Weekly Reports | Mar 07 2025
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.
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