In Case You Missed It – BC Extra Upgrades & Downgrades – 03-05-24

Weekly Reports | May 03 2024

Broker Rating Changes (Post Thursday Last Week)


WESTPAC BANKING CORPORATION ((WBC)) Upgrade to Overweight from Neutral by Jarden.B/H/S: 0/0/0

Jarden anticipates a resilient but muted half for the four bank majors, expecting sector profits to decline -1% half-on-half to $15.6bn as margin erosion and rising costs continue to impact. 

While signs of moderating margin pressure will remain a key consideration of the reporting season, the broker is also interested in indications of further returns of excess provisions. Jarden considers it likely each major will announce new capital returns of $1.0-1.5bn.

The broker estimates a -3% half-on-half profit decline from Westpac to $3.44bn. With the bank still undergoing its existing buybacks, Jarden notes Westpac may choose to return capital through special dividends rather than a top up of its buyback. 

The rating is upgraded to Overweight from Neutral and the target price increases to $25.70 from $23.50.


KAROON ENERGY LIMITED ((KAR)) Downgrade to Overweight from Buy by Jarden.B/H/S: 0/0/0

Karoon Energy has issued a larger-than-anticipated downgrade to FY24 guidance led by ongoing disappointment from Who Dat. Jarden points out the negative news arrived only four months after the acquisition was completed.

The decision to curtail output due to weak pricing does show the lack of control that resides with Karoon Energy, points out the broker. Jarden suggests the loss of confidence that has now occurred will take time to return.

The rating is downgraded to Overweight from Buy and the target price falls to $2.35 from $2.50.

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