Weekly Reports | Apr 28 2025
Weekly update on stockbroker recommendation, target price, and earnings forecast changes.
By Mark Woodruff
Guide:
The FNArena database tabulates the views of eight major Australian and international stockbrokers: Citi, Bell Potter, Macquarie, Morgan Stanley, Morgans, Ord Minnett, Shaw and Partners and UBS.
For the purpose of broker rating correlation, Outperform and Overweight ratings are grouped as Buy, Neutral is grouped with Hold and Underperform and Underweight are grouped as Sell to provide a Buy/Hold/Sell (B/H/S) ratio.
Ratings, consensus target price and forecast earnings tables are published at the bottom of this report.
Summary
Period: Monday April 21 to Friday April 25, 2025
Total Upgrades: 5
Total Downgrades: 1
Net Ratings Breakdown: Buy 61.80%; Hold 31.75%; Sell 6.45%
For the three business days ending Thursday, April 24, 2025, FNArena tracked five upgrades and just the one downgrade for ASX-listed companies from brokers monitored daily.
Average target price increases slightly outweighed declines, while the tables below show negative changes to average earnings forecasts were more common than positive moves, aside from material upgrades for Paladin Energy and Pilbara Minerals.
Ord Minnett acknowledged its prior downgrade to Paladin Energy's earnings estimates following the disruption to the Langer Heinrich mine in Namibia due to a major rain event was overdone.
The broker was commenting after a solid third quarter beat versus consensus on all metrics. Production rose by 17% quarter-on-quarter to 0.745mlb U3O8, 20% above Citi's forecast, while sales reached 0.872mlb, including 0.2mlb delivered from loan material, with a realised price of US$69.9/lb, well above the broker's US$60/lb estimate.
UBS noted mine restart activities at Langer Heinrich are ahead of expectations, with a June/July restart likely, though ramp-up risks remain.
For Pilbara Minerals, the around 21% lift in the FY25 average earnings forecast was exaggerated by small forecast numbers.
Macquarie noted March quarter production and sales of 125kt each missed consensus by around -12%, with production falling -34% quarter-on-quarter due to Ngungaju transitioning to care and maintenance.
Ngungaju is one of two processing plants at Pilbara's flagship Pilgangoora lithium operation in Western Australia.
Production and sales volumes were disrupted by P1000 project tie-ins and six days lost due to cyclone activity, explained Bell Potter.
The P1000 Project is a major expansion at Pilgangoora, which is designed to significantly boost the site's production capacity of spodumene concentrate.
Operating costs across the company beat consensus, noted Citi, and management reiterated FY25 guidance across all metrics.
Morgans expects operational improvements to emerge in the June quarter and sees Pilbara Minerals as better positioned than peers due to its scale and long-term expansion strategy.
Insignia Financial received the largest increase in average target price, solely due to Ord Minnett resuming coverage with a $5.00 target, above the existing targets from three other brokers in the FNArena database.
On Wednesday last week, Insignia released its third quarter business update showing funds under management and administration (FUMA) of $321.8bn, broadly in line with the prior UBS forecast. The number was down -1.5% quarter-on-quarter, driven by -0.8% net outflows and -0.7% market impact.
Despite headline deterioration, Citi highlighted underlying flows were broadly flat quarter-on-quarter, once a large institutional redemption is excluded, supported by strong contributions from the MLC Expand platform and the workplace superannuation channel.
Ord Minnett, while acknowledging the result was not as weak as feared, maintained a Hold rating due to global uncertainty and the risk of a lower takeover offer.
Following a request from both Bain Capital Private Equity and CC Capital Partners, management has extended by four weeks the exclusivity period for the bidders to allow finalisation of debt funding and associated due diligence, but there is no certainty either proposal will result in any transaction being put to Insignia Financial for consideration.
Annuity and funds management provider Challenger's average target price rose by nearly 6% last week after tightening FY25 profit guidance, which Citi sees as resilience amid volatile markets and a positive indicator for meeting return on equity targets.
For a further explanation of Challenger's range of products and broker views on the company's outlook see this week's FNArena article.
While AMP suffered a near -8% fall in average target after releasing its first quarter cashflows and business update, Macquarie and Citi upgraded their ratings to Buy (or equivalent) from Hold.
Macquarie lowered its target by -30 cents to $1.34 but upgraded the rating as the stocks two-year forward price-to-earnings multiple is currently trading around a -33% discount to peers. Citi pointed out first quarter flows were generally positive, and the stock has retreated a long way from its end-of-January highs.
The average target price for Perpetual also fell by around -4% last week following March quarter results after Macquarie cut its target to $15.44 from $19.74 on lower earnings forecasts and a lower ascribed valuation multiple.
Assets under management fell -4% to $221.2bn, driven by -$8.9bn in outflows and a -$0.9bn currency impact, partly offset by $0.7bn from positive market movements, explained Macquarie.
Outflows were mainly in global and US equities and cash, due to client mergers and reallocation/rebalancing and underperformance in some strategies, noted the broker, but management did not see any significant de-risking from clients in the period to March 31.
Following a FY25 trading update on April 17, Tourism Holdings received the largest negative revision (-8%) to broker earnings forecasts last week.
Management stated geopolitical tensions and tariff developments have weakened consumer confidence, particularly impacting rental revenue in the US and global vehicle sales.
As a result, the company has guided to FY25 profit below previous consensus of $45.2m due to lower expected rental revenue in the US and further deterioration in vehicles sales demand globally.
Management emphasised no requirement to raise equity because banking covenants are in a comfortable position.
Ord Minnett also noted the impact of Trump policy changes which has resulted in a material reduction in inbound visitors to the US from Europe and a reduction in consumer confidence.
Total Buy ratings in the database comprise 61.80% of the total, versus 31.75% on Neutral/Hold, while Sell ratings account for the remaining 6.45%.
Upgrade
ARISTOCRAT LEISURE LIMITED ((ALL)) Upgrade to Buy from Neutral by UBS .B/H/S: 7/0/0
UBS lowers its target for Aristocrat Leisure to $74.50 from $75.50 and upgrades to Buy from Neutral due to recent share price weakness and a view the business will be relatively more resilient in a weaker macroeconomic backdrop.
The broker's forecasts currently do not assume any material impacts on margins from potential tariffs.
The analyst notes US gross gaming revenue (GGR) has traditionally been very resilient to economic downturns.
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