Australian Broker Call

Macquarie rates AGY as Outperform (1) -

Argosy Minerals has updated on the Rincon lithium carbonate project, that has produced 17.5t of battery grade to date. Full continuous production is now expected for the 2000tpa plant by the second half of 2023.

Macquarie is also encouraged by the fact the company has completed all chemical processes and technology validation works, which confirms the capability of producing battery grade lithium carbonate at a commercial scale and further de-risks expansions.

Outperform and $0.80 target maintained.

Target price is $0.80 Current Price is $0.45 Difference: $0.355
If AGY meets the Macquarie target it will return approximately 80% (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 AMI as Upgrade to Speculative Buy from Hold (1) -

Aurelia Metals has announced the Federation funding package which Ord Minnett assesses will be sufficient to fund the project, and assumes the new US$24m loan facility will remain undrawn.

The package largely addresses prior concerns regarding the terms at which it could be agreed. Trafigura is providing the debt financing and the terms do not appear onerous to the extent equity holders are barred from upside potential.

Ord Minnett upgrades to Speculative Buy from Hold, using the speculative qualifier given risks associated with the development and delivery of the project, while reducing the target to $0.18 from $0.25.

Ord Minnett is acting as joint lead manager and underwriter to the $40m equity raising which will close on June 28.

Target price is $0.18 Current Price is $0.10 Difference: $0.082
If AMI meets the Ord Minnett target it will return approximately 84% (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 ARX as Buy (1) -

FY23 earnings (EBITDA) for Aroa Biosurgery beat Bell Potter's forecast, while the net loss after tax was in line. The combination of an increased sales force (40 from 33) and growth in active Myriad accounts largely propelled the 23% increase in revenue.

For FY24, management guided to product revenue of between NZ$72-75m and earnings in the range of NZ$1-2m, with the gross margin improving to 85%.

The broker highlights upcoming growth drivers which includes the product launches of Myriad Morcells (fine) and Symphony during FY24. 

The Buy rating and $1.45 target are unchanged.

Target price is $1.45 Current Price is $0.92 Difference: $0.535
If ARX meets the Bell Potter target it will return approximately 58% (excluding dividends, fees and charges).

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 AZJ as Outperform (1) -

Aurizon Holdings has had some of the UT5 inputs re-priced. Lower inflation assumptions will add around 2% to earnings expectations per annum through FY25-27.

Macquarie observes, to date, the weather has been the headwind with few signs that either NSW or Queensland volumes have started to improve, yet with dry weather forecast this should translate to better volumes.

On the ESG side, the company is trialling a retrofit of an existing 4000 class locomotive to be battery-powered. Macquarie increases the target to $4.05 from $3.95 and retains an Outperform rating.

Target price is $4.05 Current Price is $3.56 Difference: $0.49
If AZJ meets the Macquarie target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $3.91, suggesting upside of 9.0% (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

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

BHP Group has flagged errors in employee allowances, identifying 400 current and former employees at Port Hedland who are entitled to additional allowances following an error with the employment entity in their contract.

Based on available information, the company estimates the cost of remediation will be up to -US$280m pre-tax. Morgan Stanley expects the impact wll be a one-off for FY23 financials at around -0.9% for EBITDA.

The Equal-weight rating is unchanged. Target is $41.75. Sector view is Attractive.

Target price is $41.75 Current Price is $42.07 Difference: minus $0.32 (current price is over target).
If BHP meets the Morgan Stanley target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $44.69, suggesting upside of 3.2% (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: 0.2

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

Macquarie rates BRG as Neutral (3) -

Macquarie notes consumer demand slowed in the first quarter of 2023, notably in Europe and North America. Yet, in the broker's kitchen benchmarking survey, the industry will cycle easier comparables from the second quarter and this should support top-line results.

Elevated costs continue to impact margins although there is a sign of stabilisation. The broker's forecasts for revenue growth at Breville Group of 1.8% in the second half are consistent with its historical outperformance relative to the benchmark.

Neutral rating. Target is steady at $21.05.

Target price is $21.05 Current Price is $19.45 Difference: $1.6
If BRG meets the Macquarie target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $23.41, suggesting upside of 19.1% (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

Morgan Stanley rates EVN as Overweight (1) -

Ahead of the investor briefing from Evolution Mining Morgan Stanley considers a range of capital expenditure estimates, finding there is still good balance sheet support. Exact costings for the Mungari mill expansion to 4.2mtpa are expected.

While the company has reiterated that plant capital expenditure and associated infrastructure will be within -$250m the broker makes the point this does not take into account the expenditure required for developing associated ore bodies.

Importantly, Morgan Stanley does not expect the company will proceed with Mungari without compelling economics, not to mention the possibility the project can be delayed.

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

Target price is $3.75 Current Price is $3.46 Difference: $0.29
If EVN meets the Morgan Stanley target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $3.23, suggesting downside of -8.6% (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 GLN as Outperform (1) -

Galan Lithium has provided an update on the definitive feasibility study for Hombre Muerto West. Costing is now progressing with initial components having been delivered.

Macquarie notes pond costs represent around 70% of the capital expenditure on the project with the remainder allocated for well fields, lime plants and other supporting infrastructure. The receipt of all approvals remains the catalyst, in addition to exploration results.

Outperform rating maintained. Targe price is $1.80.

Target price is $1.80 Current Price is $0.96 Difference: $0.84
If GLN meets the Macquarie target it will return approximately 88% (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 HPI as Add (1) -

Morgans is now expecting a June distribution of 9.4cpu after Hotel Property Investments upgraded FY23 DPS guidance to 18.6cpu from 18.4cpu.

Management has also reinstated its dividend reinvestment plan (DRP) which was suspended for the interim dividend.

Hotel Property Investments has also finalised two acquisitions (total outlay -$13.4m) and increased its hedging program.

The target slips to $3.75 from $3.76. The Add rating is unchanged.

Target price is $3.75 Current Price is $3.45 Difference: $0.3
If HPI meets the Morgans target it will return approximately 9% (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

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

For non-bank financial institutions (NBFIs) and smaller players, higher deposit funding costs at the banks should correct an uneven playing field, suggests Citi.

While this may not result in a rebound for activity, the analysts believe it will end the de-rating of price earnings (PE) ratios for this group of companies.

The funding cost disadvantage had previously driven the PE discount to the majors to a record -45%, explains Citi.

The broker upgrades its rating for Liberty Financial to Buy from Neutral and increases its target to $4.15 from $3.95. No changes are made to forecasts.

Target price is $4.15 Current Price is $3.71 Difference: $0.44
If LFG meets the Citi target it will return approximately 12% (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

Citi rates MHJ as Downgrade to Neutral from Buy (3) -

Following a greater than expected slowdown in sales, Citi lowers its rating for Michael Hill to Neutral from Buy. It's thought group sales have fallen from positive growth over January and February to at least mid-single digit declines since.

The broker reduces its FY23-25 EPS forecasts by -16-20% and its target falls to 91c from $1.28. Signs of a nadir for macroeconomic risks are required before the analyst becomes more positive.

Target price is $0.91 Current Price is $0.95 Difference: minus $0.035 (current price is over target).
If MHJ meets the Citi target it will return approximately minus 4% (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

Morgans rates MIN as Add (1) -

Given Mineral Resources is mid investment/cap phase, Morgans observes the share price is relatively sensitive to a sell-off in the resources sector. This is currently occurring due to a slower Chinese growth recovery story than expected.

While keeping its Add rating, the broker sees short-term risk to its FY23 estimate, and lowers its target to $93 from $103. Lower prices are also assumed for lithium carbonate and lithium hydroxide.

Gearing may appear high, yet the analyst doesn't believe the company will resort to a capital raise. It's noted capex spending can be timed as Mineral Resources is the operator for the majority of its assets.

Target price is $93.00 Current Price is $68.26 Difference: $24.74
If MIN meets the Morgans target it will return approximately 36% (excluding dividends, fees and charges).

Current consensus price target is $90.00, suggesting upside of 29.7% (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 MP1 as Downgrade to Accumulate from Buy (2) -

Ord Minnett cuts the rating for Megaport to Accumulate from Buy as the stock has moved through the trigger level. Target is $13.

The broker expects the business to average more than 25% growth in the top-line over the next five years while continuing to narrow its losses, leading to break even by 2025.

Target price is $13.00 Current Price is $7.05 Difference: $5.95
If MP1 meets the Ord Minnett target it will return approximately 84% (excluding dividends, fees and charges).

Current consensus price target is $9.22, suggesting upside of 28.7% (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

Morgans rates NAN as Upgrade to Add from Hold (1) -

For the seventh time in around seven months, Morgans oscillates its rating between Hold and Buy for Nanosonics.

This time, the rating returns to Add from Hold as the share price has fallen back to around $5.00, which allows circa 10% upside to the broker's new target price of $5.49, up from $5.24.

No changes are made to Morgans forecasts though the analyst has increased confidence FY23 guidance will be comfortably achieved.

Target price is $5.49 Current Price is $5.17 Difference: $0.32
If NAN meets the Morgans target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $4.50, suggesting downside of -12.5% (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

Macquarie rates PDN as Outperform (1) -

Macquarie believes the risk to Paladin Energy regarding the Namibian free carry changes is minimal. Media reports have signalled the prospect of Namibia taking minority stakes in mining and petroleum production companies, but this is expected to only impact future projects.

The broker notes the stock was sold off heavily on the reports which is considered overdone. The company has previously stated that the re-start of Langer Heinrich is on track and on budget with first production in the first quarter of 2024.

Outperform and $1.00 target retained.

Target price is $1.00 Current Price is $0.61 Difference: $0.395
If PDN meets the Macquarie target it will return approximately 65% (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

Ord Minnett rates PPE as Buy (1) -

PeopleIN has completed its strategic review and returned to the strategy of growing core verticals in health/community, industrial and technology/financial services. Over the medium term, Ord Minnett believes the business still offers M&A appeal for global operators.

The company has reaffirmed full year EBITDA guidance of $62-66m. Employment sector conditions remain firm, the broker notes, with internet advertisements continuing to track above long-term averages. Buy rating retained. Target is reduced to $3.86 from $4.39.

Target price is $3.86 Current Price is $2.75 Difference: $1.11
If PPE meets the Ord Minnett target it will return approximately 40% (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

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

For non-bank financial institutions (NBFIs) and smaller players, higher deposit funding costs at the banks should correct an uneven playing field, suggests Citi.

While this may not result in a rebound for activity, the analysts believe it will end the de-rating of price earnings ratios for this group of companies.

The funding cost disadvantage had previously driven the PE discount to the majors to a record -45%, explains Citi.

The broker upgrades its rating for Pepper Money to Buy from Neutral and increases its target to $1.90 from $1.50. No changes are made to forecasts.

Target price is $1.90 Current Price is $1.29 Difference: $0.61
If PPM meets the Citi target it will return approximately 47% (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

Bell Potter rates RAD as Speculative Buy (1) -

Radiopharm Theranostics has provided an update for its lead asset GaTrivehexin (RAD301) for the imaging of pancreatic ductal adenocarcinoma (PDAC).

Bell Potter expects headline data as soon as the 2H of 2023 due to the small patient numbers being recruited for the soon-to-commence phase 1 study. The data is expected to be instructive for a future approval study.

The results are also important as the pipeline asset is RAD302, which utilises the same molecule radiolabelled with isotope non-carrier-added lutetium-177 (Lu-177) for therapy purposes, the broker clarifies.

The Speculative Buy rating and 25c target are unchanged.

Target price is $0.25 Current Price is $0.14 Difference: $0.115
If RAD meets the Bell Potter target it will return approximately 85% (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 TAH as Add (1) -

Morgans is excited by the prospect of Tabcorp Holdings becoming a more data-driven, digital-oriented innovator after listening to investor day commentary.

Management expects to achieve its FY25 targets via utilising data analytics, and hopes to increase digital market share to 30% from 25% in the 1H of FY23, while also reducing operating expenses. The aim is to double return on invested capital (ROIC).

The analyst notes the company is well placed to invest in growth and licences without needing to raise equity. 

The target rises to $1.30 from $1.20. Add.

Target price is $1.30 Current Price is $1.15 Difference: $0.15
If TAH meets the Morgans target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $1.16, suggesting upside of 0.7% (ex-dividends)

The company's fiscal year ends in August.

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

UBS rates TAH as Neutral (3) -

Tabcorp has reiterated its targets and flagged trading will be more challenging in the current year amid lower consumer confidence and cost-of-living pressures as well as regulatory scrutiny.

The lack of guidance this late in FY23 may signal, UBS asserts, that the company is relatively comfortable with consensus expectations. The broker retains a Neutral rating and $1.09 target.

Target price is $1.09 Current Price is $1.15 Difference: minus $0.06 (current price is over target).
If TAH meets the UBS target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $1.16, suggesting upside of 0.7% (ex-dividends)

The company's fiscal year ends in August.

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 VCX as Neutral (3) -

Citi has opened what it terms a catalyst watch for Vicinity Centres until July 1 leading into the June reporting season and valuation updates.

The broker feels the REIT's sale of a -50% interest in the shopping centre at Broadmeadows Central, when combined with another recent transaction, provides support for valuations.

Cap rates may increase by less than the market was previously expecting, and the analyst feels this will assist Vicinity's valuations and gearing levels.

The $2 target and Neutral rating are kept.

Target price is $2.00 Current Price is $1.88 Difference: $0.125
If VCX meets the Citi target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $2.05, suggesting upside of 10.1% (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

Macquarie rates VCX as Neutral (3) -

Vicinity Centres will sell a -50% interest in Broadmeadows Central, Victoria, for $134.5m to Nikos Property Group. The sale is at a premium to book value which the broker estimates to be up to 6.9%.

The company has signalled the divestment will result in a -70 basis points reduction in gearing. The transaction will strengthen the strategic partnership with Nikos, with the group already having a joint interest in the Colonnades in South Australia.

The Neutral rating is unchanged. Target slips to $2.02 from $2.03.

Target price is $2.02 Current Price is $1.88 Difference: $0.145
If VCX meets the Macquarie target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $2.05, suggesting upside of 10.1% (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