In Case You Missed It – BC Extra Upgrades & Downgrades – 07-06-24

This story features AFT PHARMACEUTICALS LIMITED, and other companies. For more info SHARE ANALYSIS: AFP

Broker Rating Changes (Post Thursday Last Week)

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AFT PHARMACEUTICALS LIMITED ((AFP)) Upgrade to Neutral from Underweight by Jarden.B/H/S: 0/0/0

Both the FY24 earnings (EBIT) result by AFT Pharmaceuticals and FY25 earnings guidance were in line with Jarden's forecasts.

The broker upgrades to Neutral from Underweight on an improved risk/reward balance after expectations were set lower following management's February downgrade. The ratings upgrade is also partly in response to the recent share price decline. 

FY25 earnings growth is underpinned by a margin recovery, and, following management's guidance, Jarden has more confidence the
gross margin can improve from cycling higher impairments and an improving product mix.

Management is also confident the rest-of-the-world (RoW) opportunity is underpinned by US sales and the Hikma Pharmaceuticals relationship.

Hikma and AFT signed an exclusive license and distribution agreement for the commercialisation of Combogesic IV in the US.

The target price rises to NZ$2.90 from NZ$2.80.

ELECTRO OPTIC SYSTEMS HOLDINGS LIMITED ((EOS)) Upgrade to Speculative Buy from Hold by Petra Capital.B/H/S: 0/0/0

Petra Capital views Electro Optic Systems in a more positive light following a $35m capital raise via an institutional placement and an additional $2m from a Share Purchase Plan (SPP).

According to the broker, the capital infusion addresses liquidity concerns and will fund working capital and growth initiatives, including long-lead inventory purchases and bank guarantee collateral.

The analyst lowers EPS estimates by -7 and -7% for FY24 and FY25 due to higher working capital and shares on issue.

Upgrade to Speculative Buy and the target lifts to $1.50 from $1.14

FISHER & PAYKEL HEALTHCARE CORPORATION LIMITED ((FPH)) Upgrade to Overweight from Market Weight by Wilsons.B/H/S: 0/0/0

Wilsons came away from the Fisher & Paykel Healthcare FY24 earnings presentation with an upgrade in the rating and price target.

The FY24 results saw revenue rise 10% to NZ$1,742.8m, driven by a 14% rise in NewApps consumables and 18% growth in Homecare sales, notes the broker.

Hardware sales decreased by -29% as they rebased from covid highs and the gross margin improved to 61.1%, up by 172 bps.

Management guided to FY25 revenue between NZ$1.9-NZ$2.0bn and net profit of NZ$310-NZ360m.

Wilsons adjusts EPS forecasts FY25-FY27 by 2% to 9%, driven by higher sales and margins.

Rating upgraded to Outperform from Market Weight and the target lifted to $30.

NRW HOLDINGS LIMITED ((NWH)) Upgrade to Buy from Overweight by Jarden.B/H/S: 0/0/0

Jarden upgrades NRW Holdings to Buy from Overweight and raises its target price to $3.25 from $2.95.

The broker expects improved labour conditions and earnings mix will outpace weakness in lithium and nickel markets, and likely trigger consensus upgrades.

Jarden observes earnings visibility has improved markedly, de-risking earnings forecasts and appreciates the company's strong work in hand, spying upside risk.

EPS forecasts rise 2% across FY25 to FY26.

Downgrade

PETER WARREN AUTOMOTIVE HOLDINGS LIMITED ((PWR)) Downgrade to Hold from Buy by Moelis.B/H/S: 0/0/0

Peter Warren Automotive has guided to a sharp fall in FY24 underlying profit for FY24, missing consensus forecasts by -20% (a -40% downgrade to second-half estimates) observes Moelis.

Oversupply in new cars, a softening in new car demand (cost-of-living pressures) and higher interest costs due to higher rates and inventory were declared the culprits.

Top-line revenue remained strong due to used car deliveries and a strong performance from the company's service, parts and used-car division.

Management guided to continued weakness in FY25, observing new car margins would remain under pressure, albeit above pre-covid levels.

The broker observes an oversupply in Mazda, VW, Volvo and Chinese OEM brands.

EPS forecasts fall -20% to -30% across FY24 to FY26 to reflect continued gross profit margin pressure. The broker observes there has been no update on a new CEO.

Rating is downgraded to Hold from Buy. Target price falls to $1.98 from $2.60 in March.

SANDFIRE RESOURCES LIMITED ((SFR)) Downgrade to Market Weight from Overweight by Wilsons.B/H/S: 0/0/0

Wilsons attended the recent site tour of the Motheo operation in Botswana and the analyst noted Sandfire Resources' nearly flawless execution in delivery and ramp-up activities.

The broker highlights management is focused on commissioning the filtration plant and stabilising Motheo’s performance as a 5.2Mtpa operation.

On site management indicated the long-term growth potential with plans to establish a buffer of around 15 years of reserves, and a new geological model expected in 2-3 months to enable targeted drilling.

No changes to the analyst's earnings forecasts.

Downgrade to Market Weight from Overweight, due to recent share price strength. Target retained at $9.90.

VITURA HEALTH LIMITED ((VIT)) Downgrade to Hold from Buy by Petra Capital.B/H/S: 0/0/0

Petra Capital has downgraded Vitura Health to Hold from Buy with a reduced target price of 9c from 12c.

The company's latest trading update indicated EBITDA margins year-to-date were around 5%, implying a significant downgrade for 2H24 margins, previously 8.7% in 1H24, according to the broker.

Petra Capital points to increased competition in the core cannabis distribution business for the substantial decline from the FY23 EBITDA margin of 17.7%.

The broker makes material changes to its financial estimates with net profit forecast to decline to $3m in FY24 from $6.3m. The broker is looking for management to stabilise unit volumes and EBITDA margins to regain confidence in the strategy update.

Order	Company	New Rating	Old Rating	Broker
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1	AFT PHARMACEUTICALS LIMITED	Neutral	Sell	Jarden
2	ELECTRO OPTIC SYSTEMS HOLDINGS LIMITED	Buy	Neutral	Petra Capital
3	FISHER & PAYKEL HEALTHCARE CORPORATION LIMITED	Buy	Neutral	Wilsons
4	NRW HOLDINGS LIMITED	Buy	Buy	Jarden
Downgrade
5	PETER WARREN AUTOMOTIVE HOLDINGS LIMITED	Neutral	Buy	Moelis
6	SANDFIRE RESOURCES LIMITED	Neutral	Buy	Wilsons
7	VITURA HEALTH LIMITED	Neutral	Buy	Petra Capital

Price Target Changes (Post Thursday Last Week)

Company		Last Price	Broker	New Target	Old Target	Change
A1M	AIC Mines	$0.48	Moelis	0.70	0.55	27.27%
EOS	Electro Optic Systems	$1.28	Petra Capital	1.50	1.14	31.58%
ESK	Etherstack		Wilsons	N/A	0.40	-100.00%
FEX	Fenix Resources	$0.33	Petra Capital	0.44	0.43	2.33%
FPH	Fisher & Paykel Healthcare	$28.26	Wilsons	30.00	23.25	29.03%
GLN	Galan Lithium	$0.21	Petra Capital	0.55	0.59	-6.78%
NEU	Neuren Pharmaceuticals	$19.39	Wilsons	30.00	26.58	12.87%
NWH	NRW Holdings	$3.01	Jarden	3.25	2.95	10.17%
ORG	Origin Energy	$10.29	Jarden	10.61	10.24	3.61%
PDN	Paladin Energy	$15.44	Canaccord Genuity	16.00	1.55	932.26%
PME	Pro Medicus	$122.53	Goldman Sachs	136.00	134.00	1.49%
PWR	Peter Warren Automotive	$1.75	Moelis	1.98	2.60	-23.85%
SFR	Sandfire Resources	$9.09	Canaccord Genuity	10.25	7.75	32.26%
SMP	SmartPay	$1.28	Wilsons	1.86	1.87	-0.53%
TLC	Lottery Corp	$5.16	Jarden	5.20	5.30	-1.89%
VIT	Vitura Health	$0.10	Petra Capital	0.09	0.12	-25.00%
Company		Last Price	Broker	New Target	Old Target	Change

More Highlights

AGY    ARGOSY MINERALS LIMITED

New Battery Elements – Overnight Price: $0.12

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

The Japanese producer of lithium-ion batteries, Amperex Technology Limited has invested US$5m in Argosy Minerals at 14.63cps share, in what Petra Capital considers an endorsement of development progress and product quality.

The strong calibre of this counterparty bodes well for future offtake and financing discussions for the proposed expansion to 12ktpa from 2ktpa at the plant at the Rincon facility, suggests the broker.

Petra Capital feels shares of Argosy will re-rate over the coming months as production rates lift and cash flows improve.

The Buy rating and 31c target are maintained.

This report was published on May 28, 2024.

Target price is $0.31 Current Price is $0.12 Difference: $0.185
If AGY meets the Petra Capital target it will return approximately 148% (excluding dividends, fees and charges).
The company's fiscal year ends in December.

Forecast for FY24:

Petra Capital forecasts a full year FY24 dividend of 0.00 cents and EPS of minus 0.70 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 17.86.

Forecast for FY25:

Petra Capital forecasts a full year FY25 dividend of 0.00 cents and EPS of minus 0.70 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 17.86.

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

ARX    AROA BIOSURGERY LIMITED

Pharmaceuticals & Biotech/Lifesciences – Overnight Price: $0.57

Wilsons rates ((ARX)) as Overweight (1) –

Wilsons analyses the question "why don't Aroa Biosurgery and TELA Bio (NASDAQ:TELA) merge?"

The analyst concludes such a merger makes sense due to several factors, highlighting both companies have closely linked intellectual property and manufacturing processes, making third-party takeovers less feasible.

A merger would also leverage their combined sales force, enhancing productivity and market reach, particularly in the hernia and breast reconstruction markets.

TELA's strong sales team could further accelerate the adoption of Aroa Biosurgery's products.

The broker suggests, despite the complexities, a merger could present a fast-tracked return for shareholders, offering a more significant and expedited return profile for shareholders of both companies.

Overweight rating and $1 target unchanged.

This report was published on May 28, 2024.

Target price is $1.00 Current Price is $0.57 Difference: $0.43
If ARX meets the Wilsons target it will return approximately 75% (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 0.19 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 308.11.

Forecast for FY26:

Wilsons forecasts a full year FY26 dividend of 0.00 cents and EPS of 1.76 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 32.46.

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

BRI    BIG RIVER INDUSTRIES LIMITED

Building Products & Services – Overnight Price: $1.46

Petra Capital rates ((BRI)) as Initiation of coverage with Buy (1) –

Petra Capital initiates coverage of Big River Industries with a Buy rating and $2 target price.

The company is a vertically integrated manufacturer and distributor of value-added timber and building products across regions of Australia and New Zealand, the broker explains.

The analyst points to FY23 revenue growth of 9.8% to $449.5m, with EBITDA up 7.6% to $50.4m. and net profit was $22.2m, a 4.3% rise on the previous year.

The broker believes the company has a strong balance sheet, cash flow generation, and strategic growth initiatives, both organic and through acquisitions. Petra Capital sees these key factors supporting the company's positive outlook.

Buy rating and $2 target price.

This report was published on May 30, 2024.

Target price is $2.00 Current Price is $1.46 Difference: $0.54
If BRI meets the Petra Capital target it will return approximately 37% (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 7.00 cents and EPS of 10.80 cents.
At the last closing share price the estimated dividend yield is 4.79%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 13.52.

Forecast for FY25:

Petra Capital forecasts a full year FY25 dividend of 7.00 cents and EPS of 11.00 cents.
At the last closing share price the estimated dividend yield is 4.79%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 13.27.

Market Sentiment: 1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

FFM    FIREFLY METALS LIMITED

Gold & Silver – Overnight Price: $0.69

Moelis rates ((FFM)) as Initiation of coverage with Buy (1) –

Moelis initiates coverage of copper and gold explorer FireFly Metals with a Buy rating and $1 target price.

The broker expects the company will be supported by strong demand and sluggish supply in the copper market and that the company's Green Bay project in Newfoundland suggests the company's asset valuation could rise to $1bn over the long term.

This report was published on May 31, 2024.

Target price is $1.00 Current Price is $0.69 Difference: $0.31
If FFM meets the Moelis target it will return approximately 45% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY24:

Moelis forecasts a full year FY24 EPS of minus 5.70 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 12.11.

Forecast for FY25:

Moelis forecasts a full year FY25 EPS of minus 5.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 13.80.

Market Sentiment: 1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

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