Australian Broker Call

Macquarie rates AGY as Outperform (1) -

The Rincon lithium carbonate project in Argentina is now almost complete. Full ramp up is scheduled for the second quarter of 2023 and Argosy Minerals is conducting throughput tests.

The near-term catalysts, Macquarie asserts, are achieving steady-state production and securing approvals for the 10,000tpa expansion. The Outperform rating and 85c target are retained.

Target price is $0.85 Current Price is $0.74 Difference: $0.115
If AGY meets the Macquarie target it will return approximately 16% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 1.0

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

Morgans rates ATA as Hold (3) -

Atturra's 1H result was a slight beat over both guidance and Morgans forecasts. Year-on-year organic revenue growth of 23% was considered a highlight with the balance of growth (another 6%) from acquisitions.

The broker includes Atturra's capital raise late last year in forecasts and the now-completed acquisition of Hammond Street Developments (HSD), which bumps-up FY24 forecasts.

Management continues to see strong demand across the business.

Morgans retains its Hold rating and raises its target to $1.01 from 80c.

Target price is $1.01 Current Price is $0.98 Difference: $0.035
If ATA meets the Morgans target it will return approximately 4% (excluding dividends, fees and charges).

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

Citi rates BUB as Neutral (3) -

Bubs Australia's pre-reported December-half result held negative surprises by way of -$20m impairment and -$8m inventory provision related to weaker than expected growth.

Citi says the impairment of Deloraine is something of a Clayton's surprise, given the company had already flagged it was pursuing SAMR from a China manufacturing slot, and the broker had not incorporated SAMR approval at Deloraine in the first place.

Slowing sales is problematic, observes the broker, advising the challenge now is to convert inventory to cash given the growing cash drain involved in achieving permanent FDA approval and US growth.

FY23 EPS forecasts fall sharply. Neutral rating retained. Target price is steady at 32c, the roll-forward of valuation offsetting reduced forecasts.

Target price is $0.32 Current Price is $0.25 Difference: $0.075
If BUB meets the Citi target it will return approximately 31% (excluding dividends, fees and charges).

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

Ord Minnett rates BXB as Downgrade to Hold from Accumulate (3) -

As Brambles' Share price has moved up through Morningstar's (Ord Minnett) trigger point, the rating is downgraded to Hold. Target unchanged at $14.00.

Target price is $14.00 Current Price is $13.03 Difference: $0.97
If BXB meets the Ord Minnett target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $14.09, suggesting upside of 7.8% (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: 0.4

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

Macquarie rates CIA as Neutral (3) -

Macquarie notes iron ore pellet prices have found a base with the upcoming supply/demand gap supporting pricing. In this way, Champion Iron is well-placed to take advantage of the increase in pellet demand.

The broker considers the recovery in prices and high-grade premium drives earnings upside of more than 50% from FY24 onwards. That said this has little impact on current base case forecasts.. Target rises to $7.70 from $7.50 and the Neutral rating is maintained.

Target price is $7.70 Current Price is $7.66 Difference: $0.04
If CIA meets the Macquarie target it will return approximately 1% (excluding dividends, fees and charges).

The company's fiscal year ends in March.

Forecast for FY23:

Forecast for FY24:

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

Market Sentiment: 0.5

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

Citi rates DBI as Buy (1) -

Dalrymple Bay Infrastructure's FY22 full-year result outpaced consensus forecasts, despite the port operating nearly -40% below capacity, observes Citi, thanks to strong Terminal Infrastructure Charge revenue, which included a once only True-up payment of $22.9m.

The broker says the switching to annual CPI adjustment was perfectly timed; and explains the company's debt book duration has been extended to 6.4 years, which should yield larger margins and boost distributions.

Citi also expects the company may have to pay taxes sooner than expected, generating a small franking distribution.

Buy rating retained. Target price rises to $2.80 from $2.73.

Target price is $2.80 Current Price is $2.52 Difference: $0.28
If DBI meets the Citi target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $2.86, suggesting upside of 15.3% (ex-dividends)

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

Morgan Stanley rates DDR as Overweight (1) -

While Morgan Stanley believes the FY22 result for Dicker Data provided greater confidence on future revenues, investor enthusiasm may be delayed with working capital stabilisation still six months away.

The broker conservatively forecasts higher interest costs and opex until management executes on raising New Zealand margins towards those in Australia, as promised.

The target falls to $10 from $13. Overweight. Industry View: In-Line.

Target price is $10.00 Current Price is $8.31 Difference: $1.69
If DDR meets the Morgan Stanley target it will return approximately 20% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

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

Morgans rates DGL as Add (1) -

Following a "great" 1H result, which beat guidance and expectations, Morgans increases its target for DGL Group to $2.10 from $1.90 and retains its Add rating.

Underlying earnings (EBITDA) were a 6% beat over Morgans forecast. The analyst feels the result showed an ability to grow organically and take advantage of price/demand cycles. 

FY23 earnings guidance was increased to $71.5-$73.5m from $70-$72m due to the impact of recent acquisitions (Chempac NZ, Nightingale Transport), explains the analyst.

Target price is $2.10 Current Price is $1.80 Difference: $0.3
If DGL meets the Morgans target it will return approximately 17% (excluding dividends, fees and charges).

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 DGL as Neutral (3) -

DGL Group's December-half result nosed out UBS's forecast, cash conversion recovering somewhat. Management retained cash-conversion guidance and upgraded FY23 guidance to reflect recent acquisitions.

The broker observes growth investment should prove supportive during the seasonal uptick in demand in the second half, and expects more M&A may be in the wings.

On the downside, UBS spies margin pressure. Neutral rating retained. Target price rises to $2.10 from $2.

Target price is $2.10 Current Price is $1.80 Difference: $0.3
If DGL meets the UBS target it will return approximately 17% (excluding dividends, fees and charges).

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

Morgans rates FDV as Add (1) -

Morgans adopts slightly more conservative portfolio earnings (EBITDA) margin assumptions for Frontier Digital Ventures, following FY22 results which were largely pre-released. As a result, the target falls to $1.16 from $1.29.

While the broker acknowledges reasonable revenue growth and associated profitability for FY22, softer 4Q revenue growth provides a reason for caution.

Revenue growth was lower partly due to economic/currency headwinds for Zameen and lower revenue for the Middle East & North Africa (MENA) region.

The Add rating is unchanged.

Target price is $1.16 Current Price is $0.71 Difference: $0.45
If FDV meets the Morgans target it will return approximately 63% (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

Morgans rates GDG as Add (1) -

Generation Development's stake in Lonsec has increased to 49% from 41% after Lonsec initiated a buyback and cancelation of shares. As a result, Morgans increases its FY23 and FY24 EPS estimates by 4% and 8%, respectively, and raises its target to $1.56 from $1.47.

The analyst points out several Generation Development board members and others within the management team are acquiring small holdings directly in Lonsec, which suggests they see value in the business.

The broker also believes the proposed tax increase on Superannuation earnings for balances greater than $3m is a potential positive for Generation Development over the medium term. Add.

Target price is $1.56 Current Price is $1.26 Difference: $0.295
If GDG meets the Morgans target it will return approximately 23% (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) -

The first diamond drill hole at Santa Barbara, Hombre Muerto West, has been completed with favourable conditions reflected in the core results. Macquarie asserts this provides upside for exploration success.

This project remains the key value driver for Galen Lithium and once all approvals are secured development plans for a full-scale plant are expected to be lodged.

Outperform and $1.90 target retained.

Target price is $1.90 Current Price is $1.18 Difference: $0.725
If GLN meets the Macquarie target it will return approximately 62% (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 HPG as Equal-weight (3) -

hipages Group's 1H revenue was in line with the consensus forecast and earnings (EBITDA) were a beat.

The broker feels the value proposition of the company's lead-generation platform has been assisted by increasing competition among tradies for new jobs, as a result of the weakening economy and softer housing market.

The target falls to $1.00 from $1.20 on higher forecast charges for depreciation and amortisation. Equal-weight. Industry View: Attractive.

Target price is $1.00 Current Price is $0.83 Difference: $0.175
If HPG meets the Morgan Stanley target it will return approximately 21% (excluding dividends, fees and charges).

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

UBS rates IPL as Buy (1) -

UBS cuts Incitec Pivot's target price to $4.40 from $4.50 to reflect an easing in fertiliser prices as northern hemisphere demand takes a breather ahead of a seasonal uptick.

The broker appreciates the company's leverage to ongoing strength in agricultural market and advises that the company will provide an update on the strategic review/divestment of Waggaman by May.

Buy rating retained.

Target price is $4.40 Current Price is $3.45 Difference: $0.95
If IPL meets the UBS target it will return approximately 28% (excluding dividends, fees and charges).

Current consensus price target is $4.19, suggesting upside of 22.1% (ex-dividends)

The company's fiscal year ends in September.

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

Morgans rates LVH as Add (1) -

As LiveHire's 1H result was largely pre-released, Morgans applies its focus to overall strategy and the company's pivot toward ideal client profiles (ICP).

During the 1H, the North American Direct Sourcing (DS) revenue performance was impacted by covid roles continuing to churn off the platform and a re-basing of clients towards the ICP's, explains the analyst.

Due to a slower ramp-up to the larger ICP's and lower estimated annual contract values (EACVs), the broker reduces its revenue estimates by around -20% and the target falls to 28c from 33c. Add.

Target price is $0.28 Current Price is $0.14 Difference: $0.14
If LVH meets the Morgans target it will return approximately 100% (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 MME as Hold (3) -

MoneyMe's profit beat Ord Minnett. A strong half for operating cash flow demonstrates the high cash yields derived from the loan portfolio, the broker suggests, with origination static.

The broker highlights 5.9% of loans are in arrears and have not been provisioned against. In a rising rate environment, and with pressure on discretionary incomes, this adds risk to the profit outlook, Ord Minnett warns.

A strategic capital transaction is pending to refinance and create a more sustainable funding structure going forward. Target falls to 39c from 62c, Hold retained.

Target price is $0.39 Current Price is $0.20 Difference: $0.19
If MME meets the Ord Minnett target it will return approximately 95% (excluding dividends, fees and charges).

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

Morgan Stanley rates MQG as Overweight (1) -

Morgan Stanley points out the Commodities and Global markets (CGM) division accounts for around 35% of Macquarie Group's revenues, and the EMEA region contributes 25-30% of CGM's revenue. Hence, European gas price volatility is of some importance.

Volatility is at record highs, which should boost Macquarie Group's commodities income 'substantially up', according to the broker. While volatility should ease into FY24, the bank is building other energy revenue options in the EU.

Seperately, the analysts point out their earnings forecast is 7% ahead of consensus for FY24, with an upcoming tour of US operations likely to aid understanding of potential outperformance in 2023. It's felt growth opportunities in Infrastructure and Green Energy are being understated.

The $231 target and Overweight rating are unchanged. Industry view: In-Line.

Target price is $231.00 Current Price is $188.90 Difference: $42.1
If MQG meets the Morgan Stanley target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $199.13, suggesting upside of 7.7% (ex-dividends)

The company's fiscal year ends in March.

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

Morgans rates NVX as Downgrade to Hold from Speculative Buy (3) -

Morgans has significantly pushed back its forecasts for production growth for Novonix and lowers its target to $1.44 from $3.11.

The broker now expects first sales to Kore will occur late in 2024 from production at the Riverside facility (plant under construction) and a second facility may not be operational until 2026.

The rating is also downgraded to Hold from Speculative Buy given the uncertainty and the long timeframe before potential operating profitability.

Target price is $1.44 Current Price is $1.59 Difference: minus $0.15 (current price is over target).
If NVX meets the Morgans target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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

Ord Minnett rates PBH as Hold (3) -

Higher operating expenses than expected meant a slight miss for PointsBet Holdings against Ord Minnett's earnings forecast.

The company reported that 80% of all North American business was driven by in-house proprietary technology. PointsBet has also shown improvement in its unit economics, the broker notes, with new customers contributing a higher amount to revenue whilst being acquired for a lower cost.

In line with seasonality, PointsBet reports that its marketing spend will be significantly lower in the second half from the first.

Target falls to $1.42 from $1.50, Hold retained.

Target price is $1.42 Current Price is $1.44 Difference: minus $0.015 (current price is over target).
If PBH meets the Ord Minnett target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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

Morgan Stanley rates PXA as Overweight (1) -

While Pexa Group's 1H result was a small beat over Morgan Stanley's forecasts for revenue and earnings (EBITDA), higher UK losses weighed on profit (NPATA).

FY23 guidance for spending in the UK was increased to -$65-75m from -$60m. Given the market has a tendency to prescribe zero value to unprofitable tech, the analysts would like to see a quickening of tempo towards achievement of positive free cash flows.

The target falls to $15 from $16.50. Overweight. Industry View: Attractive.

Target price is $15.00 Current Price is $11.82 Difference: $3.18
If PXA meets the Morgan Stanley target it will return approximately 27% (excluding dividends, fees and charges).

Current consensus price target is $16.15, suggesting upside of 39.7% (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

Macquarie rates RIO as Neutral (3) -

Rio Tinto has reiterated its investment plan at Simandou in a broker briefing. Investment in Simandou would account for 45% of growth capital expenditure in the next three years yet the timing of the investment remains uncertain, Macquarie observes.

Rio Tinto remains committed to growth in copper, targeting a doubling of output by the end of the decade. Exploration for lithium and potential bolt on M&A are continuing themes. Neutral rating and $122 target maintained.

Target price is $122.00 Current Price is $119.63 Difference: $2.37
If RIO meets the Macquarie target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $116.79, suggesting downside of -6.2% (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: 0.0

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

Ord Minnett rates TRJ as Buy (1) -

Trajan Group delivered a beat on revenue against Ord Minnett's forecast but a miss on earnings due to softer margins.

Price increases implemented to offset inflated input costs were largely executed in the December quarter, and as such the broker expects the full benefits to be realised in the second half.

FY23 guidance has been increased, and with modest gearing, the business is well placed to consider further M&A opportunities, Ord Minnett suggests, having just completed its 12th acquisition.

Buy and $2.50 target retained.

Target price is $2.50 Current Price is $1.90 Difference: $0.605
If TRJ meets the Ord Minnett target it will return approximately 32% (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 TYR as Accumulate (2) -

Ord Minnett welcomes Tyro Payments' result. The company has swung just into profitability when the broker had assumed FY25. Profits grew from genuine growth-drivers, the broker notes, rather than cost cuts.

Strong transaction volume, fee margin expansion and growth in lending volumes offset cost growth.

The broker retains a fair value estimate of $2.60, but has greater conviction in Tyro's ability to execute on profitability. The shares are cheap, Ord Minnett believes, despite private equity interest. Accumulate retained.

Target price is $2.60 Current Price is $1.60 Difference: $1.005
If TYR meets the Ord Minnett target it will return approximately 63% (excluding dividends, fees and charges).

Current consensus price target is $1.94, suggesting upside of 21.1% (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 ZIP as Sell (5) -

Zip Co's December-half result appears to have met UBS expectations.

While the company has embarked on a number of initiatives to reduce cash burn, the broker retains its view that there are too many moving parts to forecast with any certainty.

But UBS does say that reaching profitability by FY24 will be critical for Zip Co and that managing cash burn in this June half will determine the company's future given liquidity concerns (currently inflows are expected and needed from business sales, restructures and closures, and the release of trust investments in the company's debt program).

Sell rating and 45c target price retained.

Target price is $0.45 Current Price is $0.52 Difference: minus $0.07 (current price is over target).
If ZIP meets the UBS target it will return approximately minus 13% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $0.60, suggesting upside of 13.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: -0.8

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