Weekly Reports | May 05 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 28 to Friday May 2, 2025
Total Upgrades: 9
Total Downgrades: 9
Net Ratings Breakdown: Buy 61.73%; Hold 31.96%; Sell 6.32%
In a very busy week of quarterly reporting ending on Friday, May 2, 2025, FNArena tracked nine upgrades and nine downgrades for ASX-listed companies from brokers monitored daily.
In the tables below, the top ten percentage falls in average target prices and average forecasts are consistently larger than the top ten increases.
Coronado Global Resources, Syrah Resources, and Flight Centre Travel received the largest cuts to average targets by analysts and also appear in the table of negative change to average earnings forecasts.
Coronado's first quarter production, sales, and mining costs all missed Bell Potter's forecasts, but the bigger takeaway from the update involved emerging balance sheet concerns on weaker coal markets.
In reaction, the broker lowered its target for Coronado to 23c from 50c and downgraded to Speculative Hold from Buy.
The company's net debt position rose to US$170m from US$60m in the previous quarter due to higher capital expenditure, estimated by Ord Minnett at around -US$106m.
This broker believes weak coal prices will continue to weigh on Coronado's free cash flow throughout the remainder of 2025 and into 2026. On increased cost assumptions, the broker's target has been reduced to 20c from 28c.
While a data entry glitch was responsible for Syrah Resources' lower earnings forecasts/target, UBS provided an important update on its Balama operations which have remained offline for a third straight quarter due to ongoing unrest in Mozambique.
An agreement on resettlement and compensation has been reached, allowing for a potential restart within four to six weeks.
The company's Vidalia facility in Louisiana has begun producing active anode material (AAM), a critical component for lithium-ion batteries used in electric vehicles.
First AAM sales are still guided for 2025, but timing depends on the completion of rigorous qualification processes by major customers like Tesla and Luci, explained the broker.
Over at Flight Centre, management lowered FY25 profit guidance, noting ongoing uncertain trading conditions (read US trade and entry policies) are set to weigh on the company's busiest trading months of May and June.
As explained at https://fnarena.com/index.php/2025/05/02/flight-centre-a-downgrade-anticipated/, the market had generally anticipated management would downgrade guidance and initiatives are underway to address the current uncertainty.
Stanmore Resources heads up the week's earnings downgrade list, followed by 29Metals.
While Stanmore's FY25 earnings forecast dipped, FY26 forecasts and the average target price of brokers rose after first quarter production and sales slightly beat Citi's forecasts, but net debt rose to US$146m from US$26m at the end of December.
Management maintained FY25 production guidance but weighted it to the second half of 2025, due to weather-related issues in the first half.
Ord Minnett raised its target to $2.40 from $2.20 partly due to an improved outlook for the Isaac Downs metallurgical coal operation in Queensland's Bowen Basin.
For 29Metals, here first quarter copper production at Golden Grove fell short of forecasts, but costs were also lower on positive stockpile movements, with site costs flat.
On the flipside, average FY25 earnings forecasts rose last week for Paladin Energy, IGO Ltd, and Mineral Resources by 41%, 21% and 16%, respectively.
Shaw and Partners suggested the 50% rally in Paladin Energy's share price in the past six trading sessions had further to go as the market had initially over-reacted to commissioning issues at the Langer Heinrich mine.
This broker felt third quarter production was a strong outcome, up 18% quarter-on-quarter despite a rain disruption, and now believes the company could meet the lower end of previously withdrawn FY25 guidance.
Alluding to recent market short positions across the uranium sector, including on Paladin, Ord Minnett agreed with Shaw on the future stock price direction as short covering has further to go, also given the recent rise in spot uranium prices.
In further quarterly reporting, IGO Ltd and Mineral Resources both impressed brokers.
IGO's realised pricing at Greenbushes was stronger than analyst's forecast, and lower costs at Nova supported margins, noted Morgan Stanley. Mineral Resources achieved its lowest quarterly mining services unit cost since 2018, and unit costs across both lithium and iron ore improved sharply, highlighted Morgans.
Earnings forecasts also rose for Newmont Corp and Sigma Healthcare, finishing respectively second and third on the positive change to average target price list below.
Newmont's March quarter earnings came in 11% above consensus, helped by stronger production, explained Ord Minnett, as well as by-product sales, and higher realised prices.
Macquarie's forecasts for gold production and costs were beaten by 6% and 12%, respectively.
Free cash flow of $1.2bn was materially ahead of Ord Minnett's $457m forecast, allowing management to reduce net debt to $3.2bn from $6.4bn in 2023.
Morgan Stanley initiated coverage on Sigma Healthcare with an Overweight rating and a $3.45 target price, 15% above the next highest target in the FNArena database.
Highlighting Sigma's transformation into Australia's largest vertically integrated pharmacy retailer and distributor following its February 2025 merger with Chemist Warehouse Group, the broker suggested forecast cost synergies have potential for upward surprise.
Revenue optimisation through format conversions, private label expansion, and retail media is also thought to offer meaningful upside.
The analysts see structural tailwinds such as aging demographics and increased health/wellness spending supporting sector-leading same-store sales growth of around 10% over FY25-28.
Ramelius Resources received the largest percent lift (6%) to average target price from analysts following March quarter results, and Ord Minnett raised its target to $3.05 from $2.80 and upgraded to Buy from Accumulate.
The company generated $223m in free cash flow, with standout margins at Mt Magnet exceeding $3,000/oz, while costs (AISC) were -9% below the broker's estimates.
Management at Ramelius also narrowed FY25 guidance reflecting outperformance at the Cue gold development located in the Murchison region of Western Australia.
Ord Minnett highlighted the ramp-up in exploration across Mt Magnet, Cue, and Penny. The Southern Palladium Resources acquisition is expected to enhance near-mine opportunities and feed into a positive integrated group study due in the second quarter of FY26.
Due to recent share price strength, Regis Resources last week received two rating downgrades to Neutral from Buy (or equivalent).
The standout for Morgans from the company's third quarter report was strong cash flow due to consistent production and higher gold prices.
Net cash and bullion rose to $367m, reflecting a $512m improvement over 15 months, highlighted the analysts at Bell Potter.
Total Buy ratings in the database comprise 61.73% of the total, versus 31.96% on Neutral/Hold, while Sell ratings account for the remaining 6.32%.
Upgrade
AMCOR PLC ((AMC)) Upgrade to Overweight from Equal-weight by Morgan Stanley .B/H/S: 3/3/0
Morgan Stanley believes Amcor's merger with Berry Global is expected to deliver cost synergies of US$650m over three years, with 40% forecast to be realised in FY26.
Morgan Stanley estimates FY26 EPS at US$0.85, rising to US$0.96 in FY27 and US$1.03 in FY28, reflecting earnings accretion of 7% in FY26, 14% in FY27, and 16% in FY28 from the merger.
Dividends are forecast at US$0.51, US$0.55, and US$0.59 per share over the same period.
The analyst upgrades the stock to Overweight from Equal-weight and the target price lifts to $20.31 from $16.
Morgan Stanley believes the market is overlooking the transaction with Berry is not yet included in consensus estimates with the transaction completed on April 30.
Industry view:In-Line.
ANZ GROUP HOLDINGS LIMITED ((ANZ)) Upgrade to Neutral from Sell by Citi .B/H/S: 0/6/0
Citi has reviewed the Australian banks sector following the recent trading pattern and ahead of the 1H25 result. The broker views the buying in these stocks as more a result of investors avoiding exposures like resources, tariff risks etc, than the price being paid.
The broker remains negative on the sector on stretched valuations and potential headwinds from rate cuts (factoring four RBA cuts to 3.1%) and economic slowdown. Other headwinds include a near lack of capital management and no further need at super funds to further increase their exposure.
For ANZ Bank, the broker's forecast is 4% ahead of consensus on 1H25 cash earnings due mainly to a forecast of -32% below consensus on bad debt expenses. The broker believes the current share price has factored in the new CEO risk.
Rating upgraded to Neutral from Sell, given relative underperformance. Target price lifted to $27.50 from $25.25.
BABY BUNTING GROUP LIMITED ((BBN)) Upgrade to Buy from Accumulate by Ord Minnett .B/H/S: 3/2/0
Ord Minnett upgrades Baby Bunting to Buy from Accumulate due to recent share price weakness. The target price is retained at $2.15.
The company announced an upbeat trading update, according to the analyst, supported by strong sales momentum, profit margins tracking in line, and positive feedback on the new flagship store opening.
Year-to-date comparable sales grew 3.7% in 2H25 through to April 27, with FY25 sales growth expected to be between 2%3%, the broker explains.
Management lifted net profit after tax guidance to $10m$12.5m from $9.5m$12.5m.
Ord Minnett believes the company continues to make progress in growing sales, margins, and profitability.
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