Australian Broker Call

Credit Suisse rates AGL as Outperform (1) -

Credit Suisse increases its FY24 and FY25 earnings forecasts for AGL Energy on higher modeled electricity and large-scale generate certificate (LGC) prices, offset by a lower capacity assumption for Loy Yang A.

The broker's target increases to $9.60 from $8.20. Outperform.

After conducting a scenario analysis, Credit Suisse estimates AGL would be less impacted by government-imposed price caps than Origin Energy ((ORG)). This is due to less net output exposed to high price NSW/SA after Aluminium smelter contracts and the Liddell closure.

Target price is $9.60 Current Price is $8.05 Difference: $1.55
If AGL meets the Credit Suisse target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $8.81, suggesting upside of 8.1% (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

Ord Minnett rates ASX as Hold (3) -

Based on commentary made by the Parliamentary Joint Committee on Corporations and Financial Services this week, Ord Minnett notes there appears significant regulatory disquiet about how the committee was updated on ASX's CHESS progress. 

Regulators want more investment in CHESS to ensure it is viable until a new system can be implemented, which, as noted by Ord Minnett, will require additional capital expenditure.

The Australian Securities and Investments Commission (ASIC) appears to be seeking additional regulatory powers, with full impact as yet unknown. ASIC Chairman Joe Longo noted his confidence in ASX's ability to handle technology projects was "significantly shaken". 

The Hold rating and target price of $73.00 are retained.

Target price is $73.00 Current Price is $68.25 Difference: $4.75
If ASX meets the Ord Minnett target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $75.11, suggesting upside of 10.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.0

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

Morgans rates BHP as Downgrade to Hold from Add (3) -

Despite stable fundamentals in the iron ore market, Morgans sees reduced value upside for the major Australian miners as the market appears to have prematurely priced in a China growth recovery.

Market sentiment towards China has been rising over the last month on signals for an easing in covid restrictions and stimulus measures for the property market, explains the analyst.

The broker also increases its risk free rate to 3.6% from 3.0% for the iron ore miners under its coverage.

As a result of these changes, Morgans rating for BHP Group is downgraded to Hold from Add and its target falls to $44.80 from $47.00.

Target price is $44.80 Current Price is $46.60 Difference: minus $1.8 (current price is over target).
If BHP meets the Morgans target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $41.58, suggesting downside of -10.4% (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: 0.2

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

Morgan Stanley rates BSL as Overweight (1) -

While lowering its FY23 earnings forecast for BlueScope Steel due to lower spot steel spreads in the US and Australia in the December quarter, Morgan Stanley feels this may be the last downgrade, as spreads have improved in the last month.

The analyst feels the market will focus on the company's inherent value, once spreads gain some positive momentum. 

The Overweight rating and $24 target are unchanged. Industry view: In-Line.

Target price is $24.00 Current Price is $18.31 Difference: $5.69
If BSL meets the Morgan Stanley target it will return approximately 31% (excluding dividends, fees and charges).

Current consensus price target is $19.93, suggesting upside of 10.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.7

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

Macquarie rates CSL as Outperform (1) -

Macquarie reports that US outpatient hospitalisations and visits for the flu are sharply outpacing previous years while vaccination rates are stable, and the broker sees a positive read through for FY23 Seqirus forecasts.

Macquarie also expects that a recovery from CSL Behring will drive an uplift in earnings in FY24, while FY23 earnings should find support from the recent approval of Hemgenix, Vifor earnings and possible returns from garadacimab.

Outperform rating and $343 target price retained.

Target price is $343.00 Current Price is $299.19 Difference: $43.81
If CSL meets the Macquarie target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $327.03, suggesting upside of 9.9% (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

Morgan Stanley rates CSL as Overweight (1) -

Latest industry data show a 6.6% year-on-year increase in collection centres for CSL and Morgan Stanley notes signs of accelerating plasma collection volumes.

The Overweight rating and $327 target are retained. Industry view: In-Line.

Target price is $327.00 Current Price is $299.19 Difference: $27.81
If CSL meets the Morgan Stanley target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $327.03, suggesting upside of 9.9% (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

Morgans rates FMG as Reduce (5) -

Despite stable fundamentals in the iron ore market, Morgans sees reduced value upside for the major Australian miners as the market appears to have prematurely priced in a China growth recovery.

Market sentiment towards China has been rising over the last month on signals for an easing in covid restrictions and stimulus measures for the property market, explains the analyst.

The broker also increases its risk free rate to 3.6% from 3.0% for the iron ore miners under its coverage.

As a result of these changes, Morgans' target for Fortescue Metals falls to $14.50 from $14.70, while the Reduce rating is maintained.

Target price is $14.50 Current Price is $21.17 Difference: minus $6.67 (current price is over target).
If FMG meets the Morgans target it will return approximately minus 32% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $15.21, suggesting downside of -26.7% (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: -0.7

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

Morgans rates GEN as Speculative Buy (1) -

Despite stable fundamentals in the iron ore market, Morgans sees reduced value upside for the major Australian miners as the market appears to have prematurely priced in a China growth recovery.

Market sentiment towards China has been rising over the last month on signals for an easing in covid restrictions and stimulus measures for the property market, explains the analyst.

The broker also increases its risk free rate to 3.6% from 3.0% for the iron ore miners under its coverage.

The Speculative Buy rating and 52c target for explorer/developer Genmin is unaffected by these changes.

Target price is $0.52 Current Price is $0.23 Difference: $0.295
If GEN meets the Morgans target it will return approximately 131% (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

Macquarie rates LM8 as Outperform (1) -

Lunnon Metals has published a Mineral Resource update for Baker, outlining a 95% increase in the nickel resource.

Mine planning is scheduled to star in the March quarter and the company expects to publish its Final Investment decision in 2023.

EPS forecasts rise 7% in FY24; 9% in FY25; and 6% in FY26.

Outperform rating retained. Target price rises to $1.30 from $1.20.

Target price is $1.30 Current Price is $0.95 Difference: $0.35
If LM8 meets the Macquarie target it will return approximately 37% (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 NIC as Neutral (3) -

Nickel Industries has eight rotary kiln electric furnace (RKEF) lines on the Indonesian Morowali Industrial Park (IMIP) and Citi recently visited the Hengjaya mine.

The mine is expected to to ramp up to 9Mtpa, with 6Mtpa of limonite (HPAL feed) and saprolite (RKEF feed), explains the analyst.

Given the scale of the IMIP and competitive costs, the broker finds it hard to be bullish long-term on nickel.

Citi sees the September quarter as representing a margin low and maintains its Neutral rating and raises its target to $1.10 from 90c.

Target price is $1.10 Current Price is $1.01 Difference: $0.09
If NIC meets the Citi target it will return approximately 9% (excluding dividends, fees and charges).

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: 0.3

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

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

Consistent with the indicative bid price from Brookfield/EIG, Credit Suisse raises its target price for Origin Energy to $9.00 from $6.20 and upgrades is rating to Outperform from Neutral. It's felt the bid will ultimately be successful.

The broker increases its FY23 and FY24 earnings (EBITDA) forecasts for both Energy Markets and Integrated Gas, which factors in the massive $350-550m guidance range (on October 31) for a LNG trading gain.

After conducting a scenario analysis, Credit Suisse estimates AGL Energy ((AGL)) would be less impacted by government imposed price caps than Origin Energy ((ORG)) 

This is because AGL has less net output exposed to high price NSW/SA after Aluminium smelter contracts and the Liddell closure.

Target price is $9.00 Current Price is $7.76 Difference: $1.24
If ORG meets the Credit Suisse target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $8.05, suggesting upside of 2.4% (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

UBS rates PXA as Buy (1) -

Pexa Group's investor day advised that the company hopes to meet an estimated land information total addressable market of $1.1bn by 2027 - double the current market size, and including a forecast $50m in revenues from its Insights business by 2025.

But UBS awaits progress on the company's mergers and acquisition execution and an update on development expenditure.

At the moment, the broker says the company is working through peak-cycle competition and volumes appear to be sliding, although UBS sees the picture clearing in FY24.

Target price falls to $19 from $20. Buy rating retained.

Target price is $19.00 Current Price is $13.75 Difference: $5.25
If PXA meets the UBS target it will return approximately 38% (excluding dividends, fees and charges).

Current consensus price target is $17.75, suggesting upside of 29.5% (ex-dividends)

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

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

Morgans believes there is an unwarranted discount being applied to Qantas Airways shares due to investor caution on the macroeconomic backdrop. It's felt the market may also be concerned that the 1H of FY23 represents peak operating conditions.

The broker initiates coverage with an Add rating in the belief pent-up demand to travel will support earnings growth over FY24 and FY25. It's anticipated additional capacity will naturally drive revenue higher and fuel costs should decline in coming years.

The analyst points out shares are trading on significantly discounted multiples compared to pre-covid despite structurally higher earnings, a stronger balance sheet and a higher-returning International business. An $8.50 target is set.

Target price is $8.50 Current Price is $6.27 Difference: $2.23
If QAN meets the Morgans target it will return approximately 36% (excluding dividends, fees and charges).

Current consensus price target is $7.70, suggesting upside of 26.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.9

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

Morgans rates RIO as Downgrade to Hold from Add (3) -

Despite stable fundamentals in the iron ore market, Morgans sees reduced value upside for the major Australian miners as the market appears to have prematurely priced in a China growth recovery.

Market sentiment towards China has been rising over the last month on signals for an easing in covid restrictions and stimulus measures for the property market, explains the analyst.

The broker also increases its risk free rate to 3.6% from 3.0% for the iron ore miners under its coverage.

As a result of these changes, Morgans rating for Rio Tinto is downgraded to Hold from Add and the target falls to $107 from $108.

Target price is $107.00 Current Price is $115.50 Difference: minus $8.5 (current price is over target).
If RIO meets the Morgans target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $104.29, suggesting downside of -8.7% (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: 0.3

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

Macquarie rates SKC as Outperform (1) -

Macquarie expects SkyCity Entertainment's FY23 earnings will outpace pre-covid level in FY24, including the SkyCity Auckland carpark concession, which the broker expects will cost about NZ$185m.

Outperform rating retained, the broker considering the company to fairly cheap (trading at a 20% discount to its long-term earnings (EBITDA), and its valuation attractive.

Target price falls to NZ$3.10 from NZ$3.30.

Current Price is $2.52. Target price not assessed.

The company's fiscal year ends in June.

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: 1.0

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

Macquarie rates STO as Outperform (1) -

Santos will increase its on-market buyback by another US$350m, starting now.

Further on the capital-management front, the company has raised its payout ratio to a minimum of 40% of free-cash flow, which it says will rise to 50% when and if the Barossa/Alaska mines come on-stream in 2026.

EPS forecasts rise 1% in 2022; ease -1% in 2023; amd rose 4% in 2024 to reflect the new capital management policy.

Outperform rating retained. Target price rises to $10 from $9.90.

Target price is $10.00 Current Price is $7.17 Difference: $2.83
If STO meets the Macquarie target it will return approximately 39% (excluding dividends, fees and charges).

Current consensus price target is $9.21, suggesting upside of 29.3% (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: 1.0

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

UBS rates STO as Buy (1) -

Santos has revised its capital management policy, announcing a $350m buyback, effective immediately and a simpler framework that UBS says should increase shareholder returns by more than 17%.

As the government prepares to implement a gas cap, UBS estimates only 5% of 2023 east-coast gas-supply production will be affected. 

Santos is UBS's preferred Australian energy exposure following the capital-management spruce-up and the broker's expectation of FEED decision on the less capital intensive Papua LNG fairly soon.

EPS forecasts rise 2% and 3% in FY23 and FY24.

Buy rating and $9 target price retained.

Target price is $9.00 Current Price is $7.17 Difference: $1.83
If STO meets the UBS target it will return approximately 26% (excluding dividends, fees and charges).

Current consensus price target is $9.21, suggesting upside of 29.3% (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: 1.0

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

Credit Suisse rates WDS as Outperform (1) -

Credit Suisse raises its target for Woodside Energy to $40.60 from $39.55 on perceived upside for the Gulf of Mexico operations, LNG price upside, partly offset by lower-than-expected 2023 production guidance.

The broker feels the company set a conservative five-year outlook at its investor day and may reverse its reputation to now become an under-promiser and over-deliverer.

The Outperform rating is maintained.

Target price is $40.60 Current Price is $36.00 Difference: $4.6
If WDS meets the Credit Suisse target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $37.69, suggesting upside of 9.4% (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: 0.4

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

Ord Minnett rates WHC as Buy (1) -

A recent visit to Whitehaven Coal's primary assets has left Ord Minnett more constructive on the extension project for the company's Narrabri asset. 

While the broker expects recent wet weather to continue to impact logistics, the broker has reassessed its model and increased net present value 9%. The broker's outlook is underpinned by its assumption that thermal coal prices stay higher for longer. 

The Buy rating is retained and the target price increases to $11.70 from $11.10.

Target price is $11.70 Current Price is $9.70 Difference: $2
If WHC meets the Ord Minnett target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $11.02, suggesting upside of 15.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.9

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