In Brief: Top Picks In Financials, Retail & Healthcare

This story features JUDO CAPITAL HOLDINGS LIMITED, and other companies. For more info SHARE ANALYSIS: JDO

The company is included in ASX200, ASX300 and ALL-ORDS

Post earnings season brokers round up the summaries for a selection of what they like and what’s not so hot for financials, the retail and healthcare sectors

-Judo Capital packs some punch versus Macquarie Group
-Retailers flying above their competitors
-Healthcare down but not out 

By Danielle Ecuyer

Welcome back to In Brief with 2025 starting with a bang. 

Quote of the Week comes from Sandy Pei, Senior Portfolio Manager for Asia ex-Japan at Federated Hermes summarising the topic du jour Tariffs!

“Global trade is facing significant uncertainties. While the risks for China have been widely discussed, the potential impacts on other countries have not been fully considered in our view.”

Banks, David versus Goliath

In what Jarden describes as “The tale of two mavericks,” the broker has initiated coverage on Judo Capital ((JDO)) and Macquarie Group ((MQG)) with a straight-talking contrast and comparison as to why the former offers more upside potential over the near term.

Following some misguided steps into commercial property lending, Judo’s management has succeeded in executing a “restoration” of front book lending spreads with a return to label lending.

Jarden highlights the front book spread is back above 450bps-plus over one-month bank bill swap funding for lending to small-medium-sized enterprises ((SMEs)) in the $250k to $10m loan segment.

Judo is also positioning for a transition from minimum liquidity holdings to a liquidity coverage ratio, which could increase net interest margins by 30bps.

Banks typically do not operate in the sub-$15m loan category, affording Judo the opportunity to scale to a market share of 2% to 3% across assets and liabilities.

Jarden starts off with a Buy rating and a $2.60 target price. FNArena’s consensus target price stands at $2.147, with three Buy-equivalent ratings, two Holds, and one Sell.

In contrast, Macquarie is highlighted as a “quality and unique asset” with a good medium-to-long-term structural outlook that is currently facing some near-term headwinds, Jarden notes.

After several earnings misses, the stock’s valuation is viewed as too high relative to the earnings outlook. Concerns remain over the transition of the renewables business from the balance sheet to an asset management model, or, simply put:  the divestment of around $2.2bn of renewable assets.

The change is taking longer to progress and may be facing growing headwinds, including political pressures in the renewables space.

Capital markets improved in 2024 but have started under pressure in 2025. Jarden believes for the share price to really “fire,” Australian equity and M&A activity would need to rebound strongly.

The broker is equally cautious about the commodity market outlook, which does not appear able to replicate the opportunities of 2023.

Macquarie starts off on Underweight with a $200 target price. FNArena’s consensus target price is $225.714, with two Buy-equivalent ratings, two Holds, and one Sell.

Retailers battling competition, costs, and a picky consumer

Morgans and Jarden cast an analytical eye over consumer discretionary and retail stocks.

Morgans stresses ongoing cost-of-living pressures on consumers led to increased promotional activity towards the end of 2024. Sales advanced 6.5% year-on-year but were below expectations by -1.1%. Gross margins rose 10bps on average, with dividends slightly better than expected, up 7.6% on a medium basis.

The broker lowers FY25 and FY26 earnings forecasts by -1.7% and -1.6% due to larger downgrades affecting Super Retail Group ((SUL)) and, to a slightly lesser extent, Adairs ((ADH)) and Accent Group ((AX1)).

Forecasts for Lovisa Holdings ((LOV)) were lowered on a higher tax rate, while Morgans turned more positive on JB Hi-Fi ((JBH)) and Universal Store ((UNI)). Both Accent and The Reject Shop ((TRS)) were downgraded to Hold from Add.

Cost inflation was also observed, albeit down from peak levels, and mitigating the impact remains a focus for companies. Share price volatility was predominantly skewed to sell-offs, with a median price decline of -6% since the results.

The second half has commenced positively, and further rate cuts could boost consumer spending, says the broker.

Morgans is Buy-rated on Adairs, Beacon Lighting ((BLX)), Lovisa, Step One Clothing ((STP)) , Super Retail, and Universal Store.

Accent, Baby Bunting ((BBN)), Breville Group ((BRG)), JB Hi-Fi, and The Reject Shop all have Hold ratings.

Jarden viewed the basket of consumer stocks in its universe as reporting in-line results, with one-year forward EPS trimmed by over -5%, outstripping upgrades by 2.3 to one.

This is attributed to higher depreciation, amortisation, interest, and rent costs.

The start of the second half of 2025 has commenced well, with 55% of retailers reporting an acceleration in January and February trade. Capex commitments are being down scaled to lift return on capital invested, and the gap between stronger and weaker companies is widening. Super Retail is highlighted as an outlier on capex spending.

Amazon is viewed as a competitor to Catch and Kogan ((KGN)), and Jarden prefers Universal Store to Accent.

The 2025 outlook is noted as strong, with youth spending expected to re-accelerate, benefiting Universal Store, Super Retail, and Accent.

Online value remains a focus, with consumers looking for service, price, and range, favouring Temple & Webster ((TPW)), Amazon, Kmart inside Wesfarmers ((WES)), and Temu.

For the household replacement cycle, Jarden points to Harvey Norman ((HVN)), JB Hi-Fi, Wesfarmers, and Metcash ((MTS)) for hardware.

In food, competition is expected to rise, creating potential risks for Woolworths Group ((WOW)) and Coles Group ((COL)) if management actively targets health, beauty, and pets.

On balance, Jarden sees Flight Centre ((FLT)), Temple & Webster, Adairs, and Super Retail as the most attractive and underappreciated stocks post-results. Share prices that overreacted include a2 Milk ((A2M)), The Reject Shop, and Kogan.

Healthcare: Greenshoots sprout from challenges

The first-half 2025 results were among the “toughest seasons” for healthcare, says Wilsons, with more downgrades and “sidegrades” than ever.

The commentary mentions a sense of capitulation, which is now seen as offering opportunities, with numerous research projects undertaken by the broker pointing to upside potential for ResMed ((RMD)), Telix Pharmaceuticals ((TLX)), Clarity Pharmaceuticals ((CU6)), Clinuvel Pharmaceuticals ((CUV)), Integral Diagnostics ((IDX)), and CSL ((CSL)).

Wilsons, rather tongue-in-cheek, explains not feeling any downgrade regret on Ramsay Health Care ((RHC)), rated Market Weight with a $38.50 target; Cochlear ((COH)), Market Weight with a $280 target; Pro Medicus ((PME)), Market Weight with a $297 target; or CSL, also Market Weight with a $250 target. ResMed, Market Weight with a $42.82 target, has moved into Overweight territory.

The broker is attracted to both radiopharma stocks, noting if Telix wins in PSMA (Prostate-Specific Membrane Antigen), then so does Clarity. Both are Overweight rated, with $35 and $8.40 target prices, respectively.

The top pick in pharma and biotech is Neuren Pharmaceuticals ((NEU)), rated Overweight with a $26.50 target. Clinuvel, also Overweight with a $30 target, could triple this year, Wilsons highlights, if the competitive anti-narrative around Disc Medicine’s bitopertin EPP program is “debunked.”

Opthea ((OPT)) is rated Market Weight with a $1 target.

In medtech, the analyst recommends sticking to straightforward devices and total addressable markets, with Overweight ratings on Nanosonics ((NAN)), target $6; EBR Systems ((EBR)), target $1.62; and SomnoMed ((SOM)), target 80c.

Regarding wound care, Wilsons is Overweight and convinced on Aroa Biosurgery ((ARX)), with a 75c target, but sees the sub-sector as challenged, with Avita Medical ((AVH)) and PolyNovo ((PNV)) both rated Market Weight, with respective targets of $3.20 and $1.85.

Healthcare services remain challenged, except for special situations. Integral Diagnostics and Monash IVF ((MVF)) are rated Overweight, with Integral’s merger with Capitol seen as positive, supporting a $2.75 target price, while Monash follows Medicare volumes but is also a growing international business, with a $1.43 target.

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