Australian Broker Call *Extra* Edition – Jun 15, 2022 – Smat News

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Daily Market Reports | Jun 15 2022

An additional news report on the recommendation, valuation, forecast and opinion changes for ASX-listed equities.

In addition to The Australian Broker Call Report, which is published and updated daily (Mon-Fri), FNArena has now added The Australian Broker Call *Extra* Edition, featuring additional sources of research and insights on ASX-listed stocks, also enlarging the number of stocks that make up the FNArena universe.

One key difference is the *Extra* Edition will not be updated daily, but merely “regularly” depending on availability of suitable quality content. As such, the *Extra* Edition tries to build a bridge between daily updates via the Australian Broker Call Report and ad hoc news stories, that are not always timely for investors hungry for the next information update.

Investors using the *Extra* Edition as a source of input for their own share market research should thus take into account that information after publication may not be up to date, or yet awaiting another update by FNArena’s team of journalists.

Similar to The Australian Broker Call Report, this *Extra* Edition includes concise but limited reviews of research recently published by Stockbrokers and other experts, 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 of this Report.

The Australian Broker Call *Extra* Edition is a summary that has been prepared independently of the sources identified. Readers will check the full text of the recommendations and consult a Licenced Advisor before making any investment decision.

The copyright of this Report is owned by the publisher. Readers will not copy, forward or disseminate this Report to any other person. For more vital information about the sources included, see the bottom of this Report.

COMPANIES DISCUSSED IN THIS ISSUE

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

ABP   ACL   AFP   AMC   ARF (2)   ASX   BOE   BWP   CBO   CHC   CIP   CLW   CNI   COE (2)   COF   COH   COI   COL   CQE   CQR   CVN   DMP   DXS   EHE   EHL   EVT   FPH   GMG   GPT   HDN   HLS (2)   HMC   IDX   INA   JHX   JIN   JLG (2)   KAR   LIC   MGR   MND   MZZ   NAN   NSR   NWH   OPT   OPY   ORA   PDN   PGH   PME (3)   PXA   RHC   RMD (2)   SCG   SCP   SHL (2)   SSG   TAH (2)   TLC   TLX   TOY (2)   VCX   WES   WOW   XRO  

ABP    ABACUS PROPERTY GROUP

REITs – Overnight Price: $2.70

Jarden rates ((ABP)) as Overweight (2) –

Jarden expects earnings growth and valuations will come under pressure in the A-REIT sector, given the significant moves in bond yields, credit spreads and the cash rate. The focus has moved from the beneficiaries of low interest rates to quality and those best placed to grow.

The broker’s preference is for alternative asset classes in the sector such as childcare, storage, logistics and non-discretionary retail as well as those with conservative cap rates and potential for alternative use.

Overweight maintained for Abacus Property. Target is reduced to $3.45 from $4.10.

This report was published on June 9, 2022.

Target price is $3.45 Current Price is $2.70 Difference: $0.75
If ABP meets the Jarden target it will return approximately 28% (excluding dividends, fees and charges).
Current consensus price target is $3.51, suggesting upside of 31.0%(ex-dividends)
The company’s fiscal year ends in June.

Forecast for FY22:

Current consensus EPS estimate is 18.4, implying annual growth of -63.1%.
Current consensus DPS estimate is 18.0, implying a prospective dividend yield of 6.7%.
Current consensus EPS estimate suggests the PER is 14.6.

Forecast for FY23:

Jarden forecasts a full year FY23 EPS of 20.55 cents.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 13.14.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 19.1, implying annual growth of 3.8%.
Current consensus DPS estimate is 17.8, implying a prospective dividend yield of 6.6%.
Current consensus EPS estimate suggests the PER is 14.0.

Market Sentiment: 0.5
All consensus data are updated until yesterday. FNArena’s consensus calculations require a minimum of three sources

ACL    AUSTRALIAN CLINICAL LABS LIMITED

Healthcare services – Overnight Price: $4.67

Goldman Sachs rates ((ACL)) as Buy (1) –

Goldman Sachs believes the categorisation of “recovery stories” versus “covid beneficiaries” is far less relevant as the virus becomes endemic.

Strong pricing power, defensive volumes and resilient market share characterises the Australian healthcare sector, the broker observes. Yet the market appears less willing to pay for duration at valuation multiples that still remain elevated in the historical context.

Goldman Sachs considers the longer-term earnings power of Australian Clinical Labs is underestimated and maintains a Buy rating. Target is raised to $6.50 from $6.40.

This report was published on June 7, 2022.

Target price is $6.50 Current Price is $4.67 Difference: $1.83
If ACL meets the Goldman Sachs target it will return approximately 39% (excluding dividends, fees and charges).
The company’s fiscal year ends in June.

Forecast for FY22:

Goldman Sachs forecasts a full year FY22 dividend of 57.40 cents and EPS of 97.30 cents.
At the last closing share price the estimated dividend yield is 12.29%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 4.80.

Forecast for FY23:

Goldman Sachs forecasts a full year FY23 dividend of 23.00 cents and EPS of 40.40 cents.
At the last closing share price the estimated dividend yield is 4.93%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 11.56.

Market Sentiment: 0.5
All consensus data are updated until yesterday. FNArena’s consensus calculations require a minimum of three sources

AFP    AFT PHARMACEUTICALS LIMITED

Pharmaceuticals & Biotech/Lifesciences – Overnight Price: $3.74

Bell Potter rates ((AFP)) as Downgrade to Hold from Buy (3) –

Bell Potter was encouraged AFT Pharmaceuticals’ FY22 result which included 12% growth in revenue from product sales and EBIT almost doubling to NZ$20.4m. Short-term catalysts include the imminent approval, potentially, of Maxigesic IV in the US.

The company is yet to provide an estimate of market size for injectable pain relief but as the market is dominated by generic medicines and highly price competitive the broker expects revenues initially will be modest.

Net profit estimates are downgraded by -24% for FY23 because of the inclusion of company taxes. The company expects to pay an initial dividend in FY23. Bell Potter downgrades to Hold from Buy and reduces the target to $4.00 from $4.80.

This report was published on June 10, 2022.

Target price is $4.00 Current Price is $3.74 Difference: $0.26
If AFP meets the Bell Potter target it will return approximately 7% (excluding dividends, fees and charges).
The company’s fiscal year ends in March.

Forecast for FY23:

Bell Potter forecasts a full year FY23 dividend of 3.47 cents and EPS of 17.36 cents.
At the last closing share price the estimated dividend yield is 0.93%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 21.54.

Forecast for FY24:

Bell Potter forecasts a full year FY24 dividend of 4.13 cents and EPS of 16.33 cents.
At the last closing share price the estimated dividend yield is 1.10%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 22.90.

This company reports in NZD. All estimates have been converted into AUD by FNArena at present FX values.
All consensus data are updated until yesterday. FNArena’s consensus calculations require a minimum of three sources

AMC    AMCOR PLC

Paper & Packaging – Overnight Price: $17.76

Jarden rates ((AMC)) as Buy (1) –

Jarden’s analysis suggests Australian packaging companies have invested less in capital expenditure relative to North American competitors and this could mean a competitive disadvantage over time if not addressed.

While FY17-22 was a cyclical low point for Australian packaging expenditure, North American plastic packaging underwent increased reinvestment.

The broker believes Orora ((ORA)) would experience the highest upside to capex forecasts if it were to close the gap to US peers and limit the competitive impact of ageing fixed capital, and concludes that the market has already capitalised some of Amcor’s recent increases to long-run capex guidance. Buy rating and $17.95 target maintained.

This report was published on May 31, 2022.

Target price is $17.95 Current Price is $17.76 Difference: $0.19
If AMC meets the Jarden target it will return approximately 1% (excluding dividends, fees and charges).
Current consensus price target is $18.34, suggesting upside of 4.8%(ex-dividends)
The company’s fiscal year ends in June.

Forecast for FY22:

Jarden forecasts a full year FY22 dividend of 67.92 cents and EPS of 109.77 cents.
At the last closing share price the estimated dividend yield is 3.82%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 16.18.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 116.3, implying annual growth of N/A.
Current consensus DPS estimate is 70.4, implying a prospective dividend yield of 4.0%.
Current consensus EPS estimate suggests the PER is 15.0.

Forecast for FY23:

Jarden forecasts a full year FY23 dividend of 69.70 cents and EPS of 116.49 cents.
At the last closing share price the estimated dividend yield is 3.92%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 15.25.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 121.5, implying annual growth of 4.5%.
Current consensus DPS estimate is 72.5, implying a prospective dividend yield of 4.1%.
Current consensus EPS estimate suggests the PER is 14.4.

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

ARF    ARENA REIT

REITs – Overnight Price: $3.88

Jarden rates ((ARF)) as Underweight (4) –

Jarden expects earnings growth and valuations will come under pressure in the A-REIT sector, given the significant moves in bond yields, credit spreads and the cash rate. The focus has moved from the beneficiaries of low interest rates to quality and those best placed to grow.

The broker’s preference is for alternative asset classes in the sector such as childcare, storage, logistics and non-discretionary retail as well as those with conservative cap rates and potential for alternative use.

Underweight maintained for Arena REIT. Target is reduced to $4.50 from $4.75.

This report was published on June 9, 2022.

Target price is $4.50 Current Price is $3.88 Difference: $0.62
If ARF meets the Jarden target it will return approximately 16% (excluding dividends, fees and charges).
Current consensus price target is $4.38, suggesting upside of 12.1%(ex-dividends)
The company’s fiscal year ends in June.

Forecast for FY22:

Current consensus EPS estimate is 16.6, implying annual growth of -60.4%.
Current consensus DPS estimate is 16.0, implying a prospective dividend yield of 4.1%.
Current consensus EPS estimate suggests the PER is 23.6.

Forecast for FY23:

Jarden forecasts a full year FY23 EPS of 17.41 cents.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 22.29.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 17.3, implying annual growth of 4.2%.
Current consensus DPS estimate is 17.1, implying a prospective dividend yield of 4.4%.
Current consensus EPS estimate suggests the PER is 22.6.

Market Sentiment: 0.3
All consensus data are updated until yesterday. FNArena’s consensus calculations require a minimum of three sources


Moelis rates ((ARF)) as Sell (5) –

Arena REIT has revalued the portfolio with an increase of 7.8% during the second half while the passing yield has contracted -23 basis points to 4.91%. Moelis notes the business has a relatively well hedged debt book and would have also experienced fair-value gains.

Moreover, the transactional evidence which valuers rely on has remained robust in the childcare space in spite of sector share prices coming under meaningful pressure.

While Arena REIT is amongst the most defensively positioned in the sector it remains expensive and Moelis retains a Sell rating with a $3.86 target.

This report was published on June 9, 2022.

Target price is $3.86 Current Price is $3.88 Difference: minus $0.02 (current price is over target).
If ARF meets the Moelis target it will return approximately minus 1% (excluding dividends, fees and charges – negative figures indicate an expected loss).
Current consensus price target is $4.38, suggesting upside of 12.1%(ex-dividends)
The company’s fiscal year ends in June.

Forecast for FY22:

Moelis forecasts a full year FY22 dividend of 16.00 cents and EPS of 16.70 cents.
At the last closing share price the estimated dividend yield is 4.12%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 23.23.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 16.6, implying annual growth of -60.4%.
Current consensus DPS estimate is 16.0, implying a prospective dividend yield of 4.1%.
Current consensus EPS estimate suggests the PER is 23.6.

Forecast for FY23:

Moelis forecasts a full year FY23 dividend of 17.40 cents and EPS of 17.90 cents.
At the last closing share price the estimated dividend yield is 4.48%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 21.68.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 17.3, implying annual growth of 4.2%.
Current consensus DPS estimate is 17.1, implying a prospective dividend yield of 4.4%.
Current consensus EPS estimate suggests the PER is 22.6.

Market Sentiment: 0.3

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

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