Australian Broker Call

Bell Potter rates AAC as Buy (1) -

Australian Agricultural Co's FY23 operating earnings (EBITDA) of $67.4m beat the $57.7m forecast by Bell Potter, and operating cash flows were positive for the fifth consecutive year.

The analyst points out ongoing improvement in the return per kg through a more effective go to market strategy and cost control. It's felt the share price is excessively discounted as the majority of lower 2H cattle prices has been absorbed by gains in land values and herd growth.

The Buy rating and $2.15 target are unchanged.

Target price is $2.15 Current Price is $1.59 Difference: $0.56
If AAC meets the Bell Potter target it will return approximately 35% (excluding dividends, fees and charges).

The company's fiscal year ends in March.

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

UBS rates ALL as No Rating (-1) -

Aristocrat Leisure has maintained guidance for FY23 net profit growth in its first half results with sales growth at the upper end of the 11-12% range.

First half net profit was slightly below UBS estimates amid a strong performance in the Americas but a soft Pixel result. In the Americas outright sales would driven by 27% market growth with the company holding a more than 30% ship share.

UBS is currently restricted on providing a rating or target.

Current Price is $38.50. Target price not assessed.

Current consensus price target is $44.00, suggesting upside of 13.2% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.9

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

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

Citi raises its FY24-FY25 profit forecasts by 13% and 17%, respectively, to incorporate  revenue from winning the US$114m design contract for the auxiliary general ocean survelilance ship T-AGOS 25 Class with the US navy.

The broker considers the contract win significant as it will likely convert to an around US$3bn construction contract, which will have a relatively high margin range for Austal.

In addition, the win shows no lingering impediment to contract success from the recent indictment of three Austal employees in the US by the Department of Justice, explains the analyst.

The target rises to $2.31 from $2.00 and the broker's rating is increased to Buy from Neutral.

Target price is $2.31 Current Price is $2.01 Difference: $0.3
If ASB meets the Citi target it will return approximately 15% (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 ASB as Outperform (1) -

Austal has been awarded a US$114m contract for the T-AGOS 25 Class for the US Navy. Macquarie observes this could alleviate some market concerns as the contract should result in the near full utilisation of the new steel shipbuilding facility.

US medical ships are likely the next major award. Again, the broker expects attractive margins.

The strategy of diversifying the earnings stream is paying dividends, Macquarie asserts, and increases the visibility of a successful transition as the LCS program winds down.

Outperform rating and $2.60 target maintained.

Target price is $2.60 Current Price is $2.01 Difference: $0.59
If ASB meets the Macquarie target it will return approximately 29% (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 BGA as Neutral (3) -

UBS asserts the next two weeks will provide significant newsflow relating to Bega Cheese. All processors must release FY24 farmgate milk price intentions by June 1.

The broker calculates that while the percentage price change versus the previous period remains high, shelf prices for Bega products have stabilised.

UBS retains a Neutral rating and $3.50 target.

Target price is $3.50 Current Price is $3.72 Difference: minus $0.22 (current price is over target).
If BGA meets the UBS target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.79, suggesting upside of 4.1% (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 CGC as Neutral (3) -

Costa Group should be a beneficiary of higher fruit and vegetable prices, UBS asserts. Prices do appear to have stabilised as supply improved following weather disruptions last year.

The broker is tracking European blueberry prices, given the importance to Costa Group's Moroccan enterprise and overall first half earnings.

Prices in the first four months of this year are up 21%, driven by delays in competing blueberry volumes in Europe because of poor weather. Neutral rating and $2.75 target maintained.

Target price is $2.75 Current Price is $2.49 Difference: $0.26
If CGC meets the UBS target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $2.93, suggesting upside of 21.2% (ex-dividends)

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

Macquarie rates CXO as Outperform (1) -

Core Lithium has approved early works for the BP33 development. Macquarie considers this a key milestone and the approval of the mine a de-risking event.

BP33 accounts for around 40% of the company's total contained lithium reserves, and is the sole source of ore for FY28-33 in the broker's development scenario for Finniss.

The Outperform rating is unchanged. Target is $1.30.

Target price is $1.30 Current Price is $1.13 Difference: $0.175
If CXO meets the Macquarie target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $1.02, suggesting downside of -5.9% (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 DLI as Speculative Buy (1) -

Bell Potter notes recent media speculation of strategic interest from Hancock Prospecting and Mineral Resources ((MIN)) for Delta Lithium.

The broker raises its target to $1.05 from 85c after increasing its valuations for the company's lithium projects at Mt Ida and Yinnetharra, where potential is being highlighted via recent exploration programs.

By the conclusion of the 2023 drilling program at Yinnetharra, Bell Potter expects indications for a second development project that should support a resource of similar size to that at Mt Ida.

The Speculative Buy rating is unchanged.

Target price is $1.05 Current Price is $0.70 Difference: $0.35
If DLI meets the Bell Potter target it will return approximately 50% (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 DSK as Buy (1) -

Previously, it had been Shaw and Partners' view that Dusk Group looked ideally positioned for growth over the long-term. On Friday, the company updated FY23 guidance well below the broker's forecasts, and the share price tumbled in response.

Rising interest rates and pressure from cost of living expenses have impacted on customers more than anticipated, explains the broker. It is noted sales remain well ahead of pre-covid levels and new stores are still being opened.

Forecasts have been slashed in response. Shaw points out H2 of FY23 is now poised to become the worst period since the company listed, and it will be the first loss-making period since the second half of 2019.

One rare positive from management's profit warning is the gross margin is expected to remain broadly in line with the prior year's 67.7%, the broker suggests, implying less promotional campaigns.

Buy rating retained (with the analyst maintaining his longer term confidence). Price target tumbles to $1.80 from $2.50.

Target price is $1.80 Current Price is $1.23 Difference: $0.57
If DSK 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

Bell Potter rates GT1 as Speculative Buy (1) -

As part of a strategic investment and offtake agreement, battery OEM LG Energy Solution will acquire a 7.9% stake in Green Technology Metals at 92c/share via a $20m placement. Funds will be used to progress resource drilling and project studies, notes Bell Potter.

Green Technology Metals will supply LG Energy Solution with with 25% of annual spodumene concentrate production for five years from its proposed Seymour Lithium Project.

Alternatively, the equivalent volume will be supplied in lithium hydroxide should a conversion facility be established.

The Speculative Buy rating and $1.38 target are unchanged.

Target price is $1.38 Current Price is $0.77 Difference: $0.61
If GT1 meets the Bell Potter target it will return approximately 79% (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 IMU as Buy (1) -

The FDA has cleared the Investigational New Drug application to allow commencement of enrolment for a new phase 1 study. The study will investigate the combination of Imugene’s oncolytic virotherapy candidate CF33-CD19t (known as on CARlytics) with Blinatumomab (Blincyto).

The study will investigate the safety and tolerability of the combination in adults with advanced or metastatic solid tumours, explains the analyst.

Unfortunately, the company's market capitalisation has been sliding in recent months and Bell Potter decides to reduce its target to 21c from 35c. Speculative Buy.

Target price is $0.21 Current Price is $0.12 Difference: $0.09
If IMU 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

Ord Minnett rates MEZ as Lighten (4) -

Ord Minnett upgrades FY23 Meridian Energy estimates for EBITDA by 3% while longer-term forecasts are unchanged.

The broker estimates for the 10 months of FY23 so far, EBITDA is tracking around 13% above the same period previously, although earnings are being flattered by one-off gains on electricity hedges.

Along with its peers, Meridian Energy is benefiting from higher retail electricity prices. Generation volumes are largely flat with water inflows tracking at around 98% of historical averages. The shares screen expensive and the broker retains a Lighten rating with an NZ$4.60 target.

Current Price is $5.17. Target price not assessed.

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: -1.0

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

Macquarie rates MTS as Downgrade to Neutral from Outperform (3) -

Macquarie observes customers are reverting to pre-pandemic habits and seeking value, which means Aldi is gaining share at the expense of  smaller IGA supermarkets.

In the current macroeconomic environment, Macquarie prefers staples, noting the hardware category has contracted in the ABS data. As volumes re-bases following the pandemic liquor sales are also expected to decline, although the Metcash on-premises customer base should offset some of the decline.

Macquarie downgrades to Neutral from Outperform on what appears to be market share losses in food for Metcash. Target is reduced to $3.90 from $4.70.

Target price is $3.90 Current Price is $3.78 Difference: $0.12
If MTS meets the Macquarie target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $4.25, suggesting upside of 15.8% (ex-dividends)

The company's fiscal year ends in April.

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

Citi rates NUF as Buy (1) -

The Seed Technologies division of Nufarm was largely responsible for a strong 1H result, notes Citi, with earnings (EBITDA) beating the consensus estimate by 20% and the broker's forecast by 5%.

Group earnings margins expanded by 94bps on the previous corresponding period (pcp). Revenues for APAC and North America were down on the pcp, while revenue from Europe was up marginally, explains the analyst.

Management expects earnings will grow modestly in FY23 and will be weighted towards the 1H.

Citi maintains its Buy rating and $6.90 target.

Target price is $6.90 Current Price is $5.77 Difference: $1.13
If NUF meets the Citi target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $7.12, suggesting upside of 27.3% (ex-dividends)

The company's fiscal year ends in September.

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

Ord Minnett rates NUF as Accumulate (2) -

Nufarm reported a 7% increase in underlying first half net profit, considerably ahead of expectations. FY23 guidance is for "modest" underlying earnings growth, which assumes normal seasonal conditions.

Ord Minnett welcomes the increase in the first half dividend to 5c and increases FY23 dividend forecast by 18% to $0.13 although still believes this equates to a "pedestrian" 2.2% unfranked yield at the current price.

While the dividend is not particularly appealing, the broker acknowledges this is a growth stock and projects a five-year compound growth rate for earnings per share of over 16%.

Ord Minnett retains an Accumulate rating and raises the target to $7.70 from $7.50. 

Target price is $7.70 Current Price is $5.77 Difference: $1.93
If NUF meets the Ord Minnett target it will return approximately 33% (excluding dividends, fees and charges).

Current consensus price target is $7.12, suggesting upside of 27.3% (ex-dividends)

The company's fiscal year ends in September.

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

Macquarie rates RMD as Outperform (1) -

Macquarie observes the potential for improved industry growth in devices amid sizeable share opportunities for ResMed.

Fewer sleep tests were evident during the pandemic, and in assessing the outlook for device volumes and revenue Macquarie highlights the potential for future industry growth.

There is also scope for ResMed to gain share over the medium to longer term. A key near-term catalyst is any update from Philips regarding the consent decree from the US Department of  Justice. Outperform retained. Target is $38.

Target price is $38.00 Current Price is $33.69 Difference: $4.31
If RMD meets the Macquarie target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $38.00, suggesting upside of 11.9% (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