Weekly Reports | Nov 01 2024
Broker Rating Changes (Post Thursday Last Week)
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ADAIRS LIMITED ((ADH)) Buy by Canaccord Genuity.B/H/S: 0/0/0
Adairs' trading update pleased Canaccord Genuity, with a particularly strong sales performance the highlight, complemented by gross margins pacing ahead of a year ago despite headwinds from FX and initial impacts from higher freight costs.
The broker remains optimistic on the near-term outlook, while cautioning that we are entering peak retail trading at year-end. Canaccord has taken the view that management's initiatives to turn around Adairs and Mocka will outweigh continuing cost of living pressures.
The broker is nonetheless cautious on Focus forecasts given weak recent trading. In the medium term, Canaccord sees material top-line optionality and room for operating leverage. Target rises to $2.80 from $2.50, Buy retained.
MICHAEL HILL INTERNATIONAL LIMITED ((MHJ)) Upgrade to Buy from Overweight by Jarden.B/H/S: 0/0/0
Jarden comments Michael Hill has shown improved trading momentum in the first 14 weeks of FY25, with group sales growth accelerating to 4.3% year-on-year, up from 3.2% in the first eight weeks.
As per the broker, Australia and Canada led the way with strong same-store sales growth of 6.3% and 4.7%, respectively, while New Zealand's same-store sales contracted by -4.2%, though this represents an improvement from -6.2% previously.
Gross margin has also shown a "meaningful improvement," and management remains confident in achieving the FY25 gross margin target of circa 62%.
The broker has upgraded its rating to Buy from Overweight and raised the price target to NZ$0.80 from NZ$0.78, driven by positive earnings revisions and margin recovery progress.
PREMIER INVESTMENTS LIMITED ((PMV)) Upgrade to Neutral from Sell by Goldman Sachs.B/H/S: 0/0/0
Goldman Sachs believes there is greater visibility on Premier Investments' earnings.
The analyst expects higher EBIT margins for Peter Alexander and Smiggle as well as a clearer growth path for Apparel Brands.
The analyst lifts FY25-27 EPS estimates by -1% to 10%, respectively. A more omni-channel sales model for Apparel should help a turnaround in declining market share via data and loyalty led strategies.
The stock is upgraded to Neutral from Sell. Target price rises to $32.20 from $28.26.
WHITEHAVEN COAL LIMITED ((WHC)) Upgrade to Buy from Neutral by Goldman Sachs.B/H/S: 0/0/0
Whitehaven Coal's Q1 FY25 showed robust coal production, according to Goldman Sachs, with run-of-mine (ROM) output 10% above estimates, strong metallurgical and thermal price realisations, and unit costs near the low end of guidance at $145/t.
Production guidance remains unchanged, but higher Queensland production estimates and debt reduction initiatives provide a favourable outlook, in the analyst's opinion.
Goldman upgrades Whitehaven to Buy from Neutral, and sets a price target of $7.90, a rise of 23%. The Buy rating is based on attractive free cash flow (FCF) potential and sustained demand for metallurgical coal, explains the broker.
WISETECH GLOBAL LIMITED ((WTC)) Upgrade to Buy from Neutral by Goldman Sachs.B/H/S: 0/0/0
Goldman Sachs reaffirms WiseTech Global's competitive positioning which is reinforced by its CargoWise software, poised for adoption across large freight forwarders, with ARPU expansion anticipated through new offerings like Container Transport Optimizer.
The EBITDA margin is forecasts to rise to 54% by FY26, supported by efficiency improvements.
The stock is upgraded to Buy from Neutral post the recent sell off on concerns around CEO/Founder Richard White. Target price $138 (retained).
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