Australian Broker Call

Citi rates AKE as Buy (1) -

Allkem's investor day provided a few takeaways for Citi: the company expects to maintain 10% market share; nominated growth should be funded by stronger cash generation as will the unlocking of value from undeveloped assets; and the company considers vertical integration and flexibility of grades as key differentiators.

The company confirmed expectations of a Stage 2/3 at Sal de Vida and provided a five-year capital expenditure and production outlook.

Citi believes Allkem can outperform peers if it capitalises on its learnings from Olaroz and expects another six months of strong prices.

Buy rating retained. Target price rises to $15.50 from $14.

Target price is $15.50 Current Price is $13.42 Difference: $2.08
If AKE meets the Citi target it will return approximately 15% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.9

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

Macquarie rates AKE as Outperform (1) -

Following Allkem's strategy day, Macquarie points to a material increase in the optionality at Olaroz after a resources upgrade. Moreover,  Sal de Vida targeted volumes have been increased and brought forward.

After the analyst lowers cost assumptions at both Olaroz and Sal de Vida and increases the production profile for Sal De Vida, the target rises by 4% to $17.60. Outperform.

Target price is $17.60 Current Price is $13.42 Difference: $4.18
If AKE meets the Macquarie target it will return approximately 31% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.9

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

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

Morgan Stanley retains its Equal-weight rating and $11.30 target price following Allkem's updated development plan for Sal de Vida and notification of an expanded resource at Olaroz. The latter allows for further expansions to have a long life.

Regarding Sal de Vida, the updated plan means production will be around 40% higher though capex is now expected to increase by 70%, points out the analyst. Industry view is Attractive.

Target price is $11.30 Current Price is $13.42 Difference: minus $2.12 (current price is over target).
If AKE meets the Morgan Stanley target it will return approximately minus 16% (excluding dividends, fees and charges - negative figures indicate an expected loss).

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.9

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

Morgans rates AKE as Add (1) -

Allkem has announced strong upgrades to its lithium resources (up 153% at Olaroz and 10% at Sal de Vida) and has signalled a stage 3 expansion for the mine. Planned production capacity at Sal de Vida stage 1 rose nearly 50%.

Management also said it was considering alternative production technologies such as Direct Lithium Exchange.

Morgans says Allkem pointed to Wood Mackenzie forecasts for battery and technical grade carbonate prices to rise steeply into 2023 before retreating to stabilise. Morgans' price forecasts outstrip these numbers and the broker retains its own forecasts.

Add rating retained. Target price rises to $16.65 from $15.24.

Target price is $16.65 Current Price is $13.42 Difference: $3.23
If AKE meets the Morgans target it will return approximately 24% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.9

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

Ord Minnett rates AKE as Buy (1) -

Ord Minnett raises its target price to $18.50 from $17.50 and maintains its Buy rating for Allkem following an update on the two Argentinian-based lithium brine projects Olaroz and Sal de Vida.

The analyst explains the Olaroz resource has more than doubled and Sal de Vida has been expedited and is now also a larger project. Management's funding options for the latter include existing cash and cash flow, project financing and/or strategic offtake partners.

Target price is $17.50 Current Price is $13.42 Difference: $4.08
If AKE meets the Ord Minnett target it will return approximately 30% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.9

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

Macquarie rates APE as Outperform (1) -

Volumes for new vehicle sales in March remained -6.6% below the five-year pre-covid average. Nonetheless, it's thought auto dealers will keep elevated margins as order banks are cleared, and volumes should accelerate when new orders are satisfied.

The broker maintains its Outperform rating and $18.75 target price for Eagers Automotive.

Target price is $18.75 Current Price is $14.13 Difference: $4.62
If APE meets the Macquarie target it will return approximately 33% (excluding dividends, fees and charges).

Current consensus price target is $17.32, suggesting upside of 24.8% (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

Macquarie rates ARB as Outperform (1) -

Volumes for new vehicle sales in March remained -6.6% below the five-year pre-covid average. Nonetheless, volumes for aggregated models relevant for 4x4 accessories were strong, notes Macquarie.

The broker has an Outperform rating and $48 target for ARB Corp, which along with G.U.D. Holdings ((GUD)) has the highest exposure to the 4x4 accessories market.

Target price is $48.00 Current Price is $41.35 Difference: $6.65
If ARB meets the Macquarie target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $48.99, suggesting upside of 18.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.8

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

Ord Minnett rates ARB as Buy (1) -

Overall sales growth for new vehicles continues to be constrained by supply issues though Ord Minnett notes demand remains robust.

New vehicle sales continue to grow strongly within ARB Corp's key vehicle exposures and the broker expects sales to continue to grow at above-average levels.

The Buy rating and $52.20 price target are retained.

Target price is $52.20 Current Price is $41.35 Difference: $10.85
If ARB meets the Ord Minnett target it will return approximately 26% (excluding dividends, fees and charges).

Current consensus price target is $48.99, suggesting upside of 18.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.8

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

Citi rates ASB as Buy (1) -

Citi reports that an industry article suggests the US Marines' Light Amphibious Warships program could be delayed as the navy shifts its focus to larger ships.

Austal is one of five bidders and Citi views the news as negative for the company as it is one less medium-term opportunity available to pursue the maturing LCS program. 

Buy rating and $2.35 target price retained, the broker expecting several shipbuilding projects will be awarded this year and Citi retains confidence in the company's diversification strategies and appreciates the growth in support revenue, which is less cyclical than shipbuilding revenue.

Target price is $2.35 Current Price is $1.91 Difference: $0.44
If ASB meets the Citi target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $2.19, suggesting upside of 16.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.5

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

Macquarie rates ASG as Outperform (1) -

Volumes for new vehicle sales in March remained -6.6% below the five-year pre-covid average. Nonetheless, it's thought auto dealers will keep elevated margins as order banks are cleared, and volumes should accelerate when new orders are satisfied.

The broker maintains its Outperform rating and $2.90 target price for Autosports Group.

Target price is $2.90 Current Price is $2.03 Difference: $0.87
If ASG meets the Macquarie target it will return approximately 43% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 1.0

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

Morgan Stanley rates BOQ as Overweight (1) -

In advance of 1H results next Thursday April 14, Bank of Queensland has disclosed proforma 1H 2021 and 2H 2021 earnings broadly in-line with Morgan Stanley's expectations.

The broker maintains its Overweight rating and believes the bank will deliver positive 'jaws' in FY22, and an even stronger outcome in FY23. The term jaws refers to a comparison between gross income growth and growth for operating expenses. Industry view: Attractive.

Target price is $10.20 Current Price is $8.30 Difference: $1.9
If BOQ meets the Morgan Stanley target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $10.17, suggesting upside of 20.2% (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

Morgan Stanley rates DHG as Overweight (1) -

Morgan Stanley sees both strategic and financial merit in Domain Australia's acquisition of proptech business Realbase for -$180m. There's expected to be 4-5% EPS accretion from the transaction.

The analyst notes there's a landgrab underway at present in a competitive space for niche proptech players, which includes the REA Group ((REA)) backed Realtair (owned 36%) which is growing fast.

The Overweight rating and $5.40 target price are maintained. Industry View: Attractive.

Target price is $5.40 Current Price is $3.96 Difference: $1.44
If DHG meets the Morgan Stanley target it will return approximately 36% (excluding dividends, fees and charges).

Current consensus price target is $5.14, suggesting upside of 31.5% (ex-dividends)

The company's fiscal year ends in June.

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

Morgan Stanley rates GNC as Overweight (1) -

Morgan Stanley initiates coverage on GrainCorp with an Overweight rating and $10 target price, Industry View: In-Line.

Given the favourable weather outlook, the broker believes farmer sentiment will be buoyant and plantings should increase. It's thought the market is too conservative on FY23 earnings.

The analyst notes record grain prices and sufficient cash on hand for reinvestment in growth initiatives or to fund capital returns to shareholders.

Target price is $10.00 Current Price is $8.46 Difference: $1.54
If GNC meets the Morgan Stanley target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $8.60, suggesting upside of 2.4% (ex-dividends)

The company's fiscal year ends in September.

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

Macquarie rates GUD as Outperform (1) -

Volumes for new vehicle sales in March remained -6.6% below the five-year pre-covid average. Nonetheless, volumes for aggregated models relevant for 4x4 accessories were strong, notes Macquarie.

The broker has an Outperform rating and $16.85 target for G.U.D. Holdings, which along with ARB Corp ((ARB)) has the highest exposure to the 4x4 accessories market.

Target price is $16.85 Current Price is $11.40 Difference: $5.45
If GUD meets the Macquarie target it will return approximately 48% (excluding dividends, fees and charges).

Current consensus price target is $15.65, suggesting upside of 35.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 1.0

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

Macquarie rates KLS as Upgrade to Outperform from Neutral (1) -

Macquarie likes Kelsian Group's exposure to defensive transportation contracts (with sovereigns or established corporates), that include a hedge against inflation and fuel prices. The rating is increased to Outperform from Neutral, while the target rises to $8 from $6.90.

It is contract indexation and structure that provide the hedge against inflation and increases in other cost items, explains the analyst. It's also expected the Marine & Tourism space will approach pre-covid levels over 2022.

Target price is $8.00 Current Price is $7.10 Difference: $0.9
If KLS meets the Macquarie target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $8.79, suggesting upside of 20.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 1.0

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

Citi rates MIN as Buy (1) -

Mineral Resources and Albemarle will accelerate production from Wodgina Train 2 and Citi raises FY23 EPS forecasts accordingly.

Mineral Resources has annouced the Wodgina Train restart will yield first production in May; Train 2 will restart in July; and Train 3 is under assessment as is a possible Train 4 in late 2022. 

The company will also upgrade Mt Marion spodumene processing facilities to increast output at a cost of -$120m.

Buy rating retained. Target price rises to $66 from $58.

Target price is $66.00 Current Price is $59.67 Difference: $6.33
If MIN meets the Citi target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $63.09, suggesting upside of 4.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.8

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

Morgan Stanley rates MIN as Overweight (1) -

Morgan Stanley retains its Overweight rating and $56 target price after Mineral Resources updated expansion plans across Wodinga, Mt Marion and Kemerton.

After the broker incorporates the plans into its financial model, an earnings (EBITDA) rise of 34% is implied. Industry view: Attractive.

Target price is $56.00 Current Price is $59.67 Difference: minus $3.67 (current price is over target).
If MIN meets the Morgan Stanley target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $63.09, suggesting upside of 4.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.8

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

Ord Minnett rates MIN as Hold (3) -

In a positive and critical strategic shift, according to Ord Minnett, Mineral Resources announced its lithium joint venture with Albemarle is willing to sell spodumene into the third-party market.

Currently high prices may now be captured, while the joint venture builds and acquires downstream hydroxide capacity, explains the broker.

As a result, the Mt Marion lithium operation will expand and the Wodgina project restart will be brought forward, explains the analyst. The Hold rating is maintained, while the target price increases to $62 from $59.

Target price is $62.00 Current Price is $59.67 Difference: $2.33
If MIN meets the Ord Minnett target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $63.09, suggesting upside of 4.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.8

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

Macquarie rates NGI as Outperform (1) -

The performance of the NGI Strategic Portfolio has led Navigator Global Investments to increase FY22 earnings (EBITDA) guidance by 7.3% at the mid-point of the range, notes Macquarie.

The company had received US$20.1m net cash from its NGI Strategic Investment by mid-February 2022.  The broker's forecasts are updated to reflect both earnings changes and foreign exchange movements. The target price falls to $2.14 from $2.19. Outperform.

Target price is $2.14 Current Price is $1.83 Difference: $0.31
If NGI meets the Macquarie target it will return approximately 17% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

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

Market Sentiment: 1.0

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

Macquarie rates PAN as Outperform (1) -

Following better-than-expected drilling results at Panoramic Resources' Savannah North mine, Macquarie notes potential to expand the resource.

An updated resource is due to be released in September. In the meantime, the broker retains its Outperform rating and $0.40 target price.

Target price is $0.40 Current Price is $0.37 Difference: $0.03
If PAN meets the Macquarie target it will return approximately 8% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 1.0

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

Morgan Stanley rates REA as Overweight (1) -

Following the acquisition of Realbase by competitor Domain Australia ((DHG)), Morgan Stanley sees no immediate impact upon REA Group's earnings or valuation.

The broker believes REA Group has the ability to react to any changes in the competitive landscape. The company already has investments in the real estate campaign management space via its 36% holding in Realtair, points out the analyst.

The Overweight rating and $178 target price are retained. Industry View: Attractive.

Target price is $178.00 Current Price is $133.00 Difference: $45
If REA meets the Morgan Stanley target it will return approximately 34% (excluding dividends, fees and charges).

Current consensus price target is $162.19, suggesting upside of 23.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.4

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

Citi rates SGM as Downgrade to Neutral from Buy (3) -

Sims Metal has signaled it is on track to reach its FY25 targets despite volatile scrap markets and Citi raises earnings estimates accordingly.

Citi expects Sims Metal will continue to benefit from structural decarbonisation tailwinds, including growing demand for recycled scrap and rising landfill costs (rising at 10% to 15% a year).

Sims Lifestyle Services plans to become a one-stop shop as a secure global fulfillment enterprise that helps customers achieve their sustainability goals. Citi says Enterprise data storage is expected to growth 250% over five year.

The broker notes Sims' earnings are linked to sales volumes, margins and operating costs and that EBIT margins are at cyclical highs and absolute margins are increasing. The company expects margins will continue to rise as demand for nonferrous product grows.

Citi raises its target price to $21.60 from $19.50 but downgrades to Neutral from Buy, noting the 70% run in the share price over the past year.

Target price is $21.60 Current Price is $21.39 Difference: $0.21
If SGM meets the Citi target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $22.20, suggesting upside of 3.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.3

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

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

Western Areas has requested a trading halt while it considers the draft Independent Expert Report on IGO's ((IGO)) takeover proposal.

Morgans says IGO believes the Western Areas Board intends to terminate the acquisition on the basis of the report.

Morgans has been expecting the strong nickel price could elicit a higher bid from IGO, but management has stressed that the current nickel price does not match its long-term view.

While the broker spies potential short-term weakness as funds sell in response to the news, Morgans has revised its nickel forecasts upward and increases its target price to $4.45 from $3.29 accordingly, and upgrades to Add from Hold.

The broker believes the next most likely acquisition in the nickel arena would be from a potential combination of Western Areas and Panoramic Resources ((PAN)).

Target price is $4.45 Current Price is $3.65 Difference: $0.8
If WSA meets the Morgans target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $3.65, suggesting upside of 0.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.0

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