Weekly Reports | Apr 14 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 April 7 to Friday April 11, 2025
Total Upgrades: 15
Total Downgrades: 13
Net Ratings Breakdown: Buy 61.90%; Hold 31.39%; Sell 6.72%
For the week ended Friday, April 11, 2025, FNArena tracked fifteen upgrades and thirteen downgrades for ASX-listed companies from brokers monitored daily.
After several brokers downgraded commodity price forecasts, reductions in average target prices and average earnings forecasts materially outpaced increases as illustrated in the tables below.
Concentrating first on Industrials, HMC Capital received a -19% decrease in target price after Bell Potter and Morgans lowered their respective targets to $8.15 and $5.30 from $12.90 and $10.50.
HMC is Australia's leading diversified alternative asset manager with scalable growth platforms across real estate, private equity, energy transition, value-add infrastructure, and private credit.
Unfortunately, the Digital Infrastructure division has been negatively impacted by the pull back in data centre demand/tariff impacts, implying slower leasing ramp-up and cost inflation, explained Bell Potter.
The analysts now have lower expectations for externally managed REIT acquisitions, particularly the Digico Infrastructure REIT where the broker has reduced assumed acquisitions in FY26 to zero from $500m.
A slower overall funds under management (FUM) rollout is also assumed by the broker with the target for $50bn of funds under management (FUM) pushed further out from 2030.
While the stock price has remained under pressure as this FUM target is called into question, Morgans believes the stock is currently trading at fair value.
Bell Potter also reminded investors HMC now has breadth in segments which it didn't have just one year ago, and twice the FUM.
Diversified automotive parts company, Amotiv, and provider of wealth management solutions, Netwealth Group, also received material downgrades to their average target price last week.
Morgans lowered its target for Amotiv to $10.75 from $12.95 after management (on April 4) downgraded FY25 guidance to a "marginal" earnngs (EBITA) decline (from growth) and pointed to group US sales exposure (i.e. tariff impacted) of around -8%.
While uncertainties around tariffs increase near-term risk, in Citi's view, management noted an immaterial impact in FY25. The company's tariff response will include re-sourcing of finished goods, re-pricing, and use of alternative manufacturing and supply locations.
Netwealth Group's March quarter business update broadly met expectations by Citi, UBS, and Bell Potter, yet Friday's research update by Ord Minnett dimmed the mood.
During the current market volatility, Ord Minnett reminded investors platform operators like Netwealth, Hub24, and Praemium should be viewed as market cyclicals.
Fund flows, funds under administration metrics, and valuation multiples are all closely tied to broader market sentiment, highlighted the broker.
For both Netwealth Group and Hub24, the analyst suggested FY25 and FY26 price-to-earnings multiples of circa 50 times or more are unsustainably high. For the former, the broker's target was lowered to $15.40 from $33.00 and the rating downgraded to Lighten from Accumulate.
On the flipside, Abacus Storage King's average target price jumped by over 7% last week after receipt of a takeover bid for the shares not already owned by Ki Corporation, owned by South African billionaire Nathan Kirsh's family office, and US-listed Public Storage, one of the largest storage owners and operators globally.
If the deal proceeds, Ki Corporation will own 50% of Abacus Storage and Public Storage the other 50%.
For broker views on the takeover proposal refer to this week's article by FNArena titled 'Abacus Counts Takeover Benefits'.
Staying with Industrials, the percentage fall in average earnings forecasts for Serko and Megaport should be ignored due to small forecast numbers and a data input glitch, respectively.
In fact, Citi was positive on Serko for the second half of FY25 given Booking.com has experienced an acceleration in growth to over 800,000 business-registered companies.
Serko powers Booking.com for Business using its travel management software, Zeno, to streamline corporate travel.
Turning to the Resources sector, Regis Resources headlines the increase in target price list below after releasing positive third quarter results last week, along with more upbeat gold price forecasts by brokers.
Total gold production of 89.7koz in the quarter beat Morgans' forecast of 86.8koz, while cash generation of $138m raised the total cash and bullion position to $367m at the end of March, leaving Regis debt-free after repaying $300m debt during the quarter.
The company is now on track to achieve FY25 guidance, according to Macquarie.
Morgan Stanley's commodity price review also resulted in a new target for Regis of $4.05, up from $3.35, after EPS estimates for FY25 and FY26 were raised by 62% and 148%, respectively.
With recession becoming a realistic bear case, the broker noted gold should be an outperformer, though the commodity and gold shares can sometimes fall initially alongside other asset classes, as they are used to provide liquidity.
Regis also appears third on the positive change to earnings forecast table behind Capstone Copper and Iluka Resources.
While the increase in forecast for Capstone appears to be a glitch as both Macquarie and Citi lowered forecasts, Macquarie did highlight the company is trading on an implied copper price of US$3.25/lb when the spot price is trading around US$3.92/lb, making the stock an opportunistic Buy.
By contrast, Citi has opened a 90-day downside watch on the stock given its high leverage to copper prices, even though the analyst expects the company will reiterate guidance at upcoming first quarter results.
Regarding Illuka Resources, Ord Minnett felt the company will be a potential longer-term beneficiary after China's move to restrict exports of seven rare earths and permanent magnets in response to the Trump tariffs, which may cause heavy rare earth oxide (HREO) prices to rise.
In the same research report on the Rare Earth sector, Ord Minnett downgraded Lynas Rare Earths to Hold from Buy following recent share price gains, while retaining a $7.80 target.
Bell Potter also felt the valuation for Lynas was overextended and lowered its target to $6.50 from $7.30 and downgraded to Sell from Hold. The current share price is factoring in a US$99kg neodymium-praseodymium (NdPr) price when spot is currently around US$59/kg, explained the analysts.
Common names in the negative change to target and earnings tables for commodity-related stocks include Viva Energy, Mineral Resources, Coronado Global Resources and Deep Yellow.
Macquarie downgraded its ratings for Viva Energy and Ampol to Neutral from Outperform due to lower assumed refining margins resulting from higher-than-expected US tariffs weighing on the outlook for oil demand. Morgan Stanley's forecasts also fell for both companies after a marking-to market exercise.
In the lithium space, should prices remain around US$800/t or fall further, Morgans warned balance sheet pressure could emerge for Mineral Resources (and Liontown Resources), based on the broker's scenario analysis. Lower iron ore shipments and lower mining services volumes are also forecast for the third quarter of FY25 due to the impacts of weather and haul road interruptions.
Among other brokers, Citi forecast lithium demand will be hurt due to downside risk for global auto sales in a recessionary backdrop from US President Trump's reciprocal tariffs. Conversely, the analysts at Macquarie see lithium as a potential beneficiary if escalating trade tensions pushes China to stimulate electric vehicle consumption.
Unlike Mineral Resources and Liontown Resources, Morgan suggested Pilbara Minerals is insulated from balance sheet pressure until at least FY28. For this period, in almost every lithium price scenario above US$650/t, the broker forecasts the company will remain in a net cash position.
Despite this assertion, the broker reduced its target for Pilbara Minerals to $2.40 from $3.10 after the analyst reduced lithium spodumene and lithium hydroxide price forecasts.
Speaking of lithium, both Citi and Morgan Stanley lowered earnings forecasts for IGO Ltd but upgraded on valuation to Buy and Equal-Weight, respectively.
For Coronado Global resources. Macquarie slashed its target by -25% to 30 cents on higher funding costs and after applying a lower valuation multiple but upgraded to Neutral after the recent share price selloff.
On the uranium front, average earnings forecasts were lowered for Deep Yellow after management announced a deferral to the final investment decision on the Tumas project in Namibia as the current soft pricing outlook for uranium is deemed insufficient to encourage development.
Total Buy ratings in the database comprise 61.90% of the total, versus 31.39% on Neutral/Hold, while Sell ratings account for the remaining 6.72%.
LYNAS RARE EARTHS LIMITED ((LYC)) Downgrade to Sell from Hold by Bell Potter and Downgrade to Hold from Buy by Ord Minnett .B/H/S: 1/2/3
Bell Potter's forecasts for Lynas Rare Earths' 3Q25 production and average realised price are in line with consensus, and so are production and sales forecasts for FY26 and FY27.
However, valuation is an issue with the broker noting an average NdPr price of US$65/kg over FY26 and average EV/EBITDA multiple over the past five years results in a valuation of $3.75/share.
FY25 EPS forecast cut by -42% and FY26 by -19%. The broker doesn't see balance sheet risk under its commodity price forecasts but warns it could draw attention if NdPr prices don't recover.
Rating downgraded to Sell from Hold. Target cut to $6.50 from $7.30.
Ord Minnett reckons China's move to restrict exports of seven rare earths could lift prices of heavy rare earth oxides, but this is uncertain in the absence of full details.
The broker lifted price forecast for Dy-Tb-Y by 2-4% for 2025-26, and cut NdPr price estimates in 2025.
The broker expects HREO producers to be the biggest beneficiaries, with Lynas Rare Earths expected to produce minor Dy+Tb by mid-year and its Texas plant aiming for HREO output by 2027.
Rating downgraded to Hold from Buy following share price gains.Target unchanged at $7.80.
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