Australian Broker Call

Ord Minnett rates AGL as Hold (3) -

Ord Minnett has revisited its forecasts and assumptions for AGL Energy now that the planned demerger is no longer going ahead. Minor changes have been implemented to forecasts, but a big jump in uncertainty has occurred, the broker highlights.

Hold rating retained while the target lifts to $9.15 from $8.70.

If one were to assume current electricity prices would remain unchanged in perpetuity, the broker's net present value (NPV) would increase to $68/share, the report exclaims.

Target price is $9.15 Current Price is $8.76 Difference: $0.39
If AGL meets the Ord Minnett target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $9.12, suggesting upside of 4.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.4

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

UBS rates AGL as Neutral (3) -

With AGL Energy announcing it will no longer pursue a demerger, as well as the departure of four of its eight board members including its CEO and Chair, UBS notes the company's outlook is uncertain. 

Having spoken to AGL Energy's largest shareholder Grok, UBS notes Grok considers value in the underlying business as a scaleable trading platform that could change energy generation and retailing in Australia according to UBS.

The broker notes while AGL Energy's assets would provide an ideal testing ground for such a product, it retains a preference for Origin Energy ((ORG)).  The Neutral rating and target price of $8.50 are retained.

Target price is $8.50 Current Price is $8.76 Difference: minus $0.26 (current price is over target).
If AGL meets the UBS target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $9.12, suggesting upside of 4.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.4

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

Morgan Stanley rates ALU as Overweight (1) -

One of the key takeaways from Morgan Stanley's San Francisco TMT conference and was ongoing sporadic chip shortages continue to cause disruption, with most companies seeing the supply/demand imbalance to now persist into 2023.

While the market assumes Altium is thus also disrupted, the broker notes Altium software is experiencing higher demand, as designers are asked to re-purpose chips for new ends, and Altium's Octopart search engine continues to see strong demand as designers search for parts during this shortage.

Take-up of the new cloud-based Altium 365 is also benefiting from all the increased demand. Morgan Stanley resumes coverage (February last) with an unchanged Overweight and a target of $35 (last $37).

Industry view: Attractive.

Target price is $35.00 Current Price is $28.76 Difference: $6.24
If ALU meets the Morgan Stanley target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $31.63, suggesting upside of 11.6% (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: 0.0

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

UBS rates AMA as Neutral (3) -

While challenging conditions continue to impact AMA Group, with supply constraints and increasing costs of parts and labour adding pressure, UBS notes signs of improvement in capacity utilisation. 

The broker highlighted the cost of parts and labour are 5% and 20% higher than in FY19, and while the company's investor day laid out a clear path to earnings improvement according to the broker, UBS expects near-term cost inflation, and the ability to pass this through, will remain a key challenge.

The Neutral rating is retained and the target price decreases to $0.23 from $0.29.

Target price is $0.23 Current Price is $0.21 Difference: $0.02
If AMA meets the UBS target it will return approximately 10% (excluding dividends, fees and charges).

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

Citi rates BPT as Buy (1) -

Citi analysts have updated their modeling, which has left the $1.95 target and Buy rating unchanged.

Earnings estimates have improved by some 5%.

Target price is $1.95 Current Price is $1.73 Difference: $0.22
If BPT meets the Citi target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $1.81, suggesting upside of 3.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.4

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

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

Macquarie downgrades its view on the media sector to Underweight from Neutral, noting multiples are already pointing to a cyclical easing post monetary-policy tightening, and the broker cuts sector earnings assumptions.

Macquarie's macro strategy team now forecasts a 60% probability of a mild recession and notes that media multiples tend to be the canary in the earnings coalmine, and right now they are pointing to -20% reductions in sector earnings.

The broker notes that Carsales is generally more resilient, gaining higher listings in the face of reduced demand, and is a preferred sector pick.

Rating upgraded to Outperform from Neutral. Target price falls to $20 from $23.

Target price is $20.00 Current Price is $20.50 Difference: minus $0.5 (current price is over target).
If CAR 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 $23.35, suggesting upside of 13.8% (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

Macquarie rates CHN as Outperform (1) -

Chalice Mining has finalised a capital raising for $100m to accelerate exploration drilling at Julimar.

Macquarie has extended the development timeline to 2025 (first production) to early 2028 at Gonneville to reflect labour shortages, noting the company will need more time to undertake more detailed work on the resource update and scoping study and to allow for approvals.

Target price is $9. This compares with the last entry in the FNArena data base of $10 on May 20. Outperform rating retained.

Target price is $9.00 Current Price is $6.36 Difference: $2.64
If CHN meets the Macquarie target it will return approximately 42% (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 DHG as Neutral (3) -

Macquarie downgrades its view on the media sector to Underweight from Neutral, noting multiples are already pointing to a cyclical easing post monetary tightening and the broker cuts sector earnings assumptions.

Macquarie's macro strategy team now forecasts a 60% probability of a mild recession and notes that media multiples tend to be the canary in the earnings coalmine, and right now they are pointing to -20% reductions in sector earnings.

The broker says apart from monetary tightening, Domain Holdings Australia also faces real-estate industry-specific headwinds, but the broker revises estimates upward slightly to reflect accretion from the Realbase purchase.

EPS forecasts rise 10% in FY22; 0% in FY23; and 2% in FY24.

Rating is Neutral (previously on restriction). Target price is $2.60, which compares with $2.70 in the FNArena database as at May 31.

Target price is $2.60 Current Price is $3.20 Difference: minus $0.6 (current price is over target).
If DHG meets the Macquarie target it will return approximately minus 19% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.83, suggesting upside of 49.4% (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 HT1 as Downgrade to Neutral from Outperform (3) -

Macquarie downgrades its view on the media sector to Underweight from Neutral, noting multiples are already pointing to a cyclical easing post monetary-policy tightening, and the broker cuts sector earnings assumptions.

Macquarie's macro strategy team now forecasts a 60% probability of a mild recession, and notes that media multiples tend to be the canary in the earnings coalmine, and right now they are pointing to -20% reductions in sector earnings.

EPS forecasts for HT&E fall -4% iin FY22; -31% in FY23; and -25% in FY24.

Rating downgraded to Neutral from Outperform. Target price falls to $1.70 from $2.40.

Target price is $1.70 Current Price is $1.52 Difference: $0.18
If HT1 meets the Macquarie target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $2.23, suggesting upside of 43.2% (ex-dividends)

The company's fiscal year ends in December.

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 NEC as Neutral (3) -

Macquarie downgrades its view on the media sector to Underweight from Neutral, noting multiples are already pointing to a cyclical easing post monetary-policy tightening, and the broker cuts sector earnings assumptions.

Macquarie's macro strategy team now forecasts a 60% probability of a mild recession, and notes that media multiples tend to be the canary in the earnings coalmine, and right now they are pointing to -20% reductions in sector earnings.

EPS forecasts for Nine Entertainment -9% in FY23 and -15% in FY24.

Neutral rating retained. Target price falls to $2.20 from $2.80.

Target price is $2.20 Current Price is $2.20 Difference: $0
If NEC meets the Macquarie target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $3.41, suggesting upside of 55.7% (ex-dividends)

The company's fiscal year ends in June.

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 NWS as Outperform (1) -

Macquarie downgrades its view on the media sector to Underweight from Neutral, noting multiples are already pointing to a cyclical easing post monetary-policy tightening, and the broker cuts sector earnings assumptions.

Macquarie's macro strategy team now forecasts a 60% probability of a mild recession, and notes that media multiples tend to be the canary in the earnings coalmine, and right now they are pointing to -20% reductions in sector earnings.

Macquarie notes News Corp's earnings mix is less cyclically exposed with only 14% of revenue exposed to the advertising market, and valuations are still pointing to a return of greater than 20%. The broker also believes the market is underestimating the Professional Information Business to expand margins. The company is one of the broker's sector picks.

EPS forecasts fall -7% in FY22; -34% in FY23; and -33% in FY24.

Outperform rating retained. Target price falls to $29.00 from $45.00.

Target price is $29.00 Current Price is $24.79 Difference: $4.21
If NWS meets the Macquarie target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $34.63, suggesting upside of 41.6% (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: 1.0

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

Macquarie rates OML as Outperform (1) -

Macquarie downgrades its view on the media sector to Underweight from Neutral, noting multiples are already pointing to a cyclical easing post monetary-policy tightening, and the broker cuts sector earnings assumptions.

Macquarie's macro strategy team now forecasts a 60% probability of a mild recession, and notes that media multiples tend to be the canary in the earnings coalmine, and right now they are pointing to -20% reductions in sector earnings.

The broker believe structural tailwinds post covid (as airports and office recover) should offset cyclical challenges for oOh!media, and the company is one of Macquarie's sector picks.

EPS forecasts for oOh!media fall -17% in FY22; -22% in FY23; and -25% in FY24.

Outperform rating retained. Target price falls to $1.80 from $$2.30.

Target price is $1.80 Current Price is $1.38 Difference: $0.42
If OML meets the Macquarie target it will return approximately 30% (excluding dividends, fees and charges).

Current consensus price target is $1.75, suggesting upside of 25.0% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.3

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

Macquarie rates REA as Downgrade to Underperform from Neutral (5) -

Macquarie downgrades its view on the media sector to Underweight from Neutral, noting multiples are already pointing to a cyclical easing post monetary tightening and the broker cuts sector earnings assumptions.

Macquarie's macro strategy team now forecasts a 60% probability of a mild recession and that media multiples tend to be the canary in the earnings coalmine, and right now they are pointing to -20% reductions in sector earnings.

The broker says apart from monetary tightening, REA Group also faces real-estate industry-specific headwinds. EPS and dividend forecasts appear stable.

Rating downgraded to Underperform from Neutral. Target price falls to $90 from $130.

Target price is $90.00 Current Price is $112.61 Difference: minus $22.61 (current price is over target).
If REA meets the Macquarie target it will return approximately minus 20% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $134.96, suggesting upside of 19.3% (ex-dividends)

The company's fiscal year ends in June.

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

UBS rates RIC as Buy (1) -

Ridley Corp has released details on its new three-year Growth Plan, to be implemented from FY23, with growth drivers largely consistent with UBS's expectations, including new capabilities, product premiumisation, and improved capacity and efficiency. 

UBS notes the company's growth plan also focuses on increased contributions from Novacq, with the update suggesting an international export opportunity is set to launch in FY23. Novacq delivered a -$2m loss in the first half, but is expected to breakeven by year end.

The Buy rating and target price of $2.00 are retained.

Target price is $2.00 Current Price is $1.75 Difference: $0.25
If RIC meets the UBS target it will return approximately 14% (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 SEK as Downgrade to Underperform from Neutral (5) -

Macquarie downgrades its view on the media sector to Underweight from Neutral, noting multiples are already pointing to a cyclical easing post monetary tightening and the broker cuts sector earnings assumptions.

Macquarie's macro strategy team now forecasts a 60% probability of a mild recession and that media multiples tend to be the canary in the earnings coalmine, and right now they are pointing to -20% reductions in sector earnings.

The broker says Seek is the most cyclically exposed. EPS forecasts rise 6% in FY22 and fall -3% in FY23 and -4% in FY24.

Rating downgraded to Underperform from Neutral. Target price falls to $19 from $32.

Target price is $19.00 Current Price is $24.25 Difference: minus $5.25 (current price is over target).
If SEK meets the Macquarie target it will return approximately minus 22% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $32.14, suggesting upside of 32.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.3

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

Ord Minnett rates STG as Buy (1) -

Ord Minnett found Straker Translations' FY22 in-line with the second half in particular showing a strong performance. Buy rating retained with the broker commenting this company remains well-positioned for strong growth ahead.

Management at the company has declared (effectively) a pause in M&A activity given uncertainty in economic conditions. The broker, however, suggests these conditions will throw up attractive opportunities.

The Buy rating is retained and the target price decreases to $1.85 from $2.27 - to take into account the new value environment for equities.

Target price is $1.85 Current Price is $1.20 Difference: $0.65
If STG meets the Ord Minnett target it will return approximately 54% (excluding dividends, fees and charges).

The company's fiscal year ends in March.

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

Citi rates STO as Neutral (3) -

Citi analysts have updated their modeling which includes the Barossa sell-down, as well as forex and commodity prices forecasts.

Minor changes have occurred to estimates. The price target lifts to $8.31 from $8.13. Neutral.

Target price is $8.31 Current Price is $8.20 Difference: $0.11
If STO meets the Citi target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $9.72, suggesting upside of 18.9% (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: 0.9

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

Macquarie rates SWM as Downgrade to Neutral from Outperform (3) -

Macquarie downgrades its view on the media sector to Underweight from Neutral, noting multiples are already pointing to a cyclical easing post monetary-policy tightening, and the broker cuts sector earnings assumptions.

Macquarie's macro strategy team now forecasts a 60% probability of a mild recession, and notes that media multiples tend to be the canary in the earnings coalmine, and right now they are pointing to -20% reductions in sector earnings.

EPS forecasts for Seven West Media fall -0% in FY22; -16% in FY23; and -22% in FY24.

Rating downgraded to Neutral from Outperform. Target price falls to 66c from 95c.

Target price is $0.66 Current Price is $0.50 Difference: $0.16
If SWM meets the Macquarie target it will return approximately 32% (excluding dividends, fees and charges).

Current consensus price target is $0.75, suggesting upside of 53.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.3

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

Macquarie rates SXL as Downgrade to Neutral from Outperform (3) -

Macquarie downgrades its view on the media sector to Underweight from Neutral, noting multiples are already pointing to a cyclical easing post monetary-policy tightening, and the broker cuts sector earnings assumptions.

Macquarie's macro strategy team now forecasts a 60% probability of a mild recession, and notes that media multiples tend to be the canary in the earnings coalmine, and right now they are pointing to -20% reductions in sector earnings.

EPS forecasts for Southern Cross Media fall -36% in FY23 and -70% in FY24.

Rating downgraded to Neutral from Outperform. Target price falls to $1.50 from $1.90

Target price is $1.50 Current Price is $1.42 Difference: $0.08
If SXL meets the Macquarie target it will return approximately 6% (excluding dividends, fees and charges).

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

Morgans rates VRT as Hold (3) -

Virtus Health's board has recommended BGH Capital's revised offer to shareholders. Morgans notes the $8.15 per share cash consideration is equivalent to CapVest's bid, but is not subject to prescribed occurrences. 

The broker highlights that those shareholders who have already accepted the CapVest offer cannot accept the BGH Capital offer unless the CapVest offer is withdrawn. Morgans expects if BGH Capital's bid is unsuccessful and the company remains a minority shareholder, Virtus Health will likely experience a share price decline.

The Hold rating and target price of $8.15 are retained.

Target price is $8.15 Current Price is $8.11 Difference: $0.04
If VRT meets the Morgans target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $7.33, suggesting downside of -10.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: -0.3

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

UBS rates WES as Buy (1) -

The newly opened Bunnings Pymble demonstrates how the Wesfarmers brand will utilise innovation to expand its addressable market according to UBS. The broker particularly noted the addition of DIY options in premium categories, such as pool fencing, will allow the brand to reach new customers.

The broker also expects trade customers to present further opportunity for the new store, noting trade sales currently account for 35% of Bunnings' sales leaving material market share headroom.

The Buy rating and target price of $56.00 are retained.

Target price is $56.00 Current Price is $47.19 Difference: $8.81
If WES meets the UBS target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $53.10, suggesting upside of 11.9% (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

Macquarie rates WGN as Outperform (1) -

Wagners Holding Co has won a $140m contract to supply precast concrete for 9.8km of twin tunnels for the Sydney Metro to Western Sydney Airport project, starting late 2022.

The tunnels will connect St Marys with the Western Sydney aerotropolis and the Western Sydney Airport.

Macquarie says earnings from the contract will be skewed towards the second half of FY23 and the first half of FY24.

EPS forecasts rise 19% in FY23 and 18% in FY24.

Outperform rating retained. Target price rises to $1.85 from $1.75.

Target price is $1.85 Current Price is $1.33 Difference: $0.52
If WGN meets the Macquarie target it will return approximately 39% (excluding dividends, fees and charges).

Current consensus price target is $1.98, suggesting upside of 45.8% (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