Weekly Reports | Oct 04 2024
Broker Rating Changes (Post Thursday Last Week)
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BREVILLE GROUP LIMITED ((BRG)) Downgrade to Sell from Hold by Petra Capital.B/H/S: 0/0/0
Due to incorrect data entry, Petra Capital's rating for Breville Group should have been downgraded to Sell from Hold last month.
A summary of the broker's research dated August 22 follows.
Expansion in gross margins and stronger sales in 2H24 helped Breville Group report slightly better than forecast FY24 earnings, Petra Capital notes.
Lower freight costs with promotional activity controlled boosted the gross margin by 140 basis points in 2H24. It is likely to remain flat, the broker highlights, into FY25. This means growth will depend on volume expansion.
The analyst believes new product launches, new markets and expansion of Lelit/Baratza should assist in volume growth.
Petra Capital makes minor EPS changes. Target price rises to $28.30 from $24.40.
GPT GROUP ((GPT)) Downgrade to Underweight from Overweight by Jarden.B/H/S: 0/0/0
While Jarden is not negative on prospects for mall REITs, after strong outperformances the broker's ratings are downgraded for Vicinity Centres, Scentre Group and GPT Group.
In fact, REIT's should continue to see 3-4% comparable net operating income (NOI) growth and a 4-6% funds from operations (FFO) compound annual growth rate (CAGR) over the next few years, predict the analysts.
However, based upon transactional evidence of development returns, the broker believes a further increase in valuation premiums is not really justified.
Jarden's target for GPT Group rises to $5.10 from $5.05 and the rating is downgraded to Underweight from Overweight.
METALS ACQUISITION LIMITED ((MAC)) Downgrade to Hold from Buy by Moelis.B/H/S: 0/0/0
Moelis updates the gold, silver, copper and forex estimates and marks-to-market the changes to earnings estimates.
Rating is downgraded to Hold from Buy due to the recent 17% rally in the share price.
No change in the target price of $23.
ORA BANDA MINING LIMITED ((OBM)) Downgrade to Hold from Buy by Moelis.B/H/S: 0/0/0
Ora Banda Mining reported FY24 results which showed favourable trading activity over the last 12 months. Moelis notes this is probably due to a higher gold price and a turnaround at Davyhurst.
The analyst believes the commissioning of Sand King in FY25 will enable the business to generate around 150koz p.a. in FY26.
Target price is raised to 66c. Stock rating downgraded to Hold from Buy with a lot of optimism built into the share price at current levels.
ORICA LIMITED ((ORI)) Downgrade to Neutral from Overweight by Jarden.B/H/S: 0/0/0
Jarden believes earnings growth in Orica's key Australia Pacific & Asia (APA) division will slow into FY26 on slowing recontracting growth for ammonium nitrate (AN).
The North American AN market is growing increasingly oversupplied due to the attractive gas input costs for AN production in the US and large agricultural producers switching AN into the explosives market, explains the broker.
Now that the Orica share price has rallied by 20.2% over the past year, and the risk/reward profile has turned negative, the analysts downgrade the rating for Orica to Neutral from Overweight. The $18.50 target is maintained.
SCENTRE GROUP ((SCG)) Downgrade to Neutral from Overweight by Jarden.B/H/S: 0/0/0
While Jarden is not negative on prospects for mall REITs, after strong outperformances the broker's ratings are downgraded for Vicinity Centres, Scentre Group and GPT Group.
In fact, REIT's should continue to see 3-4% comparable net operating income (NOI) growth and a 4-6% funds from operations (FFO) compound annual growth rate (CAGR) over the next few years, predict the analysts.
However, based upon transactional evidence of development returns, the broker believes a further increase in valuation premiums is not really justified.
Jarden's target for Scentre Group rises to $3.90 from $3.75 and the rating is downgraded to Neutral from Overweight.
VICINITY CENTRES ((VCX)) Downgrade to Overweight from Buy by Jarden.B/H/S: 0/0/0
While Jarden is not negative on prospects for mall REITs, after strong outperformances the broker's ratings are downgraded for Vicinity Centres, Scentre Group and GPT Group.
In fact, REIT's should continue to see 3-4% comparable net operating income (NOI) growth and a 4-6% funds from operations (FFO) compound annual growth rate (CAGR) over the next few years, predict the analysts.
However, based upon transactional evidence of development returns, the broker believes a further increase in valuation premiums is not really justified.
Jarden's target for Vicinity Centres rises to $2.50 from $2.45 and the rating is downgraded to Overweight from Buy.
WEB TRAVEL GROUP LIMITED ((WEB)) Downgrade to Overweight from Buy by Jarden.B/H/S: 0/0/0
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.
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