Weekly Reports | Mar 28 2025
Broker Rating Changes (Post Thursday Last Week)
Upgrade
CLEANAWAY WASTE MANAGEMENT LIMITED ((CWY)) Upgrade to Buy from Overweight by Jarden.B/H/S: 0/0/0
Cleanaway Waste Management is debt-funding its proposed acquisition of Contract Resources Group for -$377m and expects the deal to be accretive on a pre and post-synergies basis.
Jarden is surprised the company is investing in the lowest margin segment but believes investors will like the deal.
The broker expects the proposed purchase (subject to ACCC approval) to improve the earnings outlook beyond FY26. For now, though, it is not incorporating this deal and the Citywide acquisition in forecasts.
The analyst made modest changes to the FY25-27 core EPS forecasts and raised the target price to $3.10 from $3.05. Rating upgraded to Buy from Overweight following recent share price weakness.
FORTESCUE LIMITED ((FMG)) Upgrade to Neutral from Underweight by Jarden.B/H/S: 0/0/0
Jarden conducted a deeper analysis of iron ore outlook and P58 discount to the benchmark P62, noting a widening discount of -30% would lead to a significant reduction in Fortescue EPS estimates.
A narrower discount of -5% is a less likely scenario but would push up EPS significantly. The broker has assumed a -14% discount in its forecasts and a US$76/t long-term price for P62.
The analyst adjusted Mindy South and Nyidinghu mine sequencing assumptions, leading to a cut in target price to $16.91 from $17.08.
Rating upgraded to Neutral from Underweight on valuation grounds.
JAMES HARDIE INDUSTRIES PLC ((JHX)) Upgrade to Overweight from Neutral by Jarden.B/H/S: 0/0/0
Jarden's initial view about James Hardie Industries' Azek acquisition announcement is the deal is strategically and operationally sensible. Also, the broker notes the announcement removes the M&A overhang since August last year.
The broker also finds reassurance from the company reaffirming it will complete the US$500m buyback once the deal is completed.
The analyst acknowledges the deal multiple is a concern and awaits further details, but for now suggests value has emerged from share price fall.
Target price cut to $45 from $53.50. Rating upgraded to Overweight from Neutral.
NANOSONICS LIMITED ((NAN)) Upgrade to Buy from Hold by Canaccord Genuity.B/H/S: 0/0/0
Canaccord Genuity notes Nanosonics received de novo approval from the US FDA for the Coris system earlier than expected. This puts it in a good position to meet the initial launch timeline of 1Q26 and 70% of the total scope by volumes target within 12 months of approval.
The de novo approval will also help the company secure the 510K approval. No changes to forecasts.
Target price lifted to $5.74 from $4.47. The broker estimates the stock has an upside potential to $7.50 in a more bullish longer-term market share assumption scenario.
Rating upgraded to Buy from Hold.
NATIONAL STORAGE REIT ((NSR)) Upgrade to Buy from Hold by Moelis.B/H/S: 0/0/0
Moelis upgrades National Storage REIT to Buy from Hold and now prefers this storage REIT compared with Abacus Storage King ((ASK)).
The broker believes capital will continue to chase the storage sector because of a growing population, densification, lifestyle purchases etc. The sector too has performed well with the REIT's cap rate moving just 3bps since June 2022.
The broker reckons there is little downside risk in the REIT, given it is trading at a wide -16.7% discount to net tangible asset
Target price unchanged at $2.37.
The full story is for FNArena subscribers only. To read the full story plus enjoy a free two-week trial to our service SIGN UP HERE
If you already had your free trial, why not join as a paying subscriber? CLICK HERE