Australian Broker Call

Citi rates APT as Neutral (3) -

Citi sees the third round of stimulus in the US as positive for the BNPL sector as it could support consumer spending. Independent data for the US show Afterpay’s US website visits grew over 91% year-on-year in February, with the rate of growth slowing from 106% in January.

While it was a good February in A&NZ, the company continues to underperform Zip Co ((Z1P)). The Neutral rating and $124.80 target are unchanged.

Target price is $124.80 Current Price is $108.33 Difference: $16.47
If APT meets the Citi target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $125.73, suggesting upside of 12.7% (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

Morgans rates BKW as Add (1) -

In anticipation of first half results due on March 25, Morgans forecasts underlying earnings (EBIT) -40% year-on-year (yoy) and underlying profit (NPAT) -45% yoy.

The drop in forecast earnings largely reflects lower contributions from the Property segment due to the non-repeat of developments profits in the pcp and lower revaluation profits, explains the broker.

It also reflects a reduced Investments contribution, given lower profitability from New Hope Corporation ((NHC)) and TPG Telecom ((TPM)).

By contrast, the combined Australian and Nth American bricks business is expected to return to growth due to an improved result from Building products Australia (BPA). The Buy rating and target of $21.01 are unchanged.

Target price is $21.01 Current Price is $19.15 Difference: $1.86
If BKW meets the Morgans target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $21.32, suggesting upside of 10.6% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.8

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

UBS rates BWP as Upgrade to Neutral from Sell (3) -

UBS upgrades to Neutral from Sell given the recent underperformance in the stock, while downgrading FY21 earnings estimates by -2% and FY22-25 by -4-5%.

The downgrade to estimates stems from the fact around two thirds of the leases are expiring in 2021-25 and this presents an elevated level of risk. Target is steady at $3.86.

Target price is $3.86 Current Price is $3.95 Difference: minus $0.09 (current price is over target).
If BWP meets the UBS target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.65, suggesting downside of -9.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

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) -

After first half results, Macquarie cuts the FY21 EPS forecast by -37% due to higher exploration expenses. Adjustments to corporate costs translate to -2%, -3% and - 5% cuts to FY22-FY24 EPS forecasts, respectively.

The changes to earnings are largely non-cash and the broker maintains the $5.50 price target. Outperform rating.

Target price is $5.50 Current Price is $4.40 Difference: $1.1
If CHN meets the Macquarie target it will return approximately 25% (excluding dividends, fees and charges).

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

UBS rates CLW as Neutral (3) -

Despite a large and stable portfolio, UBS believes risk has increased for Charter Hall Long WALE surrounding equity raisings and acquisitions. So far, the business has managed this well, being a beneficiary of a lower interest rate environment.

The broker reduces the valuation, with the target lowered to $4.80 from $5.20, reflecting a discount rate of 7.3% from 7.1% previously. Neutral maintained.

Target price is $4.80 Current Price is $4.66 Difference: $0.14
If CLW meets the UBS target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $5.13, suggesting upside of 8.9% (ex-dividends)

The company's fiscal year ends in June.

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

Credit Suisse rates EVN as Outperform (1) -

Evolution Mining will acquire the Battle North gold mining company (-CAD343m) subject to 66.67% shareholder approval.  The principal asset is the ‘Bateman’ gold project currently under development and close to the company's Red Lake operation in Ontario.

Financially the acquisition makes sense to Credit Suisse and importantly it increases the operating flexibility for Red Lake, providing readily available mill capacity at an attractive capital cost. The Outperform rating and $5.10 target are unchanged.

Target price is $5.10 Current Price is $4.05 Difference: $1.05
If EVN meets the Credit Suisse target it will return approximately 26% (excluding dividends, fees and charges).

Current consensus price target is $4.66, suggesting upside of 11.7% (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

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

Evolution Mining will buy Battle North which has the Bateman gold project not far from the company's Red Lake project in Canada.

Morgan Stanley believes this proximity should help justify the 46% takeover premium embedded in the price of CAD343m, especially when considering synergies with Red Lake.

Gearing should also be manageable. It is unclear to the broker when or how much milling capacity at Bateman could be used for excess mine output at Red Lake.

Morgan Stanley retains its Equal-weight rating. Target is $4.40. Industry view: Attractive.

Target price is $4.40 Current Price is $4.05 Difference: $0.35
If EVN meets the Morgan Stanley target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $4.66, suggesting upside of 11.7% (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 FCL as Outperform (1) -

Macquarie reviews the company versus peers Guidewire and Duck Creek and calculates the valuation is in-line with the former and at a material discount to the latter. The Outperform rating and $4.63 target are maintained.

The analyst concludes the current product offering, supported by ongoing R&D, positions the company to continue to win new clients and upgrade existing clients to the cloud. The key risk is considered the timing of contract wins in the short-term.

Target price is $4.63 Current Price is $4.40 Difference: $0.23
If FCL meets the Macquarie target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $4.51, suggesting downside of -2.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

This company reports in EUR. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: 0.8

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

Credit Suisse rates FMG as Outperform (1) -

Fortescue Metals Group has brought forward plans by a decade to become carbon neutral, now targeting 2030. Credit Suisse is impressed by the energy and clear public targets.

Cost benefits are expected along with the successful implementation of hydrogen technology, explains the broker, and the broader goal is to extend the technology into new markets. Outperform rating with a target of $23.50.

Target price is $23.50 Current Price is $20.38 Difference: $3.12
If FMG meets the Credit Suisse target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $23.24, suggesting upside of 13.1% (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

Macquarie rates FMG as Outperform (1) -

The company has announced it plans to achieve carbon neutrality by 2030, ten years earlier than the previous target of 2040. 

Green electricity, green hydrogen, and green ammonia projects in Australia under the Fortescue Future Industries (FFI) subsidiary are key to achieving the accelerated target.

The company has already committed -US$700m through its Pilbara Energy Connect project to significantly reduce power generation emissions. The removal of diesel consumption appears to be the first key step. The Outperform rating and target of $25.50 are retained.

Target price is $25.50 Current Price is $20.38 Difference: $5.12
If FMG meets the Macquarie target it will return approximately 25% (excluding dividends, fees and charges).

Current consensus price target is $23.24, suggesting upside of 13.1% (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

UBS rates GMG as Upgrade to Buy from Neutral (1) -

Demand for space from tenants has accelerated amid a ramping up of development work in progress. Still, UBS notes the size of the development pipeline is still up 40% in terms of square metres.

The flexibility on the balance sheet, meanwhile, allows the business to capitalise on structural tailwinds and establish a longer-dated development strategy.

The stock is now trading at a significant discount to the broker's $18.70 target and, given the acceleration, the risk/reward is now skewed to the upside. Hence UBS upgrades to Buy from Neutral.

Target price is $18.70 Current Price is $16.93 Difference: $1.77
If GMG meets the UBS target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $20.10, suggesting upside of 14.3% (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

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

Morgan Stanley expects a relatively benign flu season in 2021 which will impact volumes and maintain pressure on the industry even as the pandemic eases.

The broker lowers estimates for earnings per share by -7-28% and pushes out a rebound in earnings to record levels to beyond FY23.

Equal-weight rating. Target is raised to $11.00 from $10.30. Industry view: In-Line.

Target price is $11.00 Current Price is $11.39 Difference: minus $0.39 (current price is over target).
If IVC meets the Morgan Stanley target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $11.10, suggesting downside of -3.1% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.0

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

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

Dubbed by Ord Minnett as the Godfather of Tasmanian Whiskey, Lark Distilling operates at the highest end of the ultra premium whisky market and is one of Australia’s leading whisky producers.

The broker notes management is building a formidable whisky inventory with FY21 production estimated to be more than 1m litres and growing to circa 1.5m litres in FY22.

Noting upcoming catalysts like the company reaching break even on operating income, continued growth of whisky under maturation and recognition through awards, Ord Minnett initiates coverage on Lark Distilling with a Buy recommendation and price target of $3.18.

Target price is $3.18 Current Price is $1.76 Difference: $1.42
If LRK meets the Ord Minnett target it will return approximately 81% (excluding dividends, fees and charges).

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

Morgan Stanley rates NEC as Overweight (1) -

Nine Entertainment has a new TV supply deal with regional TV operator WIN Corp. Morgan Stanley considers this an incremental positive, estimating it could add $5-10m to FY22-23 operating earnings.

The broker expects WIN will be able to achieve a higher audience in regional markets and thus pay a higher affiliate fee.

Overweight retained. Target is raised to $3.50 from $3.42. While there is some speculation Nine Entertainment is considering the acquisition of WIN's TV stations Morgan Stanley envisages better use of capital can be made. Industry view: Attractive.

Target price is $3.50 Current Price is $2.99 Difference: $0.51
If NEC meets the Morgan Stanley target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $3.38, suggesting upside of 13.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.8

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

Macquarie rates OZL as Outperform (1) -

The Macquarie commodities strategy team has materially upgraded the outlook for copper after reworking the copper demand outlook to incorporate the impact of the energy transition. The upgrades have recently transformed the earnings outlook for OZ Minerals.

The company remains the broker's preferred exposure to copper with several key organic catalysts headlined by the Prominent Hill expansion update later this year.

Additionally, the analyst points out the company has the greatest earnings leverage to stronger gold prices for Macquarie's base metals coverage. The Outperform rating and $30 target are maintained due to the recent earnings upgrades by the broker.

Target price is $30.00 Current Price is $23.05 Difference: $6.95
If OZL meets the Macquarie target it will return approximately 30% (excluding dividends, fees and charges).

Current consensus price target is $19.76, suggesting downside of -15.0% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.0

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

Ord Minnett rates PMV as Hold (3) -

Premier Investments will report its first-half result on March 24 and Ord Minnett forecasts a net profit of $1760m, up 76.7% versus last year, with operating earnings of $235.1m. The broker also expects an interim dividend of 44c.

Hold recommendation with a $24 target price.

Target price is $24.00 Current Price is $23.06 Difference: $0.94
If PMV meets the Ord Minnett target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $24.77, suggesting upside of 3.4% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.2

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

Morgans rates PPE as Add (1) -

The company has made a -$3m acquisition in the mental health space, which will be funded from the company’s existing cash reserves. Morgans estimates it will be circa 3% accretive to FY22 EPS.

The price target rises to $4.22 from $4.11 and the Add rating is unchanged.The broker expects further acquisitions during 2021.

Target price is $4.22 Current Price is $3.54 Difference: $0.68
If PPE meets the Morgans target it will return approximately 19% (excluding dividends, fees and charges).

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

UBS rates SGP as Downgrade to Neutral from Buy (3) -

UBS assesses Stockland has benefited significantly from government policy aimed at strengthening the new residential sector as well as a structural shift from urban centres caused by the pandemic.

Nevertheless, the strength in residential markets means risks around macro prudential policy are heightened and the broker downgrades to Neutral from Buy. Target is steady at $4.50.

UBS also notes, with gearing of around 24% and momentum in residential generating strong cash flow, the balance sheet is sound.
Developments are likely to have capital partners and be long dated.

Target price is $4.50 Current Price is $4.38 Difference: $0.12
If SGP meets the UBS target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $4.52, suggesting upside of 2.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.0

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

Citi rates SHV as Buy (1) -

Citi initiates coverage of Select Harvests with a Buy rating and a target price of $6.50. The recently-acquired Piangil
orchard is expected to add over 20% in almond production to the company’s existing orchard base by FY23, estimates the broker.

Almond prices have historically followed a ten year cycle driven by Californian industry fundamentals. While covid-19 has disrupted this cycle, the analyst forecasts almond prices to peak at US$4.48/lb in 2024/25, almost triple current levels.

Citi expects higher almond prices and orchard yields to see improved operating leverage, with almond segment earnings (EBITDA)
margins forecast to expand to 60% in FY25, similar to the last almond price peak in FY15.

Target price is $6.50 Current Price is $5.51 Difference: $0.99
If SHV meets the Citi target it will return approximately 18% (excluding dividends, fees and charges).

The company's fiscal year ends in September.

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

Ord Minnett rates SSM as Buy (1) -

Ord Minnett has revised its FY22 forecasts for Service Stream to reflect the transition of key telco contracts from April 2021 to lower headline revenues and longer duration.

The broker's forecasts also allow for contribution from the yet to be awarded contracts within the NBN Co’s FTTN/HFC network upgrade. 

Driven by a "clean" balance sheet, high free cash flow and a solid dividend yield, Ord Minnett sees upside risks to valuation from current levels and retains its Buy rating. The target falls to $1.62 from $2.06.

Target price is $1.62 Current Price is $1.25 Difference: $0.37
If SSM meets the Ord Minnett target it will return approximately 30% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.5

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

Macquarie rates SXL as Neutral (3) -

Southern Cross Media Group announced that Nine Entertainment ((NEC)) will not extend its regional TV affiliation agreement beyond its expiry (June 2021). While this is a clear negative, Macquarie expects an offset via an affiliate agreement with Network 10.

The broker lifts FY21-FY23 estimates by 7%, 14% and 9%, respectively, reflecting the loss of the Nine affiliate and gain of Network 10. However, due to a change in valuation methodology, the target price falls to $2.10 from $2.60. Neutral rating is unchanged.

Target price is $2.10 Current Price is $2.12 Difference: minus $0.02 (current price is over target).
If SXL meets the Macquarie target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.00, suggesting downside of -5.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.0

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

Morgan Stanley rates SXL as Underweight (5) -

Morgan Stanley envisages lower earnings and higher risk as Southern Cross Media commences discussions regarding a new cornerstone TV program deal with 10 Network.

The broker suspects revenues will be lower with 10 Network as a supplier and there is the possibility a higher percentage fee will have to be paid.

The broker makes no changes to estimates, awaiting the terms of a new agreement, and remains fundamentally cautious, retaining an Underweight rating. Target is $1.40. Industry view is Attractive.

Target price is $1.40 Current Price is $2.12 Difference: minus $0.72 (current price is over target).
If SXL meets the Morgan Stanley target it will return approximately minus 34% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.00, suggesting downside of -5.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.0

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

Morgan Stanley rates TPW as Initiation of coverage with Overweight (1) -

Morgan Stanley considers the recent weakness in the stock price is an opportunity to buy a very early growth story and initiates coverage with an Overweight rating and $14 target.

The broker notes structural growth is leveraged to online migration in the furniture category in Australia, with 6% penetration in FY20 that lags the US with 16% and the UK with 18%.

The broker suspects Temple & Webster can take outsized share as it benefits from scale and an attractive value proposition. Industry view is: In-Line.

Target price is $14.00 Current Price is $9.19 Difference: $4.81
If TPW meets the Morgan Stanley target it will return approximately 52% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.5

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

Ord Minnett rates TYR as Buy (1) -

Tyro Payments' trading update for the week ended 12 March shows comparable numbers rose 19% over last year. The update also highlights better trading conditions due to a well-managed response to covid in Australia.

FY21 year-to-date comparables remain 10% higher than a year ago, and Ord Minnett expects the numbers to keep improving as the business begins to cycle covid affected previous periods. 

Buy rating with a target of $4.50.

Target price is $4.50 Current Price is $3.23 Difference: $1.27
If TYR meets the Ord Minnett target it will return approximately 39% (excluding dividends, fees and charges).

Current consensus price target is $3.75, suggesting upside of 9.6% (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

Ord Minnett rates VCX as Downgrade to Hold from Buy (3) -

Ord Minnett downgrades Vicinity Centres to Hold from Buy with a target price of $1.80.

Vicinity Centres' share price has risen about 40% since October's low of $1.21 as the stock recovered from the impact of covid. Ord Minnett believes there may be a further -10% softening in Vicinity Centres' stock price.

While retail conditions are improving, Ord Minnett expects net property income to rebase -13% below pre-covid levels in 2021 due to lower footfall, particularly in the CBD assets. 

Target price is $1.80 Current Price is $1.68 Difference: $0.12
If VCX meets the Ord Minnett target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $1.64, suggesting downside of -4.3% (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

UBS rates VCX as Sell (5) -

UBS suspects a decline in valuation is set to occur as income profiles are re-set and yields are adjusted to reflect a lower growth profile.

The broker notes CBD retail remains under pressure as a result of border restrictions, both domestic and international, while a return to full office employment is delayed. Sell maintained. Target is raised to $1.54 from $1.48.

Target price is $1.54 Current Price is $1.68 Difference: minus $0.14 (current price is over target).
If VCX meets the UBS target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $1.64, suggesting downside of -4.3% (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

Citi rates Z1P as Neutral (3) -

Citi sees the third round of stimulus in the US as positive for the BNPL sector as it could support consumer spending.

Independent data for February in the US shows QuadPay continues to see fastest website visit growth and app downloads increase month-on-month, notes the broker. In A&NZ during February, the company continues to outperform Afterpay ((APT)).

The Neutral rating and $11.35 target are unchanged.

Target price is $11.35 Current Price is $8.49 Difference: $2.86
If Z1P meets the Citi target it will return approximately 34% (excluding dividends, fees and charges).

Current consensus price target is $9.31, suggesting upside of 6.2% (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