Australian Broker Call
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March 09, 2020
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COMPANIES DISCUSSED IN THIS ISSUE
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The number next to the symbol represents the number of brokers covering it for this report -(if more than 1).
Last Updated: 05:00 PM
Your daily news report on the latest recommendation, valuation, forecast and opinion changes.
This report includes concise but limited reviews of research recently published by Stockbrokers, which should be considered as information concerning likely market behaviour rather than advice on the securities mentioned. Do not act on the contents of this Report without first reading the important information included at the end.
For more info about the different terms used by stockbrokers, as well as the different methodologies behind similar sounding ratings, download our guide HERE
Today's Upgrades and Downgrades
| BPT - | BEACH ENERGY | Upgrade to Outperform from Underperform | Macquarie |
| MQG - | MACQUARIE GROUP | Downgrade to Hold from Accumulate | Ord Minnett |
Overnight Price: $27.63
Citi rates APT as Buy (1) -
Citi's analysis of web traffic and app downloads from competitors highlights the strong growth across the sector.
Klarna has a first-mover advantage in the UK and is extending its lead. The broker will be watching with interest to see if Afterpay's pipeline of merchants results in an uptick in customer acquisition in the UK.
Recent customer metrics in the US suggests that, while Klarna's user base is increasing, it is not affecting Afterpay's growth
Buy rating and $42.20 target maintained.
Target price is $42.20 Current Price is $27.63 Difference: $14.57
If APT meets the Citi target it will return approximately 53% (excluding dividends, fees and charges).
Current consensus price target is $37.70, suggesting upside of 36.5% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY20:
Citi forecasts a full year FY20 dividend of 0.00 cents and EPS of minus 20.60 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is -13.8, implying annual growth of N/A. Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A. Current consensus EPS estimate suggests the PER is N/A. |
Forecast for FY21:
Citi forecasts a full year FY21 dividend of 0.00 cents and EPS of minus 11.10 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 4.4, implying annual growth of N/A. Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A. Current consensus EPS estimate suggests the PER is 628.0. |
Market Sentiment: 0.7
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $1.35
Macquarie rates BPT as Upgrade to Outperform from Underperform (1) -
Volume growth is being driven by extensive development in the Western Flank and Cooper Basin. Exploration success and a final investment decision on stage 2 at Waitsia are the main catalysts that should boost certainty, Macquarie suggests.
Given the recent slump in the share price, the broker upgrades to Outperform from Underperform.
Oil & gas price forecasts have been lowered for the near and medium term, with FY20 estimates decreasing by -2% and FY20 by -6%. The broker's target decreases by -9% to $2.10.
Target price is $2.10 Current Price is $1.35 Difference: $0.75
If BPT meets the Macquarie target it will return approximately 56% (excluding dividends, fees and charges).
Current consensus price target is $2.29, suggesting upside of 69.9% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY20:
Macquarie forecasts a full year FY20 dividend of 2.50 cents and EPS of 24.90 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 25.1, implying annual growth of -1.0%. Current consensus DPS estimate is 5.7, implying a prospective dividend yield of 4.2%. Current consensus EPS estimate suggests the PER is 5.4. |
Forecast for FY21:
Macquarie forecasts a full year FY21 dividend of 2.60 cents and EPS of 26.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 26.1, implying annual growth of 4.0%. Current consensus DPS estimate is 7.7, implying a prospective dividend yield of 5.7%. Current consensus EPS estimate suggests the PER is 5.2. |
Market Sentiment: 0.3
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
BRG BREVILLE GROUP LIMITED
Household & Personal Products
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Overnight Price: $16.51
Ord Minnett rates BRG as Resume coverage with Hold (3) -
First half underlying net profit was up 14.1% amid double-digit revenue growth in all regions and segments. Management has highlighted plans to expand into France.
Ord Minnett expects the company will continue on the same revenue trajectory in the near to medium term but considers the shares are fully priced.
The broker resumes coverage with a Hold rating and $20 target.
This stock is not covered in-house by Ord Minnett. Instead, the broker whitelabels research by JP Morgan.
Target price is $20.00 Current Price is $16.51 Difference: $3.49
If BRG meets the Ord Minnett target it will return approximately 21% (excluding dividends, fees and charges).
Current consensus price target is $22.72, suggesting upside of 37.6% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY20:
Ord Minnett forecasts a full year FY20 EPS of 57.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 57.7, implying annual growth of 11.4%. Current consensus DPS estimate is 40.3, implying a prospective dividend yield of 2.4%. Current consensus EPS estimate suggests the PER is 28.6. |
Forecast for FY21:
Ord Minnett forecasts a full year FY21 EPS of 65.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 66.5, implying annual growth of 15.3%. Current consensus DPS estimate is 45.8, implying a prospective dividend yield of 2.8%. Current consensus EPS estimate suggests the PER is 24.8. |
Market Sentiment: 0.3
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
FPH FISHER & PAYKEL HEALTHCARE CORPORATION LIMITED
Medical Equipment & Devices
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Overnight Price: $25.30
Macquarie rates FPH as Neutral (3) -
Macquarie suspects the spread of coronavirus could have a modest impact on profit expectations. The broker assesses US/European hospitals are unlikely to require additional hardware to cope with the epidemic, as was the case in China.
However, increased demand for consumables could add 2% to FY21 estimates for net profit.
As the virus spreads, the broker assesses the potential supply chain disruption increases and Fisher & Paykal Healthcare typically holds 12-14 weeks inventory.
Target is raised to NZ$25.02 from NZ$21.49. Neutral maintained. The broker transfers coverage to another analyst.
Current Price is $25.30. Target price not assessed.
Current consensus price target is N/A
The company's fiscal year ends in March.
Forecast for FY20:
Macquarie forecasts a full year FY20 dividend of 28.28 cents and EPS of 44.51 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 44.1, implying annual growth of N/A. Current consensus DPS estimate is 28.4, implying a prospective dividend yield of 1.1%. Current consensus EPS estimate suggests the PER is 57.4. |
Forecast for FY21:
Macquarie forecasts a full year FY21 dividend of 32.93 cents and EPS of 51.82 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 50.6, implying annual growth of 14.7%. Current consensus DPS estimate is 33.8, implying a prospective dividend yield of 1.3%. Current consensus EPS estimate suggests the PER is 50.0. |
This company reports in NZD. 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
Overnight Price: $6.43
Morgan Stanley rates IAG as Equal-weight (3) -
Morgan Stanley assesses Insurance Australia Group can improve its 2021 underlying combined operating ratio by three percentage points versus 2018.
However, it is getting tougher to find improvements, and the broker notes the company has less catastrophe budget left to June 2020 compared with its peers.
Equal-weight rating. Target is $7.90. Industry view: In Line.
Target price is $7.90 Current Price is $6.43 Difference: $1.47
If IAG meets the Morgan Stanley target it will return approximately 23% (excluding dividends, fees and charges).
Current consensus price target is $7.24, suggesting upside of 12.6% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY20:
Morgan Stanley forecasts a full year FY20 dividend of 26.00 cents and EPS of 33.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 32.4, implying annual growth of -13.5%. Current consensus DPS estimate is 24.1, implying a prospective dividend yield of 3.7%. Current consensus EPS estimate suggests the PER is 19.8. |
Forecast for FY21:
Morgan Stanley forecasts a full year FY21 dividend of 32.00 cents and EPS of 42.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 39.3, implying annual growth of 21.3%. Current consensus DPS estimate is 31.0, implying a prospective dividend yield of 4.8%. Current consensus EPS estimate suggests the PER is 16.4. |
Market Sentiment: 0.1
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
MQG MACQUARIE GROUP LIMITED
Wealth Management & Investments
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Overnight Price: $122.21
Ord Minnett rates MQG as Downgrade to Hold from Accumulate (3) -
Ord Minnett still expects Macquarie Group will beat its guidance for cash net profit to be "slightly down" in FY20, and estimates 1.6% growth.
However, there is a risk that FY21 guidance is disappointing versus consensus expectations.
The broker downgrades to Hold from Accumulate and lowers the target to $132 from $149.
Unusually for a market correction, the stock has performed in line with the market over the past two weeks and outperformed its peers and comparable companies, the broker notes.
This stock is not covered in-house by Ord Minnett. Instead, the broker whitelabels research by JP Morgan.
Target price is $132.00 Current Price is $122.21 Difference: $9.79
If MQG meets the Ord Minnett target it will return approximately 8% (excluding dividends, fees and charges).
Current consensus price target is $135.98, suggesting upside of 11.3% (ex-dividends)
The company's fiscal year ends in March.
Forecast for FY20:
Ord Minnett forecasts a full year FY20 dividend of 595.00 cents and EPS of 858.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 857.6, implying annual growth of -2.9%. Current consensus DPS estimate is 587.3, implying a prospective dividend yield of 4.8%. Current consensus EPS estimate suggests the PER is 14.3. |
Forecast for FY21:
Ord Minnett forecasts a full year FY21 dividend of 595.00 cents and EPS of 844.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 865.2, implying annual growth of 0.9%. Current consensus DPS estimate is 597.5, implying a prospective dividend yield of 4.9%. Current consensus EPS estimate suggests the PER is 14.1. |
Market Sentiment: 0.2
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $4.60
Macquarie rates NUF as Neutral (3) -
Regulatory approval has been granted in Brazil for the sale of the local business to Sumitomo. First half operating earnings (EBITDA) of $55-65m have been reaffirmed, although this includes an accounting benefit.
Nevertheless, Macquarie envisages a risk that challenging conditions still prevail in the second half because of constrained raw material supply, which is exacerbated by coronavirus.
Neutral maintained. Target is reduced to $5.38 from $5.77.
Target price is $5.38 Current Price is $4.60 Difference: $0.78
If NUF meets the Macquarie target it will return approximately 17% (excluding dividends, fees and charges).
Current consensus price target is $5.89, suggesting upside of 28.1% (ex-dividends)
The company's fiscal year ends in July.
Forecast for FY20:
Macquarie forecasts a full year FY20 dividend of 2.40 cents and EPS of 11.80 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 12.8, implying annual growth of 73.0%. Current consensus DPS estimate is 3.4, implying a prospective dividend yield of 0.7%. Current consensus EPS estimate suggests the PER is 35.9. |
Forecast for FY21:
Macquarie forecasts a full year FY21 dividend of 7.80 cents and EPS of 31.10 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 29.8, implying annual growth of 132.8%. Current consensus DPS estimate is 9.0, implying a prospective dividend yield of 2.0%. Current consensus EPS estimate suggests the PER is 15.4. |
Market Sentiment: 0.4
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $2.49
Credit Suisse rates OGC as Outperform (1) -
OceanaGold is being penalised by more than Didipio's value, Credit Suisse assesses, which signals investor aversion to the uncertainty in the Philippines.
The company has guided to 2020 production of 358-380,000 ounces at an all-in sustainable cost of US$1075-1125/oz.
The broker reduces estimates for earnings per share on the removal of Didipio and lowers the target to $4.20 from $4.75. Outperform maintained.
Target price is $4.20 Current Price is $2.49 Difference: $1.71
If OGC meets the Credit Suisse target it will return approximately 69% (excluding dividends, fees and charges).
Current consensus price target is $3.82, suggesting upside of 53.4% (ex-dividends)
The company's fiscal year ends in December.
Forecast for FY20:
Credit Suisse forecasts a full year FY20 dividend of 2.91 cents and EPS of 16.27 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 11.4, implying annual growth of N/A. Current consensus DPS estimate is 1.5, implying a prospective dividend yield of 0.6%. Current consensus EPS estimate suggests the PER is 21.8. |
Forecast for FY21:
Credit Suisse forecasts a full year FY21 dividend of 4.36 cents and EPS of 41.66 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 33.8, implying annual growth of 196.5%. Current consensus DPS estimate is 4.0, implying a prospective dividend yield of 1.6%. Current consensus EPS estimate suggests the PER is 7.4. |
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
Overnight Price: $11.04
Morgan Stanley rates QBE as Overweight (1) -
Morgan Stanley believes QBE Insurance can improve its 2021 combined operating ratio by around five percentage points versus 2018, as premium rate increases are accelerating well ahead of claims inflation.
QBE is considered best placed of the general insurers in this regard, given strong global pricing momentum and self help.
Overweight rating maintained. Target is $15.50. Industry view is In-Line.
Target price is $15.50 Current Price is $11.04 Difference: $4.46
If QBE meets the Morgan Stanley target it will return approximately 40% (excluding dividends, fees and charges).
Current consensus price target is $15.63, suggesting upside of 41.5% (ex-dividends)
The company's fiscal year ends in December.
Forecast for FY20:
Morgan Stanley forecasts a full year FY20 dividend of 1.45 cents and EPS of 98.77 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 93.9, implying annual growth of N/A. Current consensus DPS estimate is 62.4, implying a prospective dividend yield of 5.7%. Current consensus EPS estimate suggests the PER is 11.8. |
Forecast for FY21:
Morgan Stanley forecasts a full year FY21 dividend of 1.45 cents and EPS of 123.46 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 115.5, implying annual growth of 23.0%. Current consensus DPS estimate is 75.7, implying a prospective dividend yield of 6.9%. Current consensus EPS estimate suggests the PER is 9.6. |
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
Overnight Price: $10.55
Morgan Stanley rates SUN as Underweight (5) -
According to the broker, Suncorp has the least improvement potential for its underlying combined operating ratio compared with its peers.
Morgan Stanley assesses an improvement of two percentage points in 2021 versus 2018.
Property water claims could remain elevated and the broker suspects this is also pressuring claims handling costs.
Underweight rating maintained. In-Line sector view. Price target is $11.80.
Target price is $11.80 Current Price is $10.55 Difference: $1.25
If SUN meets the Morgan Stanley target it will return approximately 12% (excluding dividends, fees and charges).
Current consensus price target is $12.54, suggesting upside of 18.9% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY20:
Morgan Stanley forecasts a full year FY20 dividend of 71.00 cents and EPS of 79.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 74.3, implying annual growth of 448.7%. Current consensus DPS estimate is 63.6, implying a prospective dividend yield of 6.0%. Current consensus EPS estimate suggests the PER is 14.2. |
Forecast for FY21:
Morgan Stanley forecasts a full year FY21 dividend of 71.00 cents and EPS of 92.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 79.9, implying annual growth of 7.5%. Current consensus DPS estimate is 67.3, implying a prospective dividend yield of 6.4%. Current consensus EPS estimate suggests the PER is 13.2. |
Market Sentiment: -0.3
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Today's Price Target Changes
| Company | Last Price | Broker | New Target | Prev Target | Change | |
| BPT | BEACH ENERGY | $1.35 | Macquarie | 2.10 | 2.30 | -8.70% |
| BRG | BREVILLE GROUP | $16.51 | Ord Minnett | 20.00 | 15.08 | 32.63% |
| MQG | MACQUARIE GROUP | $122.21 | Ord Minnett | 132.00 | 149.00 | -11.41% |
| NUF | NUFARM | $4.60 | Macquarie | 5.38 | 5.77 | -6.76% |
| OGC | OCEANAGOLD | $2.49 | Credit Suisse | 4.20 | 4.75 | -11.58% |
Summaries
| APT | AFTERPAY | Buy - Citi | Overnight Price $27.63 |
| BPT | BEACH ENERGY | Upgrade to Outperform from Underperform - Macquarie | Overnight Price $1.35 |
| BRG | BREVILLE GROUP | Resume coverage with Hold - Ord Minnett | Overnight Price $16.51 |
| FPH | FISHER & PAYKEL HEALTHCARE | Neutral - Macquarie | Overnight Price $25.30 |
| IAG | INSURANCE AUSTRALIA | Equal-weight - Morgan Stanley | Overnight Price $6.43 |
| MQG | MACQUARIE GROUP | Downgrade to Hold from Accumulate - Ord Minnett | Overnight Price $122.21 |
| NUF | NUFARM | Neutral - Macquarie | Overnight Price $4.60 |
| OGC | OCEANAGOLD | Outperform - Credit Suisse | Overnight Price $2.49 |
| QBE | QBE INSURANCE | Overweight - Morgan Stanley | Overnight Price $11.04 |
| SUN | SUNCORP | Underweight - Morgan Stanley | Overnight Price $10.55 |
RATING SUMMARY
| Rating | No. Of Recommendations |
| 1. Buy | 4 |
| 3. Hold | 5 |
| 5. Sell | 1 |
Monday 09 March 2020
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