Weekly Reports | 10:00 AM
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 May 19 to Friday May 23, 2025
Total Upgrades: 6
Total Downgrades: 6
Net Ratings Breakdown: Buy 61.69%; Hold 32.11%; Sell 6.20%
For the week ending Friday, May 23, 2025, FNArena tracked six upgrades and six downgrades for ASX-listed companies from brokers monitored daily.
Although less pronounced than in previous weeks, this marks the fourth consecutive week in which the top ten percentage declines in average target prices and in forecasts have outweighed any gains across the board in the tables below.
In no surprise to long-term shareholders, TechnologyOne revealed record-beating first-half metrics and management raised FY25 profit guidance, noting SaaS-Plus is accelerating in the UK.
According to management, the company possesses a "game changing" SaaS-Plus offering, which is being deployed in the UK to significant effect. This business now represents around 8% of group annual recurring revenue (ARR).
As further explained at https://fnarena.com/index.php/2025/05/23/technologyone-the-beat-goes-on/, management has achieved a 49.4% Rule of 40 metric which fits in between the levels achieved by fellow ASX-listed heavyweights Xero and Pro Medicus.
Used to assess the balance between growth and profitability, the rule is calculated as the sum of TechOne's free cash flow margin (22%) plus the revenue growth rate of 27.4%.
Following TechOne on the positive change to average target price are Syrah Resources and Lynas Rare Earths with FY25 increases of around 13% and 6%, respectively.
Syrah Resources, which specialises in the supply of natural graphite and battery anode materials, operates the Balama mine in Mozambique, one of the world's largest and lowest-cost sources of natural flake graphite.
In Vidalia, Louisiana, Syrah also operates a downstream facility which processes natural graphite from Balama into active anode material, which is a key component in lithium-ion batteries used for electric vehicles and energy storage systems.
Last week, Macquarie raised its target for Syrah by 11% to 30c after changes in production restart, price realisation, and funding assumptions, and also downgraded to Neutral from Outperform following recent share price strength.
Synthetic graphite remains in oversupply, cautioned the analyst, with China maintaining dominance in the battery-grade market, a dynamic that is likely to cap graphite price upside.
Positively, Morgan Stanley (Equal-weight) upgraded its rare earth price forecasts and raised its target for Syrah to 40c from 22c.
This broker felt critical minerals will need a significant increase in supply to meet the fast-growing demand from robotics. One of the challenges in meeting this demand is the rising average lead times for mines, the analysts noted.
Morgan Stanley's higher rare earths price forecasts resulted in an upgrade to Overweight from Underweight for Lynas Rare Earths after a target price increase to $10 from $7.10.
Lynas specialises in the production and processing of rare earth elements, critical minerals used in high-tech, green energy, and defence applications. The company is the only significant producer of separated rare earths outside China.
On the flipside, average targets for global crop protection and seed technologies company Nufarm and Monash IVF fell by -26% and -13%, respectively.
Morgans lowered its target for Nufarm to $2.78 from $4.53 and downgraded to Hold from Add after interim results missed consensus forecasts, with a full-year loss now looking likely. The main disappointment, according to the broker, was the underperformance of the Seed Technologies business.
Morgan Stanley is no longer confident about Nufarm's business prospects, noting elevated gearing in an uncertain global environment.
A review into the Seeds business has begun, with all options on the table. A partial or full sale could unlock value and reduce balance sheet risk, highlighted Macquarie. The review is expected to take at least six months.
Provider of fertility and reproductive health services Monash IVF downgraded its FY25 underlying net profit guidance to $27.5m from $30-31m, citing soft trading conditions in March and April; improvement in May is not expected to offset that weakness.
Morgans decided to upgrade its rating for the company to Speculative Buy from Hold given a rebased earnings guidance for FY25 and in the belief the current valuation is too low.
Analysts at Macquarie felt operating costs will rise as the company increases marketing costs following the recent scandal following an embryo transfer error and higher salaries to retain staff.
New Zealand-based technology company, Serko, provider of corporate travel and expense management solutions, appears next on the ranking for negative change to target prices but also heads up the table for positive change to earnings estimates.
This anomaly is due to higher FY26 forecasts replacing FY25 numbers, after the company reported weaker-than-expected FY25 results.
FY25 revenue, excluding contribution from GetThere, came in at $85.7m, at the lower end of the $85-92m guidance. For FY26, management guided to revenue of $115-123m. Managed revenues in Australasia and North America were lower-than-expected.
Macquarie lowered its target to NZ$3.17 from NZ$4.38 and downgraded to Neutral from Underperform.
While the acquisition of GetThere has altered the risk profile, Citi maintains confidence in the long-term opportunity, supported by ongoing strong momentum in Booking.com for Business (B4B). The analysts see upside should new B4B features improve conversion and with US growth anticipated to resume post the platform rollout.
UBS re-iterated its Buy rating for Serko with the company's share price having declined by around -25% since March.
Turning to falls in average earnings forecasts by brokers, here Gentrack Group is placed on the table between Nufarm and Monash IVF. This company provides software solutions for energy and water utilities, as well as airports.
While Gentrack's interim result missed expectations and first-time FY25 guidance was lower-than-expected, analysts' reviews conclude revenue quality is on the improve with rising annual recurring revenues.
Positively, the group is relatively immune to tariffs/lower IT spend and analysts remain upbeat on the outlook as detailed in https://fnarena.com/index.php/2025/05/21/gentrack-stumbles-but-confidence-remains-high/
Total Buy ratings in the database comprise 61.69% of the total, versus 32.11% on Neutral/Hold, while Sell ratings account for the remaining 6.20%.
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