Weekly Reports | Nov 24 2023
This story features ARISTOCRAT LEISURE LIMITED, and other companies. For more info SHARE ANALYSIS: ALL
Broker Rating Changes (Post Thursday Last Week)
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ARISTOCRAT LEISURE LIMITED ((ALL)) Upgrade to Buy from Overweight by Jarden.B/H/S: 0/0/0
On November 10, prior to FY23 results for Aristocrat Leisure on November 15, Jarden upgraded its rating to Buy from Overweight given ongoing market share gains across an elevated US gaming market. The target was also increased to $47 from $41.90.
Following the results, the target was increased further to $47.20 from $47 as revenue exceeded the broker's expectation by 2%, but was in line with consensus. Strong operating cash flow generation resulted in a stronger year-end cash balance.
Jarden's Buy rating was retained.
The analysts highlight Aristocrat Leisure offers above market earnings and operating free cash flow (FCF) growth, a high return on invested capital (ROIC) and a debt-free balance sheet with ample buyback support.
CALIDUS RESOURCES LIMITED ((CAI)) Upgrade to Speculative Buy from Hold by Canaccord Genuity.B/H/S: 0/0/0
Canaccord Genuity's site tour of Calidus Resources' Warrawoona and Haoma gold interests appears to have pleased the broker.
The broker spies relief for the company's staff, grade reconciliation and water challenges as extra higher-grade feed from Haoma JV boosts an improvement from Warranoona now the Cuban pit cutback has been completed.
The company closed the September quarter with cash and equivalents of $15m and repaid $6m in debt, leaving debt of $75m. The company's hedge position also reduced.
The broker conjectures that the company is trying to renegotiate its repayment schedule and/or hedging obligations given the balance sheet is likely to be tested prior to a likely recovery in the March quarter, and the broker is awaiting updates.
Rating is raised to Speculative Buy from Hold. Target price jumps to 30c from 15c, as the broker unwinds its risk weighting.
CSL LIMITED ((CSL)) Upgrade to Buy from Neutral by Goldman Sachs.B/H/S: 0/0/0
Due to a sharp improvement in Goldman Sachs return on invested capital (ROIC) forecast, and historically-high earnings growth, it's felt CSL is now entering a period of more capital-efficient growth.
The historical correlation between CSL valuation and forward returns is set to return, suggests the broker, after the relationship broke down over FY22/23 due to a multiple de-rate.
The broker's rating is upgraded to Buy from Neutral and the target increases to $307 from $296.
PEXA GROUP LIMITED ((PXA)) Upgrade to Neutral from Underweight by Jarden.B/H/S: 0/0/0
Jarden upgrades Pexa Group to Neutral from Underweight after raising its FY24 revenue forecasts by 5% in response to stronger than expected settlements, suggesting a more-resilient than expected market.
The broker now sits 7% ahead of consensus and is ready to go higher should listings supply improve, boosting operating leverage.
EPS forecasts rise 5% in FY24 and 13% in FY25.
Target price rises to $11.95 from $10.40.
TPG TELECOM LIMITED ((TPG)) Upgrade to Buy from Overweight by Jarden.B/H/S: 0/0/0
The cessation of discussions to sell TPG Telecom's non-mobile fibre assets to Vocus group doesn't impact Jarden's investment thesis on TPG Telecom. It's felt the -12% share sell-off on November 13 presented a more attractive entry point.
The $5.40 target is unchanged, and the broker upgraded the rating to Buy from Overweight on valuation.
Management noted ongoing interest in the company's fixed infrastructure assets from financial and strategic buyers.
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DATA#3 LIMITED. ((DTL)) Downgrade to Neutral from Buy by Goldman Sachs.B/H/S: 0/0/0
While Data#3's key growth drivers including digital transformation and cyber spending remain in place, Goldman Sachs believes a lower normalised demand environment awaits, following the buoyant covid-impacted FY20-23 period.
A growing mix of services is expected to boost earnings (EBITDA) margins over the medium-to-long term.
The broker has become more conservative on margin growth across FY24-26 given the necessity for front-loaded investments into its Services franchise and management's anticipated pursuit of lower-margin deals to expand up-market.
The target falls to $7.65 from $7.95 and the rating is downgraded to Neutral from Buy.
LIGHT & WONDER INC ((LNW)) Downgrade to Overweight from Buy by Jarden.B/H/S: 0/0/0
Double-digit Q3 revenue growth across all of Light & Wonder's three business segments, along with margin expansion, resulted in a 10% beat for adjusted earnings (EBITDA) against the consensus forecast, explains Jarden.
Scale is driving enhanced operational efficiencies, explain the analysts, with year-to-date adjusted earnings growing by more than 20%. The broker points out this outcome is well ahead of management's 15% compound annual growth rate (CAGR) ambition for FY23-FY25.
Jarden's target price rises to $141 from $136, while the rating is downgraded to Overweight from Buy on valuation after a period of share price outperformance.
| Order | Company | New Rating | Old Rating | Broker | |
|---|---|---|---|---|---|
| Upgrade | |||||
| 1 | ARISTOCRAT LEISURE LIMITED | Buy | Buy | Jarden | |
| 2 | CALIDUS RESOURCES LIMITED | Buy | Neutral | Canaccord Genuity | |
| 3 | CSL LIMITED | Buy | Neutral | Goldman Sachs | |
| 4 | PEXA GROUP LIMITED | Neutral | Sell | Jarden | |
| 5 | TPG TELECOM LIMITED | Buy | Buy | Jarden | |
| Downgrade | |||||
| 6 | DATA#3 LIMITED. | Neutral | Buy | Goldman Sachs | |
| 7 | LIGHT & WONDER INC | Buy | Buy | Jarden | |
Price Target Changes (Post Thursday Last Week)
| Company | Last Price | Broker | New Target | Old Target | Change | |
|---|---|---|---|---|---|---|
| ABB | Aussie Broadband | $3.79 | Wilsons | 4.20 | 3.76 | 11.70% |
| AKE | Allkem | $8.62 | Canaccord Genuity | 18.50 | 20.00 | -7.50% |
| ALL | Aristocrat Leisure | $40.08 | Jarden | 47.20 | 41.90 | 12.65% |
| ALQ | ALS Ltd | $12.18 | Goldman Sachs | 13.70 | 14.10 | -2.84% |
| AMP | AMP | $0.91 | Jarden | 1.05 | 1.22 | -13.93% |
| ANZ | ANZ Bank | $24.36 | Jarden | 24.80 | 25.10 | -1.20% |
| APM | APM Human Services International | $1.46 | Canaccord Genuity | 2.12 | 2.65 | -20.00% |
| AVH | Avita Medical | $3.32 | Wilsons | 5.39 | 6.34 | -14.98% |
| BLD | Boral | $4.95 | Jarden | 5.35 | 4.95 | 8.08% |
| BRG | Breville Group | $23.42 | Goldman Sachs | 25.70 | 24.50 | 4.90% |
| CAI | Calidus Resources | $0.18 | Canaccord Genuity | 0.30 | 0.15 | 100.00% |
| CAJ | Capitol Health | $0.21 | Goldman Sachs | 0.24 | 0.26 | -7.69% |
| CAT | Catapult International | $1.12 | Canaccord Genuity | 1.70 | 1.50 | 13.33% |
| CBA | CommBank | $103.69 | Goldman Sachs | 81.64 | 81.68 | -0.05% |
| Jarden | 98.00 | 98.30 | -0.31% | |||
| CSL | CSL | $258.68 | Goldman Sachs | 307.00 | 296.00 | 3.72% |
| CTM | Centaurus Metals | $0.50 | Canaccord Genuity | 1.40 | 1.60 | -12.50% |
| DGL | DGL Group | $0.86 | Canaccord Genuity | 1.70 | 1.55 | 9.68% |
| DHG | Domain Holdings Australia | $3.51 | Goldman Sachs | 3.50 | 3.60 | -2.78% |
| DTL | Data#3 | $7.80 | Goldman Sachs | 7.65 | 7.95 | -3.77% |
| EBR | EBR Systems | $0.63 | Wilsons | 1.32 | 1.65 | -20.00% |
| ELD | Elders | $7.31 | Moelis | 7.92 | 7.45 | 6.31% |
| Wilsons | 7.02 | 6.49 | 8.17% | |||
| EVN | Evolution Mining | $3.68 | Jarden | 3.23 | 3.11 | 3.86% |
| FLT | Flight Centre Travel | $19.10 | Goldman Sachs | 20.00 | 22.50 | -11.11% |
| Jarden | 22.00 | 23.60 | -6.78% | |||
| GNC | GrainCorp | $7.77 | Wilsons | 6.74 | 7.44 | -9.41% |
| IGO | IGO | $8.83 | Canaccord Genuity | 8.00 | 14.25 | -43.86% |
| IPL | Incitec Pivot | $2.85 | Jarden | 2.70 | 2.85 | -5.26% |
| JHX | James Hardie Industries | $47.24 | Jarden | 48.00 | 45.20 | 6.19% |
| LIC | Lifestyle Communities | $16.66 | Canaccord Genuity | 17.00 | 18.00 | -5.56% |
| LNW | Light & Wonder | $134.61 | Jarden | 141.00 | 136.00 | 3.68% |
| NAB | National Australia Bank | $28.00 | Goldman Sachs | 30.52 | 30.49 | 0.10% |
| Jarden | 29.50 | 29.40 | 0.34% | |||
| NHF | nib Holdings | $7.60 | Goldman Sachs | 8.40 | 8.75 | -4.00% |
| NUF | Nufarm | $4.64 | Moelis | 5.40 | 5.01 | 7.78% |
| Wilsons | 5.13 | 6.04 | -15.07% | |||
| NWC | New World Resources | $0.04 | Petra Capital | 0.12 | 0.14 | -14.29% |
| NWS | News Corp | $34.74 | Goldman Sachs | 38.50 | 35.10 | 9.69% |
| OFX | OFX Group | $1.38 | Canaccord Genuity | 2.20 | 2.60 | -15.38% |
| Wilsons | 2.17 | 2.35 | -7.66% | |||
| ORI | Orica | $15.71 | Goldman Sachs | 19.90 | 19.85 | 0.25% |
| PNR | Pantoro | $0.05 | Petra Capital | 0.14 | 0.13 | 7.69% |
| PPE | PeopleIN | $1.42 | Petra Capital | 2.57 | 4.20 | -38.81% |
| PXA | Pexa Group | $11.90 | Jarden | 11.95 | 10.40 | 14.90% |
| REA | REA Group | $157.22 | Goldman Sachs | 179.00 | 175.00 | 2.29% |
| REG | Regis Healthcare | $2.75 | Moelis | 3.38 | 3.00 | 12.67% |
| RHC | Ramsay Health Care | $49.55 | Jarden | 58.00 | 62.08 | -6.57% |
| RUL | RPMGlobal | $1.56 | Moelis | 2.04 | 2.03 | 0.49% |
| SDF | Steadfast Group | $5.50 | Jarden | 6.20 | 6.00 | 3.33% |
| SDV | SciDev | $0.25 | Canaccord Genuity | 0.40 | 0.54 | -25.93% |
| SHL | Sonic Healthcare | $28.88 | Jarden | 29.90 | 30.74 | -2.73% |
| TYR | Tyro Payments | $1.03 | Wilsons | 1.08 | 1.37 | -21.17% |
| VEA | Viva Energy | $3.05 | Goldman Sachs | 3.29 | 2.70 | 21.85% |
| WDS | Woodside Energy | $32.03 | Jarden | 34.00 | 34.90 | -2.58% |
| WIN | Widgie Nickel | $0.14 | Petra Capital | 0.40 | 0.54 | -25.93% |
| XRO | Xero | $100.18 | Goldman Sachs | 141.00 | 147.00 | -4.08% |
| Jarden | 108.00 | 129.00 | -16.28% | |||
| Company | Last Price | Broker | New Target | Old Target | Change | |
More Highlights
ABB AUSSIE BROADBAND LIMITED
Telecommunication – Overnight Price: $3.85
Wilsons rates ((ABB)) as Market Weight (3) –
Wilsons notes a number of levers at Aussie Broadband's disposal to accelerate organic and inorganic growth, not only delivering from strong first quarter broadband subscriber additions, but also the proposed Symbio ((SYM)) purchase and additional capital held by the company.
The broker sees the Symbio acquisition as earnings accretive, and notes there are likely further incremental merger and acquisition opportunities in the current market, with Aussie Broadband alluding to being progressed on a number of opportunities.
The Overweight rating is retained and the target price increases to $4.20 from $3.76.
This report was published on November 15, 2023.
Target price is $4.20 Current Price is $3.85 Difference: $0.35
If ABB meets the Wilsons target it will return approximately 9% (excluding dividends, fees and charges).
The company's fiscal year ends in June.
Forecast for FY24:
Wilsons forecasts a full year FY24 dividend of 0.00 cents and EPS of 14.30 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 26.92.
Forecast for FY25:
Wilsons forecasts a full year FY25 dividend of 0.00 cents and EPS of 22.40 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 17.19.
Market Sentiment: 0.5
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
CAT CATAPULT GROUP INTERNATIONAL LIMITED
Medical Equipment & Devices – Overnight Price: $1.12
Canaccord Genuity rates ((CAT)) as Buy (1) –
Catapult International's September-half result appears to have pleased Canaccord Genuity, the company logging revenue growth of 21% and a profit uplift of 35%, retaining its long-term margin target of 80%.
Management reiterated guidance for 30% profit margins over the long term and incremental free cash flow margins of more than 30% in the short term.
The broker considers Catapult to be at an inflection point as it moves through free cash flow breakeven. FY24 and FY25 EPS forecasts are steady.
Buy rating retained. Target price rises to $1.70 from $1.60.
This report was published on November 15, 2023.
Target price is $1.70 Current Price is $1.12 Difference: $0.575
If CAT meets the Canaccord Genuity target it will return approximately 51% (excluding dividends, fees and charges).
The company's fiscal year ends in March.
Forecast for FY24:
Canaccord Genuity forecasts a full year FY24 dividend of 0.00 cents and EPS of minus 11.01 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 10.22.
Forecast for FY25:
Canaccord Genuity forecasts a full year FY25 dividend of 0.00 cents and EPS of minus 6.18 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 18.20.
This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.
Market Sentiment: 1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
DUR DURATEC LIMITED
Industrial Sector Contractors & Engineers – Overnight Price: $1.23
Moelis rates ((DUR)) as Initiation of coverage with Buy (1) –
Moelis has initiated coverage on Duratec, describing the stock as "tech-enabled asset maintenance experts with specialist defense and engineering credentials".
The broker points out as a preferred contractor, Duratec's specialist defense asset maintenance contracts underpin its near-term opportunities. The company is looking to double its recurring work profile, which currently accounts for 13% of revenue.
Moelis sees robust market tailwinds for Duratec. The broker initiates with a Buy rating and a target price of $1.50.
This report was published on November 17, 2023.
Target price is $1.50 Current Price is $1.23 Difference: $0.27
If DUR meets the Moelis target it will return approximately 22% (excluding dividends, fees and charges).
Forecast for FY24:
Moelis forecasts a full year FY24 dividend of 4.80 cents and EPS of 9.60 cents.
At the last closing share price the estimated dividend yield is 3.90%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.81.
Forecast for FY25:
Moelis forecasts a full year FY25 dividend of 5.80 cents and EPS of 11.60 cents.
At the last closing share price the estimated dividend yield is 4.72%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 10.60.
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
REG REGIS HEALTHCARE LIMITED
Aged Care & Seniors – Overnight Price: $2.79
Moelis rates ((REG)) as Buy (1) –
In a move that Moelis believes highlights the deep sector consolidation opportunity available to Regis Healthcare, the company is set to acquire five aged care homes in Queensland at a cost of -$74.2m.
The homes boast a 96% occupancy rate and delivered $13m in earnings in FY23. The broker sees potential for Regis Healthcare to explore similar acquisitions in coming years, noting the company should hold more than $120m in debt capacity following this purchase.
The Buy rating is retained and the target price increases to $3.38 from $3.00.
This report was published on November 15, 2023.
Target price is $3.38 Current Price is $2.79 Difference: $0.59
If REG meets the Moelis target it will return approximately 21% (excluding dividends, fees and charges).
The company's fiscal year ends in June.
Forecast for FY24:
Moelis forecasts a full year FY24 dividend of 9.50 cents and EPS of 9.70 cents.
At the last closing share price the estimated dividend yield is 3.41%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 28.76.
Forecast for FY25:
Moelis forecasts a full year FY25 dividend of 11.50 cents and EPS of 11.80 cents.
At the last closing share price the estimated dividend yield is 4.12%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 23.64.
Market Sentiment: 0.8
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
SKO SERKO LIMITED
Software & Services – Overnight Price: $3.85
Jarden rates ((SKO)) as Neutral (3) –
In an encouraging sign of adoption for Serko's unmanaged business travel platform in the 1H, given limited marketing efforts, the majority of new customers were net new growth as opposed to reactivation, explains Jarden.
While in line with expectations, the broker assesses a "strong" 1H result, along with an upgrade to FY24 revenue guidance. Traction was evident for the Bookings.com Business tool given 24% growth against the 2H of FY23 for completed room nights.
The analysts caution renegotiation of the partnership agreement with Bookings.com in 2024 poses a near-term risk should the terms change.
The Neutral rating is unchanged and the target is increased to NZ$4.85 from NZ$4.35.
This report was published on November 16, 2023.
Current Price is $3.85. Target price not assessed.
Current consensus price target is $5.10, suggesting upside of 32.5%(ex-dividends)
The company's fiscal year ends in March.
Forecast for FY24:
Jarden forecasts a full year FY24 dividend of 0.00 cents and EPS of minus 14.71 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 26.17.How do these forecasts compare to market consensus projections?
Current consensus EPS estimate is -10.3, 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:
Jarden forecasts a full year FY25 dividend of 0.00 cents and EPS of 1.11 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 346.85.How do these forecasts compare to market consensus projections?
Current consensus EPS estimate is 0.6, 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 641.7.
This company reports in NZD. All estimates have been converted into AUD by FNArena at present FX values.
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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CHARTS
For more info SHARE ANALYSIS: ALL - ARISTOCRAT LEISURE LIMITED
For more info SHARE ANALYSIS: CAI - CALIDUS RESOURCES LIMITED
For more info SHARE ANALYSIS: CSL - CSL LIMITED
For more info SHARE ANALYSIS: DTL - DATA#3 LIMITED.
For more info SHARE ANALYSIS: LNW - LIGHT & WONDER INC
For more info SHARE ANALYSIS: PXA - PEXA GROUP LIMITED
For more info SHARE ANALYSIS: TPG - TPG TELECOM LIMITED