Australian Broker Call *Extra* Edition – Sep 30, 2024

This story features ARISTOCRAT LEISURE LIMITED, and other companies. For more info SHARE ANALYSIS: ALL

An additional news report on the recommendation, valuation, forecast and opinion changes and updates for ASX-listed equities.

In addition to The Australian Broker Call Report, which is published and updated daily (Mon-Fri), FNArena has now added The Australian Broker Call *Extra* Edition, featuring additional sources of research and insights on ASX-listed stocks, also enlarging the number of stocks that make up the FNArena universe.

One key difference is the *Extra* Edition will not be updated daily, but merely “regularly” depending on availability of suitable quality content. As such, the *Extra* Edition tries to build a bridge between daily updates via the Australian Broker Call Report and ad hoc news stories, that are not always timely for investors hungry for the next information update.

Investors using the *Extra* Edition as a source of input for their own share market research should thus take into account that information after publication may not be up to date, or yet awaiting another update by FNArena’s team of journalists.

Similar to The Australian Broker Call Report, this *Extra* Edition includes concise but limited reviews of research recently published by Stockbrokers and other experts, which should be considered as information concerning likely market behaviour rather than advice on the securities mentioned. Do not act on the contents of this Report without first reading the important information included at the end of this Report.

The Australian Broker Call *Extra* Edition is a summary that has been prepared independently of the sources identified. Readers will check the full text of the recommendations and consult a Licenced Advisor before making any investment decision.

The copyright of this Report is owned by the publisher. Readers will not copy, forward or disseminate this Report to any other person. For more vital information about the sources included, see the bottom of this Report.

COMPANIES DISCUSSED IN THIS ISSUE

Click on a symbol for fast access.
The number next to the symbol represents the number of brokers covering it for this report -(if more than 1)

ALL   BMN   CDA (2)   ELD   FMG   KMD   LNW   PME   PMV   WEB   WTC   XRO  

ALL    ARISTOCRAT LEISURE LIMITED

Gaming – Overnight Price: $58.17

Jarden rates ((ALL)) as Overweight (2) –

Jarden highlights the successful court win for Aristocrat Leisure against Light & Wonder ((LNW)) with the Nevada court granting an injunction against Dragon Train. Light & Wonder is appealing the decision.

The broker stresses Aristocrat Leisure is asset light and intellectual property heavy with the gaming industry very litigious. The company spends 13% of annual sales on design and development.

Jarden believes some market share gains might be achieved and lifts FY25 EPS forecast by 2.4%. FY24 results are due on Nov 13.

No change in Overweight rating. Target price lifts to $59 from $56.

This report was published on September 25, 2024.

Target price is $59.00 Current Price is $58.17 Difference: $0.83
If ALL meets the Jarden target it will return approximately 1% (excluding dividends, fees and charges).
Current consensus price target is $57.47, suggesting downside of -1.2%(ex-dividends)
The company’s fiscal year ends in September.

Forecast for FY24:

Jarden forecasts a full year FY24 EPS of 246.10 cents.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 23.64.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 238.4, implying annual growth of 7.2%.
Current consensus DPS estimate is 78.5, implying a prospective dividend yield of 1.3%.
Current consensus EPS estimate suggests the PER is 24.4.

Forecast for FY25:

Jarden forecasts a full year FY25 EPS of 268.50 cents.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 21.66.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 262.6, implying annual growth of 10.2%.
Current consensus DPS estimate is 88.9, implying a prospective dividend yield of 1.5%.
Current consensus EPS estimate suggests the PER is 22.2.

Market Sentiment: 0.9
All consensus data are updated until yesterday. FNArena’s consensus calculations require a minimum of three sources

BMN    BANNERMAN ENERGY LIMITED

Uranium – Overnight Price: $3.14

Canaccord Genuity rates ((BMN)) as Speculative Buy (1) –

Management at Bannerman Energy has expanded the projected window for a financial investment decision (FID) at the Etango project and is targeting a positive decision in 2025.

This timeline neatly aligns with Canaccord Genuity’s prior forecast, and the broker forecasts first production in 2029.

Importantly, suggest the analysts, the bulk earthworks contract has been awarded to a consortium led by Civmec ((CVL)) and NRW Holdings ((NWH)).

Speculative Buy rating and $4.33 target retained. 

This report was published on September 26, 2024.

Target price is $4.33 Current Price is $3.14 Difference: $1.19
If BMN meets the Canaccord Genuity target it will return approximately 38% (excluding dividends, fees and charges).
The company’s fiscal year ends in June.

Forecast for FY25:

Canaccord Genuity forecasts a full year FY25 dividend of 0.00 cents and EPS of minus 5.31 cents.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is minus 59.17.

Forecast for FY26:

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

CDA    CODAN LIMITED

Hardware & Equipment – Overnight Price: $16.13

Canaccord Genuity rates ((CDA)) as Buy (1) –

Bolstering the Tactical Communications division and providing a 4% increase to Canaccord Genuity’s FY26 forecast, Codan will purchase Kagwerks (SKT2 LLC dba Kagwerks) for -$33.6m.

Kagwerks is a US-based provider of tactical operator-worn networking communications technologies used in a military environment. The broker anticipates Kagwerk’ DOCK platform will benefit from the greater scale, distribution and access to a larger addressable market.

The Buy rating is maintained. The target rises to $16.76 from $15.34. Codan is now a high margin earnings compounder, according to the broker, and return metrics are rapidly improving.

This report was published on September 26, 2024.

Target price is $16.76 Current Price is $16.13 Difference: $0.63
If CDA meets the Canaccord Genuity target it will return approximately 4% (excluding dividends, fees and charges).
The company’s fiscal year ends in June.

Forecast for FY25:

Canaccord Genuity forecasts a full year FY25 dividend of 26.00 cents and EPS of 54.00 cents.
At the last closing share price the estimated dividend yield is 1.61%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 29.87.

Forecast for FY26:

Canaccord Genuity forecasts a full year FY26 dividend of 31.00 cents and EPS of 66.00 cents.
At the last closing share price the estimated dividend yield is 1.92%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 24.44.

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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Moelis rates ((CDA)) as Buy (1) –

Codan has expanded its Tactical Communications technology suite, observes Moelis, by acquiring US-based SKT2 LLC dba Kagwerks for -$33.6m together with royalty payments for five years post-closing.

Kagwerks, for short, is the global leader in operator-worn networking communications technologies and provides equipment to the US Department of Defence through the Nett Warrior Program.

The Buy rating is maintained. The target price rises to $18.15 from $16.85 after the broker increases FY25-FY27 EPS forecasts by 2.3%, 6.0% and 6.7%, respectively, due to the acquisition.

This report was published on September 26, 2024.

Target price is $18.15 Current Price is $16.13 Difference: $2.02
If CDA meets the Moelis target it will return approximately 13% (excluding dividends, fees and charges).
The company’s fiscal year ends in June.

Forecast for FY25:

Moelis forecasts a full year FY25 dividend of 27.60 cents and EPS of 55.20 cents.
At the last closing share price the estimated dividend yield is 1.71%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 29.22.

Forecast for FY26:

Moelis forecasts a full year FY26 dividend of 34.40 cents and EPS of 68.60 cents.
At the last closing share price the estimated dividend yield is 2.13%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 23.51.

Market Sentiment: 0.5
All consensus data are updated until yesterday. FNArena’s consensus calculations require a minimum of three sources

ELD    ELDERS LIMITED

Agriculture – Overnight Price: $8.56

Wilsons rates ((ELD)) as Market Weight (3) –

Wilsons revisits the earnings outlook for Elders as the 2H24 comes to an end. The analyst notes livestock prices have moved off the lows and saleyard volumes have been robust over the period.

Real estate activity has slowed which is expected to impact on the company’s Real Estate Services on a like-for-like basis.

In retail products the broker highlights channel checks infer strength across fertiliser, agchem and animal health.

Target price falls to $8.07 from $8.26 for a downward revision in earnings forecasts. Market weight rating unchanged.

This report was published on September 26, 2024.

Target price is $8.07 Current Price is $8.56 Difference: minus $0.49 (current price is over target).
If ELD meets the Wilsons target it will return approximately minus 6% (excluding dividends, fees and charges – negative figures indicate an expected loss).
Current consensus price target is $9.07, suggesting upside of 5.9%(ex-dividends)
The company’s fiscal year ends in September.

Forecast for FY24:

Wilsons forecasts a full year FY24 dividend of 36.00 cents and EPS of 40.30 cents.
At the last closing share price the estimated dividend yield is 4.21%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 21.24.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 45.0, implying annual growth of -30.2%.
Current consensus DPS estimate is 30.0, implying a prospective dividend yield of 3.5%.
Current consensus EPS estimate suggests the PER is 19.0.

Forecast for FY25:

Wilsons forecasts a full year FY25 dividend of 36.00 cents and EPS of 55.40 cents.
At the last closing share price the estimated dividend yield is 4.21%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 15.45.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 63.9, implying annual growth of 42.0%.
Current consensus DPS estimate is 38.7, implying a prospective dividend yield of 4.5%.
Current consensus EPS estimate suggests the PER is 13.4.

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

FMG    FORTESCUE LIMITED

Iron Ore – Overnight Price: $20.10

Jarden rates ((FMG)) as Underweight (4) –

Jarden assesses the extension of Fortescue’s 2022 agreement to supply heavy mining equipment to Liebherr’s Pilbara operations.

The contract has been expanded to 360 autonomous, battery-electric trucks, 55 electric excavators and 60-powered dozers for around US$2.8bn, pre-battery technology solutions.

Jarden question whether this week’s China stimulus measures will create an uplift in iron ore demand, particularly when supply is not an issue. 

Regarding the company’s decarbonisation goals, the broker estimates a valuation increase of $2.25 per share if Fortescue meets its 2030 target.

No change in Underweight rating. Target price rises to $16.83 from $15,85 because of a downgrade in the weighted average cost of capital on the valuation.

This report was published on September 25, 2024.

Target price is $16.83 Current Price is $20.10 Difference: minus $3.27 (current price is over target).
If FMG meets the Jarden target it will return approximately minus 16% (excluding dividends, fees and charges – negative figures indicate an expected loss).
Current consensus price target is $18.28, suggesting downside of -9.0%(ex-dividends)
The company’s fiscal year ends in June.

Forecast for FY25:

Jarden forecasts a full year FY25 EPS of 200.76 cents.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 10.01.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 174.5, implying annual growth of N/A.
Current consensus DPS estimate is 89.7, implying a prospective dividend yield of 4.5%.
Current consensus EPS estimate suggests the PER is 11.5.

Forecast for FY26:

Jarden forecasts a full year FY26 EPS of 103.56 cents.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 19.41.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 163.7, implying annual growth of -6.2%.
Current consensus DPS estimate is 88.0, implying a prospective dividend yield of 4.4%.
Current consensus EPS estimate suggests the PER is 12.3.

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.
Market Sentiment: -0.1
All consensus data are updated until yesterday. FNArena’s consensus calculations require a minimum of three sources

KMD    KMD BRANDS LIMITED

Sports & Recreation – Overnight Price: $0.47

Canaccord Genuity rates ((KMD)) as Hold (3) –

Canaccord Genuity suggests a revenue turnaround (more likely in the 2H of FY25) is needed to prompt investors in KMD Brands into action, following a “challenged” FY24 result. The Hold rating is kept.

Difficult market conditions in FY24 drove the outcome, explains the broker, particularly weakness in North American wholesale and an ongoing weak Kathmandu performance.

Another potential catalyst for KMD Brands will be improving sales for Rip Curl, where the analysts are hopeful for improvement in the wholesale channel, which appears to have taken its medicine earlier than the outdoor brands.

The broker’s target rises to 48c from 39c partly due to higher earnings forecasts, but also due to a financial model roll-forward.

This report was published on September 26, 2024.

Target price is $0.48 Current Price is $0.47 Difference: $0.01
If KMD meets the Canaccord Genuity target it will return approximately 2% (excluding dividends, fees and charges).
Current consensus price target is $0.40, suggesting downside of -14.9%(ex-dividends)
The company’s fiscal year ends in July.

Forecast for FY25:

Canaccord Genuity forecasts a full year FY25 dividend of 0.00 cents and EPS of 0.65 cents.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 72.87.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 3.3, implying annual growth of N/A.
Current consensus DPS estimate is 2.5, implying a prospective dividend yield of 5.3%.
Current consensus EPS estimate suggests the PER is 14.2.

Forecast for FY26:

Canaccord Genuity forecasts a full year FY26 dividend of 2.58 cents and EPS of 3.50 cents.
At the last closing share price the estimated dividend yield is 5.49%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 13.41.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 4.8, implying annual growth of 45.5%.
Current consensus DPS estimate is 2.4, implying a prospective dividend yield of 5.1%.
Current consensus EPS estimate suggests the PER is 9.8.

This company reports in NZD. All estimates have been converted into AUD by FNArena at present FX values.
Market Sentiment: 0.0
All consensus data are updated until yesterday. FNArena’s consensus calculations require a minimum of three sources

LNW    LIGHT & WONDER INC

Gaming – Overnight Price: $134.41

Jarden rates ((LNW)) as Buy (1) –

Light & Wonder received a court injection on its successful Dragon Train product, Jarden highlights. Management guided to less than a -5% impact on FY25 earnings of US$1.4bn, although the broker considers it might be slightly higher.

The company is appealing the decision and does not know whether the existing machines in North American operations will need to be removed.

Jarden lowers EPS forecasts by -1.2% in FY24 and -3.2% in FY25.

Buy rating remains. Target price declines to $175 from $176.

This report was published on September 25, 2024.

Target price is $175.00 Current Price is $134.41 Difference: $40.59
If LNW meets the Jarden target it will return approximately 30% (excluding dividends, fees and charges).
Current consensus price target is $168.40, suggesting upside of 25.3%(ex-dividends)
The company’s fiscal year ends in December.

Forecast for FY24:

Jarden forecasts a full year FY24 dividend of 0.00 cents and EPS of 444.60 cents.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 30.23.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 448.4, implying annual growth of 66.2%.
Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A.
Current consensus EPS estimate suggests the PER is 30.0.

Forecast for FY25:

Jarden forecasts a full year FY25 dividend of 0.00 cents and EPS of 586.40 cents.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 22.92.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 598.0, implying annual growth of 33.4%.
Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A.
Current consensus EPS estimate suggests the PER is 22.5.

Market Sentiment: 0.9
All consensus data are updated until yesterday. FNArena’s consensus calculations require a minimum of three sources

PME    PRO MEDICUS LIMITED

Medical Equipment & Devices – Overnight Price: $174.04

Goldman Sachs rates ((PME)) as Buy (1) –

Goldman Sachs raises its target for Buy-rated Pro Medicus by 30% to $193, well in advance of the $128.50 average target of five daily-covered brokers in the FNArena database (which doesn’t include Goldman Sachs).

The $193 target is justified by the revenue/margin outlook, unique cloud offering, and significant long-term opportunity, suggest the analysts.

The company’s share of the US market remains low at 7%, highlights the broker, which forecasts a long-term US market share over 25%. Upside potential is also noted for the core total addressable market (TAM), adjacencies (cardiology and  AI) and potential new markets.

Regarding adjacencies, Goldman Sachs suggests Pro Medicus is well positioned to take share in cardiology and AI, thanks to a unique partnership with medical key opinion leaders in settings that are generally well-funded.

This report was published on September 27, 2024.

Target price is $193.00 Current Price is $174.04 Difference: $18.96
If PME meets the Goldman Sachs target it will return approximately 11% (excluding dividends, fees and charges).
Current consensus price target is $128.50, suggesting downside of -26.2%(ex-dividends)
The company’s fiscal year ends in June.

Forecast for FY25:

Goldman Sachs forecasts a full year FY25 dividend of 541.00 cents and EPS of 104.00 cents.
At the last closing share price the estimated dividend yield is 3.11%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 167.35.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 102.7, implying annual growth of 29.6%.
Current consensus DPS estimate is 51.4, implying a prospective dividend yield of 0.3%.
Current consensus EPS estimate suggests the PER is 169.5.

Forecast for FY26:

Goldman Sachs forecasts a full year FY26 dividend of 68.00 cents and EPS of 133.00 cents.
At the last closing share price the estimated dividend yield is 0.39%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 130.86.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 135.7, implying annual growth of 32.1%.
Current consensus DPS estimate is 67.8, implying a prospective dividend yield of 0.4%.
Current consensus EPS estimate suggests the PER is 128.3.

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

PMV    PREMIER INVESTMENTS LIMITED

Apparel & Footwear – Overnight Price: $30.86

Jarden rates ((PMV)) as Neutral (3) –

Premier Investments’ FY24 result had been pre-announced and the company’s retail result thus was in line with expectations.

Jarden highlights the composition and the outlook did, however. disappoint with EBIT falling around -7% and net profit down circa -3%.

Excluding Smiggle, the analyst considers the quality was good while the de-merger of Smiggle has been deferred.

Jarden lowers earnings forecasts and now expects compound average EPS of around 4% p.a. over the next three years.

Neutral rating unchanged. Target price falls slightly to $29.50 from $29.80.

This report was published on September 25, 2024.

Target price is $29.50 Current Price is $30.86 Difference: minus $1.36 (current price is over target).
If PMV meets the Jarden target it will return approximately minus 4% (excluding dividends, fees and charges – negative figures indicate an expected loss).
Current consensus price target is $31.86, suggesting upside of 3.2%(ex-dividends)
The company’s fiscal year ends in July.

Forecast for FY25:

Jarden forecasts a full year FY25 EPS of 153.40 cents.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 20.12.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 166.5, implying annual growth of 2.9%.
Current consensus DPS estimate is 121.2, implying a prospective dividend yield of 3.9%.
Current consensus EPS estimate suggests the PER is 18.5.

Forecast for FY26:

Jarden forecasts a full year FY26 EPS of 160.00 cents.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 19.29.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 177.5, implying annual growth of 6.6%.
Current consensus DPS estimate is 126.0, implying a prospective dividend yield of 4.1%.
Current consensus EPS estimate suggests the PER is 17.4.

Market Sentiment: 0.3
All consensus data are updated until yesterday. FNArena’s consensus calculations require a minimum of three sources

WEB    WEBJET LIMITED

Travel, Leisure & Tourism – Overnight Price: $7.40

Jarden rates ((WEB)) as Downgrade to Overweight from Buy (2) –

In the wake of the B2C de-merger, Jarden highlights Webjet  is now a pure-play B2B platform in the bed-bank space, which should command a premium multiple.

Such premium is deserved because of the large addressable market (over US$90bn), a high incremental return on invested capital (ROIC) and scale, the broker suggests.

The target falls to $7.70 after the de-merger, and the rating is downgraded to Overweight from Buy, with the analysts suggesting risk-reward remains skewed to the upside.

This report was published on September 27, 2024.

Target price is $7.70 Current Price is $7.40 Difference: $0.3
If WEB meets the Jarden target it will return approximately 4% (excluding dividends, fees and charges).
Current consensus price target is $8.99, suggesting upside of 21.4%(ex-dividends)
The company’s fiscal year ends in March.

Forecast for FY25:

Jarden forecasts a full year FY25 dividend of 0.00 cents and EPS of 21.50 cents.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 34.42.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 32.3, implying annual growth of 71.1%.
Current consensus DPS estimate is 6.0, implying a prospective dividend yield of 0.8%.
Current consensus EPS estimate suggests the PER is 22.9.

Forecast for FY26:

Jarden forecasts a full year FY26 dividend of 9.00 cents and EPS of 27.90 cents.
At the last closing share price the estimated dividend yield is 1.22%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 26.52.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 40.3, implying annual growth of 24.8%.
Current consensus DPS estimate is 7.5, implying a prospective dividend yield of 1.0%.
Current consensus EPS estimate suggests the PER is 18.4.

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

WTC    WISETECH GLOBAL LIMITED

Cloud services – Overnight Price: $135.15

Goldman Sachs rates ((WTC)) as Neutral (3) –

Goldman Sachs raises its target for WiseTech Global by 33% to $138. A Neutral rating is kept due to both the significant investment required over coming years and the material valuation premium to technology peers under the broker’s coverage. 

The analysts like WiseTech’s strong competitive position, the productivity benefits from CargoWise software, near-term industry tailwinds from increased M&A, and emerging customs/landside solutions.

The broker sees an opportunity to improve industry efficiency through WiseTech’s product launches, particularly Container Transport Optimisation.

This report was published on September 27, 2024.

Target price is $138.00 Current Price is $135.15 Difference: $2.85
If WTC meets the Goldman Sachs target it will return approximately 2% (excluding dividends, fees and charges).
Current consensus price target is $112.60, suggesting downside of -16.7%(ex-dividends)

Forecast for FY25:

Current consensus EPS estimate is 118.9, implying annual growth of 49.7%.
Current consensus DPS estimate is 23.6, implying a prospective dividend yield of 0.2%.
Current consensus EPS estimate suggests the PER is 113.7.

Forecast for FY26:

Current consensus EPS estimate is 163.6, implying annual growth of 37.6%.
Current consensus DPS estimate is 31.9, implying a prospective dividend yield of 0.2%.
Current consensus EPS estimate suggests the PER is 82.6.

Market Sentiment: 0.3
All consensus data are updated until yesterday. FNArena’s consensus calculations require a minimum of three sources

XRO    XERO LIMITED

Accountancy – Overnight Price: $148.72

Goldman Sachs rates ((XRO)) as Buy (1) –

Goldman Sachs raises its target for Xero by 12% to $201 on higher earnings forecasts and a re-rating of SaaS peers. Buy.

The broker’s industry feedback suggests a positive from management’s greater focus on localising the product to be more US-centric, and becoming consistent with how those accountants operate, who use QuickBooks Online Accountant (QBO).

There is an improving Canadian opportunity in 2025-26, highlight the analysts, as Open-banking is introduced. A lack of progress on open banking/bank feeds has been cited as the key reason behind an industry wide slowdown in cloud adoption, explains Goldman Sachs.

This report was published on September 27, 2024.

Target price is $201.00 Current Price is $148.72 Difference: $52.28
If XRO meets the Goldman Sachs target it will return approximately 35% (excluding dividends, fees and charges).
Current consensus price target is $161.43, suggesting upside of 8.5%(ex-dividends)
The company’s fiscal year ends in March.

Forecast for FY25:

Goldman Sachs forecasts a full year FY25 dividend of 0.00 cents.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 139.0, implying annual growth of N/A.
Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A.
Current consensus EPS estimate suggests the PER is 107.0.

Forecast for FY26:

Goldman Sachs forecasts a full year FY26 dividend of 0.00 cents.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 184.2, implying annual growth of 32.5%.
Current consensus DPS estimate is 13.6, implying a prospective dividend yield of 0.1%.
Current consensus EPS estimate suggests the PER is 80.7.

This company reports in NZD. All estimates have been converted into AUD by FNArena at present FX values.
Market Sentiment: 0.8
All consensus data are updated until yesterday. FNArena’s consensus calculations require a minimum of three sources

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