Australian Broker Call

Ord Minnett rates AGL as Buy (1) -

Ord Minnett incorporates the announced 30 June 2026 closure date for the Torrens Island B power station into its financial model for AGL Energy.

Management has economic-viability concerns for the power station after the completion in mid-2026 of the Project Energy Connect interconnector between NSW and South Australia.

The Buy rating and $9.50 target are unchanged.

Target price is $9.50 Current Price is $7.86 Difference: $1.64
If AGL meets the Ord Minnett target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $8.53, suggesting upside of 5.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.6

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

Macquarie rates ALD as Outperform (1) -

Macquarie retains its Outperform rating for Ampol and feels now is an attractive time to purchase shares with the likelihood of capital management in the February reporting season, or potentially before.

The broker expects a high dividend payout ratio (70%) as well as an on-market buyback, and points to recent share purchases by three directors, including the CEO. It's also felt a takeover is not out of the question at the current valuation.

For the shorter-term Macquarie updates its financial model for lower 2H Convenience Retail fuel volumes, reflecting a weaker-than-
expected mobility recovery and also for the company's ongoing site rationalisation.

The target falls to $38.00 from $38.75.

Target price is $38.00 Current Price is $28.40 Difference: $9.6
If ALD meets the Macquarie target it will return approximately 34% (excluding dividends, fees and charges).

Current consensus price target is $34.75, suggesting upside of 22.8% (ex-dividends)

The company's fiscal year ends in December.

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

Citi rates ASB as Buy (1) -

FY23 earnings (EBIT) guidance of $100m for Austal was in line with consensus and Citi feels no need to alter its earnings forecasts.

The analyst suspects inflationary pressures have offset a favourable decline in the Australian dollar.

The Buy rating and $3.70 target are unchanged.

Target price is $3.70 Current Price is $2.49 Difference: $1.21
If ASB meets the Citi target it will return approximately 49% (excluding dividends, fees and charges).

Current consensus price target is $3.00, suggesting upside of 23.0% (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

Morgans rates AUC as Speculative Buy (1) -

Morgans initiates coverage on WA-based gold exploration and development company Ausgold with a Speculative Buy rating and 7c target price.

The company is developing the Katanning Gold project, which is an open pit operation with an 11 year mine life.

A robust, according to the analyst, preliminary feasability study states the project will produce a life-of-mine average of 105koz per year. at an all-in sustaining cost (AISC) of $1,480/oz.

Morgans awaits the definitive feasability study but feels there is both limited regulatory and operational risk involved in the project.

Target price is $0.07 Current Price is $0.04 Difference: $0.028
If AUC meets the Morgans target it will return approximately 67% (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

Morgan Stanley rates GPT as Underweight (5) -

GPT Group has sold two logistics assets in Port Melbourne,and near-Parramatta for a combined $256m at a -1.5% discount to June 2022 book value.

While Morgan Stanley was initially surprised by the sales, a subsequent chat with management revealed solid reasoning.For example, both assets had a higher office component than thought and potential residential rezoning (at Paramatta) was a long-term proposition.

Underweight and $4.50 target unchanged. Industry view: In-Line.

Target price is $4.50 Current Price is $4.35 Difference: $0.15
If GPT meets the Morgan Stanley target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $4.70, suggesting upside of 6.1% (ex-dividends)

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

Citi rates HVN as Buy (1) -

Harvey Norman's like-for-like sales growth for Australia of 8.8% for the first four months of FY23 was a beat over the 3.5% expected by Citi and the consensus expectation for 0.7%.

The analyst points out sales momentum has continued to accelerate on a three-year view, which is consistent with recent trading updates by JB Hi-Fi ((JBH)) and that company's The Good Guys stores. The Buy rating and $4.70 target price are unchanged.

Target price is $4.70 Current Price is $4.17 Difference: $0.53
If HVN meets the Citi target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $4.66, suggesting upside of 8.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.4

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

Credit Suisse rates HVN as Outperform (1) -

Harvey Norman has retained overall solid sales growth in its first four months of the fiscal year according to Credit Suisse, but the broker expects uncertainty over the extent of a contraction to sideline investors until visibility is improved.

New Zealand reported a sharp contraction in September and October, with comparable store sales down -4.2%, which could suggest a greater contraction in Australian than the -4.5% decline the broker has accounted for in the second half.

The Outperform rating is retained, underpinned by a long-term growth runway, and the target price decreases to $5.76 from $5.82.

Target price is $5.76 Current Price is $4.17 Difference: $1.59
If HVN meets the Credit Suisse target it will return approximately 38% (excluding dividends, fees and charges).

Current consensus price target is $4.66, suggesting upside of 8.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.4

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

UBS rates HVN as Sell (5) -

UBS raises its FY23 and FY24 EPS forecasts for Harvey Norman by 13% and 1%, respectively following an AGM trading update showing higher 1H sales and growth in Asia.

The broker sees potential for the Asian share of profit to rise to 10% in FY28 from 5% in FY22. The doubling of stores to 28 in Malaysia in the last five years is expected to accelerate with 80 stores forecast by the end of FY28.

The target rises to $3.85 from $3.60. The Sell rating is kept on the analyst's caution over sales at Australian franchisees.

Target price is $3.85 Current Price is $4.17 Difference: minus $0.32 (current price is over target).
If HVN meets the UBS target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.66, suggesting upside of 8.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.4

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

Morgan Stanley rates IAG as Underweight (5) -

Morgan Stanley observes strong gross written premium (GWP) growth across personal and commercial lines of insurance on double digit pricing, according to September quarter Australian insurance industry data.

While Insurance Australia Group's GWP growth was better than expected it still lagged system growth. It's thought strong pricing presents upside risk going forward.

The broker retains its Underweight rating and $4.20 target. Industry View: In-Line.

Target price is $4.20 Current Price is $4.86 Difference: minus $0.66 (current price is over target).
If IAG meets the Morgan Stanley target it will return approximately minus 14% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.17, suggesting upside of 6.1% (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

Macquarie rates IGO as Outperform (1) -

Macquarie slightly adjusts its cost assumption for IGO though maintains its $21.00 target price following the recent award of the load and haul service contact to Macmahon ((MAH)) for the Greenbushes lithium project.

The analyst suggests there will now be extra cost visibility at the Greenbushes over the next five years after the contract award. The Outperform rating is unchanged.

Target price is $21.00 Current Price is $15.80 Difference: $5.2
If IGO meets the Macquarie target it will return approximately 33% (excluding dividends, fees and charges).

Current consensus price target is $15.23, suggesting upside of 1.1% (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

Credit Suisse rates KGN as Underperform (5) -

Kogan.com reported no material changes in sales and gross profit trends to the end of October, with declines continuing. Gross sales for the first four months of the fiscal year have declined -38.2% while gross profit declined -40.6%. 

According to Credit Suisse, Kogan.com's sustainability is dependent on a turnaround in the second half. The broker's FY24 forecasts are underpinned by an assumed 7 percentage point increase in Kogan Exclusives' gross margins, generating $10m in earnings.

The Underperform rating and target price of $2.73 are retained.

Target price is $2.73 Current Price is $3.70 Difference: minus $0.97 (current price is over target).
If KGN meets the Credit Suisse target it will return approximately minus 26% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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

Macquarie rates LM8 as Outperform (1) -

Macquarie assesses positive results from Lunnon Metals' diamond drilling program at 85H (Foster).

The results confirm the accuracy of the existing mineral resource, explains the analyst.

The Outperform rating and target price of $1.20 are retained.

Target price is $1.20 Current Price is $0.82 Difference: $0.38
If LM8 meets the Macquarie target it will return approximately 46% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

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

Macquarie rates MAH as Outperform (1) -

In a positive for Macmahon's diversification strategy and near-term margin, according to Macquarie, the company has recently been awarded the seven-year load and haul service contact for the Greenbushes lithium project.

FY23 guidance for revenue and earnings has been maintained.

The broker sees upside from a strong order book and tender pipeline, as well as ongoing margin expansion, and maintains the Outperform rating and 23c target.

Target price is $0.23 Current Price is $0.14 Difference: $0.09
If MAH meets the Macquarie target it will return approximately 64% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

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

Ord Minnett rates NAN as Upgrade to Hold from Lighten (3) -

Ord Minnett believes Nanosonics is on-track to beat its FY23 sales growth guidance, having last week reported a 42% lift in sales for the first four months of FY23. As a result of this view, the broker's rating is upgraded to Hold from Lighten.

The target also rises to $4.00 from $3.60 given the analyst's increased valuation, potential for a rise in FY23 guidance and prospects for the second product, Coris, once it is launched.

Target price is $4.00 Current Price is $4.16 Difference: minus $0.16 (current price is over target).
If NAN meets the Ord Minnett target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.25, suggesting downside of -7.7% (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

Citi rates NCK as Buy (1) -

Following a stronger-than-expected trading update for the first four months of FY23, Citi upgrades its earnings forecasts for Nick Scali. Revenue, gross margins and (potentially) costs were better than expectations.

The broker raises its target to $15.83 from $14.63 to reflect higher sales and gross margins and retains its Buy rating. FY24 forecasts are also upgraded by 6% following guidance for Plush margins to reach 59% before the end of FY23.

Target price is $15.83 Current Price is $10.23 Difference: $5.6
If NCK meets the Citi target it will return approximately 55% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

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

Macquarie rates NCK as Outperform (1) -

Macquarie now has higher percentage gross margin expectations for Nick Scali following a trading update for the first four months of FY23.

First half profit guidance was a 17% beat compared to the broker's forecast as the gross margin percentage expanded by 180bps compared to the 2H of FY22. The greater margin largely resulted via synergies from the recently-acquired sofa merchant Plush.

Management expects to open two Nick Scali and four Plush stores in FY23.

The target rises to $12.50 from $12.00. Outperform.

Target price is $12.50 Current Price is $10.23 Difference: $2.27
If NCK meets the Macquarie target it will return approximately 22% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

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

Macquarie rates NHC as Outperform (1) -

Macquarie highlights from New Hope's 1Q production report that sales and production from Bengalla were weaker than expected, while higher implied operating costs also present a headwind.

Sales at Bengalla were only -2% shy of the broker's forecast, indicating a drawdown in its coal inventories. The re-start of New Acland stage 3 was also noted.

Despite the recent correction, the analyst points out thermal prices remain buoyant. The Outperform rating is unchanged, while target falls by -9% to $6.40.

Target price is $6.40 Current Price is $5.41 Difference: $0.99
If NHC meets the Macquarie target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $6.45, suggesting upside of 20.3% (ex-dividends)

The company's fiscal year ends in July.

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

Macquarie rates ORG as Outperform (1) -

Macquarie further explores the ACCC transaction risks for the potential takeover by EIG/Brookfield of Origin Energy.

The broker believes Brookfield’s ownership of Origin would not add a materially new conflict compared to those addressed in the Australian Energy Regulator's (AER) draft ring fencing regime.

The Outperform rating and $9.00 target are retained. 

Target price is $9.00 Current Price is $7.90 Difference: $1.1
If ORG meets the Macquarie target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $7.68, suggesting downside of -3.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.4

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

Morgan Stanley rates QBE as Overweight (1) -

Morgan Stanley observes strong gross written premium (GWP) growth across personal and commercial lines of insurance on double digit pricing, according to September quarter Australian insurance industry data.

The broker notes QBE Insurance grew its GWP by more than 20%. It's thought strong pricing presents upside risk going forward.

The Overweight rating and $17 target are retained. Industry view: In-Line.

Target price is $17.00 Current Price is $12.95 Difference: $4.05
If QBE meets the Morgan Stanley target it will return approximately 31% (excluding dividends, fees and charges).

Current consensus price target is $16.03, suggesting upside of 23.1% (ex-dividends)

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

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

Morgans downgrades FY22 and FY23 profit (NPATA) estimates by -8.3% and -11.9%, respectively, and reduces its target for Smartgroup Corp to $5.65 from $7.40.

The broker’s lower forecasts were in reaction to new FY22 profit guidance that missed the consensus estimate by -8%. Guidance implied 2H profit would fall by -10-13% half-on-half due to lower settlement volume from ongoing vehicle supply constraints.

Morgans decides to upgrade its rating to Add from Hold given the company’s strong balance sheet, solid forward revenue pipeline, contract opportunities and potential for high electric vehicle lease demand.

Target price is $5.65 Current Price is $4.62 Difference: $1.03
If SIQ meets the Morgans target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $5.93, suggesting upside of 25.1% (ex-dividends)

The company's fiscal year ends in December.

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

Citi rates SKO as Buy (1) -

Citi lowers its target price for Serko by -28% to $3.65 after lowering FY24 and FY25 forecasts to reflect the impact of the macroeconomic backdrop on the core Managed Travel business.

The broker also adopts more conservative assumptions for the Booking for Business (BFB) segment.

While the analyst expects consensus forecasts to fall, the Buy rating is maintained given ample balance sheet capacity to reach the company's free cashflow break-even target. Growth is also anticipated from US expansion and the BFB business.

Target price is $3.65 Current Price is $2.32 Difference: $1.33
If SKO meets the Citi target it will return approximately 57% (excluding dividends, fees and charges).

Current consensus price target is $4.84, suggesting upside of 108.6% (ex-dividends)

Forecast for FY23:

Forecast for FY24:

This company reports in NZD. 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

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

Morgan Stanley observes strong gross written premium (GWP) growth across personal and commercial lines of insurance on double digit pricing, according to September quarter Australian insurance industry data.

While Suncorp Group's GWP growth was better than expected it still lagged system growth. It's thought strong pricing presents upside risk going forward.

The broker retains its Equal-weight rating and $11.30 target. Industry View: In-Line. 

Target price is $11.30 Current Price is $11.91 Difference: minus $0.61 (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 $13.49, suggesting upside of 12.3% (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 TYR as Add (1) -

Morgans likes the focus by new management at Tyro Payments on improved profitability and lifts its FY23 and FY24 EPS forecasts by around 10% and 3%, respectively.

These broker changes follow the company's AGM where FY23 earnings (EBITDA) guidance was raised to the top end of the target range, and cash flow breakeven was targeted by the end of FY23.

The Add rating is retained, while the target is increased to $2.05 from $1.99.

Target price is $2.05 Current Price is $1.49 Difference: $0.565
If TYR meets the Morgans target it will return approximately 38% (excluding dividends, fees and charges).

Current consensus price target is $1.70, suggesting upside of 7.6% (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 UNI as Neutral (3) -

Following a better-than-expected trading update (for sales and margins) for the first 21 weeks of FY23 (ex the Thrills acquisition), Citi  points out a slowing in revenue.

The broker expects a slowing rate of revenue growth over the remainder of the 1H due to tough comparatives and indications of a slowing since the last update at FY22 results.

Despite this view and increased costs flagged by management, the analyst still expects consensus upgrades for the 1H.

Citi maintains its Neutral rating and $4.55 target.

Target price is $4.55 Current Price is $5.20 Difference: minus $0.65 (current price is over target).
If UNI meets the Citi target it will return approximately minus 13% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.63, suggesting upside of 10.3% (ex-dividends)

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

Macquarie rates UNI as Neutral (3) -

Macquarie raises its earnings estimates for Universal Store and increases its target to $5.00 from $4.90 following an AGM trading update for the first 21 weeks of FY23. Total sales rose by 40.2% (ex the Thrills acquisition) compared to the previous corresponding period.

Management provided no guidance given the current macroeconomic uncertainty.

Macquarie continues to prefer Outperform-rated Lovisa Holdings ((LOV)) for exposure to the youth demographic and maintains its Neutral rating for Universal Store.

Target price is $5.00 Current Price is $5.20 Difference: minus $0.2 (current price is over target).
If UNI meets the Macquarie target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.63, suggesting upside of 10.3% (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

UBS rates UNI as Buy (1) -

Following an AGM trading update by Universal Store, UBS notes total sales growth (ex the recent Thrills acquisition) slowed in the first 21 weeks of FY23 to 40.2% from 54.7% in the first eight weeks.

Despite the slowing sales growth, the analyst remains upbeat on the company's exposure to youth in the tough macroeconomic backdrop and points to the store rollout opportunity.

The Buy rating and $6.25 target are retained.

Target price is $6.25 Current Price is $5.20 Difference: $1.05
If UNI meets the UBS target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $5.63, suggesting upside of 10.3% (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