Monday 03 August 2020 16 stocks I’ll be buying or selling soon!; The question on everyone’s lips: Zip or ?

Today, I’m writing about 16 stocks split into two groups. The first are 10 quality companies that WILL come good when the virus is contained. The second group are 6 good companies that SHOULD come good, but there are questions about their survival depending on COVID-19. Read on!

Paul Rickard asks: Is the “buy now, pay later (BNPL)” sector a speculative bubble? Or are Afterpay and Zip really a buy? And what about Klarna? He shares his stance on BNPL stocks in his article today.

Sincerely,

Peter Switzer

Inside this Issue 02 16 stocks I’ll be buying or selling soon! Reporting season stocks! by Peter Switzer 04 The question on everyone’s lips: Zip or Afterpay? BNPL stocks – buy or sell? by Paul Rickard 07 What stocks should you keep your eye on during reporting season? What to expect from “confession season” this year 16 stocks I’ll be buying by James Dunn 11 Buy, Hold, Sell – What the Brokers Say or selling soon! 4 upgrades, 16 downgrades by Peter Switzer by Rudi Filapek-Vandyck 02

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before Switzer Super Report is published by Switzer Financial Group Pty Ltd AFSL No. 286 531 acting, consider the appropriateness of the information, having regard to the Level 4, 10 Spring Street, Sydney, NSW, 2000 individual's objectives, financial situation and needs and, if necessary, seek T: 1300 794 893 F: (02) 9222 1456 appropriate professional advice. 16 stocks I’ll be buying or selling soon! by Peter Switzer

With reporting season upon us, is it time for ready, 1. Quality companies that WILL come good when the steady, BUY! Or should it be ready, steady, SELL! virus is beaten or contained.

As we ponder questions such as: have we missed 2. Good companies that SHOULD come good but the Afterpay boat? And what will be the there are questions about their survival if this next Afterpay that has gone up around 650% since COVID-19 challenge drags on. March 23? I want to see the reports and outlook statements of some of the companies that the The first group of stocks and their forecasted gains analysts think have big to huge upside. are:

Here’s my thinking. If you’re a huge punter/speculator, you’d buy these companies before they report and you’d resolve to hold them until they come good. And you hope the consensus of analysts on FNArena are not smoking something!

I’ve gone looking for the top 100 companies on the ASX that have potential big gains if the experts know these businesses as they should. That said, the experts don’t know the future. They don’t know when a vaccine will show up or when we can travel around the country, let alone overseas. They don’t know how bad we’ll contract as an economy, how high the jobless rate will go and how badly company profits will be affected.

It’s always a guessing game but the imponderables are usually easier than they are with the Coronavirus undermining companies and economies.

And to be quite frank, even the CEOs of the companies I’m naming here are flying blind but we hope what is revealed in upcoming reports confirms that these companies have a future after we’ve beaten this damn virus.

I’ve gone searching for quality companies that The second group include: analysts believe have an upside waiting to happen. The question is: how long might that time be? I’ve divided the companies into two groups:

Monday 03 August 2020 02 CEOs of vulnerable businesses will be asked. And if they convince the market, they might avoid another big sell off and there could be a buying opportunity for those who feel brave!

For example, The Star (SGR) has a problem with Chinese tourists for at least one or maybe two years from now, but when this changes, its share price should reflect the return to normalcy and there could be a big rebound. That’s the gamble, so watch this space as we cover the reporting season.

Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the The first group is made up of stand-the-test of time appropriateness of the information in regard to your businesses and provided you are a patient investor, circumstances. I’d expect that these will reward those who have bought into these companies when the market (largely driven by shorter-term investors) has gone off chasing those companies that are likely to deliver over the next year rather than maybe in two or three years’ time.

That’s the advantage a long-term investor has. And provided they invest with quality businesses that have long-run potential, then investing in companies one to 10 makes a lot of sense.

Our banks, shopping centres and Sydney Airport could have problems for a year or so but eventually normalcy will return and these companies will again play a major role in our lives. Two weeks ago, the great investor Warren Buffett, of Berkshire-Hathaway, piled into Bank of America shares. That was a long-term bet that the biggest bank in the USA will eventually reassert itself as the dominant player in the world’s biggest economy.

Our big four banks will follow a similar script when our economy eventually approaches normality.

The second group of companies have huge potential but they come with risks. It might seem implausible but you have to ask the question: Can and Corporate Travel actually survive?

These are the sorts of questions that the respective

Monday 03 August 2020 03 The question on everyone’s lips: Zip or Afterpay? by Paul Rickard

In a speculative bubble, it is always dangerous to call January 2020, Klarna was valued at US$5.5bn a “high” and label a stock a “sell”. But when two top (approx. A$8bn). Klarna is an unlisted company and if tier broker analysts have such different valuations on it undertook an IPO, it could be worth considerably a company, it is hard not to believe that a high can’t more. And the market for online tech darlings is hotter be too far off or may have already been witnessed. now in July than it was in January.

That’s the case for the highflying Afterpay (ASX: However, for an eighth of the customers, 40% of the APT). Morgan Stanley says it is a ‘buy’ and has a revenue and a comparable growth rate in the key US target price of $101.00, while UBS has a ‘sell’ and a market, Afterpay is arguably 1.5 to 2.0 times as target of just $27.00. They both can’t be right! expensive. Either Klarna is a screaming buy, or Afterpay is way too pricey. Maybe it is unfair to label “the buy now, pay later sector” a speculative bubble, but what brought this Locally, Klarna’s sales model is for online purchases, home to me last week was a simple comparison on whereas Afterpay grew up on in-store sales and some of the key metrics between Afterpay and offers both instore and on-line. With more than European market leader, Klarna. 41,000 merchants, it dwarfs Klarna’s penetration, but the latter will be looking to its partner CommBank to Klarna, of course, has launched in Australia in roll out an integrated offering to its merchant base of partnership with the . It is going circa 100,000 customers. Both Afterpay and Klarna “okay” in Australia (probably not as good as the allow customers to pay off their purchases in 4 equal Bank may have anticipated) and after six months, instalments, two weeks apart. No interest is charged, boasts 270,000 customers and 80 live merchants but a late fee is levied if the payment is missed. (including kogan.com, appliances online and Roses Only). Afterpay vs Klarna vs Zip Pay – Operating Models Internationally, it is a different story for Klarna. 85 million customers, $750m in revenue for the last half, and in the key US and UK markets, it grew by 350% and 125% respectively year on year.

Afterpay, on the other hand, has 9.9m million customers, generated gross revenue for the half ending 30 June of around $300m, and in the US market, grew by 330% year on year. Afterpay added 2.6m customers globally in the last half year, Klarna added more than 14m.

Afterpay’s market capitalisation on the ASX sits just shy of $20bn. When CommBank invested US$100m in Klarna in August 2019 and a further US$200m in

Monday 03 August 2020 04 After bottoming at $8.90 on March 23, Afterpay has soared to over $70. A key catalyst was news that Chinese tech giant Tencent had acquired a 5% interest in the company. A very well supported capital raising at $66 per share in July, which raised $650m, has provided a temporary floor.

Afterpay (APT) – Aug 19 to July 20

Zip, which has a market cap of around $2.3bn, has also experienced a rapid climb since its March lows. The all scrip acquisition of US buy now, pay later provider QuadPay in early June was a strong catalyst.

One important difference between the models is Zip Co (Z1P) – Aug 19 to July that Afterpay doesn’t do a credit check on its 20 customers, whereas Klarna and fellow competitor Zip (ASX: Z1P) do. Some industry commentators argue that under the guise of ‘responsible lending’, it is inevitable that the regulator ASIC requires this to happen and say that Afterpay’s failure to do so will come back to haunt it.

Zip’s operating model is more akin to the provision of a line of credit. Although no interest is charged with Zip Pay, a monthly account fee of $6 is levied on the customer for so long as there is a balance outstanding. Up to a credit limit of $1,000, the monthly instalment is $40 per month. For purchases (limits) over $1,000, Zip offers Zip Money (which potentially charges interest after 3 months). Because Zip’s transaction size is higher on average than Afterpay and the customer is also paying a fee, merchant fees (as a percentage of the transaction value) are lower.

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Fewer brokers cover Zip, but the three majors who do are collectively more bullish on Zip than they are on Afterpay. Overall, the consensus target price is $6.45, an 8.4% premium to the closing price on Friday of $5.95.

Zip (Z1P) – Broker Recommendations and Target Prices

Bottom line What do the brokers say? I will stick my neck out and call Afterpay a “sell”. In the main, the brokers see Afterpay as fully priced. There is, however, a huge divergence in opinion, with On “value” grounds, Zip looks a better bet. However, UBS the “bear” with a target price of just $27.00, I am wary of recommending the “number two” while Morgan Stanley is the “bull with a target price in a market place and if Afterpay heads south, I can’t of $101.00. According to FN Arena, the consensus see Zip heading in the other direction. target price is $67.92, a 0.9% discount to Friday’s closing price of $68.54. Individual broker Important: This content has been prepared without recommendations and target prices are shown in the taking account of the objectives, financial situation or table below. needs of any particular individual. It does not constitute formal advice. Consider the Afterpay (APT) – Broker appropriateness of the information in regard to your Recommendations and Target Prices circumstances.

Monday 03 August 2020 06 What stocks should you keep your eye on during reporting season? by James Dunn

With reporting season moving into gear this week – by 37 per cent (from $72 billion last year, to $45 although not yet in full swing – there can’t be an billion this year), with the biggest declines from investor who doesn’t understand that it’s not going banking stocks. This outlook has not been helped by to be pretty. the unprecedented ruling by the Australian Prudential Regulation Authority (APRA) that the banks – which Consensus expects earnings across the market to fall paid out more than 80% of their profits as dividends by at somewhere in the range of 15%–21%, if you over the past five years – must limit their exclude the resources sector, which is still doing dividend payout to no more than 50% of profits. comparatively well. CBA is the first bank to report under this requirement: The slump in earnings due to the hit from COVID-19 it reports on August 12. Analyst forecasts expect CBA will be the biggest fall since the GFC. Shane Oliver, to pay a final (second half) dividend of about 50 cents head of investment strategy and economics at AMP – after paying $2 in the interim (first-half) dividend. Capital, expects the Financials to be the hardest-hit But the range of analysts’ projections for the final sector, with an expected –27% slump in earnings, led dividend runs from 20 cents to $1.30. by insurers and the banks, followed by industrials with a –15% fall in earnings and resources with –13%. The country’s largest construction group, CIMIC, Oliver says Health Care may be the only sector to ditched its interim dividend last week see a rise in earnings – but hedges that by saying “even that’s iffy.” With COVID-19 changing the rules for “confession season” this year – the Australian Securities Broker UBS expects earnings per share (EPS) to fall Exchange (ASX) effectively agreed with companies by 21% – the equal worst since the GFC year, of that they were not required to predict the FY09 – and says the season will deliver a “dividend unpredictable – a wide range of companies have recession,” with dividends per share plunging by lowered market expectations for their earnings. UBS 39%. UBS also says EPS declines will be led by the says 49 members of the S&P/ASX 100 Index have Financials (–28.3%), as banks provision for bad debt lowered or removed guidance since 10 March. Some charges due to the weakening economy, followed by have upgraded, but that is uncommon. the Industrials ex-Financials (–15.5%). Despite booming iron ore prices, the broker predicts the fall in As usual, how companies’ results are received by oil and metallurgical (steelmaking) and thermal the market relates more to what the market expects (electricity) coal prices to drag resource EPS growth than the actual reported number – the extent to which to –12.9% in FY20. Only Discretionary Retail is the market has been guided toward an expectation. expected to grow EPS in FY20, with UBS expecting EPS in the sector to be up 5.9%. The market knows that FY20 is a write-off for company profits – the market is looking out to FY21 Fellow broker Citi also expects that dividends – upon and FY22. It is FY22 profit projections, and which hundreds of thousands of retirees rely to valuations, that is governing the way that analysts augment their incomes – will be hammered. The and professional investors see companies right research team at Citi predicts that dividends could fall now.

Monday 03 August 2020 07 The market will forgive awful numbers because it is include Super Cheap Auto, Rebel Sport, Macpac and looking 18 months to two years away. BCF – recently reported stronger-than-expected sales in the last quarter of FY20, as consumers spent up on The comparative strength of the resources sector – sports gear, gym equipment and car projects. more specifically, the big iron ore miners – was shown last week with ’s June 30 half-year Super Retail now expects total revenue for FY20 to result, which showed interim profit down 20% on the be $2.82 billion, up from $2.71 billion in 2019, same period last year. While that sounds typical of EBITDA (earnings before interest, tax, depreciation what the market expects for most companies, RIO’s and amortisation) of $327 million–$328 million, up underlying earnings — excluding a range of one-off from $315 million in 2019, and normalised net profit of costs — were down just 4%, to $US4.75 billion ($6.59 $153 million–$154 million, compared to $153 million billion). Despite the profit drop, the mining giant lifted in 2019. its interim dividend by 3%, to $US1.55 ($2.15) a share. In a similar vein, personal grooming retailer Shaver Shop (SSG) withdrew its FY20 earnings guidance – Despite copper and aluminium prices falling for earnings before interest, tax, depreciation and significantly, iron ore held up well: prices were up 1% amortisation (EBITDA) of $14.25 million– $15.75 on a year earlier on the back of strong demand from million, compared to $13.5 million in FY19 – in March, Chinese steel mills. and took back its already announced interim dividend of 2.1 cents a share, 80% franked, given what it said should follow-up this was “the need to preserve cash over this period”. strength in iron ore when it reports later in the season. FMG has already updated the market that it But buoyant trading – particularly online – has seen shipped a record volume of iron ore in the June 30 SSG recover to the point where it has reinstated its year, generating record revenue. FMG beat its export interim dividend. guidance over the past year, with shipments of 178.2 million tonnes, a 6% lift on last year. In contrast, AMP warned last week that its first-half profit would more than halve, as more than $4.4 In the three months to the end of July Fortescue billion flowed out of its wealth management arm in the shipped an annualised tonnage of 189 million tonnes, first half alone. Average assets under management and the company expects to ship 175 million–180 fell by 6% over the half, to $126 billion. AMP said it million tonnes in the current financial year. Australian expected to post a net profit of between $140 iron ore exports hit a record $9.9 billion in June and million–$150 million for the first half, down from $309 more than $100 billion in the financial year, with million a year ago. China taking 87% of the shipments. Broker Wilsons sees potential good news this More importantly, Fortescue had a cash production earnings season coming from ARB Corporation, A2 cost of US$13.02 for the quarter, and an average of Milk, Nick Scali, SomnoMed, Bravura Solutions, NRW US$12.94 over the financial year. But it realised an Holdings and Perenti Global. It says companies average US$81 a tonne for the June quarter, 86% of that have to do very well to meet the guidance the the average benchmark price for 62% iron ore, market is expecting from them include AMA Group, bringing average prices to US$79 a tonne for the AP Eagers, , Whitehaven Coal, New financial year. That’s why analysts expect a big final Hope and Monadelphous. dividend, of up to $1, which would be a 40-cent lift on last year. Wilsons says potential downside surprises could come from GUD Holdings, Discretionary retailers, too, could surprise on the and Nanosonics. upside as once-removed beneficiaries of government stimulus (JobKeeper and the extended JobSeeker). Goldman Sachs is expecting good results from QBE For example, – whose chains Insurance, Suncorp, , Pendal Group

Monday 03 August 2020 08 from the financial sector, as well as A2 Milk, AP analysts’ consensus target price of $5.929, while Eagers, AGL Energy, Superloop, Afterpay (not in Thomson Reuters has $5.98. profit but in transaction and merchant numbers), and Domino’s Pizza. Thursday also sees resources-industry and regional aviation business Alliance Aviation (AQZ) report, and The broker doesn’t like ASX, Platinum Asset that could also produce a rare earnings rise: FN Management and Private. Arena’s consensus of analysts’ estimates projects earnings per share (EPS) of 20.6 cents for FY20, Broker Morgans thinks could surprise actually up on FY19, by 1.9 cents (10.3%). However, positively (more in terms of capital management than the pain at Alliance will be in the dividend, which is profits), while it is very wary on Ramsay Health Care, expected to be more than halved, to 6.5 cents. Link Administration, Orora, , Coca-Cola Amatil and I looked at AQZ in January as one of three industrial (half-year). stocks for yield – at that stage, it was trading at $2.75. It has moved to $3.34, but the dividend cut puts paid On Thursday, we will hear from sleep treatment to the yield scenario that analysts were expecting medical device giant ResMed, which is one of the few earlier in the year. FN Arena has an analysts’ ASX-listed stocks to be a clear beneficiary of consensus target price of $3.663, while Thomson COVID-19. Demand for ResMed’s ventilators has Reuters’ collation has AQZ at $3.54. surged: in the March quarter, ResMed tripled its ventilator production, producing more than 52,000 On Friday, property website listings company REA units in order to fulfil an urgent contract from the Group (REA) reports, and while FN Arena’s Australian Government. The company went on to consensus of analysts’ estimates expects a 10% fall provide around 5,500 invasive and non-invasive in EPS, to 201.3 cents, with that decline more than ventilators to Australia’s national stockpile. ResMed recovered in FY21, with growth to 241 cents was one of the six companies named to help facilitate expected. REA is also considered over-priced, at the production and supply of ventilators in the United $108.48 compared to an analysts’ consensus target States after the country initiated its Defence price of $101.022. Production Act. Friday also brings what could be one of the stronger In late April, ResMed announced its results for the results from the season, when baby goods superstar third quarter of 2020, which was highlighted by a 16% Baby Bunting (BBN) reports. Baby Bunting withdrew increase in revenue to US$769.5 million, a 39% its profit guidance in March due to uncertainty created increase in net operating profit, to US$217.5 million, by the coronavirus pandemic, but in a trading update and a gross margin of 58.4% for the quarter. in July, BBN said it expected underlying net profit to rise between 29%–35% in FY20, to a range of $18.5 For the June 30 year, analysts (on consensus) expect million–$19.5 million. That was slightly lower than a 65% boost to earnings per share (EPS), in US previous profit guidance of $20 million–$22 million. dollars – but despite being a potential star of earnings season, analysts view the stock as over-priced, with a Unfortunately for investors, FN Arena’s collation has consensus price target, according to FNArena, of analysts posting a consensus price target of $3.50 for $25.10, versus the current share price of $28.28. Baby Bunting, underneath the share price of $3.57; Thomson Reuters has a consensus valuation of Insurance heavyweight IAG (IAG) will demonstrate $3.70. The stock’s low at the depths of the COVID the earnings pain from the Financials sector, when it Crash was $1.53. reports on Thursday: FNArena’s consensus has earnings per share (EPS) falling by 55% in FY20, to Important: This content has been prepared without 16.8 cents. Then, in FY21, analysts see an 84% taking account of the objectives, financial situation or rebound, to 30.9 cents. But IAG could be a buy: needs of any particular individual. It does not against a market price of $5.09, FN Arena has an constitute formal advice. Consider the

Monday 03 August 2020 09 appropriateness of the information in regard to your circumstances.

Monday 03 August 2020 10 Buy, Hold, Sell – What the Brokers Say by Rudi Filapek-Vandyck

Over the course of the last month, a clear trend has Total Buy ratings for the seven brokers monitored emerged toward downgrades for stockbroking daily remains high at 48.83% of total ratings, versus analysts’ company ratings on individual ASX-listed 39.89% on Neutral/Hold, and 11.28% in Sell ratings. stocks. Downgrades have totalled ninety compared to forty upgrades over that period. In the good books

For the week ending Friday, 31st of July, FNArena GWA GROUP LIMITED (GWA) was upgraded to registered four upgrades versus sixteen downgrades, Outperform from Neutral by Credit Suisse B/H/S: with six of those moving to a direct sell. 1/3/0

Brokers have continued to downgrade Elevated home improvement expenditure is likely to recommendations for gold mining shares, largely on continue, Credit Suisse assesses. The company valuation concerns, as they rally in response to a reports results on August 17. The broker climbing gold price. This week, three of the sixteen acknowledges the risks to renovation expenditure, as downgrades were gold shares, including Regis working-from-home trends ease. Declines in house Resources, and Gold Road Resources. prices and turnover historically drive lower business in this area. Still, the broker observes Two of the upgrades related to property. CSR was renovation-exposed companies have been more upgraded due to unrealised value in its large property resilient during prior downturns compared with new portfolio and GWA Group as a result of the potential construction. The broker upgrades to Outperform continuation of elevated home improvement from Neutral as the stock has fallen around -20% and expenditure. is now seen as at a reasonable entry point. Target is reduced to $3.05 from $3.15. Ongoing weak demand for lithium had represented in the ratings downgrade table, while Galaxy Resources was third in the table for the largest negative earnings downgrades of the week. Cooper Energy had the largest earnings downgrade due to weaker-than-expected future earnings guidance, while another gold casualty was In the not-so-good books OceanaGold Corp following an earnings downgrade. DOMINO’S PIZZA ENTERPRISES LIMITED (DMP) Both Insurance Australia Group (margin concerns) was downgraded to Sell from Neutral by and QBE Insurance Group (covid-19 costs) had UBS B/H/S: 0/4/3 negative earnings revisions of greater than 10%. Meanwhile, on a positive earnings revision note, AP Domino’s Pizza Enterprises has outperformed the Eagers led the table with a material structural ASX200 by about 109% year to date, reports UBS. reduction in costs and coming in second was Janus This was driven by covid-19 induced effects like an Henderson Group due to consensus-beating profits. uptake in delivery. The broker notes the stock exhibits defensive characteristics. Earnings forecasts for

Monday 03 August 2020 11 FY20-22 have been upgraded due to strong downgraded to Reduce from Hold by like-for-like sales, currency tailwinds and an Morgans B/H/S: 0/0/1 increasing number of stores. The company is positively affected by the shift to online but the broker Paradigm Biopharmaceutical posted its 4Q20 believes this has already been priced in. The cashflow report with the most significant item being company will declare its FY20 result on Aug 19. No an uptick in R&D expenses, according to Morgans. earnings upside expected for FY20. This leads UBS These expenses of -$4.7m were incurred as a to downgrade its rating to Sell from Neutral with the number of studies and regulatory submissions are target price increasing to $64 from $50.80. imminent. The broker is concerned about a number of issues including large management and founder selling of shares and the sudden departure of the chairman. The analyst also sees risk to the viability of the drug, named Ph2b, as a commercial asset with its low IP value and heading into an expensive Phase 3 trial. Morgans also suggests delays are likely to occur to clinical timelines as a result of covid-19. Additionally, the analyst sees downside risk ahead of filing the investigational new drug (IND) application for the Phase 3 trial by the end of 2020. All this, combined with recent share price strength, has led Morgans to downgrade the recommendation to LIMITED (MQG) was Reduce from Hold. The target price is maintained at downgraded to Accumulate from Buy by Ord $1.74. Minnett B/H/S: 3/3/0 RIO TINTO LIMITED (RIO) was downgraded to The AGM commentary and first quarter trading Hold from Add by Morgans B/H/S: 2/4/1 update were in line with Ord Minnett’s expectations. The broker suspects subsequent quarters may be The Rio Tinto 1H20 result was ahead of consensus more subdued because of delays in capital recycling, estimates, according to Morgans. The company although activity is assumed to recover in the fourth announced an interim ordinary dividend of quarter. The stock has run up strongly over recent US$1.55ps, with no special dividend. This fell short of months and the broker envisages only modest the broker’s estimate of US$1.74ps. Resilient iron potential upside. This leads to a downgrade to ore pricing helped offset lower copper and aluminium Accumulate from Buy. Target is raised to $133 from prices. The broker believes Rio Tinto may seek to $130. further expand its copper business through inorganic options, with buoyant iron ore earnings creating an OROCOBRE LIMITED (ORE) was downgraded to earnings and share price advantage over base metal Sell from Hold by Ord Minnett B/H/S: 2/3/2 peers. Morgans still views the company as a core holding for most investor types, with an attractive Ord Minnett observes, despite the company’s good yield profile, high margin earnings and a strong work with costs, stage 1 operations are losing cash balance sheet. Despite this, the rating is downgraded and stage 2 expenditure has exceeded estimates. to Hold from Add, after the broker altered various The prospect of further delays resulting from the inputs into the forecast model. The target price is pandemic could also raise costs. In the short term the decreased to $107 from $110. market is oversupplied and any recovery is expected to be well into 2021. As the stock no longer offers ST BARBARA LIMITED (SBM) was downgraded to valuation support, Ord Minnett downgrades to Sell Hold from Buy by Ord Minnett B/H/S: 2/2/1 from Hold and lowers the target to $2.00 from $2.10. St Barbara announced June-quarter production PARADIGM BIOPHARMACEUTICAL (PAR) was figures for gold in-line with the Ord Minnett forecast.

Monday 03 August 2020 12 However, FY21 guidance for Gwalia was about -20% below the broker’s estimate and FY22 onward has also been set -20% lower. The analyst still sees significant value-adding potential across Gwalia, Moose River and Simberi. The rating is lowered to Hold from Buy. The target price is decreased to $3.60 from $4.40.

SANDFIRE RESOURCES NL (SFR) was downgraded to Neutral from Outperform by Macquarie B/H/S: 3/4/0

Sandfire Resources’ June quarter was strong with higher than expected production and shipments. The above was compiled from reports on FNArena. Production of both copper and gold was 9% and 26% The FNArena database tabulates the views of seven higher than Macquarie’s forecasts. FY21 guidance major Australian and international stockbrokers: Citi, was weaker than expected. DeGrussa is expected to Credit Suisse, Macquarie, Morgan Stanley, Morgans, produce 67-70kt of copper and 36-40koz of gold. This Ord Minnett and UBS. has led the broker to decrease its earnings forecasts for FY21-23. Macquarie downgrades the stock to Important: This content has been prepared without Neutral from Outperform with the target price taking account of the objectives, financial situation or decreasing to $5.20 from $5.60. needs of any particular individual. It does not constitute formal advice. Consider the Earnings forecast appropriateness of the information in regard to your circumstances. Listed below are the companies that have had their forecast current year earnings raised or lowered by the brokers last week. The qualification is that the stock must be covered by at least two brokers. The table shows the previous forecast on an earnings per share basis, the new forecast, and the percentage change.

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