Australian Broker Call

Credit Suisse rates AIA as Upgrade to Outperform from Neutral (1) -

Credit Suisse raises its rating for Auckland International Airport to Outperform from Neutral in the expectation of strong post-pandemic travel and the potential for higher pricing.

This comes as the NZ government removes the 10 day self-isolation period for NZ citizens and highly skilled workers, and in anticipation of opening to Australia (July) and the rest of the world in October.

The analyst feels the Commerce Commission may judge airports as higher risk than pre-covid, and allow the company to set higher aeronautical pricing in the next regulatory period. The target price rises to $7.50 from $6.90.

Target price is $7.50 Current Price is $6.77 Difference: $0.73
If AIA meets the Credit Suisse target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $7.50, suggesting upside of 12.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

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

Market Sentiment: 0.5

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

Macquarie rates BRG as Outperform (1) -

Macquarie notes Breville Group's US product revenue results are not indicative of demand, with inventory levels depleted as a result of the LA Port congestion. Product revenue growth of 17.1% for the region compared to 39.4% growth in Europe and 22% in Asia Pacific. 

Elsewhere, Australian kitchen appliance spending is in-line with the previous comparable period and remains elevated compared to pre-pandemic levels, representing around 1% of spending in the second half to date.

The Outperform rating and target price of $34.80 are retained. 

Target price is $34.80 Current Price is $26.64 Difference: $8.16
If BRG meets the Macquarie target it will return approximately 31% (excluding dividends, fees and charges).

Current consensus price target is $33.03, suggesting upside of 24.0% (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

Citi rates BUB as Buy (1) -

Citi suggests FY22/FY23 consensus forecasts may need to be revised-up materially, after Bubs Australia announced an expanded partnership with its major daigou partner.

At the same time, the analyst cautions the allocation of equity to the partner may suggest current strong rates of growth may slow, without providing additional incentives.

Nonetheless, the broker expects strong short to medium-term momentum to continue from the partnership, as well as the US distribution rollout. The Buy rating and $0.73 target are maintained.

Target price is $0.73 Current Price is $0.45 Difference: $0.28
If BUB meets the Citi target it will return approximately 62% (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 CIM as Neutral (3) -

Cimic Group has received a takeover offer from Hochtief, currently the owner of a 82.95% stake, for $22.00 per share for all remaining shares. Macquarie notes the offer represents a 33.4% premium to Cimic Group's last closing price. 

Macquarie highlights that reducing the liquidity of Cimic Group shares could lead to the stock being removed from the S&P/ASX 200 Index, and negatively impact trading, but expects the offer is likely to succeed. 

The Neutral rating is retained and the target price increases to $22.00 from $17.50.

Target price is $22.00 Current Price is $22.00 Difference: $0
If CIM meets the Macquarie target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $20.63, suggesting downside of -6.3% (ex-dividends)

The company's fiscal year ends in December.

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

UBS rates CTD as Buy (1) -

Corporate Travel Management's $175m bid for Helloworld Travel's ((HLO)) corporate travel segment has been cleared by the ACCC. The acquisition offers opportunity to scale up core operations, with the combined group well positioned for market share wins according to UBS. 

While the outlook for travel recovery post omicron looks promising, the Russia-Ukraine conflict introduces new risk, but the US and UK have already reported strong passenger volume rebounds. 

The broker has identified Corporate Travel  Management as one of the best performing travel stocks. The Buy rating and target price of $28.20 are retained.

Target price is $28.20 Current Price is $21.98 Difference: $6.22
If CTD meets the UBS target it will return approximately 28% (excluding dividends, fees and charges).

Current consensus price target is $28.06, suggesting upside of 29.8% (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

Ord Minnett rates CVN as Buy (1) -

In reaction to last week's 1H result for Carnarvon Energy, Ord Minnett trims its FY22 net profit forecast, due mainly to higher expectations for exploration expenses and share of joint venture losses.

The broker's estimates for later years are unchanged. The target eases to $0.46 from $0.47.

Target price is $0.46 Current Price is $0.27 Difference: $0.19
If CVN meets the Ord Minnett target it will return approximately 70% (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

Morgan Stanley rates IAG as Underweight (5) -

Morgan Stanley estimates Insurance Australia Group is growing sub-system in relation to gross written premium growth, following December quarter Australia industry data. It's estimated the group lost around -0.5% market share.

On a three and five year view the group's share losses are -2.6% and -3%. Given Insurance Australia Group operates only in A&NZ, the broker raises questions about the medium-term growth outlook.

The Underweight rating and $3.90 target are unchanged. Industry view: Attractive.

Target price is $3.90 Current Price is $4.43 Difference: minus $0.53 (current price is over target).
If IAG meets the Morgan Stanley target it will return approximately minus 12% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.98, suggesting upside of 11.8% (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 IAG as Buy (1) -

Ord Minnett notes Insurance Australia Group's share price has slumped by -9% over the last 10 days in reaction to floods on the east coast of Australia. However. the broker expects only a modest escalation in estimates of perils costs for FY22.

Moreover, perils allowances, reinsurance costs and prices will increase in time, suggests the broker. Buy. The target of $5.50 is unchanged.

The analyst points out the group recently left its $1.045bn FY22 perils guidance unchanged.

Target price is $5.50 Current Price is $4.43 Difference: $1.07
If IAG meets the Ord Minnett target it will return approximately 24% (excluding dividends, fees and charges).

Current consensus price target is $4.98, suggesting upside of 11.8% (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

Citi rates IPL as Neutral (3) -

Another incident at the Waggaman ammonia plant prompts Citi to lower FY22 earnings estimates by -13% and decrease its target to $3.45 from $3.70.

The broker retains its Neutral rating with near-term earnings risk skewed to the upside. This is due to higher than anticipated urea/ammonia prices expected to flow from higher energy prices from the Ukraine crisis. 

Russia/Ukraine represent around 10% of the global nitrogen market with Russia responsible for circa 20% of urea exports.

Target price is $3.45 Current Price is $3.21 Difference: $0.24
If IPL meets the Citi target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $3.84, suggesting upside of 17.0% (ex-dividends)

The company's fiscal year ends in September.

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

Citi rates LVT as Buy (1) -

Largely pre-reported 1H results for LiveTiles yielded few surprises for Citi though the target rises to $0.12 from $0.10 on lower forecast depreciation and amortisation charges.

As a cash balance of $13m is forecast by the analyst for the end of FY22, a capital raise could be required should the company need to accelerate growth. Buy.

Target price is $0.12 Current Price is $0.09 Difference: $0.03
If LVT meets the Citi target it will return approximately 33% (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

Citi rates NXT as Buy (1) -

While NextDC's 1H was considered strong by Citi, and the current backlog underpins FY23 earnings, the broker lowers forecasts to reflect a slower ramp and conversion of the pipeline. The target falls to $14.55 from $15.40.

The analyst feels the next catalyst to convert customer commitments to contracted bookings will be the opening of Generation 3 assets in Sydney and Melbourne. The Buy rating is maintained.

Target price is $14.55 Current Price is $11.03 Difference: $3.52
If NXT meets the Citi target it will return approximately 32% (excluding dividends, fees and charges).

Current consensus price target is $14.06, suggesting upside of 30.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.9

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

Macquarie rates PAN as Outperform (1) -

Panaramic Resources has discovered a new 5.7 metre semi-massive sulphide mineralisation at Savannah North, in an area previously thought to be unmineralised. Macquarie notes nearby existing infrastructure presents opportunity to add tonnes to mining inventory. 

The company intends to undertake a new 18 hole drilling program targeting the Eastern Zone, including the new mineralisation. A resource estimate update is expected by September. 

The Outperform rating is retained and the target price increases to $0.32 from $0.30.

Target price is $0.32 Current Price is $0.29 Difference: $0.03
If PAN meets the Macquarie 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: 1.0

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

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

Morgan Stanley estimates Suncorp Group is growing sub-system in relation to gross written premium growth, following December quarter Australia industry data. It's estimated the group lost around -0.35% market share.

On a three and five year view the group's share losses are -2.5% and -2.8%. Given Suncorp Group operates only in A&NZ, the broker raises questions about the medium-term growth outlook.

The Equal-weight rating and $12.25 target are unchanged. Industry view: Attractive.

Target price is $12.25 Current Price is $10.61 Difference: $1.64
If SUN meets the Morgan Stanley target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $13.70, suggesting upside of 29.0% (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

Ord Minnett rates SUN as Hold (3) -

Ord Minnett notes Suncorp Group's share price has slumped by -7% over the last 10 days in reaction to floods on the east coast of Australia. However. the broker expects only a modest escalation in estimates of perils costs for FY22.

Moreover, perils allowances, reinsurance costs and prices will increase in time, suggests the broker. Hold. The target of $13.75 is unchanged.

The analyst points out that once the $75m maximum event retention is used up, the group has $400m of aggregate cover. In addition, there's coverage of 50% for the next -$150m of losses due to the purchase of additional partially-placed aggregate cover.

Target price is $13.75 Current Price is $10.61 Difference: $3.14
If SUN meets the Ord Minnett target it will return approximately 30% (excluding dividends, fees and charges).

Current consensus price target is $13.70, suggesting upside of 29.0% (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