Weekly Reports | Mar 21 2025
Broker Rating Changes (Post Thursday Last Week)
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CAR GROUP LIMITED ((CAR)) Upgrade to Neutral from Underweight by Jarden.B/H/S: 0/0/0
Jarden has lowered the forecast for CAR Group's 5-year compounded annual revenue growth rate to 9% from 10% to reflect the risks from a soft macro environment, particularly in the US.
Still, the broker sees downside risks to consensus and its FY26 forecasts.
Target price cut to $33.00 from $34.60. Rating upgraded to Neutral from Underweight after recent sell-off.
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ENDEAVOUR GROUP LIMITED ((EDV)) Downgrade to Neutral from Buy by Goldman Sachs.B/H/S: 0/0/0
Goldman Sachs expects Endeavour Group's liquor business to remain under pressure due to a structural decline in per capita volume, and cyclical trade-down by consumers amid cost of living pressures.
The broker is positive about the Dan Murphy brand but thinks BWS is losing its convenience differentiator edge.
The broker lowered the group sales forecast by -1% across three years mainly due to the retail businesses losing market share. EBIT forecasts see deeper cuts with -4% for FY25 and -5% for FY26 on a lower margin forecast.
Target price drops to $4.50 from $5.10. Rating downgraded to Neutral from Buy.
JAMES HARDIE INDUSTRIES PLC ((JHX)) Downgrade to Neutral from Overweight by Jarden.B/H/S: 0/0/0
Near-term macro risks, including tariff uncertainties, makes Jarden cautious of James Hardie Industries, prompting a downgrade in rating to Neutral from Overweight.
The broker believes pulp cost inflation from higher tariffs is a key operational risk, along with the increasing risk of a US recession. The broker also sees M&A as a risk, noting the company's deal with Fermacel failed to achieve pre-acquisition forecasts.
The broker has lowered volume growth forecasts and raised input cost estimates, leading to a -2-3% decline in average earnings forecasts.
Target price lowered to $53.50 from $54.00.
NATIONAL AUSTRALIA BANK LIMITED ((NAB)) Downgrade to Underweight from Overweight by Jarden.B/H/S: 0/0/0
Jarden thinks there's more to it than meets the eye in Nathan Goonan's resignation as CFO at National Australia Bank to move to the same role at Westpac ((WBC)). The broker reckons it may be an indication of other pressures at NAB, likely in business banking.
The broker is also suspicious of NAB appointing an acting head of business and private banking given the transition period between the departee and the new joinee on July 1 is only 15 days.
In a previous report, the broker highlighted pressure on banks' CET1 from capital-intensive business/corporate lending and phasing out of hybrid capital in January 2027. This, in turn, would limit dividend payout, with the broker seeing current consensus expectations for NAB's dividend payout ratio as too high.
The broker's believes it may have to adjust down to the high-60s from 75%, 75% and 74% forecast for FY25/26/27 respectively.
In this report, the broker cut FY25 and FY26 EPS forecasts by -2.4% and -2.9% to reflect higher margin erosion and costs, and removed the estimated 1H25 buyback. Target price cut to $30 from $38.
Rating downgraded to Underweight from Overweight reflecting uncertainties around management change.
WESTPAC BANKING CORPORATION ((WBC)) Downgrade to Underweight from Neutral by Jarden.B/H/S: 0/0/0
Westpac's first quarter update was solid, Jarden suggests, featuring good volumes, slight margin compression and low bad debts, but weak capital generation. Looking forward, the bank has management change and a material IT transformation project to execute.
Jarden sees UNITE as an overdue but welcome comprehensive rewiring of Westpac architecture, likely involving significant execution risk and internal focus, but also sees risk of project creep, with much higher investment than has previously been indicated.
Therefore, this result, while operationally pleasing, is in Jarden's view somewhat redundant. The broker downgrades to Underweight from Neutral on valuation. Target unchanged at $31.20.
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