Australian Broker Call

Macquarie rates ABC as Outperform (1) -

Macquarie notes the US Contractors’ Optimism index has declined with new residential construction weaker due to product cost inflation.

The broker feels the macroeconomic environment is getting more complex for new construction, with a more hawkish Federal Reserve and 30-year mortgage rates being up around 74bps year-to-date to 3.85%.

Taking into account the improving heavy materials market in Australia, Macquarie likes stocks with alternative growth potential, remove and replace (R&R) and infrastructure exposure. AdBri is thought to fit this bill, along with Boral, CSR and James Hardie Industries.

The Outperform rating and $4.15 target are retained.

Target price is $4.15 Current Price is $3.23 Difference: $0.92
If ABC meets the Macquarie target it will return approximately 28% (excluding dividends, fees and charges).

Current consensus price target is $3.61, suggesting upside of 14.2% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.4

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

Citi rates ABP as Buy (1) -

Abacus Property has announced a $200m institutional placement, alongside an up to $15m security purchase plan, to fund its $226m storage development pipeline and replenish acquisition capacity. Citi notes an offer share price of $3.38 is a -5.1% discount to last close.

The broker anticipates an upfront -5% dilution to earnings, but assumes Abacus Property will retain a $320m capacity post raising for acquisition opportunity and expects each $100m deployed to acquisition will be up to 1.5% accretive. 

The Buy rating and target price of $4.05 are retained.

Target price is $4.05 Current Price is $3.56 Difference: $0.49
If ABP meets the Citi target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $3.67, suggesting upside of 9.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.0

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

Macquarie rates ABP as Neutral (3) -

Macquarie sees a positive in Abacus Property's announcement of a $200m equity raise to fund self storage developments though growth for funds from operations is expected to be more longer dated.

The broker's Neutral rating is maintained, while the target rises by 2% to $3.62.

Target price is $3.62 Current Price is $3.56 Difference: $0.06
If ABP meets the Macquarie target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $3.67, suggesting upside of 9.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.0

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

Morgan Stanley rates ANZ as Overweight (1) -

After forecasting higher RBA rate hikes, Morgan Stanley upgrades its major bank FY24 EPS estimates by around 1-3%. Higher funding costs, increasing mortgage competion and modestly higher loan losses are expected to only partly offset margin benefits.

The broker now forecasts cash rates will rise by 65bpts to 0.75% this year, starting in August, and reaching 1.75% by the end of 2023.

For ANZ Bank, the Overweight rating is retained, while the target price rises to $30.30 from $30. Industry view: Attractive.

Target price is $30.30 Current Price is $27.53 Difference: $2.77
If ANZ meets the Morgan Stanley target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $30.05, suggesting upside of 9.3% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.8

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

Citi rates ASB as Buy (1) -

Media reports have suggested Cerberus Capital Management will acquire the Subic Bay Hanjin shipyard in a US$300m deal expected to settle on April 15. Citi expects this will still allow Austal to be involved at the yard given a working relationship with Cerberus Capital. 

While Austal management commented that the company was still in talks for involvement at the site, Citi expects the company will move to lease a portion of Subic Bay and obtain a support contract from the US Navy, but notes these are not guaranteed. 

The Buy rating and target price of $2.35 are retained. 

Target price is $2.35 Current Price is $2.03 Difference: $0.32
If ASB meets the Citi target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $2.28, suggesting upside of 12.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.7

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

Macquarie rates BHP as Outperform (1) -

Macquarie estimates the implied value of the Petroleum demerger for BHP Group shareholders has increased to $28bn from $20b at
the time of the announcement.

This uplift combined with the final dividend could potentially deliver shareholders a US$32bn windfall by September, suggests the analyst.

In addition, the broker points out near-term earnings are receiving a boost from higher coking coal and iron ore prices. Outperform rating retained. Target price rises to $61 from $60.

Target price is $61.00 Current Price is $45.68 Difference: $15.32
If BHP meets the Macquarie target it will return approximately 34% (excluding dividends, fees and charges).

Current consensus price target is $48.74, suggesting upside of 6.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

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

Market Sentiment: 0.2

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

Macquarie rates BLD as Outperform (1) -

Macquarie notes the US Contractors’ Optimism index has declined with new residential construction weaker due to product cost inflation.

The broker feels the macroeconomic environment is getting more complex for new construction, with a more hawkish Federal Reserve and 30-year mortgage rates being up around 74bps year-to-date to 3.85%.

Taking into account the improving heavy materials market in Australia, Macquarie likes stocks with alternative growth potential, remove and replace (R&R) and infrastructure exposure. Boral  is thought to fit this bill, along with CSR, Adbri and James Hardie Industries.

The Outperform rating and $4.35 target are retained.

Target price is $4.35 Current Price is $3.47 Difference: $0.88
If BLD meets the Macquarie target it will return approximately 25% (excluding dividends, fees and charges).

Current consensus price target is $3.82, suggesting upside of 11.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.2

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

Morgan Stanley rates CBA as Underweight (5) -

After forecasting higher RBA rate hikes, Morgan Stanley upgrades its major bank FY24 EPS estimates by around 1-3%. Higher funding costs, increasing mortgage competion and modestly higher loan losses are expected to only partly offset margin benefits.

The broker now forecasts cash rates will rise by 65bpts to 0.75% this year, starting in August, and reaching 1.75% by the end of 2023.

For CommBank, the Underweight rating is retained, while the target price rises to $92 from $91. Industry view: Attractive.

Target price is $92.00 Current Price is $106.15 Difference: minus $14.15 (current price is over target).
If CBA meets the Morgan Stanley target it will return approximately minus 13% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $92.45, suggesting downside of -12.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: -0.6

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

Macquarie rates CSR as Outperform (1) -

Macquarie notes the US Contractors’ Optimism index has declined with new residential construction weaker due to product cost inflation.

The broker feels the macroeconomic environment is getting more complex for new construction, with a more hawkish Federal Reserve and 30-year mortgage rates being up around 74bps year-to-date to 3.85%.

Taking into account the improving heavy materials market in Australia, Macquarie likes stocks with alternative growth potential, remove and replace (R&R) and infrastructure exposure. CSR is thought to fit this bill, along with Boral, Adbri and James Hardie Industries.

The Outperform rating and $6.80 target are retained.

Target price is $6.80 Current Price is $5.85 Difference: $0.95
If CSR meets the Macquarie target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $6.60, suggesting upside of 10.7% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.9

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

Macquarie rates CTD as Outperform (1) -

Macquarie retains Corporate Travel Management as its top sector pick after noting, from US-listed airlines commentary, the ongoing improvement in North American travel activity.

Leisure is currently near or above 2019 levels, while Corporate is at around 60-75% of the 2019 levels.

The analyst points out 48% of  Corporate Travel Management's 2019 revenue came from North America. The Outperform rating and $26.70 target are maintained.

Target price is $26.70 Current Price is $23.59 Difference: $3.11
If CTD meets the Macquarie target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $28.05, suggesting upside of 20.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 1.0

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

Macquarie rates FLT as Neutral (3) -

Macquarie assesses from US-listed airlines commentary an ongoing improvement in North American travel activity.

Leisure is currently near or above 2019 levels, while Corporate is at around 60-75% of the 2019 levels.

The analyst has a preference for Corporate Travel Management (CTD) in the sector which had 48% of 2019 revenue from North America, while Flight Centre Travel had around 21%.

The Neutral rating and $18.85 target are maintained for Flight Centre Travel.

Target price is $18.85 Current Price is $19.41 Difference: minus $0.56 (current price is over target).
If FLT 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 $17.54, suggesting downside of -7.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: -0.4

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

Macquarie rates FSF as Neutral (3) -

Macquarie maintains its Neutral rating for Fonterra Shareholders Fund following a "solid" 1H result. FY22 guidance was maintained and a 5cps dividend was declared.

While Ingredient performance remains favourable, the analyst points to margin pressure on Consumer and Foodservice from high
milk prices.

The broker retains its Neutral rating though cuts its target by -15% to NZ$3.62. Apart from the impact of elevated input costs, it's felt a valuation discount is warranted for risks of structure (including fund liquidity) and execution risk.

Current Price is $3.21. Target price not assessed.

The company's fiscal year ends in July.

Forecast for FY22:

Forecast for FY23:

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

Credit Suisse rates IAG as Outperform (1) -

Consistent with recent APRA statistics, Credit Suisse notes overall pricing for motor and home (new business) strengthened materially in the quarter to January 2022. It's expected this trend will continue and potentially accelerate.

Insurance Australia Group's new home rate increases of around 3-6% were below the market as were its motor rates rises. However, on a year-on-year basis motor rate rises were 11.6% above market.

The broker maintains its Outperform rating and $5.50 target price.

Target price is $5.50 Current Price is $4.58 Difference: $0.92
If IAG meets the Credit Suisse target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $4.98, suggesting upside of 8.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.3

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

Macquarie rates IAG as Outperform (1) -

After reviewing 1H Australian results for competitor Youi as as a readthrough for Insurance Australia Group, Macquarie maintains its preference for Suncorp Group ((SUN)). 

This stance is based on Suncorp's underlying insurance trading ratio (ITR) having bottomed in FY21 and the acceleration in its gross written premium (GWP) growth, explains the broker.

The Outperform rating and $5 target are retained for Insurance Australia Group.

Target price is $5.00 Current Price is $4.58 Difference: $0.42
If IAG meets the Macquarie target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $4.98, suggesting upside of 8.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.3

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

Macquarie rates JHX as Outperform (1) -

Macquarie notes the US Contractors’ Optimism index has declined with new residential construction weaker due to product cost inflation.

The broker feels the macroeconomic environment is getting more complex for new construction, with a more hawkish Federal Reserve and 30-year mortgage rates being up around 74bps year-to-date to 3.85%.

Taking into account the improving heavy materials market in Australia, Macquarie likes stocks with alternative growth potential, remove and replace (R&R) and infrastructure exposure. James Hardie Industries is thought to fit this bill, along with Boral, Adbri and CSR.

The Outperform rating and $61.70 target are retained.

Target price is $61.70 Current Price is $46.70 Difference: $15
If JHX meets the Macquarie target it will return approximately 32% (excluding dividends, fees and charges).

Current consensus price target is $56.95, suggesting upside of 24.5% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY22:

Forecast for FY23:

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

Morgans rates MME as Add (1) -

Morgans updates forecasts to allow for the recent 1H result (few surprises) and the successful completion of the acquisition of SocietyOne.

A key highlight from last month's results, according to the analyst, was the ongoing strength of Autopay originations which now account for 26% of the book.

The target price falls to $2.35 from $2.65 after also factoring-in higher impairment expenses (from accelerated loan growth) and raising longer-term revenue assumptions. The Add rating is maintained.

Target price is $2.35 Current Price is $1.50 Difference: $0.85
If MME meets the Morgans target it will return approximately 57% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 1.0

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

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

After forecasting higher RBA rate hikes, Morgan Stanley upgrades its major bank FY24 EPS estimates by around 1-3%. Higher funding costs, increasing mortgage competion and modestly higher loan losses are expected to only partly offset margin benefits.

The broker now forecasts cash rates will rise by 65bpts to 0.75% this year, starting in August, and reaching 1.75% by the end of 2023.

For National Australia Bank, the Equal-weight rating is retained, while the target price rises to $31.50 from $31. Industry view: Attractive.

Target price is $31.50 Current Price is $31.14 Difference: $0.36
If NAB meets the Morgan Stanley target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $31.91, suggesting upside of 2.8% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.4

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

Citi rates PMV as Neutral (3) -

Ahead of the release of Premier Investments' first half results next week, Citi notes the company has preannounced a first half earnings forecast beat of $35m with its guidance range of $209.5-$211.5m. 

The broker notes Premier Investments was one of few retailers who benefited from changing consumer behaviours during the pandemic, but it now looks to how to company plans to navigate ongoing normalisation, expecting the company can retain some benefits. 

The Neutral rating and target price of $30.30 are retained.

Target price is $30.30 Current Price is $28.46 Difference: $1.84
If PMV meets the Citi target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $30.55, suggesting upside of 10.6% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.6

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

Credit Suisse rates QBE as Outperform (1) -

Consistent with recent APRA statistics, Credit Suisse notes overall pricing for motor and home (new business) strengthened materially in the quarter to January 2022. It's expected this trend will continue and potentially accelerate.

However, QBE Insurance decreased its motor rates in the quarter, the only insurer in the broker's sample to do so. It was also the only insurer to keep home rates flat.

The broker maintains its Outperform rating and $14.45 target price.

Target price is $14.45 Current Price is $10.91 Difference: $3.54
If QBE meets the Credit Suisse target it will return approximately 32% (excluding dividends, fees and charges).

Current consensus price target is $14.22, suggesting upside of 29.1% (ex-dividends)

Forecast for FY22:

Forecast for FY23:

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

Market Sentiment: 1.0

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

Morgan Stanley rates SEK as Overweight (1) -

Morgan Stanley lifts its target price to $36 from $21 for Seek after assessing the combined 1H results and outlook (in February) were the strongest in its coverage of the Technology, Media & Entertainment and Telecommunications sector. Overweight.

The broker highlights shares are -20% adrift of late 2021 highs. It's thought the business will benefit from the current tight labour market and higher than normal rates of churn.

After reviewing an overseas peer, the analyst feels the market typically underestimates operating leverage inherent in such companies.

Morgan Stanley hasn't covered this stock since August 2020 (but has not labeled today's update an official resumption of coverage).

Target price is $36.00 Current Price is $30.69 Difference: $5.31
If SEK meets the Morgan Stanley target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $34.31, suggesting upside of 11.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.6

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

Credit Suisse rates SUN as Outperform (1) -

Consistent with recent APRA statistics, Credit Suisse notes overall pricing for motor and home (new business) strengthend materially in the quarter to January 2022. It's expected this trend will continue and potentially accelerate.

Suncorp Group's new home rate increases were slightly above the market while its motor rates increased markedly in the quarter, according to the analyst.

The broker maintains its Outperform rating and $13.90 target price.

Target price is $13.90 Current Price is $11.09 Difference: $2.81
If SUN meets the Credit Suisse target it will return approximately 25% (excluding dividends, fees and charges).

Current consensus price target is $13.61, suggesting upside of 19.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.7

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

Macquarie rates SUN as Outperform (1) -

After reviewing 1H Australian results for competitor Youi as as a readthrough for insurers under coverage, Macquarie maintains its preference for Suncorp Group over Insurance Australia Group ((IAG)).

This stance is based on the group's underlying insurance trading ratio (ITR) having bottomed in FY21 and the acceleration in its gross written premium (GWP) growth, explains the broker.

The Outperform rating and $15.10 target are retained.

Target price is $15.10 Current Price is $11.09 Difference: $4.01
If SUN meets the Macquarie target it will return approximately 36% (excluding dividends, fees and charges).

Current consensus price target is $13.61, suggesting upside of 19.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.7

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

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

After forecasting higher RBA rate hikes, Morgan Stanley upgrades its major bank FY24 EPS estimates by around 1-3%. Higher funding costs, increasing mortgage competion and modestly higher loan losses are expected to only partly offset margin benefits.

The broker now forecasts cash rates will rise by 65bpts to 0.75% this year, starting in August, and reaching 1.75% by the end of 2023.

For Westpac, the Equal-weight rating is retained, while the target price rises to $22.40 from $22. Industry view: Attractive.

Target price is $22.40 Current Price is $23.68 Difference: minus $1.28 (current price is over target).
If WBC meets the Morgan Stanley target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $25.16, suggesting upside of 6.1% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.4

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

Macquarie rates WEB as Neutral (3) -

Macquarie assesses from US-listed airlines commentary an ongoing improvement in North American travel activity.

Leisure is currently near or above 2019 levels, while Corporate is at around 60-75% of the 2019 levels.

The analyst has a preference for Corporate Travel Management ((CTD)) in the sector which had 48% of 2019 revenue from North America, while Webjet had around 5% of 1H 2020 total transaction value (TTV) from the Americas.

The Neutral rating and $6.10 target are maintained for Webjet.

Target price is $6.10 Current Price is $5.71 Difference: $0.39
If WEB meets the Macquarie target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $6.15, suggesting upside of 9.0% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.4

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

Macquarie rates WGX as Outperform (1) -

Macquarie explains Westgold Resources will deploy proceeds from the announced $100m equity raise to accelerate production to over 400kozpa by lifting the output of current mines.

Key projects include doubling the underground output at Bluebird, developing the Fender underground, as well as mill expansions at both Fortnum and Cue.

Dilution from the capital raise and near-term EPS reductions combine to lower the broker's target by -17% to $2.40.

Target price is $2.40 Current Price is $1.93 Difference: $0.47
If WGX meets the Macquarie target it will return approximately 24% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 1.0

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