Australian Broker Call

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

Morgan Stanley moves to Overweight from Equal-weight, due to government financial assistance enabling Australia's two last refineries to stay open until at least 2027. The target price is increased to $31.70 from $30. Industry view is Attractive.

The broker increases earnings estimates as the refining package will give the investment community more confidence that consensus forecasts can be attained. For the next leg of upside, it's considered global refinery margins need to improve.

While it is still possible to lose money, the significant bear case of refineries losing a lot of money has been reduced, explains the analyst.

Target price is $31.70 Current Price is $27.51 Difference: $4.19
If ALD meets the Morgan Stanley target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $29.82, suggesting upside of 6.8% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.5

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

UBS rates ALD as Buy (1) -

Following the announcement of the Australian government's fuel support package Ampol will continue refining operations at Lytton.

The fuel support package substantially reduces downside volatility in earnings and provides a pathway to realise the value of the storage infrastructure in the longer term, UBS observes.

The stock is the broker's preferred exposure to retail refining and a Buy rating is maintained. Earnings estimates for FY21-23 are lifted by 10-17% to reflect the additional earnings from the fuel production subsidy. Target is raised to $33.50 from $30.90.

Target price is $33.50 Current Price is $27.51 Difference: $5.99
If ALD meets the UBS target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $29.82, suggesting upside of 6.8% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.5

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

Citi rates ALG as Buy (1) -

Ardent Leisure Group's Main Event announced a trading update, showing higher than expected profitability, observes Citi. The profitability was led by strong sales momentum in March-April and the high operating leverage nature of the business, adds the broker.

Given the strong result, the broker has revised its second-half operating income forecast upwards by 150% to $60m. Like for like sales continued to grow vis-a-vis the levels seen in 2019 and Citi expects the momentum to continue into May and June.

Net profit estimates for FY21-23 have been upgraded by 13-30%.

Buy rating with the target rising to $1.30 from $1.17.

Target price is $1.30 Current Price is $0.89 Difference: $0.41
If ALG meets the Citi target it will return approximately 46% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.0

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

Ord Minnett rates ALG as Sell (5) -

Ardent Leisure's latest update on Main Event earnings has left Ord Minnett pleasantly surprised with March and April operating earnings rising 79% on pre-covid and with revenue trends showing a sharp normalisation of growth.

Ord Minnett cautions these growth trends appear to coincide with stimulus payments in the US and thus, despite a better-than-expected two months, the broker estimates the company will be unprofitable until the second half of FY23 largely due to huge financing costs.

Sell rating with a target price of $0.75.

Target price is $0.75 Current Price is $0.89 Difference: minus $0.14 (current price is over target).
If ALG meets the Ord Minnett 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 FY21:

Forecast for FY22:

Market Sentiment: 0.0

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

Citi rates ALL as Buy (1) -

Aristocrat Leisure is recovering much faster than expected, exclaims Citi, fuelled by a reopening and stimulated US economy. As a result, the broker pulls forward the recovery forecast leading to a 12% upgrade in net profit estimate in FY21.

While not a lot of details were provided in the update, Citi expects fee per day recovery in Gaming Ops, digital margin expansion and provision releases were the key elements of the better-than-expected first-half result.

Citi maintains its Buy rating with the target rising to $44.50 from $40.60.

Target price is $44.50 Current Price is $38.92 Difference: $5.58
If ALL meets the Citi target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $40.65, suggesting upside of 0.8% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.8

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

Credit Suisse rates ALL as Outperform (1) -

First half operating earnings have been flagged at $750m, well ahead of Credit Suisse estimates. In fact, the broker found it hard to source specific items that could generate so much profit in a half year, as the company provided little detail other than to say North America, Australia and its digital business were ahead.

Credit Suisse upgrades FY21 net profit estimates by 24%. Nevertheless, the broker has a feeling this situation may be temporary given the quantum of stimulus and lack of entertainment options in the US and Australian economies. Outperform retained. Target rises to $41.25 from $38.00.

Target price is $41.25 Current Price is $38.92 Difference: $2.33
If ALL meets the Credit Suisse target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $40.65, suggesting upside of 0.8% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.8

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

Macquarie rates ALL as Neutral (3) -

Macquarie forecasts $412m in net profit for Aristocrat Leisure in the first half of FY21 in line with guidance and 32% above the broker's prior forecast. In the broker's view, the upgrade appears to be more margin-driven than revenue-related.

The upgrade leads Macquarie's total FY21 net profit forecast to rise to $843m, hinting towards $431m as the second half net profit estimate.

Neutral rating with the target rising to $39 from $32.

Target price is $39.00 Current Price is $38.92 Difference: $0.08
If ALL meets the Macquarie target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $40.65, suggesting upside of 0.8% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.8

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

Morgan Stanley rates ALL as Overweight (1) -

Aristocrat Leisure has provided a very strong profit update, assesses Morgan Stanley, ahead of first half results due next Monday, May 24. The company expects first half profit (NPATA) of $412m, which is 43% ahead of the broker's forecast.

The announcement suggests to the analyst that the Land-Based covid recovery is well ahead of expectations, and both it and the Digital business have grown on the pcp. It's estimated the 1H21 upgrade alone would drive 18% consensus FY21 profit upgrades.

Morgan Stanley retains an Overweight rating and $38 target. There is no industry rating.

Target price is $38.00 Current Price is $38.92 Difference: minus $0.92 (current price is over target).
If ALL meets the Morgan Stanley target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $40.65, suggesting upside of 0.8% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.8

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

Ord Minnett rates ALL as Accumulate (2) -

Aristocrat Leisure's first-half FY21 result was strong, observes Ord Minnett, driven by improving demand in both land-based and digital businesses with improving consumer sentiment and economic conditions.

Looking at the strength of Aristocrat’s March performance and expecting a similar run-rate into April, Ord Minnett highlights several factors that bode well for the company including a pull-forward of land-based revenues, upgrades in the digital business and rerating potential for expansion into iGaming.

Accumulate rating retained and the broker lifts the target price to $42 from $39.

Target price is $42.00 Current Price is $38.92 Difference: $3.08
If ALL meets the Ord Minnett target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $40.65, suggesting upside of 0.8% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.8

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

UBS rates ALL as Buy (1) -

Aristocrat Leisure's pre-release of the first half result beat expectations with a stronger performance in the US and Australasian land-based businesses.

The outright replacement market is still down -40-45% so UBS suggests commentary regarding increasing share should be taken positively and indicates a strong product portfolio.

UBS is increasingly confident around its forecasts for a $1.1bn profit in FY22. Despite the disruptions in the US, the broker estimates that around 90% of participation machines are switched on. Buy rating retained. Target is raised to $42.50 from $35.50.

Target price is $42.50 Current Price is $38.92 Difference: $3.58
If ALL meets the UBS target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $40.65, suggesting upside of 0.8% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.8

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

UBS rates AMA as Buy (1) -

UBS suspects panel repair operators are experiencing cost pressure from parts inflation and while this should be passed on to the customer base there is likely to be a lag that could push out the margin recovery.

Labour shortages could also lead to further cost pressures, the broker adds, or constrain the top-line volume recovery.

Regardless, UBS envisages the company will be a beneficiary of consolidation opportunities within the industry and higher volumes in the post-pandemic world. Valuation remains attractive and UBS retains a Buy rating, reducing the target to $0.70 from $0.89.

Target price is $0.70 Current Price is $0.45 Difference: $0.25
If AMA meets the UBS target it will return approximately 56% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 1.0

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

Citi rates BWX as Buy (1) -

Citi highlights The Flora & Fauna acquisition provides BWX another opportunity to expand the distribution of its major brands and grow its direct-to-customer presence.

Further, the broker believes BWX is well-placed to benefit from any recovery in the US, expanded distribution, more sustainable strategies following the 2019 management change, and tailwinds from the emerging natural beauty category.

Citi retains its Buy rating with the target rising to $5.60 from $5.35.

Target price is $5.60 Current Price is $4.81 Difference: $0.79
If BWX meets the Citi target it will return approximately 16% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 1.0

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

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

Morgans upgrades to Add from Hold and lifts the target price to $20.82 from $19.45. The broker is supportive of the recent acquisition of Trader Interactive, which will likely reinvigorate topline growth.

The analyst sees Carsales.Com as providing the best growth/valuation trade-off amongst the domestic classifieds players at present. With strong domestic new car sales and Korea travelling well despite covid, conditions are considered to remain supportive into FY22.

Target price is $20.82 Current Price is $17.20 Difference: $3.62
If CAR meets the Morgans target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $22.34, suggesting upside of 30.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.6

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

UBS rates CNU as Neutral (3) -

Chorus has increased its range of fibre revenues for 2022-25 by 10%, although UBS believes it will be difficult to achieve given the increased competition in wireless broadband.

The fibre revenue range increases to NZ$760-780m, assuming tilted depreciation, and NZ$720-820m assuming smoothing and tilting, which the broker suspects is optimistic. Neutral maintained. Target is steady at NZ$6.30.

Current Price is $5.84. Target price not assessed.

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

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

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

Ord Minnett thinks Computershare offers very strong leverage to earnings from higher American interest rates following its acquisition of Wells Fargo's Corporate Trust Services business in the US.

The broker believes this is a sentiment dynamic that could even override its concerns about actual near-term earnings from the company. To reflect some potential upside from rates, Ord Minnett has raised its terminal growth assumptions.

As a result, Ord Minnett upgrades its rating to Hold from Lighten. The target price rises to $14.60 from $12. 

Target price is $14.60 Current Price is $14.90 Difference: minus $0.3 (current price is over target).
If CPU meets the Ord Minnett target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $16.22, suggesting upside of 4.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

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

Market Sentiment: 0.3

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

Citi rates ELD as Buy (1) -

Citi continues to see further upside to Elders' earnings in FY21 led by a positive winter crop outlook that is expected to drive continued double-digit growth in the rural products segment sales in the second half.

Also, backward integration benefits are accruing as expected with AIRR synergies continuing to outperform. While livestock prices are expected to ease, increased volumes will provide an offset and a supportive seasonal outlook could delay cattle price softness. 

 Buy rating with the target rising to $13.40 from $13.20.

Target price is $13.40 Current Price is $11.81 Difference: $1.59
If ELD meets the Citi target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $13.12, suggesting upside of 11.4% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.7

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

Macquarie rates ELD as Outperform (1) -

Elders' first-half net profit at $67m was higher than Macquarie's expected $59m. The result was driven by a mix of seasonal conditions, bolt-on acquisitions and organic growth, highlights Macquarie.

The broker is pleased and notes the company is "firing on all cylinders" with growth seen across all state geographies and product lines. Going ahead, the broker expects the strong first-half result to flow through to the second half.

Outperform rating with the target rising to $14.11 from $13.80.

Target price is $14.11 Current Price is $11.81 Difference: $2.3
If ELD meets the Macquarie target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $13.12, suggesting upside of 11.4% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.7

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

Morgans rates EPY as Add (1) -

After a third quarter update, Morgans assesses continued momentum in key earnings drivers. Management reaffirmed FY21 profit (NPATA) guidance, implying to the broker an around $5m second half result. A  “material increase” in FY22 earnings is expected by the company.

The analyst highlights record invoice finance volume in March of $199m, up 34% on the pcp. The Add rating and $0.54 target are maintained.

Target price is $0.54 Current Price is $0.44 Difference: $0.1
If EPY meets the Morgans target it will return approximately 23% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 1.0

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

UBS rates FPH as Sell (5) -

Fisher & Paykel Healthcare's pandemic-related hospital sales are expected to decline substantially over the next two years as vaccination programs expand. UBS expects this will result in a significant drop in earnings per share in FY22 and limited growth in FY23.

This lower demand is likely to be only partially offset by a wider uptake and full redeployment of available Airvo equipment. UBS lifts net profit estimates by 5% for FY21 and reduces FY23 estimates by -2%.

Sell rating retained. Target rises to NZ$24.80 from NZ$23.40.

Current Price is $31.32. Target price not assessed.

Current consensus price target is $33.50, suggesting upside of 9.5% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY21:

Forecast for FY22:

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

Citi rates IPL as Neutral (3) -

Citi thinks Incitec Pivot's first half was the cyclical low for the company from a volume as well as pricing perspective and the broker awaits better group volumes in FY22. Also, spot ammonia/DAP and urea prices point to a strong second-half earnings recovery. 

The company's revenue in the first half fell -11% short at $1.724bn while operating income was -14% below consensus at $333m. 

Citi upgrades to Buy from Neutral with the target rising to $2.90 from $2.70.

Target price is $2.90 Current Price is $2.37 Difference: $0.53
If IPL meets the Citi target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $2.90, suggesting upside of 18.9% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.7

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

Credit Suisse rates IPL as Neutral (3) -

First half results missed Credit Suisse forecasts, largely because of delayed timing of phosphate sales. This resulted in lower earnings for Australian fertiliser manufacturing than the broker forecast.

The ability of Incitec Pivot to achieve normal operating rates at Waggaman and the quality of the plant are dividing investor views and, as there is no objective proof of plant quality, Credit Suisse believes there will need to be several months of stable operations to prove the company's case.

Neutral maintained. Target is reduced to $2.51 from $2.83.

Target price is $2.51 Current Price is $2.37 Difference: $0.14
If IPL meets the Credit Suisse target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $2.90, suggesting upside of 18.9% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.7

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

Macquarie rates IPL as Outperform (1) -

Incitec Pivot's first-half net profit at $36m was below Macquarie's expected $51m as well as last year's $65m. The variance was mostly due to profit in stock elimination due to local DAP business. 

Macquarie notes the WALA ammonium production facility remains the problem child with the rest of the business doing well.

Even so, the second half outlook remains positive and the broker expects to get the benefit of $25m profit in stock reversal and favourable fertiliser market conditions. 

Outperform retained. Target is reduced to $2.91 from $2.96.

Target price is $2.91 Current Price is $2.37 Difference: $0.54
If IPL meets the Macquarie target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $2.90, suggesting upside of 18.9% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.7

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

Morgan Stanley rates IPL as Overweight (1) -

Despite strength across fertiliser commodities, Morgan Stanley believes reliability issues and a softer first half result detract from potential upside. Meaningful upside is considered possible if better plant utilisation coincides with pricing strength.

The result was an earnings miss, driven by lower than expected earnings from the Fertilliser segment, explains the broker. The timing of DAP sales is expected to see -$25m of earnings deferred to the second half.

The analyst's FY21 earnings (EBIT) estimate declines by -11% and profit falls -14%. Forecasts earnings for FY22-23 decline by -7-8%. The Overweight rating is reiterated though the target is reduced to $2.85 from $3.05. Industry view: In-Line.

Target price is $2.85 Current Price is $2.37 Difference: $0.48
If IPL meets the Morgan Stanley target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $2.90, suggesting upside of 18.9% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.7

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

Morgans rates IPL as Add (1) -

After first half results, Morgans maintains an Add rating given leverage to attractive industry fundamentals. However, it's recognised that the issues at the Waggaman plant need to be resolved before the stock will materially rerate.

If not for a timing issue with unsold manufactured product in eliminations, the result would have beaten the broker's forecast. It's expected there will be both strong earnings and cashflow growth in the second half, due to higher fertiliser prices.

Target price is $3.25 Current Price is $2.37 Difference: $0.88
If IPL meets the Morgans target it will return approximately 37% (excluding dividends, fees and charges).

Current consensus price target is $2.90, suggesting upside of 18.9% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.7

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

Ord Minnett rates IPL as Buy (1) -

Incitec Pivot's first-half net profit was $36.4m, well short of Ord Minnett’s $60.2m forecast. A fully franked interim dividend of 1c per share was announced, versus the broker's expected 2c.

The fertiliser segment's operating earnings were well below the broker's expectations. Further, the weak result was affected by a number of timing-related issues including delayed fertiliser sales into the second half, on top of delay in the start of the Waggaman ammonia plant.

Even so, the broker's view on the company remains unchanged and Ord Minnett sees valuation support and potential upside to earnings if fertiliser prices remain elevated and management can achieve its manufacturing excellence target of $40-$50m by FY23.

Buy recommendation with a $3 target price.

Target price is $3.00 Current Price is $2.37 Difference: $0.63
If IPL meets the Ord Minnett target it will return approximately 27% (excluding dividends, fees and charges).

Current consensus price target is $2.90, suggesting upside of 18.9% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.7

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

UBS rates IPL as Buy (1) -

First half earnings were -31% below the prior corresponding half. Results missed estimates because of a deferral of diammonium phosphate sales and a lower realised diammonium phosphate price.

Inefficiencies at the Waggaman plant were also larger than UBS expected. UBS retains a Buy rating as the stock is highly leveraged to the strong recovery in global agriculture and fertiliser pricing.

Still, the broker acknowledges that after multiple manufacturing downgrades investor confidence is low. Target is reduced to $2.88 from $3.00.

Target price is $2.88 Current Price is $2.37 Difference: $0.51
If IPL meets the UBS target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $2.90, suggesting upside of 18.9% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.7

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

Ord Minnett rates IVC as Hold (3) -

InvoCare hosted a tour of operations in Canberra along with an investor strategy day where the new management outlined its strategy for the next five years. Ord Minnett thinks the targets for the business and management’s long-term incentive look achievable.

Despite this, the broker notes in the near term the earnings profile of the business remains uncertain given the disruption from the final stages of the Protect & Grow capital expenditure program and the likelihood of another benign flu season affecting industry volumes.

Hold maintained with a target of $11.20.

Target price is $11.20 Current Price is $10.27 Difference: $0.93
If IVC meets the Ord Minnett target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $11.10, suggesting upside of 12.1% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.0

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

Citi rates LFG as Initiation of coverage with Buy (1) -

Citi initiates coverage on Liberty Financial Group with a Buy rating and a target price of $8.50.

Liberty Financial Group is a non-bank lender in Australia. Citi sees value in the non-banking space and particularly in the group's ability to provide above system credit growth.

Further, led by expanding net interest margins the broker thinks the group is set to deliver record earnings growth in FY21. Citi thinks the group remains well placed to drive strong growth in volumes and earnings via profitable niche segments.

Citi expects FY21 net profit to be 12% higher than consensus at $236m. 

Target price is $8.50 Current Price is $7.21 Difference: $1.29
If LFG meets the Citi target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $8.81, suggesting upside of 24.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 1.0

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

Macquarie rates S32 as Downgrade to Neutral from Outperform (3) -

South32 will be divesting the South Africa Energy Coal business with completion expected on 1 June 2021. The company confirmed the exit is conditional and a loss on sale of -US$125-175m will be booked.

The exit was a key catalyst for the stock, in Macquarie's view and the broker sees limited near-term positive catalysts with only the pre-feasibility study for Taylor due in the next few months.

Further, declines in some of the miner's key commodities have eroded the near-term earnings upgrade momentum and Macquarie downgrades to Neutral from Outperform. The target falls to $3.10 from $3.20.

Target price is $3.10 Current Price is $2.96 Difference: $0.14
If S32 meets the Macquarie target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $3.19, suggesting upside of 5.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

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

Morgan Stanley rates S32 as Overweight (1) -

South32 announced that all conditions precedent for the South African Energy Coal (SAEC) divestment have now been fulfilled. The transaction is now unconditional and expected to complete on 1 June 2021.

Morgan Stanley sees this as a positive as it could open the stock to ESG-focused investors, who may have been unwilling to invest due to thermal coal exposure. It's also considered to improve overall operating metrics, given SAEC's lower margins.

Overweight rating. Target is $3.35. Industry view: Attractive.

Target price is $3.35 Current Price is $2.96 Difference: $0.39
If S32 meets the Morgan Stanley target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $3.19, suggesting upside of 5.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

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

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

Citi sees attractive medium-term upside potential in Suncorp Group if the group can deliver on at least some of its FY23 targets about which the market remains skeptical.

Even so, noting any meaningful improvement in either bank or general insurer looks unlikely until at least 2H22, Citi continues to believe much of the potential for share price upside may be more medium-term than short-term.

Led by the recent share price fall, Citi upgrades to Buy from Neutral with an $11.80 target price.

Target price is $11.80 Current Price is $10.25 Difference: $1.55
If SUN meets the Citi target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $11.68, suggesting upside of 10.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.7

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

Macquarie rates SUN as Outperform (1) -

Suncorp Group's third-quarter update shows "strong" net interest margin remains led by lower funding costs. Impairment losses for the quarter amounted to circa -$1m reflecting a small change in specific provisions while collective provisions remained unchanged.

The group refrained from providing any guidance for the second half. On the positive side, the home lending portfolio returned to growth during the quarter. For FY23, the group has guided to above-average loan growth in combination with a lower absolute cost base.

Suncorp Group remains Macquarie's preferred stock in the general insurance sector and the broker retains its Outperform rating with the target rising to $13.20 from 12.90.

Target price is $13.20 Current Price is $10.25 Difference: $2.95
If SUN meets the Macquarie target it will return approximately 29% (excluding dividends, fees and charges).

Current consensus price target is $11.68, suggesting upside of 10.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.7

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) -

While Suncorp Group is reinvesting in both its bank and insurance operations for improvements by FY23, Morgan Stanley notes this adds to costs in 2H21 and FY22. It's considered additional costs will be partly offset by bank collective provision releases and strong group capital.

The broker would be more positive if the group can return to earnings growth earlier and reduces the target price to $11 from $11.10, given the upfront investment in efficiencies. Equal-weight rating. Industry view: In-line.

Target price is $11.00 Current Price is $10.25 Difference: $0.75
If SUN meets the Morgan Stanley target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $11.68, suggesting upside of 10.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.7

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

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

After a recent retracement in share price, Morgans moves to an Add rating from Hold for Suncorp Group, and lifts the target price to $11.53 from $11.39.

As part of a recent general insurance forum, Suncorp Group confirmed that momentum in the banking franchise broadly continued as expected in the third quarter.

Management also disclosed that achieving its bank cost-to-income ratio target of around 50% will come 1/3rd from revenue growth and 2/3rds from cost improvements. The broker expresses some caution on this, given past difficulties in improving banking efficiency. 

Target price is $11.53 Current Price is $10.25 Difference: $1.28
If SUN meets the Morgans target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $11.68, suggesting upside of 10.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.7

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

UBS rates SUN as Buy (1) -

The bank update for the third quarter signals earnings are tracking ahead of expectations with UBS noting a return to balance sheet growth in February and elevated net interest margins in the second half supported by lower funding costs.

Collective provisions are unchanged and Suncorp will review the situation as of June 30, noting recent roll off of government support measures and loan deferrals.

UBS increases estimates by 4% for FY21 to reflect lower bad debts and a fourth quarter provision release. Buy rating and $12 target retained.

Target price is $12.00 Current Price is $10.25 Difference: $1.75
If SUN meets the UBS target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $11.68, suggesting upside of 10.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.7

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

Citi rates TWE as Sell (5) -

Treasury Wine Estates plans for the United States to consume some of the wine being reallocated from China. The idea is to send a message that the company has sustainable long-term growth prospects not reliant on China, notes Citi.

While global wine markets remain attractive underpinned by premiumisation, Citi remains concerned that Treasury Wine’s long-term target of high single-digit earnings growth is below consensus estimates between FY22-24.

The price target rises to $9.70 from $9.30 with the rating on Sell. 

Target price is $9.70 Current Price is $11.09 Difference: minus $1.39 (current price is over target).
If TWE 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 $10.94, suggesting downside of -0.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.0

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

Morgan Stanley rates VEA as Overweight (1) -

A refining package announced by the Australian government reduces the magnitude of earnings cyclicality for Viva Energy Group, explains Morgan Stanley. The package enables Australia's two last refineries to stay open until at least 2027. 

The broker increases earnings estimates as the refining package will give the investment community more confidence that consensus forecasts can be attained. For the next leg of upside, it's considered global refinery margins need to improve.

While it is still possible to lose money, the significant bear case of refineries losing a lot of money has been reduced, explains the analyst.

Overweight retained. Target is unchanged at $2.30 as the increase in earnings forecast is offset by higher assumed capex for turnaround refining, explains the broker. Industry view is Attractive.

Target price is $2.30 Current Price is $2.13 Difference: $0.17
If VEA meets the Morgan Stanley target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $2.22, suggesting upside of 6.7% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.6

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

Morgans rates VEA as Hold (3) -

The company's risk profile has been lowered by the Federal Government’s move to support Australia’s two remaining oil refineries, one owned by Viva Energy Group, observes Morgans. The target price lifts to $2.30 from $1.90.

The support package includes both cash payments to the company and a sharing of capex to upgrade the Geelong refinery. In return, the company has committed to keeping the Geelong refinery open until at least 30 June 2027, with an additional three-year option,

Mangement estimates the government support package will shave a significant -$2.9/bbl off Geelong’s cash flow breakeven level. The Hold rating is unchanged, given the recent share price performance, explains the broker.

Target price is $2.30 Current Price is $2.13 Difference: $0.17
If VEA meets the Morgans target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $2.22, suggesting upside of 6.7% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.6

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

UBS rates VEA as Buy (1) -

Australia's government has announced a fuel security package which materially improves the earnings outlook for Viva Energy, UBS suggests. The package includes a refining production subsidy which will reduce the Geelong break-even refining margin by around -30% to $6/bbl from $9/bbl.

UBS lifts FY21-23 earnings estimates by 2-32% to reflect the additional earnings provided by the subsidy. This is partially offset by the expenditure required to upgrade the Geelong refinery. Buy retained. Target rises to $2.35 from $2.00.

Target price is $2.35 Current Price is $2.13 Difference: $0.22
If VEA meets the UBS target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $2.22, suggesting upside of 6.7% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.6

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

Macquarie rates WOW as Outperform (1) -

Woolworths confirmed Endeavour Group's demerger that will take place on June 24.

Macquarie notes Endeavour Group will be the largest Australian pure-play exposure to both retail drinks and hotels. In Australia, the closest listed competitors for retail liquor are supermarkets like Woolworths ((WOW)), Coles ((COL)) and Metcash ((MTS)) along with Treasury Wine Estates ((TWE)), Australian Vintage ((AVG)) and Redcape Hotel Group ((RDC)) for hotels. 

Ahead of the demerger, Macquarie examines listed hotels/pubs peers noting international pub and hotel operators are trading at 13.7x FY3 PE, translating to -18% discount to domestic operators due to a lack of gaming exposure.

The broker retains its Outperform rating and a $44.50 target.

Target price is $44.50 Current Price is $40.45 Difference: $4.05
If WOW meets the Macquarie target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $42.54, suggesting upside of 4.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.6

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