Australian Broker Call

Macquarie rates 29M as Outperform (1) -

29Metals released an unsurprising resource and reserve update according to Macquarie. Ore reserve additions of 2.6m tonnes went some way to offset a -3.4m tonne depletion in 2021. 

The company noted the update included only partial results from its Cervantes project, excluding six recent drill results which Macquarie notes could offer resource upside ahead. 

Macquarie also highlighted at spot prices earnings could exceed the broker's 2022 base case by 73%. 

The Outperform rating and target price of $3.60 are retained.

Target price is $3.60 Current Price is $2.78 Difference: $0.82
If 29M meets the Macquarie target it will return approximately 29% (excluding dividends, fees and charges).

Current consensus price target is $3.18, suggesting upside of 18.9% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.8

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

Credit Suisse rates ANZ as Outperform (1) -

The major banks are set to be the big winners of impending RBA cash rate rises, according to Credit Suisse. With the market preparing for rate hikes in the near future, Credit Suisse updates its coverage of Australian banks to factor in rising rates. 

Assuming the cash rate will ultimately rise to near 1.5%, the broker expects the rate increase to drive a trough in sector margins in the second half of FY22 and first half of FY23, before subsequently recovering 11-18 basis points. 

For ANZ Bank, this supports an 8% increase to Credit Suisse's profit and cash earnings forecasts for FY24. The broker noted ANZ Bank, Commonwealth Bank ((CBA)) and National Bank ((NAB)) are the key beneficiaries of the rate increase. 

ANZ Bank remains Credit Suisse's preferred sector pick. The Outperform rating is retained and the target price lifts to $30.80 from $28.50.

Target price is $30.80 Current Price is $26.58 Difference: $4.22
If ANZ meets the Credit Suisse target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $30.01, suggesting upside of 11.9% (ex-dividends)

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.8

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

Ord Minnett rates ASB as Hold (3) -

Ord Minnett observes Austal shares are trading at a -10% discount to net tangible asset (NTA) value, but quickly adds there is meaningful uncertainty regarding the company’s transition to steel manufacturing as well as returns generated over the medium term.

The broker retains its Hold rating alongside an unchanged $2.10 price target.

Target price is $2.10 Current Price is $2.02 Difference: $0.08
If ASB meets the Ord Minnett target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $2.28, suggesting upside of 11.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.7

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

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

The major banks are set to be the big winners of impending RBA cash rate rises, according to Credit Suisse. With the market preparing for rate hikes in the near future, Credit Suisse updates its coverage of Australian banks to factor in rising rates. 

Assuming the cash rate will ultimately rise to near 1.5%, the broker expects the rate increase to drive a trough in sector margins in the second half of FY22 and first half of FY23, before subsequently recovering 11-18 basis points. 

For Bendigo and Adelaide Bank, this supports 17% and 14% increases to Credit Suisse's profit and cash earnings forecasts for FY24 respectively. 

The rating is upgraded to Outperform from Neutral and the target price increases to $11.10 from $10.25. 

Target price is $11.10 Current Price is $9.75 Difference: $1.35
If BEN meets the Credit Suisse target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $10.31, suggesting upside of 3.6% (ex-dividends)

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.4

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

Citi rates BHP as Neutral (3) -

Following increased Russia/Ukraine concerns, Citi’s commodity team raises its long-term assumed benchmark iron ore price to US70/t from US60/t.

For the time being the 2023/24 forecast is unchanged at US$80/t though the broker acknowledges upside risk.

The Neutral rating and $48 target are retained for BHP Group. 

Target price is $48.00 Current Price is $47.36 Difference: $0.64
If BHP meets the Citi target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $48.54, suggesting upside of 7.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: 0.2

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

Credit Suisse rates BOQ as Outperform (1) -

The major banks are set to be the big winners of impending RBA cash rate rises, according to Credit Suisse. With the market preparing for rate hikes in the near future, Credit Suisse updates its coverage of Australian banks to factor in rising rates. 

Assuming the cash rate will ultimately rise to near 1.5%, the broker expects the rate increase to drive a trough in sector margins in the second half of FY22 and first half of FY23, before subsequently recovering 11-18 basis points. 

For Bank of Queensland, this supports 9% and 4% increases to Credit Suisse's profit and cash earnings forecasts for FY24 respectively.

The Outperform rating is retained and the target price increases to $11.40 from $11.00. 

Target price is $11.40 Current Price is $8.01 Difference: $3.39
If BOQ meets the Credit Suisse target it will return approximately 42% (excluding dividends, fees and charges).

Current consensus price target is $10.33, suggesting upside of 26.8% (ex-dividends)

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.9

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

Morgans rates BOQ as Add (1) -

Morgans sees exceptional value in Bank of Queensland shares and feels its growth outlook is superior to peers. Other positives include good execution of the transformation program and a faster-than-anticipated realisation of synergies from the ME Bank acquisition.

In terms of a peer comparison, net interest margins are on par with industry-wide trends though the home loan book is growing at above-system levels. The Add rating and $11 target are retained.

Target price is $11.00 Current Price is $8.01 Difference: $2.99
If BOQ meets the Morgans target it will return approximately 37% (excluding dividends, fees and charges).

Current consensus price target is $10.33, suggesting upside of 26.8% (ex-dividends)

The company's fiscal year ends in August.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.9

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

Morgans rates BRG as Add (1) -

Morgans updates its financial model for Breville Group to incorporate recent negative exchange rate impacts and the announced acquisition of the Italian coffee systems business LELIT. No material earnings forecast changes are made. Add. The $32 target remains.

The acquisition cost is -$170m, funded 50% by cash and 50% by new shares issued at $27.94.

Target price is $32.00 Current Price is $27.13 Difference: $4.87
If BRG meets the Morgans target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $33.03, suggesting upside of 21.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.8

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

UBS rates BRG as Buy (1) -

Breville Group has acquired Italian-based LELIT Group, designer and manufacturer of high-end Italian espresso machines and grinders for -$169m. Half of the consideration is cash, the other half shares.

The analyst forecasts a 5% accretion to sales, 4% to profit and 2% to EPS in FY23. After also allowing for a disadvantageous exchange rate, the broker retains its Buy rating and $34 target.

Target price is $34.00 Current Price is $27.13 Difference: $6.87
If BRG meets the UBS target it will return approximately 25% (excluding dividends, fees and charges).

Current consensus price target is $33.03, suggesting upside of 21.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.8

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

Credit Suisse rates CBA as Upgrade to Neutral from Underperform (3) -

The major banks are set to be the big winners of impending RBA cash rate rises, according to Credit Suisse. With the market preparing for rate hikes in the near future, Credit Suisse updates its coverage of Australian banks to factor in rising rates. 

Assuming the cash rate will ultimately rise to near 1.5%, the broker expects the rate increase to drive a trough in sector margins in the second half of FY22 and first half of FY23, before subsequently recovering 11-18 basis points. 

For Commonwealth Bank, this supports 6% and 12% increases to Credit Suisse's profit and cash earnings forecasts for FY24 respectively. The broker noted Commonwealth Bank, ANZ Bank ((ANZ)) and National Bank ((NAB)) are the key beneficiaries of the rate increase. 

The rating is upgraded to Neutral from Underperform and the target price increases to $102.80 from $96.00.

Target price is $102.80 Current Price is $102.00 Difference: $0.8
If CBA meets the Credit Suisse target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $92.53, suggesting downside of -10.8% (ex-dividends)

Forecast for FY22:

Forecast for FY23:

Market Sentiment: -0.5

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

Morgan Stanley rates CCX as Overweight (1) -

City Chic Collective's share price has fallen by -45% in the year-to-date, and while Morgan Stanley concedes the risk profile has widened, the valuation is now seen as too cheap.

The broker notes the key concern from the most recent result was the strategic investment in inventory to support growth and offset lead times. It's felt that management can execute for a number of reasons, including a good track record.

A catalyst for a re-rate may arise after an early-May trading update or any M&A activity by the company, suggests the analyst.

The Overweight rating and target price of $5 are retained. Industry view: In-Line.

Target price is $5.00 Current Price is $3.02 Difference: $1.98
If CCX meets the Morgan Stanley target it will return approximately 66% (excluding dividends, fees and charges).

Current consensus price target is $5.18, suggesting upside of 73.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.8

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

Citi rates CIA as Buy (1) -

Following increased Russia/Ukraine concerns, Citi’s commodity team raises its long-term assumed benchmark iron ore price to US70/t from US60/t. For the time being the 2023/24 forecast is unchanged at US$80/t though the broker acknowledges upside risk.

As Champion Iron has higher operating leverage than most peers among Citi's coverage of the iron ore sector, it is the largest beneficiary in term of valuation. Nonetheless, the $7.30 target is retained. Buy.

Target price is $7.30 Current Price is $7.05 Difference: $0.25
If CIA meets the Citi target it will return approximately 4% (excluding dividends, fees and charges).

The company's fiscal year ends in March.

Forecast for FY22:

Forecast for FY23:

This company reports in CAD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: 1.0

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

Citi rates DRR as Neutral (3) -

Following increased Russia/Ukraine concerns, Citi’s commodity team raises its long-term assumed benchmark iron ore price to US70/t from US60/t. For the time being the 2023/24 forecast is unchanged at US$80/t though the broker acknowledges upside risk.

The valuation for Deterra Royalties benefits given royalty revenues reflect the rise in iron ore forecasts, though the broker retains its $4.65 target price and Neutral rating.

Target price is $4.65 Current Price is $4.22 Difference: $0.43
If DRR meets the Citi target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $4.59, suggesting upside of 9.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.4

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

Citi rates ELD as Downgrade to Neutral from Buy (3) -

Citi lowers its rating for Elders to Neutral from Buy after a better-than-expected trading update after assessing the stock is trading near fair value. The target rises to $14.50 from $13.95.

The broker feels the company may be faced with less-favourable seasonal conditions and lower commodity and livestock prices over time. Rural Products sales are expected to decline by -8% year-on-year as a result of a turn in the cycle.

On the flipside, further inorganic growth (funded from a strong balance sheet) could present potential earnings upside, points out the analyst.

Target price is $14.50 Current Price is $13.32 Difference: $1.18
If ELD meets the Citi target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $14.46, suggesting upside of 8.8% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.5

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

Macquarie rates ELD as Outperform (1) -

Following a strong five month start to FY22, Elders has guided to full year earnings 20-30% ahead of the previous comparable period, implying $200-216m according to Macquarie.

Guidance range midpoint is a 15% beat to the broker's prior expectations, and Macquarie lifts its earnings forecast to $209m. Retail and Wholesale, accounting for 80% of earnings, benefited from increased activity and forward purchasing to mitigate supply risk.

Supported by agricultural production forecast increases by the Agriculture Bureau, Macquarie increases earnings forecasts 16.5%, 21.6% and 16.2% through to FY24. 

The Outperform rating is retained and the target price increases to $15.15 from $14.77. 

Target price is $15.15 Current Price is $13.32 Difference: $1.83
If ELD meets the Macquarie target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $14.46, suggesting upside of 8.8% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.5

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

Morgans rates ELD as Hold (3) -

After a trading update and new guidance by Elders, Morgans estimates the mid-point of guidance is now 15.8% ahead of the consensus forecast and a 13.5% beat versus the broker's forecast.

The broker makes material upgrades to its FY22 forecasts, though expects earnings to decline in FY23 as elevated conditions begin to normalise. The target rises to $13.60 from $12.55 and the Hold rating is maintained.

Target price is $13.60 Current Price is $13.32 Difference: $0.28
If ELD meets the Morgans target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $14.46, suggesting upside of 8.8% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.5

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

UBS rates ELD as Buy (1) -

Following a trading update by Elders for the first five months of FY22, UBS lifts FY22 and FY23 EPS estimates by 18% and 10% and raises its target price to $14.60 from $13.43. The Buy rating is unchanged.

There was considerable earnings growth across all the company's main businesses, points out the broker.

While management attributed most of the earnings growth to increased demand for the company's agriculture products, there was an element of forward purchasing by customers in a tight agriculture inputs market.

The company forecasts FY22 earnings (EBIT) growth of between 20-30%, which implies to the analyst a FY22 earnings range of $200-$216m versus the consensus estimate for $179m.

Target price is $14.60 Current Price is $13.32 Difference: $1.28
If ELD meets the UBS target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $14.46, suggesting upside of 8.8% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.5

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

Citi rates FMG as Sell (5) -

Following increased Russia/Ukraine concerns, Citi’s commodity team raises its long-term assumed benchmark iron ore price to US70/t from US60/t. For the time being the 2023/24 forecast is unchanged at US$80/t though the broker acknowledges upside risk.

As Fortescue Metals has higher operating leverage than most peers among Citi's coverage of the iron ore sector, it is the second largest beneficiary in term of valuation behind Champion Iron ((CIA)). Nonetheless, the $16 target is retained. Sell.

Target price is $16.00 Current Price is $18.04 Difference: minus $2.04 (current price is over target).
If FMG meets the Citi target it will return approximately minus 11% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $17.01, suggesting downside of -1.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: -0.6

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

Macquarie rates HLS as Outperform (1) -

Although covid related benefits are set to ease in coming months, Healius should stand to benefit from expected recovery in activity and face-to-face services according to Macquarie.

The broker assumes improved activity can drive 5.5% base pathology revenue growth in FY23, equating to revenue of $1.3bn. Macquarie updates its earnings per share forecasts -2%, 4% adn 3% through to FY24

The Outperform rating is retained and the target price increases to $5.40 from $5.30.

Target price is $5.40 Current Price is $4.31 Difference: $1.09
If HLS meets the Macquarie target it will return approximately 25% (excluding dividends, fees and charges).

Current consensus price target is $5.16, suggesting upside of 15.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.6

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

Credit Suisse rates MFG as Neutral (3) -

Magellan Financial Group has reported year-to-date outflows of -$16.8bn following -$6.0bn in outflows in the last two weeks. Credit Suisse notes company funds under management have reduced to $69bn from $95bn in December, a -28% decline.

Credit Suisse lifts its forecast for second half outflows to -$23.25bn, noting further downside risk potential. The broker highlights both Zenith and Morningstar have downgraded the fund's rating, and further downgrades could drive outflows of -15-25% in the coming year. 

The Neutral rating is retained and the target price decreases to $14.40 from $18.00. 

Target price is $14.40 Current Price is $14.00 Difference: $0.4
If MFG meets the Credit Suisse target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $13.51, suggesting downside of -3.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: -0.7

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

Macquarie rates MFG as Underperform (5) -

Magellan Financial Group has reported net outflows of -$6.0bn since its last update in late February, bringing cumulative flows for the year to -$16.8bn and driving an increase to Macquarie's second half outflow expectations to -$28.5bn from -$13.8bn.

With the company's Global Fund underperforming the benchmark by -520 basis points year-to-date, Macquarie warns that the remaining $39.2bn in the fund remains at high risk. On the broker's estimate, the fund balance will reduce to $25bn over the next six months.

Earnings per share forecasts decrease -6.8% and -36% for FY22 and FY23. 

The Underperform rating is retained and the target price decreases to $12.40 from $19.25

Target price is $12.40 Current Price is $14.00 Difference: minus $1.6 (current price is over target).
If MFG meets the Macquarie target it will return approximately minus 11% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $13.51, suggesting downside of -3.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: -0.7

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

Morgans rates MFG as Hold (3) -

Morgans still sees earnings risk to the downside for Magellan Financial until a clearer investment case can be made, mainly via funds under management (FUM) stability. It's felt Retail FUM base stabilty will be a medium-term catalyst.

The group announced the continuation of outflows, with a further -$5bn redeemed in two and a half weeks. Institutional outflows have been -$7.3bn since mid-February, and the broker expects further material outflows. The target falls to $15.78 from $21.87. Hold.

Target price is $15.78 Current Price is $14.00 Difference: $1.78
If MFG meets the Morgans target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $13.51, suggesting downside of -3.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: -0.7

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

Ord Minnett rates MFG as Lighten (4) -

Magellan Financial Group's latest market update shows continued funds outflows and Ord Minnett adds recent investment returns continue to lag benchmarks.

The broker responds by saying there is no visibility on when these negative trends will stabilise.

Lighten rating retained, while the price target drops to $13 from $20.

Target price is $13.00 Current Price is $14.00 Difference: minus $1 (current price is over target).
If MFG meets the Ord Minnett target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $13.51, suggesting downside of -3.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: -0.7

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

Morgan Stanley rates MGR as Overweight (1) -

Morgan Stanley believes FY22 guidance for Mirvac Group remains on track despite media reports that flooding at the Toombul Shopping Centre in Brisbane will lead to 6-8 months of closure.

The broker has confirmed with management that insurance over Toombul's rental income and the physical asset was in place. As a result, there's no expected impact from a closure. 

The Overweight rating and $3.30 target are retained. Industry view: In-Line.

Target price is $3.30 Current Price is $2.46 Difference: $0.84
If MGR meets the Morgan Stanley target it will return approximately 34% (excluding dividends, fees and charges).

Current consensus price target is $3.06, suggesting upside of 23.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.8

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

Citi rates MIN as Buy (1) -

Following increased Russia/Ukraine concerns, Citi’s commodity team raises its long-term assumed benchmark iron ore price to US70/t from US60/t. For the time being the 2023/24 forecast is unchanged at US$80/t though the broker acknowledges upside risk.

Nonetheless, the $58 target price is retained for Mineral Resources. Buy.

Target price is $58.00 Current Price is $46.82 Difference: $11.18
If MIN meets the Citi target it will return approximately 24% (excluding dividends, fees and charges).

Current consensus price target is $57.14, suggesting upside of 28.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.4

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

Credit Suisse rates NAB as Neutral (3) -

The major banks are set to be the big winners of impending RBA cash rate rises, according to Credit Suisse. With the market preparing for rate hikes in the near future, Credit Suisse updates its coverage of Australian banks to factor in rising rates. 

Assuming the cash rate will ultimately rise to near 1.5%, the broker expects the rate increase to drive a trough in sector margins in the second half of FY22 and first half of FY23, before subsequently recovering 11-18 basis points. 

For National Bank, this supports 16% and 14% increases to Credit Suisse's profit and cash earnings forecasts for FY24 respectively. The broker noted National Bank, ANZ Bank ((ANZ)) and Commonwealth Bank ((CBA)) are the key beneficiaries of the rate increase. 

The Neutral rating is retained and the target price increases to $32.40 from $30.00. 

Target price is $32.40 Current Price is $30.38 Difference: $2.02
If NAB meets the Credit Suisse target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $31.84, suggesting upside of 3.9% (ex-dividends)

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.4

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

Morgan Stanley rates QBE as Overweight (1) -

Morgan Stanley estimates that if current US crop insurance prices hold to the end of the year, the size of potential claims against QBE Insurance will fall.

Following prices being set for 2022 in February, the insured prices for corn and soy have risen by around 30% and 17%.

The Overweight rating and $14.50 target are unchanged. Industry View: Attractive.

Target price is $14.50 Current Price is $10.79 Difference: $3.71
If QBE meets the Morgan Stanley target it will return approximately 34% (excluding dividends, fees and charges).

Current consensus price target is $14.22, suggesting upside of 29.8% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: 1.0

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

Citi rates RIO as Neutral (3) -

Following increased Russia/Ukraine concerns, Citi’s commodity team raises its long-term assumed benchmark iron ore price to US70/t from US60/t. For the time being the 2023/24 forecast is unchanged at US$80/t though the broker acknowledges upside risk.

Nonetheless, the Neutral rating and $120 target are retained for Rio Tinto.

Target price is $120.00 Current Price is $111.12 Difference: $8.88
If RIO meets the Citi target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $116.93, suggesting upside of 9.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: 0.3

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

Macquarie rates RIO as Outperform (1) -

Rio Tinto has made a US$2.7bn offer for the remaining 49.2% of Turquoise Hill Resources it doesn't own, equating to a 32% premium to the last closing price, implying a US$5.4bn valuation of Turquoise Hill. 

Macquarie expects a successful bid will increase Rio Tinto's copper production by 10% over the next five years, and an average of 17% over the next ten years. The offer is subject to approval from more than 50% of minority shareholders. 

The Outperform rating and target price of $140.00 are retained.

Target price is $140.00 Current Price is $111.12 Difference: $28.88
If RIO meets the Macquarie target it will return approximately 26% (excluding dividends, fees and charges).

Current consensus price target is $116.93, suggesting upside of 9.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: 0.3

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

Morgan Stanley rates RIO as Overweight (1) -

Morgan Stanley sees merit in Rio Tinto increasing its stake in Turquoise Hill to 100% from 51%, as risks are largely known to Rio Tinto and likely to be factored into the decision.

The company announced a non-binding proposal to acquire the shares for -US$2.7bn.

While some investors may be alarmed with an acquistion at the (perceived) top of the commodity cycle, the broker estimates the Oyu Tolgoi project has now been somewhat de-risked. This view stems from the decision by the Mongolian government to proceed.

The Overweight rating and target price of $126.50 are retained. 

Target price is $126.50 Current Price is $111.12 Difference: $15.38
If RIO meets the Morgan Stanley target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $116.93, suggesting upside of 9.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: 0.3

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

UBS rates RIO as Sell (5) -

Rio Tinto is offering to pay cash (-US$2.7bn) to acquire the 49% of Turquoise Hill it doesn't already own. UBS notes that the transaction may take 5-6 months to close.

If successful, Rio Tinto will have a 66% interest in Oyu Tolgoi, with the balance held by the Mongolian government.

The broker feels the transaction would result in easier decision making and a structure that removes central costs.

Target price is $90.00 Current Price is $111.12 Difference: minus $21.12 (current price is over target).
If RIO meets the UBS target it will return approximately minus 19% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $116.93, suggesting upside of 9.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: 0.3

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

Macquarie rates SSM as Neutral (3) -

Service Stream's first half earnings of $39.3m exceeded Macquarie's expectations by 34%, although flat on the previous comparable period. The broker noted the better than expected result was supported by a two month contribution from Lendlease Services ((LLS)). 

The company maintained full year guidance for earnings of $120-125m, with the integration of Lendlease Services expected to provide $17m in synergies. The broker updates earnings per share forecasts 29%, 18% and 2% through to FY24. 

The Neutral rating is retained and the target price increases to $1.00 from $0.88. 

Target price is $1.00 Current Price is $0.96 Difference: $0.04
If SSM meets the Macquarie target it will return approximately 4% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.5

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

UBS rates TPG as Buy (1) -

UBS sees TPG Telecom's regional roaming deal with Telstra ((TLS)) as incrementally positive as benefits are being shared rather than competed away. The transaction increases the Vodafone/TPG Telecom 'accessible market' significantly.

Nonetheless, the broker lowers its FY22 and FY23 earnings (EBIT) estimates by -12% and -13%, due equally to reduced earnings forecasts and higher depreciation and amortisation estimates. The target falls to $7.10 from $7.60. Buy.

FY21 results released late last month were broadly in-line with the analyst's expectations.

Target price is $7.10 Current Price is $5.65 Difference: $1.45
If TPG meets the UBS target it will return approximately 26% (excluding dividends, fees and charges).

Current consensus price target is $7.31, suggesting upside of 33.4% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.7

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

Morgans rates VRT as Hold (3) -

Morgans raises its target price to $8.25 from $7.60 to match the cash offer by CapVest Partners for Virtus Health. In the absence of a better offer, the board recommends the transaction. The Hold rating remains.

As an aside, the broker suggests investors add to positions in Monash IVF ((MVF)) which is now looking attractive in relative terms.

Target price is $8.25 Current Price is $8.28 Difference: minus $0.03 (current price is over target).
If VRT meets the Morgans target it will return approximately minus 0% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $7.37, suggesting downside of -10.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: -0.3

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

Credit Suisse rates WBC as Neutral (3) -

The major banks are set to be the big winners of impending RBA cash rate rises, according to Credit Suisse. With the market preparing for rate hikes in the near future, Credit Suisse updates its coverage of Australian banks to factor in rising rates. 

Assuming the cash rate will ultimately rise to near 1.5%, the broker expects the rate increase to drive a trough in sector margins in the second half of FY22 and first half of FY23, before subsequently recovering 11-18 basis points. 

For Westpac, this supports 12% and 8% increases to Credit Suisse's profit and cash earnings forecasts for FY24 respectively.

The Neutral rating is retained and the target price increases to $24.40 from $23.00. 

Target price is $24.40 Current Price is $23.23 Difference: $1.17
If WBC meets the Credit Suisse target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $25.10, suggesting upside of 7.2% (ex-dividends)

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.4

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

Ord Minnett rates XRO as Upgrade to Accumulate from Hold (2) -

Ord Minnett's update on Xero is suggesting the company has been unfairly thrown into the same basket with technology stocks that chase growth at the expense of profit or margin.

The general sector de-rating has forced the broker to now pull back the target to $107 (was $130) while the rating moves up one notch to Accumulate from Hold.

Fundamentally, explains the broker, it likes Xero for its strong market position in Australia, New Zealand and the UK, alongside an early positioning in North America to capture the growth and adoption of cloud accounting software by small to medium-sized businesses.

Sector preferences lay with NextDC ((NXT)), WiseTech Global ((WTC)) and, in third spot, Xero.

Target price is $107.00 Current Price is $93.60 Difference: $13.4
If XRO meets the Ord Minnett target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $120.77, suggesting upside of 29.6% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY22:

Forecast for FY23:

This company reports in NZD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: 0.4

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