Weekly Reports | Mar 24 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 17 to Friday March 21, 2025
Total Upgrades: 7
Total Downgrades: 3
Net Ratings Breakdown: Buy 60.83%; Hold 32.22%; Sell 6.95%
For the week ended Friday, March 21, 2025, FNArena tracked seven upgrades and three downgrades for ASX-listed companies from brokers monitored daily.
Declines in average target prices outweighed increases, while upward revisions to average earnings forecasts were more substantial than any downgrades, as shown in the tables below.
Nanosonics' average target rose by around 7% after the long-awaited receipt of US FDA approval for the company's Coris flexible endoscope device.
Commercial launch preparations remain on target for a phased rollout in the current March quarter to raise awareness and educate key opinion leaders before a broader commercial launch at the start of 2026.
The device is designed to automate the cleaning and reprocessing of flexible endoscopes, which are challenging to sterilise due to their complex and intricate structure, explained Ord Minnett.
Morgans viewed the FDA approval as a de-risking event allowing Nanosonics to diversify and expand, as well as further embed itself as a disinfection solutions leader within the hospital space.
Agreeing the approval is pivotal, Ord Minnett is expecting the subsequent boost to investor sentiment will drive a strong stock performance.
Emphasising Nanosonics is a strong business with a dominant market position, high-margin recurring revenue, and potential for further market penetration, Morgans retained an Add rating and raised its target by $1.00 to $5.50.
New Hope, largely a thermal coal producer primarily exporting to Asia, and Lotus Resources (uranium projects in Africa) appeared in the top two placings in both the negative change to target price and earnings tables.
Despite negative revisions to broker forecasts, New Hope's interim results last week were sufficient to inspire a share price rally, aided by a share buyback surprise and a healthy interim dividend as explained at https://fnarena.com/index.php/2025/03/20/new-hope-buyback-counters-2025-uncertainty/
For Lotus Resources, updated research from Bell Potter was solely responsible for dragging down the average earnings estimate in the FNArena database.
The broker made adjustments to operating and cost assumptions for Kayelekera and its notional development scenario for Letlhakane.
By way of background, Lotus acquired the Kayelekera uranium project in Malawi from Paladin Energy in 2020. In late-2023, the company also merged with A-CAP Energy, gaining ownership of the Letlhakane uranium deposit in Botswana and the Wilconi nickel project in WA.
Regarding Kayelekera, Bell Potter was updating its research for the recently signed binding offtake agreement with one of the largest energy companies in North America for production of 600klbs U3O8 from 2026-2029, bringing total binding offtake to between 1.3-1.6mlbs from 2026 onwards.
Management reiterated the production commencement timeline of third quarter 2025 which should see first sales and cashflow by around the first quarter of FY26, notes Bell Potter.
On the flipside, uranium development company Deep Yellow appears atop the earnings upgrade list below after Macquarie adjudged it was on track for first production in early-2027 as the final investment decision (FID) for its Tumas operation in Namibia is due in coming weeks.
As management has needed to focus on Tumas, an additional period of around six months is required to complete the Mulga Rock (Western Australia) definitive feasibility study (FIS).
Next on the earnings upgrade list is Liontown Resources following in-line interim results, retained second-half guidance, and release of a new Board-approved capital allocation framework.
The company's Kathleen Valley's performance is generally tracking ahead of expectations and management is squarely focused on the transition to underground from open pit mining over 2025 as explained at https://fnarena.com/index.php/2025/03/20/liontown-resources-going-underground/
Next is Sigma Healthcare following its FY25 result (January year-end), the last before the Chemist Warehouse (reverse) acquisition last month. The next result in August will transition to a June-year-end basis.
Earnings of $68m were in line with February's guidance by management for between $64-70m. The performance was driven by the new supply contract with Chemist Warehouse which commenced July 1 last year, and 8.5% like-for-like wholesales sales growth across Amcal and Discount Drug Stores.
Macquarie has an Underperform rating for Sigma, suggesting the market is currently being overly optimistic on the growth outlook. It's felt expectations will re-set lower as greater detail is provided over the coming months to help market participants understand Chemist Warehouse Group financials and outlook when the groups operate and report as a combined entity.
First-half results at Whitehaven Coal highlighted to Morgan Stanley an improved operational performance and strong cash flow generation, supporting confidence that FY25 guidance will be met.
Despite weaker coal prices, the broker sees potential for a recovery driven by supply-side adjustments in China and rising demand from India. Citi agrees, pointing to India's growing steel production and restrictions on metallurgical coke imports as key demand catalysts for metallurgical coal.
Citi also notes China's 15% tariff on US coking coal may shift trade flows in favour of Australian supply. With Australian prime hard coking coal priced at US$183/t, near levels that challenge US East Coast producer, Citi believes supply constraints could support a price rebound.
Whitehaven's operational flexibility to pivot between metallurgical and thermal coal provides a strategic advantage, notes Morgan Stanley.
Total Buy ratings in the database comprise 60.83% of the total, versus 32.22% on Neutral/Hold, while Sell ratings account for the remaining 6.95%.
Upgrade
ALCIDION GROUP LIMITED ((ALC)) Upgrade to Buy from Hold by Bell Potter .B/H/S: 1/0/0
Bell Potter notes Alcidion Group's biggest contract to date with North Cumbria Integrated Care NHS Foundation Trust signed in February has now been finalised.
With the company delivering a modest $0.3m EBITDA in 1H25, the broker estimates a full-year EBITDA profit is likely due to $8m revenue from the contract in 2H. The broker also sees potential for a modest net profit after tax.
Target price unchanged at 11c. Rating upgraded to Buy from Hold.
CODAN LIMITED ((CDA)) Upgrade to Outperform from Neutral by Macquarie .B/H/S: 2/1/0
Macquarie's positive view on Codan remains after "solid" 1H25 results showed communications remains the key driver for the business.
The broker believes market concern about the negative impact around Ukraine is overdone, and the company is well placed to benefit once the conflict ends.
The analyst also believes the balance sheet is supportive of M&A which management continues to pursue.
Target price cut to $17.00 from $17.13 on small working capital revisions. Rating upgraded to Outperform from Neutral.
CHALLENGER LIMITED ((CGF)) Upgrade to Buy from Hold by Ord Minnett .B/H/S: 6/1/0
Ord Minnett notes the Australian Prudential Regulation Authority's review of illiquidity premiums will likely lower capital requirements for annuity providers.
For Challenger an estimated $500m buyback due to capital release would be 7% accretive, the broker estimates. The broker also sees potential for Challenger to alter its asset mix which could release an additional $1bn.
The broker believes reduced capital volatility justifies a higher PE and has lifted the price target to $7.00 from $6.65. Rating is upgraded to Buy from Hold.
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