Australian Broker Call

Morgan Stanley rates ALL as Overweight (1) -

Aristocrat Leisure's latest update is largely consistent with commentary from its first half results. According to Morgan Stanley, the company has not observed a slow down of its land-base gaming segment, while in digital it anticipates a mid-single digit compound annual growth rate over the coming years.

The company claims to be on track for real money gaming content to be available in two jurisdictions by the end of the year, and it continues to look to further merger and acquisition opportunities to accelerate expansion into the real money gaming segment.

The Overweight rating and target price of $45.00 are retained. Industry view: In-Line.

Target price is $45.00 Current Price is $33.39 Difference: $11.61
If ALL meets the Morgan Stanley target it will return approximately 35% (excluding dividends, fees and charges).

Current consensus price target is $43.29, suggesting upside of 30.3% (ex-dividends)

The company's fiscal year ends in September.

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 BHP as Outperform (1) -

Macquarie upgrades its short and long-term outlook for thermal coal due to a market deficit and energy security concerns. Earnings forecasts for relevant stocks under its coverage are materially impacted.

Over 2023-27 the broker's price estimates rise by 38-114%, while the long-term price forecast rises by 43% to US$80/t from US$58/t. 

Macquarie's EPS forecasts for BHP Group rise by 4-6% for FY23 to FY26 and the target rises to $44 from $42. The Outperform rating is maintained.

Target price is $44.00 Current Price is $37.20 Difference: $6.8
If BHP meets the Macquarie target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $41.52, suggesting upside of 11.2% (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: 0.3

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

Ord Minnett rates BHP as Hold (3) -

BHP Group has outperformed Rio Tinto ((RIO)) on operating costs and sustaining capital requirements according to Ord Minnett, and the company has flagged a potential 40m tonne per annum growth by the end of the decade.

Ord Minnett expects an upcoming iron ore briefing could provide further detail as to the scope of works required to reach this goal, and why it will take so long to achieve a relatively small increase. Studies remain underway to grow production, with results targeted by FY25.

The Hold rating and target price of $42.00 are retained.

Target price is $42.00 Current Price is $37.20 Difference: $4.8
If BHP meets the Ord Minnett target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $41.52, suggesting upside of 11.2% (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: 0.3

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

Macquarie rates CRN as Outperform (1) -

Macquarie upgrades its short and long-term outlook for thermal coal due to a market deficit and energy security concerns. Earnings forecasts for relevant stocks under its coverage are materially impacted.

Over 2023-27 the broker's price estimates rise by 38-114%, while the long-term price forecast rises by 43% to US$80/t from US$58/t. 

As Coronado Global Resources derives more than 90% of its revenue from metallurgical coal, Macquarie's EPS forecasts rise a modest 3-6% over 2023-27. The target rises to $3.60 from $3.50. The company is the preferred exposure to metallurgical coal. Outperform.

Target price is $3.60 Current Price is $1.52 Difference: $2.08
If CRN meets the Macquarie target it will return approximately 137% (excluding dividends, fees and charges).

Current consensus price target is $2.71, suggesting upside of 67.5% (ex-dividends)

The company's fiscal year ends in December.

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

Ord Minnett rates CSL as Accumulate (2) -

Ord Minnett expects CSL's Vifor Pharma acquisition contribution to be weaker in the current half given a drop in dialysis patients. The broker does expect this to be short-term issue, and one that CSL understood when making its bid for Vifor Pharma.

The return of Mexican border plasma donors has boosted Ord Minnett's Behring forecasts, and offset weakness from Vifor Pharma.

The Accumulate rating and target price of $330.00 are retained.

Target price is $330.00 Current Price is $284.64 Difference: $45.36
If CSL meets the Ord Minnett target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $324.80, suggesting upside of 15.2% (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: 0.8

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

Macquarie rates CXO as Outperform (1) -

Macquarie explains that as spodumene ore has been uncovered in the Grants open pit, a maiden DSO lithium shipment will occur later this year. This occurrence would present upside to the analyst's base case forecasts.

In addition, accelerated work on the spodumene DMS plant has resulted in spodumene production being scheduled for the 1H 2023. The broker retains its Outperform rating and $1.80 target price.

Target price is $1.80 Current Price is $1.19 Difference: $0.61
If CXO meets the Macquarie target it will return approximately 51% (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 MVF as Outperform (1) -

While Medicare statistics for August show IVF fresh cycles fell around -20%, this is in comparison to the prior August which experienced the second strongest month on record.

The broker retains its Outperform rating for Monash IVF and expects 160bps of fresh market share gains in FY23, resulting in fresh cycle growth of 8.8%. Strong specialist recruitment is also expected to contribute to growth. 

The $1.30 target price is unchanged.

Target price is $1.30 Current Price is $0.89 Difference: $0.41
If MVF meets the Macquarie target it will return approximately 46% (excluding dividends, fees and charges).

Current consensus price target is $1.23, suggesting upside of 38.2% (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 NHC as Outperform (1) -

Macquarie upgrades its short and long-term outlook for thermal coal due to a market deficit and energy security concerns. Earnings forecasts for relevant stocks under its coverage are materially impacted.

Over 2023-27 the broker's price estimates rise by 38-114%, while the long-term price forecast rises by 43% to US$80/t from US$58/t. 

Macquarie's EPS forecasts for New Hope rise by 34% and 163% in FY23 and FY24 and by over 400% from FY25 (from a low base) and the target rises to $7.00 from $6.00. The Outperform rating is maintained.

Target price is $7.00 Current Price is $5.73 Difference: $1.27
If NHC meets the Macquarie target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $5.83, suggesting downside of -1.9% (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

Citi rates NST as Buy (1) -

More detail on Northern Star Resources' Pogo strategy has reiterated to Citi that the company continues its plan to lift mine grade, reduce costs and lift reserves above ten years.

The company continues to take a slow and steady approach to reducing costs. Jumbo drilling rig operators have been reduced to six from seven, and the company targets a further reduction to five.

The broker does highlight that should gold pricing decline below US$1,200 per ounce resources would be pulled quickly.

The Buy rating and target price of $10.90 are retained.

Target price is $10.90 Current Price is $7.11 Difference: $3.79
If NST meets the Citi target it will return approximately 53% (excluding dividends, fees and charges).

Current consensus price target is $10.03, suggesting upside of 39.4% (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

Ord Minnett rates PMV as Hold (3) -

With Premier Investments set to report full year results on September 29, Ord Minnett is forecasting a -5.5% year-on-year decline in retail earnings to $332.5m, and a -3.6% year-on-year decline to earnings per share to $1.61.

Having reported elevated inventory levels of $222m with its interim result, Ord Minnett expects the market to be looking for a normalisation of inventory moving into the new financial year to minimise gross margin risk.

The Hold rating and target price of $20.50 are retained.

Target price is $20.50 Current Price is $20.49 Difference: $0.01
If PMV meets the Ord Minnett target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $25.68, suggesting upside of 24.1% (ex-dividends)

The company's fiscal year ends in July.

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 RIO as Neutral (3) -

Rio Tinto is set to expand underground mining at Kennecott via the approval of the Lower Commercial Skarn project, with first copper production expected by early 2023.

The broker believes the Lower Commercial Skarn development is an initial small-scale project to de-risk the full underground development.

The Neutral rating and target price of $93.00 are retained.

Target price is $93.00 Current Price is $90.39 Difference: $2.61
If RIO meets the Macquarie target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $105.07, suggesting upside of 16.7% (ex-dividends)

The company's fiscal year ends in December.

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

Morgan Stanley rates RIO as Overweight (1) -

Rio Tinto remains committed to the development of battery minerals projects, with a focus on lithium and nickel.

The company reiterated to Morgan Stanley it considers lithium key to the development of electric vehicles and energy storage systems, and unlike peers, believes there will be long-term incentive prices for lithium projects.

With its current projects aimed at producing lithium carbonate, Rio Tinto is actively exploring the lithium carbonate to hydroxide refining process. Morgan Stanley sees expansion into the lithium hydroxide market as critical and adding optionality to product offering.

The Overweight rating and target price of $118.50 are retained. Industry view: Attractive.

Target price is $118.50 Current Price is $90.39 Difference: $28.11
If RIO meets the Morgan Stanley target it will return approximately 31% (excluding dividends, fees and charges).

Current consensus price target is $105.07, suggesting upside of 16.7% (ex-dividends)

The company's fiscal year ends in December.

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 SLH as Add (1) -

Morgans incorporates into its forecasts the recently completed acquisition of Perth-based port logistics business, Freemantle Freight and Storage.

While EPS estimates initially fall by around -6% in FY23,  FY24-FY25 forecasts lift by 3-5% and the target price increases to $3.70 from $3.50. The company's market share is expected to increase over the medium term.

For investors seeking income, the broker highlights a relatively defensible business with an attractive dividend yield. Add.

Target price is $3.70 Current Price is $2.25 Difference: $1.45
If SLH meets the Morgans target it will return approximately 64% (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 SM1 as Underperform (5) -

The FY22 result for Synlait Milk was largely as Macquarie expected, with the business broadly on-track for recovery over FY23/24 as new customers ramp-up.

While net debt was a key positive for the analyst, a more cautious approach by management to increasing volume resulted in a significant step down from prior long-term return on capital targets.

The Underperform rating is retained due to execution risks and the target falls to NZ$3.25 from NZ$3.20.

Current Price is $3.03. Target price not assessed.

The company's fiscal year ends in July.

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: -1.0

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

Ord Minnett rates STO as Buy (1) -

Santos has confirmed the sale of a -5% stake in PNG LNG to Kumal Petroleum for US$1.4bn. The sale price, which implies value for the project of US$28-30bn, is below Ord Minnett's estimated value.

With the sale effective as of December 31, Ord Minnett notes Santos will retain the benefits of higher LNG pricing through to the end of the year. 

The Buy rating is retained and the target price decreases to $9.25 from $9.90.

Target price is $9.25 Current Price is $6.95 Difference: $2.3
If STO meets the Ord Minnett target it will return approximately 33% (excluding dividends, fees and charges).

Current consensus price target is $9.56, suggesting upside of 39.5% (ex-dividends)

The company's fiscal year ends in December.

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

UBS rates STO as Buy (1) -

Santos has agreed to exclusively deal with Kumal Petroleum Holdings following Kumal Petroleum's $1.4bn bid for Santos' 5% PNG LNG stake.

The deal remains dependent on Kumal Petroleum obtaining approvals and financing, but UBS is confident Santos could sell the stake to another bidder at similar terms should the deal fall through. 

The broker described the sell down as a strategic move, reducing exposure to liquefied natural gas and accelerating deleveraging to support further capital management. UBS estimates gearing will reach 12% by December following completion of the sell down.

The Buy rating is retained and the target price decreases to $9.20 from $9.40.

Target price is $9.20 Current Price is $6.95 Difference: $2.25
If STO meets the UBS target it will return approximately 32% (excluding dividends, fees and charges).

Current consensus price target is $9.56, suggesting upside of 39.5% (ex-dividends)

The company's fiscal year ends in December.

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

Macquarie rates UNI as Upgrade to Neutral from Underperform (3) -

After conducting a youth consumer survey, Macquarie finds Universal Store is the most preferred youth retailer, ahead of other incumbents such as General Pants and Glue Store.

These findings raise the broker's conviction in the worth of Universal Store's recent investment in digital initiatives and the rating rises to Neutral from Underperform. Improved in-store and online sales are assumed and the valuation multiple is increased.

The target jumps to $4.90 from $3.90.

Target price is $4.90 Current Price is $5.00 Difference: minus $0.1 (current price is over target).
If UNI meets the Macquarie target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.98, suggesting upside of 21.0% (ex-dividends)

The company's fiscal year ends in June.

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

Macquarie rates WHC as Outperform (1) -

Macquarie upgrades its short and long-term outlook for thermal coal due to a market deficit and energy security concerns. Earnings forecasts for relevant stocks under its coverage are materially impacted.

Over 2023-27 the broker's price estimates rise by 38-114%, while the long-term price forecast rises by 43% to US$80/t from US$58/t. 

Macquarie's EPS forecasts for Whitehaven Coal rise by 28% in FY23 and by 100%-200% for FY24-27 and the target rises to $12 from $10. The Outperform rating is maintained.

Target price is $12.00 Current Price is $8.45 Difference: $3.55
If WHC meets the Macquarie target it will return approximately 42% (excluding dividends, fees and charges).

Current consensus price target is $9.98, suggesting upside of 13.4% (ex-dividends)

The company's fiscal year ends in June.

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

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

The recent market downturn has seen Worley's share price decline, and with the stock now trading below Ord Minnett's target price the broker has lifted its rating. 

Ord Minnett continues to view Worley as a high-beta stock with better leverage to the market than most companies in its coverage.

The broker likes that capital expenditure forecasts imply mid-single digit revenue growth for each of the next two years. Ord Minnett forecasts earnings growth of 30% in FY23 and 16% in FY24. 

The rating is upgraded to Hold from Lighten and the target price of $12.80 is retained.

Target price is $12.80 Current Price is $12.52 Difference: $0.28
If WOR meets the Ord Minnett target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $14.56, suggesting upside of 17.1% (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