Australian Broker Call

Ord Minnett rates ANZ as Accumulate (2) -

An initial release of ANZ Bank's new ANZ Plus digital service offers access to an everyday banking account and a multi-goal savings account alongside some additional features, with digital mortgages to be beta tested later this year as noted by Ord Minnett.

While the bank opted to create a new platform rather than rebuild its existing one to avoid legacy issues, the broker warns customer migration, to begin in July, will likely be lengthy and maintaining dual systems for some time will drag on cost savings realisation.

Back-office costs for ANZ Plus are reportedly -30% less than the legacy platform.

The Accumulate rating and target price of $30.50 are retained.

Target price is $30.50 Current Price is $27.88 Difference: $2.62
If ANZ meets the Ord Minnett target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $30.05, suggesting upside of 8.4% (ex-dividends)

The company's fiscal year ends in September.

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

UBS rates ANZ as Buy (1) -

UBS warns that ANZ Bank's new neobank offering set to launch in June, ANZPlus, is unlikely to impact on the company's short-term pressure point of mortgage market share and assist in closing the gap to peers.

With digital loans accounting for only a small percentage of new business, and ANZ Bank already lagging behind peers in uptake of digital offerings by customers, UBS expects the addition of a digital mortgage offering will do little to address near-term issues.

The Buy rating and target price of $30.00 are retained.

Target price is $30.00 Current Price is $27.88 Difference: $2.12
If ANZ meets the UBS target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $30.05, suggesting upside of 8.4% (ex-dividends)

The company's fiscal year ends in September.

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 ASB as Buy (1) -

The news of Austal's failure to secure the Philippines offshore patrol vessel contract came as a surprise to Citi analysts given positive indicators. With a number of opportunities still in the pipeline to be awarded in 2022, Citi notes the US now offers the biggest opportunity.

According to Citi, the loss of the contract makes Austal's planned defense expansion in the Philippines and Vietnam uncertain and expects the company will need to rely on commercial work and warns this may drive Austal to bid on new work at low margins.

The Buy rating and target price of $2.35 are retained.

Target price is $2.35 Current Price is $1.78 Difference: $0.57
If ASB meets the Citi target it will return approximately 32% (excluding dividends, fees and charges).

Current consensus price target is $2.19, suggesting upside of 20.3% (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 ASB as Downgrade to Neutral from Outperform (3) -

Due to lower visibility of the medium-term outlook for Austal, Macquarie downgrades its rating to Neutral from Outperform. This comes as the company was notified it will not be awarded the contract to construct offshore patrol vessels for the Philippines Navy.

The broker notes the company will now focus on winning orders for commercial ferries for its Philippines shipyard. For FY23 and FY24, EPS forecasts are downgraded by -10% and -21% and the target price is lowered by -24% to $1.91.

Target price is $1.91 Current Price is $1.78 Difference: $0.13
If ASB meets the Macquarie target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $2.19, suggesting upside of 20.3% (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

Morgan Stanley rates ASX as Underweight (5) -

Morgan Stanley performs a mark-to-market exercise for ASX to incorporate better forecast volumes in cash equities in 2022 and improved listings, which are partly offset by weaker expectations for interest rate futures. The target rises to $74 from $73.70.

Nonetheless, the Underweight rating remains as the broker believes the stock is too expensive and envisages both cost and execution risks. Industry view: Attractive.

Target price is $74.00 Current Price is $80.66 Difference: minus $6.66 (current price is over target).
If ASX meets the Morgan Stanley target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $81.90, suggesting upside of 1.6% (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 BAP as Buy (1) -

Despite a heightened focus on elevated fuel costs recently, UBS expects fuel inflation will have only minimal impact on Bapcor's performance.

The broker anticipates a -5% decline in like-for-like retail sales in the next financial year, but expects wholesale and trade, accounting for 80% of earnings, to remain resilient. Data from UBS suggest lower income customers have started to moderate spending intentions.

The Buy rating and target price of $8.10 are retained.

Target price is $8.10 Current Price is $6.39 Difference: $1.71
If BAP meets the UBS target it will return approximately 27% (excluding dividends, fees and charges).

Current consensus price target is $8.05, suggesting upside of 28.0% (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

Morgan Stanley rates BOQ as Overweight (1) -

In anticipation of 1H results for Bank of Queensland, due on April 14, Morgan Stanley notes near-term headwinds from legacy ME Bank franchise performance and margin pressure. The latter is due to fixed rate mortgages and is not expected to ease until the 2H of 2022.

Nonetheless, the broker expects positive 'jaws' in FY22 and an even stronger outcome in FY23. Positive jaws occurs when gross income growth exceeds expense growth. The target rises to $10.20 from $10 and the Overweight rating is maintained. Industry view: Attractive.

Target price is $10.20 Current Price is $8.46 Difference: $1.74
If BOQ meets the Morgan Stanley target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $10.36, suggesting upside of 22.9% (ex-dividends)

The company's fiscal year ends in August.

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

Citi rates BPT as Buy (1) -

Upgrades to Citi's commodities deck sees Brent oil price forecasts lift US$20 a barrel to average US$91 a barrel in 2022, while its gas price forecast increases US$10 per million  thermal units to an average of US$22 per million thermal units.

Elevated spot pricing drives forecast upgrades across the broker's industry coverage. Beach Energy remains Citi's top pick and its only Buy rated stock in the sector.

The Buy rating is retained and the target price increases to $1.95 from $1.86.

Target price is $1.95 Current Price is $1.60 Difference: $0.35
If BPT meets the Citi target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $1.75, suggesting upside of 8.3% (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 CPU as Buy (1) -

A year on from Computershare's acquisition of the Computershare Corporate Trust from Wells Fargo, UBS notes the deal looks to be more accretive than originally anticipated. 

Originally expected to be 15% accretive to both earnings per share and return on invested capital, the broker now expects earnings per share accretion of more than 40% and return on invested capital accretion of more than 20% over a five-year profit boosting period.

The Buy rating is retained and the target price increases to $27.00 from $25.00.

Target price is $27.00 Current Price is $24.08 Difference: $2.92
If CPU meets the UBS target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $23.48, suggesting downside of -2.6% (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: 0.3

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

Citi rates FPH as Neutral (3) -

Following a slightly disappointing full year revenue guidance from Fisher & Paykel Healthcare, at -9.5% below consensus, Citi maintains a large potential market should support annual double digit Hospital division revenue growth over the next decade.

Near-term, the broker expects sales and profit to decline in FY22 and FY23 and highlights revenue in the next financial year will depend on utilisation of Optiflow devices by hospitals. The company guides to full year revenue of NZ$1.675-1.700bn with an expected gross margin of 62.5%.

The Neutral rating is retained and the target price decreases to NZ$28.50 from NZ$28.75.

Current Price is $23.73. Target price not assessed.

Current consensus price target is $27.00, suggesting upside of 18.0% (ex-dividends)

The company's fiscal year ends in March.

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: 0.0

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

Credit Suisse rates FPH as Neutral (3) -

Credit Suisse downgraded expectations for Fisher & Paykel Healthcare's hospital revenue by -12% and -14% in FY23 and FY24 respectively, reiterating difficulty in a clear read on the market. 

The broker noted usage of the company's nasal high flow therapy has declined from a peak as covid hospitalisations decrease and usage remains constrained outside of covid. 

Adjusting for company guidance, Credit Suisse deceases its FY22 net profit forecast -8% to NZ$366m, representing a -30% year-on-year decline.

The Neutral rating is retained and the target price decreases to $27.00 from $34.00.

Target price is $27.00 Current Price is $23.73 Difference: $3.27
If FPH meets the Credit Suisse target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $27.00, suggesting upside of 18.0% (ex-dividends)

The company's fiscal year ends in March.

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: 0.0

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

Macquarie rates KMD as Neutral (3) -

While KMD Brands had pre-reported in February, 1H results showed Macquarie the 2H should benefit as forward demand for the company's products remains at record levels.

Nonetheless, omicron continues to impact, especially in New Zealand and Western Australia, and the broker reduces the FY22 EPS forecast by -5.6%.

More positively, Macquarie points out KMD Brands is yet to execute offshore and realise the benefits of an increased marketing spend. The Neutral rating and $1.20 target are maintained.

Target price is $1.20 Current Price is $1.27 Difference: minus $0.07 (current price is over target).
If KMD meets the Macquarie target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $1.50, suggesting upside of 19.0% (ex-dividends)

The company's fiscal year ends in July.

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: 0.7

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

Macquarie rates MCR as Neutral (3) -

While the intersection of first development ore at the Cassini nickel mine helps de-risk Mincor Resources' production resumption, Macquarie had already allowed for this in forecasts.

Hence, the $2.10 target price and Neutral rating are maintained, though the broker suggest current spot nickel prices offer upside risks to its estimates.

Target price is $2.10 Current Price is $2.17 Difference: minus $0.07 (current price is over target).
If MCR meets the Macquarie target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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

Macquarie rates RMD as Outperform (1) -

Following Macquarie's conference call with ResMed, the broker's forecast uplift from Philips' recall woes have been tempered as component shortages have weighed. However, the medium-longer term growth outlook is still considered favourable.

Management noted “Q3 is going to be very difficult, similar to Q2, and Q4 will get better, but not that much better”. The broker lowers its FY22 EPS estimate by -4% and lowers its target to $37.50 from $38.50. Outperform.

Target price is $37.50 Current Price is $33.39 Difference: $4.11
If RMD meets the Macquarie target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $37.93, suggesting upside of 18.6% (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: 0.8

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

Ord Minnett rates RMD as Downgrade to Accumulate from Buy (2) -

Based on commentary from management, Ord Minnett notes ResMed has not been able to meaningfully increase device supply in the March quarter as constrained availability of chips continues, but reiterates an anticipated supply boost in the June quarter.

The broker expects this will be insufficient to meet the company's US$300-350m incremental revenue guidance, but notes the miss is largely a timing issue. Further, Ord Minnett notes supply issues are consistent with other providers.

The rating is downgraded to Accumulate from Buy and the target price decreases to $37.00 from $38.00.

Target price is $37.00 Current Price is $33.39 Difference: $3.61
If RMD meets the Ord Minnett target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $37.93, suggesting upside of 18.6% (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: 0.8

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

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

Macquarie lowers its rating for Seek to Neutral from Outperform on downside risk for earnings and limited valuation support. The target price of $32 is unchanged.

As the labour market normalises, the broker anticipates formerly strong depth revenue growth will subside. Depth is not considered to be the structural growth driver that the market is assuming.

Target price is $32.00 Current Price is $30.35 Difference: $1.65
If SEK meets the Macquarie target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $34.31, suggesting upside of 14.2% (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 SKO as Outperform (1) -

In a review of the investment thesis for Serko, Macquarie notes the Booking.com joint venture continues to slowly de-risk. Customer growth and web traffic trends are also considered to be showing positive signs.

Investors are advised to grasp any buying opportunity that short-term volatilty may present and the broker maintains its Outperform rating. The target falls by -1% to NZ$8.95. 

Current Price is $4.20. Target price not assessed.

The company's fiscal year ends in March.

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: 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) -

Upgrades to Citi's commodities deck sees Brent oil price forecasts lift US$20 a barrel to average US$91 a barrel in 2022, while its gas price forecast increases US$10 per million thermal units to an average of US$22 per million thermal units.

Elevated spot pricing drives forecast upgrades across the broker's industry coverage.

The Neutral rating is retained and the target price increases to $8.19 from $7.25.

Target price is $8.19 Current Price is $7.77 Difference: $0.42
If STO meets the Citi target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $9.10, suggesting upside of 15.3% (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: 0.8

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

Morgan Stanley rates STO as Overweight (1) -

Morgan Stanley believes the Pavo-1 oil discovery is important for Santos because it should improve the overall economics of the Dorado oil and gas project.

Pavo-1 is the first exploration well surrounding the Dorado oil discovery and there is also considered to be potential accumulation to the south of Pavo-1.

Price target remains at $10.40. Overweight. Industry view Attractive.

Target price is $10.40 Current Price is $7.77 Difference: $2.63
If STO meets the Morgan Stanley target it will return approximately 34% (excluding dividends, fees and charges).

Current consensus price target is $9.10, suggesting upside of 15.3% (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: 0.8

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

Citi rates WPL as Neutral (3) -

Upgrades to Citi's commodities deck sees Brent oil price forecasts lift US$20 a barrel to average US$91 a barrel in 2022, while its gas price forecast increases US$10 per million thermal units to an average of US$22 per million thermal units.

Elevated spot pricing drives forecast upgrades across the broker's industry coverage. The broker noted Woodside Petroleum saw the largest earnings increase from the pricing update given its exposure to the Asian LNG spot market.

The Neutral rating is retained and the target price increases to $29.35 from $26.10.

Target price is $29.35 Current Price is $32.30 Difference: minus $2.95 (current price is over target).
If WPL meets the Citi target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $29.43, suggesting downside of -11.6% (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: 0.6

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