Broker Watch

Broker watch: Airlines not travel, QBE leveraged to rates, ANZ beats expectations

Fri 06 May 22, 1:11pm (AEDT)

Key Points

  • Brokers are bullish on Qantas but not travel names like Flight Centre
  • ANZ impressed brokers amid a positive earnings outlook
  • QBE headed towards the right direction as interest rates are on the rise

Market Index takes a look at any noteworthy broker updates for ASX 200 companies from this week.

Bullish on airlines but not travel

Brokers are divided on the positive updates from Flight Centre (ASX: FLT) and Qantas (ASX: QAN) this week.

Qantas rallied 2.8% ($5.76) on Monday after saying it expects to return to profitability in FY23 as travel rebounds ahead of expectations.

Whereas Flight Centre said March total transaction volumes was almost triple the prior period, sitting around 59% of pre-covid levels. The business managed to operate on a cashflow positive basis in March.

Interestingly, most brokers hopped on board Qantas, with consensus rating the stock as a Buy with a $6.2 target price. More broadly speaking, brokers were impressed with the faster-than-expected capacity rebound and upgraded their earnings forecasts.

2022-05-06 12 51 21-Qantas Airways Ltd (ASX QAN) Share Price - Market Index
Qantas 12-month price chart

Flight Centre on the other hand received a number of hold and sell ratings after revenue margins and earnings were slightly below expectations. Consensus rates the stock as a Sell with a $17.62 target price.

2022-05-06 12 51 43-Flight Centre Travel Group Ltd (ASX FLT) Share Price - Market Index
Flight Centre 12-month price chart

Caution for Woolworths

Woolworths (ASX: WOW) delivered a fairly upbeat March quarter earnings update as inflation and higher in-home consumption helped prop sales up by 9.7% to $15.1bn.

In response to the earnings update, Woolies received 2 sells, 2 hold and 1 buy update. Consensus has a $38.12 target price. The sell ratings were more cautious as opposed to bearish.

UBS described the results as a mixed bag and sales missed its analysts' forecasts. While Credit Suisse expects softer-than-anticipated inflation and higher costs to weigh on future earnings.

2022-05-06 12 52 53-Woolworths Group Ltd (ASX WOW) Share Price - Market Index
Woolworths 12-month price chart

ANZ beats expectations 

ANZ (ASX: ANZ) said that all-important net interest margins continued to decline in the first-half of FY22, down to 1.58% compared to 1.63% a year ago. Though, its outlook was rather encouraging, citing its expectations of "2H22 margins as being slightly positive."

Brokers were quick to hop on board the positive outlook, with mostly buy ratings. Consensus has a $29.56 price target.

The general view was that first-half earnings were passable, but appear to mark a trough for the company. A near-term rebound is expected as banks begin to see margin tailwinds from higher interest rates.

2022-05-06 12 53 36-Australia and New Zealand Banking Group Ltd (ASX ANZ) Share Price - Market Index
ANZ 12-month price chart

Packaging gains 

An earnings upgrade from Brambles (ASX: BXB) has bolstered packing peers like Amcor (ASX: AMC).

Brambles bumped up its FY22 revenue and profit expectations by 1-3% after passing on higher prices to customers, which more than offset "extraordinary" timber and cost inflation. Brokers were mostly Buy rated on the stock, with a consensus price target of $11.78.

2022-05-06 12 54 17-Brambles Ltd (ASX BXB) Share Price - Market Index
Brambles 12-month price chart

QBE leveraged to rates

QBE Insurance (ASX: QBE) rallied 5.5% on Thursday after recording 19% growth in first quarter gross written premiums.

Brokers view the stock as a Strong Buy with a $15.47 target price after yesterday's upbeat result.

The US$75m hit from Ukraine wasn't viewed as a major issue and macro, industry and company-specific factors were all in-favour of the company's positive trajectory.

2022-05-06 12 55 12-QBE Insurance Group Ltd (ASX QBE) Share Price - Market Index
QBE 12-month price chart


Written By

Kerry Sun

Content Strategist

Kerry holds a Bachelor of Commerce from Monash University. He is an avid swing trader, focused on technical set ups and breakouts. Outside of writing and trading, Kerry is a big UFC fan, loves poker and training Muay Thai. Connect via LinkedIn or email.

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