Australian Broker Call

Citi rates ALU as Neutral (3) -

Citi upgrades its revenue forecasts for Altium's component search engine Octopart, which may help offset downgrades to China (covid lockdowns) and Europe (geopolitical issues).

Neutral rating retained. Target price falls to $34 from $34.10.

Target price is $34.00 Current Price is $33.32 Difference: $0.68
If ALU meets the Citi target it will return approximately 2% (excluding dividends, fees and charges).

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: -0.5

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

Morgan Stanley rates ANZ as Downgrade to Equal-weight from Overweight (3) -

Morgan Stanley downgrades its rating for ANZ Bank to Equal-weight from Overweight for a number of reasons including ongoing challenges in Australian retail and business banking.

The broker also cites a weaker outlook in New Zealand and uncertainty around group costs, as reasons for the downgrade in rating.

The analyst believes market share loss, falling margins and lower non-interest income will impact upon revenue this year. Relative to peers, it's thought the bank will have weaker volume growth and more headwinds from increasing competition for deposits in A&NZ.

The price target falls to $28.60 from $30.30 following downgrades to Morgan Stanley's cash EPS forecasts. Industry view: Attractive.

Target price is $28.60 Current Price is $27.70 Difference: $0.9
If ANZ meets the Morgan Stanley target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $30.02, suggesting upside of 9.5% (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

Macquarie rates BHP as Outperform (1) -

BHP Group expects to pay US$800m to Woodside Petroleum ((WPL)) on settlement of the Woodside-BHP Petroleum merger. Macquarie notes the demerger value has increased more than 50% for BHP Group shareholders given Woodside Petroleum's share price strength.

While Woodside Petroleum is set to pay US$830m to BHP Group related to paid cash dividends, BHP Group is expected to make a US$1,600m payment to Woodside Petroleum for net cash flow generated in the eleven months prior to June 2022.

The Outperform rating and target price of $61.00 are retained.

Target price is $61.00 Current Price is $51.68 Difference: $9.32
If BHP meets the Macquarie target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $49.56, suggesting downside of -4.2% (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: 0.4

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

Morgan Stanley rates BHP as No Rating (-1) -

Regarding the merger of BHP Group's Petroleum division with Woodside Petroleum ((WPL)), Morgan Stanley estimates the in-specie dividend will be US$4.62 ($6.20) with US$1.98 ($2.65) franking credits per BHP Group share.

The Woodside shareholder vote is on 19th May. 

Morgan Stanley is on rating restriction and offers no target price.

Current Price is $51.68. Target price not assessed.

Current consensus price target is $49.56, suggesting downside of -4.2% (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: 0.4

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

UBS rates BHP as Neutral (3) -

UBS considers the merger of BHP Group's Petroleum division with Woodside Petroleum ((WPL)), together with the sale of BHP Mitsui Coal is a key catalyst for the share price.

Thus, the broker highlights the Explanatory Memorandum (EM) and Independent Expert's Report (IER) for the proposed merger, just published by Woodside.

The IER values BHP Petroleum below the value implied by the market on 8th April and below the analyst's estimate, though concludes the merger is in Woodside shareholders' best interests. The Woodside shareholder vote is on 19th May. 

The $43 target and Neutral rating are retained.

Target price is $43.00 Current Price is $51.68 Difference: minus $8.68 (current price is over target).
If BHP meets the UBS target it will return approximately minus 17% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $49.56, suggesting downside of -4.2% (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: 0.4

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

Citi rates BSL as Buy (1) -

The -$US500m acquisition of Coil Coating by BlueScope Steel will only have a modest near-term impact on EPS, though there is an opportunity to lift output, explains Citi.

Coil Coating is the second-largest coatings player in the US and the transaction will add around 900ktpa coating capacity to BlueScope Steel's current US capacity of 475ktpa, according to the analyst.

The Buy rating and $25 target price are maintained.

Target price is $25.00 Current Price is $20.74 Difference: $4.26
If BSL meets the Citi target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $26.05, suggesting upside of 22.2% (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 BSL as Outperform (1) -

BlueScope Steel looks to fast-track growth in the US according to Macquarie, with the company announcing the acquisition of Cornerstone Building Brands' coil coatings business for US$500m.

The purchase boosts BlueScope Steel's US footprint to a level that would otherwise have taken a decade or longer to build, according to company management. The broker expects the purchase to be immediately earnings accretive, and provide $12m in synergies in the three-years post acquisition. 

Macquarie lifts its earnings per share by 2.2% and 5.0% in FY23 and FY24. 

The Outperform rating is retained and the target price increases to $23.85 from $23.35.

Target price is $23.85 Current Price is $20.74 Difference: $3.11
If BSL meets the Macquarie target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $26.05, suggesting upside of 22.2% (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

Morgan Stanley rates BSL as Overweight (1) -

Morgan Stanley likes the strategic fit of Coil Coatings, acquired by BlueScope Steel for -US$500m. It's thought the transaction fast tracks expansion for the company's US painting and coating interests, without adding new capacity in the market.

Should BlueScope fully utilise the capacity base and run the assets more efficiently, the analyst sees upside to the base revenue and synergy targets.

The $25 target and Overweight rating are maintained. Industry view: In-Line.

Target price is $25.00 Current Price is $20.74 Difference: $4.26
If BSL meets the Morgan Stanley target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $26.05, suggesting upside of 22.2% (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

Ord Minnett rates BSL as Buy (1) -

BlueScope Steel will pay US$500m to acquire Cornerstone Business Brands' coil coatings business, accelerating the company's plan to move further downstream in the region according to Ord Minnett.

At 9x earnings the broker considers the purchase price to be fair, and notes the addition offers 900,000 tonnes painting capacity currently at only 60% utilisation. 

Ord Minnett expects the acquisition to be 2% earnings per share accretive in FY24, noting US operations will contribute 60% to earnings that year.

BlueScope Steel remains a key sector pick for Ord Minnett. The Buy rating and target price of $28.00 are retained.

Target price is $28.00 Current Price is $20.74 Difference: $7.26
If BSL meets the Ord Minnett target it will return approximately 35% (excluding dividends, fees and charges).

Current consensus price target is $26.05, suggesting upside of 22.2% (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

UBS rates BSL as Buy (1) -

BlueScope Steel is paying -US$500m for Coil Coatings, the second-largest metal painter in the US. While the price seems a little high to UBS, the business has a clear path to earnings growth, partly because it is only operating at 60% utilisation.

The transaction allows BlueScope Steel to pursue ongoing US vertical integration such as additional cold rolling and coating capacity, explains the analyst.

The Buy rating and $25.75 target price are retained.

Target price is $25.75 Current Price is $20.74 Difference: $5.01
If BSL meets the UBS target it will return approximately 24% (excluding dividends, fees and charges).

Current consensus price target is $26.05, suggesting upside of 22.2% (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

Credit Suisse rates COE as Neutral (3) -

Credit Suisse raises its target price for Cooper Energy to $0.27 from $0.21 on a more positive outlook at the Orbost gas processing plant, evident before the shutdown for Phase2B work and floods.

The broker maintains a Neutral stance as an equity raise is potentially looming. It's thought the current valuation factors in growth, without the company having the means to fund it.

Target price is $0.27 Current Price is $0.28 Difference: minus $0.01 (current price is over target).
If COE meets the Credit Suisse target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $0.28, suggesting upside of 5.2% (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

Ord Minnett rates COG as Initiation of coverage with Buy (1) -

Ord Minnett initiates coverage on COG Financial Services, Australia's largest asset finance broker and aggregation group.The broker estimates COG Financial Services accounts for 18% market share of commercial assets financed annually. 

The company currently represents more than 3,200 asset finance brokers in Australia, and Ord Minnett notes potential for growth in the acquisition of more broker members to improve profit capture. 

The company reported a record first half net profit result of $10.5m, equating to 25% growth, and Ord Minnett expects it can deliver 22% growth in the second half to total $13.6m. 

The broker initiates with a Buy rating and a target price of $2.12.

Target price is $2.12 Current Price is $1.52 Difference: $0.6
If COG meets the Ord Minnett target it will return approximately 39% (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

Macquarie rates CSL as Outperform (1) -

Taking a closer look at Vifor Pharma as CSL's acquisition progresses, Macquarie notes the company has a strong market position in iron deficiency and chronic kidney disease and offers an attractive earnings growth profile through to FY24.

The company's Ferinject/Injectafer product has shown strong growth in the last decade, delivering a 31% compound annual growth rate since 2012, and looking ahead Macquarie notes areas for expansion and new product development. 

The Outperform rating and target price of $327.50 are retained.

Target price is $327.50 Current Price is $265.47 Difference: $62.03
If CSL meets the Macquarie target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $317.42, suggesting upside of 21.2% (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: 0.9

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

Citi rates IGO as Buy (1) -

Citi assigns an 80% probablity that Western Areas ((WSA)) will be acquired by IGO, after the latter raised its bid by 15% to $3.87.

The broker sees IGO as a unique way to play the electric vehicle thematic. The target price rises to $16 from $14.40. Buy.

Target price is $16.00 Current Price is $14.00 Difference: $2
If IGO meets the Citi target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $14.05, suggesting upside of 3.8% (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

Credit Suisse rates IGO as Outperform (1) -

IGO has upped its bid for Western Areas ((WSA)) by 15% to $3.87/share, partly due to a strong rise in the consensus forecast for nickel prices since the original bid.

The revised offer implies a long-run nickel price of US$7.6/lb, -4% lower than the latest consensus long-term forecast, estimates the analyst.

The Western Area's board has recommended the offer. The broker maintains its Outperform rating and $16.20 target price.

Target price is $16.20 Current Price is $14.00 Difference: $2.2
If IGO meets the Credit Suisse target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $14.05, suggesting upside of 3.8% (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 IGO as No Rating (-1) -

IGO has lifted its bid for Western Areas ((WSA)) to $3.87 per share from $3.36 per share, equating to a 15% increase and a $1.25bn valuation of Western Areas. Macquarie notes nickel pricing has risen 80% since talks of the offer were revealed on August 18.

The new bid price represents a 6% premium to Western Area's previous closing price, and a 56% premium to its closing price on August 18. Macquarie further notes IGO and Western Areas' share prices are up 47% and 55% in the same period. 

The broker is on research restriction.

Current Price is $14.00. Target price not assessed.

Current consensus price target is $14.05, suggesting upside of 3.8% (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

Ord Minnett rates KGL as Buy (1) -

KGL Resources announced a binding offtake agreement with Glencore's Mt Isa Copper Smelter for all of the project's concentrate sales. Ord Minnett views the agreement positively, noting it derisks, materially lowers unit costs and improves working capital.

Trucking concentrate to Mt Isa offers a material saving to transport costs compared to transporting to the closest port, and the broker reduces its transport costs -40% to $170 per tonne, lifting project net present value 17%.

The Speculative Buy rating is retained and the target price increases to $0.90 from $0.80.

Target price is $0.90 Current Price is $0.41 Difference: $0.49
If KGL meets the Ord Minnett target it will return approximately 120% (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 NEA as Downgrade to Neutral from Outperform (3) -

On advice from an industry contact, Macquarie notes there will be difficulties in Nearmap penetrating the North American aerial imaging for claims insurance segment particularly given the company is late to the game. 

Macquarie notes insurance contributions are material for the company, but Nearmap faces limitations on software integration given competitor EagleView holds strong measuring technology patents. Macquarie expects Nearmap would need to partner with EagleView to access technology. 

The rating is downgraded to Neutral from Outperform and the target price of $1.40 is retained.

Target price is $1.40 Current Price is $1.40 Difference: $0
If NEA meets the Macquarie target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $2.03, suggesting upside of 51.7% (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 PLS as Outperform (1) -

Pilbara Minerals' joint venture lithium hydroxide plant with POSCO Chemical progresses, with parties agreeing on construction and ramp up costs of -US$750-800m. Macquarie notes Pilbara Minerals holds an 18% stake in the project, retaining an option to increase to 30%.

With plant completion scheduled for the end of the third quarter of FY23, Macquarie pushes back its first production forecast to end of 2023. Coupled with a US$50-80m increase to cost forecasts, the broker downgrades earnings forecasts -5% and -4% in FY24 and FY25.

The Outperform rating and target price of $4.30 are retained.

Target price is $4.30 Current Price is $3.08 Difference: $1.22
If PLS meets the Macquarie target it will return approximately 40% (excluding dividends, fees and charges).

Current consensus price target is $4.05, suggesting upside of 39.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.5

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

Credit Suisse rates SPK as Neutral (3) -

As has largely been expected, notes Credit Suisse, Spark New Zealand has commenced a process for the monetisation of Spark TowerCo.

The broker retains its Neutral rating and $4.65 target price, due to uncertainty around whether a transaction will eventuate and at what price.

Target price is $4.65 Current Price is $4.43 Difference: $0.22
If SPK meets the Credit Suisse target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $4.65, suggesting upside of 6.2% (ex-dividends)

The company's fiscal year ends in June.

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

UBS rates WPL as Neutral (3) -

Woodside Petroleum has published the Explanatory Memorandum (EM) and Independent Expert's Report (IER) for the proposed merger with BHP Group's ((BHP)) Petroleum division. 

The IER values BHP Petroleum below the value implied by the market on 8th April and below the analyst's estimate, though concludes the merger is in Woodside shareholders' best interests. The Woodside shareholder vote is on 19th May. 

The Neutral rating is maintained on a full valuation, and the broker prefers Santos ((STO)) in the sector.

The target falls by -5% to $32.90 on reduced values for the Sangomar and Trion oil fields.

Target price is $32.90 Current Price is $32.06 Difference: $0.84
If WPL meets the UBS target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $30.52, suggesting downside of -4.8% (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: 0.4

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

Citi rates WSA as Neutral (3) -

Citi assigns an 80% probability that Western Areas will be acquired by IGO ((IGO)), after the latter raised its bid by 15% to $3.87.

The target price rises to $3.90 from $3.40, broadly in-line with the bid. The broker feels the potential for other bidders is limited. Neutral.

Target price is $3.90 Current Price is $3.85 Difference: $0.05
If WSA meets the Citi target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $3.89, suggesting upside of 1.2% (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 WSA as No Rating (-1) -

IGO ((IGO)) has lifted its bid for Western Areas to $3.87 per share from $3.36 per share, equating to a 15% increase and a $1.25bn valuation of Western Areas. Macquarie notes nickel pricing has risen 80% since talks of the offer were revealed on August 18.

The new bid price represents a 6% premium to Western Area's previous close price, and a 56% premium to its closing price on August 18. Macquarie further notes IGO and Western Areas' share prices are up 47% and 55% in the same period.

The broker is on research restriction.

Current Price is $3.85. Target price not assessed.

Current consensus price target is $3.89, suggesting upside of 1.2% (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