In Case You Missed It – BC Extra Upgrades & Downgrades – 20-10-23

This story features AMA GROUP LIMITED, and other companies. For more info SHARE ANALYSIS: AMA

Broker Rating Changes (Post Thursday Last Week)

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AMA GROUP LIMITED ((AMA)) Upgrade to Buy from Speculative Buy by Canaccord Genuity.B/H/S: 0/0/0

Having recently completed a $55m capital raise, AMA Group is set to deploy $35m to repay senior bank debt. Canaccord Genuity points out this will reduce net senior debt to $85m and total net debt to $135m. AMA Group is expected to refinance residual debt facilities in the financial year, and improve all-in senior debt costs.

While mindful of remaining operational headwinds and challenges, the broker upgrades to a Buy rating from Speculative Buy given the resetting of the balance sheet, improved operational stability and significant market share. 

The target price decreases to 14 cents from 22 cents. 

BREVILLE GROUP LIMITED ((BRG)) Upgrade to Buy from Neutral by Goldman Sachs.B/H/S: 0/0/0

Goldman Sachs upgrades its rating for Breville Group to Buy from Neutral on valuation and in the belief the post-covid earnings slow-down will be less than the market anticipates.

The broker notes the company’s unique positioning in the global coffee premiumisation trend, with its global high-end appliance brand backed by unique innovation. 

Given these specific advantages, the analysts note recent industry feedback on healthy spending growth by US consumers, especially those in households with income above US$100k.

The target rises to $24.50 from $23.50.

IGO LIMITED ((IGO)) Upgrade to Buy from Overweight by Jarden.B/H/S: 0/0/0

Jarden sees valuation support emerging across the Lithium sector and upgrades its rating for IGO to Buy from Overweight.

While the broker lowers its medium-term forecasts for lithium and nickel prices, IGO shares still trade at a material discount to Jarden's fair value estimate, net of exploration upside and the nickel downstream strategy.

The broker’s short-term nickel price forecasts are materially lowered (-20%) to reflect the current commodity price and macroeconomic weakness.

The target falls to $14.70 from $15.53.

Order	Company	New Rating	Old Rating	Broker
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1	AMA GROUP LIMITED	Buy	Buy	Canaccord Genuity
2	BREVILLE GROUP LIMITED	Buy	Neutral	Goldman Sachs
3	IGO LIMITED	Buy	Buy	Jarden

Price Target Changes (Post Thursday Last Week)

Company		Last Price	Broker	New Target	Old Target	Change
APE	Eagers Automotive	$13.92	Jarden	16.25	15.80	2.85%
			Moelis	16.06	15.50	3.61%
ASM	Australian Strategic Materials	$1.40	Petra Capital	1.94	10.98	-82.33%
ASN	Anson Resources	$0.15	Petra Capital	0.71	0.78	-8.97%
AZS	Azure Minerals	$2.41	Canaccord Genuity	3.95	2.25	75.56%
BKT	Black Rock Mining	$0.09	Petra Capital	0.35	0.39	-10.26%
BLU	Blue Energy	$0.01	Petra Capital	0.12	0.19	-36.84%
BOQ	Bank of Queensland	$5.55	Goldman Sachs	5.15	5.59	-7.87%
BRG	Breville Group	$21.90	Goldman Sachs	24.50	23.50	4.26%
DRE	Dreadnought Resources	$0.04	Canaccord Genuity	0.20	0.24	-16.67%
DSE	Dropsuite	$0.24	Canaccord Genuity	0.38	0.32	18.75%
			Petra Capital	0.32	0.29	10.34%
ECF	Elanor Commercial Property Fund	$0.73	Moelis	0.91	0.92	-1.09%
FBU	Fletcher Building	$4.02	Goldman Sachs	5.25	5.55	-5.41%
IAG	Insurance Australia Group	$5.79	Goldman Sachs	6.00	5.87	2.21%
IGO	IGO	$11.40	Jarden	14.70	15.53	-5.34%
MEI	Meteoric Resources	$0.21	Petra Capital	0.40	0.32	25.00%
MIN	Mineral Resources	$61.04	Jarden	47.30	45.90	3.05%
OPT	Opthea	$0.34	Goldman Sachs	2.05	2.80	-26.79%
PLS	Pilbara Minerals	$3.86	Jarden	3.42	3.50	-2.29%
PPT	Perpetual	$20.28	Jarden	27.10	28.35	-4.41%
RBL	Redbubble	$0.61	Canaccord Genuity	1.20	1.15	4.35%
RMD	ResMed	$22.62	Jarden	30.33	36.10	-15.98%
SHJ	Shine Justice	$0.74	Moelis	0.90	1.45	-37.93%
STX	Strike Energy	$0.42	Wilsons	0.54	0.52	3.85%
TAH	Tabcorp Holdings	$0.87	Jarden	1.20	1.28	-6.25%
Company		Last Price	Broker	New Target	Old Target	Change

More Highlights

CSR    CSR LIMITED

Building Products & Services – Overnight Price: $5.85

Jarden rates ((CSR)) as Overweight (2) –

WA-based Australian construction materials company BGC has signed an agreement with Belgium-based Etex. The latter aims to acquire BGC’s plasterboard and fibre cement operations to expand its regional presence beyond 14 Australian sites and around 400 employees.

Jarden feels this transaction poses a greater competitive threat to number two player, CSR, though number one James hardie Industries may not be totally exempt from a negative impact.

The broker suggests greater competition could potentially pare back recent material price hikes, while adding more capacity may be more carefully weighed by incumbent players.

Jarden's Overweight rating and $5.70 target are maintained for CSR.

This report was published on October 13, 2023.

Target price is $5.70 Current Price is $5.85 Difference: minus $0.15 (current price is over target).
If CSR meets the Jarden target it will return approximately minus 3% (excluding dividends, fees and charges – negative figures indicate an expected loss).
Current consensus price target is $5.62, suggesting downside of -3.9%(ex-dividends)
The company's fiscal year ends in March.

Forecast for FY24:

Jarden forecasts a full year FY24 dividend of 27.90 cents and EPS of 39.90 cents.
At the last closing share price the estimated dividend yield is 4.77%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.66.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 37.4, implying annual growth of -17.9%.
Current consensus DPS estimate is 28.0, implying a prospective dividend yield of 4.8%.
Current consensus EPS estimate suggests the PER is 15.6.

Forecast for FY25:

Jarden forecasts a full year FY25 dividend of 28.10 cents and EPS of 40.20 cents.
At the last closing share price the estimated dividend yield is 4.80%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.55.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 36.8, implying annual growth of -1.6%.
Current consensus DPS estimate is 27.2, implying a prospective dividend yield of 4.6%.
Current consensus EPS estimate suggests the PER is 15.9.

Market Sentiment: 0.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

DSE    DROPSUITE LIMITED

Cloud services – Overnight Price: $0.24

Canaccord Genuity rates ((DSE)) as Buy (1) –

Dropsuite reported a 10% quarter-on-quarter increase to its annual recurring revenue in the third quarter, up 44% on the previous comparable period. The result suggests 7% upside to Canaccord Genuity's full year forecasts.

The broker does highlight churn from a low average revenue per unit legacy customer factored in the quarter, and estimates this legacy customer will drag on full year results. Excluding this, the broker estimates annual recurring revenue nearer $37m for the year.

In Canaccord Genuity's view, Dropsuite's annual recurring revenue and free cash flow margins are some of the best metrics on the ASX. The Buy rating and target price of 38 cents are retained.

This report was published on October 17, 2023.

Target price is $0.38 Current Price is $0.24 Difference: $0.14
If DSE meets the Canaccord Genuity target it will return approximately 58% (excluding dividends, fees and charges).
The company's fiscal year ends in December.

Forecast for FY23:

Canaccord Genuity forecasts a full year FY23 dividend of 0.00 cents and EPS of 0.10 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 240.00.

Forecast for FY24:

Canaccord Genuity forecasts a full year FY24 dividend of 0.00 cents and EPS of 0.40 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 60.00.

Market Sentiment: 1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

MEI    METEORIC RESOURCES NL

Overnight Price: $0.21

Petra Capital rates ((MEI)) as Buy (1) –

Following a visit to the Caldeira ionic clay rare earth project in Brazil, the analyst at Petra Capital came away impressed by both the scale and advanced nature of the project. Throughput rates of 5Mtpa are expected from the proposed plant.

Prior to the visit, Petra Capital already considered Caldeira the world's best undeveloped project of its type.

The broker raises the target for Meteoric Resources to 40c from 32c after identifying an increased chance of better recoveries and grades at the beginning of the mine life. Buy.

This report was published on October 16, 2023.

Target price is $0.40 Current Price is $0.21 Difference: $0.185
If MEI meets the Petra Capital target it will return approximately 86% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY24:

Petra Capital forecasts a full year FY24 dividend of 0.00 cents and EPS of minus 0.40 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 53.75.

Forecast for FY25:

Petra Capital forecasts a full year FY25 dividend of 0.00 cents and EPS of minus 0.50 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 43.00.

Market Sentiment: 1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

RBL    REDBUBBLE LIMITED

Retailing – Overnight Price: $0.60

Canaccord Genuity rates ((RBL)) as Buy (1) –

Canaccord Genuity found a positive first quarter update from Redbubble to be "unexpected", noting marketplace revenue increased 5% quarter-on-quarter to $95m in a 6% beat to the broker's expectations. 

The broker feels an ongoing focus on improving profitability and margins over top-line growth was evident from material expansion in gross profit margins to record highs, with margin improvements driven by price increases and incorporation of tiered artist fees.

The Buy rating and target price of $1.20 are retained.

This report was published on October 12, 2023.

Target price is $1.20 Current Price is $0.60 Difference: $0.6
If RBL meets the Canaccord Genuity target it will return approximately 100% (excluding dividends, fees and charges).
Current consensus price target is $0.70, suggesting upside of 23.4%(ex-dividends)
The company's fiscal year ends in June.

Forecast for FY24:

Canaccord Genuity forecasts a full year FY24 dividend of 0.00 cents and EPS of 0.50 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 120.00.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is -1.4, implying annual growth of N/A.
Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A.
Current consensus EPS estimate suggests the PER is N/A.

Forecast for FY25:

Canaccord Genuity forecasts a full year FY25 dividend of 1.00 cents and EPS of 1.40 cents.
At the last closing share price the estimated dividend yield is 1.67%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 42.86.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is -0.1, implying annual growth of N/A.
Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A.
Current consensus EPS estimate suggests the PER is N/A.

Market Sentiment: 0.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

RMD    RESMED INC

Medical Equipment & Devices – Overnight Price: $21.54

Jarden rates ((RMD)) as Overweight (2) –

As Jarden points out, a dramatic increase in awareness and demand for GLP-1 drugs, initially intended for type 2 diabetes sufferers but in recent months made popular as a weight loss drug, has raised questions around potential impact on sales of ResMed's sleep apnea devices and masks. 

From discussion with key stakeholders in the US, Jarden has determined that as yet there is no sign of impacts on sleep lab referrals, diagnosis rates, CPAP setups or mask replacement. However, the broker expects some impact will emerge, particularly given the role of weight loss in reducing obstructive sleep apnea severity. 

The broker does anticipate it will be several years before an impact can be quantified. The Overweight rating is retained and the target price decreases to $30.33 from $36.10.

This report was published on October 10, 2023.

Target price is $30.33 Current Price is $21.54 Difference: $8.79
If RMD meets the Jarden target it will return approximately 41% (excluding dividends, fees and charges).
Current consensus price target is $36.89, suggesting upside of 67.0%(ex-dividends)
The company's fiscal year ends in June.

Forecast for FY24:

Jarden forecasts a full year FY24 dividend of 28.90 cents and EPS of 107.74 cents.
At the last closing share price the estimated dividend yield is 1.34%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 19.99.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 115.5, implying annual growth of N/A.
Current consensus DPS estimate is 31.4, implying a prospective dividend yield of 1.4%.
Current consensus EPS estimate suggests the PER is 19.1.

Forecast for FY25:

Jarden forecasts a full year FY25 dividend of 34.74 cents and EPS of 128.19 cents.
At the last closing share price the estimated dividend yield is 1.61%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 16.80.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 130.4, implying annual growth of 12.9%.
Current consensus DPS estimate is 35.6, implying a prospective dividend yield of 1.6%.
Current consensus EPS estimate suggests the PER is 16.9.

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.
Market Sentiment: 0.6
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

SHJ    SHINE JUSTICE LIMITED

Legal – Overnight Price: $0.74

Moelis rates ((SHJ)) as Buy (1) –

Moelis has reinitiated coverage on Shine Justice, noting the company is the number one player in personal injury law in Australia and operations are complimented by several new practice areas. 

The company is currently exiting a growth investment phase in pursuit of better cash conversion. The broker sees the company as well positioned for growth as it continues to progress 40 active class actions. 

The broker reinitiates with a Buy rating and a target price of 90 cents. 

This report was published on October 16, 2023.

Target price is $0.90 Current Price is $0.74 Difference: $0.16
If SHJ meets the Moelis target it will return approximately 22% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY24:

Moelis forecasts a full year FY24 dividend of 4.60 cents and EPS of 15.00 cents.
At the last closing share price the estimated dividend yield is 6.22%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 4.93.

Forecast for FY25:

Moelis forecasts a full year FY25 dividend of 5.30 cents and EPS of 17.30 cents.
At the last closing share price the estimated dividend yield is 7.16%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 4.28.

Market Sentiment: 1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

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