Weekly Reports | Feb 21 2025
Broker Rating Changes (Post Thursday Last Week)
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CHARTER HALL RETAIL REIT ((CQR)) Upgrade to Buy from Hold by Moelis.B/H/S: 0/0/0
Charter Hall Retail REIT reported 1H25 earnings per unit of 12.6c and a dividend of 12.3c, and reiterated full-year guidance.
Moelis reckons the REIT's operating performance remained strong in the context of a tough consumer environment
The broker expects Charter Hall's ((CHC)) acquisition of Hotel Property Investments ((HPI)) will result in the REIT owning 50% of the latter portfolio by June.
The analyst expects the deal to be marginally dilutive near-term, but expects this to resolve on Hotel Property's relatively high embedded rent growth and expected RBA rate cuts.
Target price rises to $3.94 from $3.89, and rating upgraded to Buy from Hold.
DATA#3 LIMITED. ((DTL)) Upgrade to Overweight from Market Weight by Wilsons.B/H/S: 0/0/0
Data#3 provided a strong first half result in a challenging environment, Wilsons assesses. The broker highlights services gross sales, with this the first period where services were meaningfully greater than product gross margin.
In light of this, and with the balance of risks to the upside over the coming year, the rating is upgraded to Overweight from Market Weight. Wilsons increases FY25 revenue estimates by 3% and the target to $9.75 from $9.23.
FISHER & PAYKEL HEALTHCARE CORPORATION LIMITED ((FPH)) Upgrade to Overweight from Market Weight by Wilsons.B/H/S: 0/0/0
Wilsons upgrades Fisher & Paykel Healthcare to Overweight from Market Weight, noting the new rating already reflects strong CDC data in emergency departments (ED) and the -12% fall in share price from pre-tariff highs.
The broker believes the spike in ED visits signals a "severe" flu season compared with the company's "moderate" expectation. This could bolster a potential beat to FY25 sales and net profit guidance.
Additionally, Wilsons has not adjusted forecasts for potential tariff impost but with the tariff already in the price, the analyst believes both the potential scenarios from here are positive for the stock.
Target price retained at $35.
GRAINCORP LIMITED ((GNC)) Upgrade to Overweight from Market Weight by Wilsons.B/H/S: 0/0/0
Wilsons notes GrainCorp's FY25 trading update and guidance fell short of consensus forecasts, driven by lower margins.
The company announced an intention for on-market share buy-back of up to $50m and to progress the feasibility assessment of a renewable fuels facility with MOU partners Ampol ((ALD)) and IFM investors.
The broker left FY25 earnings broadly unchanged but lowered FY26 earnings on anticipated lower volumes in agribusiness and lower margins in the nutrition and energy business.
Rating upgraded to Overweight from Market Weight. Target price $8.91.
GPT GROUP ((GPT)) Neutral by Jarden.B/H/S: 0/0/0
GPT Group's new management team has further clarified its strategy of growing external assets under management and improving returns, although execution in a crowded funds management market is now key, Jarden suggests.
Initial FY25 funds from operations guidance suggests less initial dilution than feared, but based on the headwind of interest expense, recent asset sales and lower trading profits, Jarden believes this could still prove ambitious.
After recent underperformance, expectations are arguably low, but the broker believes investors have attractive pure-play alternatives for Malls, an Office recovery or the interest rate sensitivity of funds.
The -7.5% discount to NTA and 4.9% dividend yield suggest to Jarden a risk-reward that is fairly balanced. Target rises to $5.10 from $4.95. Neutral retained.
HOMECO DAILY NEEDS REIT ((HDN)) Upgrade to Buy from Hold by Moelis.B/H/S: 0/0/0
HomeCo Daily Needs REIT's 1H25 funds from operations proved marginally short of Moelis' estimates. The REIT reiterated FY25 guidance of 8.8c which requires a slightly stronger 2H but management attributed it to the timing difference between acquisitions and divestments.
The broker highlights the REIT's portfolio performance has shown consistent operating metrics improvement over the last 4-5 years, reflective of the management's strategy execution and overall portfolio curation.
Target price rises marginally to $1.36 from $1.35. Rating upgraded to Buy from Hold on recent share price weakness.
OPTHEA LIMITED ((OPT)) Upgrade to Market Weight from Underweight by Wilsons.B/H/S: 0/0/0
Opthea is expected to provide phase III readouts this year for its sozinibercept drug, and Wilsons considers the current share price assumes a positive outcome.
Full de-risking of the drug should support an unrisked price target of $2.08, the broker calculates, raising its target to $1.00 from $0.28.
If approved, Wilsons expects utilisation patterns of the drug to be dramatically different to protocol use in the phase III, noting the product specification as an add-on to the standard care in retinal disease remains controversial.
The rating is upgraded to Market Weight from Underweight.
ORIGIN ENERGY LIMITED ((ORG)) Upgrade to Neutral from Underweight by Jarden.B/H/S: 0/0/0
Further to the first half results from Origin Energy, which were in line with Jarden's estimates, the rating is upgraded to Neutral from Underweight.
The broker was surprised by the unchanged guidance for emerging markets EBITDA despite the positive first half performance and does factor in higher earnings through the forecast period.
The target is reduced to $10.25 from $10.45, largely related to APLNG, where Jarden still awaits answers on the near-term production outlook and whether reserves are impacted.
XRF SCIENTIFIC LIMITED ((XRF)) Upgrade to Buy from Speculative Buy by Canaccord Genuity.B/H/S: 0/0/0
XRF Scientific posted a "solid" first half result which Canaccord Genuity believes is stronger than it appears at face value. EBITDA and pre-tax profit were ahead of expectations, underpinned by resilient margins.
There is strength in international customer demand and added capabilities now considerably enhance cross-selling potential. The broker moves the rating to Buy from Speculative Buy and raises the target to $2.22 from $1.75.
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