Australian Broker Call

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May 17, 2022

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COMPANIES DISCUSSED IN THIS ISSUE

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The number next to the symbol represents the number of brokers covering it for this report -(if more than 1).

Last Updated: 05:00 PM

Your daily news report on the latest recommendation, valuation, forecast and opinion changes.

This report includes concise but limited reviews of research recently published by Stockbrokers, which should be considered as information concerning likely market behaviour rather than advice on the securities mentioned. Do not act on the contents of this Report without first reading the important information included at the end.

For more info about the different terms used by stockbrokers, as well as the different methodologies behind similar sounding ratings, download our guide HERE

ASX  ASX LIMITED

Wealth Management & Investments

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Overnight Price: $81.86

Morgan Stanley rates ASX as Underweight (5) -

Morgan Stanley suggests volumes for ASX rate futures are now benefiting from higher interest rates. May volumes were 30% ahead year-on-year. It's also noted the company's investment income should be aided by higher short-end rates.

The Underweight rating and target price of $74.00 are retained. Industry view: Attractive.

Target price is $74.00 Current Price is $81.86 Difference: minus $7.86 (current price is over target).
If ASX meets the Morgan Stanley target it will return approximately minus 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $81.54, suggesting downside of -0.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Morgan Stanley forecasts a full year FY22 dividend of 229.50 cents and EPS of 255.00 cents.
At the last closing share price the estimated dividend yield is 2.80%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 32.10.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 258.2, implying annual growth of 3.9%.

Current consensus DPS estimate is 231.3, implying a prospective dividend yield of 2.8%.

Current consensus EPS estimate suggests the PER is 31.8.

Forecast for FY23:

Morgan Stanley forecasts a full year FY23 dividend of 238.00 cents and EPS of 265.00 cents.
At the last closing share price the estimated dividend yield is 2.91%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 30.89.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 275.8, implying annual growth of 6.8%.

Current consensus DPS estimate is 245.9, implying a prospective dividend yield of 3.0%.

Current consensus EPS estimate suggests the PER is 29.8.

Market Sentiment: -0.4

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

BXB  BRAMBLES LIMITED

Transportation & Logistics

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Overnight Price: $11.60

Citi rates BXB as Buy (1) -

Following confirmation that Brambles has had preliminary engagement with CVC Capital Partners around a potential bid, Citi estimates investors could ask for at least $13 p/share.

The broker's valuation is based upon both the size of the transaction and recent comparable’s for infrastructure and defensive assets. It's thought CVC sees an undervaluation by the market, given Brambles has little in the way of excess assets.

The Buy rating and $12.29 target price are maintained.

Target price is $12.29 Current Price is $11.60 Difference: $0.69
If BXB meets the Citi target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $11.99, suggesting upside of 11.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Citi forecasts a full year FY22 dividend of 29.98 cents and EPS of 54.92 cents.
At the last closing share price the estimated dividend yield is 2.58%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 21.12.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 60.7, implying annual growth of N/A.

Current consensus DPS estimate is 31.6, implying a prospective dividend yield of 2.9%.

Current consensus EPS estimate suggests the PER is 17.7.

Forecast for FY23:

Citi forecasts a full year FY23 dividend of 32.43 cents and EPS of 59.28 cents.
At the last closing share price the estimated dividend yield is 2.80%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 19.57.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 65.2, implying annual growth of 7.4%.

Current consensus DPS estimate is 34.1, implying a prospective dividend yield of 3.2%.

Current consensus EPS estimate suggests the PER is 16.5.

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


Credit Suisse rates BXB as Outperform (1) -

Brambles has confirmed preliminary discussions with CVC Capital Partners while press speculation suggests a potential bid of $20bn. Credit Suisse considers the speculated offer, at around $11.57 a share, grossly undervalues Brambles.

The broker believes potential fair value is around $15.20 based on FY24 earnings and excluding a control premium and would be surprised if the board granted access at such a low indicative offer.

Recent US dollar strength means the broker reduces FY23 and FY24 forecasts. Target is raised to $13.45 from $13.15 and an Outperform rating is reiterated.

Target price is $13.45 Current Price is $11.60 Difference: $1.85
If BXB meets the Credit Suisse target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $11.99, suggesting upside of 11.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Credit Suisse forecasts a full year FY22 dividend of 43.19 cents and EPS of 54.59 cents.
At the last closing share price the estimated dividend yield is 3.72%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 21.25.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 60.7, implying annual growth of N/A.

Current consensus DPS estimate is 31.6, implying a prospective dividend yield of 2.9%.

Current consensus EPS estimate suggests the PER is 17.7.

Forecast for FY23:

Credit Suisse forecasts a full year FY23 dividend of 44.70 cents and EPS of 56.38 cents.
At the last closing share price the estimated dividend yield is 3.85%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 20.58.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 65.2, implying annual growth of 7.4%.

Current consensus DPS estimate is 34.1, implying a prospective dividend yield of 3.2%.

Current consensus EPS estimate suggests the PER is 16.5.

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 BXB as Buy (1) -

Brambles has confirmed media reports of an unsolicited approach from CVC Capital Partners. Ord Minnett is not surprised there is interest, given a relatively undemanding valuation and a business with strong market share.

The broker believes the bid prospect highlights the latent value that could be realised in the business, should the problems with CHEP Americas, such as loss rates, be resolved.

Moreover, corporate activity is likely to provide support for the share price until efficiencies from the transformation program are realised and an outcome on the Costco plastic pallets trial is announced.

The broker retains a Buy rating and raises the target to $12.70 from $11.95.

This stock is not covered in-house by Ord Minnett. Instead, the broker whitelabels research by JP Morgan.

Target price is $12.70 Current Price is $11.60 Difference: $1.1
If BXB meets the Ord Minnett target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $11.99, suggesting upside of 11.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Ord Minnett forecasts a full year FY22 dividend of 27.26 cents and EPS of 53.15 cents.
At the last closing share price the estimated dividend yield is 2.35%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 21.83.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 60.7, implying annual growth of N/A.

Current consensus DPS estimate is 31.6, implying a prospective dividend yield of 2.9%.

Current consensus EPS estimate suggests the PER is 17.7.

Forecast for FY23:

Ord Minnett forecasts a full year FY23 dividend of 28.62 cents and EPS of 55.87 cents.
At the last closing share price the estimated dividend yield is 2.47%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 20.76.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 65.2, implying annual growth of 7.4%.

Current consensus DPS estimate is 34.1, implying a prospective dividend yield of 3.2%.

Current consensus EPS estimate suggests the PER is 16.5.

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 BXB as Buy (1) -

Brambles has confirmed an incomplete engagement with CVC Capital Partners regarding an unsolicited bid, highlighting no formal offer has been made.

UBS still retains a fundamental valuation that is higher than the 11% increase in the share price that occurred in reaction to press speculation, which indicated the bid was above a $20bn enterprise value.

While negative free cash flow in FY22 is suspected a strong recovery over coming years is considered likely, and the broker will look through the temporary headwinds of higher lumber costs, loss provisions and timing of expenditure.

Buy rating maintained. Target rises to $13.70 from $13.25.

Target price is $13.70 Current Price is $11.60 Difference: $2.1
If BXB meets the UBS target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $11.99, suggesting upside of 11.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

UBS forecasts a full year FY22 EPS of 73.59 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 15.76.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 60.7, implying annual growth of N/A.

Current consensus DPS estimate is 31.6, implying a prospective dividend yield of 2.9%.

Current consensus EPS estimate suggests the PER is 17.7.

Forecast for FY23:

UBS forecasts a full year FY23 EPS of 79.04 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.68.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 65.2, implying annual growth of 7.4%.

Current consensus DPS estimate is 34.1, implying a prospective dividend yield of 3.2%.

Current consensus EPS estimate suggests the PER is 16.5.

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

CHC  CHARTER HALL GROUP

REITs

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Overnight Price: $13.15

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

Despite a circa -20% share price decline for Charter Hall so far in the June quarter, Morgan Stanley stays with its Equal-weight rating on relativity to peers and unfolding macroeconomic conditions.

The target price falls to $15.17 from $18.88 to incorporate sundry factors including lower fees assumptions from FY24 and lower passive income growth due to higher cost of debt.

The asset under management (AUM) compound annual growth rate (CAGR) is also lowered for FY23 and FY24, explains Morgan Stanley. Industry view: In-line.

Target price is $15.17 Current Price is $13.15 Difference: $2.02
If CHC meets the Morgan Stanley target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $20.58, suggesting upside of 58.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Morgan Stanley forecasts a full year FY22 dividend of 40.20 cents and EPS of 111.60 cents.
At the last closing share price the estimated dividend yield is 3.06%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 11.78.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 91.4, implying annual growth of -10.7%.

Current consensus DPS estimate is 32.2, implying a prospective dividend yield of 2.5%.

Current consensus EPS estimate suggests the PER is 14.2.

Forecast for FY23:

Morgan Stanley forecasts a full year FY23 dividend of 42.60 cents and EPS of 91.14 cents.
At the last closing share price the estimated dividend yield is 3.24%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.43.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 75.7, implying annual growth of -17.2%.

Current consensus DPS estimate is 34.2, implying a prospective dividend yield of 2.6%.

Current consensus EPS estimate suggests the PER is 17.2.

Market Sentiment: 0.8

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

COE  COOPER ENERGY LIMITED

Crude Oil

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Overnight Price: $0.28

Morgans rates COE as Add (1) -

Given Cooper Energy's strong recent performance, Morgans had expected yesterday's guidance upgrade. As a result, the lift in FY22 production and earnings (EBITDAX) guidance, and reduced planned FY22 capex spend were in-line with the analysts's forecasts.

The broker retains the Add rating and $0.35 target and notes the outcome of talks between the company and Orbost-operator APA Group ((APA)) is keenly awaited.

In terms of outcomes, Morgans would prefer a change of ownership transaction on Orbost compared to a new long-term commercial operating agreement between APA Group and Cooper Energy.

Target price is $0.35 Current Price is $0.28 Difference: $0.07
If COE meets the Morgans target it will return approximately 25% (excluding dividends, fees and charges).

Current consensus price target is $0.29, suggesting upside of 2.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Morgans forecasts a full year FY22 dividend of 0.00 cents and EPS of minus 0.10 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 280.00.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is -11.1, implying annual growth of N/A.

Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A.

Current consensus EPS estimate suggests the PER is N/A.

Forecast for FY23:

Morgans forecasts a full year FY23 dividend of 0.00 cents and EPS of minus 0.40 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 70.00.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 10.5, implying annual growth of N/A.

Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A.

Current consensus EPS estimate suggests the PER is 2.7.

Market Sentiment: -0.2

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

CRN  CORONADO GLOBAL RESOURCES INC

Coal

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Overnight Price: $2.18

Morgans rates CRN as Add (1) -

Commodity strategists at Morgans lift metallurgical coal price forecasts driving 7-33% 2022-24 EPS forecast upgrades for Coronado Global Resources. The 2022-24 hard coking coal forecasts rise by 6-15% and the long term price estimate remains at US$170/t.

The broker also sees upside risk for dividends. The target price rises to $2.97 from $2.73 and the Add rating is unchanged.

Target price is $2.97 Current Price is $2.18 Difference: $0.79
If CRN meets the Morgans target it will return approximately 36% (excluding dividends, fees and charges).

Current consensus price target is $3.19, suggesting upside of 39.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Morgans forecasts a full year FY22 dividend of 59.96 cents and EPS of 81.77 cents.
At the last closing share price the estimated dividend yield is 27.51%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 2.67.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 100.9, implying annual growth of N/A.

Current consensus DPS estimate is 61.7, implying a prospective dividend yield of 26.9%.

Current consensus EPS estimate suggests the PER is 2.3.

Forecast for FY23:

Morgans forecasts a full year FY23 dividend of 38.16 cents and EPS of 46.33 cents.
At the last closing share price the estimated dividend yield is 17.50%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 4.70.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 58.8, implying annual growth of -41.7%.

Current consensus DPS estimate is 43.8, implying a prospective dividend yield of 19.1%.

Current consensus EPS estimate suggests the PER is 3.9.

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

GMG  GOODMAN GROUP

Infra & Property Developers

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Overnight Price: $19.55

Citi rates GMG as Buy (1) -

Following a 3Q update by Goodman Group highlighting a continuation of strong conditions, Citi re-iterates its Buy rating and suggests now is a good entry point, given a -25% decline in the share price over recent time.

Management upgraded FY22 EPS growth guidance to 23% from 20%, as like-for-like rental income, development work-in-progress and assets under management (AUM) all increased.

The broker still believes guidance is conservative given strong funds under management (FUM) growth into the 4Q. The $29.50 target price is maintained.

Target price is $29.50 Current Price is $19.55 Difference: $9.95
If GMG meets the Citi target it will return approximately 51% (excluding dividends, fees and charges).

Current consensus price target is $26.77, suggesting upside of 42.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Citi forecasts a full year FY22 dividend of 30.00 cents and EPS of 80.90 cents.
At the last closing share price the estimated dividend yield is 1.53%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 24.17.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 80.4, implying annual growth of -35.9%.

Current consensus DPS estimate is 30.1, implying a prospective dividend yield of 1.6%.

Current consensus EPS estimate suggests the PER is 23.3.

Forecast for FY23:

Citi forecasts a full year FY23 dividend of 32.40 cents and EPS of 97.00 cents.
At the last closing share price the estimated dividend yield is 1.66%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 20.15.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 92.0, implying annual growth of 14.4%.

Current consensus DPS estimate is 31.7, implying a prospective dividend yield of 1.7%.

Current consensus EPS estimate suggests the PER is 20.4.

Market Sentiment: 0.8

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


Macquarie rates GMG as Outperform (1) -

Goodman Group has increased FY22 guidance to growth of 23% and reaffirmed distribution guidance of $0.30 per security. In its update, the company provided a positive commentary across all aspects of the business with work in progress increased to $13.4bn.

Work in progress is anticipated to remain around current levels as of June, which Macquarie believes will allay concerns regarding Amazon's commentary about its space requirements.

The broker observes the business continues to benefit from structural tailwinds which should also result in upgrades beyond FY22. Outperform rating. Target is $27.38.

Target price is $27.38 Current Price is $19.55 Difference: $7.83
If GMG meets the Macquarie target it will return approximately 40% (excluding dividends, fees and charges).

Current consensus price target is $26.77, suggesting upside of 42.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Macquarie forecasts a full year FY22 dividend of 30.00 cents and EPS of 81.50 cents.
At the last closing share price the estimated dividend yield is 1.53%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 23.99.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 80.4, implying annual growth of -35.9%.

Current consensus DPS estimate is 30.1, implying a prospective dividend yield of 1.6%.

Current consensus EPS estimate suggests the PER is 23.3.

Forecast for FY23:

Macquarie forecasts a full year FY23 dividend of 34.10 cents and EPS of 92.50 cents.
At the last closing share price the estimated dividend yield is 1.74%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 21.14.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 92.0, implying annual growth of 14.4%.

Current consensus DPS estimate is 31.7, implying a prospective dividend yield of 1.7%.

Current consensus EPS estimate suggests the PER is 20.4.

Market Sentiment: 0.8

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


Morgan Stanley rates GMG as Overweight (1) -

Following a 3Q update, Morgan Stanley believes things are tracking along nicely for Goodman Group. FY22 EPS guidance was upgraded to 23% growth from 20%, in-line with the broker's forecasts and the consensus estimate.

The analyst highlights work in progress increased to $13.4bn from $12.7bn back in December and believes this negates talk of a
warehouse slowdown.

The Overweight rating and $27.88 target are retained. Industry View: In Line.

Target price is $27.88 Current Price is $19.55 Difference: $8.33
If GMG meets the Morgan Stanley target it will return approximately 43% (excluding dividends, fees and charges).

Current consensus price target is $26.77, suggesting upside of 42.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Morgan Stanley forecasts a full year FY22 dividend of 30.00 cents and EPS of 80.60 cents.
At the last closing share price the estimated dividend yield is 1.53%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 24.26.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 80.4, implying annual growth of -35.9%.

Current consensus DPS estimate is 30.1, implying a prospective dividend yield of 1.6%.

Current consensus EPS estimate suggests the PER is 23.3.

Forecast for FY23:

Morgan Stanley forecasts a full year FY23 dividend of 30.00 cents and EPS of 92.60 cents.
At the last closing share price the estimated dividend yield is 1.53%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 21.11.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 92.0, implying annual growth of 14.4%.

Current consensus DPS estimate is 31.7, implying a prospective dividend yield of 1.7%.

Current consensus EPS estimate suggests the PER is 20.4.

Market Sentiment: 0.8

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


Ord Minnett rates GMG as Hold (3) -

The March quarter update signalled the third consecutive quarterly earnings upgrade, albeit the company warned about escalating cost pressures.

Nevertheless, Ord Minnett envisages little earnings risk over the next three years and increases estimates for earnings per share by 2% per annum because of higher development work-in-progress. Tenant demand remains exceptionally strong, too.

Hold rating retained. Target is reduced to $23 from $24.

This stock is not covered in-house by Ord Minnett. Instead, the broker whitelabels research by JP Morgan.

Target price is $23.00 Current Price is $19.55 Difference: $3.45
If GMG meets the Ord Minnett target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $26.77, suggesting upside of 42.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Ord Minnett forecasts a full year FY22 dividend of 30.00 cents and EPS of 80.00 cents.
At the last closing share price the estimated dividend yield is 1.53%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 24.44.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 80.4, implying annual growth of -35.9%.

Current consensus DPS estimate is 30.1, implying a prospective dividend yield of 1.6%.

Current consensus EPS estimate suggests the PER is 23.3.

Forecast for FY23:

Ord Minnett forecasts a full year FY23 dividend of 34.00 cents and EPS of 92.00 cents.
At the last closing share price the estimated dividend yield is 1.74%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 21.25.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 92.0, implying annual growth of 14.4%.

Current consensus DPS estimate is 31.7, implying a prospective dividend yield of 1.7%.

Current consensus EPS estimate suggests the PER is 20.4.

Market Sentiment: 0.8

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

IGO  IGO LIMITED

Nickel

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Overnight Price: $10.62

Ord Minnett rates IGO as Lighten (4) -

Ord Minnett has rebuilt its financial model for IGO following the transition to nickel plus lithium from nickel and gold.

With two ‘tier one’ assets in WA and production of critical minerals including nickel, lithium, copper and cobalt, the analyst considers the company has a unique business.

Nonetheless, after assessing valuation, capital allocation and project execution risk, the broker maintains its Lighten rating. A target price of $8.80 is set.

Target price is $8.80 Current Price is $10.62 Difference: minus $1.82 (current price is over target).
If IGO meets the Ord Minnett target it will return approximately minus 17% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $12.87, suggesting upside of 17.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Ord Minnett forecasts a full year FY22 dividend of 15.00 cents and EPS of 50.60 cents.
At the last closing share price the estimated dividend yield is 1.41%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 20.99.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 52.5, implying annual growth of 117.4%.

Current consensus DPS estimate is 14.8, implying a prospective dividend yield of 1.4%.

Current consensus EPS estimate suggests the PER is 20.8.

Forecast for FY23:

Ord Minnett forecasts a full year FY23 dividend of 15.00 cents and EPS of 128.10 cents.
At the last closing share price the estimated dividend yield is 1.41%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 8.29.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 190.8, implying annual growth of 263.4%.

Current consensus DPS estimate is 69.2, implying a prospective dividend yield of 6.3%.

Current consensus EPS estimate suggests the PER is 5.7.

Market Sentiment: -0.2

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

NUF  NUFARM LIMITED

Agriculture

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Overnight Price: $6.47

Citi rates NUF as Buy (1) -

While supply chain pressures and other cost headwinds will likely continue through 2022, Citi notes continued strength in volume and pricing across Nufarm's key regions following recent results from peers.

The broker raises its  FY22/23 earnings (EBITDA) forecasts by 16% and 6%, respectively, and estimates 1H earnings of $333m compared to guidance for $320m-$340m.

The outlook for Nufarm is bright given the Australian summer crop is expected to be the fourth highest on record, while the winter crop is also expected to be a record, notes the analyst.

The Buy rating is retained, while the target price rises to $7.40 from $6.50.

Target price is $7.40 Current Price is $6.47 Difference: $0.93
If NUF meets the Citi target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $6.91, suggesting upside of 3.9% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY22:

Citi forecasts a full year FY22 dividend of 9.50 cents and EPS of 29.30 cents.
At the last closing share price the estimated dividend yield is 1.47%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 22.08.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 32.7, implying annual growth of 115.1%.

Current consensus DPS estimate is 9.9, implying a prospective dividend yield of 1.5%.

Current consensus EPS estimate suggests the PER is 20.3.

Forecast for FY23:

Citi forecasts a full year FY23 dividend of 11.00 cents and EPS of 33.50 cents.
At the last closing share price the estimated dividend yield is 1.70%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 19.31.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 31.2, implying annual growth of -4.6%.

Current consensus DPS estimate is 9.8, implying a prospective dividend yield of 1.5%.

Current consensus EPS estimate suggests the PER is 21.3.

Market Sentiment: 0.6

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

PPH  PUSHPAY HOLDINGS LIMITED

Software & Services

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Overnight Price: $1.12

Macquarie rates PPH as Neutral (3) -

Macquarie asserts the operating performance of Pushpay Holdings continues to deteriorate. Customer growth disappointed in FY22 with total unique customers -4% below estimates. Expenditure growth has also surprised to the upside.

The tax benefit provided by the IP transfer to the US from New Zealand provides some offset against FY23 earnings downgrades, the broker notes.

With a potential bid on the table this could support the share price, yet Macquarie cautions a positive result for investors is not guaranteed. Neutral maintained. Target is NZ$1.35.

Current Price is $1.12. Target price not assessed.

The company's fiscal year ends in March.

Forecast for FY23:

Macquarie forecasts a full year FY23 dividend of 0.00 cents and EPS of 5.04 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 22.21.

Forecast for FY24:

Macquarie forecasts a full year FY24 dividend of 0.00 cents and EPS of 5.59 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 20.05.

This company reports in USD. 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

QUB  QUBE HOLDINGS LIMITED

Transportation & Logistics

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Overnight Price: $2.94

Morgans rates QUB as Hold (3) -

Morgans updates its financial model following the completion of Qube Holdings' $400m off-market buyback at a price of $2.59/share, which reduces shares on issue by around -8%.

The valuation increases as the buyback was undertaken at a price below the analyst's intrinsic valuation per share. After also allowing for a valuation roll forward, the target price rises to $2.83 from $2.77.

The Hold rating is unchanged as Morgans is aware that rising interest rates will likely impact the company's cost of capital.

Target price is $2.83 Current Price is $2.94 Difference: minus $0.11 (current price is over target).
If QUB meets the Morgans target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.33, suggesting upside of 13.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Morgans forecasts a full year FY22 dividend of 7.00 cents and EPS of 9.00 cents.
At the last closing share price the estimated dividend yield is 2.38%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 32.67.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 9.8, implying annual growth of 102.9%.

Current consensus DPS estimate is 6.4, implying a prospective dividend yield of 2.2%.

Current consensus EPS estimate suggests the PER is 29.9.

Forecast for FY23:

Morgans forecasts a full year FY23 dividend of 7.00 cents and EPS of 11.00 cents.
At the last closing share price the estimated dividend yield is 2.38%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 26.73.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 11.4, implying annual growth of 16.3%.

Current consensus DPS estimate is 7.0, implying a prospective dividend yield of 2.4%.

Current consensus EPS estimate suggests the PER is 25.7.

Market Sentiment: 0.5

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

REG  REGIS HEALTHCARE LIMITED

Aged Care & Seniors

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Overnight Price: $2.37

Ord Minnett rates REG as Hold (3) -

Ord Minnett reviews its earnings forecasts for Regis Healthcare.

While FY22 estimates are lowered due to lower occupancy levels and ongoing covid-related costs, the broker likes the FY23 outlook. Covid grant payments are weighted to that financial year and funding is set to increase from October.

Nonetheless, the analyst retains a Hold rating pending further clarity around the government’s new funding regime. The target price rises to $2.30 from $2.10 as the broker's valuation model is rolled forward.

This stock is not covered in-house by Ord Minnett. Instead, the broker whitelabels research by JP Morgan.

Target price is $2.30 Current Price is $2.37 Difference: minus $0.07 (current price is over target).
If REG 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 $2.10, suggesting downside of -14.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Ord Minnett forecasts a full year FY22 EPS of 3.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 79.00.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 1.0, implying annual growth of -84.9%.

Current consensus DPS estimate is 7.0, implying a prospective dividend yield of 2.9%.

Current consensus EPS estimate suggests the PER is 244.0.

Forecast for FY23:

Ord Minnett forecasts a full year FY23 EPS of 14.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 16.93.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 4.3, implying annual growth of 330.0%.

Current consensus DPS estimate is 8.6, implying a prospective dividend yield of 3.5%.

Current consensus EPS estimate suggests the PER is 56.7.

Market Sentiment: 0.0

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

SCG  SCENTRE GROUP

REITs

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Overnight Price: $2.85

Macquarie rates SCG as Underperform (5) -

Macquarie observes customer visits and sales are recovering in shopping centres and the total portfolio is now at 88% of pre-pandemic levels.

The broker remains sceptical whether retail landlords will be able to pass through CPI +2% growth in rents, given the headwinds facing the consumer and the longer term structural changes to retail.

Amid the sell-off across the sector the broker increases its shareholder return estimates, yet on a relative basis Scentre Group remains the lowest. Underperform maintained. Target is $2.85.

Target price is $2.85 Current Price is $2.85 Difference: $0
If SCG meets the Macquarie target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $3.04, suggesting upside of 6.6% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Macquarie forecasts a full year FY22 dividend of 14.90 cents and EPS of 19.10 cents.
At the last closing share price the estimated dividend yield is 5.23%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.92.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 19.5, implying annual growth of 13.8%.

Current consensus DPS estimate is 15.0, implying a prospective dividend yield of 5.3%.

Current consensus EPS estimate suggests the PER is 14.6.

Forecast for FY23:

Macquarie forecasts a full year FY23 dividend of 15.80 cents and EPS of 20.10 cents.
At the last closing share price the estimated dividend yield is 5.54%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.18.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 21.0, implying annual growth of 7.7%.

Current consensus DPS estimate is 16.0, implying a prospective dividend yield of 5.6%.

Current consensus EPS estimate suggests the PER is 13.6.

Market Sentiment: 0.0

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

STP  STEP ONE CLOTHING LIMITED

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Overnight Price: $0.21

Morgans rates STP as Add (1) -

While retaining an Add rating for Step One Clothing, Morgans acknowledges confidence has taken a big hit after management now expects to miss prospectus forecasts.

FY22 earnings (EBITDA) in the range of $7-8.5m and sales growth of 15-20% are now expected. Both ranges are materially lower than previous guidance of $15m for earnings and 21-25% revenue growth, points out the analyst.

While it's a long road back, the broker expects the company to remain profitable and cash generative. The Add rating is retained while the target falls to $0.60 from $2.40.

Target price is $0.60 Current Price is $0.21 Difference: $0.39
If STP meets the Morgans target it will return approximately 186% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY22:

Morgans forecasts a full year FY22 dividend of 0.00 cents and EPS of 1.41 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.89.

Forecast for FY23:

Morgans forecasts a full year FY23 dividend of 0.00 cents and EPS of 1.57 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 13.38.

Market Sentiment: 1.0

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

WEB  WEBJET LIMITED

Travel, Leisure & Tourism

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Overnight Price: $5.64

UBS rates WEB as Buy (1) -

UBS observes Australian domestic volumes remain strong and Webjet should make further progress around its strategy. The major obstacle to expectations is a slower uplift in Australian outbound international travel.

Qantas ((QAN)) expects to be at 70% of capacity by the September quarter but other international carriers have been slower to return services.

UBS envisages upside in outer years for Webjet on the back of market share gains and higher EBITDA margins related to cost efficiency.  Buy rating retained. Target is reduced to $6.75 from $6.95.

Target price is $6.75 Current Price is $5.64 Difference: $1.11
If WEB meets the UBS target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $6.12, suggesting upside of 8.6% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY22:

UBS forecasts a full year FY22 dividend of 0.00 cents and EPS of minus 11.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 51.27.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is -13.1, implying annual growth of N/A.

Current consensus DPS estimate is 2.6, implying a prospective dividend yield of 0.5%.

Current consensus EPS estimate suggests the PER is N/A.

Forecast for FY23:

UBS forecasts a full year FY23 dividend of 12.00 cents and EPS of 23.00 cents.
At the last closing share price the estimated dividend yield is 2.13%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 24.52.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 16.5, implying annual growth of N/A.

Current consensus DPS estimate is 3.1, implying a prospective dividend yield of 0.5%.

Current consensus EPS estimate suggests the PER is 34.2.

Market Sentiment: 0.6

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

Today's Price Target Changes
Company Last Price Broker New Target Prev Target Change
BXB Brambles $10.75 Credit Suisse 13.45 13.15 2.28%
Ord Minnett 12.70 11.95 6.28%
UBS 13.70 13.25 3.40%
CHC Charter Hall $13.01 Morgan Stanley 15.17 19.88 -23.69%
CRN Coronado Global Resources $2.29 Morgans 2.97 2.73 8.79%
GMG Goodman Group $18.75 Ord Minnett 23.00 24.00 -4.17%
IGO IGO $10.92 Ord Minnett 8.80 4.30 104.65%
NUF Nufarm $6.65 Citi 7.40 6.50 13.85%
OZL OZ Minerals $22.03 Macquarie 25.00 26.00 -3.85%
QUB Qube Holdings $2.93 Morgans 2.83 2.77 2.17%
REG Regis Healthcare $2.44 Ord Minnett 2.30 2.10 9.52%
STP Step One Clothing $0.28 Morgans 0.60 2.40 -75.00%
WEB Webjet $5.64 UBS 6.75 6.85 -1.46%
Summaries
ASX ASX Underweight - Morgan Stanley Overnight Price $81.86
BXB Brambles Buy - Citi Overnight Price $11.60
Outperform - Credit Suisse Overnight Price $11.60
Buy - Ord Minnett Overnight Price $11.60
Buy - UBS Overnight Price $11.60
CHC Charter Hall Equal-weight - Morgan Stanley Overnight Price $13.15
COE Cooper Energy Add - Morgans Overnight Price $0.28
CRN Coronado Global Resources Add - Morgans Overnight Price $2.18
GMG Goodman Group Buy - Citi Overnight Price $19.55
Outperform - Macquarie Overnight Price $19.55
Overweight - Morgan Stanley Overnight Price $19.55
Hold - Ord Minnett Overnight Price $19.55
IGO IGO Lighten - Ord Minnett Overnight Price $10.62
NUF Nufarm Buy - Citi Overnight Price $6.47
PPH Pushpay Holdings Neutral - Macquarie Overnight Price $1.12
QUB Qube Holdings Hold - Morgans Overnight Price $2.94
REG Regis Healthcare Hold - Ord Minnett Overnight Price $2.37
SCG Scentre Group Underperform - Macquarie Overnight Price $2.85
STP Step One Clothing Add - Morgans Overnight Price $0.21
WEB Webjet Buy - UBS Overnight Price $5.64
RATING SUMMARY
Rating No. Of Recommendations
1. Buy

12

3. Hold

5

4. Reduce

1

5. Sell

2

Tuesday 17 May 2022

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Disclaimer:
The content of this information does in no way reflect the opinions of FNArena, or of its journalists. In fact we don't have any opinion about the stock market, its value, future direction or individual shares. FNArena solely reports about what the main experts in the market note, believe and comment on. By doing so we believe we provide intelligent investors with a valuable tool that helps them in making up their own minds, reading market trends and getting a feel for what is happening beneath the surface. This document is provided for informational purposes only. It does not constitute an offer to sell or a solicitation to buy any security or other financial instrument. FNArena employs very experienced journalists who base their work on information believed to be reliable and accurate, though no guarantee is given that the daily report is accurate or complete. Investors should contact their personal adviser before making any investment decision.