In Case You Missed It – BC Extra Upgrades & Downgrades – 10-05-24

Weekly Reports | May 10 2024

Broker Rating Changes (Post Thursday Last Week)

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DOMAIN HOLDINGS AUSTRALIA LIMITED ((DHG)) Upgrade to Buy from Overweight by Jarden.B/H/S: 0/0/0

Jarden lowers its target for Domain Holdings Australia to $3.70 from $3.75, but due to recent share price underperformance upgrades the rating to Buy from Overweight.

Among the broker's coverage of companies in the Online Classifieds category, Seek remains the top pick given the market is not currently allowing for the company's $2bn revenue aspiration in A&NZ and Asia by FY28.

The key swing factor Jarden sees for FY24 forecasts across all online classifieds stocks is 2H volumes. Domain has the highest sensitivity to volumes given its margin is lower than its peers, explains the broker.

EBOS GROUP LIMITED ((EBO)) Upgrade to Overweight from Neutral by Jarden.B/H/S: 0/0/0

Jarden is upbeat that Ebos Group should be able to re-establish its Australian presence in the PBS following the loss of the Chemist Warehouse contract from FY25 onward.

The broker considers growth will be forthcoming from the Hospital medicines segment, medical consumables, and a new 3PL contract as new facilities are constructed.

In re-casting the earnings outlook for growth in Wholesale, Medical Technoligies and Animal Care, Jarden forecasts a compound 5-year EPS growth rate of circa 7% and around 6% dividend annual growth.

Although more subdued than historically, the analyst expects other growth opportunities to emerge.

The rating is upgraded to Overweight and the target is set at NZ$38 from NZ$37.60.

LIGHT & WONDER INC ((LNW)) Upgrade to Buy from Overweight by Jarden.B/H/S: 0/0/0

The recent fall in the Light & Wonder share price is put down to macro concerns around a weaker US consumer, lower interest rate cuts, alongside a slowdown in gross gaming revenues and comments from Aristocrat Lesiure ((ALL)) on casino purchase intentions, according to Jarden.

There are no definitive signs of risks to the expected double digit earnings growth targets for FY25, while the company has grabbed market share gains in Australia from Aristocrat, alonsgide greater depth in the US games market.

There are no changes to forecasts at Jarden. The rating is upgraded to Buy from Overweight on the share price pullback and the target retained at $164.

MONASH IVF GROUP LIMITED ((MVF)) Upgrade to Overweight from Market Weight by Wilsons.B/H/S: 0/0/0

Wilsons points to a subdued March quarter for IVF which is characteristic for the time of the year, but an early Easter made the season even quieter, with Medicare data reporting an -8% fall in stimulated cycles.

The broker doesn't model quarterly results for Monash IVF, however Wilsons is expecting 7% increase from M&A over the 2H24. alongside a net 1% volume/price increase, as well as a $600,000 turnaround in Singapore EBITDA.

The rating is upgraded to Overweight, as the stock has traded sideways for 6 months, the valuation has plateaued and there is considered an intrinsic scarcity value in this particular segment of the healthcare services sector.

The target is lifted to $1.58 with potential upside to $1.80 as forecasts are cast out to FY26.

NICK SCALI LIMITED ((NCK)) Upgrade to Buy from Overweight by Jarden.B/H/S: 0/0/0

Jarden anticipates upside risk to overseas earnings for Nick Scali following the UK acquisition of Fabb Furniture and raises its target to $15.40 from $13.87. The rating is also upgraded to Buy from Overweight.

The broker expects short-term gross profit margin (GPM) synergies and material longer-term sales/store uplifts.

Potential synergies are so significant the broker believes the transaction could be EPS accretive in FY26, lending additional upside to Jarden's new forecast.

Also not incorporated into the analysts' current forecast for Nick Scali, is the broker's conservative prediction Fabb could increase its store footprint by two or three times.