from US$60/bbl.

This reflects the market's desire to price in a faster recovery in demand, along with the outcome of recent OPEC meetings where producers agreed to defer raising production.

In turn, earnings estimates raised for Woodside Petroleum and the rating is upgraded to Buy from Neutral as the risk/reward is now considered appealing, given the stock has underperformed Brent over the year to date. Target is raised to $26.70 from $26.05.

Target price is $26.70 Current Price is $25.09 Difference: $1.61
If WPL meets the UBS target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $27.57, suggesting upside of 8.8% (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: 0.7

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