Weekly Reports | Jun 06 2025
Broker Rating Changes (Post Thursday Last Week)
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BRICKWORKS LIMITED ((BKW)) Downgrade to Neutral from Overweight by Jarden.B/H/S: 0/0/0
Jarden views the proposed merger between Brickworks and Washington H. Soul Pattinson as strategically sound.
The merger removes the cross-shareholding structure and unlocks a -24% conglomerate discount embedded in Brickworks' share price, note the analysts.
Brickworks shareholders would receive 0.82 MergeCo shares per Brickworks share, implying to the broker a value of $30.28, representing a 10-22% premium to recent trading levels and volume weighted average price (VWAP).
The analysts expect the deal to improve liquidity, simplify the capital structure, and enable longer-term decision-making less tied to the housing cycle. Minimal synergies and estimated stamp duty costs of around -$250m are also noted.
Jarden forecasts completion by October 2025, pending approvals, and expects MergeCo to be net cash post-deal with Brickworks' industrial and investment interests housed in the private equity segment.
Jarden raises the target price to $32.30 from $25.00 and downgrades Brickworks to Neutral from Overweight.
FONTERRA SHAREHOLDERS FUND ((FSF)) Downgrade to Neutral from Overweight by Jarden.B/H/S: 0/0/0
Fonterra Shareholders Fund once again upgraded EPS guidance for FY25, this time to NZ65-75c from NZ55-75c, prompting Jarden to upgrade its FY25 normalised EPS forecast to NZ74c from NZ64c.
The broker also lifted FY25 dividend forecast by NZ10c. For FY26, the broker left the EPS forecast largely unchanged.
Rating downgraded to Neutral from Overweight. Target lifted to NZ$5.87 from NZ$5.19.
IDP EDUCATION LIMITED ((IEL)) Downgrade to Neutral from Overweight by Jarden.B/H/S: 0/0/0
Jarden cites reduced confidence in student flow forecasts, government policy, and internal oversight as reasons for reassessing IDP Education's outlook. The broker's target price is cut to $6.95 from $17.35 and the rating downgraded to Neutral from Overweight.
Guidance for 2025 points to student placement volumes falling -28-30% year-on-year and IELTS volumes retreating -18-20%, both much weaker than Jarden and consensus projections.
Costs are expected to be less contained than previously indicated, while price improvements in student placements are projected to ease in the second half, particularly in higher-fee destinations such as the UK.
Jarden lowers its 2025 earnings (EBITDA) expectations to $174.7m, or -34% below the prior year, and cuts its 2026 forecast by -63% to $148m, noting both reduced margin assumptions and overhead flexibility.
MAC COPPER LIMITED ((MAC)) Downgrade to Hold from Buy by Moelis.B/H/S: 0/0/0
Following MAC Copper's agreement to a US$12.25/share all-cash takeover offer from South African miner Harmony Gold, Moelis has lowered its target price to match the offer price.
Target price cut to $18.93 from $25.00. Rating downgraded to Hold from Buy.
The broker now believes a rival bid is unlikely, and investors could put these funds elsewhere or wait for cash settlement upon deal completion.
TREASURY WINE ESTATES LIMITED ((TWE)) Downgrade to Overweight from Buy by Jarden.B/H/S: 0/0/0
Jarden cuts its FY26-27 earnings (EBIT) forecasts for Treasury Wine Estates by -6% due to soft US demand, the distributor exit from California, and currency pressure.
The broker notes FY25 EBITS guidance remains unchanged at around $770m, though the RNDC (distributor) exit from California, which made up circa 25% of Americas net sales revenue, is expected to weigh on FY26.
Penfolds and the Americas luxury portfolio are forecast to represent over 85% of group EBIT by FY26, with Jarden seeing re-rating potential if Penfolds achieves peer-level multiples.
The broker views a potential future demerger into Penfolds, Americas luxury, and Global Premium as strategically compelling.
Jarden downgrades to Overweight from Buy and lowers the target price to $10.60 from $13.90.
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