Australian Broker Call

Morgan Stanley rates CBA as Underweight (5) -

There appear to be high expectations for Commonwealth Bank's four-year outlook as Morgan Stanley factors in above-system loan growth, somewhat flat margins and cost reductions after FY23.

Added to a combination of $6.5bn in buybacks and loss rates of around -15 basis points this should drive a return-on-equity recovery to 13.5% in FY24 from 11.5% in FY21.

The broker notes the business has reversed some of the underperformance recently and the stock has risen more than 10% since the start of May.

Moreover, trading multiples are at record levels which more than reflects the superior franchise performance and Morgan Stanley retains an Underweight rating. Target is raised to $89.50 from $86.50. Industry view: In-Line.

Target price is $89.50 Current Price is $98.05 Difference: minus $8.55 (current price is over target).
If CBA meets the Morgan Stanley target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $87.75, suggesting downside of -11.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: -0.3

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

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

There are signs of a strong FY22 domestic recovery in North America and Australasia and Macquarie notes these regions now comprise more than 70% of group revenue. The broker points to recent updates from Qantas ((QAN)), Serko ((SKO)) and corporate activity data.

Macquarie upgrades to Outperform from Neutral, noting the main risk is that the pandemic restrictions persist and delay recovery of domestic and international travel. Target is raised to $20.75 from $20.05.

Target price is $20.75 Current Price is $19.35 Difference: $1.4
If CTD meets the Macquarie target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $21.65, suggesting upside of 7.8% (ex-dividends)

The company's fiscal year ends in June.

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 DMP as Upgrade to Neutral from Sell (3) -

Citi upgrades Domino’s Pizza Enterprises to Neutral from Sell with the target rising to $104.2 from $72.40.

Citi sees potential for Domino’s Pizza Enterprises to enter a number of new countries in Europe like Italy, Spain and Poland. The broker estimates these markets could represent a network opportunity of 2,506 stores, potentially contributing an operating income of $263m.

81 net new stores were opened in Europe to date, suggesting the company needs to roll out at least 53 stores if it plans to rollout 2,850 stores by 2028-33. Citi highlights rollouts have been skewed towards the second and fourth quarters.

Looking at the opportunities to expand into new countries, the scope for store acquisitions in existing markets and the improving rollout pace in Europe, Citi remains optimistic.

Target price is $104.20 Current Price is $103.95 Difference: $0.25
If DMP meets the Citi target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $97.97, suggesting downside of -10.2% (ex-dividends)

The company's fiscal year ends in June.

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

Credit Suisse rates FPH as Outperform (1) -

In anticipation of FY21 results on Thursday 27 May, Credit Suisse forecasts revenue of NZ$2bn, earnings (EBIT) of NZ$800m and profit of NZ$582m. A final dividend of NZ$0.34 is estimated.

The broker forecasts Hospital Hardware sales will rise 515% and Hospital Consumable sales up by 41%. Due to strong demand during covid-19, it's estimated the nasal high flow and invasive ventilation installed base has increased more than 50% in FY21 versus FY19. 

The analyst believes the market will be focused on the outlook commentary to gain some clarity of the expected utilisation of the higher installed base. The target price is increased to $34 from $33.50 and the Outperform rating is maintained.

Target price is $34.00 Current Price is $31.22 Difference: $2.78
If FPH meets the Credit Suisse target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $34.00, suggesting upside of 6.7% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY21:

Forecast for FY22:

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

Credit Suisse rates LNK as Neutral (3) -

After a hiatus on providing a rating and target due to restriction, Credit Suisse reinstates coverage with a Neutral rating and $5.40 target. After tax proceeds from a PEXA sale are estimated to account for $2 per share.

The value of the company's 44% stake could be crystallised in the near-term due to the ongoing sales process, explains the broker. 

The analyst highlights the core business (ex-PEXA) continues to face challenging conditions. It's considered to be operating in some markets which are highly competitive, lack true scale and facing regulatory pressures.

Target price is $5.40 Current Price is $5.12 Difference: $0.28
If LNK meets the Credit Suisse target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $5.39, suggesting upside of 5.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.3

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

Macquarie rates NST as Outperform (1) -

Macquarie reviews its assumptions for mining inventory and production following the recent upgrade to resources and reserves.

Improved valuation of KCGM, Jundee and Kalgoorlie operations lifts the valuation by 20% which more than outweighs short-term reductions to earnings per share, suggests the broker.

The main risk to the outlook, in the broker's view, is gold price movements, cost inflation and any shortfall to production targets. Outperform maintained. Target rises to $13.30 from $12.20.

Target price is $13.30 Current Price is $11.24 Difference: $2.06
If NST meets the Macquarie target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $13.06, suggesting upside of 15.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.7

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

Citi rates NUF as Buy (1) -

Citi analysts have come to the conclusion that Nufarm's earnings trajectory looks positive through to FY23. This assessment is derived from the observation Nufarm offers leverage to strong agricultural fundamentals across key markets on top of continued execution on cost-out initiatives.

The one negative, short-term, is a higher tax rate outlook in 2H21 which sees Citi analysts lowering their FY21 profit forecast by -9%.

Buy rating retained, alongside a $6 price target (up from $5.40 prior).

Target price is $6.00 Current Price is $4.72 Difference: $1.28
If NUF meets the Citi target it will return approximately 27% (excluding dividends, fees and charges).

Current consensus price target is $5.68, suggesting upside of 17.6% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.6

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

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

Ord Minnett reviews forecasts and takes a more optimistic view of the potential boost from the launch of the AirSense 11 flow generator platform.

The new device is also expected to support gross margins as manufacturing volumes ramp up. In the interim, sales are expected to stagnate as customers await the new device, which may exacerbate already tough comparables.

Ord Minnett upgrades to Accumulate from Hold, envisaging potential upside to consensus numbers. Target is raised to $28.50 from $26.50.

Target price is $28.50 Current Price is $25.97 Difference: $2.53
If RMD meets the Ord Minnett target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $28.34, suggesting upside of 5.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

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 SYD as Hold (3) -

Sydney Airport has updated on its non-aeronautical business, citing improvements from property and parking. A more minor improvement was recorded in retailing. Around 54% of stores were trading in April, up from 41% in December.

Performance in the parking and ground transport business showed the strongest rebound, the broker notes, stemming from a pick up in domestic travel.

No interim distribution will be paid for the June half and the company will issue full year guidance based on its assessment of the potential for a sustained recovery in international travel.

Ord Minnett interprets this to mean there is likely to be no distribution in 2021. Hold rating and $5.70 target maintained.

Target price is $5.70 Current Price is $5.85 Difference: minus $0.15 (current price is over target).
If SYD meets the Ord Minnett target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $6.19, suggesting upside of 7.5% (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 WEB as Hold (3) -

Despite the FY21 result revealing a large loss due to covid travel restrictions and border closures, Morgans increases the price target to $5.10 from $4.92. It's considered aggressive market share targets and costs savings are supportive.

After the analyst assesses the company on a fully diluted basis, including the equity raising and convertible note issues, the share price is not far off pre-covid levels. Hold is maintained. Management noted that as markets reopen, its businesses are rebounding quickly.

Target price is $5.10 Current Price is $4.91 Difference: $0.19
If WEB meets the Morgans target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $5.41, suggesting upside of 10.5% (ex-dividends)

The company's fiscal year ends in March.

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