Australian Broker Call

Macquarie rates AMI as Outperform (1) -

Aurelia Metals has reported exploration results for its Burrabungie, Chesney and Queen Bee prospects.

Macquarie observes all are within 10km of the company's Peak processing plant and could extend Peak's mine life. 

The broker also considers the company to be a potential M&A target.

Outperform rating and 23c target price retained.

Target price is $0.23 Current Price is $0.12 Difference: $0.115
If AMI meets the Macquarie target it will return approximately 100% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.5

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

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

Futures trading and OTC clearing accounted for 21% of ASX's revenue in FY22, and remains one of the company's largest revenue streams.

Morgan Stanley's data suggests futures volumes increased 35% year-on-year in March to-date.

While the broker calculates a 25% rise in volume translates to around 6% upside to its 2H earnings forecast, interest income may slow and undermine the current trend.

The Equal-weight rating and target price of $68.90 are retained. Industry view: In-Line.

Target price is $68.90 Current Price is $66.58 Difference: $2.32
If ASX meets the Morgan Stanley target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $69.97, suggesting upside of 6.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.1

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

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

Ord Minnett upgrades its rating for AUB Group to Accumulate from Hold valuation after a recent share price decline.

No changes are made to the broker's forecasts and the $29 target is unchanged.

Target price is $29.00 Current Price is $24.35 Difference: $4.65
If AUB meets the Ord Minnett target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $29.81, suggesting upside of 19.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.9

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

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

Credit Suisse warns Cleanaway Waste Management is likely at risk of severe economic sensitivity, based on impacts on peers in the US and UK during the global financial crisis. The peer companies in question saw revenue decline as much as -12%, and earnings as much as -50%. 

Extrapolating these results, Credit Suisse expects a gross domestic product decline of between -1-2% would see Cleanaway Waste Management's revenue decline -2-4% and earnings -6-8%, while in the less likely case of a -5% gross domestic product decline would see revenue decline -10-12% and drive a materially greater earnings decline. 

The rating is upgraded to Neutral from Underperform and the target price of $2.50 are retained.

Target price is $2.50 Current Price is $2.49 Difference: $0.01
If CWY meets the Credit Suisse target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $2.75, suggesting upside of 13.3% (ex-dividends)

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.1

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

Morgan Stanley rates EVN as Overweight (1) -

According to Morgan Stanley, the recent operational stoppage at Evolution Mining and high gearing levels have the market concerned with the company's liquidity position.

The analysts dispel such talk, noting Evolution could withstand gold prices as much as -US$300/oz lower for a period of three years.

While the company has been impacted by wet weather at the Ernest Henry operations, the broker considers management guidance of six weeks for the asset to recover is reasonable.

The Overweight rating is retained and the target slips to $3.35 from $3.40. Industry view: Attractive. 

Target price is $3.35 Current Price is $2.84 Difference: $0.51
If EVN meets the Morgan Stanley target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $2.99, suggesting upside of 3.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: -0.1

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

Morgans rates EVN as Add (1) -

Fears of banking contagion is leading to the increasing appeal of safe haven assets such as gold, notes Morgans.

Despite a 10% rise in the Australian dollar gold price in the last 12 months, the broker points out Australian gold stocks (All Ordinaries Gold index) have fallen around -11% over the same period.

The analyst suggests gold equities may be lagging the broader market due to inflationary pressures, lower margins and the strong US dollar.

Morgans top selections from gold stocks under coverage are Evolution Mining and Newcrest Mining.

The broker maintains its Add rating and $3.70 target for Evolution.

Target price is $3.70 Current Price is $2.84 Difference: $0.86
If EVN meets the Morgans target it will return approximately 30% (excluding dividends, fees and charges).

Current consensus price target is $2.99, suggesting upside of 3.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: -0.1

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

UBS rates EVN as Sell (5) -

With Evolution Mining reporting first underground stope mining and processing from its Cowal asset this month, ahead of schedule, UBS is finding the company to look "increasingly good" at spot prices. The project is on track to ramp up to 320,000 ounces in the next fiscal year, from 275,000 in the current year. 

The broker expects Evolution Mining will chase the low end of its 685,000-755,000 ounce guidance for the year, largely dependent on the Ernest Henry restart. Recovery is making progress after six weeks of down time, and this remains a short-term focus.

The Sell rating is retained and the target price increases to $2.70 from $2.65.

Target price is $2.70 Current Price is $2.84 Difference: minus $0.14 (current price is over target).
If EVN meets the UBS target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.99, suggesting upside of 3.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: -0.1

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

Macquarie rates HLS as Outperform (1) -

Australian Clinical Labs ((ACL)) has targeted Healius in an off-market bid at a 4.2% discount to the March 17 closing price, and Macquarie suspects this could rise if Healius meets internal margin targets.

Under the deal, Healius shareholders get 0.74 ACL shares for each Healius share resulting in the latter getting 68% of the merged company, and ACL shareholders emerging with 32%.

Australian Clinical Labs predicts the merger would result in a pre-tax costs synergies of $95m ($55m in the first two years).

Macquarie's calculates Healius's valuation of $4.87 to be well above the offer, and that the offer (at roughly $3.66) is 32% above the share price, suggesting strong upside for Healius shareholders in the merged company if margins are achieved, says the broker.

Outperform rating and $4 target price retained. 

Target price is $4.00 Current Price is $3.01 Difference: $0.99
If HLS meets the Macquarie target it will return approximately 33% (excluding dividends, fees and charges).

Current consensus price target is $3.13, suggesting upside of 3.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: -0.1

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

Morgan Stanley rates HLS as Underweight (5) -

Given Morgan Stanley sees limited upside for Healius shares, especially when considering a poor record of strategic execution, most upside is likely to be generated from shared synergies with the likes of Australian Clinical Labs ((ACL)).

The latter has made an all-share takeover offer for Healius at a -4.2% discount to the last closing price.

As far as the broker is concerned, the synergy potential on offer is of a similar magnitude to initiatives by Healius under the existing sustainable improvement program (SIP).

Management at Australian Clinical Labs expect the proposed merger to create -$95m in cost synergies across four years.

Underweight rating and $2.65 target price retained.

Target price is $2.65 Current Price is $3.01 Difference: minus $0.36 (current price is over target).
If HLS meets the Morgan Stanley target it will return approximately minus 12% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.13, suggesting upside of 3.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: -0.1

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

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

In an approach that looks opportunistic to Morgans, given a lack of premium, Healius has received an all-scrip off-market takeover offer from Australian Clinical Labs ((ACL)). The deal is comprised of 0.74 Australian Clinical Labs shares for each Healius share.

The potential to unlock -$95m cost synergies is realistic, believes the broker.

While conceding the potential for scale benefits and cost savings, Morgans sees risk in merging the operations from hiccups or divestments, which may impact on returns achieved. Also, ACCC clearance for the transaction may not be certain, explains the analyst

The rating is downgraded to Hold from Add and the $3.02 target retained.

Target price is $3.02 Current Price is $3.01 Difference: $0.01
If HLS meets the Morgans target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $3.13, suggesting upside of 3.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: -0.1

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

Ord Minnett rates HLS as Accumulate (2) -

The takeover proposal by Australian Clinical Labs materially undervalues Healius as a stand-alone business, prior to any synergies, according to Ord Minnett.

Putting the bid to one side, the broker anticipates a recovery in margins for Healius as activity levels for the base business recover and cost-out initiatives take effect.

Ord Minnett has little doubt the Healius board will reject the proposal.

The Accumulate rating and $3.55 target are unchanged.

Target price is $3.55 Current Price is $3.01 Difference: $0.54
If HLS meets the Ord Minnett target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $3.13, suggesting upside of 3.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: -0.1

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

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

Ord Minnett upgrades its rating for Insurance Australia Group to Accumulate from Hold on valuation after a recent share price decline.

No changes are made to the broker's forecasts and the $5.50 target is unchanged.

Target price is $5.50 Current Price is $4.49 Difference: $1.01
If IAG meets the Ord Minnett target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $5.23, suggesting upside of 15.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.4

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

Citi rates IPL as Neutral (3) -

Incitec Pivot is selling its Waggaman ammonia facility for total gross proceeds of $2.5bn or post tax realised proceeds of $1.884bn, around 4% above Citi's estimated value.

The company has also entered into a 25-year offtake agreement with the buyer of Waggaman (CF Industries) to supply 200k short tons/per year of ammonia for 15 years to support the Dyno Nobel Americas explosives business. The offtake agreement is valued at -$634m.

The Neutral rating and $3.95 target are unchanged.

Target price is $3.95 Current Price is $3.12 Difference: $0.83
If IPL meets the Citi target it will return approximately 27% (excluding dividends, fees and charges).

Current consensus price target is $4.07, suggesting upside of 25.6% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.5

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

Morgan Stanley rates IPL as Overweight (1) -

Morgan Stanley expects meaningful capital management after Incitec Pivot sold its Louisiana-based WALA ammonia facility for $2.5bn, a price slightly ahead of market expectations.

The analysts reiterate the Overweight rating and believe the sale will crystalise value and simplify the organisation, as well as increasing the importance of the higher-quality explosives business.

Once the sale has concluded, management will look at demerging the IPF fertiliser business.

Morgan Stanley hasn't yet adjusted its earnings forecasts for the sale, though the target falls to $4.10 from $5.05 on a mark-to-market exercise and revised fertiliser assumptions. Industry view: In-Line.

Target price is $4.10 Current Price is $3.12 Difference: $0.98
If IPL meets the Morgan Stanley target it will return approximately 31% (excluding dividends, fees and charges).

Current consensus price target is $4.07, suggesting upside of 25.6% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.5

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

Morgans rates NCM as Add (1) -

Fears of banking contagion is leading to the increasing appeal of safe haven assets such as gold, notes Morgans.

Despite a 10% rise in the Australian dollar gold price in the last 12 months, the broker points out Australian gold stocks (All Ordinaries Gold index) have fallen around -11% over the same period.

The analyst suggests gold equities may be lagging the broader market due to inflationary pressures, lower margins and the strong US dollar.

Morgans top selections from gold stocks under coverage are Newcrest Mining and Evolution Mining.

The broker maintains its Add rating and $25.70 target for Newcrest.

Target price is $25.70 Current Price is $25.65 Difference: $0.05
If NCM meets the Morgans target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $26.08, suggesting upside of 1.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

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

Ord Minnett rates ORI as Hold (3) -

Prior to Ord Minnett's decision to whitelabel resarch from Morningstar, the target price for Orica in the FNArena target price was $15.60 (JP Morgan's research).

In new research, Ord Minnett's $16.10 (Morningstar) target is unchanged, despite the broker's margin assumption for Orica being slightly reduced.

The analyst also marginally reduces its DPS forecast. The yield was already considered pedestrian.

Target price is $16.10 Current Price is $15.12 Difference: $0.98
If ORI meets the Ord Minnett target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $16.25, suggesting upside of 8.1% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.3

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

Citi rates PMV as Neutral (3) -

First half results for Premier Investments are due on March 27 and Citi forecasts retail earnings (EBIT) of $223m and overall earnings growth of 11% year-on-year.

The broker notes near-term trading conditions appear robust when taking into account peer results and official ABS data.

The Neutral rating and target price of $26.30 are retained.

Target price is $26.30 Current Price is $25.53 Difference: $0.77
If PMV meets the Citi target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $26.62, suggesting upside of 3.6% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.5

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

Morgan Stanley rates PMV as Overweight (1) -

Following the February reporting season, Morgan Stanley has conviction on earnings and outperformance for Premier Investments.

Should the consumer continue to be resilient, the analysts feel exposure to Premier is the most desirable in the small/mid cap space. This is due to around $400m in net cash and a strong track record by management, which is strongly aligned to shareholder interests.

The broker also notes offshore expansion opportunities for Smiggle and Peter Alexander.

The Overweight rating and $30.50 target are unchanged. Industry view: In-Line.

Target price is $30.50 Current Price is $25.53 Difference: $4.97
If PMV meets the Morgan Stanley target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $26.62, suggesting upside of 3.6% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.5

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

Ord Minnett rates RIO as Upgrade to Hold from Lighten (3) -

Ord Minnett upgrades its rating for Rio Tinto to Hold from Lighten after a recent share price decline.

No changes are made to the broker's forecasts and the $107 target is unchanged.

Target price is $107.00 Current Price is $113.99 Difference: minus $6.99 (current price is over target).
If RIO meets the Ord Minnett target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $116.79, suggesting upside of 1.4% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY23:

Forecast for FY24:

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

Market Sentiment: 0.1

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

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

Macquarie resumes coverage of Star Entertainment post its equity raising, observing a large earnings discrepancy between consensus input forecasts.

The broker applies an Outperform rating (which compares with its last rating in the FNArena data base on February 13 of Hold), and a target price of $1.65 ($1.55 in February), with the proviso that much depends on the NSW tax outcome ($300m of penalties compares with the company's $150m provision).

The broker expects the company can cushion some of the blow by cutting capital and operating expenditure and believes the share market is factoring in a worst-case scenario.

Target price is $1.65 Current Price is $1.42 Difference: $0.23
If SGR meets the Macquarie target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $1.90, suggesting upside of 29.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.5

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

Macquarie rates WAF as Outperform (1) -

West African Resources's FY23 full-year result outpaced Macquarie's forecasts and production and all-in-sustaining cost guidance was retained.

Management retierated its plan to fund Kiaka frm existing cash, debt and internal cash flows.

The broker expects the company will announce its annural resoure/reserve and new 10-year production outlook within weeks, and observes details of the company's debt package are expected in the June quarter.

Outperform rating retained. Target price of $1.70, compares with the last entry of $1.60 in the FNArena data base in February.

Target price is $1.70 Current Price is $1.02 Difference: $0.675
If WAF meets the Macquarie target it will return approximately 66% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

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