Australian Broker Call

Ord Minnett rates AOF as Hold (3) -

Ord Minnett likes the healthy 10% premium to June book value achieved for the sale of 2 Eden park drive in Macquarie Park, one of Australian Unity Office Fund's better assets.

The analyst feels this sale, in conjunction with last month's sale of 30 Pirrie Steet Adelaide, improves upside risk for the REIT, given the market is now implying a greater than -30% discount for the remaining portfolio.

The Hold rating and $1.78 target are unchanged.

Target price is $1.78 Current Price is $1.48 Difference: $0.3
If AOF meets the Ord Minnett target it will return approximately 20% (excluding dividends, fees and charges).

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

Credit Suisse rates APM as Outperform (1) -

Credit Suisse is anticipating APM Human Services International's earnings will be significantly second half weighted, off the back of a disrupted first half amid the ramp up of Workforce Australia.

The broker forecasts net profits of $80m in the first half and $105m in the second half, with the second half also benefiting not only from the Workforce Australia ramp up, but also a full six month contribution from the Equus acquisition and the DES reshuffle. 

The Outperform rating is retained and the target price decreases to $4.00 from $4.30.

Target price is $4.00 Current Price is $2.58 Difference: $1.42
If APM meets the Credit Suisse target it will return approximately 55% (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

UBS rates APM as Buy (1) -

The UK Restart program looks likely to assist less participants, but at a higher cost per candidate to the government, in what UBS considers a minor negative to its outlook for APM Human Services International's FY23 and FY23.

The broker explains lower volumes have been driven by lower unemployment than originally forecast. 

Despite this, the broker sees a pipeline of positive catalysts over the remainder of the fiscal year. UBS expects APM Human Services International can do better than 18% market share in the DES reshuffle given its market leading position. 

The Buy rating is retained and the target price decreases to $3.75 from $3.95. 

Target price is $3.75 Current Price is $2.58 Difference: $1.17
If APM meets the UBS target it will return approximately 45% (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

Ord Minnett rates AUB as Buy (1) -

While overall FY23 guidance is unchanged, AUB Group provided more detail on the 1H:2H split for earnings.

The more detailed guidance is broadly in line with Ord Minnett's expectations, apart from a new expectation for greater seasonality at the Tysers business.

The broker retains its Buy rating and $26 target price.

Target price is $26.00 Current Price is $22.52 Difference: $3.48
If AUB meets the Ord Minnett target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $25.24, suggesting upside of 11.3% (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

Macquarie rates BGL as Outperform (1) -

Bellevue Gold has completed a $60m institutional placement and is raising a further $10m via a share purchase plan, with funds partially intended to accelerate underground development ahead of first gold which Macquarie expects will de-risk the project. 

An additional $10m is allocated to fast tracking the Tribune mining front, while remaining funds will be used for exploration and drilling. The capital raising drives an increase in corporate cost estimates to $12m per annnum, from a previous $8m, while earnings are adjusted -4% and 5% for FY24 and FY25 respectively. 

The Outperform rating is retained and the target price increases to $1.40 from $1.20.

Target price is $1.40 Current Price is $1.13 Difference: $0.27
If BGL meets the Macquarie target it will return approximately 24% (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

Morgans rates CIP as Hold (3) -

Asset revaluations at Centuria Industrial REIT as at December have resulted in cap rate expansion of 47bps, largely offset by rental growth, explains Morgans. 

Management reiterated FY23 guidance for funds from operations (FFO) of 17.6cpu and a DPS of 16cpu.

The REIT has formed a partnership to acquire a 50% interest in eight properties owned by Centuria Industrial REIT and proceeds will be used to reduce debt.

The Hold rating is unchanged, while the target eases to $3.31 from $3.40.

Target price is $3.31 Current Price is $3.20 Difference: $0.11
If CIP meets the Morgans target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $3.28, suggesting upside of 1.5% (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 COH as Underweight (5) -

According to Morgan Stanley, healthcare stocks appear expensive relative to the last time the Australian 10-year bond yield was at around 4%, in 2013.

The broker identifies stocks where the growth outlook is now better than in 2013 and, hence, price earnings multiples may have less downside.

For Cochlear, the analysts see growth now better than in FY13 and a quality business. However, an Underweight rating is retained due to a high multiple and the risk of delayed surgeries. The $190 target is unchanged. Industry View: In-line.

Target price is $190.00 Current Price is $206.58 Difference: minus $16.58 (current price is over target).
If COH 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 $215.78, suggesting upside of 3.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: -0.2

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

Morgan Stanley rates CSL as Overweight (1) -

According to Morgan Stanley, healthcare stocks appear expensive relative to the last time the Australian 10-year bond yield was at around 4%, in 2013.

The broker identifies stocks where the growth outlook is now better than in 2013 and, hence, price earnings multiples may have less downside.

For CSL, the analysts see growth now better than in FY13, as well as potential EPS upside from a plasma recovery, Vifor upside and new product launches.

The target rises to $337 from $327. Overweight. Industry view: In-Line.

Target price is $337.00 Current Price is $298.20 Difference: $38.8
If CSL meets the Morgan Stanley target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $328.70, suggesting upside of 11.2% (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 FPH as Downgrade to Equal-weight from Overweight (3) -

According to Morgan Stanley, healthcare stocks appear expensive relative to the last time the Australian 10-year bond yield was at around 4%, in 2013.

The broker identifies stocks such as CSL, where the growth outlook is now better than in 2013 and, hence, price earnings multiples may have less downside.

For Fisher & Paykel Healthcare, Morgan Stanley downgrades its rating to Equal-weight from Overweight following a 20% rally in share price over the last month after reporting 1H results. The target of NZ$22.90 is unchanged.

Current Price is $21.50. Target price not assessed.

Current consensus price target is $21.50, suggesting upside of 0.7% (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

Morgans rates HDN as Add (1) -

HomeCo Daily Needs REIT has reaffirmed FY23 guidance for funds from operations (FFO) of 8.6cpu and DPS of 8.3cpu.

Morgans lowers its target to $1.52 from $1.56 after incorporating into its forecasts the acquisition of a new asset in Perth for $92.5m and the launch of the unlisted Last Mile Logistics fund. The REIT will commit -$50m in seed funding.

The broker also assumes some asset sales over FY23/24 after management flagged the potential to divest some Large Format Retail centres. Add.

Target price is $1.52 Current Price is $1.32 Difference: $0.2
If HDN meets the Morgans target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $1.37, suggesting upside of 5.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.4

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

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

According to Morgan Stanley, healthcare stocks appear expensive relative to the last time the Australian 10-year bond yield was at around 4%, in 2013.

The broker identifies stocks such as CSL, where the growth outlook is now better than in 2013 and, hence, price earnings multiples may have less downside.

For Integral Diagnostics, Morgan Stanley lowers its FY23-25 EPS forecasts by -19.3%, -10.7% and -1.8%, respectively, based on a read across from Medicare data and the trading update provided at the November 4 AGM.

The target falls to $2.86 from $3.00. Equal-weight. Industry view In-Line.

Target price is $2.86 Current Price is $2.92 Difference: minus $0.06 (current price is over target).
If IDX meets the Morgan Stanley target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.80, suggesting downside of -9.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: -0.2

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

Morgan Stanley rates MVF as Overweight (1) -

According to Morgan Stanley, healthcare stocks appear expensive relative to the last time the Australian 10-year bond yield was at around 4%, in 2013.

The broker identifies stocks such as CSL, where the growth outlook is now better than in 2013 and, hence, price earnings multiples may have less downside.

For Monash IVF, Morgan Stanley raises its FY23-25 EPS estimates by 12.7%, 14% and 13.6%, respectively, based on a read across from Medicare data and FY23 profit guidance provided at the November 11 AGM.

The target rises to $1.25 from $1.15. Overweight. Industry view In-Line.

Target price is $1.25 Current Price is $0.95 Difference: $0.305
If MVF meets the Morgan Stanley target it will return approximately 32% (excluding dividends, fees and charges).

Current consensus price target is $1.26, suggesting upside of 30.2% (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

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

According to Morgan Stanley, healthcare stocks appear expensive relative to the last time the Australian 10-year bond yield was at around 4%, in 2013.

The broker identifies stocks where the growth outlook is now better than in 2013 and, hence, price earnings multiples may have less downside.

For nib Holdings, Morgan Stanley lowers its price target to $7.15 from $7.50 mostly due to the increased share count associated with acquisition of Maple Plan. Equal-weight. Industry View: In-Line.

Target price is $7.15 Current Price is $7.17 Difference: minus $0.02 (current price is over target).
If NHF meets the Morgan Stanley target it will return approximately minus 0% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $7.58, suggesting upside of 4.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.2

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

Macquarie rates PNI as Outperform (1) -

Pinnacle Investment Management has warned that its net share of first half performance fees could be less than $1m, a decline from the $6.4m in the previous year and a sizeable miss to Macquarie's expected $4.6m. 

According to the broker fees were impacted by a tougher exit point, and Macquarie has applied a discount to historical performance fee contributions through to FY25 as a result but with minimal impact on earnings forecasts. 

The Outperform rating is retained and the target price decreases to $11.20 from $11.31.

Target price is $11.20 Current Price is $8.47 Difference: $2.73
If PNI meets the Macquarie target it will return approximately 32% (excluding dividends, fees and charges).

Current consensus price target is $10.41, suggesting upside of 19.3% (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 PNI as Add (1) -

Pinnacle Investment Management has guided to performance fees of less than $1m. While management noted several affiliates have outperformed relative benchmarks during the 1H, they remain below high water marks.

The investment management firm expects a 2H skew for performance fees. However, Morgans decides to lower its FY23-25 EPS forecasts by -10%, -6% and -4.3%, respectively, on earnings revisions and an increase in the assumed risk-free rate.

The broker remains positive on the longer-term prospects for Pinnacle Investment Management. Add. Target falls to $10.95 from $12.40.

Target price is $10.95 Current Price is $8.47 Difference: $2.48
If PNI meets the Morgans target it will return approximately 29% (excluding dividends, fees and charges).

Current consensus price target is $10.41, suggesting upside of 19.3% (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) -

According to Morgan Stanley, healthcare stocks appear expensive relative to the last time the Australian 10-year bond yield was at around 4%, in 2013.

The broker identifies stocks where the growth outlook is now better than in 2013 and, hence, price earnings multiples may have less downside.

For Ramsay Health Care, the analysts see growth now better than in FY13, though current growth is now inflated by a depressed EPS profile in the pandemic, and will fall short of reaching 2019 levels. 

The analysts retain an Underweight rating and the target price is lowered to $62.10 from $64.40. It's felt the base business is recovering. Industry view: In-Line.

Target price is $62.10 Current Price is $65.61 Difference: minus $3.51 (current price is over target).
If RHC meets the Morgan Stanley target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $66.78, suggesting upside of 1.7% (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 RIO as Neutral (3) -

Rio Tinto has secured approval from Turquoise Hill Resources' minority shareholders in support of its CAD43.00 per share takeover bid. Macquarie highlights completion of the offer is expected before the end of 2022, subject to satisfaction of closing conditions. 

Macquarie has incorporated Turquoise Hill's earnings into estimates, but with contributions from the Oyu Tolgoi asset already included impacts are minimal. 

The Neutral rating and target price of $115.00 are retained. 

Target price is $115.00 Current Price is $116.35 Difference: minus $1.35 (current price is over target).
If RIO meets the Macquarie target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $107.86, suggesting downside of -6.4% (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: 0.3

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

Credit Suisse rates SBM as Neutral (3) -

St. Barbara and Genesis Minerals have agreed to a premium merger that will eventuate in the creation of Hoover House. Credit Suisse highlights the new entity will be run by Genesis Minerals' management team, and be focused on the Leonora gold project. 

St. Barbara's non-Leonora assets, which includes its Simberi and Atlantic projects, will be demerged and formed into Phoenician Metals, to be run by St. Barbara's management.

Credit Suisse has refrained from changing forecasts until these changes are effective. The Outperform rating is retained and the target price increases to $1.25 from $0.55.

Target price is $1.25 Current Price is $0.65 Difference: $0.6
If SBM meets the Credit Suisse target it will return approximately 92% (excluding dividends, fees and charges).

Current consensus price target is $0.87, suggesting upside of 33.5% (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

Morgan Stanley rates SHL as Overweight (1) -

According to Morgan Stanley, healthcare stocks appear expensive relative to the last time the Australian 10-year bond yield was at around 4%, in 2013.

The broker identifies stocks such as CSL where the growth outlook is now better than in 2013 and, hence, price earnings multiples may have less downside.

For Sonic Healthcare, the analysts consider the multiple is undemanding and retain an Overweight rating. An improving base business, and balance sheet options are also noted.

The target falls to $35.05/share from $38.60 due to the broker's negative earnings revisions following a read across from the peer group, Medicare data and covid PCR test data. Industry view: In-Line.

Target price is $35.05 Current Price is $30.16 Difference: $4.89
If SHL meets the Morgan Stanley target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $34.60, suggesting upside of 12.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.2

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

Ord Minnett rates TYR as Buy (1) -

After a period of research restriction, Ord Minnett resumes coverage of Tyro Payments with a Buy rating and sets a $1.60 target price.

Management has ceased takeover discussions with Westpac ((WBC)) and Potentia.

While the broker suggests some caution, given the company's exposure to discretionary expenditure in the current macroeconomic backdrop, underlying momentum heading into 2023 is highlighted.

In reaction to the current macro backdrop, the analyst points out Tyro is adapting by shifting to a more profitable growth model.

Target price is $1.60 Current Price is $1.20 Difference: $0.4
If TYR meets the Ord Minnett target it will return approximately 33% (excluding dividends, fees and charges).

Current consensus price target is $1.68, suggesting upside of 15.1% (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

Morgan Stanley rates WBC as Overweight (1) -

After undertaking due diligence on Tyro Payments ((TYR)), Westpac "has decided that submitting an offer is not in the best interests of Westpac shareholders at this time". Morgan Stanley passes little comment on the non-acquisition.

The broker remains Overweight-rated, seeing upside risk to 1H margins and good progress on the Cost Re-set Plan. Signs of improving franchise performance are also noted, along with low investor expectations and supportive trading multiples.

The $24 target is unchanged. Industry view: In line.

Target price is $24.00 Current Price is $23.36 Difference: $0.64
If WBC meets the Morgan Stanley target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $25.87, suggesting upside of 9.3% (ex-dividends)

The company's fiscal year ends in September.

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

UBS rates ZIP as Sell (5) -

Zip Co has announced a liability management exercise on its $400m zero-coupon senior convertible notes due 2028, inviting existing noteholders to convert their notes into Zip ordinary shares.

While prima facie this appears favourable to ordinary shareholders, UBS is concerned it could infer that convertible note holders do not believe they can recover their principal in full. However this also buys Zip time to demonstrate it can achieve free cash flow profitability in FY24.

If Zip achieves this, UBS expects convertible note holders are likely to demand full repayment of the remaining principal and interest. This would be more dilutive for ordinary shareholders than the current deal, but less dilutionary than if there was no deal.

Sell and 45c target retained.

Target price is $0.45 Current Price is $0.72 Difference: minus $0.265 (current price is over target).
If ZIP meets the UBS target it will return approximately minus 37% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $0.67, suggesting upside of 5.0% (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