Australian Broker Call

Macquarie rates A11 as Outperform (1) -

Atlantic Lithium has new assays from infill and exploration RC drilling at Ewoyaa. The intercepts are high-great intervals including 48m at 1.31% lithium from 137m, 24m at 1.86% lithium from 10m and 29m at 1.37% lithium from 184m.

Macquarie notes upside to the resource is underpinned by these results. Outperform and 70c target retained.

Target price is $0.70 Current Price is $0.41 Difference: $0.29
If A11 meets the Macquarie target it will return approximately 71% (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 ARB as Buy (1) -

Data from the Federal Chamber of Automotive Industries indicates new vehicle sales increased 15.4% in August, representing the  strongest August on record. The key area for ARB Corp is the SUV market, where sales increased 28.3%.

This should add to the order book although Ord Minnett notes continued staff shortages across the national network present challenges in meeting customer demand. Buy rating and $36 target maintained.

Target price is $36.00 Current Price is $32.76 Difference: $3.24
If ARB meets the Ord Minnett target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $29.55, suggesting downside of -8.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: -0.2

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

Morgan Stanley rates ART as Underweight (5) -

Airtasker's FY23 result missed Morgan Stanley's estimates slightly, as Australian business revenue growth in the second half slowed to just 6%. The broker finds it unclear just how much of the slowdown is cyclical compared with structural.

The company has committed to reach positive free cash flow by the end of FY24, welcomed by the broker, although the market is expected to wait for actual delivery before rewarding the shares. Morgan Stanley forecasts FY25 as the first full year of positive free cash flow.

The broker suspects the shares would re-rate if the business exited or sold its loss-making UK and US operations although the company has made it clear it is committed to funding the start-up loss in developing these segments.

Underweight retained. Target is reduced to $0.18 from $0.25. Industry view is Attractive.

Target price is $0.18 Current Price is $0.20 Difference: minus $0.02 (current price is over target).
If ART meets the Morgan Stanley target it will return approximately minus 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.0

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

Macquarie rates CHN as Outperform (1) -

Macquarie observes shares in Chalice Mining have fallen -42% since the release of the Gonneville scoping study, which outlined two different options. This did not integrate any underground ore sources which could materially improve the project economics, the broker adds.

Macquarie notes 97% of the underground resource at Gonneville is inferred and further definition drilling is required to integrate into the upcoming prefeasibility study.

The slump in the share price is considered an overreaction. The Outperform rating is maintained. The target drops to $3.50 from $9.20.

Target price is $3.50 Current Price is $2.90 Difference: $0.6
If CHN meets the Macquarie target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $4.26, suggesting upside of 36.2% (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 CHN as Upgrade to Neutral from Sell (3) -

Chalice Mining has outlined a scoping study for Gonneville with two large scenarios (15mtpa and 30mtpa), which was disappointing because of higher expenditure, lower grades, lower recoveries and first production envisaged two years later than UBS anticipated.

UBS expects the next round of project optimisation in the prefeasibility study will look at a smaller, higher-grade project and that may prompt a different reaction.

The broker's analysis indicates a smaller project will be more attractive and on this basis the rating is upgraded to Neutral from Sell. The target is reduced to $3 from $6.

Target price is $3.00 Current Price is $2.90 Difference: $0.1
If CHN meets the UBS target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $4.26, suggesting upside of 36.2% (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

Macquarie rates COL as Outperform (1) -

Coles Group experienced a surge in theft between the first and second halves of FY23 and is accelerating security upgrades.

Macquarie observes the issue appears to have dragged on Coles results to a greater extent than Woolworths ((WOW)), although the latter is similarly affected, while US retailers have also indicated similar issues of rising theft.

Coles is implementing Skip Scan technology, expected to be in more than 100 stores by the end of December. Woolworths already has this in more than 600 stores.

Macquarie remains concerned that the rising cost of living will erode discretionary expenditure in the second half of 2023 and seeks relative safety in staples. Outperform rating. Target is reduced to $18.20 from $18.50.

Target price is $18.20 Current Price is $15.85 Difference: $2.35
If COL meets the Macquarie target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $16.65, suggesting upside of 5.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.0

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

Macquarie rates FMG as Underperform (5) -

Macquarie's meeting with Fortescue Metals focused on the capital allocation between iron ore, decarbonisation and shareholder returns. The company has reiterated that five major "green" projects would reach a final investment decision before the end of the year.

Macquarie observes the FY23 dividend payout ratio was 65%, envisaging downside risk given the capital competition from FFI. Amid the uncertainty over the capital commitment, the broker retains an Underperform rating and $16.40 target.

Target price is $16.40 Current Price is $20.34 Difference: minus $3.94 (current price is over target).
If FMG meets the Macquarie target it will return approximately minus 19% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $16.14, suggesting downside of -19.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

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

UBS rates FMG as Sell (5) -

Fortescue Metals, in an analyst briefing, has explained that the removal of 10% net profit guidance for FMG Energy is a "natural evolution" as projects come into a final decision and compete on merit. The internal rate of return hurdle for metals projects is 20% or more while for energy projects it is 15%.

The company also expanded on recent leadership changes, assessing "fit" from a governance perspective was critical and a quick response was essential.

UBS remains cautious assessing prospective weakness in iron ore prices as steel production caps roll into the fourth quarter. Sell rating and $15.20 target unchanged.

Target price is $15.20 Current Price is $20.34 Difference: minus $5.14 (current price is over target).
If FMG meets the UBS target it will return approximately minus 25% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $16.14, suggesting downside of -19.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

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

Citi rates MQG as Neutral (3) -

Macquarie Group has updated on the FY24 outlook, signalling that asset realisations will predominantly occur in the second half rather than the first while leaving current performance metrics unchanged.

Citi suspects the current consensus cash earnings forecasts for the first half of around $1.9bn will be revised down closer to its own $1.6bn estimate. The broker remains concerned regarding the earnings risk in the second half and retains a Neutral rating.Target is $175.

Target price is $175.00 Current Price is $170.21 Difference: $4.79
If MQG meets the Citi target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $189.88, suggesting upside of 10.5% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.6

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

Morgans rates MQG as Add (1) -

Short-term guidance by Macquarie Group was largely unchanged, according to Morgans, during a market update at a conference in Hong Kong.

Management advises asset realisations in Macquarie Asset Management will be skewed to the 2H.

The broker remains confident in the medium-term outlook and retains its Add rating.

The target price edges up to $194.40 from $193.60.

Target price is $194.40 Current Price is $170.21 Difference: $24.19
If MQG meets the Morgans target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $189.88, suggesting upside of 10.5% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.6

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

Morgans rates NTD as Hold (3) -

Despite lower FY23 revenue than expected, National Tyre & Wheel achieved a slightly higher margin outcome than Morgans anticipated, after exhibiting strong operating cost control in the 2H.

The gross margin expanded by 33bps on the previous corresponding period to 28.1%.

Despite ongoing pressure in its Consumer segment, the company is seeking to improve upon profit (NPATA) in FY24 after the 2H FY23 $6.6m contribution came in largely in line with guidance.

The broker awaits further evidence of earnings certainty and balance sheet improvement before moving up from its Hold rating. The target rises to 74c from 73c.

Target price is $0.74 Current Price is $0.70 Difference: $0.045
If NTD meets the Morgans target it will return approximately 6% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.0

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

Macquarie rates ORA as No Rating (-1) -

Orora will acquire Saverglass for -$2.16bn, which will mean it operates further up the packaging value chain and moves into a higher "product-to-pack" segment, Macquarie notes.

The Saverglass business operates across a diverse customer and geographic base and has a 33% market share of the global premium-plus spirits market.

The broker reduces estimates for FY24 EPS by -5% to reflect the timing of new shares on issue ($1.34bn in equity being raised) and expected completion of the acquisition at the end of 2023. Macquarie is on research restrictions and cannot advise a valuation or rating.

Current Price is $2.88. Target price not assessed.

Current consensus price target is $3.61, suggesting upside of 29.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.3

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

Morgans rates ORA as Downgrade to Hold from Add (3) -

Morgans highlights the acquisition of Saverglass for -$2.2bn comes with both execution and integration risks and forecasts the transaction will be 5% EPS in FY25 and 9% accretive in the third year (FY27) of full ownership.

The size of the deal creates heightened risks to Orora's future earnings growth, and, after incorporating the $1.35bn equite raise, the broker downgrades its rating to Hold from Add. The target falls to $3.00 from $4.05.

After allowing for synergies, management is targeting EPS accretion of mid-single digits in FY25, which the analyst considers modest.

France-based Saverglass manafactures premium and ultra-premium glass bottles, servicing luxury spirits and wine producers globally.

Target price is $3.00 Current Price is $2.88 Difference: $0.12
If ORA meets the Morgans target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $3.61, suggesting upside of 29.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.3

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

Bell Potter rates PBH as Buy (1) -

Regarding the sold US business, Bell Potter lowers its target for PointsBet Holdings to $1.08 from $2.10 after updating for shares going ex entitlement for the initial $1.00/share capital distribution, which will occur on September 22.

The lower target also reflects an increase in shares on issue.

The brokers $1.08 target incorporates 42c for the second and final capital distribution, 48c for the Australian business and 8c for the Canadian business. Buy.

Target price is $1.08 Current Price is $0.74 Difference: $0.34
If PBH meets the Bell Potter target it will return approximately 46% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 1.0

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

Macquarie rates PLL as Outperform (1) -

Piedmont Lithium's joint venture partner at Ewoyaa has assays for 6,150metres of infill and exploration RC drilling which have confirmed mineralisation extension at South-2 and North-East deposits.

As production at North American Lithium ramps up, the broker expects the company will start generating strong cash flow from the offtake and this should help it fund share of the Ewoyaa project and the Tennessee lithium hydroxide plant.

Outperform rating and $1.80 target maintained.

Target price is $1.80 Current Price is $0.71 Difference: $1.09
If PLL meets the Macquarie target it will return approximately 154% (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

Ord Minnett rates STX as Hold (3) -

Strike Energy will acquire Talon Energy, its joint venture partner in Walyering, via an all-scrip deal. The latter will de-merge its Mongolian asset to the benefit of existing shareholders although the scheme with Strike Energy is not conditional upon this occurring.

Ord Minnett believes the deal makes sense as it simplifies ownership and facilitates an increased pace in Perth Basin gas development. The broker retains a $0.45 target and Hold rating.

Target price is $0.45 Current Price is $0.38 Difference: $0.07
If STX meets the Ord Minnett target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $0.54, suggesting upside of 38.5% (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 TPG as Accumulate (2) -

Ord Minnett does not infer anything from the extension of due diligence to October 4 for the possible sale of TPG Telecom's non-mobile fibre assets.

The broker believes, for a potential price tag of $6.3bn, it is fair that Vocus requires more time to assess the transaction.

The pace of earnings recovery is considered encouraging for the consumer unit as an 8% lift in mobile service revenue in the June half pushed service revenue share to 14.1%. The broker retains an Accumulate rating and $7.40 target.

Target price is $7.40 Current Price is $5.58 Difference: $1.82
If TPG meets the Ord Minnett target it will return approximately 33% (excluding dividends, fees and charges).

Current consensus price target is $6.18, suggesting upside of 11.3% (ex-dividends)

The company's fiscal year ends in December.

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

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

The FY23 results exceeded Morgan Stanley's expectations while trading at the start of FY24 is slower. Importantly, free cash flow has turned positive. The company has undertaken a commitment to investors to focus on improving profitability and free cash flow.

The main issue for the broker is what the sustainable EBITDA margin is for a small operator in a very competitive space. FY24 EBITDA guidance of $52-58m implies a 26% margin on gross profit. Equal-Weight and $1.60 target maintained. Industry view: Attractive.

Target price is $1.60 Current Price is $1.38 Difference: $0.225
If TYR meets the Morgan Stanley target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $1.94, suggesting upside of 44.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.8

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

Morgan Stanley rates WTC as Overweight (1) -

Morgan Stanley flags WiseTech Global as a leading software provider to the global freight forwarding industry with penetration of just 20-40%. The broker has lifted forecasts for growth in revenue to 23% from FY23-28 after the recent results.

There is one component of the outlook which the broker believes has received little attention, and that is the boost from ongoing M&A activity in the industry. The broker envisages potential for an incremental $110-240m in revenue by FY28.

Target is raised to $85 from $70. Overweight. Industry View: Attractive.

Target price is $85.00 Current Price is $69.73 Difference: $15.27
If WTC meets the Morgan Stanley target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $79.53, suggesting upside of 14.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.4

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

UBS rates XRO as Buy (1) -

UBS is confident regarding the ability of Xero to deliver earnings and cash flow growth over the next three years based on app download data.

Price rises have been implemented in core markets and the November results should be another catalyst, providing clarity around the medium-term growth strategy.

The broker raises FY24-26 revenue estimates by an average 6% and free cash flow by 18%. There is even more upside to forecasts anticipated should there be increased focus on growing strategic pillars.

UBS reiterates a Buy rating. Target is raised to $143.50 from $117.70.

Target price is $143.50 Current Price is $122.23 Difference: $21.27
If XRO meets the UBS target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $117.57, suggesting downside of -3.7% (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: 0.3

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