Weekly Reports | 10:00 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 23 to Friday June 27, 2025
Total Upgrades: 7
Total Downgrades: 17
Net Ratings Breakdown: Buy 61.35%; Hold 30.92%; Sell 7.73%
In the week ending Friday, June 27, 2025, FNArena tracked seven upgrades and seventeen downgrades for ASX-listed companies from brokers monitored daily.
Average target price reductions outpaced increases, though upgrades to earnings forecasts were more substantial at the upper end of the table below.
Much of the movement in broker ratings, target prices, and earnings estimates centred on the mining sector, following commodity price revisions by Citi, Ord Minnett, and Morgans.
Fortescue received two rating downgrades from Morgans and Citi to Hold (or equivalent) from Buy.
Citi expects the iron ore price to remain range-bound between US$90-100/t, but with downside risk tied to potential steel production cuts in China. This broker lowered its 0-3 month price forecast to US$90/t and its 6-12 month view to US$85/t, from US$100/t and US$90/t respectively.
After also adjusting for a higher Australian dollar forecast, Citi reduced its target price for Fortescue to $16.00 from $17.50.
Morgans revised down its FY26 average iron ore forecast to US$89/t, while retaining its long-term estimate of US$77/t real, leading to a target price for Fortescue of $16.50, down from $18.80. Commentary noted a -US$5/t fall in iron ore prices wil reduce FY26 earnings by around -14% and flagged a widening low-grade discount in weaker markets as an added risk.
Liontown Resources was downgraded to Sell by both Citi and Ord Minnett, with Citi also cutting IGO Ltd and Pilbara Minerals to Neutral.
Citi's key commodity revision last week concerned lithium, further reducing spodumene forecasts by -13% for 2025, -27% for 2026, and -20% for 2027, with chemical prices cut by similar margins.
Ord Minnett also dropped its Liontown target to 45c from 50c following across-the-board forecast downgrades for lithium spodumene, carbonate, and hydroxide out to 2027.
On the positive side of the ledger, average target prices in the FNArena database rose last week for shipbuilder Austal and grocery wholesaler and hardware supplier Metcash, by approximately 14% and 8%, respectively.
Citi lifted its target for Austal to $6.10 from $4.09, citing increased US and Australian defence spending plus recent progress on the US Navy's Towing, Salvage, and Rescue Ship (T-ATS) program. These Navajo-class ships are designed to replace the ageing T-ATF and T-ARS vessels currently in service.
In further positives for Austal, Citi also pointed to the potential near-term finalisation of the Strategic Shipbuilding Agreement and the heightened probability of a takeover by Hanwha, following approval from the Committee on Foreign Investment in the United States (CFIUS).
For Metcash, FY25 earnings landed at the top end of guidance, supported by a strong performance from Food & Liquor, despite a continued decline in tobacco sales.
Hardware is expected to benefit from future interest rate cuts, although the timing and scale of any recovery remain uncertain. These and other matters are discussed further at https://fnarena.com/index.php/2025/06/24/metcash-outlook-tobacco-sales-vs-rate-cuts/
On the flipside, Adairs saw its average target price fall by around -14% last week, after becoming the latest discretionary retailer to downgrade earnings guidance. Tough trading conditions after Easter prompted heavier discounting, which in turn added to margin pressure.
Ord Minnett's response, detailed at https://fnarena.com/index.php/2025/06/25/new-broom-clearing-the-decks-for-adairs/, suggests management may need to reassess its growth ambitions such as store refurbishments and network expansion, until sales show clearer signs of stabilisation.
For the same reasons as applied to Lionstown Resources above, Pilbara Minerals follows Adairs on negative change to targets, after Citi and Ord Minnett lowered their targets to $1.30 and $1.10, respectively, from $1.60 and $1.75.
Adairs also appears second on the negative change to average earnings forecast table below, wedged in between Paladin Energy and Aurizon Holdings.
UBS last week raises its price target for Paladin by 3% to $9.40 reflecting improved uranium prices and cost assumptions. The uranium market outlook has strengthened, in the analysts' view, driven by positive US nuclear policy momentum, including bipartisan support and plans to quadruple nuclear capacity by 2050.
Also, Paladin's Langer Heinrich mine restart in Namibia is progressing ahead of schedule, with June quarter production expected to beat consensus despite earlier water-related issues.
FNArena's June 18 article on Aurizon Holdings https://fnarena.com/index.php/analysis-data/consensus-forecasts/stock-analysis/?code=AZJ posed the question: Will the company's long term copper haulage contract with BHP Group be enough to stem the company's tide of negative revisions?
It seems not. Last Friday, management cited higher bad debt provisioning and lower-than-expected Network division volumes when downgrading FY25 earnings guidance.
The company deferred $50m of Network income to FY27, versus the earlier estimate by UBS for $19m, which explains most of the earnings miss. The Network division manages the Central Queensland Coal Network (CQCN).
While the share price now looks attractive in the short-term, Morgans downgraded to Hold from Accumulate on medium-term concerns around the Coal division which specialises in the transport of coal from mines in Queensland and New South Wales to end customers and ports.
Collins Food is the leading stock from the Industrial sector on the earnings upgrade table after posting a strong beat against broker expectations on FY25 earnings and margins.
These outcomes were due to better-than-expected results from both KFC Australia and Europe, lower corporate costs, and lower net interest. For greater detail refer to https://fnarena.com/index.php/2025/06/25/collins-foods-finger-lickin-turnaround/.
Collins Foods aside, other top increases in average earnings forecasts went to miners 29Metals and Stanmore Resources.
Citi's target for copper-focused base and precious metals mining company 29Metals was increased to 15c from 12c after raising FY25 and FY27 earnings forecasts by between 4-6% on higher base metal forecasts.
The broker's Sell rating was retained. Elsewhere among copper names, a Buy for Capstone Copper and a Neutral for Sandfire Resources were retained.
At Ord Minnett, where 29Metals remains a Hold, South32 (Neutral at Citi) and Capstone Copper remain this broker's top picks for base metals exposure.
Citi's earnings forecast for Stanmore Resources rose due to higher price forecasts for Low Volatile Pulverized Injection (PCI) coal, causing FY26 and FY27 forecasts to increase by 10% and 6%, respectively.
This type of coal is primarily used in the blast furnace process for producing pig iron from iron ore, serving as a more cost-effective alternative to traditional coking coal.
Total Buy ratings in the database comprise 61.35% of the total, versus 30.92% on Neutral/Hold, while Sell ratings account for the remaining 7.73%.
Upgrade
ADAIRS LIMITED ((ADH)) Upgrade to Buy from Accumulate by Morgans .B/H/S: 1/3/0
Morgans notes Adairs' FY25 group earnings (EBIT) guidance of $53.557.0m is about -10% below the consensus expectation, though up 1.2% year-on-year, with sales expected to rise 6.2%.
According to the broker, Adairs-branded sales remain solid, up 9.2%, but promotional intensity and a weaker currency have pressured margins, particularly in June.
Focus sales are down -7%, with earnings falling nearly -36% due to geographic exposure and weaker conversion in large-ticket items, explain the analysts.
Mocka continues to perform strongly, observes the broker, with FY25 revenue up 14.1%, supported by over 25% growth in Australia and a turnaround in New Zealand.
Despite near-term earnings softness, Morgans sees valuation support and upgrades to a Buy rating from Accumulate with a $2.60 price target, down from $2.85.
See also ADH downgrade.
AMCOR PLC ((AMC)) Upgrade to Buy from Neutral by UBS .B/H/S: 5/1/0
UBS raises its target for Amcor to $18.25 from $16.90 upgrades to Buy (from Neutral) for the first time in around three years. The analysts see the Berry merger as a catalyst for a forecast 12% EPS compound annual growth rate (CAGR) over FY2528.
The broker expects full delivery of $650m in synergy benefits, with just 10% priced into shares and consensus assuming around 70%.
Amcor's revised capital plan, including $1.2bn in potential share buybacks and higher growth capex, is seen by UBS as supportive of earnings growth and a multiple re-rating.
The broker sees a shift from stagnant EPS to sustained double-digit growth as Amcor invests more in high-growth packaging categories.
ADVERITAS LIMITED ((AV1)) Upgrade to Buy from Speculative Buy by Bell Potter .B/H/S: 1/0/0
Adveritas has completed an $8.5m capital raising via the issue of 85m shares at 10c to support US expansion, e-commerce growth, product development and new integrations, observes Bell Potter.
The raise was larger than previously forecast by the broker but resulted in fewer shares issued, leading to modest EPS upgrades by the analysts of around 1% in FY26 and FY27.
Bell Potter's cash forecasts are lifted to $9.2m for FY25 and $9.9m for FY26, with the broker assuming the company remains modestly cash flow positive across FY26. The target is raised to 18c from 15c.
Bell Potter upgrades to Buy from Speculative rating, citing a stronger balance sheet and reduced risk profile.
AURIZON HOLDINGS LIMITED ((AZJ)) Upgrade to Outperform from Neutral by Macquarie .B/H/S: 1/4/1
FY25 will mark Aurizon's weakest year since 2013, observes Macquarie, with coal volumes flat and contract delays weighing on performance. Management is expecting underlying earnings (EBITDA) of around $1.575m.
The broker forecasts a recovery in FY26, supported by a $100m uplift in regulated network revenue and benefits from a cost-out program.
Expected earnings for FY25 were 2.1% ahead of the analyst's expectations, but downgrades have been made to the broker's FY25-27 earnings forecasts due to weaker coal volumes and network under-recovery.
Macquarie retains its price target at $3.39 and upgrades to Outperform from Neutral.
See also AZJ downgrade.
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