Australian Broker Call

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October 12, 2020

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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
AIA - Auckland International Downgrade to Equal-weight from Overweight Morgan Stanley
ANZ - ANZ Banking Group Upgrade to Accumulate from Hold Ord Minnett
JHG - Janus Henderson Group Upgrade to Neutral from Underperform Credit Suisse
NCM - Newcrest Mining Upgrade to Buy from Neutral Citi
SYD - Sydney Airport Upgrade to Overweight from Equal-weight Morgan Stanley
AD8  AUDINATE GROUP LIMITED

Hardware & Equipment

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Overnight Price: $6.05

Morgan Stanley rates AD8 as Overweight (1) -

Morgan Stanley believes Audinate's competitive position is improving, but transitory headwinds have masked underlying earnings power.

The broker sees top-line re-acceleration from FY22 that is underestimated by consensus. The structural growth story is considered intact and risk-reward compelling at these levels.

The $400m winner-take-most networked audio total addressable market (TAM) is the company's to lose, assesses the analyst. It's considered the company is leveraging its audio dominance into synergistic verticals with a combined $1bn-plus TAM.

The rating is Overweight with an unchanged target price of $7.50. Industry view: In-line.

Target price is $7.50 Current Price is $6.05 Difference: $1.45
If AD8 meets the Morgan Stanley target it will return approximately 24% (excluding dividends, fees and charges).

Current consensus price target is $6.72, suggesting upside of 12.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Morgan Stanley forecasts a full year FY21 dividend of 0.00 cents and EPS of minus 4.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 151.25.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is -4.1, 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 N/A.

Forecast for FY22:

Morgan Stanley forecasts a full year FY22 dividend of 0.00 cents and EPS of minus 1.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 605.00.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 1.1, 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 541.8.

Market Sentiment: 0.7

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

AIA  AUCKLAND INTERNATIONAL AIRPORT LTD

Infrastructure & Utilities

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Overnight Price: $6.99

Morgan Stanley rates AIA as Downgrade to Equal-weight from Overweight (3) -

The Auckland Airport share price has rallied 77% from its March 2020 trough. Morgan Stanley thinks the company's leading domestic pax recovery and favourable leverage to the trans-tasman bubble are well appreciated by investors.

As a result of a survey of Chinese outbound travel intentions, Morgan Stanley tempers enthusiasm somewhat (noting Asia-NZ flights are longer haul). However, the broker hasn't changed its view on a long list of positives for the company including earnings diversity from the Mangere land bank and lack of competition.

Morgan Stanley downgrades the rating to Equal-weight from Overweight with the target price increasing to NZ$7.47 from NZ$7.07. Industry view: Cautious.

Current Price is $6.99. Target price not assessed.

Current consensus price target is N/A

The company's fiscal year ends in June.

Forecast for FY21:

Morgan Stanley forecasts a full year FY21 dividend of 0.00 cents and EPS of 0.47 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 1484.08.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is -0.4, 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 N/A.

Forecast for FY22:

Morgan Stanley forecasts a full year FY22 dividend of 14.42 cents and EPS of 14.70 cents.
At the last closing share price the estimated dividend yield is 2.06%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 47.54.

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 9.4, implying a prospective dividend yield of 1.4%.

Current consensus EPS estimate suggests the PER is 68.0.

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

AMC  AMCOR LIMITED

Paper & Packaging

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Overnight Price: $15.82

Credit Suisse rates AMC as Neutral (3) -

Credit Suisse assesses Amcor has further potential to penetrate the small customer base in North America. The small customer segment makes up an estimated US$5bn of a US$20bn industry.

The broker calculates the opportunity is around US$500m in sales at higher margins if executed well. Neutral rating and $15.50 target retained.

Target price is $15.50 Current Price is $15.82 Difference: minus $0.32 (current price is over target).
If AMC meets the Credit Suisse target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $16.87, suggesting upside of 7.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Credit Suisse forecasts a full year FY21 dividend of 74.98 cents and EPS of 103.68 cents.
At the last closing share price the estimated dividend yield is 4.74%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 15.26.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 97.5, implying annual growth of N/A.

Current consensus DPS estimate is 68.3, implying a prospective dividend yield of 4.3%.

Current consensus EPS estimate suggests the PER is 16.1.

Forecast for FY22:

Credit Suisse forecasts a full year FY22 dividend of 82.33 cents and EPS of 112.60 cents.
At the last closing share price the estimated dividend yield is 5.20%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.05.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 105.5, implying annual growth of 8.2%.

Current consensus DPS estimate is 72.0, implying a prospective dividend yield of 4.6%.

Current consensus EPS estimate suggests the PER is 14.9.

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

ANZ  AUSTRALIA & NEW ZEALAND BANKING GROUP

Banks

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Overnight Price: $18.61

Ord Minnett rates ANZ as Upgrade to Accumulate from Hold (2) -

Ord Minnett's stance on the major banks has turned somewhat positive. While the fundamental revenue outlook has not improved, the broker notes the stocks are cheap and trading below book values (except Commonwealth Bank).

House prices are holding up better than feared, points out Ord Minnett, and housing finance approvals continue to improve. This is further bolstered by the federal budget aiding the households and small- to medium-sized enterprises (SME).

The broker expects a rally in value stocks into year-end and also believes all the major banks will pay dividends this year. 

Reflecting its incrementally more positive view on the sector, Ord Minnett upgrades its recommendation on ANZ Banking Group to Accumulate from Hold. The target price rises to $20 from $19.50.

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

Target price is $20.00 Current Price is $18.61 Difference: $1.39
If ANZ meets the Ord Minnett target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $21.49, suggesting upside of 13.6% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY20:

Ord Minnett forecasts a full year FY20 dividend of 60.00 cents and EPS of 132.00 cents.
At the last closing share price the estimated dividend yield is 3.22%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.10.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 134.1, implying annual growth of -36.1%.

Current consensus DPS estimate is 56.4, implying a prospective dividend yield of 3.0%.

Current consensus EPS estimate suggests the PER is 14.1.

Forecast for FY21:

Ord Minnett forecasts a full year FY21 dividend of 85.00 cents and EPS of 137.00 cents.
At the last closing share price the estimated dividend yield is 4.57%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 13.58.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 152.7, implying annual growth of 13.9%.

Current consensus DPS estimate is 85.4, implying a prospective dividend yield of 4.5%.

Current consensus EPS estimate suggests the PER is 12.4.

Market Sentiment: 0.9

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

CBA  COMMONWEALTH BANK OF AUSTRALIA

Banks

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Overnight Price: $67.71

Ord Minnett rates CBA as Hold (3) -

Ord Minnett's stance on the major banks has turned somewhat positive. While the fundamental revenue outlook has not improved, the broker notes the stocks are cheap and trading below book values except for Commonwealth Bank.

House prices are holding up better than feared, points out Ord Minnett, and housing finance approvals continue to improve. This is further bolstered by the federal budget aiding the households and small- to medium-sized enterprises (SME).

The broker expects a rally in value stocks into year-end and also believes all the major banks will pay dividends this year. 

Ord Minnett maintains its Hold recommendation with the target price rising to $66.30 from $65.30.

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

Target price is $66.30 Current Price is $67.71 Difference: minus $1.41 (current price is over target).
If CBA meets the Ord Minnett target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $67.23, suggesting downside of -1.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Ord Minnett forecasts a full year FY21 dividend of 270.00 cents and EPS of 393.00 cents.
At the last closing share price the estimated dividend yield is 3.99%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 17.23.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 398.0, implying annual growth of -3.6%.

Current consensus DPS estimate is 262.4, implying a prospective dividend yield of 3.8%.

Current consensus EPS estimate suggests the PER is 17.2.

Forecast for FY22:

Ord Minnett forecasts a full year FY22 dividend of 320.00 cents and EPS of 430.00 cents.
At the last closing share price the estimated dividend yield is 4.73%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 15.75.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 442.3, implying annual growth of 11.1%.

Current consensus DPS estimate is 307.1, implying a prospective dividend yield of 4.5%.

Current consensus EPS estimate suggests the PER is 15.5.

Market Sentiment: -0.3

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

CIM  CIMIC GROUP LIMITED

Industrial Sector Contractors & Engineers

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Overnight Price: $22.17

Ord Minnett rates CIM as No Rating (-1) -

Following Cimic's third-quarter result, Ord Minnett has updated its financial model for the group. 2020-22 net profit estimates have been reduced largely due to increased depreciation and amortisation charges.

The broker assumes division wise margins will remain broadly consistent with the first half. Near-term revenue assumptions are reduced as project awards get delayed due to the pandemic. 

Ord Minnett is currently unable to provide a rating or target.

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

Current Price is $22.17. Target price not assessed.

Current consensus price target is $26.73, suggesting upside of 22.7% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Ord Minnett forecasts a full year FY20 dividend of 54.00 cents and EPS of 207.00 cents.
At the last closing share price the estimated dividend yield is 2.44%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 10.71.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 211.5, implying annual growth of N/A.

Current consensus DPS estimate is 41.4, implying a prospective dividend yield of 1.9%.

Current consensus EPS estimate suggests the PER is 10.3.

Forecast for FY21:

Ord Minnett forecasts a full year FY21 dividend of 143.00 cents and EPS of 219.00 cents.
At the last closing share price the estimated dividend yield is 6.45%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 10.12.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 223.8, implying annual growth of 5.8%.

Current consensus DPS estimate is 137.5, implying a prospective dividend yield of 6.3%.

Current consensus EPS estimate suggests the PER is 9.7.

Market Sentiment: 0.3

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


UBS rates CIM as Neutral (3) -

Cimic Group's third-quarter sales, operating income and net profit figures were in-line with UBS's estimate but the operating cash flow conversion,  impacted by the slowdown of revenues and new work due to covid-19 and reduced debtor factoring, was weaker than expected.

No formal earnings guidance was provided. UBS expects better operating conditions and momentum going into the fourth quarter. 

UBS maintains its Neutral rating with a target price of $23.

Target price is $23.00 Current Price is $22.17 Difference: $0.83
If CIM meets the UBS target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $26.73, suggesting upside of 22.7% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

UBS forecasts a full year FY20 dividend of 0.00 cents and EPS of 208.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 10.66.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 211.5, implying annual growth of N/A.

Current consensus DPS estimate is 41.4, implying a prospective dividend yield of 1.9%.

Current consensus EPS estimate suggests the PER is 10.3.

Forecast for FY21:

UBS forecasts a full year FY21 dividend of 143.00 cents and EPS of 219.00 cents.
At the last closing share price the estimated dividend yield is 6.45%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 10.12.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 223.8, implying annual growth of 5.8%.

Current consensus DPS estimate is 137.5, implying a prospective dividend yield of 6.3%.

Current consensus EPS estimate suggests the PER is 9.7.

Market Sentiment: 0.3

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

CNU  CHORUS LIMITED

Telecommunication

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Overnight Price: $8.06

Macquarie rates CNU as Neutral (3) -

First quarter connection data signals trends are reverting to pre-pandemic levels.

Total fibre connections increased by 33,000. Copper connections decreased by -57,000 over the same period.

Macquarie retains a Neutral rating and NZ$7.65 target.

Current Price is $8.06. Target price not assessed.

Current consensus price target is N/A

The company's fiscal year ends in June.

Forecast for FY21:

Macquarie forecasts a full year FY21 dividend of 23.57 cents and EPS of 11.03 cents.
At the last closing share price the estimated dividend yield is 2.92%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 73.09.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 13.0, implying annual growth of N/A.

Current consensus DPS estimate is 22.9, implying a prospective dividend yield of 2.8%.

Current consensus EPS estimate suggests the PER is 62.3.

Forecast for FY22:

Macquarie forecasts a full year FY22 dividend of 26.39 cents and EPS of 11.69 cents.
At the last closing share price the estimated dividend yield is 3.27%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 68.96.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 14.7, implying annual growth of 13.1%.

Current consensus DPS estimate is 26.8, implying a prospective dividend yield of 3.3%.

Current consensus EPS estimate suggests the PER is 55.1.

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

Market Sentiment: -0.3

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: $295.32

UBS rates CSL as Buy (1) -

UBS observes CSL's decline in plasma collection volumes over the last six months appears to be priced in with the stock underperforming the ASX200 by circa -20% over the period.

The broker decides to focus on the medium-term outlook for the business. Assuming CSL is able to manage its clinical trials successfully and complete commercialisation, the broker believes its valuation, based on future discounted cash flows (DCF methodology), falls in-line with its current price target for the stock.

That price target, explains the report, sits right in the middle of a successful outcome (valuation $427) and a negative outcome (valuation $255). UBS makes no changes to the Buy rating or $346 price target.

Target price is $346.00 Current Price is $295.32 Difference: $50.68
If CSL meets the UBS target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $311.11, suggesting upside of 5.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

UBS forecasts a full year FY21 dividend of 302.85 cents and EPS of 711.56 cents.
At the last closing share price the estimated dividend yield is 1.03%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 41.50.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 689.1, implying annual growth of N/A.

Current consensus DPS estimate is 302.1, implying a prospective dividend yield of 1.0%.

Current consensus EPS estimate suggests the PER is 43.0.

Forecast for FY22:

UBS forecasts a full year FY22 dividend of 361.66 cents and EPS of 817.41 cents.
At the last closing share price the estimated dividend yield is 1.22%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 36.13.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 779.8, implying annual growth of 13.2%.

Current consensus DPS estimate is 343.4, implying a prospective dividend yield of 1.2%.

Current consensus EPS estimate suggests the PER is 38.0.

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

Market Sentiment: 0.4

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

ILU  ILUKA RESOURCES LIMITED

Mineral Sands

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Overnight Price: $9.44

Ord Minnett rates ILU as Hold (3) -

Iluka Resources's EGM will be held on October 16 for shareholders to vote on the proposed spin-off of MAC iron ore royalties to form Deterra Royalties ((DRR)).

Ord Minnett expects the decision to be 'yes' and expects Iluka to trade ex-Deterra rights from October 23 with Deterra commencing trading from November 3.

Assumptions and costs for Iluka have been revised and accordingly, the broker maintains its Hold rating with the target price rising to $9.50 from $8.90.

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

Target price is $9.50 Current Price is $9.44 Difference: $0.06
If ILU meets the Ord Minnett target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $10.07, suggesting upside of 5.9% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Ord Minnett forecasts a full year FY20 dividend of 0.00 cents and EPS of 54.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 17.48.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 47.1, implying annual growth of N/A.

Current consensus DPS estimate is 1.5, implying a prospective dividend yield of 0.2%.

Current consensus EPS estimate suggests the PER is 20.2.

Forecast for FY21:

Ord Minnett forecasts a full year FY21 dividend of 29.00 cents and EPS of 53.00 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 17.81.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 73.5, implying annual growth of 56.1%.

Current consensus DPS estimate is 33.5, implying a prospective dividend yield of 3.5%.

Current consensus EPS estimate suggests the PER is 12.9.

Market Sentiment: 0.4

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

JHG  JANUS HENDERSON GROUP PLC.

Wealth Management & Investments

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Overnight Price: $37.27

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

Credit Suisse upgrades to Neutral from Underperform, following further analysis on the potential initiatives activist investor Trion could employ to enhance shareholder value.

Initiatives could include improving the operating margin by streamlining product and reducing the real estate footprint as well as leveraging the balance sheet and repurchasing stock. The broker raises the target to $26 from $16.

Target price is $26.00 Current Price is $37.27 Difference: minus $11.27 (current price is over target).
If JHG meets the Credit Suisse target it will return approximately minus 30% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $34.63, suggesting downside of -8.6% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Credit Suisse forecasts a full year FY20 dividend of 211.70 cents and EPS of 366.07 cents.
At the last closing share price the estimated dividend yield is 5.68%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 10.18.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 338.7, implying annual growth of N/A.

Current consensus DPS estimate is 200.0, implying a prospective dividend yield of 5.3%.

Current consensus EPS estimate suggests the PER is 11.2.

Forecast for FY21:

Credit Suisse forecasts a full year FY21 dividend of 211.70 cents and EPS of 371.95 cents.
At the last closing share price the estimated dividend yield is 5.68%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 10.02.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 347.1, implying annual growth of 2.5%.

Current consensus DPS estimate is 200.1, implying a prospective dividend yield of 5.3%.

Current consensus EPS estimate suggests the PER is 10.9.

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

MGX  MOUNT GIBSON IRON LIMITED

Iron Ore

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Overnight Price: $0.73

Macquarie rates MGX as Outperform (1) -

The update on the Shine project suggests it can produce 6mt in stage 1 and 2 over FY22-25. Macquarie expects this should materially boost the company's leverage to iron ore prices.

Production at Koolan Island is expected to double in FY22 and generate $1bn in free cash flow over the life of the mine. Macquarie maintains an Outperform rating and reduces the target to $0.93 from $0.95.

Target price is $0.93 Current Price is $0.73 Difference: $0.2
If MGX meets the Macquarie target it will return approximately 27% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY21:

Macquarie forecasts a full year FY21 dividend of 4.00 cents and EPS of 8.60 cents.
At the last closing share price the estimated dividend yield is 5.48%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 8.49.

Forecast for FY22:

Macquarie forecasts a full year FY22 dividend of 10.00 cents and EPS of 20.10 cents.
At the last closing share price the estimated dividend yield is 13.70%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 3.63.

Market Sentiment: 1.0

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

NCM  NEWCREST MINING LIMITED

Gold & Silver

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Overnight Price: $31.26

Citi rates NCM as Upgrade to Buy from Neutral (1) -

Newcrest Mining will move to the second stage at the Cadia expansion project. This -US$175m expansion should be completed in late FY22.

The miner will also spend -US$65m at Lihir to pick up more gold. Citi believes consensus expectations at Lihir have been reset and earnings momentum is now positive.

Newcrest Mining will also list on the Toronto Stock Exchange this week but, as there is no equity issue with this secondary listing, liquidity could be challenging, Citi asserts, noting the TSX is "crowded with gold stocks".

Citi upgrades to Buy from Neutral and maintains a $37 target.

Target price is $37.00 Current Price is $31.26 Difference: $5.74
If NCM meets the Citi target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $36.09, suggesting upside of 13.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Citi forecasts a full year FY21 dividend of 36.75 cents and EPS of 199.21 cents.
At the last closing share price the estimated dividend yield is 1.18%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 15.69.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 201.7, implying annual growth of N/A.

Current consensus DPS estimate is 33.5, implying a prospective dividend yield of 1.1%.

Current consensus EPS estimate suggests the PER is 15.8.

Forecast for FY22:

Citi forecasts a full year FY22 dividend of 27.93 cents and EPS of 220.52 cents.
At the last closing share price the estimated dividend yield is 0.89%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.18.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 180.3, implying annual growth of -10.6%.

Current consensus DPS estimate is 26.5, implying a prospective dividend yield of 0.8%.

Current consensus EPS estimate suggests the PER is 17.7.

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


Macquarie rates NCM as Neutral (3) -

The stage 2 expansion project at Cadia has been approved along with the front end recovery project at Lihir. This is in line with previous expectations.

Macquarie also expects a maiden inferred resource estimate for Havieron will be forthcoming in the first half of FY21, amid encouraging results.

The broker retains a Neutral rating and reduces the target by -6% to $33.

Target price is $33.00 Current Price is $31.26 Difference: $1.74
If NCM meets the Macquarie target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $36.09, suggesting upside of 13.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Macquarie forecasts a full year FY21 dividend of 42.64 cents and EPS of 199.06 cents.
At the last closing share price the estimated dividend yield is 1.36%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 15.70.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 201.7, implying annual growth of N/A.

Current consensus DPS estimate is 33.5, implying a prospective dividend yield of 1.1%.

Current consensus EPS estimate suggests the PER is 15.8.

Forecast for FY22:

Macquarie forecasts a full year FY22 dividend of 22.05 cents and EPS of 143.93 cents.
At the last closing share price the estimated dividend yield is 0.71%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 21.72.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 180.3, implying annual growth of -10.6%.

Current consensus DPS estimate is 26.5, implying a prospective dividend yield of 0.8%.

Current consensus EPS estimate suggests the PER is 17.7.

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


Morgan Stanley rates NCM as Overweight (1) -

Newcrest Mining announced approvals at Cadia and Lihir.

Morgan Stanley had already assumed Cadia stage 2 expansion would happen given favourable economics, although approval is considered a positive step.

The broker calculates recovery upgrades at Lihir will benefit the long life mine with a strong 32% internal rate of return (IRR).

Morgan Stanley concludes both announcements are positive developments for the company's two key assets.

Overweight rating maintained with a target price of $37.40. Industry view: Attractive.

Target price is $37.40 Current Price is $31.26 Difference: $6.14
If NCM meets the Morgan Stanley target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $36.09, suggesting upside of 13.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Morgan Stanley forecasts a full year FY21 dividend of 27.93 cents and EPS of 214.64 cents.
At the last closing share price the estimated dividend yield is 0.89%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.56.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 201.7, implying annual growth of N/A.

Current consensus DPS estimate is 33.5, implying a prospective dividend yield of 1.1%.

Current consensus EPS estimate suggests the PER is 15.8.

Forecast for FY22:

Morgan Stanley forecasts a full year FY22 dividend of 29.40 cents and EPS of 164.66 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 18.98.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 180.3, implying annual growth of -10.6%.

Current consensus DPS estimate is 26.5, implying a prospective dividend yield of 0.8%.

Current consensus EPS estimate suggests the PER is 17.7.

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


Ord Minnett rates NCM as Accumulate (2) -

The news that Newcrest Mining got approval for expanding its projects at Cadia and Lihir has had a minimal impact on Ord Minnett's valuation. However, the broker notes this is a good reminder of the optionality remaining within these two long-life assets.

In Ord Minnett’s view, the key catalysts are updates on growth projects at Telfer (Havieron) and Red Chris.

For now, the broker maintains its Accumulate recommendation with the target price rising to $34.70 from $34.30.

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

Target price is $34.70 Current Price is $31.26 Difference: $3.44
If NCM meets the Ord Minnett target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $36.09, suggesting upside of 13.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Ord Minnett forecasts a full year FY21 dividend of 42.64 cents and EPS of 208.76 cents.
At the last closing share price the estimated dividend yield is 1.36%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.97.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 201.7, implying annual growth of N/A.

Current consensus DPS estimate is 33.5, implying a prospective dividend yield of 1.1%.

Current consensus EPS estimate suggests the PER is 15.8.

Forecast for FY22:

Ord Minnett forecasts a full year FY22 dividend of 39.69 cents and EPS of 199.94 cents.
At the last closing share price the estimated dividend yield is 1.27%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 15.63.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 180.3, implying annual growth of -10.6%.

Current consensus DPS estimate is 26.5, implying a prospective dividend yield of 0.8%.

Current consensus EPS estimate suggests the PER is 17.7.

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

OTW  OVER THE WIRE HOLDINGS LIMITED

Cloud services

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Overnight Price: $4.60

Morgans rates OTW as Hold (3) -

Over The Wire Holdings will acquire Digital Sense which provides customisable and scalable cloud offerings to enterprise and government customers.

The cloud services include infrastructure as a service, desktop as a service, storage as a service and data protection as a service. The three largest customers are local or state governments.

Cloud solution is one of three key pillars for Over The Wire Holdings. The three are cloud, connect and collaborate. Digital Sense is both a customer and supplier to the company and, according to the analyst, the business and its technical solutions are already well known to the company.

The deal makes strategic sense to Morgans and bolsters the company's cloud offering and enterprise and government base. It's also considered to make financial sense by delivering double-digit cash EPS accretion and double-digit cash return on equity (ROE).

Morgans upgrades cash EPS forecasts by 8% in FY21 and 20% in FY22.

The Hold rating is unchanged and the target price is increased to $5.01 from $4.38.

Target price is $5.01 Current Price is $4.60 Difference: $0.41
If OTW meets the Morgans target it will return approximately 9% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY21:

Morgans forecasts a full year FY21 dividend of 4.00 cents and EPS of 28.00 cents.
At the last closing share price the estimated dividend yield is 0.87%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 16.43.

Forecast for FY22:

Morgans forecasts a full year FY22 dividend of 5.00 cents and EPS of 31.00 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 14.84.

Market Sentiment: 0.0

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

PDL  PENDAL GROUP LIMITED

Wealth Management & Investments

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Overnight Price: $6.03

Morgan Stanley rates PDL as Overweight (1) -

Morgan Stanley sees some downside risk to its own flow forecasts for Pendal Group for the September quarter. This is based on weaker retail flows in JO Hambro Capital Management (JOHCM). 

However, the broker thinks risks are mostly in the price and the circa 6% dividend yield is attractive. Additionally, it's considered September funds under management (FUM) is likely to beat the broker's forecast, given stronger markets.

Morgan Stanley also expects institutional flows to be a net positive in the September quarter.

Overweight rating reaffirmed with a target price of $7.30. Industry view: In-line.

Target price is $7.30 Current Price is $6.03 Difference: $1.27
If PDL meets the Morgan Stanley target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $6.63, suggesting upside of 9.0% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY20:

Morgan Stanley forecasts a full year FY20 dividend of 34.00 cents and EPS of 39.00 cents.
At the last closing share price the estimated dividend yield is 5.64%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 15.46.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 45.9, implying annual growth of -15.6%.

Current consensus DPS estimate is 37.3, implying a prospective dividend yield of 6.1%.

Current consensus EPS estimate suggests the PER is 13.2.

Forecast for FY21:

Morgan Stanley forecasts a full year FY21 dividend of 35.50 cents and EPS of 41.00 cents.
At the last closing share price the estimated dividend yield is 5.89%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.71.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 42.1, implying annual growth of -8.3%.

Current consensus DPS estimate is 36.5, implying a prospective dividend yield of 6.0%.

Current consensus EPS estimate suggests the PER is 14.4.

Market Sentiment: 0.4

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

SYD  SYDNEY AIRPORT HOLDINGS LIMITED

Infrastructure & Utilities

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Overnight Price: $6.02

Morgan Stanley rates SYD as Upgrade to Overweight from Equal-weight (1) -

Morgan Stanley believes green shoots in Sydney Airport's routes over the next 12 months should support a re-rating back towards (but not exceeding) historical valuations.

The broker considers the company could also benefit from proposed concessional corporate tax arrangements in FY21 and FY22 (100% capex write-offs), pushing out cash tax payments further in time.

Modest distributions may resume in late 2021, according to the broker.

The rating is upgraded to Overweight from Equal-weight and the target price is increased to $6.67 from $6.39. Industry View: cautious.

Target price is $6.67 Current Price is $6.02 Difference: $0.65
If SYD meets the Morgan Stanley target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $5.87, suggesting downside of -3.1% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Morgan Stanley forecasts a full year FY20 dividend of 0.00 cents and EPS of minus 10.30 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 58.45.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is -8.8, 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 N/A.

Forecast for FY21:

Morgan Stanley forecasts a full year FY21 dividend of 22.00 cents and EPS of 4.90 cents.
At the last closing share price the estimated dividend yield is 3.65%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 122.86.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 0.3, implying annual growth of N/A.

Current consensus DPS estimate is 13.0, implying a prospective dividend yield of 2.1%.

Current consensus EPS estimate suggests the PER is 2020.0.

Market Sentiment: 0.4

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

WBC  WESTPAC BANKING CORPORATION

Banks

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Overnight Price: $18.21

Ord Minnett rates WBC as Hold (3) -

Ord Minnett's stance on the major banks has turned somewhat positive. While the fundamental revenue outlook has not improved, the broker notes the stocks are cheap and trading below book values (except Commonwealth Bank).

House prices are holding up better than feared, points out Ord Minnett, and housing finance approvals continue to improve. This is further bolstered by the federal budget aiding the households and small- to medium-sized enterprises (SME).

The broker expects a rally in value stocks into year-end and also believes all the major banks will pay dividends this year. However, the prospects for Westpac Banking Corp are considered to be the most uncertain given the possible impact from below-the-line charges.

Ord Minnett maintains its Accumulate recommendation with the target price rising to $18.80 from $18.20.

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

Target price is $18.80 Current Price is $18.21 Difference: $0.59
If WBC meets the Ord Minnett target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $20.20, suggesting upside of 9.1% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY20:

Ord Minnett forecasts a full year FY20 dividend of 25.00 cents and EPS of 92.00 cents.
At the last closing share price the estimated dividend yield is 1.37%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 19.79.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 97.9, implying annual growth of -57.6%.

Current consensus DPS estimate is 32.0, implying a prospective dividend yield of 1.7%.

Current consensus EPS estimate suggests the PER is 18.9.

Forecast for FY21:

Ord Minnett forecasts a full year FY21 dividend of 80.00 cents and EPS of 148.00 cents.
At the last closing share price the estimated dividend yield is 4.39%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.30.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 155.9, implying annual growth of 59.2%.

Current consensus DPS estimate is 85.9, implying a prospective dividend yield of 4.6%.

Current consensus EPS estimate suggests the PER is 11.9.

Market Sentiment: 0.7

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

WGX  WESTGOLD RESOURCES LIMITED

Gold & Silver

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Overnight Price: $2.64

Macquarie rates WGX as Outperform (1) -

First quarter production results were in line with guidance. However, costs were better than expected. Macquarie observes the ramp up of Big Bell continues to gain momentum.

The broker has progressively improving production expectations over FY21. Outperform retained. Target is steady at $3.20. 

Target price is $3.20 Current Price is $2.64 Difference: $0.56
If WGX meets the Macquarie target it will return approximately 21% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY21:

Macquarie forecasts a full year FY21 dividend of 0.00 cents and EPS of 23.40 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 11.28.

Forecast for FY22:

Macquarie forecasts a full year FY22 dividend of 0.00 cents and EPS of 31.10 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 8.49.

Market Sentiment: 1.0

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
ANZ ANZ Banking Group $18.92 Ord Minnett 20.00 19.50 2.56%
CBA Commbank $68.47 Ord Minnett 66.30 65.30 1.53%
ILU Iluka Resources $9.51 Ord Minnett 9.50 9.10 4.40%
JHG Janus Henderson Group $37.90 Credit Suisse 26.00 21.00 23.81%
MGX Mount Gibson Iron $0.72 Macquarie 0.93 0.95 -2.11%
NCM Newcrest Mining $31.90 Macquarie 33.00 35.00 -5.71%
Ord Minnett 34.70 34.30 1.17%
OTW Over The Wire Holdings Ltd $4.60 Morgans 5.01 4.38 14.38%
PDL Pendal Group $6.08 Morgan Stanley 7.30 7.00 4.29%
SYD Sydney Airport $6.06 Morgan Stanley 6.67 6.39 4.38%
WBC Westpac Banking $18.51 Ord Minnett 18.80 18.20 3.30%
Summaries
AD8 Audinate Group Overweight - Morgan Stanley Overnight Price $6.05
AIA Auckland International Downgrade to Equal-weight from Overweight - Morgan Stanley Overnight Price $6.99
AMC Amcor Neutral - Credit Suisse Overnight Price $15.82
ANZ ANZ Banking Group Upgrade to Accumulate from Hold - Ord Minnett Overnight Price $18.61
CBA Commbank Hold - Ord Minnett Overnight Price $67.71
CIM Cimic Group No Rating - Ord Minnett Overnight Price $22.17
Neutral - UBS Overnight Price $22.17
CNU CHORUS Neutral - Macquarie Overnight Price $8.06
CSL CSL Buy - UBS Overnight Price $295.32
ILU Iluka Resources Hold - Ord Minnett Overnight Price $9.44
JHG Janus Henderson Group Upgrade to Neutral from Underperform - Credit Suisse Overnight Price $37.27
MGX Mount Gibson Iron Outperform - Macquarie Overnight Price $0.73
NCM Newcrest Mining Upgrade to Buy from Neutral - Citi Overnight Price $31.26
Neutral - Macquarie Overnight Price $31.26
Overweight - Morgan Stanley Overnight Price $31.26
Accumulate - Ord Minnett Overnight Price $31.26
OTW Over The Wire Holdings Ltd Hold - Morgans Overnight Price $4.60
PDL Pendal Group Overweight - Morgan Stanley Overnight Price $6.03
SYD Sydney Airport Upgrade to Overweight from Equal-weight - Morgan Stanley Overnight Price $6.02
WBC Westpac Banking Hold - Ord Minnett Overnight Price $18.21
WGX Westgold Resources Outperform - Macquarie Overnight Price $2.64
RATING SUMMARY
Rating No. Of Recommendations
1. Buy

8

2. Accumulate

2

3. Hold

10

Monday 12 October 2020

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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.