In Case You Missed It – BC Extra Upgrades & Downgrades – 08-12-23

Weekly Reports | Dec 08 2023

Broker Rating Changes (Post Friday Last Week)

Upgrade

TEMPLE & WEBSTER GROUP LIMITED ((TPW)) Upgrade to Buy from Overweight by Jarden.B/H/S: 0/0/0

Following an AGM trading update, Jarden upgrades its rating on preferred small cap pick Temple & Webster to Buy from Overweight and raises its target to $8.56 from $6.59.

Up to November 27 in FY24, the broker notes 23% year-on-year revenue growth and significant market share gains, against a category 
that is down -5-10% year-on-year.

The analysts feel current valuation multiples do not reflect latent earning power, as Temple & Webster is currently in a period of investment.

After making forecast revenue increases, partially offset by increased marketing costs (to reflect accelerated growth), the broker raises EPS forecasts across FY24-26 by 7%, 7% and 14%, respectively.

Downgrade

FISHER & PAYKEL HEALTHCARE CORPORATION LIMITED ((FPH)) Downgrade to Underweight from Neutral by Jarden.B/H/S: 0/0/0

While Jarden assesses a "solid" 1H result for Fisher & Paykel Healthcare, the rating is downgraded to Underweight from Neutral, largely due to valuation.

A key standout, in the broker's opinion, was the 26% revenue increase in Homecare, underpinned by strength for obstructive sleep apnea (OSA) masks, especially the ongoing popularity for the Evora mask.

Management maintained revenue guidance of circa NZ$1.7bn, which implies to the analysts a softer 2H revenue outlook.

The target price decreases to NZ$22.00 from NZ$22.50.

GENTRACK GROUP LIMITED ((GTK)) Downgrade to Underweight from Neutral by Jarden.B/H/S: 0/0/0

A strong full year result from Gentrack Group, says Jarden, not delivering metrics ahead of estimates but also issuing an upgrade to FY24 guidance. Underlying revenue grew 42% year-on-year, with total revenue NZ$11m ahead of guidance.

Gentrack Group is now guiding to revenue of at least NZ$170m in the coming year, and the broker feels the phrasing of this suggests confidence in a near-term outlook. Jarden expects the company has a reasonable line of sight on potential pipeline conversion.

The rating is downgraded to Underweight from Neutral and the target price increases to NZ$5.00 from NZ$3.90.

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

Wilsons slashes its target for PeopleIN to $1.39 from $2.80 on uncertain earnings visibility, and downgrades its rating to Market Weight from Overweight following a "sombre" AGM trading update.

Management noted a “significant decline” in business confidence across multiple sectors and a declining economic backdrop, though expects the wider downturn will be relatively short-lived, especially in health.

The broker believes management should now adjust to what may be a prolonged downturn in several sectors. The company is targeting efficiencies where possible, notes Wilsons, to realign the cost base with reduced margins.


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