Weekly Reports | 10:05 AM
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 16 to Friday June 20, 2025
Total Upgrades: 11
Total Downgrades: 15
Net Ratings Breakdown: Buy 61.70%; Hold 31.81%; Sell 6.50%
In the week ending Friday, June 20, 2025, FNArena tracked eleven upgrades and fifteen downgrades for ASX-listed companies from brokers monitored daily.
Among the ratings changes, both UBS and Bell Potter upgraded Centuria Capital to Hold (or equivalent) from Sell following recent underperformance relative to the REIT sector.
Centuria Capital is considered well positioned to benefit from an improving real estate cycle, with asset valuations likely near the bottom and transaction volumes expected to rebound. A solid FY25 result is expected.
In New Zealand, where the REIT generates high-margin funds management fees, the analysts feel market conditions appear to be turning more favourable for property fund managers.
Also, recent Australian transactions, such as with BentallGreenOak (BGO) in industrial, suggest to Bell Potter a more supportive environment for earnings growth, margin expansion, and a potential re-rating in valuation.
UBS analysts suggest the outlook for real estate is the most favourable since the onset of covid.
Asset values seem to have bottomed, interest rates are falling, and rental growth is strong, noted this broker, helped by population gains and a low level of new supply. UBS added high build costs and weak productivity are constraining supply.
Centuria Capital has continued to expand in areas such as agriculture, shopping centres and private credit, though at a slower pace than in the past. With asset values now stabilising and interest rates likely to fall, the broker believes management will be better placed to raise equity for new fund launches.
Perhaps the most significant news on the ASX during the week was the takeover proposal for Santos, resulting in two rating downgrades from separate brokers.
The Santos share price didn't rise to the $8.89 offer price (from a consortium that includes Abu Dhabi sovereign wealth fund and Carlyle Group) because investors see risks around FIRB approval and the long timeline to get various approvals. Shares closed the week at $7.70.
Ord Minnett downgraded its rating to Accumulate from Buy. Morgans moved to Trim from Hold, noting only modest share price upside versus steep downside were the transaction to fail.
The analyst at Morgans also expressed concern at early endorsement by the Santos board for the bid prior to due diligence, potentially reducing negotiating leverage and deterring rival bids.
Looking across the changes to average targets and earnings forecasts in the tables below, rises outweighed falls.
Life360 leads the earnings upgrades table after UBS raised its price target to US$71 from US$57. The move follows reduced platform risk after Apple's 2025 Worldwide Developers conference, which offered no signs of increased competition from its 'Find My' service.
The broker highlighted strong early traction in Life360's new advertising products, such as Place Ads and Uplift, with Uber's campaign driving over 100,000 rides. UBS sees advertising, App Store fee reform, and new verticals like pet and elder monitoring as major growth drivers.
A few days later, Morgan Stanley reviewed its investment case (target to $40 from $33.30), focusing on management's ability to drive subscriptions with Pet Tracking.
Life360 has one of the largest and fastest growing bases of users on the ASX, noted the analysts, with growth largely underpinned by 'word-of-mouth'. The latter infers lower user acquisition cost and a fast payback period.
Should the feature set improve, and the audience continues to grow, the broker believes management will have ample opportunity to monetise ahead of market expectations.
Zip Co follows next after management raised FY25 cash earnings guidance by around 5% to "at least $160m'. Strong trading momentum has been evident, particularly in the US, where May total transaction value (TTV) growth exceeded 40% year-on-year.
Raising its target to $3.40 from $3.00, Ord Minnett highlighted performance comes with no material deterioration in bad debts, which remain at around 1.6% of TTV.
Management also confirmed the business remains on track to meet its two-year targets and the company has repurchased 12.3m shares for -$22.6m under its -$50m buyback program.
Coming third on the earnings upgrade table below, Neuren Pharmaceuticals received a boost solely from new research coverage by Macquarie. Neuren also place third for negative change to average target price, after the broker commenced with an $18.60 target, lower than other 12-month projections in the FNArena database.
Part of the reason for Ord Minnett's Outperform rating is the premium US pricing Neuren achieves for targeting various neurodevelopmental diseases with its Daybue product. This broker sees Neuren as offering a rare asymmetric risk-reward profile.
Providing significant upside with minimal financial exposure, the analysts explain the company's partnership with Acadia covers all Daybue commercialisation costs, leaving Neuren to benefit from 10-15% royalties and substantial milestone payments.
Coming in behind Life360 for rises in average target prices last week are COG Financial Services, Temple & Webster, and uranium miner Deep Yellow.
COG, which specialises in providing finance solutions for small to medium-sized enterprises, is fundamentally undervalued, according to Bell Potter, which raised its target to $1.75 from $1.35.
It's felt the market is discounting the intrinsic value for the company's national broker network, growth runway, early-stage earnings recovery, and Australia's trend in long-term capital investment.
The analysts see potential for an upgrade cycle as interest rate settings turn accommodative, while, for the longer-term, the company will be supported by energy transition work.
Morgan Stanley raised its target for retailer Temple & Webster by $10 to $28, highlighting the company's expansion into home improvement and simplifying the shopping experience for the customer.
While customers will still rely on a builder, tradie, or DIY, Temple & Webster may eventually support installation through a referral network and strategic partnerships.
Other positive factors for the stock include long-term tailwinds from migration of consumers to an online platform and ongoing margin expansion, noted the analysts.
For Deep Yellow, which is highly leveraged to the spot uranium price, Morgans explained the US$200m raise by asset manager Sprott Physical Uranium Trust (SPUT) will provide structural support to prices.
In response, the broker reinstated its bull case uranium price assumption of US$100/lb, helping push its target for Deep Yellow to $1.92 from $1.56.
On the flipside, Pilbara Minerals features atop the earnings downgrade table after Citi lowered its lithium price forecasts by between -15% to -20% over the next three years, resulting in a rating downgrade by the broker to Neutral from Buy.
Accent Group and HMC Capital both feature at or near the top of the tables for lower average earnings forecasts and targets.
Morgans lowered its target for Accent Group to $1.85 from $2.00 and downgraded to Hold from Buy following a softer-than-expected trading update. Management cited ongoing weakness in the lifestyle footwear segment. A highly promotional environment also weighed on gross margins.
Citi's reaction was more extreme, with a new target of $1.67, down from $2.61. The analysts kept a Buy rating, anticipating a more favourable consumer environment over the next year.
Later in the week, UBS released its survey results around spending intentions of Australia's around 7m youth consumers.
Underpinned by rising incomes, steady employment, and greater confidence in job security, these consumers retain a more optimistic financial outlook over the next 12 months than the wider population, explained the broker.
Positively, Accent Group slots into the analysts' area of preference: strong operators/market share gainers exposed to the youth consumer in their categories of importance, such as apparel & footwear.
Returning to where this article began, positivity around the REIT sector, HMC Capital remains Buy-rated at UBS. HMC Capital is, similar to Centuria Capital, one of local asset managers in the sector, as are Charter Hall, Goodman Group, Mirvac Group, and GPT Group.
Due to matters specific to HMC Capital (fund restructuring, including a revised performance fee hurdle), the analysts cut their earnings forecasts by -15% over FY26-29.
UBS also adopted a lower valuation multiple, resulting in a target price fall to $8.00 from $12.40.
Total Buy ratings in the database comprise 61.70% of the total, versus 31.81% on Neutral/Hold, while Sell ratings account for the remaining 6.50%.
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