Australian Broker Call

UBS rates ADH as Buy (1) -

UBS believes the pandemic will be a catalyst for the market appreciating the strength of the online business and re-rating the PE multiple. Trading is strong and the broker suggests online is, at the least, margin neutral.

UBS upgrades FY20-22 estimates for earnings per share by 5-40%, as recent weeks revealed online sales growth of 80%. Buy rating maintained. Target is raised to $2.15 from $1.90.

Target price is $2.15 Current Price is $2.04 Difference: $0.11
If ADH meets the UBS target it will return approximately 5% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 1.0

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

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

Atlas Arteria is undertaking a capital raising via a $420m institutional placement and share purchase plan of up to $75m. Proceeds are to be used to repay the debt related to the APRR investment.

Morgans recommends clients take up the offer as the price represents at least a 12% potential return compared with the target, which is reduced to $6.98 from $7.21.

Given the recent strength of the share price and reduction in the target, the potential return at current prices has compressed to 5%. Hence, Morgans downgrades to Hold from Add.

Target price is $6.98 Current Price is $6.84 Difference: $0.14
If ALX meets the Morgans target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $6.65, suggesting downside of -2.7% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.0

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

Morgan Stanley rates BHP as Overweight (1) -

BHP Group combines balance sheet resilience with free cash flows and an attractive valuation. The company’s operations have been mostly unaffected by covid-19, reports Morgan Stanley.

Supplementing macro factors include high iron ore prices and a decline in Brazil’s iron ore shipments.

Morgan Stanley forecasts an increase in FY21 operating income. The company has exposure to commodities other than iron ore, another positive according to the broker.

The stock is rated Overweight with a target price of GBP16.80. Industry view: In-line.

Target price is $36.65 Current Price is $35.41 Difference: $1.24
If BHP meets the Morgan Stanley target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $37.62, suggesting upside of 6.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

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

Market Sentiment: 0.9

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

Ord Minnett rates BSL as Accumulate (2) -

Ord Minnett believes the worst is behind BlueScope Steel, in terms of pricing. Channel checks indicate volumes are holding up relatively well.

The stock is one of the few cyclicals in the broker's coverage which are trading near 2020 lows and, for this reason, it is starting to signal a tactical trade into a recovery. Accumulate rating and $11.90 target maintained.

Target price is $11.90 Current Price is $11.76 Difference: $0.14
If BSL meets the Ord Minnett target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $11.47, suggesting downside of -2.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.4

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

UBS rates CSL as Buy (1) -

UBS expects the pandemic will result in an increase in demand for flu vaccination and an increase in government-led preparedness for influenza. In FY21 the broker forecasts Seqirus revenue of US$1.32bn, up 8%, and EBIT of US$230m.

The strong earnings performance should have a relatively modest impact overall on group earnings (EBIT) as Seqirus represents around 8%.

This would, however, assist in partially offsetting any weakness in CSL Behring because of temporary plasma supply disruptions.

UBS maintains a Buy rating and $342 target.

Target price is $342.00 Current Price is $285.80 Difference: $56.2
If CSL meets the UBS target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $314.81, suggesting upside of 10.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

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

Market Sentiment: 0.4

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

Ord Minnett rates EXP as Buy (1) -

Ord Minnett found the recent update positive enough, given the circumstances. Management expects the company will emerge from the pandemic without the need for further funding.

This is despite an expected material decline in earnings from pre-pandemic levels amid a slow recovery. Ord Minnett expects facility waiver agreements will be extended and asset finance lease instalments will be deferred until September 30.

Skydiving operations have recommenced in New Zealand and the company is targeting 3-4 Australian-based drop zones resuming in June. Buy rating maintained. Target is reduced to $0.21 from $0.27.

Target price is $0.21 Current Price is $0.14 Difference: $0.07
If EXP meets the Ord Minnett target it will return approximately 50% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 1.0

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

Morgans rates IRE as Add (1) -

Iress will purchase superannuation fund administration service provider OneVue Holdings ((OVH)) for $115m.

While the purchase may create long-term value, Morgans assesses earnings per share will be reduced in the short term, as OneVue is loss-making under the Iress accounting approach.

The plan is to fully integrate the platforms with the existing Acurity superannuation business. The deal is associated with an equity raising of up to $170m.

Morgans retains an Add rating and reduces the target to $13.74 from $14.94.

Target price is $13.74 Current Price is $11.68 Difference: $2.06
If IRE meets the Morgans target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $12.30, suggesting upside of 5.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.1

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

Ord Minnett rates IRE as Downgrade to Accumulate from Buy (2) -

The company has announced a $170m capital raising and will acquire OneVue Holdings ((OVH)) at an implied equity value of $107m. In the near term, the acquisition is dilutive but offers longer-term upside potential.

While Iress has withdrawn guidance, trading in the year to April has been in line with expectations and there is no material impact from the pandemic thus far.

Ord Minnett updates forecasts and reduces the rating to Accumulate from Buy. Target is lowered to $11.85 from $12.65.

Target price is $11.85 Current Price is $11.68 Difference: $0.17
If IRE meets the Ord Minnett target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $12.30, suggesting upside of 5.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.1

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

UBS rates PME as Downgrade to Neutral from Buy (3) -

Pro Medicus has been awarded a five-year contract worth $22m by Chicago-based Northwestern Memorial Healthcare, which UBS considers is further validation of the Visage viewing platform. Material upside is envisaged from this contract.

The company has not experienced any major delay or deferral from the pandemic. However, the broker reduces FY20 and FY21 revenue estimates by -7% and -5%, respectively, to account for a more conservative recovery in elective examination volumes.

Rating is downgraded to Neutral from Buy as, despite the growth outlook, the valuation risks are considered evenly balanced. Target is raised to $29.65 from $29.30.

Target price is $29.65 Current Price is $28.40 Difference: $1.25
If PME meets the UBS target it will return approximately 4% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.5

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

UBS rates SDF as Initiation of coverage with Buy (1) -

Premium growth on the client trading platform has been tracking behind target but increased broker uptake of the INSIGHT platform, along with the expansion of auto-rating to additional classes, is expected to clear bottlenecks to growth from the second half of FY21.

Hence, UBS suggests the target of 60% of contestable gross written premium on the platform is still achievable, albeit likely beyond FY24. The monetisation will be brought forward under a revised professional services fees agreement with insurers.

The broker envisages around 10% growth in earnings per share over FY20-23 and initiates coverage with a Buy rating and $3.90 target.

Target price is $3.90 Current Price is $3.30 Difference: $0.6
If SDF meets the UBS target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $3.76, suggesting upside of 13.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.9

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

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

Star Entertainment has achieved tax certainty regarding the NSW government's gambling tax regime, moving to fixed tax rates as expected.

Citi increases FY20 estimates for operating earnings by 10% following the re-opening of Sydney, although acknowledges the pace of recovery remains uncertain.

Rating is downgraded to Neutral from Buy as, once Queens Wharf in Brisbane is operating and earnings normalise, the free cash flow no longer offers a significant margin of safety, given competitive pressures and VIP restrictions. Target is raised $3.10 from $2.95.

Target price is $3.10 Current Price is $3.10 Difference: $0
If SGR meets the Citi target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $3.26, suggesting upside of 5.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.7

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

Credit Suisse rates SGR as Outperform (1) -

Star Entertainment has reached agreement with the NSW government to set the casino tax rates and create certainty around the regulatory framework for the period FY22-41.

Star Entertainment must remain the sole casino with slot machines in NSW for this period, unless otherwise compensated. Credit Suisse suggests this is positive for the company's earnings. Outperform rating and $3.75 target maintained.

Target price is $3.75 Current Price is $3.10 Difference: $0.65
If SGR meets the Credit Suisse target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $3.26, suggesting upside of 5.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.7

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

Morgan Stanley rates SGR as Overweight (1) -

The Star Sydney casino is set to re-open, albeit only to its loyalty club members. This is a month earlier than expected by Morgan Stanley. 

Tax will be charged at a flat rate on domestic gaming revenue from FY22-41, as expected by the broker. Electronic gaming machine (EGM) made exclusive to the Star Sydney till June 2041.

Rating reaffirmed at Overweight with a target price of $2.50. Industry view: Cautious.

Target price is $2.50 Current Price is $3.10 Difference: minus $0.6 (current price is over target).
If SGR meets the Morgan Stanley target it will return approximately minus 19% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.26, suggesting upside of 5.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.7

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

Ord Minnett rates SGR as Hold (3) -

Star Entertainment has reopened private gaming rooms for up to 500 loyalty club members along with up to 12 food and beverage venues. Based on Ord Minnett's analysis, FY20 revenue of $1.82bn is expected.

The broker assumes consumer behaviour will remain subdued and earnings levels will not reach the pre-pandemic level until FY23.

Ord Minnett retains a Hold rating and $2.45 target.

Target price is $2.45 Current Price is $3.10 Difference: minus $0.65 (current price is over target).
If SGR meets the Ord Minnett target it will return approximately minus 21% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.26, suggesting upside of 5.2% (ex-dividends)

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.7

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

UBS rates SGR as Buy (1) -

The company has reached agreement with the NSW government around casino tax rates. UBS estimates the blended tax rate will be 30-31% going forward which compares to prior forecasts of 32%.

The broker has also brought forward expectations for a phased re-opening of the casino, with the main gaming floor expected to open from July 1.

An earnings recovery over the next three years will also be affected by the opening of Crown Sydney ((CWN)) and the opening of Queens Wharf.

UBS retains a Buy rating and raises the target to $3.60 from $3.00.

Target price is $3.60 Current Price is $3.10 Difference: $0.5
If SGR meets the UBS target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $3.26, suggesting upside of 5.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.7

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

UBS rates SUL as Downgrade to Neutral from Buy (3) -

UBS downgrades Super Retail to Neutral from Buy and increases earnings (EPS) estimates for FY20-22 by 8-26% to reflect improved trading conditions. Target is raised to $8.70 from $7.50.

Over the medium to longer term UBS suggests the company is well-placed to emerge from the pandemic in a stronger position, however given the share price performance and near-term earnings risk the risk/reward is considered balanced.

Target price is $8.70 Current Price is $8.36 Difference: $0.34
If SUL meets the UBS target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $8.51, suggesting upside of 1.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.6

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

Citi rates VCX as Neutral (3) -

Vicinity Centres has announced a $1.2bn placement alongside a share purchase plan. Citi notes preliminary property valuations are down -11-13% and the company will not pay a June distribution.

The broker points out a number of investors have queried the pricing of the capital raising relative to book value and the alternative of selling assets.

Citi understands the timing and execution risks may have been a factor in the decision, as disposals provide less near-term certainty compared with an equity raising.

Neutral rating maintained. Target is reduced to $1.65 from $1.67.

Target price is $1.65 Current Price is $1.61 Difference: $0.04
If VCX meets the Citi target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $1.62, suggesting upside of 0.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.2

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

Morgan Stanley rates VCX as Underweight (5) -

Vicinity Centres will be opting for a $1.2bn placement along with a share purchase plan of $200m. The aim is to reduce gearing to 26.6% from 34.9%.

There will be no dividends in the second half, notes Morgan Stanley. Rent collections stand at 49% from March to May while foot traffic is 74% of what it was this time last year.

Underweight rating retained with a target price of $1.25. Industry view: In-line.

Target price is $1.25 Current Price is $1.61 Difference: minus $0.36 (current price is over target).
If VCX meets the Morgan Stanley target it will return approximately minus 22% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $1.62, suggesting upside of 0.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.2

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

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

Vicinity Centres has raised $1.2bn equity via an underwritten placement at $1.48 a share along with a share purchase plan.

Ord Minnett believes covenant and liquidity pressures were not the trigger but rather the board elected to keep gearing below the upper end of the target range.

This is a big dilution for investors to wear, in the broker's view. In addition, the company will not pay a second half distribution.

The stock has bounced since early April and is now trading in line with valuation. Ord Minnett downgrades to Hold from Accumulate and lowers the target to $1.70 from $1.80.

Target price is $1.70 Current Price is $1.61 Difference: $0.09
If VCX meets the Ord Minnett target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $1.62, suggesting upside of 0.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.2

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

UBS rates VCX as Neutral (3) -

Vicinity Centres is raising $1.2bn to ensure the balance sheet can withstand the volatility in income and asset valuations as a result of the evolving landscape in the wake of the pandemic.

Gearing is unchanged. Asset valuations declines of -11-13% are in line with UBS expectations. Foot traffic is now 74% of the prior year and up from a low of 50% in April, with around 80% of stores now trading from a low of 42%.

The broker adjusts forecasts down by -12% for FY21 and -17% for FY22. Neutral maintained but under review. Target is raised to $1.46 from $1.22.

Target price is $1.46 Current Price is $1.61 Difference: minus $0.15 (current price is over target).
If VCX meets the UBS target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $1.62, suggesting upside of 0.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.2

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

Morgans rates VHT as Add (1) -

There were no surprises in the FY20 results. Morgans observes Volpara now has NZ$70m to pursue strategic acquisitions, centred on patient database and/or technology additions.

Recent contracts have meant average revenue per unit is in the range of US$1.45-3.50. Therefore, Morgans expects this will rise as quarterly results are released.

The company has noted that patient volumes in late May were starting to return to pre-pandemic levels and in some areas achieving around 80% of prior volume.

The broker retains a Speculative Buy (Add) rating. Target is raised to $1.73 from $1.68.

Target price is $1.73 Current Price is $1.40 Difference: $0.33
If VHT meets the Morgans target it will return approximately 24% (excluding dividends, fees and charges).

The company's fiscal year ends in March.

Forecast for FY21:

Forecast for FY22:

This company reports in NZD. 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

Morgan Stanley rates VOC as Overweight (1) -

Morgan Stanley expects debt worth $1.1bn to be refinanced this month along with an update on the FY20 operating income guidance. The broker expects a scenario in which the debt is refinanced and FY20 operating income guidance is reaffirmed at $359-379m.

Overweight rating retained by the broker with a target price of $3.50. Industry view: In-line.

Target price is $3.50 Current Price is $3.10 Difference: $0.4
If VOC meets the Morgan Stanley target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $3.60, suggesting upside of 16.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.3

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

Ord Minnett rates WSP as Buy (1) -

The FY20 operating loss is now expected to be between -$7.4-7.9m compared with a -$9.4m loss forecast in the prospectus. Revenue has been stronger than expected and operating costs lower.

Ord Minnett updates forecasts and increases the target to $2.80 from $2.15. The broker suspects new customers signed in the third quarter are ramping up and trends have extended into the fourth quarter. Buy rating maintained.

Target price is $2.80 Current Price is $2.46 Difference: $0.34
If WSP meets the Ord Minnett target it will return approximately 14% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 1.0

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