Australian Broker Call

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March 30, 2021

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COMPANIES DISCUSSED IN THIS ISSUE

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

Last Updated: 05:00 PM

Your daily news report on the latest recommendation, valuation, forecast and opinion changes.

This report includes concise but limited reviews of research recently published by Stockbrokers, 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.

For more info about the different terms used by stockbrokers, as well as the different methodologies behind similar sounding ratings, download our guide HERE

Today's Upgrades and Downgrades
REA - REA Group Upgrade to Neutral from Underperform Credit Suisse
TLS - Telstra Corp Upgrade to Overweight from Underweight Morgan Stanley
AGL  AGL ENERGY LIMITED

Infrastructure & Utilities

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Overnight Price: $10.17

Macquarie rates AGL as Neutral (3) -

AGL Energy has announced a structural separation into New AGL, comprising the retailing interests and PrimeCo, mainly comprised of coal. The company also flagged the sale of two assets, Newcastle Gas storage and Silver Springs.

Macquarie highlights the company is tapping into the need for “green” and currently as a large coal fired gentailer it is compromised. The split ensures “New AGL” has strong ESG credentials, yet the flexibility to move quickly for growth in a rapidly changing electricity market. 

The change will require at least “New AGL” to maintain an investment grade credit rating, says the analyst. The around -$400m of asset sales ensures debt levels in FY21 for the group remain flat on FY20, thus actual separation debt is not expected to be a strain.

The Neutral rating and $9.84 target are retained.

Target price is $9.84 Current Price is $10.17 Difference: minus $0.33 (current price is over target).
If AGL meets the Macquarie target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $10.81, suggesting upside of 9.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Macquarie forecasts a full year FY21 dividend of 86.00 cents and EPS of 86.00 cents.
At the last closing share price the estimated dividend yield is 8.46%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 11.83.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 86.4, implying annual growth of -45.5%.

Current consensus DPS estimate is 83.7, implying a prospective dividend yield of 8.5%.

Current consensus EPS estimate suggests the PER is 11.4.

Forecast for FY22:

Macquarie forecasts a full year FY22 dividend of 46.00 cents and EPS of 45.50 cents.
At the last closing share price the estimated dividend yield is 4.52%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 22.35.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 67.7, implying annual growth of -21.6%.

Current consensus DPS estimate is 67.9, implying a prospective dividend yield of 6.9%.

Current consensus EPS estimate suggests the PER is 14.5.

Market Sentiment: -0.4

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

AMP  AMP LIMITED

Insurance

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Overnight Price: $1.30

Macquarie rates AMP as Neutral (3) -

AMP will end the management agreement with Precinct Properties NZ, allowing that company to internalise management for a one-off payment of $197m, of which AMP's share is 50%.

AMP has also confirmed the exclusivity period with Ares for the private markets joint venture has concluded. Both companies are working towards a transaction.

Further clarity around this deal is required before Macquarie can become more constructive on the stock and a Neutral rating is retained. Target rises to $1.50 from $1.45.

Target price is $1.50 Current Price is $1.30 Difference: $0.2
If AMP meets the Macquarie target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $1.57, suggesting upside of 22.0% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY21:

Macquarie forecasts a full year FY21 dividend of 0.00 cents and EPS of 9.70 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 13.40.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 8.5, implying annual growth of 63.5%.

Current consensus DPS estimate is 4.6, implying a prospective dividend yield of 3.6%.

Current consensus EPS estimate suggests the PER is 15.2.

Forecast for FY22:

Macquarie forecasts a full year FY22 dividend of 2.50 cents and EPS of 9.60 cents.
At the last closing share price the estimated dividend yield is 1.92%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 13.54.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 9.6, implying annual growth of 12.9%.

Current consensus DPS estimate is 4.5, implying a prospective dividend yield of 3.5%.

Current consensus EPS estimate suggests the PER is 13.4.

Market Sentiment: 0.2

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

CPU  COMPUTERSHARE LIMITED

Diversified Financials

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Overnight Price: $14.96

UBS rates CPU as Neutral (3) -

UBS incorporates the Corporate Trust Services acquisition into its modelling. Over a five-year view, on the assumption the company is successful in delivering on synergies and the US cash rate rises, UBS believes the acquisition would be around 15% accretive.

The long dated nature of the synergies and complexities of the acquisition underscore the risk of slippage, the broker points out, in addition there is ongoing short-term earnings risk in the core business. UBS retains a Neutral rating and raises the target to $16.25 from $15.00.

Target price is $16.25 Current Price is $14.96 Difference: $1.29
If CPU meets the UBS target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $15.86, suggesting upside of 6.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

UBS forecasts a full year FY21 dividend of 57.13 cents and EPS of 71.06 cents.
At the last closing share price the estimated dividend yield is 3.82%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 21.05.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 66.7, implying annual growth of N/A.

Current consensus DPS estimate is 55.7, implying a prospective dividend yield of 3.8%.

Current consensus EPS estimate suggests the PER is 22.2.

Forecast for FY22:

UBS forecasts a full year FY22 dividend of 45.98 cents and EPS of 69.67 cents.
At the last closing share price the estimated dividend yield is 3.07%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 21.47.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 71.5, implying annual growth of 7.2%.

Current consensus DPS estimate is 50.4, implying a prospective dividend yield of 3.4%.

Current consensus EPS estimate suggests the PER is 20.8.

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

CSL  CSL LIMITED

Pharmaceuticals & Biotech/Lifesciences

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Overnight Price: $265.39

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

Morgan Stanley's base case is for a strong EPS rebound in FY23 though uncertainty regarding the shape of plasma recovery and risk of
some permanency to Ig demand management strategies keep the rating at Equal-weight and the target at $276.

Plasma collections are now well below 2019 levels for around 12-months. Ig shortages of similar magnitude and duration should follow. Industry view: In-Line.

Target price is $276.00 Current Price is $265.39 Difference: $10.61
If CSL meets the Morgan Stanley target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $297.30, suggesting upside of 12.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Morgan Stanley forecasts a full year FY21 dividend of 254.84 cents and EPS of 709.21 cents.
At the last closing share price the estimated dividend yield is 0.96%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 37.42.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 657.7, implying annual growth of N/A.

Current consensus DPS estimate is 264.6, implying a prospective dividend yield of 1.0%.

Current consensus EPS estimate suggests the PER is 40.1.

Forecast for FY22:

Morgan Stanley forecasts a full year FY22 dividend of 249.97 cents and EPS of 724.54 cents.
At the last closing share price the estimated dividend yield is 0.94%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 36.63.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 664.1, implying annual growth of 1.0%.

Current consensus DPS estimate is 290.5, implying a prospective dividend yield of 1.1%.

Current consensus EPS estimate suggests the PER is 39.7.

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

Market Sentiment: 0.6

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

HLS  HEALIUS LIMITED

Healthcare services

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Overnight Price: $4.11

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

For 2021 to date, total pathology benefits are up 19.8% driven by 6.1% volume growth and an increased 13.7% price / mix impact. The strong growth reflects ongoing contribution from covid-19 testing which accelerated over the New Year period, notes Morgan Stanley. 

Equal-weight and target of $3.95 are retained. The broker feels Sonic Healthcare ((SHL)) offers the most palatable valuation relative to other large cap Australia healthcare from an earnings, dividend and balance sheet perspective. Industry view: In-line.

Target price is $3.95 Current Price is $4.11 Difference: minus $0.16 (current price is over target).
If HLS meets the Morgan Stanley target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.26, suggesting upside of 4.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Morgan Stanley forecasts a full year FY21 dividend of 11.40 cents and EPS of 23.00 cents.
At the last closing share price the estimated dividend yield is 2.77%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 17.87.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 22.5, implying annual growth of N/A.

Current consensus DPS estimate is 12.6, implying a prospective dividend yield of 3.1%.

Current consensus EPS estimate suggests the PER is 18.0.

Forecast for FY22:

Morgan Stanley forecasts a full year FY22 dividend of 8.90 cents and EPS of 16.00 cents.
At the last closing share price the estimated dividend yield is 2.17%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 25.69.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 17.4, implying annual growth of -22.7%.

Current consensus DPS estimate is 10.0, implying a prospective dividend yield of 2.5%.

Current consensus EPS estimate suggests the PER is 23.3.

Market Sentiment: 0.5

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

IAG  INSURANCE AUSTRALIA GROUP LIMITED

Insurance

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Overnight Price: $4.72

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

Longer term, Morgan Stanley sees structural risks around climate change. Shorter term the key to a re-rating is considered a reduction in earnings volatility and in the meantime investors could switch out of insurance stocks into more earnings-stable large-cap financials.

The group is now likely to modestly exceed the forecast FY21 catastrophe (CAT) budget, which has consistently occurred over the past few years, explains the broker. This is considered to mean higher earnings volatility and likely leads to higher reinsurance costs.

Aside from CAT's, the other issue overhanging insurers is covid losses, explains the analyst. Industry feedback is that business interruption insurance (BI) claims are complicated to settle and we will not know for some time if the insurers have over-provisioned

Morgan Stanley's cash profit (NPAT) and underlying EPS forecasts fall -11% for FY21, largely because of higher CAT cost estimates with Sydney heavy rain losses. Equal-Weight rating. The price target falls to $5 from $5.10. Industry view: In-line.

Target price is $5.00 Current Price is $4.72 Difference: $0.28
If IAG meets the Morgan Stanley target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $5.42, suggesting upside of 17.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Morgan Stanley forecasts a full year FY21 dividend of 19.00 cents and EPS of minus 1.00 cents.
At the last closing share price the estimated dividend yield is 4.03%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 472.00.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 16.8, implying annual growth of -11.8%.

Current consensus DPS estimate is 21.9, implying a prospective dividend yield of 4.7%.

Current consensus EPS estimate suggests the PER is 27.6.

Forecast for FY22:

Morgan Stanley forecasts a full year FY22 dividend of 23.00 cents and EPS of 26.00 cents.
At the last closing share price the estimated dividend yield is 4.87%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 18.15.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 28.0, implying annual growth of 66.7%.

Current consensus DPS estimate is 22.6, implying a prospective dividend yield of 4.9%.

Current consensus EPS estimate suggests the PER is 16.5.

Market Sentiment: 0.6

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

IDX  INTEGRAL DIAGNOSTICS LIMITED

Medical Equipment & Devices

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Overnight Price: $4.79

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

For 2021 to date, total pathology benefits are up 19.8% driven by 6.1% volume growth and an increased 13.7% price / mix impact. The strong growth reflects ongoing contribution from covid-19 testing which accelerated over the New Year period, notes Morgan Stanley. 

Equal-weight and target of $4.60 are retained. The broker feels Sonic Healthcare ((SHL)) offers the most palatable valuation relative to other large cap Australia healthcare from an earnings, dividend and balance sheet perspective. Industry view: In-line.

Target price is $4.60 Current Price is $4.79 Difference: minus $0.19 (current price is over target).
If IDX meets the Morgan Stanley target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.20, suggesting upside of 9.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Morgan Stanley forecasts a full year FY21 EPS of 20.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 23.95.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 20.8, implying annual growth of 67.3%.

Current consensus DPS estimate is 11.4, implying a prospective dividend yield of 2.4%.

Current consensus EPS estimate suggests the PER is 22.9.

Forecast for FY22:

Morgan Stanley forecasts a full year FY22 EPS of 20.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 23.95.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 21.4, implying annual growth of 2.9%.

Current consensus DPS estimate is 12.5, implying a prospective dividend yield of 2.6%.

Current consensus EPS estimate suggests the PER is 22.2.

Market Sentiment: 0.6

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

MIN  MINERAL RESOURCES LIMITED

Iron Ore

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Overnight Price: $37.94

Macquarie rates MIN as Outperform (1) -

Mineral Resources has rights to new onshore exploration blocks in the Perth Basin and Pilbara. The acquisitions form part of the plan to develop a fully integrated energy business to support the mining and processing operations.

Macquarie notes the company now boasts a large exploration portfolio and the drilling of the Lockyer Deep-1 well later this year is a potential catalyst.

Upgrade momentum remains strong along with the iron ore price and the broker maintains an Outperform rating. Target is $50.

Target price is $50.00 Current Price is $37.94 Difference: $12.06
If MIN meets the Macquarie target it will return approximately 32% (excluding dividends, fees and charges).

Current consensus price target is $42.18, suggesting upside of 13.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Macquarie forecasts a full year FY21 dividend of 306.00 cents and EPS of 640.80 cents.
At the last closing share price the estimated dividend yield is 8.07%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 5.92.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 616.2, implying annual growth of 15.6%.

Current consensus DPS estimate is 262.7, implying a prospective dividend yield of 7.1%.

Current consensus EPS estimate suggests the PER is 6.0.

Forecast for FY22:

Macquarie forecasts a full year FY22 dividend of 185.00 cents and EPS of 412.90 cents.
At the last closing share price the estimated dividend yield is 4.88%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 9.19.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 495.7, implying annual growth of -19.6%.

Current consensus DPS estimate is 202.3, implying a prospective dividend yield of 5.5%.

Current consensus EPS estimate suggests the PER is 7.5.

Market Sentiment: 0.3

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

MOC  MORTGAGE CHOICE LIMITED

Banks

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Overnight Price: $1.91

Citi rates MOC as Neutral (3) -

Citi expects REA Group's ((REA)) $1.95 takeover bid for Mortgage Choice will be successful although it is arguably opportunistic as profitability has been hit by elevated repayments and a re-basing distribution network. Nevertheless, the broker suspects there will be a lack of competing offers.

The Mortgage Choice business will add scale to REA Group's existing broker footprint and offer the opportunity to leverage its digital presence and large audience.

The transaction is evidence of further industry consolidation and highlights the strategic appeal in being able to monetise distribution, the broker adds. Neutral rating and $1.40 target retained.

Target price is $1.40 Current Price is $1.91 Difference: minus $0.51 (current price is over target).
If MOC meets the Citi target it will return approximately minus 27% (excluding dividends, fees and charges - negative figures indicate an expected loss).

The company's fiscal year ends in June.

Forecast for FY21:

Citi forecasts a full year FY21 dividend of 8.00 cents and EPS of 7.10 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 26.90.

Forecast for FY22:

Citi forecasts a full year FY22 dividend of 8.00 cents and EPS of 8.10 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 23.58.

Market Sentiment: 0.0

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

MVF  MONASH IVF GROUP LIMITED

Healthcare services

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Overnight Price: $0.75

Morgan Stanley rates MVF as Overweight (1) -

Industry growth is better than Morgan Stanley anticipated and it is likely to be elevated across the balance of the second half FY21 at least. The broker has a preference for Monash IVF Group in the sector on valuation grounds. 

On a rolling 12 month basis, fresh cycles are up 10.3% versus a five year average up 2.2% and frozen cycles are up 8.9% versus a five year average up 4.5% showing demand remains elevated, explains the broker.

Overweight rating and $0.90 target are maintained.  Industry view: In-Line.

Target price is $0.90 Current Price is $0.75 Difference: $0.15
If MVF meets the Morgan Stanley target it will return approximately 20% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY21:

Morgan Stanley forecasts a full year FY21 dividend of 3.80 cents and EPS of 5.80 cents.
At the last closing share price the estimated dividend yield is 5.07%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.93.

Forecast for FY22:

Morgan Stanley forecasts a full year FY22 dividend of 3.50 cents and EPS of 5.90 cents.
At the last closing share price the estimated dividend yield is 4.67%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.71.

Market Sentiment: 1.0

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

QBE  QBE INSURANCE GROUP LIMITED

Insurance

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Overnight Price: $9.56

Morgan Stanley rates QBE as Overweight (1) -

Longer term, Morgan Stanley sees structural risks around climate change. Shorter term the key to a re-rating is considered a reduction in earnings volatility and in the meantime investors could switch out of insurance stocks into more earnings-stable large-cap financials.

Aside from catastrophes, the other issue overhanging insurers is covid losses, explains the analyst. Industry feedback is that business interruption insurance (BI) claims are complicated to settle and we will not know for some time if the insurers have over-provisioned

Overweight rating. Target is $11. Industry view: In-line. 

Target price is $11.00 Current Price is $9.56 Difference: $1.44
If QBE meets the Morgan Stanley target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $10.64, suggesting upside of 12.2% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY21:

Morgan Stanley forecasts a full year FY21 dividend of 40.41 cents and EPS of 61.31 cents.
At the last closing share price the estimated dividend yield is 4.23%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 15.59.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 58.8, implying annual growth of N/A.

Current consensus DPS estimate is 43.3, implying a prospective dividend yield of 4.6%.

Current consensus EPS estimate suggests the PER is 16.1.

Forecast for FY22:

Morgan Stanley forecasts a full year FY22 dividend of 52.95 cents and EPS of 84.99 cents.
At the last closing share price the estimated dividend yield is 5.54%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 11.25.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 85.6, implying annual growth of 45.6%.

Current consensus DPS estimate is 60.7, implying a prospective dividend yield of 6.4%.

Current consensus EPS estimate suggests the PER is 11.1.

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

REA  REA GROUP LIMITED

Real Estate

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Overnight Price: $137.45

Credit Suisse rates REA as Upgrade to Neutral from Underperform (3) -

REA Group will acquire all of Mortgage Choice ((MOC)) via a scheme of arrangement. The offer is $1.95 a share. Credit Suisse estimates the acquisition will more than triple the market share of REA Group in the mortgage broking channel to around 7%.

This should provide opportunities for synergies from greater scale and the ability to negotiate better rates. It will also be able to stream leads generated from its platform to a business which is fully owned.

Nevertheless, Credit Suisse warns mortgage broking is a business that is exposed to cyclical fluctuations and, while the scale of the investment is not enough to change the earnings profile, it is marginally dilutive to the multiple.

Rating is upgraded to Neutral from Underperform as the stock is now trading in line with valuation. Target is $136.70.

Target price is $136.70 Current Price is $137.45 Difference: minus $0.75 (current price is over target).
If REA meets the Credit Suisse target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $152.40, suggesting upside of 9.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Credit Suisse forecasts a full year FY21 dividend of 121.00 cents and EPS of 243.00 cents.
At the last closing share price the estimated dividend yield is 0.88%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 56.56.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 250.6, implying annual growth of 193.8%.

Current consensus DPS estimate is 121.6, implying a prospective dividend yield of 0.9%.

Current consensus EPS estimate suggests the PER is 55.7.

Forecast for FY22:

Credit Suisse forecasts a full year FY22 dividend of 164.00 cents and EPS of 299.00 cents.
At the last closing share price the estimated dividend yield is 1.19%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 45.97.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 317.7, implying annual growth of 26.8%.

Current consensus DPS estimate is 176.5, implying a prospective dividend yield of 1.3%.

Current consensus EPS estimate suggests the PER is 43.9.

Market Sentiment: 0.3

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


Ord Minnett rates REA as Hold (3) -

The company announced an offer to purchase mortgage broker Mortgage Choice ((MOC)) for $1.95 a share, or circa -$244m. The takeover offer, to be implemented via a scheme of arrangement, has the unanimous backing of the Mortgage Choice board.

There are no changes to Ord Minnett's FY21 estimates, as the transaction is likely to occur in late June or early July, while the FY22 net profit forecast increases by 2%. The Hold rating and $145 target are unchanged.

The analyst highlights the acquisition is EPS-accretive with potential upside, with both revenue and cost benefits. It will be financed by an increase in the group’s syndicated debt facilities, with the $170m existing facility due to expire in December.

This stock is not covered in-house by Ord Minnett. Instead, the broker whitelabels research by JP Morgan.

Target price is $145.00 Current Price is $137.45 Difference: $7.55
If REA meets the Ord Minnett target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $152.40, suggesting upside of 9.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Ord Minnett forecasts a full year FY21 dividend of 113.00 cents and EPS of 247.00 cents.
At the last closing share price the estimated dividend yield is 0.82%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 55.65.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 250.6, implying annual growth of 193.8%.

Current consensus DPS estimate is 121.6, implying a prospective dividend yield of 0.9%.

Current consensus EPS estimate suggests the PER is 55.7.

Forecast for FY22:

Ord Minnett forecasts a full year FY22 dividend of 161.00 cents and EPS of 306.00 cents.
At the last closing share price the estimated dividend yield is 1.17%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 44.92.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 317.7, implying annual growth of 26.8%.

Current consensus DPS estimate is 176.5, implying a prospective dividend yield of 1.3%.

Current consensus EPS estimate suggests the PER is 43.9.

Market Sentiment: 0.3

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


UBS rates REA as Neutral (3) -

UBS believes the acquisition of Mortgage Choice fits in with REA Group's financial service strategy and is immediately accretive to earnings amid further opportunity for synergies.

Mortgage Choice is an Australian mortgage broking business with over 500 brokers and 30 lending partners. The proposed transaction is to be funded by an increase in debt facilities.

The acquisition is small in the overall scheme of REA Group but the broker notes opportunities for additional synergies and larger scale in mortgage broking could help in negotiations with lenders. Neutral rating and $155 target retained.

Target price is $155.00 Current Price is $137.45 Difference: $17.55
If REA meets the UBS target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $152.40, suggesting upside of 9.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

UBS forecasts a full year FY21 dividend of 124.00 cents and EPS of 248.00 cents.
At the last closing share price the estimated dividend yield is 0.90%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 55.42.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 250.6, implying annual growth of 193.8%.

Current consensus DPS estimate is 121.6, implying a prospective dividend yield of 0.9%.

Current consensus EPS estimate suggests the PER is 55.7.

Forecast for FY22:

UBS forecasts a full year FY22 dividend of 150.00 cents and EPS of 301.00 cents.
At the last closing share price the estimated dividend yield is 1.09%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 45.66.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 317.7, implying annual growth of 26.8%.

Current consensus DPS estimate is 176.5, implying a prospective dividend yield of 1.3%.

Current consensus EPS estimate suggests the PER is 43.9.

Market Sentiment: 0.3

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

RHC  RAMSAY HEALTH CARE LIMITED

Healthcare services

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Overnight Price: $67.11

Citi rates RHC as Neutral (3) -

Citi reviews Ramsay Health Care in terms of its offshore acquisitions. While there is some potential for upside surprise post the pandemic, the broker assesses the stock is currently fairly valued.

The broker's analysis reveals that returns differ materially between geographies. In FY23 a return on invested capital for the Australian business is estimated to be 21%, largely because of the low historical cost base of the assets.

The return on the UK business, on the other hand, is forecast at 9% while Ramsay Sante is 4%, below the cost of capital.

The broker considers the change in the long-term incentive methodology at the company a positive, aligning the interests of management and shareholders more closely. Neutral rating retained. Target is reduced to $67 from $69.

Target price is $67.00 Current Price is $67.11 Difference: minus $0.11 (current price is over target).
If RHC meets the Citi target it will return approximately minus 0% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $69.06, suggesting upside of 4.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Citi forecasts a full year FY21 dividend of 148.50 cents and EPS of 210.90 cents.
At the last closing share price the estimated dividend yield is 2.21%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 31.82.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 201.0, implying annual growth of 53.4%.

Current consensus DPS estimate is 115.8, implying a prospective dividend yield of 1.8%.

Current consensus EPS estimate suggests the PER is 32.9.

Forecast for FY22:

Citi forecasts a full year FY22 dividend of 203.00 cents and EPS of 288.40 cents.
At the last closing share price the estimated dividend yield is 3.02%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 23.27.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 258.3, implying annual growth of 28.5%.

Current consensus DPS estimate is 145.0, implying a prospective dividend yield of 2.2%.

Current consensus EPS estimate suggests the PER is 25.6.

Market Sentiment: 0.1

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

S32  SOUTH32 LIMITED

Mining

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Overnight Price: $2.84

Macquarie rates S32 as Outperform (1) -

The divestment of the South Africa Energy Coal business, which has been loss-making over the past three years, is set to be completed. Macquarie notes this is a key catalyst as the sale simplifies the business.

Meanwhile, earnings upgrade momentum has improved because of stronger silver, nickel and manganese prices. A spot price scenario generates earnings largely in line with forecasts and Macquarie retains an Outperform rating and $3.10 target.

Target price is $3.10 Current Price is $2.84 Difference: $0.26
If S32 meets the Macquarie target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $3.04, suggesting upside of 8.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Macquarie forecasts a full year FY21 dividend of 6.55 cents and EPS of 15.47 cents.
At the last closing share price the estimated dividend yield is 2.31%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 18.36.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 13.3, implying annual growth of N/A.

Current consensus DPS estimate is 6.3, implying a prospective dividend yield of 2.2%.

Current consensus EPS estimate suggests the PER is 21.1.

Forecast for FY22:

Macquarie forecasts a full year FY22 dividend of 10.45 cents and EPS of 26.06 cents.
At the last closing share price the estimated dividend yield is 3.68%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 10.90.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 19.6, implying annual growth of 47.4%.

Current consensus DPS estimate is 9.2, implying a prospective dividend yield of 3.3%.

Current consensus EPS estimate suggests the PER is 14.3.

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

SGP  STOCKLAND

Infra & Property Developers

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Overnight Price: $4.37

Morgan Stanley rates SGP as Overweight (1) -

The company has confirmed that new CEO, Tarun Gupta was appointed with full knowledge of Stockland's direction. He will start in around two months.

Morgan Stanley believes he will look to enhance the quality of the portfolio (for example by trimming assets, developing new
commercial towers etc) and bolster the development pipeline, which at present looks lean versus diversified peers.

The broker also feels he will maximise the company's earnings potential from its existing skill-sets by bringing in capital partners, making more use of the existing landbank or exploration of tangential sectors. Overweight rating. Target is $4.90. Industry view: In-line.

Target price is $4.90 Current Price is $4.37 Difference: $0.53
If SGP meets the Morgan Stanley target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $4.52, suggesting upside of 5.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Morgan Stanley forecasts a full year FY21 dividend of 24.90 cents and EPS of 33.20 cents.
At the last closing share price the estimated dividend yield is 5.70%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 13.16.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 31.5, implying annual growth of N/A.

Current consensus DPS estimate is 24.6, implying a prospective dividend yield of 5.7%.

Current consensus EPS estimate suggests the PER is 13.7.

Forecast for FY22:

Morgan Stanley forecasts a full year FY22 dividend of 27.20 cents and EPS of 36.30 cents.
At the last closing share price the estimated dividend yield is 6.22%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.04.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 33.4, implying annual growth of 6.0%.

Current consensus DPS estimate is 26.4, implying a prospective dividend yield of 6.1%.

Current consensus EPS estimate suggests the PER is 12.9.

Market Sentiment: 0.0

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

SHL  SONIC HEALTHCARE LIMITED

Healthcare services

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Overnight Price: $35.30

Morgan Stanley rates SHL as Overweight (1) -

For 2021 to date, total pathology benefits are up 19.8% driven by 6.1% volume growth and an increased 13.7% price / mix impact. The strong growth reflects ongoing contribution from covid-19 testing which accelerated over the New Year period, notes Morgan Stanley. 

The Overweight rating and target of $39.70 are retained as the broker feels the company offers the most palatable valuation relative to other large cap Australia healthcare peers from an earnings, dividend and balance sheet perspective. Industry view: In-line.

Target price is $39.70 Current Price is $35.30 Difference: $4.4
If SHL meets the Morgan Stanley target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $37.36, suggesting upside of 6.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Morgan Stanley forecasts a full year FY21 dividend of 86.90 cents and EPS of 277.00 cents.
At the last closing share price the estimated dividend yield is 2.46%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.74.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 250.1, implying annual growth of 125.1%.

Current consensus DPS estimate is 115.2, implying a prospective dividend yield of 3.3%.

Current consensus EPS estimate suggests the PER is 14.1.

Forecast for FY22:

Morgan Stanley forecasts a full year FY22 dividend of 53.60 cents and EPS of 171.00 cents.
At the last closing share price the estimated dividend yield is 1.52%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 20.64.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 159.9, implying annual growth of -36.1%.

Current consensus DPS estimate is 101.1, implying a prospective dividend yield of 2.9%.

Current consensus EPS estimate suggests the PER is 22.0.

Market Sentiment: 0.6

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

SHV  SELECT HARVESTS LIMITED

Agriculture

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Overnight Price: $6.11

Citi rates SHV as Buy (1) -

The 2021 crop update has revealed softer pricing with 20% of the crop now ordered at $6.60/kg. This produces a -$3m reduction in Citi's earnings estimates for FY21. The company no longer appears to be anticipating a firming of prices in the current season.

Guidance is unchanged despite disruption to harvests in NSW because of heavy rainfall. The broker remains constructive on almond prices beyond FY21. Citi retains a Buy rating and $6.50 target.

Target price is $6.50 Current Price is $6.11 Difference: $0.39
If SHV meets the Citi target it will return approximately 6% (excluding dividends, fees and charges).

The company's fiscal year ends in September.

Forecast for FY21:

Citi forecasts a full year FY21 dividend of 6.00 cents and EPS of 12.10 cents.
At the last closing share price the estimated dividend yield is 0.98%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 50.50.

Forecast for FY22:

Citi forecasts a full year FY22 dividend of 19.00 cents and EPS of 37.90 cents.
At the last closing share price the estimated dividend yield is 3.11%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 16.12.

Market Sentiment: 1.0

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

SM1  SYNLAIT MILK LIMITED

Dairy

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Overnight Price: $3.12

Macquarie rates SM1 as Neutral (3) -

First half results were affected by several factors, largely one-off, Macquarie notes, producing a net profit that was down -76% and the second half will move to a loss.

The weakness was the result of a sudden drop in canned infant formula demand, a shift in mix to ingredients and shipping delays.

Macquarie forecasts full year operating earnings of NZ$80-85m but notes significant uncertainty around the timing and speed of the recovery. Neutral rating retained. Target is reduced to NZ$3.60 from NZ$5.33.

Current Price is $3.12. Target price not assessed.

Current consensus price target is $2.58, suggesting downside of -16.8% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY21:

Macquarie forecasts a full year FY21 dividend of 0.00 cents and EPS of 1.21 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 257.00.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 10.1, implying annual growth of N/A.

Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A.

Current consensus EPS estimate suggests the PER is 30.7.

Forecast for FY22:

Macquarie forecasts a full year FY22 dividend of 0.00 cents and EPS of 19.34 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 16.13.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 22.6, implying annual growth of 123.8%.

Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A.

Current consensus EPS estimate suggests the PER is 13.7.

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

Market Sentiment: 0.0

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


Morgans rates SM1 as Reduce (5) -

The weak first half result was in-line with the Morgans’ expectations. However, softer-than-expected FY21 guidance leads to material FY21 forecasts downgrades and the assumption a breakeven profit (NPAT) result. 

The analyst’s profit forecasts fall -8.9% and -5.1% for FY22 and FY23 as a result of slightly more conservative assumptions regarding the rate of the company’s recovery.

Morgans maintains a reduce rating due to near-term earnings uncertainty, heightened balance sheet risk and long-term challenges with The a2M Milk Co ((A2M)). The target is reduced to $2.58 from $2.78.

Target price is $2.58 Current Price is $3.12 Difference: minus $0.54 (current price is over target).
If SM1 meets the Morgans target it will return approximately minus 17% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.58, suggesting downside of -16.8% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY21:

Morgans forecasts a full year FY21 dividend of 0.00 cents and EPS of 0.00 cents.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 10.1, implying annual growth of N/A.

Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A.

Current consensus EPS estimate suggests the PER is 30.7.

Forecast for FY22:

Morgans forecasts a full year FY22 dividend of 0.00 cents and EPS of 0.18 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 1762.71.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 22.6, implying annual growth of 123.8%.

Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A.

Current consensus EPS estimate suggests the PER is 13.7.

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

Market Sentiment: 0.0

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


UBS rates SM1 as Buy (1) -

The first half earnings fell -58% because of a sharp reduction in high-margin infant formula volumes and associated manufacturing efficiencies with low off-season dryer utilisation.

Nevertheless, Synlait Milk is trading on a record discount to book value for a business with hard assets and proven world-class manufacturing capability, the broker asserts.

UBS lowers estimates by -94% for FY21 and -18% for FY22, reflecting a temporary increase in manufacturing unit costs and lower basic ingredient price premiums. Buy rating retained. Target is reduced to NZ$5.55 from NZ$5.75.

Current Price is $3.12. Target price not assessed.

Current consensus price target is $2.58, suggesting downside of -16.8% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY21:

UBS forecasts a full year FY21 dividend of 0.00 cents and EPS of 0.93 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 334.05.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 10.1, implying annual growth of N/A.

Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A.

Current consensus EPS estimate suggests the PER is 30.7.

Forecast for FY22:

UBS forecasts a full year FY22 dividend of 0.00 cents and EPS of 25.41 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.28.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 22.6, implying annual growth of 123.8%.

Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A.

Current consensus EPS estimate suggests the PER is 13.7.

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

Market Sentiment: 0.0

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

SUN  SUNCORP GROUP LIMITED

Banks

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Overnight Price: $9.88

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

Longer term, Morgan Stanley sees structural risks around climate change. Shorter term the key to a re-rating is considered a reduction in earnings volatility and in the meantime investors could switch out of insurance stocks into more earnings-stable large-cap financials.

The group is now likely to modestly exceed the forecast FY21 catastrophe (CAT) budget, which has consistently occurred over the past few years, explains the broker. This is considered to mean higher earnings volatility and likely leads to higher reinsurance costs.

Aside from CAT's, the other issue overhanging insurers is covid losses, explains the analyst. Industry feedback is that business interruption insurance (BI) claims are complicated to settle and we will not know for some time if the insurers have over-provisioned.

Equal-weight rating. Target is $11.10. Industry view: In-line.

Target price is $11.10 Current Price is $9.88 Difference: $1.22
If SUN meets the Morgan Stanley target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $11.83, suggesting upside of 21.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Morgan Stanley forecasts a full year FY21 dividend of 63.00 cents and EPS of 74.00 cents.
At the last closing share price the estimated dividend yield is 6.38%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 13.35.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 72.6, implying annual growth of 0.9%.

Current consensus DPS estimate is 55.4, implying a prospective dividend yield of 5.7%.

Current consensus EPS estimate suggests the PER is 13.4.

Forecast for FY22:

Morgan Stanley forecasts a full year FY22 dividend of 57.00 cents and EPS of 65.00 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 15.20.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 68.0, implying annual growth of -6.3%.

Current consensus DPS estimate is 53.9, implying a prospective dividend yield of 5.5%.

Current consensus EPS estimate suggests the PER is 14.3.

Market Sentiment: 0.6

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

TLS  TELSTRA CORPORATION LIMITED

Telecommunication

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Overnight Price: $3.39

Morgan Stanley rates TLS as Upgrade to Overweight from Underweight (1) -

Morgan Stanley upgrades to Overweight from Underweight after recent news of the separation into three operating companies and the injection of external investors into Mobile Towers. The price target is raised to $4 from $3.

The broker feels the greater the degree of freedom headquarters allows each entity the better. The Towers spin-off provides a near term catalyst though it's considered the primary risk continues to be intense competitive rivalries preventing mobile and fixed line price inflation.

Additional options are now emerging to create value including but not limited to InfraCo and the NBN and the analyst thinks additional
changes in structure across other operating units are also possible. Industry view: In-Line.

Target price is $4.00 Current Price is $3.39 Difference: $0.61
If TLS meets the Morgan Stanley target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $3.79, suggesting upside of 10.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Morgan Stanley forecasts a full year FY21 dividend of 16.00 cents and EPS of 16.05 cents.
At the last closing share price the estimated dividend yield is 4.72%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 21.12.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 14.7, implying annual growth of -3.9%.

Current consensus DPS estimate is 16.0, implying a prospective dividend yield of 4.7%.

Current consensus EPS estimate suggests the PER is 23.4.

Forecast for FY22:

Morgan Stanley forecasts a full year FY22 dividend of 16.00 cents and EPS of 13.58 cents.
At the last closing share price the estimated dividend yield is 4.72%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 24.96.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 14.1, implying annual growth of -4.1%.

Current consensus DPS estimate is 16.0, implying a prospective dividend yield of 4.7%.

Current consensus EPS estimate suggests the PER is 24.4.

Market Sentiment: 0.8

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

VRT  VIRTUS HEALTH LIMITED

Healthcare services

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Overnight Price: $5.95

Morgan Stanley rates VRT as Underweight (5) -

Industry growth is better than Morgan Stanley anticipated and it is likely to be elevated across the balance of the second half FY21 at least. The broker has a preference for Monash IVF Group ((MVF)) in the sector on valuation grounds. 

On a rolling 12 month basis, fresh cycles are up 10.3% versus a five year average up 2.2% and frozen cycles are up 8.9% versus a five year average up 4.5% showing demand remains elevated, explains the broker.

The Underweight rating and $5.05 target are retained. Industry view is In-Line.

Target price is $5.05 Current Price is $5.95 Difference: minus $0.9 (current price is over target).
If VRT meets the Morgan Stanley target it will return approximately minus 15% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $6.29, suggesting upside of 5.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Morgan Stanley forecasts a full year FY21 dividend of 14.90 cents and EPS of 36.90 cents.
At the last closing share price the estimated dividend yield is 2.50%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 16.12.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 44.3, implying annual growth of 7408.5%.

Current consensus DPS estimate is 17.0, implying a prospective dividend yield of 2.8%.

Current consensus EPS estimate suggests the PER is 13.5.

Forecast for FY22:

Morgan Stanley forecasts a full year FY22 dividend of 21.80 cents and EPS of 33.50 cents.
At the last closing share price the estimated dividend yield is 3.66%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 17.76.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 39.5, implying annual growth of -10.8%.

Current consensus DPS estimate is 23.9, implying a prospective dividend yield of 4.0%.

Current consensus EPS estimate suggests the PER is 15.1.

Market Sentiment: 0.3

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

Today's Price Target Changes
Company Last Price Broker New Target Prev Target Change
AMP AMP Ltd $1.29 Macquarie 1.50 1.45 3.45%
CPU Computershare $14.84 UBS 16.25 15.00 8.33%
IAG Insurance Australia $4.63 Morgan Stanley 5.00 5.10 -1.96%
RHC Ramsay Health Care $66.08 Citi 67.00 69.00 -2.90%
SM1 Synlait Milk $3.10 Morgans 2.58 2.78 -7.19%
TLS Telstra Corp $3.44 Morgan Stanley 4.00 3.00 33.33%
Summaries
AGL AGL Energy Neutral - Macquarie Overnight Price $10.17
AMP AMP Ltd Neutral - Macquarie Overnight Price $1.30
CPU Computershare Neutral - UBS Overnight Price $14.96
CSL CSL Equal-weight - Morgan Stanley Overnight Price $265.39
HLS Healius Equal-weight - Morgan Stanley Overnight Price $4.11
IAG Insurance Australia Equal-weight - Morgan Stanley Overnight Price $4.72
IDX Integral Diagnostics Equal-weight - Morgan Stanley Overnight Price $4.79
MIN Mineral Resources Outperform - Macquarie Overnight Price $37.94
MOC Mortgage Choice Neutral - Citi Overnight Price $1.91
MVF Monash IVF Overweight - Morgan Stanley Overnight Price $0.75
QBE QBE Insurance Overweight - Morgan Stanley Overnight Price $9.56
REA REA Group Upgrade to Neutral from Underperform - Credit Suisse Overnight Price $137.45
Hold - Ord Minnett Overnight Price $137.45
Neutral - UBS Overnight Price $137.45
RHC Ramsay Health Care Neutral - Citi Overnight Price $67.11
S32 South32 Outperform - Macquarie Overnight Price $2.84
SGP Stockland Overweight - Morgan Stanley Overnight Price $4.37
SHL Sonic Healthcare Overweight - Morgan Stanley Overnight Price $35.30
SHV Select Harvests Buy - Citi Overnight Price $6.11
SM1 Synlait Milk Neutral - Macquarie Overnight Price $3.12
Reduce - Morgans Overnight Price $3.12
Buy - UBS Overnight Price $3.12
SUN Suncorp Equal-weight - Morgan Stanley Overnight Price $9.88
TLS Telstra Corp Upgrade to Overweight from Underweight - Morgan Stanley Overnight Price $3.39
VRT Virtus Health Underweight - Morgan Stanley Overnight Price $5.95
RATING SUMMARY
Rating No. Of Recommendations
1. Buy

9

3. Hold

14

5. Sell

2

Tuesday 30 March 2021

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Disclaimer:
The content of this information does in no way reflect the opinions of FNArena, or of its journalists. In fact we don't have any opinion about the stock market, its value, future direction or individual shares. FNArena solely reports about what the main experts in the market note, believe and comment on. By doing so we believe we provide intelligent investors with a valuable tool that helps them in making up their own minds, reading market trends and getting a feel for what is happening beneath the surface. This document is provided for informational purposes only. It does not constitute an offer to sell or a solicitation to buy any security or other financial instrument. FNArena employs very experienced journalists who base their work on information believed to be reliable and accurate, though no guarantee is given that the daily report is accurate or complete. Investors should contact their personal adviser before making any investment decision.