Australian Broker Call

Ord Minnett rates AGL as Buy (1) -

Ord Minnett calculates the bid price for Meridian Energy’s Australian retail business, Powershop Australia, equates to a value for AGL Energy’s retail business of $10.73 per share.

The analyst feels there's more likelihood of corporate appeal after separation of AGL Energy into the retail and generation businesses by mid-2022. However, a bid could be launched earlier to avoid a competitive process. The Buy rating and $7.65 target are retained.

Target price is $7.65 Current Price is $6.11 Difference: $1.54
If AGL meets the Ord Minnett target it will return approximately 25% (excluding dividends, fees and charges).

Current consensus price target is $6.96, suggesting upside of 11.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.2

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

Morgan Stanley rates ARB as Overweight (1) -

Following Morgan Stanley's recent initiation on ARB Corporation, the broker has provided additional detail around the company's current 30x multiple valuation, which Morgan Stanley finds reasonable.

The broker noted ARB Corporation is trading above historical average and is comparatively valued to global peers. Further, the broker is estimating 11% per annum capital returns, and believes the company's growth profile is being understated by consensus forecasts. 

The Overweight rating and target price of $56 are retained. Industry view is In-Line.

Target price is $56.00 Current Price is $46.66 Difference: $9.34
If ARB meets the Morgan Stanley target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $48.74, suggesting upside of 2.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.0

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

Credit Suisse rates ASX as Neutral (3) -

Despite a mixed first quarter for ASX, Credit Suisse maintains that it is a high quality business. Low near-term growth outlooks may present a cyclical opportunity for long-term investors. 

The quarter saw better-than-expected levels of capital raising, with $9.5bn in initial public offerings making it the strongest September quarter on record. ASX24 Derivatives showed little sign of recovery and remained weak throughout the quarter.

The Neutral rating and target price of $78.00 are retained.

Target price is $78.00 Current Price is $80.48 Difference: minus $2.48 (current price is over target).
If ASX meets the Credit Suisse target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $77.34, suggesting downside of -3.8% (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

Macquarie rates ASX as Outperform (1) -

After reviewing the September activity report from the ASX, Macquarie adjusts EPS earnings forecasts for a slower recovery in futures contracts, and a later increase in EPS from higher interest income. 

The analyst highlights that equities trading activity returned to growth. The broker lifts its target to $98 from $97.50 and retains its Outperform rating.

Target price is $98.00 Current Price is $80.48 Difference: $17.52
If ASX meets the Macquarie target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $77.34, suggesting downside of -3.8% (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

Ord Minnett rates ASX as Hold (3) -

Ord Minnett adjusts forecasts to reflect the September ASX report, which showed derivatives volume declined significantly. Other figures showed significant increases for cash market value traded and capital raisings versus September 2020, notes the analyst.

Short-term interest rate futures volumes nearly halved from September 2019 levels, points out the broker. The Hold rating is retained and the target price lowered to $79 from $80.

Target price is $79.00 Current Price is $80.48 Difference: minus $1.48 (current price is over target).
If ASX meets the Ord Minnett target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $77.34, suggesting downside of -3.8% (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

Macquarie rates BHP as Outperform (1) -

Macquarie points out rising coking coal prices allow BHP Group to maintain earnings upgrade momentum, despite the recently volatile price for iron ore. It's also thought the high coal prices prices could provide a boost to the sale prices for non-core assets.

The company is currently trading on a FY22 free cash flow yield of 20%, notes the analyst. The Outperform rating and $56 target price are unchanged.

Target price is $56.00 Current Price is $36.64 Difference: $19.36
If BHP meets the Macquarie target it will return approximately 53% (excluding dividends, fees and charges).

Current consensus price target is $47.30, suggesting upside of 25.4% (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: 0.3

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

UBS rates CAR as Buy (1) -

UBS expects growth for all online classifieds in the first half of 2022 will be significantly impacted by current lockdowns, with the near-term clouded by the potential for more lockdowns.

While observed volume growth continues for Carsales.com, the broker questions if this may be due to lockdowns. The analyst retains the Buy rating and $25.50 target price.

Target price is $25.50 Current Price is $24.46 Difference: $1.04
If CAR meets the UBS target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $24.32, suggesting downside of -2.2% (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

Ord Minnett rates CBO as Initiation of coverage with Buy (1) -

Ord Minnett initiates coverage on Cobram Estate Olives with a Buy rating and $2.21 price target. With full ownership of land and production assets, the company is considered to have developed a globally significant and vertically integrated extra-virgin olive oil operation.

According to the analyst, the Cobram Estate and Red Island brands are number 1 & 4 in terms of supermarket sales, and have consistently achieved higher retail prices over time.

Importantly, the broker points to a strong competitive advantage. This is considered to spring from the lowest quartile cost of production globally, a premium positioning and an over ten year time advantage in terms of orchard development.

Target price is $2.21 Current Price is $2.01 Difference: $0.2
If CBO meets the Ord Minnett target it will return approximately 10% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 1.0

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

Macquarie rates CHC as Outperform (1) -

In reviewing the near-term outlook for performance fees and assets under management (AUM) growth, Macquarie identifies $3bn of acquisitions in FY22 to-date. This accounts for around 50% of the broker's full-year forecast.

The analyst has confidence the $6bn forecast will be achieved as some transactions do not reach media outlets or are in unlisted
funds, and are therefore not announced to the market.

This, along with a review of performance fees estimates, leads Macquarie to lift its target price to $19.98 from $19.95 and retain its Outperform rating.

Target price is $19.98 Current Price is $16.75 Difference: $3.23
If CHC meets the Macquarie target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $19.85, suggesting upside of 18.2% (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

Macquarie rates CKF as Outperform (1) -

Collins Foods will become KFC’s corporate franchisee in the Netherlands, after signing an agreement with Yum! Brands. The deal is for an initial term of five years, with the option to extend by a further five years, and will commence from 31 December, 2021.

The broker retains its Outperform rating and feels the announcement signals growing confidence in the company's ability to grow the Dutch market. The target price of $12.50 is unchanged.

Target price is $12.50 Current Price is $12.81 Difference: minus $0.31 (current price is over target).
If CKF meets the Macquarie target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $12.72, suggesting downside of -3.0% (ex-dividends)

The company's fiscal year ends in May.

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

UBS rates CKF as Neutral (3) -

Collins Foods is set to develop, manage, market, support and operate the KFC business in the Netherlands, after entering into a corporate franchise agreement with Yum! Brands.

While UBS is positive on the transaction from a strategic perspective, (more control around its future path in the Netherlands), its size is considered immaterial. The $12.85 target price and Neutral rating are retained.

Target price is $12.85 Current Price is $12.81 Difference: $0.04
If CKF meets the UBS target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $12.72, suggesting downside of -3.0% (ex-dividends)

The company's fiscal year ends in May.

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

Macquarie rates CSL as Neutral (3) -

Improved plasma collection trends over coming months are vital for Macquarie to achieve its FY23 earnings forecasts. However, it's noted, foot traffic trends for CSL's US-based plasma collection centres remained relatively stable over September 2021.

The broker retains its Neutral rating and $302.50 target price.

Target price is $302.50 Current Price is $288.06 Difference: $14.44
If CSL meets the Macquarie target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $305.32, suggesting upside of 5.1% (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

UBS rates DHG as Buy (1) -

UBS expects growth for all online classifieds in the first half of 2022 will be significantly impacted by current lockdowns, with the near-term clouded by the potential for more lockdowns.

However, strong recent data leads the broker to increase its FY22 volume estimates for Domain Holdings Australia to 6% from 2%. However, after normalsing volume assumptions for FY23, the valuation is unchanged. The Buy rating and $5.70 target are retained.

Target price is $5.70 Current Price is $5.45 Difference: $0.25
If DHG meets the UBS target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $5.20, suggesting downside of -7.8% (ex-dividends)

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 FBU as Upgrade to Buy from Neutral (1) -

Following recent share price weakness, and with a looming re-opening opportunity, UBS raises its target price for Fletcher Building to NZ$8 from NZ$7.85 and increases its rating to Buy from Neutral. There's also considered to be an attractive dividend yield.

Despite current lockdowns, the analyst's forecasts point to further earnings momentum, reflecting higher construction activity and stronger building products pricing.

Current Price is $6.75. Target price not assessed.

Current consensus price target is $8.40, suggesting upside of 21.0% (ex-dividends)

The company's fiscal year ends in June.

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: 0.8

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

Macquarie rates FMG as Outperform (1) -

Current activities of Fortescue Future Industries (FFI) are geared toward removing scope 1 and 2 emissions from the iron-ore business, notes Macquarie. Fortescue Metals Group hopes to achieve this aim by 2030.

However, the analyst feels investment hurdles for FFI beyond this are unclear, and correcting this has the potential to be a key positive catalyst for the company. The broker retains its Outperform rating and $21 target price.

Target price is $21.00 Current Price is $13.91 Difference: $7.09
If FMG meets the Macquarie target it will return approximately 51% (excluding dividends, fees and charges).

Current consensus price target is $18.31, suggesting upside of 28.2% (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: 0.0

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

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

Insurance Australia Group saw a modest price rise in its New South Wales compulsory third party new business pricing. Morgan Stanley does not expect margin improvement in the segment.

Home and motor new business slowed to a near halt during the September quarter, reflecting the community's inability to afford additional  price increases.

The Equal-weight rating and target price of $4.80 are retained. Industry view: In-line. 

Target price is $4.80 Current Price is $5.12 Difference: minus $0.32 (current price is over target).
If IAG meets the Morgan Stanley target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.54, suggesting upside of 7.0% (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

Macquarie rates IMD as Outperform (1) -

After a trading update indicating  growth in all regions including South America, Macquarie raises FY22 and FY23 EPS forecasts by 9% and 8%. There's also estimated to be upside risk to forecasts if activity levels continue to accelerate and covid-related mobility improves.

Management outlined higher investment areas including R&D, Mine Portal software development and integration, and Digital Transformation 2.0. The broker lifts its target price to $2.90 from $2.65 and retains its Outperform rating.

Target price is $2.90 Current Price is $2.63 Difference: $0.27
If IMD meets the Macquarie target it will return approximately 10% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 1.0

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

UBS rates IMD as Buy (1) -

First quarter revenue was a substantially beat versus the estimate of UBS, driven by a strong recovery in Latin America and
continued robust demand conditions in North America. The broker lifts its target price to $2.90 from $2.73 and retains its Buy rating.

The analyst expects another solid year for exploration though sounds caution over an expectation for reduced prices for copper (china construction slowdown and supply growth) and gold. 

Target price is $2.90 Current Price is $2.63 Difference: $0.27
If IMD meets the UBS target it will return approximately 10% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 1.0

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

Morgans rates KLL as Add (1) -

Kalium Lakes has announced the first sulphate of potash production at the Beyondie project. Beyondie will expand to a 120,000 tonnes per annum project, from its current 90,000 tonnes per annum, over the next year to keep margins sustainable.

Morgans notes sulphate of potash pricing has risen since previous updates, and upgrades its long-term pricing to US$600 per tonne. However, the broker also highlights rising shipping costs and increases forecast operating costs.

The Speculative Buy rating is retained and the target price increases to $0.32 from $0.24.

Target price is $0.32 Current Price is $0.23 Difference: $0.09
If KLL meets the Morgans target it will return approximately 39% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 1.0

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

Ord Minnett rates MQG as Accumulate (2) -

Macquarie Group's Green Investment Group (GIG), acquired in 2017, now has more than 240 projects and continues to grow its development pipeline, notes Ord Minnett.

The analyst likes the GIG for its ESG credentials and notes financial disclosure is limited due to it being a part of the Macquarie Capital (MacCap) division. 

Separately, the broker points to energy price volatility, which will potentially support the near-term outlook for the Commodities and Global Markets (CGM) division. The Accumulate rating and $190 target price are maintained.

Target price is $190.00 Current Price is $180.66 Difference: $9.34
If MQG meets the Ord Minnett target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $174.82, suggesting downside of -4.0% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.1

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

Credit Suisse rates MYX as Neutral (3) -

Mayne Pharma Group is facing further delays for the approval of Nuvaring, receiving a third complete response letter from the FDA. Credit Suisse notes approval by June 2022 would be best case, pushing the product launch to the second half of FY23.

The broker also highlighted that given delays there is continued risk of a competitor beating Mayne Pharma Group to market. Given the launch delay, underlying earnings forecasts reduce by -7% and -5% in FY22 and FY23 respectively. 

The Neutral rating is retained and the target price increases to $0.30 from $0.29. 

Target price is $0.30 Current Price is $0.32 Difference: minus $0.02 (current price is over target).
If MYX meets the Credit Suisse target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $0.31, suggesting upside of 0.0% (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

Macquarie rates PLS as Outperform (1) -

Pilbara Minerals has formally commenced commissioning of the Ngungaju plant at Pilgangoora in WA, while Macquarie also notes spot lithium prices in China continue to present earnings upgrade momentum.

Management expects the plant to commence spodumene production in the third quarter of FY22 and achieve full production by the first quarter of FY23. The $2.80 target price and Outperform rating are retained by the broker.

Target price is $2.80 Current Price is $2.00 Difference: $0.8
If PLS meets the Macquarie target it will return approximately 40% (excluding dividends, fees and charges).

Current consensus price target is $2.17, suggesting upside of 10.2% (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

UBS rates REA as Neutral (3) -

UBS expects growth for all online classifieds in the first half of 2022 will be significantly impacted by current lockdowns, with the near-term clouded by the potential for more lockdowns.

However, strong recent data leads the broker to increase its FY22 volume estimates for REA Group to 4% from -3.5%. After normalising volume assumptions for FY23, the valuation is unchanged. The Neutral rating and $160 target are retained.

Target price is $160.00 Current Price is $153.92 Difference: $6.08
If REA meets the UBS target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $164.65, suggesting upside of 5.0% (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

UBS rates SEK as Buy (1) -

UBS expects growth for all online classifieds in the first half of 2022 will be significantly impacted by current lockdowns, with the near-term clouded by the potential for more lockdowns.

However, while not a perfect indicator of growth, Seek's Australian total job inventories remained strong according to UBS's data tracker as at 6 October. It is near the peak of around 201,000 listings observed in early June. The broker retains its Buy rating and $35 target price.

Target price is $35.00 Current Price is $31.36 Difference: $3.64
If SEK meets the UBS target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $33.53, suggesting upside of 4.8% (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

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

Suncorp Group's compulsory third party pricing for new business in Queensland was flat on the last quarter, while home and motor new business slowed to a near halt during the September quarter, reflecting the community's inability to afford additional  price increases.

Morgan Stanley notes while pricing does impact on the company's share price, Suncorp Group has managed covid impacts better than some peers. 

The Equal-weight rating and target price of $11.90 are retained. Industry view: In-line.

Target price is $11.90 Current Price is $12.56 Difference: minus $0.66 (current price is over target).
If SUN meets the Morgan Stanley target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $13.42, suggesting upside of 6.1% (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