Australian Broker Call

Macquarie rates AGY as Outperform (1) -

Lithium miner Argosy Minerals has updated on the Rincon LCE project, having recently completed a 24-hour trial of continuous production. During commissioning the plant achieved 20,000t of LCE with an average grade of 99.79%, above the battery grade 99.5%.

Macquarie notes the strategic partner selection process is also nearing completion in order to secure funding for the 10,000tpa project as well as long-term offtake agreements. The main catalyst is acquiring Argentinian government approvals.

Outperform retained. Target is $0.80.

Target price is $0.80 Current Price is $0.42 Difference: $0.38
If AGY meets the Macquarie target it will return approximately 90% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

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

Shaw and Partners rates ANG as Buy (1) -

Austin Engineering has received all purchase orders following a successful tender in 2022 for truck trays to be delivered to Western Australia.

Shaw and Partners notes the order book to the end of May 2023 is up 21% to $146m more than double the same time two years ago.

The company has also reiterated guidance issued in May for the normalised net profit in the range of $17-19m.

The stock is trading on a FY24 EV/EBITDA multiple of 3.3x compared with 5.0x for its peer set. Accordingly the broker retains a Buy rating with a $0.43 target.

Target price is $0.43 Current Price is $0.30 Difference: $0.135
If ANG meets the Shaw and Partners target it will return approximately 46% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

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

Ord Minnett rates APA as Hold (3) -

Ord Minnett concludes APA Group is "reasonably priced" and could appeal to income investors. Most revenue is from medium-term contracts with CPI-linked tariffs that are moving higher in the current environment.

Revenue is also expected to benefit from the completion of developments. The broker projects a 4% growth rate in distributions per security over the next five years.

After cancelling plans to expand into the US the company is intent on supporting Australia's renewable energy transition. The main headwind is higher interest rates as it carries substantial amounts of debt.

Hold rating maintained. Target is $10.20.

Target price is $10.20 Current Price is $9.82 Difference: $0.38
If APA meets the Ord Minnett target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $10.35, suggesting upside of 5.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.0

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

Bell Potter rates APE as Buy (1) -

Eagers Automotive has increased its interest in the EV dealer group to 80% from 49%. The additional interest in the retail joint venture was acquired from EVDirect.com for consideration of $70m, comprising $50m cash and $20m in shares.

Bell Potter updates forecasts to take account of the increased stake but makes no changes to underlying forecasts.  The company already consolidates the JV so the only change is in the minority interest and net profit after minorities.

The company believes the increased interest will strengthen its position as the exclusive retailer partner for BYD and EVDirect.com in the Australian market. Bell Potter retains a Buy rating and raises the target to $15.15 from $15.00.

Target price is $15.15 Current Price is $13.83 Difference: $1.32
If APE meets the Bell Potter target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $14.43, suggesting upside of 0.5% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.6

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

Morgans rates AQZ as Add (1) -

Morgans suggests the altitude of FY24 and FY25 consensus profit forecasts is too low as earnings from the E190 fleet expansion program (announced in February) are set to increase.

Moreover, benefits are beginning to accrue from an increase in the term and number of E190 aircraft available to Qantas Airways ((QAN)) under a wet lease agreement, explain the analysts.

While the broker cautions FY23 guidance is not without risk, the Add rating is maintained and the target is increased to $4.70 from $4.65. 

Target price is $4.70 Current Price is $2.85 Difference: $1.85
If AQZ meets the Morgans target it will return approximately 65% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

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

Morgan Stanley rates ARB as Equal-weight (3) -

At a price point of around $75,000, ARB Corp has launched a new and adjacent product category of recreation vehicles, providing further evidence to Morgan Stanley of management's innovation and R&D capabilities.

The broker believes the trailer will be built in Thailand, which now clarify's the company's uplift in 2H capex. It's thought the launch will be limited to Australia, though may provide upside in the US over time.

The $31 target is unchanged. Morgan Stanley remains positive longer-term, but cautious near-term. Equal-weight. Industry view: In-Line. 

Target price is $31.00 Current Price is $29.93 Difference: $1.07
If ARB meets the Morgan Stanley target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $31.64, suggesting upside of 5.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.2

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

Bell Potter rates AZS as Speculative Buy (1) -

Azure Minerals has provided new results from drilling in its target areas at its Western Australian lithium exploration project and Bell Potter updates its resource estimates, increasing assumed average grade to 1.2% lithium and the assumed lithium recovery to 67.5%.

The broker envisages a high probability of more than 100mt as a resource. The broker believes the stock is undervalued and retains a Speculative Buy rating, raising the target to $3 from $2.

Target price is $3.00 Current Price is $1.43 Difference: $1.57
If AZS meets the Bell Potter target it will return approximately 110% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

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

Macquarie rates CPU as Outperform (1) -

Marking to markets, Macquarie updates forecasts for Computershare, noting most forward curves have increased since the first half results. The broker is forecasting FY23 margin income of $783m on an actual currency basis.

While falling yields and ongoing inflationary pressures post downside risk to earnings the broker maintains an Outperform rating on the basis of potential capital returns in the next 12 months. Target rises to $26 from $25.

Target price is $26.00 Current Price is $23.42 Difference: $2.58
If CPU meets the Macquarie target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $25.56, suggesting upside of 8.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: 0.7

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

Shaw and Partners rates CXL as Buy (1) -

Calix expects to conclude the final investment process with Pilbara Minerals ((PLS)) in respect of the mid-stream demonstration plant joint venture by the end of July.

Shaw and Partners regards this as a positive development as both companies appear strongly committed to the project, despite the final investment decision originally being targeted for June 30. Successful demonstration of the process may lead to a commercial scale plant being built.

The Buy rating and target price of $6.00 are retained.

Target price is $6.00 Current Price is $4.36 Difference: $1.64
If CXL meets the Shaw and Partners target it will return approximately 38% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

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

Ord Minnett rates DOW as Accumulate (2) -

Ord Minnett notes two sizeable new contracts recently announced are worth a combined $5.1bn and support a positive outlook rather than necessarily adding value to Downer EDI. It also increases the proportion of high-quality customers on the company's books.

The company, just prior to financial year end, announced contractual close on its Queensland train manufacturing program which amounts to $4.6bn of revenue over 15 years.

The broker assesses cyclical and "accident-prone" revenue has become a thing of the past for the company and government and government-related contracts are now likely to account for 90% of income.

Ord Minnett retains an Accumulate rating with a $5.60 target.

Target price is $5.60 Current Price is $4.22 Difference: $1.38
If DOW meets the Ord Minnett target it will return approximately 33% (excluding dividends, fees and charges).

Current consensus price target is $4.17, suggesting downside of -0.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.2

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

Bell Potter rates DVP as Buy (1) -

Develop Global has made a proposal to acquire Essential Metals ((ESS)) by way of a scheme of arrangement. Mineral Resources ((MIN)), the largest shareholder in the latter at 19.55%, has indicated it will vote in favour of the scheme.

The company has also announced a $50m equity raising via a $30m institutional placement and $20m 1-for-29 entitlement offer. Funds will be used to accelerate exploration and development at Pioneer Dome as well as further drilling at Woodlawn and other costs relating to the proposal.

Bell Potter is yet to incorporate the acquisition into its valuation while making EPS changes to reflect dilution from the equity raising. Buy rating unchanged. Target is reduced to $3.90 from $4.00.

Target price is $3.90 Current Price is $3.46 Difference: $0.44
If DVP meets the Bell Potter target it will return approximately 13% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

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

Macquarie rates GLN as Outperform (1) -

Galan Lithium has finalised a definitive feasibility study for Hombre Muerto West stage 1 which assumes average production of 537,000tpa lithium carbonate equivalent, which is 34% ahead of Macquarie's previous forecasts.

The broker also notes the production process has been optimised along with the pond design to unlock additional output. Once all approvals are achieved the company is expected to lodge its development plan for the full scale plant.

Outperform maintained. Target is $1.70, reduced from $1.80.

Target price is $1.70 Current Price is $0.96 Difference: $0.74
If GLN meets the Macquarie target it will return approximately 77% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

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

UBS rates GQG as Buy (1) -

Prior to GQG Partners' monthly funds under management announcement, UBS marks to market its forecasts and anticipates a record figure of circa US$104bn, which compares to a consensus forecast of US$98bn.

Management fee margins should be more resilient than expected, while the investment performance in the key emerging market strategy remains strong.

The fund manager is the broker's preferred exposure in the space with both an attractive valuation and dividend yield. The target rises to $2.25 from $2.20. Buy.

Target price is $2.25 Current Price is $1.41 Difference: $0.845
If GQG meets the UBS target it will return approximately 60% (excluding dividends, fees and charges).

Current consensus price target is $2.05, suggesting upside of 34.0% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY23:

Forecast for FY24:

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: 1.0

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

Bell Potter rates IMM as Speculative Buy (1) -

Bell Potter believes Immutep is in an improved position for commercial partnering discussions regarding efti. The company has recently made an $80m capital placement and entitlement offer, extending its cash to the first quarter of 2026.

Consequently, the company will continue to advance late-stage clinical trials in multiple indications, further de-risking the asset, the broker observes.

Speculative Buy rating maintained. Target is reduced to $0.55 from $0.60 to allow for the dilution from the capital raising.

Target price is $0.55 Current Price is $0.32 Difference: $0.235
If IMM meets the Bell Potter target it will return approximately 75% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

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

Morgans rates M7T as Add (1) -

The visibility of Mach7 Technologies' products and its standing for future contracts should be increased, according to Morgans, following a “monster” contact win with the US Department of Veterans Affairs.

The $60m total contact value over the next eight years rectifies prior investor concerns around lumpiness of cashflows and dearth of progress in tier-one contracts, explains the analyst.

Even after a strong post-announcement share price rally, the broker eyes a strong buying opportunity. The target rises to $1.67 from $1.34. Add.

Target price is $1.67 Current Price is $0.74 Difference: $0.935
If M7T meets the Morgans target it will return approximately 127% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

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

Shaw and Partners rates M7T as Buy (1) -

Mach7 Technologies has a new contract worth $11.7m with the US Veterans Health Administration's national teleradiology program.

Shaw and Partners observes this validates the company's technology with America's largest integrated healthcare system and materially grows a recurring revenue base.

Moreover, as the company has a scaled cost base now this should contribute to higher cash earnings and the broker reiterates a Buy rating with a $1.30 target. As fourth quarter results are due, the broker does not make any changes to forecasts at this point.

Target price is $1.30 Current Price is $0.74 Difference: $0.565
If M7T meets the Shaw and Partners target it will return approximately 77% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

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

UBS rates MPL as Buy (1) -

Results of a UBS private health insurance survey suggest consumer sentiment towards policies has improved to multi-year highs. A further increase in participation and policy numbers into FY24 is now expected.

The broker has a positive view on the sector and believes supportive tailwinds are more durable and persistent than current market forecasts.

For Buy-rated Medibank Private, UBS raises its target to $4.20 from $4.00 to incorporate elevated policy growth and ongoing above-average margins.

Target price is $4.20 Current Price is $3.49 Difference: $0.71
If MPL meets the UBS target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $3.55, suggesting downside of -0.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.2

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

Ord Minnett rates NAN as Lighten (4) -

Ord Minnett suspects the market is discounting the risk for continued downward earnings pressure on Nanosonics.

Benefits from improved pricing have been largely recognised in the first half and management now expects lower gross margins because the sales mix is shifting to lower-margin capital revenue, along with ongoing cost inflation.

The broker expects the overall downward trend in new installations of Trophon in North America to be maintained while, despite a presence since 2015, the company is yet to make a significant breakthrough in EMEA because of existing competition and the difficult process of revising cleaning protocols in each country.

Lighten rating and $4 target unchanged.

Target price is $4.00 Current Price is $4.72 Difference: minus $0.72 (current price is over target).
If NAN meets the Ord Minnett target it will return approximately minus 15% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.50, suggesting downside of -6.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: -0.5

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

UBS rates NHF as Buy (1) -

Results of a UBS private health insurance survey suggest consumer sentiment towards policies has improved to multi-year highs. A further increase in participation and policy numbers into FY24 is now expected.

The broker has a positive view on the sector and believes supportive tailwinds are more durable and persistent than current market forecasts.

For Buy-rated nib Holdings, UBS raises its target by 5% to $9.70 to incorporate elevated policy growth and ongoing above-average margins.

Target price is $9.70 Current Price is $8.43 Difference: $1.27
If NHF meets the UBS target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $7.78, suggesting downside of -10.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.3

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

Macquarie rates PLS as Outperform (1) -

Along with its joint venture partner Calix, Pilbara Minerals has agreed to increase the pre-final investment decision capital commitment for its mid-stream demonstration plant. The project is expected to be presented to the board for FID this month.

Macquarie assesses the increase in funding indicates positive progress and the front-end loading of costs could also help to manage cost inflation pressures. A large cash balance positions the company well for growth and shareholder returns, the broker adds.

Outperform rating and $7.30 target maintained.

Target price is $7.30 Current Price is $5.06 Difference: $2.24
If PLS meets the Macquarie target it will return approximately 44% (excluding dividends, fees and charges).

Current consensus price target is $5.25, suggesting upside of 1.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.4

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

Shaw and Partners rates RMS as Buy (1) -

Ramelius Resources has made a takeover offer for Musgrave Minerals ((MGV)) at 1-for-4.21 shares plus four cents in cash. Shaw and Partners notes this is the company's third acquisition in the past two years.

The offer values the Cue project at an EV/oz resource of $204/oz, over double the ASX-listed gold explorer/developer peer group, which the broker points out highlights the disparity between corporate and equity market valuations of gold resources.

Musgrave Minerals directors have accepted the bid because of the synergies between the Cue project and the Mount Magnet operation.

Shaw and Partners retains a Buy rating and increases the target to $1.69 from $1.50.

Target price is $1.69 Current Price is $1.25 Difference: $0.44
If RMS meets the Shaw and Partners target it will return approximately 35% (excluding dividends, fees and charges).

Current consensus price target is $1.61, suggesting upside of 21.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

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

Ord Minnett rates SKO as Buy (1) -

Serko has reiterated expenditure guidance for FY24 in the range of $86-90m. This is a signal, in Ord Minnnett's view, of a strong focus on cost discipline and operating efficiencies.

The trading update at the AGM was in line with expectations with the company indicating that, if June quarter trends continue, income for FY24 could be above the midpoint of the $63-70m guidance range.

The broker believes this provides evidence that the impressive top-line growth delivered in FY23, largely on the back of the Booking.com deal, has continued. Buy rating retained. Target is raised to $5.03 from $5.01.

Target price is $5.03 Current Price is $3.58 Difference: $1.45
If SKO meets the Ord Minnett target it will return approximately 41% (excluding dividends, fees and charges).

Current consensus price target is $4.69, suggesting upside of 31.7% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY24:

Forecast for FY25:

This company reports in NZD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: 1.0

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

Macquarie rates STX as Outperform (1) -

The delay in gas from Strike Energy's Walyering highlights the difficulties in delivering projects in the current environment and Macquarie now assumes first gas in September. Tight labour markets, delays in components and inclement weather have all weighed on timelines.

This drives a -30% reduction in estimates for earnings per share in FY24. Strike Energy has not revised current expenditure estimates but Macquarie increases its forecasts to $25m, which is 48% above the company's guidance at final investment decision.

Outperform rating retained. Target edges down to $0.59 from $0.60.

Target price is $0.59 Current Price is $0.44 Difference: $0.15
If STX meets the Macquarie target it will return approximately 34% (excluding dividends, fees and charges).

Current consensus price target is $0.54, suggesting upside of 25.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.7

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

Ord Minnett rates UMG as Hold (3) -

Malteries Soufflet's bid for United Malt appears likely to proceed now a scheme implementation deed has been agreed.

Ord Minnett believes the offer is attractive on valuation grounds, at $5, representing 45% premium to the share price prior to the proposal being announced.

A number of hurdles are still on the horizon including AFIRB and competition regulators in Australia, Canada and the UK.

The broker observes the business appears set for a stronger second half, coinciding with higher beer demand in the northern hemisphere summer. Hold rating and $4.75 target maintained.

Target price is $4.75 Current Price is $4.78 Difference: minus $0.03 (current price is over target).
If UMG meets the Ord Minnett target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.94, suggesting upside of 3.7% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.0

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