Australian Broker Call

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May 16, 2022

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COMPANIES DISCUSSED IN THIS ISSUE

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The number next to the symbol represents the number of brokers covering it for this report -(if more than 1).

Last Updated: 05:00 PM

Your daily news report on the latest recommendation, valuation, forecast and opinion changes.

This report includes concise but limited reviews of research recently published by Stockbrokers, which should be considered as information concerning likely market behaviour rather than advice on the securities mentioned. Do not act on the contents of this Report without first reading the important information included at the end.

For more info about the different terms used by stockbrokers, as well as the different methodologies behind similar sounding ratings, download our guide HERE

Today's Upgrades and Downgrades
PMV - Premier Investments Upgrade to Buy from Neutral Citi
WES - Wesfarmers Downgrade to Sell from Neutral Citi
BRG  BREVILLE GROUP LIMITED

Household & Personal Products

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Overnight Price: $22.05

Macquarie rates BRG as Outperform (1) -

As a read-through for Breville Group, Macquarie reviews 1Q results for peer De'Longhi, which reaffirmed positive trends for the segment required price increases to counter inflation.

De'Longhi maintained its FY22 guidance as revenue growth continued in all regions except for Europe, due to geopolitical tensions and tough comparatives to prior periods.

The broker maintains the Outperform rating and $34.80 target price for Breville Group.

Target price is $34.80 Current Price is $22.05 Difference: $12.75
If BRG meets the Macquarie target it will return approximately 58% (excluding dividends, fees and charges).

Current consensus price target is $32.53, suggesting upside of 50.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Macquarie forecasts a full year FY22 dividend of 30.10 cents and EPS of 75.20 cents.
At the last closing share price the estimated dividend yield is 1.37%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 29.32.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 78.6, implying annual growth of 19.5%.

Current consensus DPS estimate is 31.1, implying a prospective dividend yield of 1.4%.

Current consensus EPS estimate suggests the PER is 27.6.

Forecast for FY23:

Macquarie forecasts a full year FY23 dividend of 34.20 cents and EPS of 86.20 cents.
At the last closing share price the estimated dividend yield is 1.55%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 25.58.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 89.9, implying annual growth of 14.4%.

Current consensus DPS estimate is 36.0, implying a prospective dividend yield of 1.7%.

Current consensus EPS estimate suggests the PER is 24.1.

Market Sentiment: 0.8

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

BTH  BIGTINCAN HOLDINGS LIMITED

Cloud services

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Overnight Price: $0.58

Morgan Stanley rates BTH as Overweight (1) -

Morgan Stanley expects Bigtincan Holdings' latest update will be well received by the market, particularly against the recent de-ratings of SaaS stocks, with the company guiding to earnings profitability in FY22 and free cash flow profitability in FY23.

The company also guided to annual recurring revenue of at least $119m in FY22. Morgan Stanley notes the company's leadership position underpins growth forecasts, anticipating the total addressable market to grow at a compound annual growth rate of more than 20%.

The Overweight rating is retained and the target price decreases to $1.60 from $2.10. Industry view: In-Line.

Target price is $1.60 Current Price is $0.58 Difference: $1.02
If BTH meets the Morgan Stanley target it will return approximately 176% (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

GMG  GOODMAN GROUP

Infra & Property Developers

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Overnight Price: $19.67

UPDATED

Macquarie rates GMG as Outperform (1) -

Following today's 3Q operational update, Goodman Group upgraded its FY22 earnings (OEPS) growth guidance to 23% year-on-year from 20%. At first glance, Macquarie estimates the upgrade was broadly in-line with its forecasts and the consensus expectation.

The broker highlights like-for-like net property income (NPI) improved by around 30bps quarter-on-quarter, consistent with strong leasing fundamentals in Industrial globally.

Development work in progress (WIP) increased to $13.4bn as at March, up from $12.7bn last December. Taking into account the rise in expected earnings, higher NPI growth and a larger WIP balance, Macquarie expects consensus upgrades for FY22.

Management also reaffirmed DPS guidance of 30cps and noted rising interest rates may result in lower competition in its key markets, as more leveraged peers will be more exposed. The Outperform rating and $27.38 target are retained.

Target price is $27.38 Current Price is $19.67 Difference: $7.71
If GMG meets the Macquarie target it will return approximately 39% (excluding dividends, fees and charges).

Current consensus price target is $26.97, suggesting upside of 37.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Macquarie forecasts a full year FY22 dividend of 30.00 cents and EPS of 80.80 cents.
At the last closing share price the estimated dividend yield is 1.53%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 24.34.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 80.5, implying annual growth of -35.8%.

Current consensus DPS estimate is 30.1, implying a prospective dividend yield of 1.5%.

Current consensus EPS estimate suggests the PER is 24.3.

Forecast for FY23:

Macquarie forecasts a full year FY23 dividend of 33.70 cents and EPS of 90.90 cents.
At the last closing share price the estimated dividend yield is 1.71%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 21.64.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 91.3, implying annual growth of 13.4%.

Current consensus DPS estimate is 31.6, implying a prospective dividend yield of 1.6%.

Current consensus EPS estimate suggests the PER is 21.5.

Market Sentiment: 0.8

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

HVN  HARVEY NORMAN HOLDINGS LIMITED

Consumer Electronics

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Overnight Price: $4.53

Citi rates HVN as Buy (1) -

Citi retains a positive view on the Retail sector despite depressed expectations due to increased fuel prices and the interest rate outlook.

While Harvey Norman has leverage to higher inflation it is also levered to negative housing impacts, explains the broker. As a result FY24 earnings estimates are cut by around -7% due to an expected decline in housing churn in response to falling house prices.

Nonetheless, the analyst upgrades FY22 and FY23 earnings forecasts by 3-4% on a better than expected consumer outlook for FY23
and a positive read-through from the recent strong JB Hi-Fi ((JBH)) trading update.

The target price falls to $5.00 from $5.90 and the Buy rating is unchanged.

Target price is $5.00 Current Price is $4.53 Difference: $0.47
If HVN meets the Citi target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $5.87, suggesting upside of 29.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Citi forecasts a full year FY22 dividend of 38.00 cents and EPS of 56.60 cents.
At the last closing share price the estimated dividend yield is 8.39%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 8.00.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 53.0, implying annual growth of -21.5%.

Current consensus DPS estimate is 36.0, implying a prospective dividend yield of 8.0%.

Current consensus EPS estimate suggests the PER is 8.5.

Forecast for FY23:

Citi forecasts a full year FY23 dividend of 40.00 cents and EPS of 42.20 cents.
At the last closing share price the estimated dividend yield is 8.83%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 10.73.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 42.9, implying annual growth of -19.1%.

Current consensus DPS estimate is 32.9, implying a prospective dividend yield of 7.3%.

Current consensus EPS estimate suggests the PER is 10.5.

Market Sentiment: 0.8

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

IDX  INTEGRAL DIAGNOSTICS LIMITED

Medical Equipment & Devices

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Overnight Price: $3.70

Credit Suisse rates IDX as Neutral (3) -

Credit Suisse sees FY23 headwinds from a lower run rate performance of the New Zealand business, continued cost inflation and a drawn out elective surgery volume recovery in Victoria.

Nonetheless, recent acquisitions of Exact and Peloton will add to FY23 earnings, and after adjusting blended valuation multiples the broker increases its target price to $3.95 from $3.80. The Neutral rating is unchanged.

Target price is $3.95 Current Price is $3.70 Difference: $0.25
If IDX meets the Credit Suisse target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $4.41, suggesting upside of 17.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Credit Suisse forecasts a full year FY22 dividend of 9.85 cents and EPS of 13.27 cents.
At the last closing share price the estimated dividend yield is 2.66%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 27.88.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 14.0, implying annual growth of -10.1%.

Current consensus DPS estimate is 9.6, implying a prospective dividend yield of 2.6%.

Current consensus EPS estimate suggests the PER is 26.7.

Forecast for FY23:

Credit Suisse forecasts a full year FY23 dividend of 12.26 cents and EPS of 18.29 cents.
At the last closing share price the estimated dividend yield is 3.31%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 20.23.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 20.7, implying annual growth of 47.9%.

Current consensus DPS estimate is 13.7, implying a prospective dividend yield of 3.7%.

Current consensus EPS estimate suggests the PER is 18.1.

Market Sentiment: 0.6

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

IFM  INFOMEDIA LIMITED

Automobiles & Components

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Overnight Price: $1.28

UBS rates IFM as Buy (1) -

Infomedia has confirmed it has received a takeover bid from a TA Associates-Viburnum Funds consortium at $1.70 per share.

UBS notes that while the company will consider the proposal it is also in preliminary discussions with other interested parties.

The broker anticipates Infomedia can continue to benefit from strong top line growth and operating leverage.

The Buy rating and target price of $2.15 are retained.

Target price is $2.15 Current Price is $1.28 Difference: $0.87
If IFM meets the UBS target it will return approximately 68% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY22:

UBS forecasts a full year FY22 dividend of 4.00 cents and EPS of 6.00 cents.
At the last closing share price the estimated dividend yield is 3.13%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 21.33.

Forecast for FY23:

UBS forecasts a full year FY23 EPS of 7.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 18.29.

Market Sentiment: 1.0

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

JBH  JB HI-FI LIMITED

Consumer Electronics

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Overnight Price: $48.53

Citi rates JBH as Neutral (3) -

Citi retains a positive view on the Retail sector despite depressed expectations due to increased fuel prices and the interest rate outlook.

The broker maintains its Neutral rating for JB Hi-Fi noting minimal correlation with house prices as compared to Harvey Norman ((HVN)). The target price is decreased to $53.00 from $55.00.

Target price is $53.00 Current Price is $48.53 Difference: $4.47
If JBH meets the Citi target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $57.31, suggesting upside of 19.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Citi forecasts a full year FY22 dividend of 275.00 cents and EPS of 422.30 cents.
At the last closing share price the estimated dividend yield is 5.67%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 11.49.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 416.4, implying annual growth of -5.5%.

Current consensus DPS estimate is 270.8, implying a prospective dividend yield of 5.6%.

Current consensus EPS estimate suggests the PER is 11.6.

Forecast for FY23:

Citi forecasts a full year FY23 dividend of 252.00 cents and EPS of 386.40 cents.
At the last closing share price the estimated dividend yield is 5.19%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.56.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 377.4, implying annual growth of -9.4%.

Current consensus DPS estimate is 243.2, implying a prospective dividend yield of 5.1%.

Current consensus EPS estimate suggests the PER is 12.8.

Market Sentiment: 0.7

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

JIN  JUMBO INTERACTIVE LIMITED

Gaming

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Overnight Price: $15.84

Morgan Stanley rates JIN as Overweight (1) -

While Morgan Stanley retains its $22 target price for Jumbo Interactive, stronger 2H jackpots are expected to underpin consensus
forecasts and lead to potential EPS upside.

The broker expects increased customers around recent large draws and the OzLotto game change should further de-risk FY23 estimates.

The Overweight rating is retained. Industry view: In-line.

Target price is $22.00 Current Price is $15.84 Difference: $6.16
If JIN meets the Morgan Stanley target it will return approximately 39% (excluding dividends, fees and charges).

Current consensus price target is $20.13, suggesting upside of 24.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Morgan Stanley forecasts a full year FY22 dividend of 40.00 cents and EPS of 53.00 cents.
At the last closing share price the estimated dividend yield is 2.53%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 29.89.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 52.2, implying annual growth of 20.9%.

Current consensus DPS estimate is 42.9, implying a prospective dividend yield of 2.7%.

Current consensus EPS estimate suggests the PER is 31.0.

Forecast for FY23:

Morgan Stanley forecasts a full year FY23 dividend of 55.70 cents and EPS of 74.00 cents.
At the last closing share price the estimated dividend yield is 3.52%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 21.41.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 66.2, implying annual growth of 26.8%.

Current consensus DPS estimate is 49.1, implying a prospective dividend yield of 3.0%.

Current consensus EPS estimate suggests the PER is 24.4.

Market Sentiment: 0.8

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

MVF  MONASH IVF GROUP LIMITED

Healthcare services

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Overnight Price: $1.06

Morgans rates MVF as Add (1) -

Monash IVF policy dictates patients who have contracted covid must defer treatment for eight weeks. While this policy, along with close contact requirements for staff and patients has negatively impacted trading, Morgans expects lost demand will be picked up in FY23.

Management reiterated the strong industry fundamentals. The broker retains an Add rating and lowers forecasts in-line with the trading update. The target price is reduced to $1.25 from $1.29.

Target price is $1.25 Current Price is $1.06 Difference: $0.19
If MVF meets the Morgans target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $1.23, suggesting upside of 22.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Morgans forecasts a full year FY22 dividend of 4.20 cents and EPS of 5.30 cents.
At the last closing share price the estimated dividend yield is 3.96%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 20.00.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 6.0, implying annual growth of -7.0%.

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

Current consensus EPS estimate suggests the PER is 16.8.

Forecast for FY23:

Morgans forecasts a full year FY23 dividend of 4.50 cents and EPS of 6.50 cents.
At the last closing share price the estimated dividend yield is 4.25%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 16.31.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 6.7, implying annual growth of 11.7%.

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

Current consensus EPS estimate suggests the PER is 15.1.

Market Sentiment: 1.0

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

PMV  PREMIER INVESTMENTS LIMITED

Apparel & Footwear

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Overnight Price: $23.05

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

Citi retains a positive view on the Retail sector despite depressed expectations due to increased fuel prices and the interest rate outlook.

The broker upgrades its rating for Premier Investments to Buy from Neutral, while the target price eases to $29.00 from $30.80. It is felt Smiggle and the fashion brands will be reopening beneficiaries, while Peter Alexander is expected to hold up well.

Target price is $29.00 Current Price is $23.05 Difference: $5.95
If PMV meets the Citi target it will return approximately 26% (excluding dividends, fees and charges).

Current consensus price target is $30.88, suggesting upside of 31.8% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY22:

Citi forecasts a full year FY22 dividend of 114.00 cents and EPS of 173.00 cents.
At the last closing share price the estimated dividend yield is 4.95%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 13.32.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 154.2, implying annual growth of -9.9%.

Current consensus DPS estimate is 102.0, implying a prospective dividend yield of 4.4%.

Current consensus EPS estimate suggests the PER is 15.2.

Forecast for FY23:

Citi forecasts a full year FY23 dividend of 134.00 cents and EPS of 156.30 cents.
At the last closing share price the estimated dividend yield is 5.81%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.75.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 149.3, implying annual growth of -3.2%.

Current consensus DPS estimate is 114.2, implying a prospective dividend yield of 4.9%.

Current consensus EPS estimate suggests the PER is 15.7.

Market Sentiment: 0.8

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

PXA  PEXA GROUP LIMITED

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Overnight Price: $15.61

UBS rates PXA as Buy (1) -

On the back of an update from PEXA Group, UBS considers both the company's UK rollout and PEXA Insights opportunity are yet to be priced into the stock at its current valuation.

The company highlighted it is on track for the launch of Refi in the UK in October, although Bank of England is slowing progress on the rollout. Positively, this could offer PEXA Group a two-year window to solidify its market position as the company targets 25-40% market share by 2025.

The Buy rating is retained and the target price decreases to $21.50 from $22.50.

Target price is $21.50 Current Price is $15.61 Difference: $5.89
If PXA meets the UBS target it will return approximately 38% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY22:

UBS forecasts a full year FY22 EPS of 44.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 35.48.

Forecast for FY23:

UBS forecasts a full year FY23 EPS of 43.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 36.30.

Market Sentiment: 1.0

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

SIQ  SMARTGROUP CORPORATION LIMITED

Vehicle Leasing & Salary Packaging

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Overnight Price: $8.36

Macquarie rates SIQ as Neutral (3) -

In a trading update, Smartgroup Corp noted customers, leads and the pipeline are all trending positively. Meanwhile, revenue and earnings (EBITDA) are in-line with management's expectations and the previous corresponding period.

Macquarie leaves its earnings forecasts unchanged, despite the likelihood vehicle supply will remain a headwind during FY22. The Neutral rating and $8.31 target price are unchanged.

Target price is $8.31 Current Price is $8.36 Difference: minus $0.05 (current price is over target).
If SIQ meets the Macquarie target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $8.66, suggesting upside of 3.4% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Macquarie forecasts a full year FY22 dividend of 49.60 cents and EPS of 54.90 cents.
At the last closing share price the estimated dividend yield is 5.93%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 15.23.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 54.4, implying annual growth of 19.8%.

Current consensus DPS estimate is 45.1, implying a prospective dividend yield of 5.4%.

Current consensus EPS estimate suggests the PER is 15.4.

Forecast for FY23:

Macquarie forecasts a full year FY23 dividend of 51.80 cents and EPS of 57.50 cents.
At the last closing share price the estimated dividend yield is 6.20%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.54.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 58.1, implying annual growth of 6.8%.

Current consensus DPS estimate is 47.9, implying a prospective dividend yield of 5.7%.

Current consensus EPS estimate suggests the PER is 14.4.

Market Sentiment: 0.4

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

SUL  SUPER RETAIL GROUP LIMITED

Automobiles & Components

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Overnight Price: $10.00

Citi rates SUL as Buy (1) -

Citi has revisited Australia's retail sector to account for fuel-price and interest-rate changes and broadly expects retail to prove resilient in FY2023 before hitting more resistance in FY24, at which point in the down-cycle stock clearances and margin erosion emerge.

Citi acknowledges risks to retail from rate rises and the resumption of travel, but expects normalisation of trade will more than compensate for this.

Citi notes 40% of mortgages are fixed, further ameliorating the impact, and notes consumers have ample room to cut savings compared with historical levels. The affect of petrol prices is difficult to ascertain at this stage, says the broker.

Buy rating retained for Super Retail Group. Target price falls to $14 from $14.40.

Target price is $14.00 Current Price is $10.00 Difference: $4
If SUL meets the Citi target it will return approximately 40% (excluding dividends, fees and charges).

Current consensus price target is $13.21, suggesting upside of 32.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Citi forecasts a full year FY22 dividend of 66.00 cents and EPS of 97.40 cents.
At the last closing share price the estimated dividend yield is 6.60%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 10.27.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 98.7, implying annual growth of -26.0%.

Current consensus DPS estimate is 66.3, implying a prospective dividend yield of 6.7%.

Current consensus EPS estimate suggests the PER is 10.1.

Forecast for FY23:

Citi forecasts a full year FY23 dividend of 63.50 cents and EPS of 90.90 cents.
At the last closing share price the estimated dividend yield is 6.35%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 11.00.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 89.2, implying annual growth of -9.6%.

Current consensus DPS estimate is 59.7, implying a prospective dividend yield of 6.0%.

Current consensus EPS estimate suggests the PER is 11.2.

Market Sentiment: 0.8

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

UNI  UNIVERSAL STORE HOLDINGS LIMITED

Apparel & Footwear

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Overnight Price: $4.50

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

Citi initiates coverage on Universal Store, noting a number of growth drivers ahead for the retailer should support a 10% compound annual growth rate through to FY24.

With a current 73 stores across Australia and New Zealand, the company is targeting more than 100 stores. Citi finds this conservative, seeing potential for 110 stores, and notes once stores are mature they'll offer 37% upside to FY22 earnings forecasts.

Further, the broker expects the company can support a 100 basis point margin expansion between FY21-25 as stores reach maturity and brand penetration increases.

The broker initiates with a Buy rating and a target price of $5.83.

Target price is $5.83 Current Price is $4.50 Difference: $1.33
If UNI meets the Citi target it will return approximately 30% (excluding dividends, fees and charges).

Current consensus price target is $7.87, suggesting upside of 67.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Citi forecasts a full year FY22 dividend of 19.50 cents and EPS of 28.50 cents.
At the last closing share price the estimated dividend yield is 4.33%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 15.79.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 29.0, implying annual growth of -12.9%.

Current consensus DPS estimate is 19.2, implying a prospective dividend yield of 4.1%.

Current consensus EPS estimate suggests the PER is 16.2.

Forecast for FY23:

Citi forecasts a full year FY23 dividend of 27.10 cents and EPS of 39.10 cents.
At the last closing share price the estimated dividend yield is 6.02%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 11.51.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 42.1, implying annual growth of 45.2%.

Current consensus DPS estimate is 29.0, implying a prospective dividend yield of 6.2%.

Current consensus EPS estimate suggests the PER is 11.1.

Market Sentiment: 1.0

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

VRT  VIRTUS HEALTH LIMITED

Healthcare services

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Overnight Price: $8.12

Morgans rates VRT as Hold (3) -

Morgans lowers FY22 forecasts for Virtus Health by -20% after a trading update revealed lower cycle activity, however, the broker's main focus is upon the takeover bids by CapVest and BGH.

The broker sets the target price at the CapVest Scheme price of $8.15 although expects more developments in coming weeks. A scheme meeting is set for June 6 and the board is recommending voting in favour of the Scheme. Hold rating retained.

Target price is $8.15 Current Price is $8.12 Difference: $0.03
If VRT meets the Morgans target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $7.33, suggesting downside of -10.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Morgans forecasts a full year FY22 dividend of 23.00 cents and EPS of 31.00 cents.
At the last closing share price the estimated dividend yield is 2.83%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 26.19.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 37.5, implying annual growth of -30.4%.

Current consensus DPS estimate is 25.3, implying a prospective dividend yield of 3.1%.

Current consensus EPS estimate suggests the PER is 21.7.

Forecast for FY23:

Morgans forecasts a full year FY23 dividend of 25.00 cents and EPS of 38.00 cents.
At the last closing share price the estimated dividend yield is 3.08%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 21.37.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 43.9, implying annual growth of 17.1%.

Current consensus DPS estimate is 29.0, implying a prospective dividend yield of 3.6%.

Current consensus EPS estimate suggests the PER is 18.6.

Market Sentiment: -0.3

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

WES  WESFARMERS LIMITED

Apparel & Footwear

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Overnight Price: $49.97

Citi rates WES as Downgrade to Sell from Neutral (5) -

Citi has revisited Australia's retail sector to account for fuel-price and interest-rate changes and broadly expects retail to prove resilient in FY2023 before hitting more resistance in FY24, at which point in the down-cycle stock clearances and margin erosion emerge.

Citi acknowledges risks to retail from rate rises and the resumption of travel, but expects normalisation of trade will more than compensate for this.

On the rate front, Citi notes 40% of mortgages are fixed, further ameliorating the impact, and notes consumers have ample room to cut savings compared with historical levels. The affect of petrol prices is difficult to ascertain at this stage, says the broker.

Wesfarmers is downgraded to Sell from Neutral. Target price falls to $42 from $50.00.

Target price is $42.00 Current Price is $49.97 Difference: minus $7.97 (current price is over target).
If WES meets the Citi target it will return approximately minus 16% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $52.77, suggesting upside of 6.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Citi forecasts a full year FY22 dividend of 179.00 cents and EPS of 197.10 cents.
At the last closing share price the estimated dividend yield is 3.58%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 25.35.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 192.9, implying annual growth of -8.3%.

Current consensus DPS estimate is 162.1, implying a prospective dividend yield of 3.3%.

Current consensus EPS estimate suggests the PER is 25.7.

Forecast for FY23:

Citi forecasts a full year FY23 dividend of 193.00 cents and EPS of 214.90 cents.
At the last closing share price the estimated dividend yield is 3.86%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 23.25.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 211.8, implying annual growth of 9.8%.

Current consensus DPS estimate is 171.4, implying a prospective dividend yield of 3.5%.

Current consensus EPS estimate suggests the PER is 23.4.

Market Sentiment: 0.0

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

XRO  XERO LIMITED

Accountancy

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Overnight Price: $84.16

Citi rates XRO as Buy (1) -

Lower than expected subscriber growth for Xero in the UK could be correlated with increased investment in the country by competitor Sage, according to Citi, but the broker anticipates Xero can continue to deliver strong growth in the region.

The broker also notes Making Tax Digital regulatory changes should support cloud adoption in the UK, something that was not recognised as a growth driver by Sage given its skew towards larger businesses.

The Buy rating and target price of $108 are retained.

Target price is $108.00 Current Price is $84.16 Difference: $23.84
If XRO meets the Citi target it will return approximately 28% (excluding dividends, fees and charges).

Current consensus price target is $110.50, suggesting upside of 25.7% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY23:

Current consensus EPS estimate is 32.8, implying annual growth of N/A.

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

Current consensus EPS estimate suggests the PER is 267.9.

Forecast for FY24:

Current consensus EPS estimate is 73.4, implying annual growth of 123.8%.

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

Current consensus EPS estimate suggests the PER is 119.7.

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

Market Sentiment: 0.5

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


UBS rates XRO as Sell (5) -

A solid top line performance from Xero saw the company deliver 29% full year revenue growth and beat UBS's expectations despite lower than anticipated subscriber growth in the second half.

Annual recurring revenue at the end of March of $1,231m reflected 12% growth on FY22's revenue, but the broker notes recent favourable foreign exchange movements could add upside of more than $50m, while at spot foreign exchange rates the broker anticipates revenue could grow to $1.4bn in FY23.

Despite the positives, the broker notes a lack of cash flow continues to challenge a more favourable outlook for the company. The Sell rating is retained and the target price decreases to $70.00 from $88.00.

Target price is $70.00 Current Price is $84.16 Difference: minus $14.16 (current price is over target).
If XRO meets the UBS target it will return approximately minus 17% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $110.50, suggesting upside of 25.7% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY23:

UBS forecasts a full year FY23 EPS of 26.34 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 319.48.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 32.8, implying annual growth of N/A.

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

Current consensus EPS estimate suggests the PER is 267.9.

Forecast for FY24:

UBS forecasts a full year FY24 EPS of 107.25 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 78.47.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 73.4, implying annual growth of 123.8%.

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

Current consensus EPS estimate suggests the PER is 119.7.

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

Market Sentiment: 0.5

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

Today's Price Target Changes
Company Last Price Broker New Target Prev Target Change
BTH Bigtincan Holdings $0.55 Morgan Stanley 1.60 2.10 -23.81%
HVN Harvey Norman $4.52 Citi 5.00 5.90 -15.25%
IDX Integral Diagnostics $3.74 Credit Suisse 3.95 3.80 3.95%
JBH JB Hi-Fi $48.14 Citi 53.00 55.00 -3.64%
MVF Monash IVF $1.01 Morgans 1.25 1.29 -3.10%
PMV Premier Investments $23.42 Citi 29.00 30.80 -5.84%
PXA PEXA Group $15.58 UBS 21.50 22.50 -4.44%
SIQ Smartgroup Corp $8.37 Macquarie 8.31 7.90 5.19%
SUL Super Retail $9.95 Citi 14.00 14.40 -2.78%
VRT Virtus Health $8.15 Morgans 8.15 8.25 -1.21%
WES Wesfarmers $49.61 Citi 42.00 50.00 -16.00%
XRO Xero $87.88 Citi 108.00 125.00 -13.60%
UBS 70.00 88.00 -20.45%
Summaries
BRG Breville Group Outperform - Macquarie Overnight Price $22.05
BTH Bigtincan Holdings Overweight - Morgan Stanley Overnight Price $0.58
GMG Goodman Group Outperform - Macquarie Overnight Price $19.67
HVN Harvey Norman Buy - Citi Overnight Price $4.53
IDX Integral Diagnostics Neutral - Credit Suisse Overnight Price $3.70
IFM Infomedia Buy - UBS Overnight Price $1.28
JBH JB Hi-Fi Neutral - Citi Overnight Price $48.53
JIN Jumbo Interactive Overweight - Morgan Stanley Overnight Price $15.84
MVF Monash IVF Add - Morgans Overnight Price $1.06
PMV Premier Investments Upgrade to Buy from Neutral - Citi Overnight Price $23.05
PXA PEXA Group Buy - UBS Overnight Price $15.61
SIQ Smartgroup Corp Neutral - Macquarie Overnight Price $8.36
SUL Super Retail Buy - Citi Overnight Price $10.00
UNI Universal Store Initiation of coverage with Buy - Citi Overnight Price $4.50
VRT Virtus Health Hold - Morgans Overnight Price $8.12
WES Wesfarmers Downgrade to Sell from Neutral - Citi Overnight Price $49.97
XRO Xero Buy - Citi Overnight Price $84.16
Sell - UBS Overnight Price $84.16
RATING SUMMARY
Rating No. Of Recommendations
1. Buy

12

3. Hold

4

5. Sell

2

Monday 16 May 2022

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