In Case You Missed It – BC Extra Upgrades & Downgrades – 01-12-23

This story features KAROON ENERGY LIMITED, and other companies. For more info SHARE ANALYSIS: KAR

Broker Rating Changes (Post Thursday Last Week)

Upgrade

KAROON ENERGY LIMITED ((KAR)) Upgrade to Buy from Neutral by Goldman Sachs.B/H/S: 0/0/0

Goldman Sachs upgrades Karoon Energy to Buy from Neutral on valuation, the broker observing the company is trading at a sharp discount to net assets.

The broker expects oil prices will remain higher over the near term and observes Karoon Energy offers lower regulatory risk compared to peers.

The company has announced the purchase of a non-operated stake in Who Dat oil & Gas project in the Gulf Of Mexico from LLOG for -US$745m via cash, a US$300m equity raise and drawn debt.

Goldman Sachs doesn't include the acquisition in its estimates but appreciates its potential to diversify earnings. Target price is $2.68.

LIONTOWN RESOURCES LIMITED ((LTR)) Upgrade to Neutral from Sell by Goldman Sachs.B/H/S: 0/0/0

It is too early to call the bottom of the lithium bear market, declares Goldman Sachs. Estimates for ASX-listed Lithium sector stocks under coverage are updated to reflect lithium/nickel pricing updates and company specific changes.

The broker anticipates significant downside risk to lithium prices due to oversupply, and accordingly lowers forecasts over 2023 and 2024 with the 2025 estimate unchanged.

The rating for Liontown Resources is upgraded to Neutral from Sell as production risks are now more accurately reflected in the share price, explains the broker, after a -47% fall since October 16. The target falls to $1.55 from $1.85.

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

Jarden raises its target for Webjet to $8.80 from $8.15 and upgrades to Buy from Overweight after 1H earnings (EBITDA) beat consensus by 4% and FY24 guidance exceeded market expectations by around 2%.

The broker highlights a standout performance by WebBeds, and feels this B2B Platform business should trade at a higher multiple. Management reiterated its $10bn total transaction value (TTV) target for WebBeds, and talked to $4bn in the near-term. 

Prior to the strategy day in March, the analysts see various positive catalysts including an acceleration of WebBeds, via purchasing of inventory, and an easing in geopolitical tensions.

Downgrade

ACCENT GROUP LIMITED ((AX1)) Downgrade to Market Weight from Overweight by Wilsons.B/H/S: 0/0/0

Trading has remained volatile for Accent Group, with group like-for-like sales declining -2.0% year-on-year. With gross margins also under pressure, Wilsons feels the trading update reflects canceled orders and a broader promotional environment than the broker had expected.

Looking forward, the broker sees increased uncertainty for demand, and has little confidence in performance in upcoming peak sales periods given recent volatility. 

The rating is downgraded to Market Weight from Overweight and the target price decreases to $1.90 from $2.20.

CORE LITHIUM LIMITED ((CXO)) Downgrade to Sell from Neutral by Goldman Sachs.B/H/S: 0/0/0

It is too early to call the bottom of the lithium bear market, declares Goldman Sachs. Estimates for ASX-listed Lithium sector stocks under coverage are updated to reflect lithium/nickel pricing updates and company specific changes.

The broker anticipates significant downside risk to lithium prices due to oversupply, and accordingly lowers forecasts over 2023 and 2024 with the 2025 estimate unchanged.

The rating for Core Lithium is downgraded to Sell from Neutral on increased risk that funding from existing cash/operating cash flows may be insufficient to fund the BP33 development, explain the analysts.

It's believed underground mining costs have worsened by around -40% since the final investment decision. The broker's target falls to 31c from 37c.

PRAEMIUM LIMITED ((PPS)) Downgrade to Market Weight from Overweight by Wilsons.B/H/S: 0/0/0

Praemium has announced a sharp rise in operating costs due to strong reinvestment in systems, people and risk as a new investment team on-boards, observes Wilsons.

The broker expects price increase will be in order but given challenges on the high net worth front and the now likely to delay in earnings recovery at a time when competition is intensifying, pulls in its horns.

EPS forecasts fall sharply across FY24 and FY25.

Rating is reduced to Market Weight from Overweight. Target falls to 40c from 86c.

Order	Company	New Rating	Old Rating	Broker
Upgrade
1	KAROON ENERGY LIMITED	Buy	N/A	Goldman Sachs
2	LIONTOWN RESOURCES LIMITED	Neutral	Neutral	Goldman Sachs
3	WEBJET LIMITED	Buy	Buy	Jarden
Downgrade
4	ACCENT GROUP LIMITED	Neutral	Buy	Wilsons
5	CORE LITHIUM LIMITED	Sell	Neutral	Goldman Sachs
6	PRAEMIUM LIMITED	Neutral	Buy	Wilsons

Price Target Changes (Post Thursday Last Week)

Company		Last Price	Broker	New Target	Old Target	Change
AKE	Allkem	$8.54	Goldman Sachs	10.90	14.40	-24.31%
AMP	AMP	$0.93	Jarden	1.05	1.22	-13.93%
ARU	Arafura Rare Earths	$0.21	Canaccord Genuity	0.50	0.75	-33.33%
AX1	Accent Group	$1.83	Jarden	1.87	2.30	-18.70%
			Wilsons	1.90	2.20	-13.64%
BSL	BlueScope Steel	$20.93	Goldman Sachs	23.70	21.60	9.72%
			Jarden	24.90	24.50	1.63%
CAA	Capral	$8.65	Taylor Collison	10.97	N/A	–
CXO	Core Lithium	$0.28	Goldman Sachs	0.31	0.37	-16.22%
DEG	De Grey Mining	$1.36	Goldman Sachs	1.40	1.30	7.69%
DOW	Downer EDI	$4.20	Goldman Sachs	4.20	4.10	2.44%
GLN	Galan Lithium	$0.62	Canaccord Genuity	2.60	3.00	-13.33%
GNC	GrainCorp	$7.56	Wilsons	6.74	7.44	-9.41%
GOR	Gold Road Resources	$1.91	Goldman Sachs	2.00	1.85	8.11%
HLS	Healius	$1.48	Jarden	1.52	2.48	-38.71%
HUB	Hub24	$32.98	Jarden	32.95	31.90	3.29%
			Wilsons	37.23	33.66	10.61%
IGO	IGO	$8.56	Goldman Sachs	10.60	12.70	-16.54%
KAR	Karoon Energy	$2.03	Jarden	2.80	3.00	-6.67%
KGN	Kogan.com	$5.22	Canaccord Genuity	6.50	4.10	58.54%
LOV	Lovisa Holdings	$19.08	Jarden	23.20	21.60	7.41%
			Wilsons	22.90	23.60	-2.97%
LTR	Liontown Resources	$1.40	Goldman Sachs	1.55	1.35	14.81%
MIN	Mineral Resources	$60.42	Goldman Sachs	49.00	51.00	-3.92%
MND	Monadelphous Group	$14.11	Goldman Sachs	12.30	11.80	4.24%
NEC	Nine Entertainment	$1.92	Goldman Sachs	2.30	2.40	-4.17%
NWL	Netwealth Group	$14.65	Wilsons	15.37	15.38	-0.07%
PLS	Pilbara Minerals	$3.64	Goldman Sachs	3.20	3.80	-15.79%
PPS	Praemium	$0.44	Canaccord Genuity	0.71	1.20	-40.83%
			Moelis	0.66	0.93	-29.03%
			Wilsons	0.40	0.86	-53.49%
PXA	Pexa Group	$11.86	Jarden	12.20	11.95	2.09%
RIC	Ridley Corp	$2.30	Wilsons	2.61	2.60	0.38%
SDF	Steadfast Group	$5.65	Jarden	6.20	6.00	3.33%
SHL	Sonic Healthcare	$29.17	Jarden	29.90	30.74	-2.73%
SLC	Superloop	$0.66	Wilsons	0.92	0.95	-3.16%
STO	Santos	$6.88	Goldman Sachs	8.55	7.20	18.75%
			Jarden	7.85	7.95	-1.26%
SVW	Seven Group	$32.14	Goldman Sachs	32.50	31.00	4.84%
SWM	Seven West Media	$0.26	Goldman Sachs	0.30	0.35	-14.29%
TLX	Telix Pharmaceuticals	$9.91	Wilsons	13.25	13.13	0.91%
TNE	TechnologyOne	$15.43	Wilsons	18.68	18.12	3.09%
UNI	Universal Store	$3.41	Jarden	4.86	4.70	3.40%
			Wilsons	5.30	5.10	3.92%
VEA	Viva Energy	$3.08	Goldman Sachs	3.29	2.70	21.85%
WEB	Webjet	$6.55	Goldman Sachs	8.10	7.70	5.19%
			Jarden	8.80	8.15	7.98%
			Wilsons	9.22	9.02	2.22%
Company		Last Price	Broker	New Target	Old Target	Change

More Highlights

CAA    CAPRAL LIMITED

Aluminium, Bauxite & Alumina – Overnight Price: $8.70

Taylor Collison rates ((CAA)) as Outperform & Accumulate (2) –

Taylor Collison has initiated coverage on aluminium extruder Capral with an Outperform rating and a $10.97 target price.

While the broker expects a macro slowing from here to 2025, it expects the -18% national structural "underbuild" will supporting housing prices and construction, and points to the new home bonus of $3bn for the states, and a program to build 1.2m new homes with solid volume forecast to come to market by the end of FY24.

Taylor Collison considers the shares to be undervalued and says the market has underestimated the growth potential in its industrial division and the likely pace of the residential construction rebound by early FY25.

The broker says the company is also to take advantage of the 15,000T solar market through a low carbon aluminium offering and cladding rectification. This also places the company in a better position should a carbon border adjustment mechanism be introduced and the broker expects Capral is also likely to benefit from the covid-inspired fall in imports (although some reversion to the norm is likely).

The company holds zero net debt, $41m in cash and a $80m financing facility, putting it in a good position to pitch for market dominance, says the broker.

This report was published on November 23, 2023.

Target price is $10.97 Current Price is $8.70 Difference: $2.27
If CAA meets the Taylor Collison target it will return approximately 26% (excluding dividends, fees and charges).
The company's fiscal year ends in December.

Forecast for FY23:

Taylor Collison forecasts a full year FY23 dividend of 168.10 cents and EPS of 64.00 cents.
At the last closing share price the estimated dividend yield is 19.32%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 13.59.

Forecast for FY24:

Taylor Collison forecasts a full year FY24 dividend of 136.30 cents and EPS of 64.00 cents.
At the last closing share price the estimated dividend yield is 15.67%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 13.59.

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

CLV    CLOVER CORPORATION LIMITED

Health & Nutrition – Overnight Price: $0.86

Taylor Collison rates ((CLV)) as Initiation of coverage with Outperform (2) –

Taylor Collison initiates coverage of encapsulated Docosahexaeonic Acid (used in infant formula) manufacturer Clover with an Outperform rating and 95c target price.

The broker observes changes to the regulatory regime in China and the European Union, increasing the levels of DHA required in infant formula, augur well for the company and could result in a 30% increase in revenue by FY26.

Taylor Collison also notes the company is in a low cycle, offering an opportunity for entry, and is continuing to take market share despite being a 20% more expensive premium product.

In the event of a slowing global birth rate, the broker believes the company has wiggle room to drop costs, making it a formidable competitor in a tough quality-sensitive environment.

And did we mention M&A? The broker considers it to be an attractive target.

This report was published on November 23, 2023.

Target price is $0.95 Current Price is $0.86 Difference: $0.09
If CLV meets the Taylor Collison target it will return approximately 10% (excluding dividends, fees and charges).
The company's fiscal year ends in July.

Forecast for FY24:

Taylor Collison forecasts a full year FY24 dividend of 1.20 cents and EPS of 3.60 cents.
At the last closing share price the estimated dividend yield is 1.40%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 23.89.

Forecast for FY25:

Taylor Collison forecasts a full year FY25 dividend of 1.20 cents and EPS of 5.50 cents.
At the last closing share price the estimated dividend yield is 1.40%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 15.64.

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

FSF    FONTERRA SHAREHOLDERS FUND

Dairy – Overnight Price: $2.83

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

Jarden sees accretive value potential in Fonterra Shareholders Fund buying back Fonterra Co-operative Group (FCG) shares.

Value has arisen, explains the broker, since the March implementation of capital structure changes de-linked FCG shares from Fonterra Shareholders Fund units. These changes significantly reduced the shares farmers were required to hold against milk supply.

The analysts believe buying FCG shares would likely compare well against non-core/growth investment alternatives. 

Target falls to NZ$3.84 from NZ$4.15 and the Overweight rating is unchanged.

This report was published on November 21, 2023.

Current Price is $2.83. Target price not assessed.
The company's fiscal year ends in July.

Forecast for FY24:

Jarden forecasts a full year FY24 dividend of 34.69 cents and EPS of 57.82 cents.
At the last closing share price the estimated dividend yield is 12.26%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 4.89.

Forecast for FY25:

Jarden forecasts a full year FY25 dividend of 27.38 cents and EPS of 45.61 cents.
At the last closing share price the estimated dividend yield is 9.68%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 6.21.

This company reports in NZD. All estimates have been converted into AUD by FNArena at present FX values.
Market Sentiment: 0.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

PPS    PRAEMIUM LIMITED

Wealth Management & Investments – Overnight Price: $0.43

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

Praemium has issues a material downgrade to its first half earnings guidance, now expecting to deliver earnings -20% lower than the first half of FY23. Canaccord Genuity has lowered its first half forecast to $9.1m from $12.4m, and full year forecast to $20.9m from $26.5m.

A number of drivers contributed to the decline, including lower average platform revenue margins and the impact of strategic investment, with investment targeting a longer-term earnings increase.

The Buy rating is retained and the target price decreases to 71 cents from $1.20.

This report was published on November 24, 2023.

Target price is $0.71 Current Price is $0.43 Difference: $0.28
If PPS meets the Canaccord Genuity target it will return approximately 65% (excluding dividends, fees and charges).
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 3.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.33.

Forecast for FY25:

Canaccord Genuity forecasts a full year FY25 dividend of 1.00 cents and EPS of 4.00 cents.
At the last closing share price the estimated dividend yield is 2.33%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 10.75.

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

SLR    SILVER LAKE RESOURCES LIMITED

Gold & Silver – Overnight Price: $1.06

Moelis rates ((SLR)) as Initiation of coverage with Buy (1) –

Moelis has initiated coverage on a number of emerging domestic gold stocks, including Silver Lake Resources. Of these stocks, Moelis indicated a preference for where business is improving, namely Alkane Resources ((ALK)), Genesis Minerals ((GMD)) and Silver Lake Resources.

The broker believes the primary challenges facing Silver Lake Resources is relatively short mine life across its assets and typically smaller mineral deposits. More importantly though, says Moelis, is how the company decides to spend cash given a strong balance sheet.

The broker initiates with a Buy rating and target price of $1.45.

This report was published on November 23, 2023.

Target price is $1.45 Current Price is $1.06 Difference: $0.385
If SLR meets the Moelis target it will return approximately 36% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY24:

Moelis forecasts a full year FY24 EPS of 9.40 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 11.33.

Forecast for FY25:

Moelis forecasts a full year FY25 EPS of 10.20 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 10.44.

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

UNI    UNIVERSAL STORE HOLDINGS LIMITED

Apparel & Footwear – Overnight Price: $3.50

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

Jarden places Universal Store among a select group of discretionary retailers able to reduce the cost-of-doing-business (CODB) metric as a percentage of sales while like-for-like sales are going backwards (down -6.4% for the first 13 weeks of FY24).

In an increasingly tough market, according to the broker's industry feedback, gross profit margin resilience by Universal Store is impressive, suggests Jarden, given inflationary headwinds.

The analysts raise the target to $4.86 from $4.70 on higher EPS forecasts, and the Overweight rating is maintained.

This report was published on November 21, 2023.

Target price is $4.86 Current Price is $3.50 Difference: $1.36
If UNI meets the Jarden target it will return approximately 39% (excluding dividends, fees and charges).
Current consensus price target is $4.17, suggesting upside of 19.2%(ex-dividends)
The company's fiscal year ends in June.

Forecast for FY24:

Jarden forecasts a full year FY24 EPS of 31.70 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 11.04.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 33.6, implying annual growth of 3.4%.
Current consensus DPS estimate is 23.5, implying a prospective dividend yield of 6.7%.
Current consensus EPS estimate suggests the PER is 10.4.

Forecast for FY25:

Jarden forecasts a full year FY25 EPS of 38.80 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 9.02.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 39.7, implying annual growth of 18.2%.
Current consensus DPS estimate is 26.9, implying a prospective dividend yield of 7.7%.
Current consensus EPS estimate suggests the PER is 8.8.

Market Sentiment: 0.6
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

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