Weekly Reports | May 24 2024
This story features COLES GROUP LIMITED, and other companies. For more info SHARE ANALYSIS: COL
Broker Rating Changes (Post Thursday Last Week)
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COLES GROUP LIMITED ((COL)) Upgrade to Neutral from Sell by Goldman Sachs.B/H/S: 0/0/0
Post the 1Q24 trading update from Coles Group, Goldman Sachs has become more positive on the company.
The analyst notes improvements in addressing margin and stock-loss issues under new CEO leadership, as well as strong retail execution, efficient communication of value to consumers, and significant cost reductions through the Simplify and Save program.
Faster scaling of Retail Media, which is expected to significantly enhance the Food segment's margin, has been identified by the broker as a major growth driver.
Goldman Sachs assesses the company is positioned for recovery and EBIT forecasts have been raised by 2% in FY24 up to 6% in FY26.
Upgrade to Neutral from Sell and the target revised to $16.30.
INCITEC PIVOT LIMITED ((IPL)) Upgrade to Overweight from Neutral by Jarden.B/H/S: 0/0/0
According to Jarden the 1H24 Incitec Pivot results showed strong performance in the Explosives segment, which offset weaknesses in Fertilisers.
Explosives earnings are expected to remain robust, with significant re-contracting growth anticipated through FY25 and FY26, notes the analyst, while the Fertilisers trade sale remains a key overhang, with ongoing negotiations impacting the $900m share buyback.
Gearing remains low and the analyst envisages a positive long-term outlook for Explosives. The rating is upgraded to Overweight from Neutral and the target lifted to $3.15 from $2.75.
XERO LIMITED ((XRO)) Upgrade to Overweight from Neutral by Jarden.B/H/S: 0/0/0
In a report published before today's market update, Jarden believes Xero is now well placed to produce meaningful free cash flow as operating leverage emerges, and is capable of still balancing growth and profitability.
While the current valuation is not cheap, upside risk is asymmetric, suggest the analysts.
Payments of dividends will likely commence in FY25, according to the broker, and revenue should almost triple on a 10-year view.
Software-as-a-service (SaaS) economics are expected to drive significant operating leverage, and Jarden assumes an earnings (EBIT) margin expansion to around 40% in the long-term from 6% in FY23.
The target rises to $141 from $110 and the broker's rating is upgraded to Overweight from Neutral.
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JB HI-FI LIMITED ((JBH)) Downgrade to Sell from Neutral by Goldman Sachs.B/H/S: 0/0/0
The worse than expected growth outlook for the retail industry and increasing competition has resulted in an earnings downgrade for JB Hi-Fi by Goldman Sachs.
The broker sees consumers as more cost-conscious and with interest rates expected to remain high, the company's bulky discretionary goods, particularly at The Good Guys (TGG), are anticipated to be more impacted.
Competition is increasing from various fronts, including Amazon, Harvey Norman, and Officeworks. The latter has expanded its technology sales mix aggressively.
The analyst forecasts sales and margins to disappoint in FY25/26, and adjusts net profit by -3% to -5% for FY24 through to FY26, below consensus estimates.
JB Hi-Fi is downgraded to Sell from Neutral. Target price lowered to $50.00 from $56.50.
LEO LITHIUM LIMITED ((LLL)) Downgrade to Sell from Neutral by Jarden.B/H/S: 0/0/0
It has been seven months since shares of Leo Lithium were suspended, and Jarden expects the price will be volatile if (and when) it resumes trading. Commencement of operations (expected this quarter) at the Goulamina project is at risk.
Negotiations are at an impasse between Leo Lithium and the Malian Government, notes the broker, leading the company's joint venture partner, Ganfeng, to purchase Leo Lithium's 40% equity interest in the Goulamina project for US$342.7m.
This amount compares with Jarden's last published 100% project valuation of US$2,273m, implying US$909m for 40%, reflecting the increasingly weakened negotiating position for management at Leo Lithium.
A 1.5% gross revenue royalty for 20 years upon commercial production offers a potential future revenue source, observes the analyst.
The broker's rating is downgraded to Sell from Neutral and the target is slashed to 43c from 60c.
MACQUARIE TECHNOLOGY GROUP LIMITED ((MAQ)) Downgrade to Neutral from Buy by Goldman Sachs.B/H/S: 0/0/0
Goldman Sachs reviews Macquarie Technology in light of the shift from key data centre big-picture catalysts to the execution and construction phases, particularly the IC3W project.
The broker seeks confirmation of the size of the IC3W upscale to 45MW from 32MW or land purchase in Sydney for a new site to offer upside potential to the stock.
At this stage the company is viewed as entering a capital intensive phase and any contract announcement may be some time away.
The analyst sees limited upside expected for FY24-26 EBITDA forecasts and with a valuation already reflecting growth, the rating is downgraded to Neutral from Buy.
The target is lowered -3% to $90.20.
ORICA LIMITED ((ORI)) Downgrade to Overweight from Buy by Jarden.B/H/S: 0/0/0
As per Jarden, the 1H24 earnings report for Orica proved ln line with expectations and 4% ahead of consensus.
Strong EBIT growth was reported by North America (despite weather issues), LATAM and EMEA, notes the analyst, and the APA segment benefited from lower ammonia prices and re-contracting activities.
Future re-contracting growth is forecast to slow, impacting earnings from APA and result in the broker's EPS forecasts being lowered by -1.3% for FY24 and raised 3.2% in FY25.
Downgrade to Overweight from Buy with an unchanged target of $18.55.
| Order | Company | New Rating | Old Rating | Broker | |
|---|---|---|---|---|---|
| Upgrade | |||||
| 1 | COLES GROUP LIMITED | Neutral | Sell | Goldman Sachs | |
| 2 | INCITEC PIVOT LIMITED | Buy | Neutral | Jarden | |
| 3 | XERO LIMITED | Buy | Buy | Jarden | |
| Downgrade | |||||
| 4 | JB HI-FI LIMITED | Sell | Neutral | Goldman Sachs | |
| 5 | LEO LITHIUM LIMITED | Sell | Neutral | Jarden | |
| 6 | MACQUARIE TECHNOLOGY GROUP LIMITED | Neutral | Buy | Goldman Sachs | |
| 7 | ORICA LIMITED | Buy | Buy | Jarden | |
Price Target Changes (Post Thursday Last Week)
| Company | Last Price | Broker | New Target | Old Target | Change | |
|---|---|---|---|---|---|---|
| 360 | Life360 | $15.14 | Goldman Sachs | 16.05 | 14.20 | 13.03% |
| ABB | Aussie Broadband | $3.50 | Wilsons | 4.52 | 4.77 | -5.24% |
| ABC | Adbri | $3.17 | Goldman Sachs | N/A | 1.85 | -100.00% |
| AD8 | Audinate Group | $16.75 | Canaccord Genuity | 20.00 | 11.00 | 81.82% |
| ASX | ASX | $63.50 | Goldman Sachs | 60.00 | 67.46 | -11.06% |
| BBN | Baby Bunting | $1.40 | Wilsons | 1.80 | 2.40 | -25.00% |
| BEN | Bendigo & Adelaide Bank | $10.99 | Goldman Sachs | 10.51 | 9.74 | 7.91% |
| Jarden | 10.20 | 9.40 | 8.51% | |||
| CBA | CommBank | $120.73 | Goldman Sachs | 82.61 | 81.98 | 0.77% |
| CHL | Camplify Holdings | $1.47 | Canaccord Genuity | 2.75 | 3.25 | -15.38% |
| COL | Coles Group | $16.28 | Goldman Sachs | 16.30 | 15.40 | 5.84% |
| CSL | CSL | $282.00 | Wilsons | 297.02 | 253.29 | 17.26% |
| CU6 | Clarity Pharmaceuticals | $4.13 | Wilsons | 4.50 | 3.12 | 44.23% |
| DMP | Domino's Pizza Enterprises | $37.46 | Goldman Sachs | 36.30 | 39.70 | -8.56% |
| FBU | Fletcher Building | $2.95 | Goldman Sachs | 3.05 | 3.70 | -17.57% |
| FWD | Fleetwood | $1.36 | Moelis | 2.10 | 2.31 | -9.09% |
| GNC | GrainCorp | $8.41 | Wilsons | 8.27 | 7.28 | 13.60% |
| GSS | Genetic Signatures | $0.73 | Taylor Collison | 2.21 | 2.19 | 0.91% |
| GUD | G.U.D. Holdings | $10.71 | Canaccord Genuity | 14.60 | 15.15 | -3.63% |
| Wilsons | 13.06 | 13.29 | -1.73% | |||
| HLI | Helia Group | $4.04 | Goldman Sachs | 4.53 | 4.47 | 1.34% |
| IEL | IDP Education | $17.04 | Jarden | 19.70 | 29.45 | -33.11% |
| IPL | Incitec Pivot | $3.07 | Goldman Sachs | 3.35 | 3.25 | 3.08% |
| Jarden | 3.15 | 2.70 | 16.67% | |||
| JBH | JB Hi-Fi | $57.41 | Goldman Sachs | 50.00 | 56.50 | -11.50% |
| Jarden | 50.50 | 50.80 | -0.59% | |||
| JDO | Judo Capital | $1.27 | Goldman Sachs | 1.72 | 1.69 | 1.78% |
| JIN | Jumbo Interactive | $16.83 | Jarden | 15.90 | 14.70 | 8.16% |
| KAR | Karoon Energy | $1.84 | Jarden | 2.21 | 2.35 | -5.96% |
| LLL | Leo Lithium | Jarden | 0.43 | 0.60 | -28.33% | |
| LTR | Liontown Resources | $1.41 | Jarden | 1.03 | 0.91 | 13.19% |
| MAQ | Macquarie Technology | $86.99 | Goldman Sachs | 90.20 | 93.00 | -3.01% |
| MPL | Medibank Private | $3.66 | Jarden | 3.85 | 3.80 | 1.32% |
| MXI | MaxiPARTS | $1.92 | Canaccord Genuity | 2.62 | 3.91 | -32.99% |
| MYX | Mayne Pharma | $5.41 | Wilsons | 7.09 | 7.38 | -3.93% |
| NWS | News Corp | $41.59 | Goldman Sachs | 44.70 | 42.80 | 4.44% |
| OML | oOh!media | $1.50 | Canaccord Genuity | 1.90 | 2.00 | -5.00% |
| Goldman Sachs | 1.67 | 1.62 | 3.09% | |||
| ORG | Origin Energy | $10.35 | Jarden | 10.24 | 10.00 | 2.40% |
| ORI | Orica | $18.69 | Jarden | 18.55 | 17.75 | 4.51% |
| PPM | Pepper Money | $1.47 | Goldman Sachs | 1.67 | 1.62 | 3.09% |
| PPT | Perpetual | $22.11 | Jarden | 24.55 | 26.50 | -7.36% |
| PSI | PSC Insurance | $6.02 | Jarden | 6.19 | 4.80 | 28.96% |
| PXA | Pexa Group | $14.50 | Jarden | 12.60 | 11.65 | 8.15% |
| QBE | QBE Insurance | $18.05 | Goldman Sachs | 20.90 | 20.58 | 1.55% |
| Jarden | 21.00 | 20.75 | 1.20% | |||
| Jarden | 21.50 | 20.75 | 3.61% | |||
| REA | REA Group | $188.41 | Goldman Sachs | 202.00 | 201.00 | 0.50% |
| RHC | Ramsay Health Care | $49.43 | Jarden | 64.30 | 63.43 | 1.37% |
| SGM | Sims | $11.29 | Goldman Sachs | 12.40 | 14.00 | -11.43% |
| Jarden | 12.10 | 14.00 | -13.57% | |||
| SUL | Super Retail | $12.58 | Jarden | 15.10 | 15.40 | -1.95% |
| Wilsons | 13.70 | 15.30 | -10.46% | |||
| TLX | Telix Pharmaceuticals | $15.59 | Wilsons | 20.00 | 14.50 | 37.93% |
| WBC | Westpac | $26.87 | Jarden | 26.20 | 25.70 | 1.95% |
| XRO | Xero | $134.84 | Jarden | 141.00 | 108.00 | 30.56% |
| Company | Last Price | Broker | New Target | Old Target | Change | |
More Highlights
AD8 AUDINATE GROUP LIMITED
Hardware & Equipment – Overnight Price: $16.24
Canaccord Genuity rates ((AD8)) as Buy (1) –
Audinate Group updated the market at its Investor Day and Canaccord Genuity points to the central role this company holds in the networked audio market, supported by over 4,000 Dante-enabled products from 600-plus OEM manufacturers.
The broker notes cloud-based initiatives, such as Dante Connect and Dante Director, aim to centralise AV control, offering substantial monetisation opportunities.
Canaccord Genuity forecasts sales growth to $148.3m by FY2026 from $69.7m in FY2023, with EBITDA expected to increase to $45.0m from $13.5m over the same period.
Buy rating and $20 target unchanged.
This report was published on May 16, 2024.
Target price is $20.00 Current Price is $16.24 Difference: $3.76
If AD8 meets the Canaccord Genuity target it will return approximately 23% (excluding dividends, fees and charges).
Current consensus price target is $20.15, suggesting upside of 19.8%(ex-dividends)
The company's fiscal year ends in June.
Forecast for FY24:
Canaccord Genuity forecasts a full year FY24 EPS of 13.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 124.92.How do these forecasts compare to market consensus projections?
Current consensus EPS estimate is 9.2, implying annual growth of -33.1%.
Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A.
Current consensus EPS estimate suggests the PER is 182.8.
Forecast for FY25:
Canaccord Genuity forecasts a full year FY25 EPS of 15.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 108.27.How do these forecasts compare to market consensus projections?
Current consensus EPS estimate is 15.9, implying annual growth of 72.8%.
Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A.
Current consensus EPS estimate suggests the PER is 105.8.
Market Sentiment: 0.5
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
GSS GENETIC SIGNATURES LIMITED
Pharmaceuticals & Biotech/Lifesciences – Overnight Price: $0.76
Taylor Collison rates ((GSS)) as Speculative Outperform (2) –
In a potentially transformational milestone, Taylor Collison points out the final stage is approaching for FDA review of Genetic Signatures' 510(k) application.
The company is seeking clearance to market its EasyScreen gastrointestinal parasite (GIP) test kit in the US. If approved, the analyst is expecting a rapid take-up as the test meets an unmet need, and reimbursement at US$263/test is already in place.
While the broker is expecting a decision before the end of May, there is a moderate risk the FDA review could continue into June.
The Speculative Outperform rating is maintained. Target $2.21.
This report was published on May 17, 2024.
Target price is $2.21 Current Price is $0.76 Difference: $1.45
If GSS meets the Taylor Collison target it will return approximately 191% (excluding dividends, fees and charges).
The company's fiscal year ends in June.
Forecast for FY24:
Taylor Collison forecasts a full year FY24 dividend of 0.00 cents and EPS of minus 13.30 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 5.71.
Forecast for FY25:
Taylor Collison forecasts a full year FY25 dividend of 0.00 cents and EPS of minus 5.40 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 14.07.
Market Sentiment: 1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
GUD G.U.D. HOLDINGS LIMITED
Automobiles & Components – Overnight Price: $10.94
Canaccord Genuity rates ((GUD)) as Buy (1) –
Canaccord Genuity came away from the G.U.D. Holdings investor day upbeat, believing the company is intrinsically undervalued.
The broker points to past underperformance of the APG acquisition and the fact it has yet to reach its EBITDA forecasts underscores market concerns.
The analyst points to FY24 guidance which sits at least $193.5m EBITA, with underlying growth estimated at 8%.
Canaccord Genuity retains earnings estimates and highlights an anticipated recovery which opens up a potential re-rating for the stock.
Buy rating and $14.60 target retained.
This report was published on May 15, 2024.
Target price is $14.60 Current Price is $10.94 Difference: $3.66
If GUD meets the Canaccord Genuity target it will return approximately 33% (excluding dividends, fees and charges).
Current consensus price target is $12.79, suggesting upside of 16.9%(ex-dividends)
The company's fiscal year ends in June.
Forecast for FY24:
Canaccord Genuity forecasts a full year FY24 dividend of 42.00 cents and EPS of 87.00 cents.
At the last closing share price the estimated dividend yield is 3.84%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.57.How do these forecasts compare to market consensus projections?
Current consensus EPS estimate is 76.2, implying annual growth of 9.0%.
Current consensus DPS estimate is 42.8, implying a prospective dividend yield of 3.9%.
Current consensus EPS estimate suggests the PER is 14.4.
Forecast for FY25:
Canaccord Genuity forecasts a full year FY25 dividend of 50.00 cents and EPS of 98.00 cents.
At the last closing share price the estimated dividend yield is 4.57%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 11.16.How do these forecasts compare to market consensus projections?
Current consensus EPS estimate is 85.8, implying annual growth of 12.6%.
Current consensus DPS estimate is 46.8, implying a prospective dividend yield of 4.3%.
Current consensus EPS estimate suggests the PER is 12.8.
Market Sentiment: 0.8
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
MYX MAYNE PHARMA GROUP LIMITED
Pharmaceuticals & Biotech/Lifesciences – Overnight Price: $5.34
Wilsons rates ((MYX)) as Overweight (1) –
Back in mid-February, Change Healthcare in the US publicly disclosed it had been impacted by a cyberattack. Wilsons explains this event then rippled across the US healthcare system from February-April, and impacted Mayne Pharma too.
In particular, impacts were felt at Mayne's Nextstellis business, as well as its customer base accessing co-pay support for this product, but the analysts advise the setback is only temporary.
The Overweight rating is unchanged and the target falls to $7.09 from $7.38.
This report was published on May 17, 2024.
Target price is $7.09 Current Price is $5.34 Difference: $1.75
If MYX meets the Wilsons target it will return approximately 33% (excluding dividends, fees and charges).
The company's fiscal year ends in June.
Forecast for FY24:
Wilsons forecasts a full year FY24 dividend of 0.00 cents and EPS of minus 48.80 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 10.94.
Forecast for FY25:
Wilsons forecasts a full year FY25 dividend of 0.00 cents and EPS of minus 24.40 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 21.89.
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
TLX TELIX PHARMACEUTICALS LIMITED
Pharmaceuticals & Biotech/Lifesciences – Overnight Price: $15.78
Wilsons rates ((TLX)) as Overweight (1) –
Wilsons is confident reflecting Telix Pharmaceuticals has in place a strategy to become a fully integrated radiopharmaceutical developer.
The analyst views more upside potential if the company’s therapeutic assets, such as TLX591, are commercialised independently rather than out-licensed, ultimately offering more value for shareholders.
Looking ahead, the broker also anticipates catalysts from the 'ILL2CCIX' strategy and US Medicare pricing reforms.
Recent M&A activity in the sector and the strong R&D pipeline position the shares for potential inclusion in the ASX100, notes Wilsons.
Overweight rating and the target is raised to $20.
This report was published on May 20, 2024.
Target price is $20.00 Current Price is $15.78 Difference: $4.22
If TLX meets the Wilsons target it will return approximately 27% (excluding dividends, fees and charges).
The company's fiscal year ends in December.
Forecast for FY24:
Wilsons forecasts a full year FY24 dividend of 0.00 cents and EPS of 10.10 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 156.24.
Forecast for FY25:
Wilsons forecasts a full year FY25 dividend of 0.00 cents and EPS of 20.80 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 75.87.
Market Sentiment: 0.5
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
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CHARTS
For more info SHARE ANALYSIS: COL - COLES GROUP LIMITED
For more info SHARE ANALYSIS: IPL - INCITEC PIVOT LIMITED
For more info SHARE ANALYSIS: JBH - JB HI-FI LIMITED
For more info SHARE ANALYSIS: LLL - LEO LITHIUM LIMITED
For more info SHARE ANALYSIS: MAQ - MACQUARIE TECHNOLOGY GROUP LIMITED
For more info SHARE ANALYSIS: ORI - ORICA LIMITED
For more info SHARE ANALYSIS: TLX - TELIX PHARMACEUTICALS LIMITED
For more info SHARE ANALYSIS: XRO - XERO LIMITED