Australian Broker Call

Shaw and Partners rates A1M as Buy (1) -

AIC Mines has a new copper "shoot" at Jericho North, midway between Eloise and Jericho, with the first diamond hole returning 9.8m at 2.1% copper.

Shaw and Partners considers this an excellent start to the regional drilling program, confirming outstanding exploration potential which should lead to a material increase in the size of the Jericho resource.

The company has a FY24 production target of 12,500t of copper at AISC of $5/lb. The broker retains a Buy rating with a $0.80 target.

Target price is $0.80 Current Price is $0.34 Difference: $0.465
If A1M meets the Shaw and Partners target it will return approximately 139% (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 ABG as Outperform (1) -

Macquarie reviews the investment thesis for Abacus Group following the de-stapling of Abacus Storage King ((ASK)) and now forecasts earnings of 9.3c per security, around the midpoint of the guidance range implied by the target payout ratio.

The broker assesses there is minimal downside risk to guidance although, having 11% of its office portfolio expiring in FY24 and 16% in FY25, achieving office leasing will be important as conditions are challenging.

The ASK investment comprises 23% of Macquarie's forecast FY24 operating EBIT for Abacus Group through fee and co-investment income. Outperform rating and $1.35 target.

Target price is $1.35 Current Price is $1.05 Difference: $0.305
If ABG meets the Macquarie target it will return approximately 29% (excluding dividends, fees and charges).

Current consensus price target is $1.56, suggesting upside of 50.3% (ex-dividends)

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

Citi rates ALL as Buy (1) -

It seems like a management round table has provided Citi analysts with sufficient positive insights to keep the Buy rating intact alongside an unchanged price target of $42.80.

Among the key items highlighted are management's confidence the land based pokie machines are not pulling forward any future demand; it's normal growth in sales, the broker reports.

Management also has high expectations for its upcoming NFL title, expected to last a lot longer than your typical movie licensed titles. Plus there are early signs of sequential growth in digital games.

Citi remains of the view the market is underestimating the earnings potential that comes from the Americas, while the NFL title offers upside surprise risk. Citi is more constrained on digital gaming, but sees management's indication as a positive.

Target price is $42.80 Current Price is $41.04 Difference: $1.76
If ALL meets the Citi target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $44.26, suggesting upside of 4.5% (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

Morgan Stanley rates ALL as Overweight (1) -

After a briefing from management, Morgan Stanley observes the North American environment is supportive with Aristocrat Leisure experiencing strong shipments in the June quarter. Current sales appear to reflect a normal environment and no "outsized contraction" is expected in FY24.

The company has made no change to guidance, forecasting modestly lower constant currency profit in FY23. Around 50% of the $1.5bn buyback has been executed to date and the acquisition of NeoGames is on track to be completed in FY24.

The Overweight rating and $43 target are unchanged. Industry View: In-Line.

Target price is $43.00 Current Price is $41.04 Difference: $1.96
If ALL meets the Morgan Stanley target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $44.26, suggesting upside of 4.5% (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

Morgans rates ALL as Add (1) -

Aristocrat Leisure held a briefing ahead of its results in November, confiming the second half is trending in line with expectations.

North America continues to be the "powerhouse" Morgans asserts, amid strong shipments in the June quarter along with capital commitments from customers.

The company is also confident of the success of the NFL Super Bowl Jackpots game that has been launched in selected markets. While the Pixel United operating environment has been subdued, the company has flagged "no further deterioration in growth".

Morgans retains an Add rating and raises the target to $46 from $45, increasing net profit estimates by 4% in FY23 and 1% in FY24.

Target price is $46.00 Current Price is $41.04 Difference: $4.96
If ALL meets the Morgans target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $44.26, suggesting upside of 4.5% (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

Bell Potter rates ALU as Hold (3) -

Bell Potter revises forecasts, upgrading revenue by 1% because of higher design software revenue that is partially offset by lower cloud platform revenue. FY24 revenue is now expected to be US$322m, within the Altium guidance range of US$315-325m.

There is no change in the broker's EBITDA margin forecast of 37%. FY26 revenue is forecast at US$454.9m, still below the company's aspirational target of US$500m.

Bell Potter considers the stock fair value, trading on a FY24 PE ratio of around 48x. Hold retained. Target is raised to $44 from $40.

Target price is $44.00 Current Price is $44.91 Difference: minus $0.91 (current price is over target).
If ALU meets the Bell Potter target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $44.94, suggesting upside of 1.1% (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: 0.3

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

Bell Potter rates AZS as Speculative Buy (1) -

Azure Minerals has first assays for its target area 2 showing economic grade lithium in a narrow intersection. Bell Potter observes, following the announcement, the share price declined -12% in response to the narrow widths relative to the target area 1.

The broker points out drilling is in the early stages. Speculative Buy rating retained.

Bell Potter expects the next news will relate to expansion of the large AP11 deposit, continued early testing of target area 2 and exploration commencing at target area 3, where some of the higher strength lithium targets are located. Target is $4.90.

Target price is $4.90 Current Price is $2.60 Difference: $2.3
If AZS meets the Bell Potter 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

Macquarie rates HAS as Neutral (3) -

Macquarie marks to market adjustments to the third quarter 2023 rare earths price forecasts, which translates to reduced earnings forecasts for producers in the near term.

The broker lowers the target for Hastings Technology Metals by -19% to $1.05 because of equity dilution impacts. Neutral retained.

Target price is $1.05 Current Price is $0.93 Difference: $0.12
If HAS meets the Macquarie target it will return approximately 13% (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

Macquarie rates ILU as Outperform (1) -

Macquarie marks to market adjustments to the third quarter 2023 rare earths price forecasts, which translates to reduced earnings forecasts for producers in the near term.

The broker reduces the target for Iluka Resources to $10.20 from $10.50 because of higher expected capital expenditure in the medium term. Outperform retained.

Target price is $10.20 Current Price is $8.21 Difference: $1.99
If ILU meets the Macquarie target it will return approximately 24% (excluding dividends, fees and charges).

Current consensus price target is $10.20, suggesting upside of 28.5% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.1

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

Citi rates JHX as Buy (1) -

Citi analysts have become less sanguine about the outlook for James Hardie Industries. Their advice previously had been that investors should keep a close watch on data and indicators for US housing construction.

The latest data release saw August starts and permits disappoint to the downside.

It's still early days, the analysts surmise, but these data have made them "incrementally more cautious" in anticipation of the company releasing 4Q24 numbers.

The broker believes current start/permit levels need to hold at least over the next 3-4 months to hit market consensus. As R&R is still declining, Citi points out new housing needs to do the heavy lifting from here.

Buy. Target $55.10.

Target price is $55.10 Current Price is $42.10 Difference: $13
If JHX meets the Citi target it will return approximately 31% (excluding dividends, fees and charges).

Current consensus price target is $51.66, suggesting upside of 22.8% (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: 0.8

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

Citi rates NHC as Downgrade to Sell from Neutral (5) -

Much of New Hope's FY23 had been pre-guided, though yesterday's release showed a net profit of $1.09bn and this missed Citi's forecast by -3%. The 70c dividend missed by -2%.

Higher costs and a slower ramp up at Acland sees the broker downgrading FY24 and FY25 estimates by -7%-19%. Target price moves to $5.50 from $5.20 on higher assumed multiples, the broker explains.

Given the shares rallied some 32% since July, Citi has decided to downgrade to Sell from Neutral. Also highlighted: New Acland Stage 3 capex spend has risen to -$459m.

It is Citi's view the recent thermal coal price rally on LNG strikes is overdone and thermal demand should weaken into shoulder season.

Target price is $5.50 Current Price is $6.30 Difference: minus $0.8 (current price is over target).
If NHC meets the Citi target it will return approximately minus 13% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.28, suggesting downside of -13.9% (ex-dividends)

The company's fiscal year ends in July.

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

Macquarie rates NHC as Underperform (5) -

The FY23 result from New Hope was largely in line with Macquarie's expectations as EBITDA and the cash position were previously reported. The final dividend was weaker than expected.

Volume guidance for FY24 is in line, with 10.5mt expected from Bengalla and 900,000t at New Acland. The ramp up at New Acland is slower than the broker had anticipated.

Macquarie envisages a dividend headwind going into FY24 and FY25 with yields decreasing to around 5%. Underperform rating and $4.20 target retained.

Target price is $4.20 Current Price is $6.30 Difference: minus $2.1 (current price is over target).
If NHC meets the Macquarie target it will return approximately minus 33% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.28, suggesting downside of -13.9% (ex-dividends)

The company's fiscal year ends in July.

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

Citi rates ORI as Buy (1) -

Ahead of the Sustainability Day presentations Orica's strong business performance over FY23 has been confirmed while the emissions reduction targets have been expanded.

Strength in the underlying business is expected to continue into FY24 with the company expecting improvements in both trade working capital and operating cash flow.

Capital expenditure for the full year is expected to be at the upper end of the -$400-420m guidance. Orica is exiting Venezuela and will incur a -$20m post-tax expense reported as a significant item. Citi retains a Buy rating and $17.45 target.

Target price is $17.45 Current Price is $15.88 Difference: $1.57
If ORI meets the Citi target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $18.00, suggesting upside of 16.1% (ex-dividends)

The company's fiscal year ends in September.

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

Macquarie rates ORI as Outperform (1) -

Orica expects FY23 earnings will be in line with the guidance given at the first half result. Macquarie notes the positive profit drivers include commercial discipline, strong customer demand and increased earnings from blasting and digital technology offerings.

On the negative side a significant turnaround in plant activity is anticipated in the first half of FY24 with Kooragang Island to undergo a two-month scheduled maintenance shutdown.

The broker estimates a negative -$30m first half EBIT impact. Around 10% FY24 EPS growth is forecast. Macquarie retains an Outperform rating and reduces the target to $17.80 from $18.00.

Target price is $17.80 Current Price is $15.88 Difference: $1.92
If ORI meets the Macquarie target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $18.00, suggesting upside of 16.1% (ex-dividends)

The company's fiscal year ends in September.

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

UBS rates ORI as Buy (1) -

Orica expects strength will be sustained into the second half and UBS anticipates an 18% increase in FY23 EBIT to $685m, with earnings supported by solid mining demand, increased technology uptake and repricing benefits in ammonium nitrate contracts.

Orica is now targeting a reduction in Scope 1and 2 emissions of at least -45% by 2030 and has a new short-term target of reducing these emissions by -30% by 2026.

The installation of tertiary abatement technology at the ammonium nitrate plants underpins the emissions targets. The company is also exploring the potential for a Hunter Valley hydrogen hub with Origin Energy ((ORG)).

UBS retains a Buy rating and reduces the target to $18.80 from $19.00 along with a -2% cut to EBIT forecasts to account for the outage from a planned maintenance program at Kooragang Island.

Target price is $18.80 Current Price is $15.88 Difference: $2.92
If ORI meets the UBS target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $18.00, suggesting upside of 16.1% (ex-dividends)

The company's fiscal year ends in September.

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 PAC as Buy (1) -

Pacific Current Group has acquired a 24.9% equity stake in Avante Capital Partners, a private credit fund manager based in the US, for up to -US$40m. The acquisition is expected to yield US$1.5-2.5bn in management fees from 2024.

Ord Minnett considers the acquisition "sensible" and in line with the structure of recent deals made by the company.

The broker expects updates on potential corporate interest over the next 4-6 weeks, although Pacific Current is yet to formally respond to the Regal Partners ((RPL)) proposal. Buy rating retained. Target rises to $12.20 from $12.00.

Target price is $12.20 Current Price is $11.20 Difference: $1
If PAC meets the Ord Minnett target it will return approximately 9% (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

Ord Minnett rates RMS as Buy (1) -

Ord Minnett assesses the acquisition of Musgrave Minerals ((MGV)) is a positive step for Ramelius Resources.

The company has passed the 90% compulsory acquisition threshold and the key deposit, Cue, is incorporated into the broker's base case modelling with first ore expected in the fourth quarter of FY25.

A conservative ramp up and cost outlook is modelled with low capital intensity. The ore is expected to enter the Mount Magnet mill from the fourth quarter of FY25 and displace lower-grade sources of ore, growing future production. 

Buy rating retained. Target rises to $1.95 from $1.80.

Target price is $1.95 Current Price is $1.47 Difference: $0.485
If RMS meets the Ord Minnett target it will return approximately 33% (excluding dividends, fees and charges).

Current consensus price target is $1.78, suggesting upside of 20.3% (ex-dividends)

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 TCL as Outperform (1) -

Macquarie assesses the NSW budget is a net positive for Transurban Group. Tolling policy shifts from paying 40% of the toll above $1608 per annum to capping costs at $60 a week and lowering the truck multiplier to 2x on the M5 east and M8.

The government has estimated the new policy is 5-6% of Sydney's toll revenue which the broker assesses is probably conservative as the cap potentially induces toll road usage.

The broker continues to assess the stock as a high-quality defensive offering that benefits from having the road capacity to capture population growth.

Outperform retained. A change in bond rate assumptions drags on valuation and the target is reduced to $13.97 from $15.09.

Target price is $13.97 Current Price is $13.18 Difference: $0.79
If TCL meets the Macquarie target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $14.41, suggesting upside of 9.9% (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

Morgan Stanley rates TUA as Overweight (1) -

The Tuas result beat Morgan Stanley's estimates in FY23 supported by 40% growth in mobile subscribers. There was strong cash flow conversion along with resilient margins, the broker adds.

The business is currently a consumer mobile business with plans to expand into broadband in the first half of FY24. Tuas also has ambitions to become a full service telco over time.

Morgan Stanley increases EBITDA forecasts by 1% for FY24-25. The stock is trading on 22x FY24 estimates for EBITDA, considered attractive in the context of 20% growth rates. Overweight retained. Target rises to $2.40 from $2.15. Industry view is In-Line.

Target price is $2.40 Current Price is $2.10 Difference: $0.3
If TUA meets the Morgan Stanley target it will return approximately 14% (excluding dividends, fees and charges).

The company's fiscal year ends in July.

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