Australian Broker Call

Citi rates A2M as Upgrade to Neutral from Sell (3) -

Citi upgrades its rating for a2 Milk Co to Neutral from Sell due to encouraging China momentum and the increasing likelihood of Chinese State Administration for Market Renewal (SAMR) approval over the next few months.

Longer-term concerns around birth rate and margin expectations prevents the broker from assigning a Buy rating.

While Citi lowers its FY23-25 forecasts on lower management guidance for revenue and weaker Australian sales, the target rises to $5.35 from $4.70 on the potential SAMR outcome.

Target price is $5.35 Current Price is $5.30 Difference: $0.05
If A2M meets the Citi target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $5.84, suggesting upside of 9.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

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

Market Sentiment: 0.1

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

Morgans rates ADH as Hold (3) -

After a big share price fall following a material cut to FY23 guidance by Adairs, Morgans retains its Hold rating despite a very attractive dividend yield, due to the volatility and unpredictability of near-term earnings.

Guidance for sales was reduced to $616-622m from $625-665m, while earnings (EBIT) guidance is now expected to be in the range of $62-65m, down from $70-80m.

The highly discretionary nature of the homewares category further amplifies the apparent recent capitulation of the consumer, notes the analyst. 

The target is reduced to $1.80 from $2.60.

Target price is $1.80 Current Price is $1.61 Difference: $0.195
If ADH meets the Morgans target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $1.72, suggesting upside of 6.6% (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

Ord Minnett rates ADH as Hold (3) -

Adairs has downgraded sales and profit guidance for FY23. Sales are expected to be in the range of $616-622m, -4% lower than the mid point of prior guidance.

Ord Minnett notes the impact of rising interest rates and higher cost of living has meant declining household goods expenditure, with traffic lower in both stores and online.

The broker expects trading conditions will deteriorate in the short term and retains a Hold rating, reducing the target to $1.70 from $2.40.

Target price is $1.70 Current Price is $1.61 Difference: $0.095
If ADH meets the Ord Minnett target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $1.72, suggesting upside of 6.6% (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

UBS rates ADH as Downgrade to Neutral from Buy (3) -

Adairs has cut FY23 sales guidance by -4% and EBIT by -15%. The drivers of the downgrade were the core Adairs brand and Focus, with the latter surprising UBS given recent upbeat commentary from management about the outlook and potential as a "trade-down" beneficiary.

UBS reassesses top-line and cost assumptions from FY24 and reduces EPS estimates by -36%, cutting FY25 by -28%. The visibility into FY24 across the brands remains challenging, given the consumer backdrop and recent execution issues.

UBS downgrades to Neutral from Buy and reduces the target to $1.65 from $2.95.

Target price is $1.65 Current Price is $1.61 Difference: $0.045
If ADH meets the UBS target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $1.72, suggesting upside of 6.6% (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

Citi rates APX as Sell (5) -

While the recent equity raise bolsters Appen's balance sheet, and Citi sees large-language models as a tailwind, the Sell rating is maintained on valuation, as well as client concentration and execution risk.

As the company is 60% through its $46m cost-out program, the analyst expects lower operating expenses will offset potential revenue headwinds.

After a change in valuation methodology the target rises to $2.40 from $1.94. Based on the cost-out program as well as operating leverage from top-line growth, the earnings (EBITDA) margin is expected to rise to 12% in the 2H of FY25 from -11% in the 1H of FY23.

Target price is $2.40 Current Price is $3.76 Difference: minus $1.36 (current price is over target).
If APX meets the Citi target it will return approximately minus 36% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $1.99, suggesting downside of -41.9% (ex-dividends)

The company's fiscal year ends in December.

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

Ord Minnett rates AUB as Upgrade to Accumulate from Hold (2) -

As the share price of AUB Group has moved through the trigger level Ord Minnett upgrades to Accumulate from Hold. Target is $29.

Target price is $29.00 Current Price is $25.09 Difference: $3.91
If AUB meets the Ord Minnett target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $29.59, suggesting upside of 15.6% (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

UBS rates BGA as Neutral (3) -

Bega Cheese has provided its offer price of $8.80/kg for farmgate milk, in line with regulatory requirements for all Australian dairy processors.

UBS notes the decline in price was broadly in line with expectations, given the significant drop in the commodity export price which processes such as Bega Cheese partially sell into.

Given this price is below the majority of the industry the broker notes there is some risk that prices get re-negotiated higher.

UBS retains a Neutral rating and $3.50 target.

Target price is $3.50 Current Price is $3.60 Difference: minus $0.1 (current price is over target).
If BGA meets the UBS target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.79, suggesting upside of 5.5% (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

Citi rates BUB as Neutral (3) -

Citi lowers its target for Bubs Australia to 19c from 32c after incorporating a weaker-than-expected 3Q trading update in China and to a lesser extent in the US. The forecast FY23 loss is increased by -$3m to -$40m.

The 3Q update has implications for channel profitability and subsequently consumer offtake, point out the analysts.

Recent execution and strategic uncertainty also means the broker's former high premium for the company relative to peers is no longer justified. The Neutral rating is unchanged.

Target price is $0.19 Current Price is $0.18 Difference: $0.01
If BUB meets the Citi target it will return approximately 6% (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 EBO as Upgrade to Lighten from Sell (4) -

As the share price of Ebos Group has moved through the trigger level Ord Minnett upgrades to Lighten from Sell. Target is $29.

Target price is $29.00 Current Price is $38.05 Difference: minus $9.05 (current price is over target).
If EBO meets the Ord Minnett target it will return approximately minus 24% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $38.04, suggesting upside of 0.1% (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

Morgan Stanley rates EVN as Overweight (1) -

Evolution Mining is expected to provide an update on expenditure and timelines for Mungari at its investor briefing. Morgan Stanley believes the market will pay close attention to this and it should be a catalyst for the share price.

If capital expenditure for the mill is below prior guidance of $250m and total project capital is below $300m this would provide a bull case. If capex is above guidance then this creates concerns for the balance sheet and a potential capital raising, as the start date is imminent.

The target is $3.75. Overweight rating is unchanged. Industry view: Attractive. 

Target price is $3.75 Current Price is $3.53 Difference: $0.22
If EVN meets the Morgan Stanley target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $3.23, suggesting downside of -11.6% (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 FCL as Neutral (3) -

Fineos Corp continues to trade at a material discount to Guidewire, Macquarie observes, and the latter has raised profitability expectations for FY23 amid higher cloud margins, while the cost performance has outweighed lower services revenue and margin.

The broker makes no changes to the Fineos Corp earnings estimates but upgrades the target to $1.67 from $1.59, to reflect the updated Guidewire multiple and FX. Neutral maintained.

Target price is $1.67 Current Price is $1.79 Difference: minus $0.12 (current price is over target).
If FCL meets the Macquarie target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.44, suggesting upside of 36.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

This company reports in EUR. 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

Morgans rates GMG as Initiation of coverage with Add (1) -

Morgans points out active industrial managers/developers like Goodman Group operate in one of the few sub-sectors where operating conditions are sufficiently positive to offset increasing yields. 

The broker initiates coverage with an Add rating and $24 target price. Compared to overseas peers, the group consistently delivers higher returns at lower levels of leverage and at a comparable price to book ratio, observes the broker.

Much of the increased demand by tenants for warehouse space is to attain cost efficiencies through improved proximity to end customers, explains the analyst. This space includes retail (physical stores fulfillment and e-commerce), data storage and  manufacturing.

Morgans likes Goodman Group because it can grow assets under management (AUM) and add value from an active buy, build, manage strategy. 

Target price is $24.00 Current Price is $19.88 Difference: $4.12
If GMG meets the Morgans target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $22.86, suggesting upside of 13.5% (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

Morgan Stanley rates JHX as Overweight (1) -

The market share of fibre cement in US new housing data for 2022 showed an increase of 1.3 percentage points to 23.5%. Morgan Stanley observes fibre cement made meaningful gains in the midwest while vinyl softened in the north-east.

Vinyl siding's overall share has declined -9 percentage points, while bricks have shown a -6 ppts decline and wood -2 ppts.

Morgan Stanley continues to believe James Hardie industries is the highest-quality company within its building materials coverage and there is attractive valuation support through the cycle.

Overweight rating reiterated. Target is $44. Industry View: In-Line.

Target price is $44.00 Current Price is $38.25 Difference: $5.75
If JHX meets the Morgan Stanley target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $42.83, suggesting upside of 10.3% (ex-dividends)

The company's fiscal year ends in March.

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: 0.9

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

Macquarie rates MIN as Outperform (1) -

Macquarie notes sentiment in the lithium market is improving with regional prices higher week on week.

Mineral Resources remains among the broker's preferred producers, while movements in spot iron ore and spodumene prices presenting the most material upside risk.

Target is reduced to $113 from $115. Outperform maintained.

Target price is $113.00 Current Price is $69.50 Difference: $43.5
If MIN meets the Macquarie target it will return approximately 63% (excluding dividends, fees and charges).

Current consensus price target is $89.71, suggesting upside of 27.6% (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

Morgans rates MME as Hold (3) -

After MoneyMe's recent quarterly update and the completion of a $33m capital raise at 8c/share, with a $5m share purchase plan to follow, Morgans lowers its target to 33c from 85c and retains its Hold rating.

The analyst believes a key overhang for the stock price will be removed when the majority of the new funds are used to repay the company's $50m corporate debt facility. Annual interest cost savings (on the $50m balance) will now be around $6-8m.

The quarterly update highlighted a renewed focus by management on maintaining profitability, according to the broker.

Target price is $0.33 Current Price is $0.09 Difference: $0.242
If MME meets the Morgans target it will return approximately 275% (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 NHC as Upgrade to Accumulate from Hold (2) -

The share price of New Hope has moved through the trigger level and Ord Minnett upgrades to Accumulate from Hold. Target is $6.10.

Target price is $6.10 Current Price is $4.79 Difference: $1.31
If NHC meets the Ord Minnett target it will return approximately 27% (excluding dividends, fees and charges).

Current consensus price target is $5.64, suggesting upside of 17.4% (ex-dividends)

The company's fiscal year ends in July.

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

Citi rates NWH as Upgrade to Buy from Neutral (1) -

Citi believes the around -20% selloff in NRW Holdings shares since interim results in February is overdone as the company currently has a robust order book based on announced contract wins.

Moreover, the analysts expect major contract award momentum could begin and accelerate in the near term.

The broker points out customers have been increasingly keen to secure capacity and have been awarding (unannounced) small work packages. Larger contracts are expected to follow.

The rating is upgraded to Buy from Neutral, while the target rises to $2.90 from $2.80.

Target price is $2.90 Current Price is $2.19 Difference: $0.71
If NWH meets the Citi target it will return approximately 32% (excluding dividends, fees and charges).

Current consensus price target is $2.83, suggesting upside of 23.2% (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

Bell Potter rates PDN as Speculative Buy (1) -

The Namibian government has confirmed that existing mineral or petroleum licence holders would be exempt of any future free-carry ownership legislation. Bell Potter considers the comments will support Paladin Energy and remove a potential overhang for the stock.

The near-term catalyst is a re-start of Langer Heinrich. The broker notes the uranium price continues to gain momentum as limited supply spurs the spot market. The company represents the largest, most liquid exposure to uranium on ASX.

Speculative Buy rating retained. Target is $0.99.

Target price is $0.99 Current Price is $0.67 Difference: $0.32
If PDN meets the Bell Potter target it will return approximately 48% (excluding dividends, fees and charges).

Current consensus price target is $1.10, suggesting upside of 63.7% (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: 1.0

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

Citi rates PRN as Buy (1) -

Perenti is holding a strategy briefing tomorrow and Citi expects updates on progress/findings made by the Safety Transformation
Taskforce to date.

The analysts also believe FY25 targets are out of date and will be revised given guidance upgrades so far this year.

The $1.60 target and Buy rating are retained.

Target price is $1.60 Current Price is $1.15 Difference: $0.45
If PRN meets the Citi target it will return approximately 39% (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

Bell Potter rates WTC as Hold (3) -

Bell Potter reviews forecasts and expects more revenue, assuming greater penetration in both customs & compliance and landside logistics markets.

This follows the announcement of a venture with Kuehne+Nagel and the acquisition of two landside logistics companies in the current half-year.

The broker suspects the strength of the CargoWise platform is a sign WiseTech Global could eventually dominate adjacent markets as it does within freight forwarding now.

The broker upgrades FY24 and FY25 EPS forecasts by 3% and 11%, respectively. Hold rating maintained. Target is raised to $74.25 from $60.00.

Target price is $74.25 Current Price is $76.63 Difference: minus $2.38 (current price is over target).
If WTC meets the Bell Potter target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $73.54, suggesting downside of -3.4% (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