Weekly Reports | Nov 15 2024
Broker Rating Changes (Post Thursday Last Week)
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DOMAIN HOLDINGS AUSTRALIA LIMITED ((DHG)) Upgrade to Buy from Overweight by Jarden.B/H/S: 0/0/0
Domain Holdings Australia and REA Group's quarterly updates showed similar paid volumes growth, Jarden notes, however this is where the similarities ended.
The impact of winbacks diluted Domain's controllable yield growth while REA's Buy yield grew by an "impressive" 15%.
The broker suggests this indicates REA is growing its share of agent spend, although agent spend is growing overall, which still benefits Domain.
Jarden has downgraded forecast earnings for Domain and upgraded REA's, cutting Domain's target by-2.9% to $3.35 and lifting REA's target 2.3% to $181.
Domain's share price underperformance is considered an opportunity and the broker upgrades to Buy from Overweight. Jarden moves REA to Underweight from Sell despite its stronger operating momentum but notes a lack of near-term catalyst.
REA GROUP LIMITED ((REA)) Upgrade to Underweight from Sell by Jarden.B/H/S: 0/0/0
Domain Holdings Australia and REA Group's quarterly updates showed similar paid volumes growth, Jarden notes, however this is where the similarities ended.
The impact of winbacks diluted Domain's controllable yield growth while REA's Buy yield grew by an impressive 15%.
This indicates REA is growing its share of agent spend, the broker suggests, although agent spend is growing overall, which still benefits Domain.
Jarden has downgraded forecast earnings for Domain and upgraded REA's, cutting Domain's target by-2.9% to $3.35 and lifting REA's target 2.3% to $181.
Domain's share price underperformance is considered an opportunity and the broker upgrades to Buy from Overweight. Jarden moves REA to Underweight from Sell, ignoring its stronger operating momentum but notes a lack of near-term catalyst.
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ENDEAVOUR GROUP LIMITED ((EDV)) Downgrade to Neutral from Overweight by Jarden.B/H/S: 0/0/0
Jarden has downgraded Endeavour Group to Neutral from Overweight, citing a challenging outlook for the company as Q1 retail sales were flat and Q2 is expected to decline.
The broker expects 2Q retail margins to fall by -50 to -100bps year-on-year due to increased competition and promotional activity, while a lack of significant catalysts limits near-term growth opportunities.
With the recent CEO change, the analysts express concern over long-term execution, especially with rising operational costs and new ERP implementation pressures.
Jarden reduces its target price to $5.00 from $6.00, reflecting uncertainty and a cautious stance on retail and liquor market trends. Neutral.
HARVEY NORMAN HOLDINGS LIMITED ((HVN)) Downgrade to Sell from Neutral by Goldman Sachs.B/H/S: 0/0/0
Goldman Sachs has downgraded Harvey Norman to Sell from Neutral, reducing the target price to $4.00 from $4.50 ahead of the company's trading update.
The downgrade is based on the broker's expectations of market share losses in A&NZ due to increased competition from JB Hi-Fi ((JBH)) and Officeworks ((WES)), as well as lower anticipated earnings.
The broker's forecast earnings sit below consensus estimates by -8% to -13% for FY25 to FY27.
Goldman Sachs has revised valuation multiples down for A&NZ franchises and raised the cap rate for property valuation to 6.25%, citing a challenging macro environment.
LIONTOWN RESOURCES LIMITED ((LTR)) Downgrade to Hold from Buy by Petra Capital.B/H/S: 0/0/0
Following an optimisation study, Petra Capital highlights Liontown Resources has lowered its long-term processing rate to 2.8Mtpa, reducing expected output to 530ktpa by FY28 from a previous estimate of 560ktpa.
Separately, the ramp-up at Kathleen Valley is progressing well, with guidance for FY25 production now at 275kt (midpoint) compared to the broker's previous assumption of 198kt.
Due to lower output and lower feed grade, the broker assumes higher unit costs over the coming years, reducing the target to 85c from $1.10. The rating is downgraded to Hold from Buy.
SILK LOGISTICS HOLDINGS LIMITED ((SLH)) Downgrade to Hold from Buy by Moelis.B/H/S: 0/0/0
Moelis notes Silk Logistics has entered into a binding Scheme Implementation Deed with DP World Australia for the proposed acquisition of 100% of the company's shares at $2.14.
The offer values the company at $174.5m, a significant premium to recent trading, the analyst notes, and Silk Logistics' board is recommending shareholders vote in favour of the proposal in the absence of a better offer.
No changes to the analyst's earnings forecasts.
The stock is downgraded to Hold from Buy with a higher target price of $2.14.
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