Australian Broker Call

Morgans rates AIM as Add (1) -

Following Ai-Media Technologies' AGM, Morgans sees a large opportunity to expand the iCap business (the recently acquired EEG) globally.

After allowing for new markets and a changing business mix, the analyst lowers short-term forecasts though raises longer-term estimates. The Add rating and $1.46 target price are maintained.

Target price is $1.46 Current Price is $0.98 Difference: $0.48
If AIM meets the Morgans target it will return approximately 49% (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

Morgans rates ANP as Speculative Buy (1) -

Now that Antisense Therapeutics has raised $20m via an institutional placement at $0.24 (along with a 1 for 2 free-attaching options), Morgans raises its target price to $0.58 from $0.45.

The capital allows completion of the Duchenne muscular dystrophy (DMD) program in the EU up to a major valuation inflection point, explains the analyst. A strong pipeline of news catalysts is expected. The Speculative Buy rating is retained.

Target price is $0.58 Current Price is $0.21 Difference: $0.37
If ANP meets the Morgans target it will return approximately 176% (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 AWC as Neutral (3) -

Citi strategists expect aluminium winners will emerge from those companies with access to hydro-powered electricity or those that can access competitively-priced renewables-based power. The broker remains bullish on aluminum, forecasting a deep 2022 market deficit.

The analyst feels Alumina's robust free cash flow generation will likely result in higher cash returns for shareholders. Citi retains its Neutral rating and $2.20 target price for Alumina Ltd.

Target price is $2.20 Current Price is $1.90 Difference: $0.3
If AWC meets the Citi target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $2.11, suggesting upside of 11.6% (ex-dividends)

The company's fiscal year ends in December.

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

Morgan Stanley rates CBA as Underweight (5) -

In advance of Commonwealth Bank's September quarter trading update on Wednesday November 17, Morgan Stanley expects a fall in cash profit by around -8% to $2.28bn. This is mainly from the non-recurrence of the large impairment benefit in the 2H21. 

The analyst forecasts around 2% revenue growth, including net interest income growth of circa 2.5%, with other income remaining flat. It's estimated expenses will rise -2% and there will be pre-provision profit growth of about 2%.

The broker expects a heightened focus upon margins, given 2H trends from the other major banks. The Underweight rating and $90 target price are retained. Industry view: In-Line.

Target price is $90.00 Current Price is $108.12 Difference: minus $18.12 (current price is over target).
If CBA meets the Morgan Stanley target it will return approximately minus 17% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $90.50, suggesting downside of -16.2% (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 ECX as Outperform (1) -

For a read through for Eclipx Group, Macquarie reviews the 3Q performance of key competitor Element (Custom Fleet) and notes ongoing microchip shortages causing OEM production delays. However, Element expects normalisation of production by mid-2023.

After that, management of Element expect a multi-quarter surge in revenue should occur to clear the excess order backlog, points out the broker, The Outperform rating and $2.82 target price for Eclipx Group are retained.

Target price is $2.82 Current Price is $2.50 Difference: $0.32
If ECX meets the Macquarie target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $2.81, suggesting upside of 14.1% (ex-dividends)

The company's fiscal year ends in September.

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

Morgans rates HCW as Initiation of coverage with Add (1) -

Morgans initiates coverage on HealthCo Healthcare & Wellness REIT with an Add rating and $2.48 target. Offering leverage to the fast growing themes of health, wellness, technology and an ageing population, the REIT is expected to grow via development and acquisition.

The aim is to provide stable and growing distributions, and capital growth via exposure to hospitals, aged care, childcare, government, life sciences and research, as well as Primary Care & Wellness properties.

The REIT is externally managed by Home Consortium ((HMC)) which also has a 20% holding. Based upon guidance at the recent IPO, an annualised distribution yield of circa 4.3% is on offer, points out the analyst. 

Target price is $2.48 Current Price is $2.14 Difference: $0.34
If HCW meets the Morgans target it will return approximately 16% (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

Credit Suisse rates HT1 as Outperform (1) -

Here There & Everywhere is buying regional radio broadcaster Grant Broadcasters for $307.5m ($283m in cash and $69m in scrip) at $1.93 a share. It is the company's first foray into the regional market.

Credit Suisse views the multiple as high for a private company and says any accretion would arise from the realisation of the $20m revenue targeted as part of the transaction, which should be achievable.

The broker appreciates the stability of the acquisition and adjusts earnings estimates to include the purchase from FY22 onwards; and to reflect the company's trading update which revealed slower growth.

FY22 EPS estimates rise 30% in FY22. Target price is steady at $2.50. Outperform rating retained.

Target price is $2.50 Current Price is $1.92 Difference: $0.58
If HT1 meets the Credit Suisse target it will return approximately 30% (excluding dividends, fees and charges).

Current consensus price target is $2.12, suggesting upside of 18.9% (ex-dividends)

The company's fiscal year ends in December.

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 LNK as Accumulate (2) -

Link Administration has an existing $3/share non-binding offer from Carlyle Group for the ex-PEXA businesses, which includes the Banking & Credit Management (BCM) division.

Now the company has received a $86.5m non-binding indicative proposal from Pepper European Servicing to acquire the BCM division, which Ord Minnett estimates would add 16.5cps if the sale happened immediately.

The broker believes additional offers may emerge. The Accumulate rating and $5 target price are maintained.

Target price is $5.00 Current Price is $4.77 Difference: $0.23
If LNK meets the Ord Minnett target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $5.48, suggesting upside of 14.8% (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 MAF as Buy (1) -

After a hiatus and with insights from a new analyst, Ord Minnett renews coverage of MA financial Group with a $10.50 target,up from $5.53, and a Buy rating. The group has a specialist asset management business and is thought a re-opening play with its hospitality assets.

Specialist asset management comprised 71% of 1H21 earnings (EBITDA) and offers long-term expansion opportunities, according to the analyst. There's also considered long term optionality in lending and a steady contribution from Corporate Advisory.

Target price is $10.50 Current Price is $8.76 Difference: $1.74
If MAF meets the Ord Minnett target it will return approximately 20% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

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 MQG as Buy (1) -

While a little wary of the strong upward share price move by Macquarie Group, Citi confesses such wariness has prevailed since the $70 lows of early 2020. It's thought, green credentials aside, the rise is largely due to revenue upgrades in the gas and power-heavy CGM division.

The analyst expects conventional commodity volatility is set to drive ongoing favourable revenue conditions. Tight energy markets and low inventories are already driving energy prices higher, which augers well for the gas marketing business.

The Buy rating and $226 target price are retained.

Target price is $226.00 Current Price is $201.26 Difference: $24.74
If MQG meets the Citi target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $214.60, suggesting upside of 5.9% (ex-dividends)

The company's fiscal year ends in March.

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

Citi rates NEA as Neutral (3) -

Citi analysts found Nearmap's guidance regarding the annualised contract value (ACV) disappointing in light of the company's increased investments made.

They do believe the company is being overly conservative and Nearmap will achieve the upper end of the guidance range. Price target drops to $2.20 from $2.30 on reduced forecasts.

The Neutral/High Risk rating is retained with the added forecast this share price is currently absent a clear catalyst and thus likely to remain range-bound until the interim result release in February.

Target price is $2.20 Current Price is $1.83 Difference: $0.37
If NEA meets the Citi target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $2.53, suggesting upside of 40.0% (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

Morgan Stanley rates NWS as Overweight (1) -

In the wake of News Corp's Sep-Q results, Morgan Stanley has increased conviction in its investment thesis and particularly likes the accelerating revenue and earnings (EBITDA) growth. This emanates from increasing digitisation within the portfolio of businesses, explains the analyst.

While the share price has traditionally traded at a discount to the broker's sum of the parts valuation, the US$1bn buyback and further asset sales are expected to narrow the gap. It's thought exiting the capital-heavy Foxtel business would be of benefit for this and increased management focus. 

Morgan Stanley increases its target price to $33 from $32 and retains its Overweight rating. Industry view: Attractive.

Target price is $33.00 Current Price is $32.65 Difference: $0.35
If NWS meets the Morgan Stanley target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $40.75, suggesting upside of 24.6% (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

UBS rates ORG as Buy (1) -

Given supply tightness, UBS' oil pricing forecasts have increased by as much as 30% through to 2025, driving an 18-87% earnings per share increase to forecasts for Origin Energy through to FY24. 

The broker notes there is likely more upside risk to pricing than downside as the global energy transition drives higher cost capital, leading to underinvestment and a continuing tightening of supply.

UBS expects Origin Energy is well positioned to generate strong free cash flow over FY22-25 from rising prices of electricity, oil, LNG and domestic gas. 

The Buy rating is retained and the target price increases to $6.45 from $6.00. 

Target price is $6.45 Current Price is $4.95 Difference: $1.5
If ORG meets the UBS target it will return approximately 30% (excluding dividends, fees and charges).

Current consensus price target is $5.75, suggesting upside of 16.7% (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

UBS rates OSH as Buy (1) -

Given supply tightness, UBS' oil pricing forecasts have increased by as much as 30% through to 2025, driving a 6-85% earnings per share increase to forecasts for Oil Search through to FY23.

The broker notes there is likely more upside risk to pricing than downside as the global energy transition drives higher cost capital, leading to underinvestment and a continuing tightening of supply.

Additionally, the broker notes Oil Search's merger with Santos Limited ((STO)) is materially de-risked having received Independent Expert recommendation that the transaction is in Oil Search investors' best interests. 

The Buy rating is retained and the target price increases to $5.65 from $5.00.

Target price is $5.65 Current Price is $4.29 Difference: $1.36
If OSH meets the UBS target it will return approximately 32% (excluding dividends, fees and charges).

Current consensus price target is $5.04, suggesting upside of 18.3% (ex-dividends)

The company's fiscal year ends in December.

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: 0.5

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

UBS rates QBE as Buy (1) -

According to UBS, QBE Insurance Group may finally be positioned to deliver sustained earnings recovery following return on equity disappointment that has plagued the property insurance and casualty insurance sector for the last decade. 

The broker expects a combination of interest rates, Australian housing trends, industry trends and initiatives being undertaken by QBE to drive earnings, and increases its FY22 cash earnings forecast by 18%. 

The Buy rating is retained and the target price increases to $15.00 from $13.55.

Target price is $15.00 Current Price is $11.56 Difference: $3.44
If QBE meets the UBS target it will return approximately 30% (excluding dividends, fees and charges).

Current consensus price target is $14.15, suggesting upside of 21.5% (ex-dividends)

The company's fiscal year ends in December.

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: 0.8

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

Citi rates RIO as Buy (1) -

Citi strategists expect aluminium winners will emerge from those companies with access to hydro-powered electricity or those that can access competitively-priced renewables-based power. The broker remains bullish on aluminum, forecasting a deep 2022 market deficit.

The analyst feels Rio Tinto is well positioned to benefit from Chinese supply-side reforms, that result in better fundamentals for high-grade iron ore and aluminium markets. The Buy rating and $115 target price are retained.

Target price is $115.00 Current Price is $92.21 Difference: $22.79
If RIO meets the Citi target it will return approximately 25% (excluding dividends, fees and charges).

Current consensus price target is $108.43, suggesting upside of 17.9% (ex-dividends)

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

Citi rates S32 as Buy (1) -

Citi strategists expect aluminium winners will emerge from those companies with access to hydro-powered electricity or those that can access competitively-priced renewables-based power. The broker remains bullish on aluminum, forecasting a deep 2022 market deficit.

The analyst feels South32 is well positioned to benefit from Chinese supply-side reforms, which support aluminum and high-quality steel-making raw materials.The Buy rating and $4.30 target price are retained.

Target price is $4.30 Current Price is $3.55 Difference: $0.75
If S32 meets the Citi target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $4.41, suggesting upside of 26.0% (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: 0.9

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

Ord Minnett rates STO as Buy (1) -

After adjusting domestic gas price forecasts, Ord Minnett lowers its target price for Santos to $7.90 from $8.00. More importantly, the broker sees increased risk to the merger with Oil Search ((OSH)), from media reports that one shareholder will not vote for the union.

The shareholder vote is next month, and the analyst points out the Oil Search share price would suffer the most in the event of a veto. However, it's thought highly unusual for board-recommended transactions to fail. Ord Minnett retains is Buy rating for Santos.

Target price is $7.90 Current Price is $6.89 Difference: $1.01
If STO meets the Ord Minnett target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $8.59, suggesting upside of 25.2% (ex-dividends)

The company's fiscal year ends in December.

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: 0.7

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

UBS rates STO as Buy (1) -

Given supply tightness, UBS' oil pricing forecasts have increased by as much as 30% through to 2025, driving a 5-55% earnings per share increase to forecasts for Santos through to FY23.

The broker notes there is likely more upside risk to pricing than downside as the global energy transition drives higher cost capital, leading to underinvestment and a continuing tightening of supply.

The company's merger with Oil Search Limited ((OSH)) has received Independent Expert recommendation and is expected to be implemented in December. 

The Buy rating is retained and the target price increases to $9.60 from $8.55. 

Target price is $9.60 Current Price is $6.89 Difference: $2.71
If STO meets the UBS target it will return approximately 39% (excluding dividends, fees and charges).

Current consensus price target is $8.59, suggesting upside of 25.2% (ex-dividends)

The company's fiscal year ends in December.

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: 0.7

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

UBS rates WPL as Buy (1) -

Given supply tightness, UBS' oil pricing forecasts have increased by as much as 30% through to 2025, driving a 2-66% earnings per share increase to forecasts for Woodside Petroleum through to FY23.

The broker notes there is likely more upside risk to pricing than downside as the global energy transition drives higher cost capital, leading to underinvestment and a continuing tightening of supply.

However, given delays the broker also decreased production expectations in 2022-23 by between -3% and -6%, partially offsetting strong pricing. 

The Buy rating is retained and the target price increases to $26.90 from $24.70.

Target price is $26.90 Current Price is $22.25 Difference: $4.65
If WPL meets the UBS target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $26.24, suggesting upside of 16.7% (ex-dividends)

The company's fiscal year ends in December.

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: 0.6

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

Macquarie rates XRO as Underperform (5) -

Following Xero's 1H results, valuation remains Macquarie's key concern. The broker sees A&NZ reaching maturity and slower than forecast overseas growth weighing upon revenue.

International subscriber growth was -3% below the analyst's expectation. In the US market, the analyst sees difficulty in competing with the size of QuickBooks. The $130 target price and Underperform rating are maintained.

Target price is $130.00 Current Price is $142.26 Difference: minus $12.26 (current price is over target).
If XRO meets the Macquarie target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $134.17, suggesting downside of -8.2% (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: 0.2

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

UBS rates XRO as Sell (5) -

Xero has met expectations in the first half, with a highlight of results for UBS Australian subscriber growth of 158,000. The broker expects an acceleration into the second half and is forecasting over 30% year-on-year increase to the annualised monthly run rate. 

Costs are also expected to increase in the second half as the company reinvests in product design and development, and international sales and marketing. Looking ahead, UBS increases its revenue growth expectations to 27% in FY22. 

Despite a strong result, the broker finds the valuation too high to offer fair reward for risk to investors. The Sell rating is retained and the target price increases to $88.00 from $81.00.

Target price is $88.00 Current Price is $142.26 Difference: minus $54.26 (current price is over target).
If XRO meets the UBS target it will return approximately minus 38% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $134.17, suggesting downside of -8.2% (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: 0.2

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