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

This story features TEMPLE & WEBSTER GROUP LIMITED, and other companies. For more info SHARE ANALYSIS: TPW

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.

Order	Company	New Rating	Old Rating	Broker
Upgrade
1	TEMPLE & WEBSTER GROUP LIMITED	Buy	Neutral	Jarden
Downgrade
2	FISHER & PAYKEL HEALTHCARE CORPORATION LIMITED	Sell	Neutral	Jarden
3	GENTRACK GROUP LIMITED	Sell	Neutral	Jarden
4	PEOPLEIN LIMITED	Neutral	Buy	Wilsons

Price Target Changes (Post Thursday Last Week)

Company		Last Price	Broker	New Target	Old Target	Change
ADH	Adairs	$1.65	Canaccord Genuity	1.40	1.60	-12.50%
			Jarden	1.45	2.00	-27.50%
			Wilsons	1.10	1.00	10.00%
ANZ	ANZ Bank	$24.60	Goldman Sachs	26.66	27.25	-2.17%
ARX	Aroa Biosurgery	$0.68	Canaccord Genuity	1.20	1.50	-20.00%
			Jarden	1.20	1.26	-4.76%
			Wilsons	1.60	1.69	-5.33%
ASG	Autosports Group	$2.30	Moelis	3.20	3.30	-3.03%
AWC	Alumina Ltd	$0.81	Goldman Sachs	1.10	1.15	-4.35%
BEN	Bendigo & Adelaide Bank	$9.12	Goldman Sachs	9.35	9.69	-3.51%
BHP	BHP Group	$47.42	Goldman Sachs	47.15	46.50	1.40%
BRI	Big River Industries	$2.09	Moelis	2.61	3.36	-22.32%
CAA	Capral	$8.75	Taylor Collison	10.97	N/A	–
CDA	Codan	$8.54	Moelis	8.52	8.25	3.27%
			Petra Capital	9.49	9.45	0.42%
CIA	Champion Iron	$7.67	Goldman Sachs	8.30	7.20	15.28%
CKF	Collins Foods	$11.40	Canaccord Genuity	10.95	8.80	24.43%
			Jarden	10.00	9.20	8.70%
			Wilsons	13.41	11.19	19.84%
CPU	Computershare	$23.57	Goldman Sachs	27.00	N/A	–
CSL	CSL	$266.49	Wilsons	300.00	342.50	-12.41%
DUR	Duratec	$1.40	Moelis	1.62	1.50	8.00%
FMG	Fortescue	$25.48	Goldman Sachs	18.10	16.30	11.04%
FPH	Fisher & Paykel Healthcare	$22.18	Wilsons	23.25	23.39	-0.60%
GDF	Garda Property	$1.16	Moelis	1.63	1.75	-6.86%
GTK	Gentrack Group	$6.03	Canaccord Genuity	N/A	4.73	-100.00%
HVN	Harvey Norman	$3.86	Jarden	3.60	3.40	5.88%
IPG	IPD Group	$4.65	Moelis	5.05	5.27	-4.17%
LGL	Lynch Group	$1.80	Jarden	2.50	2.60	-3.85%
MCP	McPherson's	$0.52	Moelis	0.57	0.51	11.76%
MXI	MaxiPARTS	$2.38	Canaccord Genuity	3.91	4.22	-7.35%
NEU	Neuren Pharmaceuticals	$15.75	Wilsons	22.79	22.21	2.61%
NHC	New Hope	$5.00	Goldman Sachs	3.60	3.70	-2.70%
NXD	NextEd Group	$0.75	Petra Capital	1.00	1.95	-48.72%
PFP	Propel Funeral Partners	$4.78	Moelis	5.40	5.01	7.78%
PPE	PeopleIN	$1.04	Moelis	1.92	3.30	-41.82%
			Wilsons	1.39	2.80	-50.36%
PWH	PWR Holdings	$9.71	Moelis	10.20	10.92	-6.59%
QBE	QBE Insurance	$14.64	Goldman Sachs	18.34	18.09	1.38%
			Jarden	20.90	21.00	-0.48%
RHC	Ramsay Health Care	$48.28	Jarden	58.98	58.00	1.69%
RIO	Rio Tinto	$127.76	Goldman Sachs	136.10	126.50	7.59%
SHV	Select Harvests	$3.22	Wilsons	5.20	5.53	-5.97%
SMR	Stanmore Resources	$3.85	Petra Capital	5.36	5.15	4.08%
TIE	Tietto Minerals	$0.61	Petra Capital	0.75	0.73	2.74%
TPW	Temple & Webster	$8.40	Canaccord Genuity	8.00	5.20	53.85%
			Jarden	8.56	6.50	31.69%
VIT	Vitura Health	$0.29	Petra Capital	0.61	0.70	-12.86%
WGX	Westgold Resources	$2.14	Canaccord Genuity	2.35	2.20	6.82%
WR1	Winsome Resources	$1.05	Canaccord Genuity	3.00	3.55	-15.49%
Company		Last Price	Broker	New Target	Old Target	Change

More Highlights

ARX    AROA BIOSURGERY LIMITED

Pharmaceuticals & Biotech/Lifesciences – Overnight Price: $0.67

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

While Canaccord Genuity retains its Buy rating for Aroa Biosurgery, noting commercial progress with Myriad continues to progress well, the broker's target falls to $1.20 from $1.50 on an anticipated rise for the cost base.

Investments into sales and research drive near-term downgrades to the broker's forecasts.

First half product revenue slightly missed the broker's forecast, and Myriad's 80% revenue growth to NZ$10.1m also missed expectations for 100% growth. Improving sales force execution and 21 new account additions are noted.

Management's FY24 guidance implies to Canaccord a slight downgrade to underlying sales projections.

This report was published on November 29, 2023.

Target price is $1.20 Current Price is $0.67 Difference: $0.53
If ARX meets the Canaccord Genuity target it will return approximately 79% (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 1.30 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 51.74.

Forecast for FY25:

Canaccord Genuity forecasts a full year FY25 dividend of 0.00 cents and EPS of 1.20 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 55.69.

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

CAA    CAPRAL LIMITED

Aluminium, Bauxite & Alumina – Overnight Price: $8.75

Taylor Collison rates ((CAA)) as Outperform (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 $8.75 Difference: $2.22
If CAA meets the Taylor Collison target it will return approximately 25% (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 19.21%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 13.67.

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 15.58%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 13.67.

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

ERD    EROAD LIMITED

Transportation & Logistics – Overnight Price: $0.86

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

Eroad's 1H result revealed strong growth in all regions and exceeded Canaccord Genuity's forecasts, partly due to initial benefits from management's cost-out strategy.

The broker highlights momentum in organic annualised monthly recurring revenue and record unit additions. A capex unwind from accelerated 3G-4G replacement is expected to drive strong near-term improvement in free cash flow.

Management reiterated FY24 revenue guidance range of NZ$175-180m.

Canaccord's Buy rating is unchanged and the target rises to NZ$1.60 from NZ$1.50.

This report was published on November 30, 2023.

Current Price is $0.86. Target price not assessed.
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 0.46 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 186.15.

Forecast for FY25:

Canaccord Genuity forecasts a full year FY25 dividend of 0.00 cents and EPS of 4.72 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 18.23.

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

HVN    HARVEY NORMAN HOLDINGS LIMITED

Consumer Electronics – Overnight Price: $3.88

Jarden rates ((HVN)) as Neutral (3) –

While elevated discounting remains a risk, Jarden was buoyed by Harvey Norman's AGM trading update showing improving sales trends over the past eight weeks. Reported sales growth to November 25 showed improved sales trajectories for all regions.

While forecasting a -46% decline in FY24 franchisee profit  the broker anticipates Australian franchisee margins will hit a nadir in FY24 at 3.4%.

The Neutral rating is unchanged and the target rises to $3.60 from $3.40.

This report was published on November 30, 2023.

Target price is $3.60 Current Price is $3.88 Difference: minus $0.28 (current price is over target).
If HVN meets the Jarden target it will return approximately minus 7% (excluding dividends, fees and charges – negative figures indicate an expected loss).
Current consensus price target is $3.91, suggesting upside of 0.8%(ex-dividends)
The company's fiscal year ends in June.

Forecast for FY24:

Jarden forecasts a full year FY24 dividend of 20.00 cents and EPS of 27.20 cents.
At the last closing share price the estimated dividend yield is 5.15%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.26.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 29.4, implying annual growth of -32.1%.
Current consensus DPS estimate is 23.1, implying a prospective dividend yield of 6.0%.
Current consensus EPS estimate suggests the PER is 13.2.

Forecast for FY25:

Jarden forecasts a full year FY25 dividend of 23.00 cents and EPS of 30.70 cents.
At the last closing share price the estimated dividend yield is 5.93%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.64.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 34.2, implying annual growth of 16.3%.
Current consensus DPS estimate is 26.6, implying a prospective dividend yield of 6.9%.
Current consensus EPS estimate suggests the PER is 11.3.

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

SMR    STANMORE RESOURCES LIMITED

Coal – Overnight Price: $3.87

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

In a strong positive signal to the market, suggests Petra Capital, Stanmore Resources is returning excess cash to shareholders. The company will pay a special fully franked dividend of US5.82cps on December 14.

Cash was previously being set aside for the now failed bid for BHP Group's ((BHP)) Daunia coal mine, explains the broker. Further payouts should be announced as part of the FY23 results presentation.

The analyst forecasts a 7-8% fully franked dividend yield in 2023/24, building to 23% in 2025.

The Buy rating is retained and the target price slips to $5.36 from $5.47.

This report was published on November 30, 2023.

Target price is $5.36 Current Price is $3.87 Difference: $1.49
If SMR meets the Petra Capital target it will return approximately 39% (excluding dividends, fees and charges).
The company's fiscal year ends in December.

Forecast for FY23:

Petra Capital forecasts a full year FY23 dividend of 30.94 cents and EPS of 82.86 cents.
At the last closing share price the estimated dividend yield is 7.99%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 4.67.

Forecast for FY24:

Petra Capital forecasts a full year FY24 dividend of 87.38 cents and EPS of 65.80 cents.
At the last closing share price the estimated dividend yield is 22.58%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 5.88.

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

WR1    WINSOME RESOURCES LIMITED

New Battery Elements – Overnight Price: $1.05

Canaccord Genuity rates ((WR1)) as Speculative Buy (1) –

While Winsome Resources is yet to issue a maiden resource for its Adina project, the company released  results of nineteen drill holes, with assays pending for a further 54. With 40,200 metres of drilling complete, the company intends to complete a further 10,000 metres by year's end.

Canaccord Genuity's conceptual resource for Adina sits at 55m tonnes at 1.2% lithium following this update, up 38% on its previous estimate, which would see Adina within the top five lithium resources in Canada.

Canaccord Genuity suggests the maiden resource could prove a share price catalyst. The Speculative Buy rating is retained and the target price decreases to $3.00 from $3.55.

This report was published on November 28, 2023.

Target price is $3.00 Current Price is $1.05 Difference: $1.945
If WR1 meets the Canaccord Genuity target it will return approximately 184% (excluding dividends, fees and charges).

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

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