In Case You Missed It – BC Extra Upgrades & Downgrades – 17-11-23

Weekly Reports | Nov 17 2023

Broker Rating Changes (Post Thursday Last Week)


JANUS HENDERSON GROUP PLC ((JHG)) Upgrade to Neutral from Underweight by Jarden.B/H/S: 0/0/0

Janus Henderson's third quarter earnings per share have far surpassed Jarden's expectations, despite continued outflows, helped by stronger management fee margins and robust cost management. 

The company's board approved a $150m buyback, leaving Janus Henderson with the option to pursue capital management. Jarden remains cautious on near-term flows given weaker fund performance, expecting the company to suffer outflows for up to a further two years. 

The rating is upgraded to Neutral from Underweight and the target price increases to $39.70 from $37.05.

WESTPAC BANKING CORPORATION ((WBC)) Upgrade to Neutral from Underweight by Jarden.B/H/S: 0/0/0

Jarden has described Westpac's full year result as "better-than-feared", and highlighted capital is tracking better. The bank announced a $1.5m buyback to be completed over the next six months, and the broker sees potential for further capital management over the year. 

The broker was looking for early signs of a multi-year turnaround from the bank, and with the bank signalling its CORE program is now largely complete it is expected to begin the four plus year process of investing to simplify. 

The rating is upgraded to Neutral from Underweight and the target price increases to $21.60 from $21.40.


CSR LIMITED ((CSR)) Downgrade to Neutral from Overweight by Jarden.B/H/S: 0/0/0

Following CSR's below-consensus 1H results, Jarden downgrades to Neutral from Overweight on peak profitability for the Building Products division, and an uncertain medium and longer-term outlook for the Aluminium business.

A recent share price rally was also taken into account for the ratings downgrade.

The target price rises to $6.00 from $5.70 on higher forecasts for Building Products after record earnings (EBIT) and margins for the half.

The timing of contractual Property profits was delayed and there were greater Aluminium losses than the analysts expected. Jarden would have a more positive view of CSR should the Aluminium business be sold.


INTEGRAL DIAGNOSTICS LIMITED ((IDX)) Downgrade to Neutral from Overweight by Jarden and Downgrade to Market Weight from Overweight by Wilsons.B/H/S: 0/0/0

Integral Diagnostics' Q1 update surprised negatively with growth lagging the market, labour costs pressuring margins and with higher-than-anticipated D&A and non-interest expenses.

Jarden bemoans the absence of the operating leverage that was flagged by management to continue into FY24. The broker reminds investors yesterday's update follows on from the market update that occurred on August 28.

Not exactly evidence management has everything under control and is capable of predicting where things are heading internally. We are paraphrasing now, but such is the sentiment inside Jarden's response.

The former paragraph also explains why the broker has pulled back to Neutral from Overweight. Target tumbles to $2.58 from $3.23. Estimates have been culled.

Wilsons had upgraded to Overweight following Integral Diagnostics' FY23 release, confident things were turning around for the medical imaging services business, but then followed the reality check, and that move has now been reversed.

The price target falls by -41% to $2. Needless to say, the broker is not happy, labeling it "the company’s most perplexing downgrade yet".

Wilsons sees a red flag in the fact this business has deteriorated so quickly in such a short time frame, suggesting a potential equity raising might follow next.

An interest cover ratio of 1.2x feels too tight for a company downgrading in a rising rates environment, the broker surmises. Downgrade to Market Weight from Overweight.


SYMBIO HOLDINGS LIMITED ((SYM)) Downgrade to Hold from Buy by Canaccord Genuity.B/H/S: 0/0/0

Canaccord Genuity believes Aussie Broadband's ((ABB)) bid for Symbio Holdings is too low, based on previous comparable transaction values and optionality over the Asian expansion strategy.

The broker lowers its target for Symbio to $3.00 from $4.45 to nearly align with the $3.01 Symbio board-backed offer, and downgrades the rating to Hold from Buy.

TALON ENERGY LIMITED ((TPD)) Downgrade to Hold from Speculative Buy by Canaccord Genuity.B/H/S: 0/0/0

If everything goes according to plan, Talon Energy won't be a stand-alone operation for much longer. Target and suitor Strike Energy ((STX)) are aiming for a meeting in early December to work out the details.

Canaccord Genuity has downgraded to Hold from Speculative Buy, with a 24c price target.

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