Australian Broker Call

Credit Suisse rates AGL as Underperform (5) -

Too many changes to the electricity grid in Australia are not helping the energy retailers, such is the sentiment expressed in Credit Suisse's latest sector update.

The analysts continue to see "material downside" for AGL Energy's earnings in FY23, as well as for key competitor Origin Energy's earnings.

It is the analysts' view that market consensus is failing to reflect a further -$10/MWh fall in realised wholesale electricity prices for FY22-23 as implied by futures.

Credit Suisse retains its Underperform rating with the target price decreasing to $11.10 from $12.60 on further reductions in forecasts.

Target price is $11.10 Current Price is $12.23 Difference: minus $1.13 (current price is over target).
If AGL meets the Credit Suisse target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $12.73, suggesting upside of 6.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: -0.5

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

Citi rates APT as Neutral (3) -

Citi analysts have further updated their input and modeling for Afterpay, noting strong downloading of apps remains prevalent, even though the rate of overall growth slowed somewhat in December.

The update has triggered an upgrade for the price target to $115 from $97.75. Neutral rating retained.

Target price is $115.00 Current Price is $113.99 Difference: $1.01
If APT meets the Citi target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $100.83, suggesting downside of -9.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.3

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

Credit Suisse rates ASX as Underperform (5) -

Credit Suisse found the ASX’s December trading activity update (slightly) weaker-than-projected, and therefore the current share price is considered too expensive.

Earnings estimates have been sliced, which pulls back the price target to $71 from $73. Credit Suisse reiterates its Underperform rating.

Target price is $71.00 Current Price is $72.41 Difference: minus $1.41 (current price is over target).
If ASX meets the Credit Suisse target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $72.07, suggesting downside of -0.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: -0.9

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

UBS rates CSL as Buy (1) -

With 21 centres opened since July 2020, analysts at UBS note CSL appears well on track to reach the FY21 target of 20-30. It is their view this may partially mitigate collection pressures due to the pandemic.

However, mobility data are suggesting overall plasma collection in late 2020 took another dive and UBS, while also acknowledging a seasonal impact, sees volumes potentially shrinking by similar numbers as during March-April last year.

The analysts don't seem too worried, continuing to forecast a -20% decline in plasma collection in the April-Sep 2020 period with recovery thereafter.

The Buy rating and target price of $346 are unchanged.

Target price is $346.00 Current Price is $275.95 Difference: $70.05
If CSL meets the UBS target it will return approximately 25% (excluding dividends, fees and charges).

Current consensus price target is $313.39, suggesting upside of 14.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

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

Morgans rates EVN as Hold (3) -

A fresh remodeling by stockbroker Morgans has delivered a new price target for Evolution Mining; $5.05 instead of the previous $4.08. Hold rating maintained.

The broker has revised its assumptions for Red Lake, but nevertheless states to have remained conservative beyond the current resource estimate.

Morgans likes the company's focus on margins rather than volume. Management is clearly in the business of making money, says the analyst, rather than producing gold (which the company is, of course).

Target price is $5.05 Current Price is $4.72 Difference: $0.33
If EVN meets the Morgans target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $4.88, suggesting upside of 4.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: -0.1

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

Credit Suisse rates HLS as Outperform (1) -

More testing means earnings estimates continue to rise for Healius. Beyond the current peak in testing, Credit Suisse sees further growth on the back of reduced costs and profitable investments.

Outperform retained. Target remains at $4.30, having risen from $4.00 in December.

Target price is $4.30 Current Price is $3.87 Difference: $0.43
If HLS meets the Credit Suisse target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $4.12, suggesting upside of 5.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.4

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

Citi rates MFG as Neutral (3) -

Post the recent market update, Citi has elected to retain the Neutral rating while lowering its forecasts. The analysts thought it was a rather mixed performance overall.

Amidst the headwinds of global portfolio rotation into cyclicals, Citi comments the business is proving remarkably resilient, with valuation support starting to emerge.

Price target drops to $56.50 from $60.

Target price is $56.50 Current Price is $51.40 Difference: $5.1
If MFG meets the Citi target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $58.83, suggesting upside of 17.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.0

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's market update showed funds inflows have remained strong, but the overall funds performance proved weaker-than-anticipated, comment analysts at Credit Suisse.

Estimates have been lowered, which pushed back the price target to $55 from $58.50. Credit Suisse is concerned the persistent underperformance will eventually lead to funds outflows.

This concern is further exacerbated by the fact last year's strong performance for the Global Fund will soon drop off the performance comparison tables, opening up material underperformance in comparative statistics. Neutral.

Target price is $55.00 Current Price is $51.40 Difference: $3.6
If MFG meets the Credit Suisse target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $58.83, suggesting upside of 17.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.0

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

Morgans rates MFG as Add (1) -

Magellan Financial Group's market update showed continued retail funds inflows with institutions and funds performance providing negative offset.

Stockbroker Morgans is not too worried, arguing a stronger AUD has equally weighed on the share price recently. The broker considers the currency and the underperformance as temporary mild headwinds only.

While the target price declines to $59.05 from $61.05, the Add rating has been maintained.

Target price is $59.05 Current Price is $51.40 Difference: $7.65
If MFG meets the Morgans target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $58.83, suggesting upside of 17.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.0

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

Credit Suisse rates ORG as Neutral (3) -

Too many changes to the electricity grid in Australia are not helping the energy retailers, such is the sentiment expressed in Credit Suisse's latest sector update.

The analysts continue to see "material downside" for FY23 earnings both for AGL Energy and Origin Energy.

It is the analysts' view that market consensus is failing to reflect a further -$10/MWh fall in realised wholesale electricity prices for FY22-23 as implied by futures.

Credit Suisse retains its Neutral rating with the target price decreasing to $5.70 from $5.80. Estimates have been lowered.

Target price is $5.70 Current Price is $5.11 Difference: $0.59
If ORG meets the Credit Suisse target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $6.15, suggesting upside of 22.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.6

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

Ord Minnett rates PNI as Buy (1) -

Pinnacle Investment Management had the please of reporting strong performance fees in H1 and Ord Minnett sees this as a continuing theme.

Earnings estimates have gone up. The price target improved to $7.85 from $6.60. Buy rating retained.

Among the multiple observations made, the analysts highlight equity managers Hyperion, Antipodes and Firetrail all recorded strong performances in the six months to December 31.

Target price is $7.85 Current Price is $6.96 Difference: $0.89
If PNI meets the Ord Minnett target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $7.25, suggesting upside of 1.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 1.0

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

Credit Suisse rates PTM as Neutral (3) -

Platinum Asset Management's market update proved largely in-line with Credit Suisse's forecasts. While the broker remains cautious on the medium-term outlook overall, the analysts also feel consensus forecasts are likely too low.

The Asia Fund provided a large offset in December and Credit Suisse had become more positive on the outlook because of the Asia Fund's potential growth.

However, the departure of the Asia Fund’s portfolio manager has scuppered the broker's enthusiasm. Neutral. Target $4.30. No changes made to forecasts.

Target price is $4.30 Current Price is $4.16 Difference: $0.14
If PTM meets the Credit Suisse target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $3.57, suggesting downside of -14.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: -0.4

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

Macquarie rates QBE as Underperform (5) -

Macquarie has updated its thoughts and modeling for QBE Insurance Group. One of the key highlights is the broker feels without a permanent CEO for the Group and Australia Pacific division, the insurer is moving into FY21 with rebasing risk - an idea also entertained elsewhere.

Macquarie analysts do not expect FY21 guidance and forecast only a 4c dividend in 2H20, given the magnitude of statutory losses. The broker cuts its price target to $7.70 from $8 on further reduction in forecasts. Underperform.

Target price is $7.70 Current Price is $8.47 Difference: minus $0.77 (current price is over target).
If QBE meets the Macquarie target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $10.55, suggesting upside of 23.0% (ex-dividends)

The company's fiscal year ends in December.

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: 0.5

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

Morgan Stanley rates QBE as Overweight (1) -

Now it has transpired that reinsurance renewal fees will be less of a burden than feared in 2021, Morgan Stanley analysts -clearly among the bulls when it comes to QBE Insurance- suggest investor attention can now focus on the quality of earnings.

Offsetting the reinsurance positive, the analysts point out the insurer has also decided to put more money aside for potential catastrophe claims.

Morgan Stanley retains an Overweight rating alongside a target of $11.50. Industry view: In-line.

Target price is $11.50 Current Price is $8.47 Difference: $3.03
If QBE meets the Morgan Stanley target it will return approximately 36% (excluding dividends, fees and charges).

Current consensus price target is $10.55, suggesting upside of 23.0% (ex-dividends)

The company's fiscal year ends in December.

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: 0.5

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

UBS rates QBE as Neutral (3) -

UBS believes QBE Insurance's market update will lead to consensus forecast reductions in the order of -5-10%. The reason is a change in reinsurance dynamics which is forcing the insurer to retain more risk, which has triggered an increase in the reserve for catastrophe claims.

UBS analysts remind investors they have been cautious for a while, believing this was a problem that would not go away. UBS's forecasts are some -10-15% below market consensus.

While the numbers published are not out of whack with expectations, the broker does suggest the incoming CEO may decide to increase reserves further. Hence earnings risk continues to be to the downside, on the broker's assessment.

Price target $9 (versus $10.50 in December). Neutral.

In a separate sector report, UBS states it prefers Suncorp ((SUN)) over Insurance Australia Group ((IAG)) and both over QBE Insurance.

Target price is $9.00 Current Price is $8.47 Difference: $0.53
If QBE meets the UBS target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $10.55, suggesting upside of 23.0% (ex-dividends)

The company's fiscal year ends in December.

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: 0.5

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

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

Renegotiations and disagreements between operators at Oyu Tolgoi and the Mongolian governments have the potential to erode the value of the project for Rio Tinto shareholders, comment the analysts.

Morgan Stanley points out, this project represents about 3% of its estimated group attributable Net Present Value, with an estimated contribution of 5% to group underlying EBITDA for 2021 and 36% of the copper division EBITDA.

No changes made. Equal-weight rating retained. Target is 5,220p ($113.50). Industry view: Attractive.

Target price is $113.50 Current Price is $122.40 Difference: minus $8.9 (current price is over target).
If RIO meets the Morgan Stanley target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $117.64, suggesting downside of -3.3% (ex-dividends)

The company's fiscal year ends in December.

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

Credit Suisse rates SHL as Outperform (1) -

Testing rates for coronavirus continue to remain strong and Credit Suisse once again lifts its forecasts for Sonic Healthcare.

The broker's forecasts are above market consensus with the analysts pointing out the longer this global pandemic persists, the more upside will reveal itself for the company.

$39 price target and Outperform rating retained. Regardless, current forecasts imply a peak in profits and dividends for FY21, followed by a material drop in the years thereafter.

Target price is $39.00 Current Price is $33.54 Difference: $5.46
If SHL meets the Credit Suisse target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $37.18, suggesting upside of 11.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.6

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

UBS rates SUL as Upgrade to Buy from Neutral (1) -

UBS has upgraded Super Retail Group to Buy from Neutral on the belief investors are underestimating the duration of the spike in demand for the group's products, with the broker specifically highlighting domestic tourism benefits and car miles driven.

There is the risk that (part of) demand has been pulled forward, the analysts concede, but they also believe this is already in the share price.

The shares are seen trading at a discount while a gradual recovery in international travel and favourable FX complement a better than expected macro outlook, UBS argues.

Higher forecasts have lifted the price target to $12.20 from $11.30.

Target price is $12.20 Current Price is $10.96 Difference: $1.24
If SUL meets the UBS target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $12.07, suggesting upside of 4.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.6

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

Ord Minnett rates TYR as Accumulate (2) -

Tyro Payments finished 2020 on a better-than-expected note with total transaction value beating Ord Minnett's forecast despite ongoing interruptions from covid-19.

However, at present the company is struggling with technical problems with part of its payment terminals and the broker says one of possible consequences is reputational damage.

For now, Accumulate rating retained, alongside a $5 price target. Minor changes have been made to forecasts.

Target price is $5.00 Current Price is $3.15 Difference: $1.85
If TYR meets the Ord Minnett target it will return approximately 59% (excluding dividends, fees and charges).

Current consensus price target is $4.28, suggesting upside of 49.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.5

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

Citi rates Z1P as Neutral (3) -

Citi analysts have used a general sector update on the Buy Now, Pay Later sector to highlight that Zip Co managed to outperform competitor Afterpay in terms of total app downloads in Australia in December.

This is only the second such achievement by Zip Co since Citi started collating data on the sector, the analysts point out.

Price target has gained 10c to $6.50. Neutral/High Risk rating retained.

Target price is $6.50 Current Price is $5.37 Difference: $1.13
If Z1P meets the Citi target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $6.53, suggesting upside of 20.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.1

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