Australian Broker Call

Macquarie rates ALD as Outperform (1) -

Macquarie raises its 2022 and 2023 EPS forecasts for Ampol by 4% on higher refining margins. The 2H is thought to be tracking well and there's potential for another off-market buyback in February 2023 as gearing should dip below management's target range by December.

The broker assumes a $400m buyback and raises its target price by 1% to $40.45. The Outperform rating is unchanged.

Target price is $40.45 Current Price is $33.65 Difference: $6.8
If ALD meets the Macquarie target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $38.04, suggesting upside of 18.5% (ex-dividends)

The company's fiscal year ends in December.

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

Credit Suisse rates ALQ as Downgrade to Neutral from Outperform (3) -

ALS has laid out a pathway to its five year aspirations of 50% revenue growth to $3.3bn and 55% earnings growth to $600m by FY27. Credit Suisse notes the company intends to deliver margins above 19% and cash conversion above 90%.

The broker noted the company highlighted its major divisions remain favourably exposed to operating trends. Credit Suisse is cautious on potential moderating activity from junior miners in the near-term, but on a five year view sees strong investment opportunity in ALS.

The rating is downgraded to Neutral from Outperform and the target price of $12.60 is retained.

Target price is $12.60 Current Price is $12.42 Difference: $0.18
If ALQ meets the Credit Suisse target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $13.44, suggesting upside of 13.4% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.3

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

Macquarie rates ALQ as Outperform (1) -

Macquarie raises its FY25 and FY26 EPS forecasts after more clarity on long-term growth targets was garnered from ALS's investor day. Compound annual growth rates for revenue and earnings (EBIT) of 8% were implied by five year growth targets through to FY27.

Management pointed to $1bn of potential acquisitions over the next five years. As expected by the analyst, the acquisition focus will be on Life Sciences and food & pharma, while Commodity targets will also be considered.

The Outperform rating is maintained and the target increases to $13.60 from $13.20.

Target price is $13.60 Current Price is $12.42 Difference: $1.18
If ALQ meets the Macquarie target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $13.44, suggesting upside of 13.4% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.3

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

UBS rates ALQ as Neutral (3) -

ALS used its recent investor day to reiterate its five year targets, with the company looking to boost earnings through end market activity growth. UBS notes the company remains focused on its Life Sciences segment, which it believes can deliver above group growth. 

UBS notes ongoing regulatory demand combined with growth through acquisition should see Life Sciences deliver a 14% revenue compound annual growth rate over the next five years. The company targets revenue of $3.3bn in FY27 and earnings of $600m. 

The Neutral rating and target price of $13.15 are retained.

Target price is $13.15 Current Price is $12.42 Difference: $0.73
If ALQ meets the UBS target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $13.44, suggesting upside of 13.4% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.3

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

Macquarie rates BGL as Outperform (1) -

Bellevue Gold announced project execution continues to proceed to plan, with 90% of pre-production expenditure contracted, and announced the $15.8m raiseboring contract was awarded to RUC Cementation Mining Contractors Pty Ltd.

Macquarie notes development is tracking nicely to plan and maintains its Outperform rating and $1.20 target price.

Target price is $1.20 Current Price is $0.81 Difference: $0.39
If BGL meets the Macquarie target it will return approximately 48% (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 BHP as Outperform (1) -

The Macquarie Commodities Strategy team lowers its 4Q 2022 metallurgical coal price forecasts by -10% (reflecting a rapid fall in ex-China Steel demand). The 2023 and long-term forecasts rise by 14-41% as a stronger thermal coal market should lend support.

Coronado Global Resources is the broker's preferred pure coal exposure due to leverage to the met coal price.

For BHP Group, the analyst raises EPS forecasts by 1% for FY23 and by 3%-11% for FY24 onward, and the target rises to $42 from $40.00. Outperform.

Target price is $42.00 Current Price is $39.30 Difference: $2.7
If BHP meets the Macquarie target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $40.24, suggesting upside of 4.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

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

Macquarie rates CRN as Outperform (1) -

The Macquarie Commodities Strategy team lowers its 4Q 2022 metallurgical coal price forecasts by -10% (reflecting a rapid fall in ex-China Steel demand). The 2023 and long-term forecasts rise by 14-41% as a stronger thermal coal market should lend support.

Coronado Global Resources is the broker's preferred pure coal exposure due to leverage to the met coal price.

While Macquarie lowers its 2022 EPS forecast by -17%, EPS forecasts from 2023 onwards rise by 55-195%, and the target jumps to $3.50 from $2.50. Outperform.

Target price is $3.50 Current Price is $1.68 Difference: $1.82
If CRN meets the Macquarie target it will return approximately 108% (excluding dividends, fees and charges).

Current consensus price target is $2.68, suggesting upside of 58.6% (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: 1.0

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

Macquarie rates GL1 as Outperform (1) -

Macquarie points out the Manna lithium project in WA accounts for around 80% of its valuation for Global Lithium Resources and recent drilling results have been impressive. High lithium grades were intercepted.

The target rises to $2.70 from $2.50 to allow for the drilling results and also to reflect updated equity raising assumptions after recent share price strength. Outperform.

Target price is $2.70 Current Price is $2.40 Difference: $0.3
If GL1 meets the Macquarie target it will return approximately 13% (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 JHX as Buy (1) -

Day two of James Hardie Industries' investor day (wrong name, but ok) and Citi reports management has expressed renewed confidence it can turn the APAC business back into a growth phase, riding the structural trend in design toward modern mixed-siding homes.

Presentations equally painted a promising picture of growth potential in Europe, with management indicating wall costs are -7-18% cheaper than competitors, and the company isn't even manufacturing on the continent!

Target $41.90. Buy.

Target price is $41.90 Current Price is $35.32 Difference: $6.58
If JHX meets the Citi target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $48.57, suggesting upside of 43.0% (ex-dividends)

The company's fiscal year ends in February.

Forecast for FY23:

Forecast for FY24:

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 LNK as Accumulate (2) -

It appears exposure to the failed Woodford funds in the UK might scupper the Link Administration take-over by Canada's Dye & Durham.

Link Fund Solutions might still be facing a hefty fine. Ord Minnett points out were a fine of GBP100m be sanctioned by authorities, this would still only equate to 15.5c per Link share, including tax offsets at 19%.

Accumulate rating retained, while the target price is lowered to $4.20 from $4.80. No changes have been made to forecasts.

Target price is $4.20 Current Price is $3.58 Difference: $0.62
If LNK meets the Ord Minnett target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $4.58, suggesting upside of 30.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.3

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

Macquarie rates LYC as Neutral (3) -

Macquarie lowers its near-term production outlook for Lynas Rare Earths as the plant in Malaysia has been afflicted by water supply challenges. Soft Neodymium-Praseodymium (NdPr) prices are also thought to present headwinds.

The broker cuts its FY23 earnings forecast by -13% and the target falls by -2% to $9.30. Clearly, restoration of water supply is considered a positive future catalyst. The Neutral rating is unchanged.

Target price is $9.30 Current Price is $8.79 Difference: $0.51
If LYC meets the Macquarie target it will return approximately 6% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: -0.5

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

Morgans rates MME as Add (1) -

Following recent FY22 results, FY23 guidance and a $20m capital raise, Morgans lower its target for MoneyMe to $1.20 from $2.37 and retains its Add rating. As management concentrates on a return to statutory profitability, more moderate growth is expected.

The broker lowers its FY23-25 earnings (EBITDA) forecasts by around -37%-57%. 

More positively, the analyst still sees strong organic and inorganic book growth and anticipates growing market share from a new, innovative product suite.

Protection from the macro backdrop is afforded by an ability to pass on higher interest rates via variable rate products, explains Morgans.

Target price is $1.20 Current Price is $0.45 Difference: $0.75
If MME meets the Morgans target it will return approximately 167% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

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 RHC as Buy (1) -

Having reviewed Ramsay Health Care's full year result, and noted the implied meaningful downward pressure on valuation, the KKR consortium has been unable to improve proposal terms.

Citi notes the consortium stated should Ramsay Health Care consider a new proposal, it would move quickly to discuss acceptable terms.

The broker highlights meaningful increases to inflation and interest rates since the initial proposal was made in April mean potential returns for an acquirer are lowered. 

Citi expects labour cost inflation to be the biggest risk to margins for Ramsay Health Care in the medium-term, accounting for 60% of operational expenditure. 

The Buy rating is retained and the target price decreases to $73.00 from $85.00. 

Target price is $73.00 Current Price is $62.94 Difference: $10.06
If RHC meets the Citi target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $73.73, suggesting upside of 17.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.5

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

Morgan Stanley rates RHC as Underweight (5) -

The KKR consortium has reportedly called off its bid for Ramsay Health Care, with its alternative bid made in August considered inferior by the Ramsey board, although Morgan Stanley notes neither company has commented. 

The broker notes its earnings per share forecasts declined -36%, -25% and -16% through to FY24 since KKR's initial bid in April as covid impacts linger, and expects challenges to remain. Notably, the broker expects some permanency to covid-driven operating cost elevation.

The Underweight rating and target price of $64.40 are retained. Industry view: In-Line.

Target price is $64.40 Current Price is $62.94 Difference: $1.46
If RHC meets the Morgan Stanley target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $73.73, suggesting upside of 17.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.5

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

Morgans rates RHC as Add (1) -

Morgans believes the sell-off looks overdone for shares of Ramsay Health Care as a deal may not be completely off the table with the KKR-led consortium.

The consortium indicated it would not improve takeover deal terms and noted recent FY22 results exert downward valuation pressure.

The broker makes no changes to forecast earnings though withdraws its takeout premium and lowers its target price to $72.26 from $80.00. The Add rating is unchanged.

The consortium is willing to negotiate further on an alternate deal should the Ramsay board be “willing to reset valuation expectations”.

Target price is $72.26 Current Price is $62.94 Difference: $9.32
If RHC meets the Morgans target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $73.73, suggesting upside of 17.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.5

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

Ord Minnett rates RHC as Accumulate (2) -

Ord Minnett had gone quiet on Ramsay Health Care -research restriction- but has now returned as the KKR consortium has effectively withdrawn its take-over intention (though not everybody believes this is the case).

Updating its forecasts, the broker is now taking the view margin recovery for the private hospital operator will be more gradual than earlier assumed.

Forecasts have been reduced by -40% and -30% for FY213 and FY24 respectively, also because of higher costs and balance sheet leverage in an environment of rising interest rates.

Target is now $71 (we think it was $75 prior to the research restriction). Accumulate.

Target price is $71.00 Current Price is $62.94 Difference: $8.06
If RHC meets the Ord Minnett target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $73.73, suggesting upside of 17.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.5

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

Macquarie rates S32 as Outperform (1) -

The Macquarie Commodities Strategy team lowers its 4Q 2022 metallurgical coal price forecasts by -10% (reflecting a rapid fall in ex-China Steel demand). The 2023 and long-term forecasts rise by 14-41% as a stronger thermal coal market should lend support.

Coronado Global Resources is the broker's preferred pure coal exposure due to leverage to the met coal price.

For South32, the analyst raises EPS forecasts by 2% for FY23 and by 5%-23% for FY24 onward, and the target rises to $5.00 from $4.70. Outperform.

Target price is $5.00 Current Price is $4.31 Difference: $0.69
If S32 meets the Macquarie target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $4.91, suggesting upside of 13.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

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 SGR as Outperform (1) -

Macquarie was not surprised by the findings of Adam Bell (senior counsel) that Star Entertainment is unsuitable to hold a NSW casino licence, though a clear pathway on how to achieve that suitability would have been useful.

The broker awaits the suitability pathway from the newly established NSW Independent Casino Commission (NICC), and until that time uncertainty will likely prevail. 

The Outperform rating and $3.50 target are unchanged.

Target price is $3.50 Current Price is $2.78 Difference: $0.72
If SGR meets the Macquarie target it will return approximately 26% (excluding dividends, fees and charges).

Current consensus price target is $3.41, suggesting upside of 26.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.6

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

Morgan Stanley rates TPW as Overweight (1) -

Morgan Stanley has identified Temple & Webster as a key pick from the reporting season. Having delivered an earnings margin of 3.8%, the retailer will continue to focus on profitability in the coming year and lifted its margins target to between 3-5%.

The broker notes Temple & Webster's share price has declined -45% year-to-date, likely driven by slowing sales momentum as a post-covid normalisation continues.

Despite this, Morgan Stanley finds margin guidance a positive, and notes the company is six times more exposed to the online market. 

The Overweight rating and target price of $7.00 are retained. Industry view: In-Line.

Target price is $7.00 Current Price is $6.01 Difference: $0.99
If TPW meets the Morgan Stanley target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $6.09, suggesting upside of 5.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.3

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

Macquarie rates VEA as Outperform (1) -

Macquarie raises its 2022 and 2023 EPS forecasts for Viva Energy by 9% on higher refining margins and a weaker Australian dollar.

The Outperform rating and $3.50 target are left unchanged.

Target price is $3.50 Current Price is $2.79 Difference: $0.71
If VEA meets the Macquarie target it will return approximately 25% (excluding dividends, fees and charges).

Current consensus price target is $3.24, suggesting upside of 18.7% (ex-dividends)

The company's fiscal year ends in December.

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 WHC as Outperform (1) -

The Macquarie Commodities Strategy team lowers its 4Q 2022 metallurgical coal price forecasts by -10% (reflecting a rapid fall in ex-China Steel demand). The 2023 and long-term forecasts rise by 14-41% as a stronger thermal coal market should lend support.

Coronado Global Resources is the broker's preferred pure coal exposure due to leverage to the met coal price.

For Whitehaven Coal, the analyst raises EPS forecasts for FY23-25 by 5%, 39% and 90%%, respectively, and the target rises to $10.00 from $9.20. Outperform.

Target price is $10.00 Current Price is $8.46 Difference: $1.54
If WHC meets the Macquarie target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $9.11, suggesting upside of 6.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.8

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

Citi rates XRO as Buy (1) -

Citi notes a focus on Xero's Future of Xero program could be a key driver of elevated research and development costs, with the program aimed at re-writing the company's code base and architecture, but expects the program could deliver leverage on completion. 

Once complete, Citi sees possibility that the Future of Xero program can speed up product development, particularly in relation to localisation. 

The Buy rating and target price of $106.80 are retained.

Target price is $106.80 Current Price is $90.92 Difference: $15.88
If XRO meets the Citi target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $97.01, suggesting upside of 12.2% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY23:

Forecast for FY24:

This company reports in NZD. 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