Weekly Reports | May 31 2024
This story features AUCKLAND INTERNATIONAL AIRPORT LIMITED, and other companies. For more info SHARE ANALYSIS: AIA
Broker Rating Changes (Post Thursday Last Week)
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AUCKLAND INTERNATIONAL AIRPORT LIMITED ((AIA)) Upgrade to Overweight from Neutral by Jarden.B/H/S: 0/0/0
Jarden highlights the ComCom regulatory draft review on Auckland International Airport pricing is due late May and is expected to be favourable and pose less risk to the company's pricing.
The broker also estimates a potential -3% to -5% reduction in pricing across FY25-FY27 would only have a -3.5% impact on EPS.
Auckland International Airport's capital expenditure (capex) plan of NZ$5bn is based on the PSE4 pricing and Jarden notes the regulator did not express concerns around the PSE3 pricing when there was a notable increase in capex, although covid stymied the plans.
No changes have been made to financial forecasts.
Rating upgraded to Overweight from Neutral. Target price adjusts to NZ$8.58 from NZ$8.44.
JAMES HARDIE INDUSTRIES PLC ((JHX)) Upgrade to Buy from Overweight by Jarden.B/H/S: 0/0/0
Jarden attributes the -15% decline in the James Hardie Industries share price post the 4Q24 earnings as a result of management's conservative FY25 guidance. The 4Q24 results were only a slight miss against consensus estimates, notes the analyst.
Management expects adjusted net income between US$630-US$700m for FY25, implying high single to low double-digit earnings downgrades, notes the broker.
Despite flat volume outlooks and cost headwinds, the company is expected to maintain a circa 30% EBIT margin, supported by higher average selling prices and pro-active cost reductions.
Jarden adjusts earnings forecasts lower. The rating is upgraded to Buy from Overweight. Target price declines to $54 from $57.
WORLEY LIMITED ((WOR)) Upgrade to Buy from Neutral by Goldman Sachs.B/H/S: 0/0/0
Goldman Sachs upgrades Worley to Buy from Neutral after a -6% decline in share price over the last six months, when the ASX200 climbed by 11% over the same time frame.
The company is well-placed to benefit from the energy transition, reiterates the broker, and the outlook remains supported by capex being deployed by customers in this area.
The broker's target edges up by 1% to $17.50.
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ALS LIMITED ((ALQ)) Downgrade to Overweight from Buy by Jarden.B/H/S: 0/0/0
ALS Ltd reported earnings for FY24 in line with management's guidance range.
Jarden comments strength in the Geochemistry business was a highlight and the outlook for Life Sciences is promising, driven by stronger organic growth and recent acquisitions, though the Nuvisan turnaround remains a challenge, notes the broker.
Earnings forecasts are raised by 4% for FY25 and a compound average growth rate in EPS between FY24 and FY27 of 9.6% is anticipated.
The rating is downgraded to Overweight from Buy. Target lifted to $14.90 from $13.70.
MACQUARIE TECHNOLOGY GROUP LIMITED ((MAQ)) Downgrade to Hold from Buy by Petra Capital.B/H/S: 0/0/0
The strong share price appreciation of Macquarie Technology has resulted in a downgrade in the rating by the Petra Capital analyst.
The broker emphasises the longer term appeal and fundamentals of the company, but the appreciation has happened at a faster rate than the analyst expected.
The company also completed a dilutive capital raise for the next phase of the development of IC3SW (data centre) which is due for completion in the 3Q of 2026, with no obvious change in the earnings outlook over that period, according to Petra Capital.
The rating is downgraded to Hold from Buy and the target raised to $90.37 from $82.16, on a higher valuation.
NATIONAL AUSTRALIA BANK LIMITED ((NAB)) Downgrade to Neutral from Buy by Goldman Sachs.B/H/S: 0/0/0
Goldman Sachs assesses the National Australia Bank 1H24 as positive with the bank displaying strong fundamentals and a significant pipeline of productivity benefits, adding: sustaining these benefits in the outer years may prove challenging.
The broker views the upside risks to earnings from a better performance on expense control and net interest margin management due to less competitive pressures in business lending compared to housing.
Financial forecasts are unchanged. Target price maintained at $34.04 and the rating downgraded to Neutral from Buy on valuation grounds.
WESTPAC BANKING CORPORATION ((WBC)) Downgrade to Sell from Neutral by Goldman Sachs.B/H/S: 0/0/0
Goldman Sachs assesses the 1H24 results for Westpac and highlights concerns over execution, cost, and timing risks associated with the bank's technology simplification plan.
The broker also raises doubts on the potential constraints on growth due to the bank's heavy exposure to the Australian housing market, and the impact of managing interest rate risks over shorter durations.
Despite a strong capital position and some positive earnings indicators, the analysts point to valuation concerns, with the bank's 12-month forward PER of 14.2x above its historic average.
Goldman Sachs' FY24 estimates remain broadly in line with consensus.
Rating downgraded to Sell from Neutral. Target retained at $24.10.
XERO LIMITED ((XRO)) Downgrade to Market Weight from Overweight by Wilsons.B/H/S: 0/0/0
Following FY24 results, Wilsons raises its target for Xero to $131.63 from $126.93 and downgrades to Market Weight from Overweight on valuation.
Operating expenses as a percentage of revenue ratio was 73% (68% in H2), thereby beating FY24 guidance for "around 75%". However, management is now guiding to 73% in FY25, suggesting to the broker the return of some costs.
Incrementally slower subscriber growth over the past three years means Xero is slightly more reliant on price rises to maintain high double-digit topline growth, note the analysts.
| Order | Company | New Rating | Old Rating | Broker | |
|---|---|---|---|---|---|
| Upgrade | |||||
| 1 | AUCKLAND INTERNATIONAL AIRPORT LIMITED | Buy | Neutral | Jarden | |
| 2 | JAMES HARDIE INDUSTRIES PLC | Buy | Buy | Jarden | |
| 3 | WORLEY LIMITED | Buy | Neutral | Goldman Sachs | |
| Downgrade | |||||
| 4 | ALS LIMITED | Buy | Buy | Jarden | |
| 5 | MACQUARIE TECHNOLOGY GROUP LIMITED | Neutral | Buy | Petra Capital | |
| 6 | NATIONAL AUSTRALIA BANK LIMITED | Neutral | Buy | Goldman Sachs | |
| 7 | WESTPAC BANKING CORPORATION | Sell | Neutral | Goldman Sachs | |
| 8 | XERO LIMITED | Neutral | Buy | Wilsons | |
Price Target Changes (Post Thursday Last Week)
| Company | Last Price | Broker | New Target | Old Target | Change | |
|---|---|---|---|---|---|---|
| ALQ | ALS Ltd | $14.10 | Goldman Sachs | 15.60 | 13.60 | 14.71% |
| Jarden | 14.90 | 13.70 | 8.76% | |||
| APE | Eagers Automotive | $10.12 | Canaccord Genuity | 11.70 | 16.10 | -27.33% |
| Jarden | 13.00 | 14.10 | -7.80% | |||
| Moelis | 12.41 | 15.96 | -22.24% | |||
| Wilsons | 10.47 | 14.72 | -28.87% | |||
| ARL | Ardea Resources | $0.61 | Petra Capital | 1.12 | 0.74 | 51.35% |
| ARX | Aroa Biosurgery | $0.54 | Canaccord Genuity | 1.00 | 1.20 | -16.67% |
| DDR | Dicker Data | $9.23 | Jarden | 11.38 | 12.61 | -9.75% |
| DUR | Duratec | $1.04 | Moelis | 1.50 | 1.62 | -7.41% |
| GLN | Galan Lithium | $0.22 | Petra Capital | 0.59 | 3.41 | -82.70% |
| JHX | James Hardie Industries | $46.68 | Jarden | 54.00 | 57.00 | -5.26% |
| MAQ | Macquarie Technology | $84.57 | Petra Capital | 90.27 | 82.16 | 9.87% |
| MAY | Melbana Energy | $0.05 | Petra Capital | 0.19 | 0.21 | -9.52% |
| MDR | MedAdvisor | $0.44 | Canaccord Genuity | 0.45 | 0.39 | 15.38% |
| NDO | Nido Education | $0.89 | Canaccord Genuity | 1.25 | 1.30 | -3.85% |
| Moelis | 1.33 | 1.36 | -2.21% | |||
| Wilsons | 1.27 | 1.47 | -13.61% | |||
| NHC | New Hope | $4.95 | Goldman Sachs | 3.60 | 3.70 | -2.70% |
| NUF | Nufarm | $4.47 | Wilsons | 4.86 | 5.28 | -7.95% |
| NXD | NextEd Group | $0.20 | Canaccord Genuity | 0.60 | 0.70 | -14.29% |
| OFX | OFX Group | $2.13 | Canaccord Genuity | 2.60 | 2.20 | 18.18% |
| Wilsons | 2.60 | 2.17 | 19.82% | |||
| PBH | PointsBet Holdings | $0.51 | Jarden | 0.85 | 1.15 | -26.09% |
| PLT | Plenti Group | $0.71 | Wilsons | 1.30 | 1.20 | 8.33% |
| RIC | Ridley Corp | $2.11 | Wilsons | 2.58 | 2.85 | -9.47% |
| RRL | Regis Resources | $1.85 | Canaccord Genuity | 2.50 | 2.55 | -1.96% |
| S32 | South32 | $3.98 | Goldman Sachs | 4.00 | 3.70 | 8.11% |
| SHL | Sonic Healthcare | $24.26 | Jarden | 26.19 | 28.88 | -9.31% |
| TLS | Telstra Group | $3.44 | Goldman Sachs | 4.25 | 4.55 | -6.59% |
| Jarden | 4.00 | 4.40 | -9.09% | |||
| TLX | Telix Pharmaceuticals | $17.20 | Jarden | 13.94 | 13.52 | 3.11% |
| TNE | TechnologyOne | $17.44 | Goldman Sachs | 18.85 | 18.30 | 3.01% |
| Wilsons | 19.31 | 18.68 | 3.37% | |||
| TPG | TPG Telecom | $4.61 | Goldman Sachs | 4.90 | 5.40 | -9.26% |
| TRS | Reject Shop | $3.36 | Jarden | 6.00 | 6.70 | -10.45% |
| VIT | Vitura Health | $0.08 | Petra Capital | 0.12 | 0.14 | -14.29% |
| WEB | Webjet | $8.66 | Goldman Sachs | N/A | 8.10 | -100.00% |
| Jarden | 10.30 | 9.55 | 7.85% | |||
| Wilsons | 10.04 | 10.13 | -0.89% | |||
| WOR | Worley | $14.75 | Goldman Sachs | 17.50 | 17.60 | -0.57% |
| XRO | Xero | $133.95 | Goldman Sachs | 164.00 | 156.00 | 5.13% |
| Jarden | 144.00 | 141.00 | 2.13% | |||
| Wilsons | 131.63 | 126.93 | 3.70% | |||
| Company | Last Price | Broker | New Target | Old Target | Change | |
More Highlights
ARL ARDEA RESOURCES LIMITED
Nickel – Overnight Price: $0.61
Petra Capital rates ((ARL)) as Buy (1) –
Petra Capital assesses Ardea Resources as offering exposure to Australia's largest nickel resource in the top 10 globally.
The KNP-Goongarrie Hub, part of its JV with Sumitomo Metal Mining and Mitsubishi Corporation, places the company in a strong strategic position, notes the analyst.
Notably the ESG credentials of Ardea Resources via the project's expected life-of-mine CO2 footprint of 11.9t CO2 equivalent per tonne nickel is highlighted as particularly strong.
The Definitive Feasibility Study (DFS) is underway and fully funded at $98.5m. The broker's financial forecasts remain unchanged.
Buy rating and $1.12 target price maintained.
This report was published on May 23, 2024.
Target price is $1.12 Current Price is $0.61 Difference: $0.51
If ARL meets the Petra Capital target it will return approximately 84% (excluding dividends, fees and charges).
The company's fiscal year ends in June.
Forecast for FY24:
Petra Capital forecasts a full year FY24 dividend of 0.00 cents and EPS of minus 0.80 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 76.25.
Forecast for FY25:
Petra Capital forecasts a full year FY25 dividend of 0.00 cents and EPS of 27.60 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 2.21.
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
EOS ELECTRO OPTIC SYSTEMS HOLDINGS LIMITED
Hardware & Equipment – Overnight Price: $1.35
Canaccord Genuity rates ((EOS)) as Buy (1) –
Analysts at Canaccord Genuity came away from the site visit/investor day held by Electro Optic Systems incrementally encouraged by the company's position in the structurally beneficial defence industry.
The broker also noted current and upcoming tendering opportunities and management's ability to execute upon these. The company's multiple is expected to re-rate as investors gain further confidence in its ability to secure large scale, multi-year contracts.
The Buy rating and $1.95 target are maintained.
This report was published on May 24, 2024.
Target price is $1.95 Current Price is $1.35 Difference: $0.6
If EOS meets the Canaccord Genuity target it will return approximately 44% (excluding dividends, fees and charges).
The company's fiscal year ends in December.
Forecast for FY24:
Canaccord Genuity forecasts a full year FY24 dividend of 0.00 cents and EPS of minus 9.98 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 13.53.
Forecast for FY25:
Canaccord Genuity forecasts a full year FY25 dividend of 0.00 cents and EPS of 2.60 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 51.92.
Market Sentiment: 1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
OFX OFX GROUP LIMITED
Diversified Financials – Overnight Price: $2.02
Canaccord Genuity rates ((OFX)) as Buy (1) –
Canaccord Genuity analysts maintain the Buy rating for OFX Group with an increased price target to $2.60 from $2.20 following the company's FY24 results release.
As per the broker, OFX reported net operating income growth of 5% to $224m, with adjusted EBITDA beating expectations at $61m, reflecting improved margins and operational efficiencies.
Revenue forecasts for 2024, 2025, and 2026 have been revised upwards by 2.8%, 2.4%, and 1.9%, respectively, with EPS forecasts lifted by 18.6% for 2024, 8.3% for 2025, and 3.9% for 2026.
Canaccord Genuity believes the company’s outlook remains positive, supported by strong performance, higher gross and net win margins, and significant potential for scale-up and valuation upside.
This report was published on May 21, 2024.
Target price is $2.60 Current Price is $2.02 Difference: $0.58
If OFX meets the Canaccord Genuity target it will return approximately 29% (excluding dividends, fees and charges).
The company's fiscal year ends in March.
Forecast for FY25:
Canaccord Genuity forecasts a full year FY25 dividend of 0.00 cents and EPS of 16.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.63.
Forecast for FY26:
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
PLT PLENTI GROUP LIMITED
Business & Consumer Credit – Overnight Price: $0.73
Wilsons rates ((PLT)) as Overweight (1) –
Following the release of FY24 results, Wilsons has maintained an Overweight rating for Plenti Group and raised its price target to $1.30 from $1.20.
Revenue, loan book, and cash net profit of $6.1m were in line with prior guidance. The broker highlighted the cost/income ratio target for FY25 is below 24%, showcasing strong operating leverage.
Forecast cash profit for FY25 has been lifted by 4% to $10m, FY26 is revised up by 11% to $20m. The title above the report says it all: Plenti To Like.
This report was published on May 23, 2024.
Target price is $1.30 Current Price is $0.73 Difference: $0.568
If PLT meets the Wilsons target it will return approximately 78% (excluding dividends, fees and charges).
The company's fiscal year ends in March.
Forecast for FY25:
Wilsons forecasts a full year FY25 dividend of 0.00 cents and EPS of minus 2.10 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 34.86.
Forecast for FY26:
Wilsons forecasts a full year FY26 dividend of 0.00 cents and EPS of minus 0.30 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 244.00.
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: AIA - AUCKLAND INTERNATIONAL AIRPORT LIMITED
For more info SHARE ANALYSIS: ALQ - ALS LIMITED
For more info SHARE ANALYSIS: JHX - JAMES HARDIE INDUSTRIES PLC
For more info SHARE ANALYSIS: MAQ - MACQUARIE TECHNOLOGY GROUP LIMITED
For more info SHARE ANALYSIS: NAB - NATIONAL AUSTRALIA BANK LIMITED
For more info SHARE ANALYSIS: WBC - WESTPAC BANKING CORPORATION
For more info SHARE ANALYSIS: WOR - WORLEY LIMITED
For more info SHARE ANALYSIS: XRO - XERO LIMITED