Australian Broker Call

Morgan Stanley rates ALL as Upgrade to Overweight from Equal-weight (1) -

New analysts at Morgan Stanley "assume coverage" of Aristocrat Leisure and begin with an Overweight rating and set a $45 target. While prior coverage is not referenced, this is effectively an upgrade from an Equal-weight rating. The target has risen from $43.

The broker expects a re-rating of Aristocrat Leisure shares based on potential to become a meaningful player in i-Gaming in the US and to navigate a weaker consumer backdrop in that country. Past digital growth is also considered to be sustainable.

Apart from an attractive valuation, the analysts also see potential upside from the pursuit of M&A opportunities or capital management initiatives.

Industry View: In-Line.

Target price is $45.00 Current Price is $34.21 Difference: $10.79
If ALL meets the Morgan Stanley target it will return approximately 32% (excluding dividends, fees and charges).

Current consensus price target is $43.40, suggesting upside of 26.2% (ex-dividends)

The company's fiscal year ends in September.

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

Citi rates ANZ as Buy (1) -

Citi is anticipating a shift in the tide for the banking sector in the coming year, with banks holding historic levels of excess liquidity ahead of the quickest and largest tightening in more than thirty years.

The broker notes this should generate strong return on liquidity over the next year, and drive a 30 basis point net interest margin increase, before liquidity diminishes in 2024-25.

The Buy rating and target price of $29.00 are retained.

Target price is $29.00 Current Price is $23.74 Difference: $5.26
If ANZ meets the Citi target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $26.58, suggesting upside of 13.1% (ex-dividends)

The company's fiscal year ends in September.

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

Citi rates BEN as Upgrade to Buy from Neutral (1) -

Citi is anticipating a shift in the tide for the banking sector in the coming year, with banks holding historic levels of excess liquidity ahead of the quickest and largest tightening in more than thirty years.

The broker notes this should generate strong return on liquidity over the next year, and drive a 30 basis point net interest margin increase, before liquidity diminishes in 2024-25.

Given its recent sell off, Citi upgrades Bendigo & Adelaide Bank to Buy from Neutral and the target price decreases to $9.75 from $10.40.

Target price is $9.75 Current Price is $8.50 Difference: $1.25
If BEN meets the Citi target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $9.83, suggesting upside of 15.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.3

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

Citi rates BOQ as Buy (1) -

Citi is anticipating a shift in the tide for the banking sector in the coming year, with banks holding historic levels of excess liquidity ahead of the quickest and largest tightening in more than thirty years.

The broker notes this should generate strong return on liquidity over the next year, and drive a 30 basis point net interest margin increase, before liquidity diminishes in 2024-25.

The Buy rating and target price of $8.75 are retained.

Target price is $8.75 Current Price is $6.90 Difference: $1.85
If BOQ meets the Citi target it will return approximately 27% (excluding dividends, fees and charges).

Current consensus price target is $8.66, suggesting upside of 26.5% (ex-dividends)

The company's fiscal year ends in August.

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

Citi rates CBA as Sell (5) -

Citi is anticipating a shift in the tide for the banking sector in the coming year, with banks holding historic levels of excess liquidity ahead of the quickest and largest tightening in more than thirty years.

The broker notes this should generate strong return on liquidity over the next year, and drive a 30 basis point net interest margin increase, before liquidity diminishes in 2024-25.

The Sell rating is retained and the target price decreases to $85.50 from $86.50.

Target price is $85.50 Current Price is $95.06 Difference: minus $9.56 (current price is over target).
If CBA meets the Citi target it will return approximately minus 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $88.94, suggesting downside of -5.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: -0.3

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

UBS rates EDV as Sell (5) -

UBS expects regulatory risk to increase over time for Endeavour Group and provide a potential headwind for the share price.

In line with this view, from the end of 2024, the Tasmanian government stated it will implement mandatory pre-commitment for electronic gaming machine (EGM) players. Cards with a pre-set default loss will be used.

Given a very small EGM presence in Tasmania, the broker points out any decline in gaming will have an immaterial impact on Endeavour Group.

Seperately, the tax rate for the highest performing EGMs in Victoria was increased from August. UBS rertains its Sell rating and $7.10 target price.

Target price is $7.10 Current Price is $7.33 Difference: minus $0.23 (current price is over target).
If EDV meets the UBS target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $7.44, suggesting upside of 4.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.0

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

UBS rates MIN as Buy (1) -

Using peers as reference point, UBS estimates a 6x EV/EBITDA multiple would be appropriate to value the (potential) separate listing of Mineral Resources' lithium business in the US. Thus, a valuation of around $17bn is derived, a rise of 86% over the current valuation.

The broker retains its $83 target price and Buy rating.

Target price is $83.00 Current Price is $70.01 Difference: $12.99
If MIN meets the UBS target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $82.58, suggesting upside of 23.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.8

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

Morgans rates MLM as Initiation of coverage with Speculative Buy (1) -

Metallica Minerals is a resource development company with interests in several north QLD mining projects, including its wholly-owned  flagship Cape Flattery Silica Sands project, 200km north of Cairns.

Morgans feels the company is well positioned to supply high purity silica to the Asia-Pacific market and initiates coverage with a Speculative Buy rating. Reserves at Cape Flattery are thought to support a 25 year project life.

Last month, management signed a memorandum of understanding with Mitsui & Co for a potential off-take arrangement for the silica sand product. First production is forecast for the 1H of 2025. The broker sets a $0.15 target price.

Target price is $0.15 Current Price is $0.04 Difference: $0.11
If MLM meets the Morgans target it will return approximately 275% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Market Sentiment: 1.0

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

Citi rates NAB as Upgrade to Buy from Neutral (1) -

Citi is anticipating a shift in the tide for the banking sector in the coming year, with banks holding historic levels of excess liquidity ahead of the quickest and largest tightening in more than thirty years.

The broker notes this should generate strong return on liquidity over the next year, and drive a 30 basis point net interest margin increase, before liquidity diminishes in 2024-25.

Given its recent pull back, Citi upgrades National Australia Bank to Buy from Neutral and the target price increases to $32.75 from $32.25.

Target price is $32.75 Current Price is $29.82 Difference: $2.93
If NAB meets the Citi target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $31.76, suggesting upside of 6.6% (ex-dividends)

The company's fiscal year ends in September.

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

UBS rates NEC as Buy (1) -

Standard Media Index (SMI) data for August show metropolitan free-to-air (FTA) ad agency bookings fell -14% year-on-year.

SMI notes forward bookings for September point to growth in ad demand, with nearly 90% of last September's total ad spend already confirmed. Specifically, there is very strong demand for both TV and Outdoor media.

UBS forecasts metro FTA add markets for Nine Entertainment will decline -3.5% year-on-year in FY23. The Buy rating and $3.10 target are retained.

Target price is $3.10 Current Price is $2.04 Difference: $1.06
If NEC meets the UBS target it will return approximately 52% (excluding dividends, fees and charges).

Current consensus price target is $3.12, suggesting upside of 49.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.8

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

Macquarie rates RMS as Outperform (1) -

Macquarie notes reports of high-grade intersections from Ramelius Resources' recent drilling, notably first ore being intersected at Penny and high grade intersections at Bartus East and Symes Find.

The company also reported progress on the Galaxy underground mine decline rehabilitation, with top level ore now 160m from the current position. Macquarie expects improved cost performance through the coming financial year, driving positive impact on FY24 and FY25.

The Outperform rating and target price of $1.05 are retained.

Target price is $1.05 Current Price is $0.69 Difference: $0.36
If RMS meets the Macquarie target it will return approximately 52% (excluding dividends, fees and charges).

Current consensus price target is $1.17, suggesting upside of 80.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.7

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

Morgan Stanley rates RWC as Overweight (1) -

At an investor day in the US, Reliance Worldwide noted ongoing management of supply chain issues that have not eased meaningfully.

An update on August trading revealed a 20% rise (constant currency) for sales ex EZ-Flo, up from the -3% run-rate in July. External sales in all regions grew.

Demand remains resilient, according to the company, and contractors continue to be busy. The Repair and Renovation (R&R) segment is also expected to remain resilient.

The broker retains its Overweight rating and $5.40 target price. Industry view: In-Line.

Target price is $5.40 Current Price is $3.59 Difference: $1.81
If RWC meets the Morgan Stanley target it will return approximately 50% (excluding dividends, fees and charges).

Current consensus price target is $4.79, suggesting upside of 30.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

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

Macquarie rates SCG as Neutral (3) -

Macquarie notes Scentre Group retains first rights to three assets held in partnership with AMP Capital's Shopping Centre Fund (ACSCF), and has indicated it may not waive these if ACSCF transfers management to GPT Group ((GPT)), as has been reported by the media.

The remaining 50% stake in the Southland, Tea Tree and Liverpool Westfield assets is valued at $1.6bn, and while Scentre Group retains first rights, Macquarie notes funding could be more difficult. Further, the broker notes the assets have a lower sales productivity level than the company's average.

The Neutral rating and target price of $2.79 are retained.

Target price is $2.79 Current Price is $2.78 Difference: $0.01
If SCG meets the Macquarie target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $3.00, suggesting upside of 10.0% (ex-dividends)

The company's fiscal year ends in December.

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 SHV as Buy (1) -

Management at Select Harvests notes almond prices have strengthened in recent weeks and UBS raises its FY22 forecast sales price marginally. This increase is offset by wet weather, with reduced forecast crop volumes for 2022.

The broker also increases cost forecasts, and overall, the EPS estimate for FY22 falls by -13%, and the target eases to $7.00 from $7.10. The FY23 EPS forecast is largely unchanged.

After recent detection of the Varroa Mite, the company provided welcome news that bee hive requirements were met for all orchids for the 2023 crop pollination. Buy.

Target price is $7.00 Current Price is $5.56 Difference: $1.44
If SHV meets the UBS target it will return approximately 26% (excluding dividends, fees and charges).

The company's fiscal year ends in September.

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 STO as Outperform (1) -

With Santos having executed on around 72% of its US$350m buyback program, Macquarie notes the company appears to have paused on further buyback activity in the last week. The broker anticipates the sale of its PNG LNG interests will generate US$1.3bn, and assumes the company will return 38% of proceeds through a further US$500m buyback.

The broker sees this as a major driver of earnings per share and value accretion, and lifts its earnings per share forecasts 6% and 5% in FY22 and F23 respectively.

The Outperform rating is retained and the target price increases to $10.60 from $10.40.

Target price is $10.60 Current Price is $7.96 Difference: $2.64
If STO meets the Macquarie target it will return approximately 33% (excluding dividends, fees and charges).

Current consensus price target is $9.68, suggesting upside of 25.3% (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: 1.0

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

UBS rates SWM as Buy (1) -

Standard Media Index (SMI) data for August show metropolitan free-to-air (FTA) ad agency bookings fell -14% year-on-year.

SMI notes forward bookings for September point to growth in ad demand, with nearly 90% of last September's total ad spend already confirmed. Specifically, there is very strong demand for both TV and Outdoor media.

UBS forecasts metro FTA add markets for Seven West Media will decline -3.5% year-on-year in FY23. The Buy rating and $0.85 target are retained.

Target price is $0.85 Current Price is $0.47 Difference: $0.38
If SWM meets the UBS target it will return approximately 81% (excluding dividends, fees and charges).

Current consensus price target is $0.67, suggesting upside of 46.1% (ex-dividends)

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.2

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

Ord Minnett rates TLS as Buy (1) -

Ord Minnett observes a more competitive and less profitable broadband reseller market, which has resulted from low barriers to entry, aggressive pricing and a commoditised product.

The analyst also expects a less than 10% margin over the life of a customer, and new NBN pricing proposals will further erode margins.

The broker anticipates it will be increasingly hard for Telstra to retain its market share and lowers its profit margin assumptions.

The Buy rating and $4.60 target are retained.

Target price is $4.60 Current Price is $3.86 Difference: $0.74
If TLS meets the Ord Minnett target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $4.41, suggesting upside of 15.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.7

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

Ord Minnett rates TPG as Buy (1) -

Ord Minnett observes a more competitive and less profitable broadband reseller market, which has resulted from low barriers to entry, aggressive pricing and a commoditised product.

The analyst also expects a less than 10% margin over the life of a customer and new NBN pricing proposals will further erode margins.

The broker forecasts TPG Telecom will cede market share as an NBN reseller to smaller competitors. It's considered likely management will focus on transitioning NBN customers to fixed wireless and on-net fibre to the basement (FTTB) alternatives with higher margins.

The Buy rating is maintained, while the target slips to $6.55 from $6.70.

Target price is $6.55 Current Price is $5.01 Difference: $1.54
If TPG meets the Ord Minnett target it will return approximately 31% (excluding dividends, fees and charges).

Current consensus price target is $6.34, suggesting upside of 28.1% (ex-dividends)

The company's fiscal year ends in December.

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

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

The bid by the Potentia Capital Management-led consortium has been rejected by the board of Tyro Payments. Ord Minnett feels further bids may eventuate, given shares are trading -77% below highs attained prior to the bid.

The rating is lowered to Accumulate from Buy and the $1.40 target is unchanged.

Separately, Jon Davey, who has been with the business since May 2021, has been appointed as the new ceo.

Target price is $1.40 Current Price is $1.29 Difference: $0.11
If TYR meets the Ord Minnett target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $1.50, suggesting upside of 16.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.5

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

Citi rates WBC as Buy (1) -

Citi is anticipating a shift in the tide for the banking sector in the coming year, with banks holding historic levels of excess liquidity ahead of the quickest and largest tightening in more than thirty years.

The broker notes this should generate strong return on liquidity over the next year, and drive a 30 basis point net interest margin increase, before liquidity diminishes in 2024-25.

The Buy rating is retained and the target price increases to $30.00 from $29.00

Target price is $30.00 Current Price is $21.54 Difference: $8.46
If WBC meets the Citi target it will return approximately 39% (excluding dividends, fees and charges).

Current consensus price target is $24.52, suggesting upside of 13.7% (ex-dividends)

The company's fiscal year ends in September.

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

Citi rates WTC as Sell (5) -

Citi has updated its mix of recurring and non-recurring revenues for WiseTech Global, driving minor group level changes.

The Sell rating and target price of $52.70 are retained.

Target price is $52.70 Current Price is $58.70 Difference: minus $6 (current price is over target).
If WTC meets the Citi target it will return approximately minus 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $58.43, suggesting upside of 4.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.1

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