Weekly Ratings, Targets, Forecast Changes – 14-03-25

Weekly Reports | Mar 17 2025

Weekly update on stockbroker recommendation, target price, and earnings forecast changes.

By Mark Woodruff

Guide:

The FNArena database tabulates the views of eight major Australian and international stockbrokers: Citi, Bell Potter, Macquarie, Morgan Stanley, Morgans, Ord Minnett, Shaw and Partners and UBS.

For the purpose of broker rating correlation, Outperform and Overweight ratings are grouped as Buy, Neutral is grouped with Hold and Underperform and Underweight are grouped as Sell to provide a Buy/Hold/Sell (B/H/S) ratio.

Ratings, consensus target price and forecast earnings tables are published at the bottom of this report.

Summary

Period: Monday March 10 to Friday March 14, 2025
Total Upgrades: 6
Total Downgrades: 4
Net Ratings Breakdown: Buy 60.31%; Hold 32.62%; Sell 7.08%

For the week ended Friday, March 14, 2025, FNArena tracked six upgrades and four downgrades for ASX-listed companies from brokers monitored daily.

Adjustments to both target prices and earnings forecasts proved larger to the downside than any positive revisions, as shown in the tables below.

New Zealand's fourth largest milk processor Synlait Milk's average target saw the largest increase after Bell Potter raised its target to 90 cents from 42 cents, following a delayed forecast update in response to management's upgraded guidance on January 24.

Perhaps the broker was getting in before the release of first half results for Synlait (July year-end) due on March 24.

Signalling a turnaround faster-than-expected by the analysts, management provided first-half earnings guidance of NZ$58-63m, a material uplift from the NZ$36.1m in the first-half of FY24.

Management cited an improved performance in the ingredients business (on better management of currency and product mix), ongoing cost control, and new business development in advanced nutrition products.

As the Synlait share price closed last week at 83.5 cents, up from 36 cents at the time of new guidance, Bell Potter retains its Hold rating.

Primarily for export markets and food manufacturers, Synlait is a B2B supplier of infant formula products, Lactoferrin, and a range of dairy ingredients including skim milk powder, whole milk powder, and anhydrous milk fat.

The release of a new mine plan for the Mt Magnet gold mine in Western Australia, owned by Ramelius Resources, disappointed the market last week, resulting in the largest fall (-9%) in average target price in the table below.

Ord Minnett noted a weaker-than-expected outlook for production, costs, and capital expenditure, driven by a slower-than-expected ramp-up of the Eridanus open-pit cutback at higher costs.

This broker downgraded to Accumulate from Buy, noting a declining production profile from FY26 to FY31 increases pressure on management to pursue inorganic growth opportunities, i.e. go out and find some assets to purchase.

The 10-year production rate for Mt Magnet came in -19% below the consensus estimate, according to Macquarie, and indicated capex of -$823m was twice the broker's previous estimate.

More positively, Shaw and Partners forecasts production will increase significantly in the FY32-35 period, and only lowered its target to $2.89 from $2.98.

Lotus Resources and COG Financial Services received the largest reductions in average earnings forecasts last week.

While the negative percentage change for Lotus should be ignored due to the small forecast numbers involved, Macquarie's research highlighted some interesting points for current and potential shareholders.

Both governance and organisational quality are on the improve, according to the broker, as Lotus prepares for its transition to uranium producer.

Along with a strengthened management team, Simon Hay and Leanne Heywood have joined the board, seen as adding respective technical and commercial experience.

Lotus remains the cheapest uranium stock under coverage by Macquarie, and the broker envisages a re-rating relative to peers should the next one or two quarterly updates go well for the Kayelekera mine in Malawi.

The average earnings forecast for COG Financial Services declined by approximately -9% following Morgans' delayed research update on interim results released on February 26.

Noting a mixed result, the analyst highlighted tougher conditions in the Finance Broking and Aggregation division showing a -3% decline in Net Assets Financed and flat revenue.

Also, while the Asset Management and Lending division experienced robust revenue growth, the broker pointed to margin compression partially due to technology investments.

For the views of Ord Minnett and Bell Potter on COG Financial's first half, see FNArena's Corporate Results Monitor, which summarises all the misses and beats from the reporting season at https://fnarena.com/index.php/reporting_season/

Total Buy ratings in the database comprise 60.31% of the total, versus 32.62% on Neutral/Hold, while Sell ratings account for the remaining 7.08%.

Upgrade

ANZ GROUP HOLDINGS LIMITED ((ANZ)) Upgrade to Hold from Reduce by Morgans .B/H/S: 0/5/1

Morgans reckons a common theme from recent big bank quarterlies was a weakening in risk-weighted assets which could reduce buyback or need for more regulatory capital to meet CET1 requirements.

The broker notes credit growth has accelerated according to RBA data, with 6.5% y/y rise in January from 4.9%.

ANZ Bank recorded solid net loan growth in Q1 and a rise in customer deposits but the CET1 capital ratio of 11.5% was affected by an increase in the floor for regulatory capital. The broker believes the higher RWA reduces buyback potential.

The broker made minor changes to EPS forecasts and raised the FY26 dividend forecast, assuming a higher payout ratio of 70%.

Target price lifts to $26.66 from $26.34, and rating upgraded to Hold from Reduce. At current price, the broker estimate the stock is trading at a 5.8% cash yield (70% franked).

CAR GROUP LIMITED ((CAR)) Upgrade to Buy from Hold by Ord Minnett .B/H/S: 5/1/0

Ord Minnett has upgraded Car Group to Buy from Hold on valuation grounds. No change to the $39 target price.

The broker notes one of the reasons for the -15% decline in share price since early February was expectations of a soft 2H for recreational vehicle sales. But its recent calls with US-based dealers indicated a modest recovery in sales since January.

Overall, the broker expects the impact of tariffs on sales to be modest and higher used car sales to offset some of the declines.

CHARTER HALL GROUP ((CHC)) Upgrade to Buy from Neutral by Citi .B/H/S: 2/2/1

Citi reminds investors expected lower interest rates, in Australia and globally over 2025, typically results in multi-year positive share price performance for REITs.

While uncertainty in trade policies and the expectation of higher inflation has resulted in the recent selldown of Australian REITs, the broker highlights longer-term bond yields have largely remained stable.

For Charter Hall, the broker retains its $18.50 target and upgrades to Buy from Neutral, expecting the return of equity flows into Australia.  Multiples tend to expand in periods of funds under management (FUM), note the analysts.