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 June 9 to Friday June 13, 2025
Total Upgrades: 4
Total Downgrades: 6
Net Ratings Breakdown: Buy 61.65%; Hold 31.97%; Sell 6.38%
In the week ending Friday, June 13, 2025, FNArena tracked four upgrades and six downgrades for ASX-listed companies from brokers monitored daily.
Beach Energy received two ratings downgrades from separate brokers.
Shares have rallied by around 10% since the company released quarterly results in April, but Morgans last week warned earnings remain vulnerable ahead of the June quarter result, given likely consensus downgrades and already weak sentiment.
With Waitsia Stage 2 in the Perth Basin now in a critical commissioning phase, despite consensus expecting full production by September, and Cooper Basin operations disrupted by severe fourth-quarter flooding, the broker cut its target to $1.36 from $1.55 and downgraded its rating to Hold from Accumulate.
UBS also downgraded Beach to Neutral from Buy, trimming its target to $1.35 from $1.40, citing elevated risks of further commissioning delays at the Waitsia gas plant.
Among covered Energy names, this broker now ranks Beach Energy behind Santos (top pick) and Woodside Energy in order of preference.
On a more positive note, UBS highlighted Beach's strong balance sheet, giving the Board flexibility to exceed its stated dividend policy.
Morgans also sees room for a valuation recovery, contingent on improved production delivery and a resilient earnings base, should near-term risks abate.
Turning to average target prices and earnings forecasts, here the tables below show rises and falls were broadly even last week.
After announcing the closure of loss-making Jetstar Asia, Qantas Airways received an around 8% lift in average target from brokers, with Macquarie suggesting the move will generate additional earnings before interest and tax of around $47m by FY27.
Flights will be shut down as of July 31, impacting 16 intra-Asia routes, but will not affect Jetstar Airways international flights from Australia to Asia or the Japanese business.
Some aircraft will be re-deployed to higher-return markets in A&NZ, freeing up to $500m in capital and supporting broader fleet renewal initiatives, highlighted Morgans.
Management also reiterated FY25 and FY26 capex guidance, with some of the capex benefits expected to flow through over FY27 and FY28. Post covid, it's felt the airline is better equipped to manage its international network and improve return on capital employed.
Online furniture and homewares retailer Temple & Webster and Catapult International (sports technology) were next with rises in average targets of around 6% apiece.
Ord Minnett raised its target for Temple & Webster to $20 from $14 after reviewing its financial model, but retained a Sell rating due to valuation concerns.
The company has proven its business model, suggested the analyst, whereby manufacturers and suppliers ship directly to Temple & Webster customers, obviating the need to hold inventory of furniture and homewares.
Regarding the Sell rating, here Ord Minnett explained Temple & Webster remains a relatively minor player in the business-to-business (B2B) and home improvement segments, which are expected to contribute less than $50m in revenue in FY25.
The broker believes the market is pricing in substantial growth in these categories, despite limited evidence of successful expansion among domestic or international peers. Moreover, assumptions around maintaining margins at scale and facing limited competitive pressure are viewed as optimistic and unlikely to hold in practice.
Following the recent acquisition of US-based Perch for initial consideration of -US$18m, Bell Potter raised its target for Catapult by $1.00 to $6.00. The increase was partly due to higher earnings forecasts and a higher assumed valuation multiple due to the large cross-sell opportunity via Perch, as well as the ongoing rally in the technology sector.
Perch is a "next generation leader in athlete monitoring in the gym for elite teams" and will fit into or enhance Catapult's Performance & Health (P&H) or Wearables vertical, in the broker's opinion.
Zip Co also had a good week, heading up the earnings upgrade table below, after management raised FY25 cash earnings guidance to $160m from $153m, due to a stronger-than-expected US performance in both April and May.
During these months Zip generated 40% year-on-year growth in Total Transaction Volume (TTV). Despite accelerating customer acquisition, Citi noted credit performance remained steady, which is expected to support re-investment in marketing to drive further growth.
Lower fuel prices and interest rate cuts could deliver a further 5-10% earnings uplift, forecasts UBS, with each -25bps cut estimated to add around $5m to earnings.
The appearance of Life360 in the positive tables for earnings and target below should largely be ignored as averages were impacted by Ord Minnett's decision to cease coverage due to a departing analyst.
Morgan Stanley noted last week management had taken advantage of compelling capital market conditions, rather than an immediate need/opportunity to deploy significant capital, in issuing US$320m of convertible notes due June 2030.
The notes have a 0% coupon and are convertible if the stock trades above US$80.97 per share (closing price of US$61.09 last Friday). After further hedging, the share price would need to reach US$122.22 to trigger any dilution, explained the broker, which would likely be proactively managed.
On the flipside, Coronado Global Resources appears atop the tables for negative change to earnings and target.
To alleviate immediate working capital risks during the current weaker coal price environment, and while costs remain elevated, management has announced measures to improve its cash liquidity position by up to US$400m.
In addition to the previously announced US$100m cost reduction target throughout 2025, the company recently entered a binding agreement with Oaktree Capital Management to refinance its US$150m Asset Based Lending facility.
Last week, management also agreed with Stanwell Corporation to provide a liquidity benefit of up to US$150m through a thermal coal pre-payment and rebate deferral.
According to Bell Potter, unless coal prices improve materially, Coronado may need to implement additional liquidity measures over the coming quarters. The broker's target was cut to 19c from 23c, and a Speculative Hold rating was kept.
Macquarie (Neutral) lowered its target price by- 24% to 19c, partly reflecting a weakened earnings outlook and a higher cost of debt.
Last week, footwear and apparel retailer Accent Group's average FY25 earnings forecast in the FNArena database fell by -5% after management guided to FY25 earnings (EBIT) of $108-118m, a -17-19% miss against the consensus forecast of $133m.
Management noted "Low overall growth in the lifestyle footwear market from March to early June has impacted sales in both the retail and wholesale segments".
While lowering its target to $2.10 from $2.60, Bell Potter kept a Buy rating, expect a monetary policy led recovery into the backend of 2025 to support FY26 performance.
The analysts anticipate a higher growth focus, leveraging the outperforming sports segment via global partner and key shareholder, UK-based Frasers Group.
Perennial disappointer Domino's Pizza Enterprises was downgraded to Equal-weight from Overweight at Morgan Stanley. It's thought a shift in consumers' perception of value within the quick service restaurant (QSR) space is causing structural headwinds to build for traditional players.
The customer is trending toward healthier options, convenience (sometimes via Uber Eats), and enhanced digital experiences, notes the broker. It's thought some QSR operators with more sophisticated apps and loyalty programs are gaining a competitive advantage.
Total Buy ratings in the database comprise 61.65% of the total, versus 31.97% on Neutral/Hold, while Sell ratings account for the remaining 6.38%.
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