Weekly Reports | 11:25 AM
Broker Rating Changes (Post Thursday Last Week)
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DOMAIN HOLDINGS AUSTRALIA LIMITED ((DHG)) Upgrade to Buy from Overweight by Jarden.B/H/S: 0/0/0
Following the reporting season, Jarden highlights consensus EPS revisions across FY25-27 were downwards to varying degrees for the four main online classifieds companies. On the other hand, valuation multiples have risen for all except Domain Holdings Australia.
Rather than volumes, the broker suggests an ability to grow yield is the key driver of long-term value for online classifieds businesses, noting yield growth was strong across FY24 for all four, and well ahead of inflation.
The analysts expect yields will continue to grow well above the rate of inflation for REA Group, CAR Group, Seek and Domain, demonstrating the pricing power across these exposures.
Jarden lowers its target for Domain Holdings Australia to $3.35 from $3.40, but upgrades to Buy from Overweight following recent share price underperformance.
GOODMAN GROUP ((GMG)) Upgrade to Buy from Neutral by Jarden.B/H/S: 0/0/0
Jarden raises its target for Goodman Group to $40 from $37.60 and upgrades to Buy from Neutral after the share price underperformed the REIT sector by -10% over the last three months.
This equity price decline contrasts with growing visibility of both duration and magnitude of earnings, suggests the broker, driven by the group's $85bn Data Centre development pipeline.
On the topic of potential execution risk, the analysts point to Goodman's history of managing risk through pre-commitments, strong capital partnerships and a prudent approach to capital management and project selection.
PLATINUM ASSET MANAGEMENT LIMITED ((PTM)) Upgrade to Neutral from Underweight by Jarden.B/H/S: 0/0/0
Jarden observes Platinum Asset Management reported weaker than forecast FY24 earnings because of softer revenue and one-off costs.
Although ongoing funds outflows are anticipated, the analyst believes Platinum Asset Management has done a commendable job in right sizing the business, including -$25m in cost outs planned for FY25.
The broker revises EPS forecasts by 5% for FY25 and -9% for FY26. Upgraded to Neutral from underweight. Target price $1 from $1.05.
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CHARTER HALL GROUP ((CHC)) Downgrade to Hold from Buy by Moelis.B/H/S: 0/0/0
Charter Hall, on behalf of Charter Hall Retail REIT ((CQR)) and a trust managed on behalf of Hostplus (50:50 basis), has lodged an on-market takeover bid to acquire 100% of Hotel Property Investments ((HPI)) for $3.65/share.
According to the target's board, the bid represents a -10% discount to net tangible assets (NTA) and should be rejected by shareholders.
Following the recent share price rally, Moelis downgrades its rating for Charter Hall to Hold from Buy. The unchanged target is $3.89.
CARNARVON ENERGY LIMITED ((CVN)) Downgrade to Overweight from Buy by Jarden.B/H/S: 0/0/0
Jarden adjusts the outlook for Carnarvon Energy on the back of recent commentary from Santos ((STO)) on Dorado.
The analyst points at frustration around the fact the operator of the company's key asset is flagging a challenging environment, including the decision to lower the risk weighting on Dorado to 75% from 100%.
Jarden maintains its forecasts for the final investment decision date in 2026 and first production in 2030.
Rating downgraded to Overweight from Buy. Target price moves to 21c from 24c.
IMPEDIMED LIMITED ((IPD)) Downgrade to Speculative Buy from Buy by Canaccord Genuity.B/H/S: 0/0/0
Upon further reflection on FY24 results, Canaccord Genuity lowers its target for ImpediMed to 9c from 14c and downgrades to Speculative Buy from Buy.
The analyst adopts a more conservative approach to the cadence of installed base growth, and on management's ability to drive SaaS pricing increases. Unfortunately, payor wins have not been sufficient to drive Sozo unit sales, explains Canaccord.
Over the last year, the analyst suggests material disruption at both management and board level may have negatively impacted the sales/strategy planning and execution.
The broker's initial take on FY24 results is summarised below.
FY24 results for ImpediMed were in line with quarterly reporting in July. However, Canaccord Genuity suggests share price pressure reflects a level of impatience as investors await sales execution, with a material uplift in new installed Sozo units remaining elusive.
Management highlighted actions to manage cash burn including a FY25 operating cash spend -10% lower than the FY24 level.
The broker suggests management's aim to be breakeven by July 2025 is very optimistic, and the analyst's forecasts assume a capital injection.
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