Market Index takes a look at any noteworthy broker updates from the past week.
Macquarie remained optimistic post-earnings, with an Outperform rating and a $16.54 target price. The broker said Elders' FY22 guidance was conservative and its current valuation remains attractive.
On the flip side, Morgans retained a Hold rating with a $14.75 target price amid concerns that earnings could slow heading into FY23.
Several soft commodities including wheat, corn and cattle have all slipped around 5-10% from recent highs. If price weakness continues to persist, then that may dampen Elders' earnings in the near-term.
You can read more about the demerger here.
Brokers generally view the demerger as a value unlocking catalyst to separate the growth-oriented lottery and Keno business from the more stable, core Tabcorp business.
Consensus view the stock as a Buy with a $5.075 target price.
Notable growth drivers include:
Growing lottery market (Macquarie forecasts lottery volumes to hit all-time highs in FY22, alongside 3% CAGR over the next 3 years)
Monopoly in operational states
Digital penetration as a catalyst for margin expansion
The narrative for vaccine loser Fisher & Paykel Healthcare (ASX: FPH) is not a pretty sight.
Management said that covid has brought forward an approximate 10 years worth of hardware sales. As covid tailwinds begin to fade, the company's earnings have a lot of unwinding to do.
This was apparent in Fisher & Paykel's full year FY22 results on Wednesday, where profits were down -28% to NZ$376.9m.
Interestingly, Macquarie and Citi were both issued Buy ratings post earnings. The average target price was $23.49.
Brokers took a rather long-term view about margin normalisation from 62.6% in FY22 back to historic levels of mid 60s. As well as tapping into under-penetrated and high margin markets such as anesthesia, surgical humidification and oxygen flow devices.
At face value, earnings were very strong given the coal pricing backdrop. New Hope generated $358.6m in earnings in the third quarter and $913m year-to-date, which is quite substantial relative to the company's $3.3bn market cap.
Weather and covid-related issues took a massive toll on coal production, with most production-related metrics down around -25%.
It appears that brokers are looking past the near-term production headwinds, suggesting that any production weakness should be offset by the elevated pricing environment.
Macquarie and Credit Suisse both retained Outperform ratings post-earnings, with an average price target of $4.60.
Finance Writer & Social Media
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