Australian Broker Call
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January 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
| BGA - | Bega Cheese | Downgrade to Hold from Accumulate | Ord Minnett |
| PME - | Pro Medicus | Upgrade to Hold from Reduce | Morgans |
Overnight Price: $90.68
Citi rates ASX as Sell (5) -
Citi analysts note the ASX's strong market positioning and reliability of earnings has proved attractive to part of the longer-term oriented investment community, which has supported the share price at elevated multiples.
However, Citi remains of the view that the stock is expensive, including in comparison with offshore peers. Hence, the Sell rating is retained, while the price target now incorporates a 10% premium but still doesn't reach higher than $82.30.
Target price is $82.30 Current Price is $90.68 Difference: minus $8.38 (current price is over target).
If ASX meets the Citi target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $79.93, suggesting downside of -11.6% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY22:
Citi forecasts a full year FY22 dividend of 229.60 cents and EPS of 255.10 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 256.1, implying annual growth of 3.1%. Current consensus DPS estimate is 229.8, implying a prospective dividend yield of 2.5%. Current consensus EPS estimate suggests the PER is 35.3. |
Forecast for FY23:
Citi forecasts a full year FY23 dividend of 235.70 cents and EPS of 261.90 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 266.7, implying annual growth of 4.1%. Current consensus DPS estimate is 239.7, implying a prospective dividend yield of 2.7%. Current consensus EPS estimate suggests the PER is 33.9. |
Market Sentiment: -0.3
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Macquarie rates ASX as Outperform (1) -
ASX's monthly activity report reveals a continued decline in the December-quarter futures and over-the-counter (OTC) activity but strength in capital markets and equity trading.
Macquarie expects a recovery in futures and OTC volumes from the June quarter - a conservative date.
Equities volumes outpaced pre-covid turnover by roughly 29% and capital markets volumes were particularly strong - more than double the average for the preceding five quarters - notes the broker. Floats rose to $20.2bn from $15.5bn in the previous corresponding period.
The broker tinkers with EPS revisions and the target price rises to $103.50 from $101.50. Outperform rating retained.
Target price is $103.50 Current Price is $90.68 Difference: $12.82
If ASX meets the Macquarie target it will return approximately 14% (excluding dividends, fees and charges).
Current consensus price target is $79.93, suggesting downside of -11.6% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY22:
Macquarie forecasts a full year FY22 dividend of 241.10 cents and EPS of 267.90 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 256.1, implying annual growth of 3.1%. Current consensus DPS estimate is 229.8, implying a prospective dividend yield of 2.5%. Current consensus EPS estimate suggests the PER is 35.3. |
Forecast for FY23:
Macquarie forecasts a full year FY23 dividend of 257.10 cents and EPS of 285.70 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 266.7, implying annual growth of 4.1%. Current consensus DPS estimate is 239.7, implying a prospective dividend yield of 2.7%. Current consensus EPS estimate suggests the PER is 33.9. |
Market Sentiment: -0.3
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $2.33
Morgans rates AX1 as Hold (3) -
A new analyst in charge has led to a general remodeling and this has led to a slight reduction in forecasts. The price target declines to $2.40 from $2.57 in response.
Among the negatives cited are a rather elevated valuation on top of higher gearing than many peers, as well as the reliance on distribution agreements with large third-party suppliers.
Hold rating retained.
Target price is $2.40 Current Price is $2.33 Difference: $0.07
If AX1 meets the Morgans target it will return approximately 3% (excluding dividends, fees and charges).
Current consensus price target is $2.80, suggesting upside of 26.0% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY22:
Morgans forecasts a full year FY22 dividend of 8.00 cents and EPS of 10.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 10.5, implying annual growth of -26.1%. Current consensus DPS estimate is 8.2, implying a prospective dividend yield of 3.7%. Current consensus EPS estimate suggests the PER is 21.1. |
Forecast for FY23:
Morgans forecasts a full year FY23 dividend of 11.00 cents and EPS of 13.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 15.5, implying annual growth of 47.6%. Current consensus DPS estimate is 11.6, implying a prospective dividend yield of 5.2%. 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
Overnight Price: $5.48
Ord Minnett rates BGA as Downgrade to Hold from Accumulate (3) -
Bega Cheese's trading update missed Ord Minnett's forecast despite strong demand, explains the broker. Challenges from supply chain disruptions and rising farm gate milk prices are to blame.
Earnings forecasts have been reduced. Price target drops to $5.40 from $6.30. Downgrade to Hold from Accumulate.
This stock is not covered in-house by Ord Minnett. Instead, the broker whitelabels research by JP Morgan.
Target price is $5.40 Current Price is $5.48 Difference: minus $0.08 (current price is over target).
If BGA meets the Ord Minnett target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $5.96, suggesting upside of 9.4% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY22:
Ord Minnett forecasts a full year FY22 dividend of 11.50 cents and EPS of 23.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 24.3, implying annual growth of -11.1%. Current consensus DPS estimate is 11.3, implying a prospective dividend yield of 2.1%. Current consensus EPS estimate suggests the PER is 22.4. |
Forecast for FY23:
Ord Minnett forecasts a full year FY23 dividend of 14.00 cents and EPS of 28.30 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 29.8, implying annual growth of 22.6%. Current consensus DPS estimate is 13.0, implying a prospective dividend yield of 2.4%. Current consensus EPS estimate suggests the PER is 18.3. |
Market Sentiment: 0.3
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $0.77
Ord Minnett rates INR as Speculative Buy (1) -
Ioneer Ltd appears in the running to receive US$500m in low-cost US Government debt, points out Ord Minnett.
If completed, this will mark a major project milestone that neatly wraps up the company's funding needs, explains the broker.
While the deal arrived as a positive surprise, Ord Minnett argues it highlights the project quality. The broker has raised its target by 5cps to $0.80/sh and reiterates its Speculative Buy recommendation.
Target price is $0.80 Current Price is $0.77 Difference: $0.03
If INR meets the Ord Minnett target it will return approximately 4% (excluding dividends, fees and charges).
The company's fiscal year ends in June.
Forecast for FY22:
Ord Minnett forecasts a full year FY22 dividend of 0.00 cents and EPS of minus 24.20 cents. |
Forecast for FY23:
Ord Minnett forecasts a full year FY23 dividend of 0.00 cents and EPS of minus 54.60 cents. |
Market Sentiment: 1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
PME PRO MEDICUS LIMITED
Medical Equipment & Devices
More Research Tools In Stock Analysis - click HERE
Overnight Price: $54.12
Morgans rates PME as Upgrade to Hold from Reduce (3) -
Last week, with hardy an attentive soul around, Morgans had decided to downgrade its rating for Pro Medicus to Reduce but a quick sell-off in the share price has occurred and today the stockbroker has reversed that move; so it's back to Hold.
While acknowledging the shares are still trading on a high PE multiple, the broker sees continued strong growth on the horizon with "a strong and competitive product offering paired with long-term contracted revenues".
As the current level, near the bottom of the six months trading range, is seen as a reasonable entry point, the rating has been pulled up to Hold, negating last week's downgrade. Target $54.49.
Target price is $54.49 Current Price is $54.12 Difference: $0.37
If PME meets the Morgans target it will return approximately 1% (excluding dividends, fees and charges).
The company's fiscal year ends in June.
Forecast for FY22:
Morgans forecasts a full year FY22 dividend of 19.00 cents and EPS of 42.00 cents. |
Forecast for FY23:
Morgans forecasts a full year FY23 dividend of 22.00 cents and EPS of 49.00 cents. |
Market Sentiment: -0.5
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
PNI PINNACLE INVESTMENT MANAGEMENT GROUP LIMITED
Wealth Management & Investments
More Research Tools In Stock Analysis - click HERE
Overnight Price: $13.52
Macquarie rates PNI as No Rating (-1) -
Pinnacle Investment Management Group's affiliate's $18m first-half performance fee outpaced Macquarie's forecasts by roughly 5%, yielding Pinnacle a $6.2m share - roughly 72% more than the broker expected.
The company's tax bill was higher than historical averages. Overall, the broker says the news has an immaterial impact on forecasts.
Due to research restrictions, Macquarie cannot update earnings for the transaction or provide a target price and rating.
Current Price is $13.52. Target price not assessed.
Current consensus price target is $17.10, suggesting upside of 25.3% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY22:
Macquarie forecasts a full year FY22 dividend of 38.70 cents and EPS of 46.90 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 43.2, implying annual growth of 13.0%. Current consensus DPS estimate is 35.1, implying a prospective dividend yield of 2.6%. Current consensus EPS estimate suggests the PER is 31.6. |
Forecast for FY23:
Macquarie forecasts a full year FY23 dividend of 46.40 cents and EPS of 56.50 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 51.8, implying annual growth of 19.9%. Current consensus DPS estimate is 41.8, implying a prospective dividend yield of 3.1%. Current consensus EPS estimate suggests the PER is 26.4. |
Market Sentiment: 0.3
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $1.27
Macquarie rates WAF as Outperform (1) -
West African Resources's has provided a preliminary production guidance beat on Macquarie's forecasts for the 2021 calendar year, thanks largely to a strong performance from Sanbrado.
The news is roughly 8% ahead of Macquarie's estimates, and stronger grades were also reported. 2021 EPS forecast inches up 1%.
The broker expects 2022 guidance and the Kiaka study should prove catalysts and retains an Outperform rating. Target price is $1.60.
Target price is $1.60 Current Price is $1.27 Difference: $0.33
If WAF meets the Macquarie target it will return approximately 26% (excluding dividends, fees and charges).
The company's fiscal year ends in December.
Forecast for FY21:
Macquarie forecasts a full year FY21 dividend of 0.00 cents and EPS of 24.00 cents. |
Forecast for FY22:
Macquarie forecasts a full year FY22 dividend of 0.00 cents and EPS of 12.80 cents. |
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 | |
| ASX | ASX | $90.38 | Citi | 82.30 | 73.20 | 12.43% |
| Macquarie | 103.50 | 101.50 | 1.97% | |||
| AX1 | Accent Group | $2.22 | Morgans | 2.40 | 2.57 | -6.61% |
| BGA | Bega Cheese | $5.45 | Ord Minnett | 5.40 | 6.30 | -14.29% |
| INR | ioneer | $0.78 | Ord Minnett | 0.80 | 0.75 | 6.67% |
Summaries
| ASX | ASX | Sell - Citi | Overnight Price $90.68 |
| Outperform - Macquarie | Overnight Price $90.68 | ||
| AX1 | Accent Group | Hold - Morgans | Overnight Price $2.33 |
| BGA | Bega Cheese | Downgrade to Hold from Accumulate - Ord Minnett | Overnight Price $5.48 |
| INR | ioneer | Speculative Buy - Ord Minnett | Overnight Price $0.77 |
| PME | Pro Medicus | Upgrade to Hold from Reduce - Morgans | Overnight Price $54.12 |
| PNI | Pinnacle Investment Management | No Rating - Macquarie | Overnight Price $13.52 |
| WAF | West African Resources | Outperform - Macquarie | Overnight Price $1.27 |
RATING SUMMARY
| Rating | No. Of Recommendations |
| 1. Buy | 3 |
| 3. Hold | 3 |
| 5. Sell | 1 |
Monday 10 January 2022
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