Australian Broker Call

Credit Suisse rates A2M as Neutral (3) -

While a2 Milk Co's September quarter sales ran ahead of budget given weakness from the New Zealand dollar, Credit Suisse notes earnings are tracking to budget. 

The company continues to transition its English label product to a new label and formulation, with the broker finding the transition smooth so far. Credit Suisse expects reformulations to drive market share gains for a2 Milk Co.

The Neutral rating is retained and the target price increases to $5.25 from $5.15.

Target price is $5.25 Current Price is $5.40 Difference: minus $0.15 (current price is over target).
If A2M meets the Credit Suisse target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.99, suggesting downside of -5.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

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

Market Sentiment: -0.5

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

Macquarie rates CTM as Outperform (1) -

Centaurus Metals has reported strong intercepts, according to Macquarie, at the Jaguar nickel sulphide project.

A mineral resource update will be delayed to late October due to laboratory backlogs.

The broker retains its Outperform rating and $1.30 target price.

Target price is $1.30 Current Price is $0.99 Difference: $0.31
If CTM meets the Macquarie target it will return approximately 31% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

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 CXO as Outperform (1) -

As Core Lithium has announced an institutional placement of $100m (at $1.03/share) to accelerate organic growth, Macquarie lowers its FY23 and FY24 EPS forecasts by -38% and -8%, respectively. Forecasts for FY25 and beyond fall by -5%.

The analyst explains accelerated exploration and development plans also contributed to lower earnings forecasts.

The target price falls to $1.70 from $1.80 and the Outperform rating is unchanged.

Target price is $1.70 Current Price is $1.11 Difference: $0.59
If CXO meets the Macquarie target it will return approximately 53% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

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

Macquarie rates HAS as Outperform (1) -

Macquarie makes only minor changes to its forecasts after reviewing FY22 results for Hastings Technology Metals.

As previously noted, the company is undertaking an institutional placement and share purchase plan to raise $110m. The funds are necessary to enable the Yangibana project to commence production, explains the analyst.

The $6.10 target and Outperform rating are unchanged.

Target price is $6.10 Current Price is $3.46 Difference: $2.64
If HAS meets the Macquarie target it will return approximately 76% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

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

Morgans rates KAR as Add (1) -

Despite the macroeconomic backdrop, Morgans is highly surprised to see Karoon Energy shares trading near recent lows after successfully increasing production and earnings.

Now that the intervention program has completed for producing fields at  Bauna (which unlocked growth at the top end of guidance), attention now turns to the development of the Patola field.

The broker upgrades its base case forecast as a result of the intervention program and sees further upside risk from Patola.

The target price rises to $3.60 from $3.20 and the Add rating is unchanged.

Target price is $3.60 Current Price is $1.82 Difference: $1.78
If KAR meets the Morgans target it will return approximately 98% (excluding dividends, fees and charges).

Current consensus price target is $2.80, suggesting upside of 50.5% (ex-dividends)

The company's fiscal year ends in June.

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

Macquarie rates LTR as Outperform (1) -

FY22 results for Liontown Resources are largely in line with Macquarie's forecasts. It's felt a cash balance of $453m is sufficient to progress the Kathleen Valley project.

While the broker retains its $2.50 target price, a spot price scenario generates a $14.11/share valuation. It's noted 90% of the planned production from Stage 1 of Kathleen Valley is now under offtake agreements. Outperform.

Target price is $2.50 Current Price is $1.49 Difference: $1.01
If LTR meets the Macquarie target it will return approximately 68% (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

Macquarie rates QAL as Outperform (1) -

Qualitas has secured a new $440m commitment from a global institutional investor for the Qualitas Construction Debt Fund II.

Macquarie notes the funds will be immediately deployed ($100m already) into a $440m residential construction senior debt opportunity, and estimates FY23 and FY24 profit accretion of 3.2% and 8.6%, respectively.

According to management, the borrower is a “well-capitalised, local private developer with an established track record of residential apartment project delivery”.

The target rises to $3.21 from $3.19. The Outperform rating is retained.

Target price is $3.21 Current Price is $2.35 Difference: $0.86
If QAL meets the Macquarie target it will return approximately 37% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

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

Macquarie rates SFR as Outperform (1) -

Macquarie is disappointed by the departure of Managing Director and CEO Karl Simich given his 15 years of strong leadership.

Separately, the broker lowers its FY23 earnings forecast by -29%, and FY24 and FY25 forecasts by -1-2%. This follows mixed 1Q FY23 preliminary production results and the life extension of DeGrussa via the processing of lower-grade stockpiles.

Stronger zinc output was offset by weaker copper production in the 1Q. 

After taking into account these lower forecasts (also lower out to FY28), the analyst notes the cumulative reduction in forecasts earnings is only -$14m, and the $5.00 target price remains unchanged. Outperform.

Target price is $5.00 Current Price is $3.73 Difference: $1.27
If SFR meets the Macquarie target it will return approximately 34% (excluding dividends, fees and charges).

Current consensus price target is $5.41, suggesting upside of 49.6% (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: 0.6

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

Morgan Stanley rates SFR as Overweight (1) -

A positive feasibility study for the Degrussa Processing extension project now allows transitional stockpiles to be processed until January 2023. As a result, Sandfire Resources lifts group production guidance for copper by 2.5% and gold by 18%.

Also, the analyst doesn't expect a negative market reaction to news CEO Karl Simich has stepped down, given lengthy service and a capable interim replacement.

The Overweight rating and $5.95 target are maintained. Attractive industry view.

Target price is $5.95 Current Price is $3.73 Difference: $2.22
If SFR meets the Morgan Stanley target it will return approximately 60% (excluding dividends, fees and charges).

Current consensus price target is $5.41, suggesting upside of 49.6% (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: 0.6

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

Morgan Stanley rates SIG as Underweight (5) -

Morgan Stanley points out pharmacy distribution revenue for the six months to July 31 contracted by around -7%, indicating Sigma Healthcare continues to lose market share.

The 1H benefit of covid testing masked underlying challenges, according to the analyst.

The broker cuts its FY23 and FY24 EPS forecasts by -70% and -25%, respectively, and the target price falls to $0.43 from $0.48. The Underweight rating is unchanged. Industry view In-Line.

Target price is $0.43 Current Price is $0.67 Difference: minus $0.24 (current price is over target).
If SIG meets the Morgan Stanley target it will return approximately minus 36% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $0.53, suggesting downside of -21.6% (ex-dividends)

The company's fiscal year ends in January.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: -0.8

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

Credit Suisse rates TWE as Outperform (1) -

Credit Suisse expects Treasury Wine Estates to be a beneficiary of foreign exchange market movements, if shelf prices and consumer behaviours remain consistent in the short-term.

Including foreign exchange movements into its outlook would see earnings projections lift to $641m from $617m in FY23, but Credit Suisse has not changed its forecasts given market volatility. 

The Outperform rating and target price of $13.80 are retained.

Target price is $13.80 Current Price is $12.57 Difference: $1.23
If TWE meets the Credit Suisse target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $14.22, suggesting upside of 15.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.7

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

Macquarie rates XRO as Underperform (5) -

Macquarie retains its Underweight rating and $70 target for Xero following a review of competitor Intuit's updated medium-to long-term strategy. 

At its recent investor day, Intuit noted its international expansion strategy will focus on Canada, UK and Australia over the medium-term, via its QBO ecosystem.

Over the longer term, the broker feels QBO and Mailchimp could combine to produce powerful AI insights for QBO customers (placing pressure on Xero) to better target spending, manage inventory and maximise profitability.

Target price is $70.00 Current Price is $73.51 Difference: minus $3.51 (current price is over target).
If XRO meets the Macquarie target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $97.01, suggesting upside of 35.5% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY23:

Forecast for FY24:

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