Weekly Reports | Jun 10 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 June 2 to Friday June 6, 2025
Total Upgrades: 7
Total Downgrades: 10
Net Ratings Breakdown: Buy 61.61%; Hold 32.07%; Sell 6.32%
In the week ending Friday, June 6, 2025, FNArena tracked seven upgrades and ten downgrades for ASX-listed companies from brokers monitored daily.
The tables below show negative changes to average target prices and earnings forecasts outweighed increases across the board.
Tabcorp Holdings was the standout in the earnings upgrade table after Morgan Stanley forecast upside risk to FY26 earnings, citing good positioning to improve retail profitability through changes to venue commission structures and targeted product innovation.
A strategic pivot is underway to enhance monetisation in the retail network, noted the broker, including reducing commissions paid to pubs and clubs and reinvesting within the existing cost envelope rather than recycling savings into unrelated areas.
Reporting on money making ideas from stockbrokers and other experts, FNArena's Treasure Chest article last week highlighted Tabcorp at https://fnarena.com/index.php/2025/06/03/treasure-chest-tabcorp-holdings/
On the other side of the coin, brokers lowered the average target price by circa -62% for global provider of international student placement services and English language testing, IDP Education.
Management issued a hefty profit warning, citing ongoing policy uncertainty in key destination markets, prompting Morgans, Morgan Stanley, and Ord Minnett to downgrade their ratings to Hold (or equivalent) from Buy.
More positively, Macquarie remained at Outperform, noting negative impacts were due to cyclical issues rather than a structural industry shift. UBS also upgraded to Buy from Hold, stressing the company remains a high-quality business, suggesting the current operating environment is nearing trough conditions.
For more detail around all broker views on IDP Education see https://fnarena.com/index.php/2025/06/06/idp-education-surely-it-cannot-get-any-worse/
Nufarm also had a bad week, coming in ahead of IDP Education on the negative change to earnings list with an average fall of around -68% for FY25.
This company is more exposed to the downcycle across agriculture stocks, noted Macquarie, due to its weak balance sheet.
Ongoing uncertainty around earnings as well as the balance sheet is expected to persist, with the broker noting the company's asset-backed lending facility is covenant-light (fewer protections or restrictions for lenders) and not scheduled for refinancing until late-2027.
Recently Nufarm's interim result missed consensus forecasts, driven by weaker earnings from the Seeds division due to a decline in fish oil prices impacting its Omega-3 business as further explained at https://fnarena.com/index.php/2025/05/26/seeds-of-doubt-for-nufarm/
While we are on negative street, average targets for Syrah Resources and Treasury Wine Estates also fell by circa -26% and 9%, respectively. The appearance of Syrah Resources is the result of FNArena removing Shaw and Partners from our monitoring (we no longer believe this broker is still actively on the case) and thus best ignored within this context.
Management at Treasury Wine Estates lowered FY25 earnings guidance though Morgans noted updated guidance is still marginally above the consensus estimate.
As pointed out by this broker, the winemaker's downgrade was due to weaker US Premium wine sales, particularly 19 Crimes below US$15 per bottle, though Luxury portfolios such as Penfolds appear to be tracking to plan.
In addition, management has been advised by its current distributor, RNDC, it will cease operations in early-September for California, the largest wine consumption state in the US.
While this outcome will not impact FY25 results, Ord Minnett noted the FY26 performance for the Americas division will be negatively impacted, especially if RNDC exits additional states.
Management is looking to restructure operations into a new Global Premium division from FY26, offering clearer visibility into Treasury Americas' luxury growth and margin profile.
Turning to increases in average target prices, here shipbuilder and defence contractor Austal led the gains with a rise of just under 9%.
As Australia's largest defence exporter, Austal delivers design, manufacturing, and through-life support services to both defence and commercial clients.
Bell Potter was solely responsible for the uplift in average target, following a review of its forecasts in light of Austal's strong share price performance year to date.
The broker raised its target to $5.60 from $4.45 and downgraded to Hold from Buy.
Bell Potter analysts anticipate a strong FY25 result and have upgraded FY26 revenue forecasts and beyond by low single digits, primarily reflecting increased shipbuilding activity in the Australasian region.
Following the re-election of the Labor Government in Australia, the broker has increased confidence the Submarine Support Agreement (SSA) with the US, and associated programs, will proceed according to plan and remain on schedule.
The SSA is part of the broader AUKUS partnership, under which Australia collaborates with the US (and the UK) on nuclear-powered submarine development, technology sharing, and defence industrial cooperation.
Global mining services provider Perenti and Brickworks (involved in building products, property, and investments) follow next with rises in average targets of over 6% apiece.
Perenti's underground mining specialist, Barminco, is the primary contractor at Zone 5, a major copper mining project in Botswana. However, Barminco will cease its operations at Zone 5 on June 30 after deciding not to pursue a renewal under existing terms as the project was not meeting Perenti's internal financial benchmarks.
While recent contract awards are unlikely to fully offset the void from Zone 5 in FY26, Citi believes management is well placed in the near-term with a robust pipeline of opportunities and potential uptick from Drilling Services.
After rolling forward the company's valuation and applying a higher multiple to reflect improved confidence in free cash generation, and potential crystallisation of upside catalysts, the broker raised its target to $1.90 from $1.60 and maintained a Buy rating.
It was a busy week for analysts covering Brickworks following the proposed merger with Washington H. Soul Pattinson.
Neutral-rated Macquarie noted the deal will create a $14bn diversified investment group, combining Soul Patts' portfolio of private and listed assets with an increased property weighting from Brickworks, bringing this asset class to 19% of the merged entity's portfolio.
Ord Minnett suggested cost synergies will be modest but highlighted the strong net cash position of the combined group, enhancing its capacity to pursue future investments. This broker raised its target price for Brickworks to $34.90 from $30 but downgraded to Hold from Accumulate, citing recent share price strength.
Under the proposal, a new ASX-listed entity ("TopCo") will be formed to acquire the shares of both Soul Patts and Brickworks. Soul Patts shareholders will receive one TopCo share per share held, while Brickworks shareholders will receive 0.82 TopCo shares per share.
Longer term, the broker believes Brickworks shareholders will gain exposure to a larger, better capitalised, and more diversified investment vehicle.
Total Buy ratings in the database comprise 61.61% of the total, versus 32.07% on Neutral/Hold, while Sell ratings account for the remaining 6.32%.
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