Weekly Reports | 10:30 AM
Broker Rating Changes (Post Thursday Last Week)
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ACCENT GROUP LIMITED ((AX1)) Upgrade to Overweight from Market Weight by Wilsons and Upgrade to Overweight from Neutral by Jarden.B/H/S: 0/0/0
Accent Group's FY24 trading update pleased Wilsons, earnings (EBIT) guidance outpacing the broker by 13% thanks to stronger like for like sales in the June half.
The broker says this points to strong execution in core retail brands and a resilient consumer backdrop in the face of cost-of-living pressures and higher interest rates.
The closure of 17 underperforming Glue store should also remove a drag on earnings says the broker, noting the company is trading at a discount to peers.
Rating upgraded to Overweight from Market Weight. Target price rises 19% to $2.50 from $2.10.
Jarden raises its target for Accent Group to $2.28 from $2.05 and upgrades to Overweight from Neutral due to 2H like-for-like (LFL) sales growth of 4.1% compared to the 1H and closure of some Glue stores.
The broker believes closing unprofitable Glue stores will improve earnings (EBIT) by around $3m in FY25, with further upside derived from improving the remaining stores.
There are significant medium-term growth drivers, according to Jarden, as management buys back The Athlete's Foot franchisees, closes unprofitable stores, annualises cost-out, and continues to expand the network.
SANDFIRE RESOURCES LIMITED ((SFR)) Upgrade to Overweight from Neutral by Jarden.B/H/S: 0/0/0
Jarden raises its target for Sandfire Resources to $9.00 from $7.40 and upgrades the rating to Overweight from Neutral. These changes flow from the broker's increased long-term copper price forecast of US$4.00/lb real, up from US$3.50/lb.
The analysts retain a preference for the stock across the base metals universe. Shares represent a low-risk proposition for both FY25 guidance and FY24 financial disclosure relative to the rest of the sector, according to Jarden.
June quarter results are due on Thursday July 25. The broker's FY24 underlying EBITDA forecast of around US$316m sits around -10% below the consensus estimate.
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AUSSIE BROADBAND LIMITED ((ABB)) Downgrade to Market Weight from Overweight by Wilsons.B/H/S: 0/0/0
Aussie Broadband upgraded FY24 earnings (EBITDA) to the top end of its range but downgraded FY25 guidance. Wilson's suspects an underestimation of Origin's contribution.
The company also announced the launch of its Buddy brand, the company's digital first brand. The upgrade and downgrade are reflected in EPS-forecast changes.
Rating is downgraded to Market Weight from Overweight. Target price slumps to $3.32 from $4.52.
AUCKLAND INTERNATIONAL AIRPORT LIMITED ((AIA)) Downgrade to Neutral from Overweight by Jarden.B/H/S: 0/0/0
Jarden lowers its target for Auckland International Airport to NZ$8.13 from NZ$8.58 and downgrades to Neutral from Overweight. These changes follow from the Commerce Commission in New Zealand suggesting a lower level of targeted returns compared to management.
The broker makes a -5% reduction in FY26 and FY27 aeronautical pricing forecasts, which results in a modest -2cps reduction in
value.
Also, prior to any price adjustment, the analysts had noted passenger volumes were likely to remain below the company's Price Setting Event 4 (PSE4) forecasts for the next two years. PSE4 covers aeronautical prices for the five-year period from FY23-27.
HUB24 LIMITED ((HUB)) Downgrade to Market Weight from Overweight by Wilsons.B/H/S: 0/0/0
Wilsons downgrades Hub24's rating to Market Weight from Overweight after the company's recent share price rally but raises the target price to $49 from $44.69 after an increase in its FY25 valuation multiple.
FY24 EPS forecasts fall -4% to reflect slower than forecast migration of Equity Trustees ((EQT)) accounts and a slower than expected recovery in Pooled cash.
LYNAS RARE EARTHS LIMITED ((LYC)) Downgrade to Hold from Buy by Canaccord Genuity.B/H/S: 0/0/0
Canaccord Genuity has downgraded Lynas Rare Earths to Hold from Buy as uncertainty has risen around the near-term production outlook and as weak pricing for rare earths has persisted.
The broker's target price has declined by -10% to $6.25.
Lynas Rare Earths' quarterly production report only slightly missed due to shipping delays, but management continued to refer to soft market conditions in China.
The broker has now revised forecasts to a loss in FY25.
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