Australian shares are poised to open lower, following overseas losses as policymakers dismiss market expectations that a pivot is near. Follow updates here.
Morningstar equity analyst Nathan Zaia says “wide-moat” Westpac is the cheapest of the Australian major banks, with shares hit by disappointing guidance and operating expenses, and lost market share in home loans.“Loan approval times, and loan growth, have already improved, but a rebasing of costs will take time,” Zaia says.
Morningstar has a 4-star rating for Westpac, and a fair value estimate of $29 per share. Westpac shares last closed at $23.30.Five-star rated Santos is trading at a 40 per cent discount to where Morningstar sees fair value, according to senior equity analyst Mark Taylor. Taylor says Santos’ solid balance sheet and low costs are advantageous, and believes the company is not being sufficiently credited for new oil and gas developments underway.on new domestic wholesale gas contracts, which passed parliament last week, will have a minimal effect on the company as its domestic gas revenue equates to less than 20 per cent in total. Instead, Australian energy companies like Santos have a higher exposure to Asian markets.
Taylor raised Santos’ fair value estimate by 6 per cent to $12 per share last Thursday following Santos’ announcement that it will be increasing shareholder returns to a minimum of 40 per cent of free cash flow. Santos has a fair value estimate of $12.00 per share.
Star Entertainment Group is trading around a 34 per cent discount to Morningstar’s fair value estimate of $3.90. It has an uncertainty rating of very high.
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