Australian Broker Call

Citi rates ALU as Buy (1) -

Citi retains its Buy rating and $35.40 target price despite recent Chinese government restrictions that could negatively impact printed circuit board (PCB) manufacturing.

While the broker's Taiwan and China Semiconductor sector analyst sees potential for a prolonged impact, the analyst highlights management remarks of continued strong design activity. Also, the company noted this activity is decoupled from manufacturing issues.

Target price is $35.40 Current Price is $34.90 Difference: $0.5
If ALU meets the Citi target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $31.50, suggesting downside of -11.3% (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: 0.0

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

Ord Minnett rates AMC as Accumulate (2) -

After an update to the analyst's financial model, Ord Minnett adjusts its EPS forecasts and raises its target price for Amcor to $18 from $17.50. The Accumulate rating is unchanged.

Target price is $18.00 Current Price is $16.20 Difference: $1.8
If AMC meets the Ord Minnett target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $18.43, suggesting upside of 12.5% (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: 0.6

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

Citi rates AMP as Neutral (3) -

Citi envisages a major business transition and simplification for AMP as significant cross-subsidisation between product and advice is being removed. While many advisers have departed, the broker's analysis indicates, the rate of decline has recently slowed.

As a result, advisors will pay more for the services provided to them by AMP with the ultimate goal of making a profit from self-employed advice. Citi maintains its Neutral rating and $1.25 target price.

Target price is $1.25 Current Price is $1.00 Difference: $0.25
If AMP meets the Citi target it will return approximately 25% (excluding dividends, fees and charges).

Current consensus price target is $1.20, suggesting upside of 20.9% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.0

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

Credit Suisse rates BKL as Outperform (1) -

Credit Suisse runs the numbers on a potential takeover of Blackmores, after press reports of a defence strategy by management. After applying a mutiple from a recent overseas takeover, it's thought $105 per share may be a suitable valuation starting point for an offer.

Given a significant cost base in Australia, the broker suggests synergies to be derived may tempt a large multinational functional food company that has operations here. The Outperform rating and $100 target price are unchanged.

Target price is $100.00 Current Price is $92.66 Difference: $7.34
If BKL meets the Credit Suisse target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $86.30, suggesting downside of -8.4% (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 GOR as Outperform (1) -

Throughput has been reduced because of a mill bearing failure at Gruyere and the ball mill is expected to return to operation in 3-7 days.

Macquarie notes the company needs a good fourth quarter to meet the low end of its 260-300,000 ounces guidance for 2021 and now forecasts 248koz ounces.

Despite the interruption, the broker's long-term assumptions at Gruyere remain unchanged for throughput at 9.5mtpa. Outperform maintained. Target is lowered to $1.40 from $1.50.

Target price is $1.40 Current Price is $1.21 Difference: $0.19
If GOR meets the Macquarie target it will return approximately 16% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 1.0

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

Citi rates HUB as Buy (1) -

Citi notes the transition of advisers away from vertically integrated players has been a tailwind for HUB24 and Netwealth Group ((NWL)). The transition of the back book is now considered key for future market share gains.

Adviser growth is an indication of future flows, as advisers are typically slow to transition funds to a new platform, explains the analyst. The flow outlook should result in strong medium-term earnings growth and the broker sets a $32 target with an unchanged Buy rating.

Target price is $32.00 Current Price is $28.60 Difference: $3.4
If HUB meets the Citi target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $30.23, suggesting upside of 4.2% (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

Citi rates IFL as Buy (1) -

Citi envisages a major business transition and simplification for IOOF Holdings as significant cross-subsidisation between product and advice is being removed. While many advisers have departed, the broker's analysis indicates the rate of decline has recently slowed.

As a result, advisors will pay more for the services provided to them by IOOF Holdings with the ultimate goal of making a profit from self-employed advice. Citi maintains its Buy rating and $5.30 target price.

Target price is $5.30 Current Price is $4.36 Difference: $0.94
If IFL meets the Citi target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $5.28, suggesting upside of 22.7% (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

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

Citi upgrades JB Hi-Fi to Buy from Neutral due to recent share price underperformance. While the analyst makes no changes to forecast earnings, the target price falls to $53 from $55 on changes to peer valuations.

The broker highlights a -40% discount to the ASX200 ex-resources index, while the stock usually trades between a -10% and -30% discount to the broader market.

Target price is $53.00 Current Price is $44.19 Difference: $8.81
If JBH meets the Citi target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $51.53, suggesting upside of 13.2% (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

Macquarie rates LTR as Outperform (1) -

Macquarie updates estimates to incorporate the FY21 results. The near-term catalysts include the securing of offtake and funding agreements amid a formal commitment to the development of Kathleen Valley.

The broker expects the first phase of development will focus on the 350,000tpa spodumene open pit and underground mine. Outperform rating and $1.70 target unchanged.

Target price is $1.70 Current Price is $1.44 Difference: $0.26
If LTR meets the Macquarie target it will return approximately 18% (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

Credit Suisse rates MFG as Neutral (3) -

Credit Suisse lowers EPS forecasts by -7-9% for FY22-24 due to lower estimates for funds under management (FUM) from outflows and markets. The target price falls to $37 from $46.50 though the Neutral rating is unchanged as current multiples are considered fair.

However, the analyst expects negative catalysts for the next six months and the share price may fall below fundamental valuation. The company reported outflows in the June quarter and the broker's analysis indicates this has continued into the September quarter.

The Global Fund is more expensive than peers, notes the broker, which is creating concerns that underperformance and competitors at a lower price point will force a fee cut.

Target price is $37.00 Current Price is $35.70 Difference: $1.3
If MFG meets the Credit Suisse target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $42.68, suggesting upside of 20.7% (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

Morgans rates MX1 as Add (1) -

Morgans has already included contributions in forecasts for recently signed contracts to start development work on the airport security project and the early stroke detection program.

The former is with the Australian Stroke Alliance (ASA) for $8m, and the latter with the US Government’s Department of Homeland Security (DHS) for $2.5m. Both come with funding, underpinning the projects until a successful (or not) outcome is achieved.

The broker makes no changes to forecasts and retains its Speculative Buy rating and $0.58 target price.

Target price is $0.58 Current Price is $0.34 Difference: $0.24
If MX1 meets the Morgans target it will return approximately 71% (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

Citi rates NWL as Neutral (3) -

Citi notes the transition of advisers away from vertically integrated players has been a tailwind for HUB24 ((HUB)) and Netwealth Group. The transition of the back book is now considered key for future market share gains.

Adviser growth is an indication of future flows, as advisers are typically slow to transition funds to a new platform, explains the analyst. The flow outlook should result in strong medium-term earnings growth, according to the broker. Neutral rating and $15.40 target price. 

Target price is $15.40 Current Price is $14.38 Difference: $1.02
If NWL meets the Citi target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $16.53, suggesting upside of 13.5% (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

Citi rates ORI as Buy (1) -

Citi expects the market to look through the recognition of around -$350m of significant items (largely non-cash) in the second half FY21 accounts.

The broker prefers to focus on underlying earnings momentum from improved pricing and recovering ammonium nitrate volumes. The Buy rating and $14 target price are unchanged.

Target price is $14.00 Current Price is $12.04 Difference: $1.96
If ORI meets the Citi target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $13.76, suggesting downside of -0.4% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.4

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

Credit Suisse rates ORI as Outperform (1) -

After a FY21 trading update, Credit Suisse points out impairments to Burrup and the EMEA division do not appear to reflect a fundamental change in Orica’s outlook. The broker retains its Outperform rating and lifts its target price to $16.11 from $15.66.

After management comments, the broker feels volume is possibly better and ammonia cost impacts not as material as previously forecast.

While gas and ammonia costs are likely to remain a headwind through to the first half of 2022, contract cost pass through should result in a recovery of most of these costs in the second half.

Target price is $16.11 Current Price is $12.04 Difference: $4.07
If ORI meets the Credit Suisse target it will return approximately 34% (excluding dividends, fees and charges).

Current consensus price target is $13.76, suggesting downside of -0.4% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.4

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

Morgans rates ORI as Upgrade to Add from Hold (1) -

Prior to FY21 results on November 11, Orica has announced -$345-370m of after tax one-off items, which will now result in a statutory loss. Despite this, Morgans notes a strong balance sheet, improving operating conditions and an undemanding PE multiple.

As a result, the broker raises its rating to Add from Hold and edges up its target price to $13.70 from $13.65. The analyst highlights the new SaaS accounting standard will increase underlying earnings (EBIT) in FY21 by $20m, the equivalent of a 5% upgrade.

Morgans feels the earnings downgrade cycle of the last few years is now finally over.

Target price is $13.70 Current Price is $12.04 Difference: $1.66
If ORI meets the Morgans target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $13.76, suggesting downside of -0.4% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.4

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

UBS rates ORI as Neutral (3) -

Orica will include around -$360m in significant items at its upcoming FY21 results. This will not affect underlying earnings. UBS notes the items outlined follow the recent appointment of Sanjeev Gandhi as CEO and proceed the strategic update in November.

No formal guidance on earnings has been provided which signals to the broker the result should be consistent with consensus expectations of EBIT at around $403m. Gearing remains within the target range of 30-40%.

UBS believes Orica should provide significant leverage to a global recovery and a normalisation of mine production, although coal trade dislocation and cost inflation may weigh. Neutral retained. Target is reduced to $13.00 from $13.50.

Target price is $13.00 Current Price is $12.04 Difference: $0.96
If ORI meets the UBS target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $13.76, suggesting downside of -0.4% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.4

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

Macquarie rates RDY as Outperform (1) -

The company has announced the acquisition of Avaxa for $2.2m, which will expand its customers to include both the Chisholm TAFE and Melbourne Polytechnic.

Macquarie believes the acquisition should improve the prospect for transitioning of Avaxa customers to ReadyTech's JobReady Plus platform.

The main downside risk the broker envisages is FY22 guidance for mid-teen organic revenue growth falling short. This would reduce confidence in the FY26 $125m organic revenue target. Outperform retained. Target rises to $3.98 from $3.30.

Target price is $3.98 Current Price is $3.51 Difference: $0.47
If RDY meets the Macquarie target it will return approximately 13% (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

Credit Suisse rates SIQ as Downgrade to Neutral from Outperform (3) -

Credit Suisse increases its target price to $10.35 from $8 and lowers its rating to Neutral from Outperform after SmartGroup Corp received a proposal to acquire 100% of its shares for $10.35 by way of a Scheme of Arrangement.

The indicative, non-binding and conditional proposal is from a consortium comprising TPG Global and Potentia Capital. While competing offers could potentially emerge, the broker considers the price offered is good for shareholders.

Target price is $10.35 Current Price is $9.28 Difference: $1.07
If SIQ meets the Credit Suisse target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $9.25, suggesting downside of -2.6% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.1

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

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

Smartgroup Corp has received a non-binding proposal from a consortium at $10.35 a share, a 38.6% premium to the 90-day VWAP. Morgan Stanley believes the offer reflects the low gearing and capital-light, cash-generating nature of the business model.

The broker believes investors will now turn their attention to further industry consolidation and the valuation multiples of listed operators should  respond favourably.

Equal-weight rating. Target is  $7.70. Industry view: In Line.

Target price is $7.70 Current Price is $9.28 Difference: minus $1.58 (current price is over target).
If SIQ meets the Morgan Stanley target it will return approximately minus 17% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $9.25, suggesting downside of -2.6% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.1

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

Morgans rates SIQ as Downgrade to Hold from Add (3) -

Morgans moves to a Hold rating from Add after SmartGroup Corp received a non-binding indicative offer from US private equity firm TPG Global and Potentia Capital (consortium) for $10.35 in cash. The target price rises to the $10.35 bid price from $8.35.

The broker feels the likelihood of the offer being withdrawn is lessened by the company's resilient earnings base, clean balance sheet and recently renewed long-term contracts. 

The Board, which intends to unanimously recommend the offer, has granted four weeks exclusive due diligence.

Target price is $10.35 Current Price is $9.28 Difference: $1.07
If SIQ meets the Morgans target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $9.25, suggesting downside of -2.6% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.1

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

Ord Minnett rates SIQ as Downgrade to Accumulate from Buy (2) -

Ord Minnett considers the $10.35 offer a strong price, without being exceptional, after SmartGroup Corp received an indicative proposal for acquisition by private equity.

While it is more likely than not the proposal will proceed, the broker downgrades its rating to Accumulate from Buy, given the jump in the share price. The revised target price is $9.85 from $8. 

Target price is $9.95 Current Price is $9.28 Difference: $0.67
If SIQ meets the Ord Minnett target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $9.25, suggesting downside of -2.6% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.1

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