In Case You Missed It – BC Extra Upgrades & Downgrades – 26-07-24

This story features ACCENT GROUP LIMITED, and other companies. For more info SHARE ANALYSIS: AX1

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.

Downgrade

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.

Order	Company	New Rating	Old Rating	Broker
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1	ACCENT GROUP LIMITED	Buy	Neutral	Wilsons
2	ACCENT GROUP LIMITED	Buy	Neutral	Jarden
3	SANDFIRE RESOURCES LIMITED	Buy	Neutral	Jarden
Downgrade
4	AUCKLAND INTERNATIONAL AIRPORT LIMITED	Neutral	Buy	Jarden
5	AUSSIE BROADBAND LIMITED	Neutral	Buy	Wilsons
6	HUB24 LIMITED	Neutral	Buy	Wilsons
7	LYNAS RARE EARTHS LIMITED	Neutral	Buy	Canaccord Genuity

Price Target Changes (Post Thursday Last Week)

Company		Last Price	Broker	New Target	Old Target	Change
A1N	ARN Media	$0.69	Wilsons	N/A	0.92	-100.00%
ABB	Aussie Broadband	$3.01	Wilsons	3.32	4.52	-26.55%
ASX	ASX	$63.77	Goldman Sachs	59.00	55.45	6.40%
AX1	Accent Group	$2.18	Jarden	2.28	2.05	11.22%
			Petra Capital	2.35	2.10	11.90%
			Wilsons	2.50	2.10	19.05%
AZL	Arizona Lithium	$0.02	Petra Capital	0.05	0.06	-16.67%
BSL	BlueScope Steel	$21.22	Jarden	24.00	23.90	0.42%
BVS	Bravura Solutions	$1.11	Wilsons	1.43	1.51	-5.30%
CAR	CAR Group	$34.54	Goldman Sachs	41.40	39.40	5.08%
CIA	Champion Iron	$5.93	Jarden	7.58	7.94	-4.53%
CMM	Capricorn Metals	$5.25	Canaccord Genuity	6.65	6.40	3.91%
EMR	Emerald Resources	$3.82	Canaccord Genuity	4.80	4.60	4.35%
EOS	Electro Optic Systems	$1.89	Petra Capital	1.89	1.50	26.00%
GMD	Genesis Minerals	$2.12	Canaccord Genuity	3.15	2.90	8.62%
GOR	Gold Road Resources	$1.78	Canaccord Genuity	2.15	2.05	4.88%
HUB	Hub24	$47.73	Jarden	44.45	43.80	1.48%
			Wilsons	49.00	44.69	9.64%
KCN	Kingsgate Consolidated	$1.54	Canaccord Genuity	3.20	3.00	6.67%
LOT	Lotus Resources	$0.28	Petra Capital	0.59	0.50	18.00%
NWH	NRW Holdings	$3.37	Moelis	3.56	3.40	4.71%
OBM	Ora Banda Mining	$0.43	Canaccord Genuity	0.52	0.50	4.00%
PPS	Praemium	$0.47	Wilsons	0.55	0.56	-1.79%
PRU	Perseus Mining	$2.58	Canaccord Genuity	3.80	3.60	5.56%
RED	Red 5	$0.40	Canaccord Genuity	0.46	0.43	6.98%
RIO	Rio Tinto	$112.81	Goldman Sachs	136.10	137.00	-0.66%
RNU	Renascor Resources	$0.09	Petra Capital	0.13	0.15	-13.33%
RXL	Rox Resources	$0.13	Canaccord Genuity	0.51	0.50	2.00%
SEK	Seek	$20.20	Goldman Sachs	20.60	23.50	-12.34%
SFR	Sandfire Resources	$8.16	Jarden	9.00	7.40	21.62%
SHM	Shriro	$0.70	Petra Capital	0.99	0.90	10.00%
WGX	Westgold Resources	$2.62	Canaccord Genuity	3.50	3.35	4.48%
Company		Last Price	Broker	New Target	Old Target	Change

More Highlights

BSL    BLUESCOPE STEEL LIMITED

Steel & Scrap Overnight Price: $21.40

Jarden rates ((BSL)) as Overweight (2)

Jarden suspects recent weakness in US benchmark steel spreads could prove the dark before the dawn, observing some forward indicators are starting to improve.

Should spreads remain low throughout the December half, the broker expects BlueScope Steel’s earnings could fall -10% to -15% on consensus forecasts, and believes this has already been factored into the share price.

Add the valuation support from the company’s $18.24 net tangible assets should prove a floor. Combine this with surplus land assets, and the broker is not too concerned. Dividend forecasts are steady.

FY24 EPS forecasts inch up but FY25 forecasts fall a decent clip. Overweight rating retained. Target price inches up to $24 from $23.90.

This report was published on July 15, 2024.

Target price is $24.00 Current Price is $21.40 Difference: $2.6
If BSL meets the Jarden target it will return approximately 12% (excluding dividends, fees and charges).
Current consensus price target is $22.26, suggesting upside of 4.0%(ex-dividends)
The company’s fiscal year ends in June.

Forecast for FY24:

Jarden forecasts a full year FY24 dividend of 50.00 cents and EPS of 207.00 cents.
At the last closing share price the estimated dividend yield is 2.34%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 10.34.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 206.3, implying annual growth of -5.1%.
Current consensus DPS estimate is 50.0, implying a prospective dividend yield of 2.3%.
Current consensus EPS estimate suggests the PER is 10.4.

Forecast for FY25:

Jarden forecasts a full year FY25 dividend of 50.00 cents and EPS of 162.40 cents.
At the last closing share price the estimated dividend yield is 2.34%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 13.18.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 181.6, implying annual growth of -12.0%.
Current consensus DPS estimate is 50.0, implying a prospective dividend yield of 2.3%.
Current consensus EPS estimate suggests the PER is 11.8.

Market Sentiment: 0.2
All consensus data are updated until yesterday. FNArena’s consensus calculations require a minimum of three sources

CMM    CAPRICORN METALS LIMITED

Gold & Silver Overnight Price: $5.30

Canaccord Genuity rates ((CMM)) as Buy (1)

Canaccord Genuity anticipates further upside for both the gold price and gold equities supported by pending rate cuts and strong margin growth, respectively.

The broker raises its 2024-29 gold price forecasts by an average of 3.4% and increases the long-term (from 2030) estimate by 5% to US$2,712/oz. For silver, the long-term price is increased by 20% to US$33.58/oz.

Across Canaccord’s research coverage of developers and explorers, price targets rise by 3% on average, after FY25 and FY26 earnings (EBITDA) forecasts increase by 2% and 3%, respectively, on the higher gold price estimates.

For Capricorn Metals, the broker increases the target to $6.65 from $6.40 and the Buy rating is kept.

This report was published on July 11, 2024.

Target price is $6.65 Current Price is $5.30 Difference: $1.35
If CMM meets the Canaccord Genuity target it will return approximately 25% (excluding dividends, fees and charges).
Current consensus price target is $5.78, suggesting upside of 9.0%(ex-dividends)

Forecast for FY24:

Current consensus EPS estimate is 21.3, implying annual growth of 1705.1%.
Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A.
Current consensus EPS estimate suggests the PER is 24.9.

Forecast for FY25:

Current consensus EPS estimate is 38.8, implying annual growth of 82.2%.
Current consensus DPS estimate is 2.0, implying a prospective dividend yield of 0.4%.
Current consensus EPS estimate suggests the PER is 13.7.

Market Sentiment: 0.7
All consensus data are updated until yesterday. FNArena’s consensus calculations require a minimum of three sources

GTK    GENTRACK GROUP LIMITED

Software & Services Overnight Price: $9.62

Wilsons rates ((GTK)) as Initiation of coverage with Overweight (1)

Wilsons initiates coverage on Gentrack Group with an Overweight rating and $11 target price citing a combination of positive regulatory, macro, micro and competitive movements which should play out well for the company over the medium to long term.

The broker expects the above trends (particularly SAP’s ceasing of support for its core platform) will force utilities to Gentrack Group’s cloud-native platform.

Add to that a track record up upgrades, quality management, possible near-term index inclusion in the ASX300 and exposure to megatrends, and the broker is upbeat.

Overweight rating and $11 target price.

This report was published on July 18, 2024.

Target price is $11.00 Current Price is $9.62 Difference: $1.38
If GTK meets the Wilsons target it will return approximately 14% (excluding dividends, fees and charges).
The company’s fiscal year ends in September.

Forecast for FY24:

Wilsons forecasts a full year FY24 dividend of 0.00 cents and EPS of 11.08 cents.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 86.81.

Forecast for FY25:

Wilsons forecasts a full year FY25 dividend of 0.00 cents and EPS of 17.27 cents.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 55.70.

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

LOT    LOTUS RESOURCES LIMITED

Uranium Overnight Price: $0.28

Petra Capital rates ((LOT)) as Buy (1)

Petra Capital has noted greenfield uranium developers have lagged brownfield developers and producers in the first half of the year. Investor enthusiasm for the sector is expected to broaden in the second half of the year.

Only one third of ASX uranium equities delivered a positive return in 1H 2024, the broker notes.

The broker continues to see value in the near-term production of Lotus Resources, rating the shares Buy with a price target of 59c (up from 50c).

Forecasts have been left untouched.

This report was published on July 22, 2024.

Target price is $0.59 Current Price is $0.28 Difference: $0.31
If LOT meets the Petra Capital target it will return approximately 111% (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 0.40 cents.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is minus 70.00.

Forecast for FY25:

Petra Capital forecasts a full year FY25 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 93.33.

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

SHM    SHRIRO HOLDINGS LIMITED

Overnight Price: $0.68

Petra Capital rates ((SHM)) as Buy (1)

Shriro has decided to outsource subscale parts of its A&NZ business to a third-party distributor and Petra Capital welcomes the move, arguing in combination with the upcoming completion of the ERP upgrade, this should secure a boost for earnings and cash flows.

On this basis FY24 forecasts have been upgraded (slightly reduced for FY25) and Petra Capital re-iterates its Buy rating. The price target lifts to 99c from 90c.

This report was published on July 18, 2024.

Target price is $0.99 Current Price is $0.68 Difference: $0.31
If SHM meets the Petra Capital target it will return approximately 46% (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 24.00 cents and EPS of 8.40 cents.
At the last closing share price the estimated dividend yield is 35.29%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 8.10.

Forecast for FY25:

Petra Capital forecasts a full year FY25 dividend of 7.50 cents and EPS of 9.70 cents.
At the last closing share price the estimated dividend yield is 11.03%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 7.01.

All consensus data are updated until yesterday. FNArena’s consensus calculations require a minimum of three sources

SMP    SMARTPAY HOLDINGS LIMITED

Business & Consumer Credit Overnight Price: $1.16

Wilsons rates ((SMP)) as Overweight (1)

SmartPay has provided a seven-week trading update for FY25: transacting terminals rose by 700; monthly TTV rose 21% on the previous corresponding period and monthly acquiring revenue was up 24%.

Wilsons considers this to be a strong start to the year and expects tax-cut timing should also ameliorate any potential consumer spending withdrawals in the remaining half (the trading update shows consumer spending is hurting the company’s “back-book”, although this has been more than compensated by the front book, says Wilsons).

Overweight rating and $1.86 target price retained.

This report was published on July 12, 2024.

Target price is $1.86 Current Price is $1.16 Difference: $0.7
If SMP meets the Wilsons target it will return approximately 60% (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 4.80 cents.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 24.15.

Forecast for FY26:

Wilsons forecasts a full year FY26 dividend of 0.00 cents and EPS of 7.76 cents.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 14.95.

This company reports in NZD. All estimates have been converted into AUD by FNArena at present FX values.
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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