Australian Broker Call

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March 10, 2022

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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
NIC - Nickel Mines Downgrade to Neutral from Outperform Credit Suisse
Downgrade to Hold from Accumulate Ord Minnett
ALL  ARISTOCRAT LEISURE LIMITED

Gaming

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Overnight Price: $35.20

UBS rates ALL as Buy (1) -

Despite some of Aristocrat Leisure's staff living in Ukraine, management doesn't expect a material impact on earnings as a result of the conflict.

Now the company has abandoned the Playtech takeover, the broker removes earnings previously anticipated, and reduces its target to $49 from $53.60. The company will consider capital returns if high returning investments are not uncovered.

The Buy rating is maintained after a material sell off for the share price over the last month on geopolitical concerns. The analyst reminds investors gaming has historically been a very resilient discretionary spend category in relative terms.

Target price is $49.00 Current Price is $35.20 Difference: $13.8
If ALL meets the UBS target it will return approximately 39% (excluding dividends, fees and charges).

Current consensus price target is $48.20, suggesting upside of 33.7% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY22:

UBS forecasts a full year FY22 dividend of 57.00 cents and EPS of 157.00 cents.
At the last closing share price the estimated dividend yield is 1.62%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 22.42.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 152.1, implying annual growth of 18.7%.

Current consensus DPS estimate is 59.9, implying a prospective dividend yield of 1.7%.

Current consensus EPS estimate suggests the PER is 23.7.

Forecast for FY23:

UBS forecasts a full year FY23 dividend of 78.00 cents and EPS of 181.00 cents.
At the last closing share price the estimated dividend yield is 2.22%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 19.45.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 177.0, implying annual growth of 16.4%.

Current consensus DPS estimate is 72.6, implying a prospective dividend yield of 2.0%.

Current consensus EPS estimate suggests the PER is 20.4.

Market Sentiment: 0.9

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

AMC  AMCOR PLC

Paper & Packaging

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Overnight Price: $15.01

Credit Suisse rates AMC as Neutral (3) -

Extreme energy cost increases, euro depreciation, and Eastern Europe volume losses, are weighing on Amcor's outlook. Despite guiding to being price-cost positive by financial year-end, Credit Suisse notes this is subject to commodity prices that have continued to rise. 

Amcor is not sizeably exposed to energy pricing, and the company is expected to pass higher costs through. Credit Suisse estimates a 2-3% price increase would be required to recover costs at current spot pricing. Earnings per share estimates decline -1-4% through to FY24. 

The Neutral rating is retained and the target price decreases to $16.00 from $17.50.

Target price is $16.00 Current Price is $15.01 Difference: $0.99
If AMC meets the Credit Suisse target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $18.07, suggesting upside of 20.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Credit Suisse forecasts a full year FY22 dividend of 68.80 cents and EPS of 108.27 cents.
At the last closing share price the estimated dividend yield is 4.58%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 13.86.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 109.6, implying annual growth of N/A.

Current consensus DPS estimate is 66.5, implying a prospective dividend yield of 4.4%.

Current consensus EPS estimate suggests the PER is 13.7.

Forecast for FY23:

Credit Suisse forecasts a full year FY23 dividend of 74.19 cents and EPS of 113.30 cents.
At the last closing share price the estimated dividend yield is 4.94%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 13.25.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 114.8, implying annual growth of 4.7%.

Current consensus DPS estimate is 68.3, implying a prospective dividend yield of 4.6%.

Current consensus EPS estimate suggests the PER is 13.1.

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

BBN  BABY BUNTING GROUP LIMITED

Apparel & Footwear

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Overnight Price: $4.57

Morgans rates BBN as Add (1) -

In reviewing the February reporting season for retail stocks, Lovisa Holdings ((LOV)) was a clear standout for Morgans.  Lovisa, Baby Bunting and Universal Store ((UNI)) are now the broker's top three picks in the sector.

The broker points out that across its coverage of retailers, 1H22 earnings (EBIT) beat expectations by 5.7%. 

The analyst retains an Add rating and $6 target for Baby Bunting. 

Target price is $6.00 Current Price is $4.57 Difference: $1.43
If BBN meets the Morgans target it will return approximately 31% (excluding dividends, fees and charges).

Current consensus price target is $6.39, suggesting upside of 36.2% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY22:

Morgans forecasts a full year FY22 dividend of 16.00 cents and EPS of 23.00 cents.
At the last closing share price the estimated dividend yield is 3.50%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 19.87.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 22.5, implying annual growth of 65.2%.

Current consensus DPS estimate is 16.0, implying a prospective dividend yield of 3.4%.

Current consensus EPS estimate suggests the PER is 20.8.

Forecast for FY23:

Morgans forecasts a full year FY23 dividend of 19.00 cents and EPS of 28.00 cents.
At the last closing share price the estimated dividend yield is 4.16%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 16.32.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 26.5, implying annual growth of 17.8%.

Current consensus DPS estimate is 18.8, implying a prospective dividend yield of 4.0%.

Current consensus EPS estimate suggests the PER is 17.7.

Market Sentiment: 1.0

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

BGA  BEGA CHEESE LIMITED

Dairy

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Overnight Price: $4.79

UBS rates BGA as Neutral (3) -

UBS believes the Bega Cheese share price has underperformed on a relative basis due to an unfounded market expectation that a FY22 earnings (EBITDA) guidance downgrade is imminent.

The broker estimates FY22 earnings will be within the existing guidance range and a guidance update prior to August results should be a positive catalyst for the stock. The Buy rating is maintained and the target falls to $5.40 from $5.64.

Target price is $5.40 Current Price is $4.79 Difference: $0.61
If BGA meets the UBS target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $5.28, suggesting upside of 8.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

UBS forecasts a full year FY22 EPS of 20.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 23.95.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 18.7, implying annual growth of -31.6%.

Current consensus DPS estimate is 11.0, implying a prospective dividend yield of 2.3%.

Current consensus EPS estimate suggests the PER is 26.0.

Forecast for FY23:

UBS forecasts a full year FY23 EPS of 28.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 17.11.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 25.1, implying annual growth of 34.2%.

Current consensus DPS estimate is 12.0, implying a prospective dividend yield of 2.5%.

Current consensus EPS estimate suggests the PER is 19.4.

Market Sentiment: 0.0

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

BKW  BRICKWORKS LIMITED

Building Products & Services

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Overnight Price: $20.58

Citi rates BKW as Buy (1) -

Brickworks' first half earnings look to benefit from a cap rate compression revision that Citi estimates will bring the half's result to $321m, up from earnings guidance of $290-310 suggested in December. 

The broker's earnings expectation excludes the sale of the company's Washington H Soul Pattinson shares ((SOL)), which Citi anticipates to generate a one-off profit benefit of $375-425m. 

Increases in thermal coal expectations drive a 26% and 125% earnings forecast increase from the broker in FY22 and FY23.

The Buy rating is retained and the target price decreases to $25.00 from $30.00.

Target price is $25.00 Current Price is $20.58 Difference: $4.42
If BKW meets the Citi target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $25.23, suggesting upside of 19.2% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY22:

Citi forecasts a full year FY22 dividend of 62.00 cents and EPS of 279.90 cents.
At the last closing share price the estimated dividend yield is 3.01%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 7.35.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 238.4, implying annual growth of 50.0%.

Current consensus DPS estimate is 62.8, implying a prospective dividend yield of 3.0%.

Current consensus EPS estimate suggests the PER is 8.9.

Forecast for FY23:

Citi forecasts a full year FY23 dividend of 63.00 cents and EPS of 192.80 cents.
At the last closing share price the estimated dividend yield is 3.06%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 10.67.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 148.0, implying annual growth of -37.9%.

Current consensus DPS estimate is 64.5, implying a prospective dividend yield of 3.0%.

Current consensus EPS estimate suggests the PER is 14.3.

Market Sentiment: 0.3

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

IAG  INSURANCE AUSTRALIA GROUP LIMITED

Insurance

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Overnight Price: $4.26

Citi rates IAG as Buy (1) -

Despite Insurance Australia Group issuing an increase to estimated perils costs, Citi continues to see the company's outlook as attractive. Perils costs for FY22 rose to -$1.1bn, from -$1.045bn, and the broker expects upward pressure on FY23 perils guidance moving forward.

The additional perils costs see Citi forecast a 10.6% margin for the year, in the lower half of the company's 10-12% guidance range but equating to a notable margin improvement in the second half compared to the first. 

The Buy rating and target price of $5.75 are retained. 

Target price is $5.75 Current Price is $4.26 Difference: $1.49
If IAG meets the Citi target it will return approximately 35% (excluding dividends, fees and charges).

Current consensus price target is $4.98, suggesting upside of 15.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Citi forecasts a full year FY22 dividend of 17.00 cents and EPS of 19.00 cents.
At the last closing share price the estimated dividend yield is 3.99%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 22.42.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 19.7, implying annual growth of N/A.

Current consensus DPS estimate is 17.6, implying a prospective dividend yield of 4.1%.

Current consensus EPS estimate suggests the PER is 21.9.

Forecast for FY23:

Citi forecasts a full year FY23 dividend of 28.00 cents and EPS of 33.70 cents.
At the last closing share price the estimated dividend yield is 6.57%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.64.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 28.8, implying annual growth of 46.2%.

Current consensus DPS estimate is 24.6, implying a prospective dividend yield of 5.7%.

Current consensus EPS estimate suggests the PER is 15.0.

Market Sentiment: 0.3

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


Ord Minnett rates IAG as Buy (1) -

Following a claims update by Insurance Australia Group, Ord Minnett makes adjustments to earnings forecasts to reflect the new guidance on events, though makes no changes to forecast investment earnings. The Buy rating and $5.50 target are unchanged.

The analyst notes the group is confident all the costs will be treated as a single event for reinsurance purposes. Otherwise it's estimated management would have needed to allow for another retention amount of -$34m.

This stock is not covered in-house by Ord Minnett. Instead, the broker whitelabels research by JP Morgan.

Target price is $5.50 Current Price is $4.26 Difference: $1.24
If IAG meets the Ord Minnett target it will return approximately 29% (excluding dividends, fees and charges).

Current consensus price target is $4.98, suggesting upside of 15.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Ord Minnett forecasts a full year FY22 dividend of 20.00 cents and EPS of 21.00 cents.
At the last closing share price the estimated dividend yield is 4.69%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 20.29.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 19.7, implying annual growth of N/A.

Current consensus DPS estimate is 17.6, implying a prospective dividend yield of 4.1%.

Current consensus EPS estimate suggests the PER is 21.9.

Forecast for FY23:

Ord Minnett forecasts a full year FY23 dividend of 23.00 cents and EPS of 28.00 cents.
At the last closing share price the estimated dividend yield is 5.40%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 15.21.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 28.8, implying annual growth of 46.2%.

Current consensus DPS estimate is 24.6, implying a prospective dividend yield of 5.7%.

Current consensus EPS estimate suggests the PER is 15.0.

Market Sentiment: 0.3

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


UBS rates IAG as Sell (5) -

Following an update by Insurance Australia Group on east coast flooding, UBS feels the consensus estimate for earnings may need to be lowered. The broker's forecast was previously below consensus. Thus, the $4.20 target and Sell rating are retained.

The company has increased FY22 catastrophe guidance by -$55m to -$1.1bn. The broker estimates the FY23 consensus expectation for a sharp increase in margin will be impacted by reinsurance constraints and a likely associated increase in catastrophe budget.

Target price is $4.20 Current Price is $4.26 Difference: minus $0.06 (current price is over target).
If IAG meets the UBS target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.98, suggesting upside of 15.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

UBS forecasts a full year FY22 EPS of 20.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 21.30.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 19.7, implying annual growth of N/A.

Current consensus DPS estimate is 17.6, implying a prospective dividend yield of 4.1%.

Current consensus EPS estimate suggests the PER is 21.9.

Forecast for FY23:

UBS forecasts a full year FY23 EPS of 26.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 16.38.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 28.8, implying annual growth of 46.2%.

Current consensus DPS estimate is 24.6, implying a prospective dividend yield of 5.7%.

Current consensus EPS estimate suggests the PER is 15.0.

Market Sentiment: 0.3

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

IEL  IDP EDUCATION LIMITED

Education & Tuition

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Overnight Price: $28.61

Morgan Stanley rates IEL as Overweight (1) -

According to Morgan Stanley, IDP Education's first half results offered the first hard evidence that the company can deliver on a pre-covid growth trajectory rebound and meet the more than 50% earnings compound annual growth rate factored into broker estimates. 

Earnings increased 71% on the previous comparable period and revenue increased 47%, meaning first half earnings exceeded the previous full year by 12% while revenue was equivalent to 75% of the previous full year. 

Morgan Stanley finds IDP Education better positioned to capture market share than competitors as markets reopen, and the company is a key pick from the reporting season. 

The Overweight rating and target price of $40.20 are retained. Industry view: In-Line.

Target price is $40.20 Current Price is $28.61 Difference: $11.59
If IEL meets the Morgan Stanley target it will return approximately 41% (excluding dividends, fees and charges).

Current consensus price target is $36.80, suggesting upside of 23.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Morgan Stanley forecasts a full year FY22 dividend of 20.30 cents and EPS of 41.00 cents.
At the last closing share price the estimated dividend yield is 0.71%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 69.78.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 39.1, implying annual growth of 174.0%.

Current consensus DPS estimate is 26.2, implying a prospective dividend yield of 0.9%.

Current consensus EPS estimate suggests the PER is 76.4.

Forecast for FY23:

Morgan Stanley forecasts a full year FY23 dividend of 45.00 cents and EPS of 68.00 cents.
At the last closing share price the estimated dividend yield is 1.57%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 42.07.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 63.8, implying annual growth of 63.2%.

Current consensus DPS estimate is 46.0, implying a prospective dividend yield of 1.5%.

Current consensus EPS estimate suggests the PER is 46.8.

Market Sentiment: 0.8

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

LOV  LOVISA HOLDINGS LIMITED

Retailing

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Overnight Price: $17.70

Morgans rates LOV as Add (1) -

In reviewing the February reporting season, Lovisa Holdings was a clear standout for Morgans. It's felt the company will be able to deliver growth independent of any downturn in consumer sentiment and spending.

The broker points out that across its coverage of retailers, 1H22 earnings (EBIT) beat expectations by 5.7%, and by far the largest upgrade to forecasts was reserved for Lovisa. The Add rating and $24 target are retained.

Baby Bunting ((BBN)) and Universal Store ((UNI)) also feature with Lovisa as the broker's top picks in the sector.

Target price is $24.00 Current Price is $17.70 Difference: $6.3
If LOV meets the Morgans target it will return approximately 36% (excluding dividends, fees and charges).

Current consensus price target is $22.64, suggesting upside of 21.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Morgans forecasts a full year FY22 dividend of 60.00 cents and EPS of 47.00 cents.
At the last closing share price the estimated dividend yield is 3.39%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 37.66.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 50.2, implying annual growth of 117.3%.

Current consensus DPS estimate is 57.0, implying a prospective dividend yield of 3.1%.

Current consensus EPS estimate suggests the PER is 37.1.

Forecast for FY23:

Morgans forecasts a full year FY23 dividend of 57.00 cents and EPS of 64.00 cents.
At the last closing share price the estimated dividend yield is 3.22%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 27.66.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 65.3, implying annual growth of 30.1%.

Current consensus DPS estimate is 58.6, implying a prospective dividend yield of 3.1%.

Current consensus EPS estimate suggests the PER is 28.5.

Market Sentiment: 0.8

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

NHC  NEW HOPE CORPORATION LIMITED

Coal

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Overnight Price: $2.83

Morgans rates NHC as Add (1) -

In a discussion around New Hope's pre-released 1H results on March 22, Morgans now sees upside for the FY22 dividend and forecasts 36cps. The target rises to $3.05 from $2.61 on stronger recent prices for coal.

While the broker maintains its Add rating, there's some concern that spot coal prices may have peaked and suggests there may be a cheaper entry point ahead for the stock.

Target price is $2.61 Current Price is $2.83 Difference: minus $0.22 (current price is over target).
If NHC meets the Morgans target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.83, suggesting upside of 1.3% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY22:

Morgans forecasts a full year FY22 dividend of 36.00 cents and EPS of 83.00 cents.
At the last closing share price the estimated dividend yield is 12.72%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 3.41.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 86.2, implying annual growth of 804.5%.

Current consensus DPS estimate is 36.7, implying a prospective dividend yield of 13.2%.

Current consensus EPS estimate suggests the PER is 3.2.

Forecast for FY23:

Morgans forecasts a full year FY23 dividend of 22.00 cents and EPS of 53.00 cents.
At the last closing share price the estimated dividend yield is 7.77%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 5.34.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 55.4, implying annual growth of -35.7%.

Current consensus DPS estimate is 21.7, implying a prospective dividend yield of 7.8%.

Current consensus EPS estimate suggests the PER is 5.0.

Market Sentiment: 1.0

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

NIC  NICKEL MINES LIMITED

Nickel

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Overnight Price: $1.41

Citi rates NIC as Buy (1) -

Nickel Mines finds itself in a trading halt having suffered a -23% share-price fall yesterday as shareholder/partner Tsingshan Holdings reportedly scrambles to resolve a material short position on nickel, but Citi notes there is minimal risk to Nickel Mines' operations.

Tsingshan holds an 18.4% stake in Nickel Mines, anticipated to increase to 21% pending approval, and is the operator of a number of rotary kiln-electric furnace plants that Nickel Mines holds an 80% equity interest in.

Cost expectations increased given higher energy prices, Citi expects the June quarter to be a cost peak. 

The Buy rating and target price of $1.90 are retained.

Target price is $1.90 Current Price is $1.41 Difference: $0.49
If NIC meets the Citi target it will return approximately 35% (excluding dividends, fees and charges).

Current consensus price target is $1.64, suggesting upside of 33.1% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Citi forecasts a full year FY22 dividend of 5.40 cents and EPS of 12.41 cents.
At the last closing share price the estimated dividend yield is 3.83%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 11.36.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 10.1, implying annual growth of N/A.

Current consensus DPS estimate is 6.8, implying a prospective dividend yield of 5.5%.

Current consensus EPS estimate suggests the PER is 12.2.

Forecast for FY23:

Current consensus EPS estimate is 12.5, implying annual growth of 23.8%.

Current consensus DPS estimate is 7.1, implying a prospective dividend yield of 5.8%.

Current consensus EPS estimate suggests the PER is 9.8.

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


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

Tsingshan Holdings allegedly secured credit agreement to cover the cost margin requirements that saw the company drive up nickel prices earlier in the week, but Credit Suisse notes Nickel Mines' market perception impact will likely linger given its relationship with Tsinghshan. 

Despite this, large cost base exposure to price rises in nickel ore and coal were already placing pressure on Nickel Mines' margins. Credit Suisse attributes earnings per share forecast changes to higher unit costs. 

The rating is downgraded to Neutral from Outperform and the target price decreases to $1.35 from $1.74.

Target price is $1.35 Current Price is $1.41 Difference: minus $0.06 (current price is over target).
If NIC meets the Credit Suisse target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $1.64, suggesting upside of 33.1% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Credit Suisse forecasts a full year FY22 dividend of 4.72 cents and EPS of 7.39 cents.
At the last closing share price the estimated dividend yield is 3.35%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 19.07.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 10.1, implying annual growth of N/A.

Current consensus DPS estimate is 6.8, implying a prospective dividend yield of 5.5%.

Current consensus EPS estimate suggests the PER is 12.2.

Forecast for FY23:

Credit Suisse forecasts a full year FY23 dividend of 5.40 cents and EPS of 2.59 cents.
At the last closing share price the estimated dividend yield is 3.83%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 54.44.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 12.5, implying annual growth of 23.8%.

Current consensus DPS estimate is 7.1, implying a prospective dividend yield of 5.8%.

Current consensus EPS estimate suggests the PER is 9.8.

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


Ord Minnett rates NIC as Downgrade to Hold from Accumulate (3) -

Ord Minnett expects negative sentiment will weigh on Nickel Mines' near-term stock price given ties to joint venture partner Tsingshan Holding, following allegations that Tsingshan spiked a nickel price rally as it attempted to address a shortfall. 

Nickel prices more than doubled on Monday, reaching more than US$100 per kilogram from US$45 per kilogram, before the London Metal Exchange suspended trading, with limited spot inventory driving the rally. 

With reports suggesting the company was short 100,000 tonnes of nickel at the beginning of the year, Ord Minnett predicts losses of -US$2.0-10.0bn, but adds the Chinese state has likely already moved to bail out Tsingshan. 

The rating is downgraded to Hold from Accumulate and the target price of $1.60 is retained.

Target price is $1.60 Current Price is $1.41 Difference: $0.19
If NIC meets the Ord Minnett target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $1.64, suggesting upside of 33.1% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Ord Minnett forecasts a full year FY22 dividend of 6.75 cents and EPS of 15.51 cents.
At the last closing share price the estimated dividend yield is 4.78%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 9.09.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 10.1, implying annual growth of N/A.

Current consensus DPS estimate is 6.8, implying a prospective dividend yield of 5.5%.

Current consensus EPS estimate suggests the PER is 12.2.

Forecast for FY23:

Ord Minnett forecasts a full year FY23 dividend of 8.09 cents and EPS of 18.62 cents.
At the last closing share price the estimated dividend yield is 5.74%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 7.57.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 12.5, implying annual growth of 23.8%.

Current consensus DPS estimate is 7.1, implying a prospective dividend yield of 5.8%.

Current consensus EPS estimate suggests the PER is 9.8.

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

ORG  ORIGIN ENERGY LIMITED

NatGas

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Overnight Price: $5.86

Credit Suisse rates ORG as Neutral (3) -

Origin Energy has so far retained its energy market guidance for the coming financial year of $600-850m, but Credit Suisse notes substantially locked in customer pricing presents risk amid a rising price environment. 

The broker estimates a potential -$100m earnings impact in FY23 if the company needs to acquire Eraring production from the electricity market at high prices.

More positively, Credit Suisse anticipates high oil pricing to benefit FY24 earnings by $275m, and notes on a forward curve model this could increase by a further $400-500m over FY23 and FY24. 

The Neutral rating is retained and the target price increases to $6.20 from $6.00.

Target price is $6.20 Current Price is $5.86 Difference: $0.34
If ORG meets the Credit Suisse target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $6.28, suggesting upside of 8.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Credit Suisse forecasts a full year FY22 dividend of 25.00 cents and EPS of 28.39 cents.
At the last closing share price the estimated dividend yield is 4.27%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 20.64.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 29.5, implying annual growth of N/A.

Current consensus DPS estimate is 29.0, implying a prospective dividend yield of 5.0%.

Current consensus EPS estimate suggests the PER is 19.7.

Forecast for FY23:

Credit Suisse forecasts a full year FY23 dividend of 34.00 cents and EPS of 44.24 cents.
At the last closing share price the estimated dividend yield is 5.80%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 13.25.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 40.4, implying annual growth of 36.9%.

Current consensus DPS estimate is 31.6, implying a prospective dividend yield of 5.4%.

Current consensus EPS estimate suggests the PER is 14.4.

Market Sentiment: 0.5

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


Macquarie rates ORG as Outperform (1) -

Origin Energy has announced an initial $250m market share buyback on the back of strong cashflow supported by oil pricing, suggesting to Macquarie a buyback expansion is likely.

Energy Market targets reiterated, including a $200-250m cost base reduction of which $110m have been achieved. Strength in oil and gas pricing sees Macquarie lift earnings 35% in FY23, while the share buyback drives a 4.6% increase to its FY24 forecast.

The Outperform rating is retained and the target price increases to $6.81 from $6.70.

Target price is $6.81 Current Price is $5.86 Difference: $0.95
If ORG meets the Macquarie target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $6.28, suggesting upside of 8.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Macquarie forecasts a full year FY22 dividend of 26.50 cents and EPS of 30.40 cents.
At the last closing share price the estimated dividend yield is 4.52%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 19.28.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 29.5, implying annual growth of N/A.

Current consensus DPS estimate is 29.0, implying a prospective dividend yield of 5.0%.

Current consensus EPS estimate suggests the PER is 19.7.

Forecast for FY23:

Macquarie forecasts a full year FY23 dividend of 39.00 cents and EPS of 61.30 cents.
At the last closing share price the estimated dividend yield is 6.66%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 9.56.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 40.4, implying annual growth of 36.9%.

Current consensus DPS estimate is 31.6, implying a prospective dividend yield of 5.4%.

Current consensus EPS estimate suggests the PER is 14.4.

Market Sentiment: 0.5

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


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

Morgan Stanley notes Origin Energy continues to look to cost saving measures, with the company targeting a -$200-250m cash cost reduction to FY18 levels over the next two years, while also targeting a -30% sustained capital expenditure reduction through to FY26. 

The company is also set to launch an initial $250m on-market buyback in April. 

The Equal-Weight rating and target price of $6.05 are retained. Industry view: Cautious. 

Target price is $6.05 Current Price is $5.86 Difference: $0.19
If ORG meets the Morgan Stanley target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $6.28, suggesting upside of 8.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Morgan Stanley forecasts a full year FY22 dividend of 26.50 cents and EPS of 27.00 cents.
At the last closing share price the estimated dividend yield is 4.52%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 21.70.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 29.5, implying annual growth of N/A.

Current consensus DPS estimate is 29.0, implying a prospective dividend yield of 5.0%.

Current consensus EPS estimate suggests the PER is 19.7.

Forecast for FY23:

Morgan Stanley forecasts a full year FY23 dividend of 26.20 cents and EPS of 30.00 cents.
At the last closing share price the estimated dividend yield is 4.47%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 19.53.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 40.4, implying annual growth of 36.9%.

Current consensus DPS estimate is 31.6, implying a prospective dividend yield of 5.4%.

Current consensus EPS estimate suggests the PER is 14.4.

Market Sentiment: 0.5

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


Morgans rates ORG as Add (1) -

Morgans upgrades its earnings forecasts for Origin Energy in FY23 in anticipation of another strong year for APLNG. In addition, the broker has revised up its dividend forecast in that financial year by 10cps.

The broker estimates LNG markets will likely remain tight during FY23 and notes LNG prices were elevated even prior to the Ukraine conflict.

Management also announced an on-market share buyback of up to $250m, likely to commence in April. The Add rating is maintained and the target rises by 1% to $6.44.

Target price is $6.44 Current Price is $5.86 Difference: $0.58
If ORG meets the Morgans target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $6.28, suggesting upside of 8.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Morgans forecasts a full year FY22 dividend of 28.00 cents and EPS of 26.00 cents.
At the last closing share price the estimated dividend yield is 4.78%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 22.54.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 29.5, implying annual growth of N/A.

Current consensus DPS estimate is 29.0, implying a prospective dividend yield of 5.0%.

Current consensus EPS estimate suggests the PER is 19.7.

Forecast for FY23:

Morgans forecasts a full year FY23 dividend of 33.00 cents and EPS of 31.00 cents.
At the last closing share price the estimated dividend yield is 5.63%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 18.90.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 40.4, implying annual growth of 36.9%.

Current consensus DPS estimate is 31.6, implying a prospective dividend yield of 5.4%.

Current consensus EPS estimate suggests the PER is 14.4.

Market Sentiment: 0.5

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


Ord Minnett rates ORG as Hold (3) -

Origin Energy's investor day further highlighted to Ord Minnett that large retailers are investing more on energy capacity
(hydrogen, battery, peaking gas) to risk-manage increasingly volatile grid prices.

Investments in both this energy capacity, as well as information technology, are to maintain a competitive advantage in retailing, explains the analyst. However, it's feared a more commoditised offering could incur greater competition.

The Hold rating and $5.50 target are maintained.

This stock is not covered in-house by Ord Minnett. Instead, the broker whitelabels research by JP Morgan.

Target price is $5.50 Current Price is $5.86 Difference: minus $0.36 (current price is over target).
If ORG meets the Ord Minnett target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $6.28, suggesting upside of 8.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Ord Minnett forecasts a full year FY22 dividend of 39.00 cents and EPS of 30.00 cents.
At the last closing share price the estimated dividend yield is 6.66%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 19.53.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 29.5, implying annual growth of N/A.

Current consensus DPS estimate is 29.0, implying a prospective dividend yield of 5.0%.

Current consensus EPS estimate suggests the PER is 19.7.

Forecast for FY23:

Ord Minnett forecasts a full year FY23 dividend of 26.00 cents and EPS of 44.00 cents.
At the last closing share price the estimated dividend yield is 4.44%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 13.32.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 40.4, implying annual growth of 36.9%.

Current consensus DPS estimate is 31.6, implying a prospective dividend yield of 5.4%.

Current consensus EPS estimate suggests the PER is 14.4.

Market Sentiment: 0.5

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

PMV  PREMIER INVESTMENTS LIMITED

Apparel & Footwear

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Overnight Price: $26.25

UBS rates PMV as Buy (1) -

In a preview of 1H results for Premier Investments, UBS forecasts a profit of $153.8m (consensus estimate $158.6m), and a dividend of 48cps. Gross margins are expected to fall modestly to 64.5%.

The analyst believes Smiggle provides significant reopening leverage, with children now at school more often. In addition, there's considered to be potential for increased wholesale demand in existing and (in the medium term) new markets.

The Buy rating and $30 target are unchanged.

Target price is $30.00 Current Price is $26.25 Difference: $3.75
If PMV meets the UBS target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $30.55, suggesting upside of 11.0% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY22:

UBS forecasts a full year FY22 dividend of 100.00 cents and EPS of 145.00 cents.
At the last closing share price the estimated dividend yield is 3.81%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 18.10.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 149.1, implying annual growth of -12.9%.

Current consensus DPS estimate is 96.4, implying a prospective dividend yield of 3.5%.

Current consensus EPS estimate suggests the PER is 18.5.

Forecast for FY23:

UBS forecasts a full year FY23 dividend of 129.00 cents and EPS of 149.00 cents.
At the last closing share price the estimated dividend yield is 4.91%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 17.62.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 147.0, implying annual growth of -1.4%.

Current consensus DPS estimate is 110.2, implying a prospective dividend yield of 4.0%.

Current consensus EPS estimate suggests the PER is 18.7.

Market Sentiment: 0.6

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

TWE  TREASURY WINE ESTATES LIMITED

Food, Beverages & Tobacco

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Overnight Price: $11.40

Ord Minnett rates TWE as Hold (3) -

Recent data shows industry price growth in the US partially offset lower volumes, and Ord Minnett points out Treasury Wine Estates relative sales underperformance is narrowing.

The company achieved price growth of 8.6% in the four weeks to 26 February, well above market growth of 3.7%. The analyst notes strong price growth is being seen across the 19 Crimes, Frank Family Vineyards and Stags’ Leap brands.

The Hold rating and $12.80 target are maintained.

This stock is not covered in-house by Ord Minnett. Instead, the broker whitelabels research by JP Morgan.

Target price is $12.80 Current Price is $11.40 Difference: $1.4
If TWE meets the Ord Minnett target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $13.34, suggesting upside of 15.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Ord Minnett forecasts a full year FY22 dividend of 20.00 cents and EPS of 44.00 cents.
At the last closing share price the estimated dividend yield is 1.75%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 25.91.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 44.2, implying annual growth of 27.5%.

Current consensus DPS estimate is 26.9, implying a prospective dividend yield of 2.3%.

Current consensus EPS estimate suggests the PER is 26.2.

Forecast for FY23:

Ord Minnett forecasts a full year FY23 dividend of 35.00 cents and EPS of 55.00 cents.
At the last closing share price the estimated dividend yield is 3.07%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 20.73.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 54.8, implying annual growth of 24.0%.

Current consensus DPS estimate is 35.5, implying a prospective dividend yield of 3.1%.

Current consensus EPS estimate suggests the PER is 21.2.

Market Sentiment: 0.7

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

UNI  UNIVERSAL STORE HOLDINGS LIMITED

Apparel & Footwear

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Overnight Price: $5.29

Morgans rates UNI as Add (1) -

In reviewing the February reporting season for retail stocks, Lovisa Holdings ((LOV)) was a clear standout for Morgans. Lovisa, Baby Bunting ((BBN)) and Universal Store are now the broker's top three picks in the sector.

The broker points out that across its coverage of retailers, 1H22 earnings (EBIT) beat expectations by 5.7%. 

The analyst retains an Add rating and $8.50 target for Universal Store.

Target price is $8.50 Current Price is $5.29 Difference: $3.21
If UNI meets the Morgans target it will return approximately 61% (excluding dividends, fees and charges).

Current consensus price target is $8.55, suggesting upside of 48.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Morgans forecasts a full year FY22 dividend of 22.00 cents and EPS of 31.00 cents.
At the last closing share price the estimated dividend yield is 4.16%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 17.06.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 29.1, implying annual growth of -12.6%.

Current consensus DPS estimate is 19.0, implying a prospective dividend yield of 3.3%.

Current consensus EPS estimate suggests the PER is 19.8.

Forecast for FY23:

Morgans forecasts a full year FY23 dividend of 32.00 cents and EPS of 45.00 cents.
At the last closing share price the estimated dividend yield is 6.05%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 11.76.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 43.1, implying annual growth of 48.1%.

Current consensus DPS estimate is 30.0, implying a prospective dividend yield of 5.2%.

Current consensus EPS estimate suggests the PER is 13.4.

Market Sentiment: 1.0

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
ALL Aristocrat Leisure $36.05 UBS 49.00 53.60 -8.58%
AMC Amcor $15.01 Credit Suisse 16.00 17.50 -8.57%
BGA Bega Cheese $4.86 UBS 5.40 5.61 -3.74%
BKW Brickworks $21.16 Citi 25.00 30.00 -16.67%
NIC Nickel Mines $1.23 Citi 1.90 1.80 5.56%
Credit Suisse 1.35 1.75 -22.86%
ORG Origin Energy $5.80 Credit Suisse 6.20 6.00 3.33%
Macquarie 6.81 6.70 1.64%
Morgans 6.44 6.23 3.37%
Summaries
ALL Aristocrat Leisure Buy - UBS Overnight Price $35.20
AMC Amcor Neutral - Credit Suisse Overnight Price $15.01
BBN Baby Bunting Add - Morgans Overnight Price $4.57
BGA Bega Cheese Neutral - UBS Overnight Price $4.79
BKW Brickworks Buy - Citi Overnight Price $20.58
IAG Insurance Australia Group Buy - Citi Overnight Price $4.26
Buy - Ord Minnett Overnight Price $4.26
Sell - UBS Overnight Price $4.26
IEL IDP Education Overweight - Morgan Stanley Overnight Price $28.61
LOV Lovisa Holdings Add - Morgans Overnight Price $17.70
NHC New Hope Add - Morgans Overnight Price $2.83
NIC Nickel Mines Buy - Citi Overnight Price $1.41
Downgrade to Neutral from Outperform - Credit Suisse Overnight Price $1.41
Downgrade to Hold from Accumulate - Ord Minnett Overnight Price $1.41
ORG Origin Energy Neutral - Credit Suisse Overnight Price $5.86
Outperform - Macquarie Overnight Price $5.86
Equal-weight - Morgan Stanley Overnight Price $5.86
Add - Morgans Overnight Price $5.86
Hold - Ord Minnett Overnight Price $5.86
PMV Premier Investments Buy - UBS Overnight Price $26.25
TWE Treasury Wine Estates Hold - Ord Minnett Overnight Price $11.40
UNI Universal Store Add - Morgans Overnight Price $5.29
RATING SUMMARY
Rating No. Of Recommendations
1. Buy

13

3. Hold

8

5. Sell

1

Thursday 10 March 2022

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Disclaimer:
The content of this information does in no way reflect the opinions of FNArena, or of its journalists. In fact we don't have any opinion about the stock market, its value, future direction or individual shares. FNArena solely reports about what the main experts in the market note, believe and comment on. By doing so we believe we provide intelligent investors with a valuable tool that helps them in making up their own minds, reading market trends and getting a feel for what is happening beneath the surface. This document is provided for informational purposes only. It does not constitute an offer to sell or a solicitation to buy any security or other financial instrument. FNArena employs very experienced journalists who base their work on information believed to be reliable and accurate, though no guarantee is given that the daily report is accurate or complete. Investors should contact their personal adviser before making any investment decision.