Australian Broker Call

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May 17, 2021

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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
APA - APA Downgrade to Neutral from Outperform Macquarie
TPG - TPG Telecom Upgrade to Buy from Hold Ord Minnett
TWE - Treasury Wine Estates Upgrade to Add from Hold Morgans
ANZ  AUSTRALIA & NEW ZEALAND BANKING GROUP

Banks

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Overnight Price: $27.42

Macquarie rates ANZ as Outperform (1) -

In a review of first half bank results, Macquarie observes that, contrary to expectations, pre-provision earnings excluding markets income continued to decline. A focus on costs is considered driven by an inability to deliver revenue growth.

Compared to the FY20 average, the majority of banks experienced a revenue decline, explains the broker. In the lead-up to results, the market was also looking for improving pre-provision earnings growth, which failed to materialise, explains Macquarie. 

Only ANZ Bank didn’t see a revenue (excluding Markets) decline, explains the analyst. While it's considered the bank continues to offer better relative value in the medium term, the 2H21 outlook appears less optimistic.

This is partly due to a lift in expenses and slowing balance sheet momentum, explains the broker. Macquarie maintains the Outperform rating and $30.50 target.

Target price is $30.50 Current Price is $27.42 Difference: $3.08
If ANZ meets the Macquarie target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $30.17, suggesting upside of 10.5% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY21:

Macquarie forecasts a full year FY21 dividend of 140.00 cents and EPS of 195.30 cents.
At the last closing share price the estimated dividend yield is 5.11%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.04.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 203.4, implying annual growth of 61.0%.

Current consensus DPS estimate is 140.3, implying a prospective dividend yield of 5.1%.

Current consensus EPS estimate suggests the PER is 13.4.

Forecast for FY22:

Macquarie forecasts a full year FY22 dividend of 141.00 cents and EPS of 207.00 cents.
At the last closing share price the estimated dividend yield is 5.14%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 13.25.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 217.8, implying annual growth of 7.1%.

Current consensus DPS estimate is 145.8, implying a prospective dividend yield of 5.3%.

Current consensus EPS estimate suggests the PER is 12.5.

Market Sentiment: 0.4

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

APA  APA GROUP

NatGas

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Overnight Price: $9.66

Macquarie rates APA as Downgrade to Neutral from Outperform (3) -

Macquarie feels emissions policies are driving a structural decline in gas usage and, hence, growth for APA Group over a 30-year horizon. The broker lowers the rating to Neutral from Outperform. The target price falls to $10.09 from $10.40.

The analyst believes renewables are still an avenue for growth though the space remains competitive.

While the government release of the RIS Gas pipeline review has minimal impact on the group, increased information disclosure may cause pricing pressure, cautions the broker. 

Target price is $10.09 Current Price is $9.66 Difference: $0.43
If APA meets the Macquarie target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $10.60, suggesting upside of 12.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Macquarie forecasts a full year FY21 dividend of 51.00 cents and EPS of 16.10 cents.
At the last closing share price the estimated dividend yield is 5.28%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 60.00.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 24.4, implying annual growth of 9.0%.

Current consensus DPS estimate is 51.0, implying a prospective dividend yield of 5.4%.

Current consensus EPS estimate suggests the PER is 38.6.

Forecast for FY22:

Macquarie forecasts a full year FY22 dividend of 53.20 cents and EPS of 27.90 cents.
At the last closing share price the estimated dividend yield is 5.51%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 34.62.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 30.6, implying annual growth of 25.4%.

Current consensus DPS estimate is 53.1, implying a prospective dividend yield of 5.6%.

Current consensus EPS estimate suggests the PER is 30.8.

Market Sentiment: 0.6

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

BEN  BENDIGO AND ADELAIDE BANK LIMITED

Banks

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Overnight Price: $10.21

Macquarie rates BEN as Outperform (1) -

In a review of first half bank results, Macquarie observes that, contrary to expectations, pre-provision earnings excluding markets income continued to decline. A focus on costs is considered driven by an inability to deliver revenue growth.

Compared to the FY20 average, the majority of banks experienced a revenue decline, explains the broker. In the lead-up to results, the market was also looking for improving pre-provision earnings growth, which failed to materialise, explains Macquarie. 

No specific commentary was made for Bendigo and Adelaide Bank. The Outperform rating and $11 target are unchanged.

Target price is $11.00 Current Price is $10.21 Difference: $0.79
If BEN meets the Macquarie target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $10.27, suggesting downside of -0.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Macquarie forecasts a full year FY21 dividend of 52.00 cents and EPS of 66.00 cents.
At the last closing share price the estimated dividend yield is 5.09%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 15.47.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 70.9, implying annual growth of 85.9%.

Current consensus DPS estimate is 51.0, implying a prospective dividend yield of 4.9%.

Current consensus EPS estimate suggests the PER is 14.5.

Forecast for FY22:

Macquarie forecasts a full year FY22 dividend of 50.00 cents and EPS of 66.00 cents.
At the last closing share price the estimated dividend yield is 4.90%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 15.47.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 71.6, implying annual growth of 1.0%.

Current consensus DPS estimate is 51.8, implying a prospective dividend yield of 5.0%.

Current consensus EPS estimate suggests the PER is 14.4.

Market Sentiment: 0.0

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

BGL  BELLEVUE GOLD LTD

Gold & Silver

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Overnight Price: $0.82

Macquarie rates BGL as Outperform (1) -

After a site tour, Macquarie believes mineral inventory growth is likely to continue at Bellevue Gold, as drilling efficiency improves from additional underground drill positions. 

The broker now lifts the mining inventory assumption by 22% ahead of the Stage Two Feasibility Study, which is expected in mid-2021.

Consequently, the increase in valuation for Bellevue, and a reduction in the share dilution assumption (a smaller equity raise base case), are the primary drivers behind an uplift to $1.20 from $1.05 for the target price.

Target price is $1.20 Current Price is $0.82 Difference: $0.38
If BGL meets the Macquarie target it will return approximately 46% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY21:

Macquarie forecasts a full year FY21 dividend of 0.00 cents and EPS of minus 0.90 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 91.11.

Forecast for FY22:

Macquarie forecasts a full year FY22 dividend of 0.00 cents and EPS of minus 0.80 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 102.50.

Market Sentiment: 1.0

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

BOQ  BANK OF QUEENSLAND LIMITED

Banks

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Overnight Price: $8.82

Macquarie rates BOQ as No Rating (-1) -

In a review of first half bank results, Macquarie observes that, contrary to expectations, pre-provision earnings excluding markets income continued to decline. A focus on costs is considered driven by an inability to deliver revenue growth.

Compared to the FY20 average, the majority of banks experienced a revenue decline, explains the broker. In the lead-up to results, the market was also looking for improving pre-provision earnings growth, which failed to materialise, explains Macquarie. 

Macquarie is under advice restriction for Bank of Queensland and no rating is provided.

Current Price is $8.82. Target price not assessed.

Current consensus price target is $9.67, suggesting upside of 9.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Macquarie forecasts a full year FY21 dividend of 36.00 cents and EPS of 57.40 cents.
At the last closing share price the estimated dividend yield is 4.08%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 15.37.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 61.8, implying annual growth of 144.1%.

Current consensus DPS estimate is 36.3, implying a prospective dividend yield of 4.1%.

Current consensus EPS estimate suggests the PER is 14.3.

Forecast for FY22:

Macquarie forecasts a full year FY22 dividend of 47.00 cents and EPS of 70.30 cents.
At the last closing share price the estimated dividend yield is 5.33%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.55.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 70.4, implying annual growth of 13.9%.

Current consensus DPS estimate is 46.3, implying a prospective dividend yield of 5.3%.

Current consensus EPS estimate suggests the PER is 12.5.

Market Sentiment: 0.8

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

CAR  CARSALES.COM LIMITED

Automobiles & Components

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Overnight Price: $19.51

Credit Suisse rates CAR as No Rating (-1) -

Carsales.com has acquired Trader Interactive for $797m. As well, the company has provided higher FY21 guidance compared with Credit Suisse estimates.

A strong performance domestically and in Korea has been signalled while Brazil is described as "resilient". To reflect the trading update Credit Suisse anticipates adjusted operating earnings of $252.9m, within the guidance range of $250-254m.

The broker is restricted from providing a target or rating at present.

Current Price is $19.51. Target price not assessed.

Current consensus price target is $22.07, suggesting upside of 27.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Credit Suisse forecasts a full year FY21 dividend of 55.50 cents and EPS of 60.98 cents.
At the last closing share price the estimated dividend yield is 2.84%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 31.99.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 59.4, implying annual growth of 25.6%.

Current consensus DPS estimate is 49.8, implying a prospective dividend yield of 2.9%.

Current consensus EPS estimate suggests the PER is 29.1.

Forecast for FY22:

Credit Suisse forecasts a full year FY22 dividend of 56.80 cents and EPS of 65.66 cents.
At the last closing share price the estimated dividend yield is 2.91%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 29.71.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 66.8, implying annual growth of 12.5%.

Current consensus DPS estimate is 54.5, implying a prospective dividend yield of 3.2%.

Current consensus EPS estimate suggests the PER is 25.9.

Market Sentiment: 0.4

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

CBA  COMMONWEALTH BANK OF AUSTRALIA

Banks

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Overnight Price: $96.58

Macquarie rates CBA as Neutral (3) -

In a review of first half bank results, Macquarie observes that, contrary to expectations, pre-provision earnings excluding markets income continued to decline. A focus on costs is considered driven by an inability to deliver revenue growth.

Compared to the FY20 average, the majority of banks experienced a revenue decline, explains the broker. In the lead-up to results, the market was also looking for improving pre-provision earnings growth, which failed to materialise, explains Macquarie. 

The analyst believes the performance of Commonwealth Bank sets it apart, with better revenue growth than peers, the ability to sustain balance sheet momentum and improving margins. The bank's capital position is also considered sector leading.

The pro forma CET1 of around 13.4% is circa 60-100bps ahead of peers. When coupled with a healthy franking credit balance, it suggests to Macquarie an increased likelihood of a structured buyback in 1H22. The Neutral rating and $86 target are retained.

Target price is $86.00 Current Price is $96.58 Difference: minus $10.58 (current price is over target).
If CBA meets the Macquarie target it will return approximately minus 11% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $86.82, suggesting downside of -11.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Macquarie forecasts a full year FY21 dividend of 350.00 cents and EPS of 456.10 cents.
At the last closing share price the estimated dividend yield is 3.62%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 21.18.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 475.2, implying annual growth of -12.8%.

Current consensus DPS estimate is 345.0, implying a prospective dividend yield of 3.5%.

Current consensus EPS estimate suggests the PER is 20.6.

Forecast for FY22:

Macquarie forecasts a full year FY22 dividend of 375.00 cents and EPS of 502.90 cents.
At the last closing share price the estimated dividend yield is 3.88%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 19.20.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 515.8, implying annual growth of 8.5%.

Current consensus DPS estimate is 386.3, implying a prospective dividend yield of 3.9%.

Current consensus EPS estimate suggests the PER is 19.0.

Market Sentiment: -0.3

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

CSL  CSL LIMITED

Pharmaceuticals & Biotech/Lifesciences

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Overnight Price: $277.68

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

Morgan Stanley expects a strong rebound in FY23. Nevertheless, some uncertainty exists regarding the shape of a recovery in plasma. The latter keeps the broker on an Equal-weight footing.

Having forecast collection growth of 45% to March 2022, given recent data, the broker now suspects this may be too optimistic.

After a review of competitor numbers, Morgan Stanley forecasts CSL will recover plasma collection to be just -5% below pre-pandemic levels by FY24.

The broker reduces its target to $267 from $275. Industry view: In-Line.

Target price is $267.00 Current Price is $277.68 Difference: minus $10.68 (current price is over target).
If CSL meets the Morgan Stanley target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $297.90, suggesting upside of 7.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Morgan Stanley forecasts a full year FY21 dividend of 229.99 cents and EPS of 694.58 cents.
At the last closing share price the estimated dividend yield is 0.83%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 39.98.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 650.0, implying annual growth of N/A.

Current consensus DPS estimate is 258.7, implying a prospective dividend yield of 0.9%.

Current consensus EPS estimate suggests the PER is 42.5.

Forecast for FY22:

Morgan Stanley forecasts a full year FY22 dividend of 215.31 cents and EPS of 591.27 cents.
At the last closing share price the estimated dividend yield is 0.78%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 46.96.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 636.9, implying annual growth of -2.0%.

Current consensus DPS estimate is 281.3, implying a prospective dividend yield of 1.0%.

Current consensus EPS estimate suggests the PER is 43.4.

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

Market Sentiment: 0.7

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

CSR  CSR LIMITED

Building Products & Services

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Overnight Price: $5.96

UBS rates CSR as Neutral (3) -

FY21 earnings of $238m were ahead of UBS estimates. This was driven by aluminium and building product earnings. The main update centred on the western Sydney property valuation, which at $900m is in line with the broker's expectations.

Over the next three years CSR has $146m in property sales contracted and land sales have also been expanded at Horsley Park. UBS lifts estimates for FY22-24 by 6-23%.

The broker believes the company's solid leverage to the Australian housing market and aluminium hedge book should support the outlook. Neutral maintained. Target rises to $6.17 from $5.73.

Target price is $6.17 Current Price is $5.96 Difference: $0.21
If CSR meets the UBS target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $6.40, suggesting upside of 3.6% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY22:

UBS forecasts a full year FY22 dividend of 25.00 cents and EPS of 35.20 cents.
At the last closing share price the estimated dividend yield is 4.19%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 16.93.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 35.5, implying annual growth of 17.9%.

Current consensus DPS estimate is 25.8, implying a prospective dividend yield of 4.2%.

Current consensus EPS estimate suggests the PER is 17.4.

Forecast for FY23:

UBS forecasts a full year FY23 dividend of 26.00 cents and EPS of 36.90 cents.
At the last closing share price the estimated dividend yield is 4.36%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 16.15.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 37.5, implying annual growth of 5.6%.

Current consensus DPS estimate is 27.0, implying a prospective dividend yield of 4.4%.

Current consensus EPS estimate suggests the PER is 16.5.

Market Sentiment: 0.3

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

EVT  EVENT HOSPITALITY AND ENTERTAINMENT LTD

Travel, Leisure & Tourism

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Overnight Price: $12.36

Citi rates EVT as Buy (1) -

Citi highlights Chinese box office during May Day holiday reached a record high despite the absence of Hollywood blockbuster releases with local films dominating the Chinese box office.

The broker thinks this indicates there is indeed demand for movies in cinemas once the covid disruption eases and thus bodes well for Event Hospitality and Entertainment.

While Event’s businesses will take some time to return to pre-covid profitability, Citi expects the improving momentum will likely be taken positively.

Buy rating and $12.25 price target left intact.

Target price is $12.25 Current Price is $12.36 Difference: minus $0.11 (current price is over target).
If EVT meets the Citi target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

The company's fiscal year ends in June.

Forecast for FY21:

Citi forecasts a full year FY21 dividend of 0.00 cents and EPS of minus 62.70 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 19.71.

Forecast for FY22:

Citi forecasts a full year FY22 dividend of 0.00 cents and EPS of 22.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 56.18.

Market Sentiment: 1.0

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

FPH  FISHER & PAYKEL HEALTHCARE CORPORATION LIMITED

Medical Equipment & Devices

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Overnight Price: $30.68

Macquarie rates FPH as Outperform (1) -

Macquarie increases EPS forecasts to reflect an upgrade to Hospital device and consumables expectations, as covid-19 continues to drive adoption/use. This comes after a review of recent vaccine and hospital data in key markets.

With virus variants proliferating and a slower vaccine rollout (particularly in low-middle income countries), the broker sees an increasing risk of elevated respiratory hospitalisations into the second half FY22 and FY23.

The Outperform rating is unchanged and the target is increased to NZ$40.38 from NZ$39.01.

Current Price is $30.68. Target price not assessed.

Current consensus price target is $33.50, suggesting upside of 6.5% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY21:

Macquarie forecasts a full year FY21 dividend of 48.50 cents and EPS of 99.52 cents.
At the last closing share price the estimated dividend yield is 1.58%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 30.83.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 94.6, implying annual growth of N/A.

Current consensus DPS estimate is 43.9, implying a prospective dividend yield of 1.4%.

Current consensus EPS estimate suggests the PER is 33.2.

Forecast for FY22:

Macquarie forecasts a full year FY22 dividend of 39.19 cents and EPS of 71.59 cents.
At the last closing share price the estimated dividend yield is 1.28%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 42.86.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 68.1, implying annual growth of -28.0%.

Current consensus DPS estimate is 44.8, implying a prospective dividend yield of 1.4%.

Current consensus EPS estimate suggests the PER is 46.2.

This company reports in NZD. 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

JHX  JAMES HARDIE INDUSTRIES N.V.

Building Products & Services

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Overnight Price: $41.93

Macquarie rates JHX as Outperform (1) -

James Hardie Industries will be reporting on 18 May and holding its “A New James Hardie” investor day on 21 May.

A recent survey, combined with builder and distributor feedback, continues to indicate to Macquarie strong underlying demand
in residential R&R and new construction. However, tighter supply chains and rising costs are considered weighing on contractor sentiment. 

On this latter point, Macquarie foresees further pressures over summer. The Outperform rating and $45.30 target are retained.

Target price is $45.30 Current Price is $41.93 Difference: $3.37
If JHX meets the Macquarie target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $44.84, suggesting upside of 6.3% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY21:

Macquarie forecasts a full year FY21 dividend of 95.15 cents and EPS of 136.47 cents.
At the last closing share price the estimated dividend yield is 2.27%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 30.72.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 130.9, implying annual growth of N/A.

Current consensus DPS estimate is 90.8, implying a prospective dividend yield of 2.2%.

Current consensus EPS estimate suggests the PER is 32.2.

Forecast for FY22:

Macquarie forecasts a full year FY22 dividend of 100.58 cents and EPS of 168.28 cents.
At the last closing share price the estimated dividend yield is 2.40%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 24.92.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 158.6, implying annual growth of 21.2%.

Current consensus DPS estimate is 86.2, implying a prospective dividend yield of 2.0%.

Current consensus EPS estimate suggests the PER is 26.6.

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

Market Sentiment: 0.6

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

NAB  NATIONAL AUSTRALIA BANK LIMITED

Banks

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Overnight Price: $26.22

Macquarie rates NAB as Neutral (3) -

In a review of first half bank results, Macquarie observes that, contrary to expectations, pre-provision earnings excluding markets income continued to decline. A focus on costs is considered driven by an inability to deliver revenue growth.

Compared to the FY20 average, the majority of banks experienced a revenue decline, explains the broker. In the lead-up to results, the market was also looking for improving pre-provision earnings growth, which failed to materialise, explains Macquarie. 

While National Australia Bank reported a clean first half result, the result fell short of providing an additional catalyst for a further re-rating, explains the analyst. The Neutral rating and $28 target are retained.

Target price is $28.00 Current Price is $26.22 Difference: $1.78
If NAB meets the Macquarie target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $27.58, suggesting upside of 5.9% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY21:

Macquarie forecasts a full year FY21 dividend of 120.00 cents and EPS of 185.90 cents.
At the last closing share price the estimated dividend yield is 4.58%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.10.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 192.2, implying annual growth of 134.0%.

Current consensus DPS estimate is 122.5, implying a prospective dividend yield of 4.7%.

Current consensus EPS estimate suggests the PER is 13.6.

Forecast for FY22:

Macquarie forecasts a full year FY22 dividend of 125.00 cents and EPS of 181.30 cents.
At the last closing share price the estimated dividend yield is 4.77%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.46.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 189.6, implying annual growth of -1.4%.

Current consensus DPS estimate is 130.5, implying a prospective dividend yield of 5.0%.

Current consensus EPS estimate suggests the PER is 13.7.

Market Sentiment: 0.2

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

NUF  NUFARM LIMITED

Agriculture

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Overnight Price: $5.05

Ord Minnett rates NUF as Hold (3) -

Nufarm will report its first-half FY21 result on May 20. Ord Minnett notes the year has been challenging with Nufarm hit by factors like supply chain disruptions and poor seasonal conditions, although the company has recovered since then.

With crop prices at elevated levels and upbeat commentary from peers, the broker believes the current market backdrop is supportive for Nufarm. Going ahead, the broker expects better performance and forecasts earnings before interest and tax of $66m in the first half.

Hold rating with the target price rising to $4.90 from $4.50.

This stock is not covered in-house by Ord Minnett. Instead, the broker whitelabels research by JP Morgan.

Target price is $4.90 Current Price is $5.05 Difference: minus $0.15 (current price is over target).
If NUF meets the Ord Minnett target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.49, suggesting upside of 8.6% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY21:

Ord Minnett forecasts a full year FY21 dividend of 0.00 cents and EPS of 7.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 72.14.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 14.4, implying annual growth of N/A.

Current consensus DPS estimate is 1.8, implying a prospective dividend yield of 0.4%.

Current consensus EPS estimate suggests the PER is 35.1.

Forecast for FY22:

Ord Minnett forecasts a full year FY22 dividend of 7.00 cents and EPS of 16.00 cents.
At the last closing share price the estimated dividend yield is 1.39%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 31.56.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 22.2, implying annual growth of 54.2%.

Current consensus DPS estimate is 7.0, implying a prospective dividend yield of 1.4%.

Current consensus EPS estimate suggests the PER is 22.8.

Market Sentiment: 0.7

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

OZL  OZ MINERALS LIMITED

Copper

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Overnight Price: $25.16

Ord Minnett rates OZL as Lighten (4) -

Even though copper recently hit all-time highs, Ord Minnett thinks the elevated levels could be sustained for some time. Still, the broker struggles to be constructive on OZ Minerals' valuation which is currently at a 20% premium over the broker's net present value.

On balance, Ord Minnett retains its Lighten rating with the target price rising to $21 from $14.50.

This stock is not covered in-house by Ord Minnett. Instead, the broker whitelabels research by JP Morgan.

Target price is $21.00 Current Price is $25.16 Difference: minus $4.16 (current price is over target).
If OZL meets the Ord Minnett target it will return approximately minus 17% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $23.31, suggesting downside of -5.6% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY21:

Ord Minnett forecasts a full year FY21 dividend of 50.00 cents and EPS of 157.50 cents.
At the last closing share price the estimated dividend yield is 1.99%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 15.97.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 129.7, implying annual growth of 98.9%.

Current consensus DPS estimate is 28.2, implying a prospective dividend yield of 1.1%.

Current consensus EPS estimate suggests the PER is 19.1.

Forecast for FY22:

Ord Minnett forecasts a full year FY22 dividend of 39.00 cents and EPS of 116.70 cents.
At the last closing share price the estimated dividend yield is 1.55%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 21.56.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 130.5, implying annual growth of 0.6%.

Current consensus DPS estimate is 27.0, implying a prospective dividend yield of 1.1%.

Current consensus EPS estimate suggests the PER is 18.9.

Market Sentiment: 0.0

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

RWC  RELIANCE WORLDWIDE CORPORATION LIMITED

Building Products & Services

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Overnight Price: $5.07

Macquarie rates RWC as Outperform (1) -

A recent survey, combined with builder and distributor feedback, continues to indicate to Macquarie strong underlying demand
in residential R&R and new construction. However, tighter supply chains and rising costs are considered weighing on contractor sentiment. 

On this latter point, Macquarie foresees further pressures over summer. The Outperform rating and $5.30 target are retained for Reliance Worldwide.

Target price is $5.30 Current Price is $5.07 Difference: $0.23
If RWC meets the Macquarie target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $5.21, suggesting downside of -0.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Macquarie forecasts a full year FY21 dividend of 12.00 cents and EPS of 24.90 cents.
At the last closing share price the estimated dividend yield is 2.37%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 20.36.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 24.3, implying annual growth of 112.6%.

Current consensus DPS estimate is 11.9, implying a prospective dividend yield of 2.3%.

Current consensus EPS estimate suggests the PER is 21.6.

Forecast for FY22:

Macquarie forecasts a full year FY22 dividend of 13.00 cents and EPS of 27.50 cents.
At the last closing share price the estimated dividend yield is 2.56%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 18.44.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 24.2, implying annual growth of -0.4%.

Current consensus DPS estimate is 12.2, implying a prospective dividend yield of 2.3%.

Current consensus EPS estimate suggests the PER is 21.7.

Market Sentiment: 0.7

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

SHV  SELECT HARVESTS LIMITED

Agriculture

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Overnight Price: $6.04

Citi rates SHV as Buy (1) -

Blue Diamond, California’s largest almond grower co-operative and processor, has lowered the USDA’s 2021 crop forecast of 3.2bn lbs due to ongoing water supply deficits across the state.

As a result, Citi sees an upside to both US almond prices for the 2021 season and Select Harvests' expected earnings in FY22.

Buy rating with a $6.50 target price.

Target price is $6.50 Current Price is $6.04 Difference: $0.46
If SHV meets the Citi target it will return approximately 8% (excluding dividends, fees and charges).

The company's fiscal year ends in September.

Forecast for FY21:

Citi forecasts a full year FY21 dividend of 6.00 cents and EPS of 12.10 cents.
At the last closing share price the estimated dividend yield is 0.99%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 49.92.

Forecast for FY22:

Citi forecasts a full year FY22 dividend of 19.00 cents and EPS of 37.90 cents.
At the last closing share price the estimated dividend yield is 3.15%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 15.94.

Market Sentiment: 1.0

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

TNE  TECHNOLOGYONE LIMITED

IT & Support

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Overnight Price: $8.79

Credit Suisse rates TNE as Initiation of coverage with Neutral (3) -

Credit Suisse expects pre-tax profit growth of around 12.5% with the top line supported by the transition of existing customers to software-as-a-service as well as increasing product penetration. The broker believes the business has a compelling offering and is well regarded.

Yet, over the medium term Credit Suisse is concerned regarding competition from best-of-breed solutions and believes the current PE ratio is adequately capturing the risk/reward profile. Credit Suisse initiates coverage with a Neutral rating and $9.10 target.

Target price is $9.10 Current Price is $8.79 Difference: $0.31
If TNE meets the Credit Suisse target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $9.35, suggesting upside of 7.3% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY21:

Credit Suisse forecasts a full year FY21 dividend of 14.68 cents and EPS of 22.43 cents.
At the last closing share price the estimated dividend yield is 1.67%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 39.19.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 22.7, implying annual growth of 14.9%.

Current consensus DPS estimate is 15.2, implying a prospective dividend yield of 1.7%.

Current consensus EPS estimate suggests the PER is 38.4.

Forecast for FY22:

Credit Suisse forecasts a full year FY22 dividend of 16.15 cents and EPS of 24.68 cents.
At the last closing share price the estimated dividend yield is 1.84%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 35.62.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 24.9, implying annual growth of 9.7%.

Current consensus DPS estimate is 17.3, implying a prospective dividend yield of 2.0%.

Current consensus EPS estimate suggests the PER is 35.0.

Market Sentiment: 0.5

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

TPG  TPG TELECOM LIMITED

Telecommunication

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Overnight Price: $5.26

Ord Minnett rates TPG as Upgrade to Buy from Hold (1) -

Ord Minnett believes market concerns about TPG Telecom's management change and the impact of covid on subscribers have been the key drivers of TPG Telecom's underperformance.

While concerned over the mobile business with covid headwinds not expected to ease until mid-2022, the broker does expect strong earnings growth driven partly by cost synergies from the merger.

Ord Minnett upgrades to Buy from Hold with the target price lowered to $6.45 from $7.40 led by lower post-paid revenue and fixed average revenue per user (ARPU).

Target price is $6.45 Current Price is $5.26 Difference: $1.19
If TPG meets the Ord Minnett target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $7.70, suggesting upside of 49.0% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY21:

Ord Minnett forecasts a full year FY21 dividend of 0.00 cents and EPS of 16.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 32.88.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 18.4, implying annual growth of -71.3%.

Current consensus DPS estimate is 11.1, implying a prospective dividend yield of 2.1%.

Current consensus EPS estimate suggests the PER is 28.1.

Forecast for FY22:

Ord Minnett forecasts a full year FY22 dividend of 0.00 cents and EPS of 20.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 26.30.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 24.5, implying annual growth of 33.2%.

Current consensus DPS estimate is 14.5, implying a prospective dividend yield of 2.8%.

Current consensus EPS estimate suggests the PER is 21.1.

Market Sentiment: 0.8

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

TWE  TREASURY WINE ESTATES LIMITED

Food, Beverages & Tobacco

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Overnight Price: $10.84

Morgans rates TWE as Upgrade to Add from Hold (1) -

Morgans lifts the rating to Add from Hold and raises the target price to $13 from $11.10, after developing greater confidence in Treasury wine Estate's growth profile. The FY21-23 profit forecasts were increased by 4.4%, 9.0% and 4.8%, respectively.

The FY21 trading update was better than the broker expected, despite covid-impacts on some of the higher-margin channels and no China sales in the second half.

To maximise the benefits of a separate focus across brand portfolios, rather than regions, management has created new divisions (Penfolds, Treasury Americas and Treasury Premium Brands). 

The analyst believes this will allow the market to properly value the Penfolds brand, and prove that the sum-of-the-parts is worth more than the whole.

Target price is $13.00 Current Price is $10.84 Difference: $2.16
If TWE meets the Morgans target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $10.89, suggesting downside of -1.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Morgans forecasts a full year FY21 dividend of 0.00 cents and EPS of 42.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 25.81.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 40.9, implying annual growth of 12.9%.

Current consensus DPS estimate is 21.4, implying a prospective dividend yield of 1.9%.

Current consensus EPS estimate suggests the PER is 27.1.

Forecast for FY22:

Morgans forecasts a full year FY22 dividend of 0.00 cents and EPS of 46.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 23.57.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 42.8, implying annual growth of 4.6%.

Current consensus DPS estimate is 22.7, implying a prospective dividend yield of 2.0%.

Current consensus EPS estimate suggests the PER is 25.9.

Market Sentiment: 0.0

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

WBC  WESTPAC BANKING CORPORATION

Banks

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Overnight Price: $25.41

Macquarie rates WBC as Neutral (3) -

In a review of first half bank results, Macquarie observes that, contrary to expectations, pre-provision earnings excluding markets income continued to decline. A focus on costs is considered driven by an inability to deliver revenue growth.

Compared to the FY20 average, the majority of banks experienced a revenue decline, explains the broker. In the lead-up to results, the market was also looking for improving pre-provision earnings growth, which failed to materialise, explains Macquarie. 

For Westpac Bank, the analyst expects general caution before potential cost-out benefits are believed. Over the last five years, it's considered such ambitious cost-out strategy announcements by the majors have generally failed to materialise.

The Neutral rating and $27.25 target are retained.

Target price is $27.25 Current Price is $25.41 Difference: $1.84
If WBC meets the Macquarie target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $28.49, suggesting upside of 12.5% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY21:

Macquarie forecasts a full year FY21 dividend of 120.00 cents and EPS of 170.50 cents.
At the last closing share price the estimated dividend yield is 4.72%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.90.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 176.1, implying annual growth of 176.3%.

Current consensus DPS estimate is 116.0, implying a prospective dividend yield of 4.6%.

Current consensus EPS estimate suggests the PER is 14.4.

Forecast for FY22:

Macquarie forecasts a full year FY22 dividend of 125.00 cents and EPS of 162.60 cents.
At the last closing share price the estimated dividend yield is 4.92%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 15.63.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 180.3, implying annual growth of 2.4%.

Current consensus DPS estimate is 124.3, implying a prospective dividend yield of 4.9%.

Current consensus EPS estimate suggests the PER is 14.0.

Market Sentiment: 0.7

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

XRO  XERO LIMITED

Accountancy

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Overnight Price: $112.50

Morgan Stanley rates XRO as Overweight (1) -

Xero has lowered expectations for earnings margins and Morgan Stanley notes a negative response from the market.

The broker takes a different stance, pointing out that to sustain a leadership position requires continual reinvestment in product, and this is why the decision to revert to previous expenditure/investment ratios makes financial sense.

Revenue estimates for FY22 are lifted by 3% and by 7% for FY23. Overweight maintained. Target is reduced to $135 from $140. Industry view: Attractive.

Target price is $135.00 Current Price is $112.50 Difference: $22.5
If XRO meets the Morgan Stanley target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $116.83, suggesting downside of -1.8% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY22:

Morgan Stanley forecasts a full year FY22 dividend of 0.00 cents and EPS of 44.68 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 251.77.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 25.4, implying annual growth of N/A.

Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A.

Current consensus EPS estimate suggests the PER is 468.5.

Forecast for FY23:

Morgan Stanley forecasts a full year FY23 dividend of 0.00 cents and EPS of 96.82 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 116.20.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 67.6, implying annual growth of 166.1%.

Current consensus DPS estimate is 4.3, implying a prospective dividend yield of 0.0%.

Current consensus EPS estimate suggests the PER is 176.0.

This company reports in NZD. 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

Today's Price Target Changes
Company Last Price Broker New Target Prev Target Change
APA APA $9.43 Macquarie 10.09 10.40 -2.98%
BGL Bellevue Gold $0.91 Macquarie 1.20 1.05 14.29%
CAR Carsales.Com $17.29 Credit Suisse N/A 20.20 -100.00%
CSL CSL $276.57 Morgan Stanley 267.00 275.00 -2.91%
CSR CSR $6.17 UBS 6.17 5.73 7.68%
NUF Nufarm $5.06 Ord Minnett 4.90 4.50 8.89%
OZL Oz Minerals $24.71 Ord Minnett 21.00 14.50 44.83%
TPG TPG Telecom $5.17 Ord Minnett 6.45 7.40 -12.84%
TWE Treasury Wine Estates $11.10 Morgans 13.00 11.10 17.12%
XRO Xero $119.00 Morgan Stanley 135.00 140.00 -3.57%
Summaries
ANZ ANZ Banking Group Outperform - Macquarie Overnight Price $27.42
APA APA Downgrade to Neutral from Outperform - Macquarie Overnight Price $9.66
BEN Bendigo And Adelaide Bank Outperform - Macquarie Overnight Price $10.21
BGL Bellevue Gold Outperform - Macquarie Overnight Price $0.82
BOQ Bank Of Queensland No Rating - Macquarie Overnight Price $8.82
CAR Carsales.Com No Rating - Credit Suisse Overnight Price $19.51
CBA Commbank Neutral - Macquarie Overnight Price $96.58
CSL CSL Equal-weight - Morgan Stanley Overnight Price $277.68
CSR CSR Neutral - UBS Overnight Price $5.96
EVT Event Hospitality Buy - Citi Overnight Price $12.36
FPH Fisher & Paykel Healthcare Outperform - Macquarie Overnight Price $30.68
JHX James Hardie Outperform - Macquarie Overnight Price $41.93
NAB National Australia Bank Neutral - Macquarie Overnight Price $26.22
NUF Nufarm Hold - Ord Minnett Overnight Price $5.05
OZL Oz Minerals Lighten - Ord Minnett Overnight Price $25.16
RWC Reliance Worldwide Outperform - Macquarie Overnight Price $5.07
SHV Select Harvests Buy - Citi Overnight Price $6.04
TNE Technologyone Initiation of coverage with Neutral - Credit Suisse Overnight Price $8.79
TPG TPG Telecom Upgrade to Buy from Hold - Ord Minnett Overnight Price $5.26
TWE Treasury Wine Estates Upgrade to Add from Hold - Morgans Overnight Price $10.84
WBC Westpac Banking Neutral - Macquarie Overnight Price $25.41
XRO Xero Overweight - Morgan Stanley Overnight Price $112.50
RATING SUMMARY
Rating No. Of Recommendations
1. Buy

11

3. Hold

8

4. Reduce

1

Monday 17 May 2021

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Disclaimer:
The content of this information does in no way reflect the opinions of FNArena, or of its journalists. In fact we don't have any opinion about the stock market, its value, future direction or individual shares. FNArena solely reports about what the main experts in the market note, believe and comment on. By doing so we believe we provide intelligent investors with a valuable tool that helps them in making up their own minds, reading market trends and getting a feel for what is happening beneath the surface. This document is provided for informational purposes only. It does not constitute an offer to sell or a solicitation to buy any security or other financial instrument. FNArena employs very experienced journalists who base their work on information believed to be reliable and accurate, though no guarantee is given that the daily report is accurate or complete. Investors should contact their personal adviser before making any investment decision.