Weekly Reports | 10:30 AM
A summary of the highlights from Broker Call Extra updates throughout the week past.
Broker Rating Changes (Post Thursday Last Week)
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EAGERS AUTOMOTIVE LIMITED ((APE)) Upgrade to Buy from Hold by Canaccord Genuity.B/H/S: 0/0/0
Canaccord Genuity assesses Eagers Automotive's 1H25 result as strong, with underlying profit before tax beating its forecast despite pressure on margins, which is widespread in the industry.
Revenue of $6.5bn was ahead of the broker's forecast of $5.8bn, aided by BYD's contribution. Operating cash flow was very strong, leading to an improvement in leverage to 0.82x.
The broker reckons the result suggests the earnings profile is less dependent on cycles than previously thought due to strong positioning in new brands and powertrains.
FY25 EPS forecast upgraded by 2.3% and FY26 by 4.5%.
Target lifted to $28.00 from $17.20 for reasons, including an increase in the terminal rate. Rating upgraded to Buy from Hold.
ABACUS STORAGE KING ((ASK)) Upgrade to Overweight from Neutral by Jarden.B/H/S: 0/0/0
Jarden notes REIT stocks outperformed in August, up 6.2%, with the performance supported by the sector exceeding elevated expectations during the result season.
Macro tailwinds like rate cuts, cap rate compression and limited supply support rental/price growth and asset values. Balance sheets are healthy, enabling capital deployment and potential consolidation-driven upside.
Among key risks in the broker's view are elevated rates vs past cycles, regulatory headwinds, and a wide gap between underlying and cash-backed earnings.
In the case of Abacus Storage King, the broker believes growth will get a boost from a larger development pipeline, ongoing add-on acquisitions, and management system efficiencies.
Rating upgraded to Overweight from Neutral. Target unchanged at $1.65.
CHARTER HALL RETAIL REIT ((CQR)) Upgrade to Overweight from Neutral by Jarden.B/H/S: 0/0/0
Jarden notes REIT stocks outperformed in August, up 6.2%, with the performance supported by the sector exceeding elevated expectations during the result season.
Macro tailwinds like rate cuts, cap rate compression and limited supply support rental/price growth and asset values. Balance sheets are healthy, enabling capital deployment and potential consolidation-driven upside.
Among key risks in the broker's view are elevated rates vs past cycles, regulatory headwinds, and a wide gap between underlying and cash-backed earnings.
The broker notes Charter Hall Retail REIT shares are up around 33% YTD, but well supported by a -10% discount to NTA and 6.1% dividend yield.
Rating upgraded to Overweight from Neutral. Target rises to $4.75 from $4.35.
INGENIA COMMUNITIES GROUP ((INA)) Upgrade to Buy from Overweight by Jarden.B/H/S: 0/0/0
Jarden notes REIT stocks outperformed in August, up 6.2%, with the performance supported by the sector exceeding elevated expectations during the result season.
Macro tailwinds like rate cuts, cap rate compression and limited supply support rental/price growth and asset values. Balance sheets are healthy, enabling capital deployment and potential consolidation-driven upside.
Among key risks in the broker's view are elevated rates vs past cycles, regulatory headwinds, and a wide gap between underlying and cash-backed earnings.
The broker sees upside potential to Ingenia Communities' guidance if market conditions remain strong and the lower rate environment continues to strengthen residential sentiment.
Rating upgraded to Buy from Underweight. Target unchanged at $7.10.
PEXA GROUP LIMITED ((PXA)) Upgrade to Buy from Overweight by Jarden.B/H/S: 0/0/0
Pexa Group's FY25 earnings (EBITDA) of $134m, rose by 17% year-on-year but but came in -4% below Jarden’s and consensus forecasts. International revenue was weaker and exchange margins lower than expected.
FY26 guidance of between $405-430m revenue and 32-35% margins implies to the broker respective -4% and -11% downgrades to consensus forecasts at midpoints. Capex guidance of -$60-65m was lower-than-expectated.
The broker cuts its FY26-FY28 EPS forecasts by -26% to -37% due to lower international and digital revenues, and higher UK costs, Terminal EPS are only reduced by -2% with UK market share assumptions intact at around 40%.
Jarden lowers its target price to $17.70 from $17.75 and upgrades Pexa Group to Buy from Overweight given the strong UK opportunity.
SMARTGROUP CORPORATION LIMITED ((SIQ)) Upgrade to Buy from Hold by Canaccord Genuity.B/H/S: 0/0/0
Smartgroup Corp's 1H25 result was largely in line with Canaccord Genuity's forecast, and the highlight was the company announcing FY27 EBITDA margin target of mid-40%s.
The broker previously had 41% EBITDA margin estimate for FY27, but revised it to 42.9%, noting material upside potential if the company achieves the target.
In the short term, the broker sees headwinds from tougher comps due to prior-year PHEV FBT settlements, with some yield pressure likely to weigh further.
FY25-26 revenue forecasts cut by 3.2% and 2.4% respectively, and FY27 revenue raised by 0.2%, with offset from a lift in EBITDA margins. The net result is a cut in FY25-26 net profit forecasts, but a lift to FY27.
Target rises to $9.10 from $8.70. Rating upgraded to Buy from Hold.
TOURISM HOLDINGS LIMITED ((THL)) Upgrade to Overweight from Market Weight by Wilsons.B/H/S: 0/0/0
Tourism Holdings Rentals delivered FY25 profit of NZ$28.7m, 5% above Wilsons’ forecasts and within guidance, with rental income up 10% and goods sales down -6%.
Growth was supported by fleet expansion in New Zealand and higher US revenue per rental vehicle, partly offset by a smaller fleet, explains the broker. Weaker RV retail sales and normalising margins weighed on Australian earnings.
Management reaffirmed its roadmap to NZ$100m profit over 3-4 years, underpinned by assumptions including 25% more rental days, fleet growth to 9,000 by FY28, and modest gross margin improvement.
The broker's earnings (EBITDA) forecasts rise 9-10% across FY26-28, while profit lifts 4% in FY26 and 10% in FY28 on higher utilisation and revised interest assumptions.
Wilsons upgrades its rating to Overweight from Market Weight after raising its target price to $2.94 from $2.12.
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HMC CAPITAL LIMITED ((HMC)) Downgrade to Neutral from Overweight by Jarden.B/H/S: 0/0/0
Jarden notes REIT stocks outperformed in August, up 6.2%, with the performance supported by the sector exceeding elevated expectations during the result season.
Macro tailwinds like rate cuts, cap rate compression and limited supply support rental/price growth and asset values. Balance sheets are healthy, enabling capital deployment and potential consolidation-driven upside.
Among key risks in the broker's view are elevated rates vs past cycles, regulatory headwinds, and a wide gap between underlying and cash-backed earnings.
In the case of HMC Capital, the broker believes earnings are dependent on the ability to raise unlisted capital where the track record is minimal. Forecasts and valuation lowered to reflect the range of possibilities.
Rating downgraded to Neutral from Overweight. Target trimmed to $4.00 from $5.20.
PANTORO GOLD LIMITED ((PNR)) Downgrade to Hold from Buy by Moelis.B/H/S: 0/0/0
Moelis downgraded Pantoro Gold's rating to Hold from Buy following recent share price gains. No change to $4.50 target price.
The broker notes the share price has appreciated 65% since July vs the 22% average gains in its gold coverage stocks.
The stock could continue to trade higher on pure momentum, but to drive a rating upgrade, the broker needs to have more conviction around peak production or the gold price to exceed $6,000/oz.
SANDFIRE RESOURCES LIMITED ((SFR)) Downgrade to Neutral from Buy by Jarden.B/H/S: 0/0/0
Jarden regards Sandfire Resources' FY25 result as unusually messy but broadly meeting its forecast at the underlying EBITDA and EBIT line, missing at the EBT line, but beating at the reporting net profit level.
The highlights were consistent cash generation and an improved balance sheet, with FY26 guidance viewed as robust.
The broker lifted FY26 EBITDA forecast by 2% but trimmed FY27 by -4% on higher costs, partly offset by greater precious metals credit.
Target cut to $11.00 from $11.20. Rating downgraded to Neutral from Buy.
LOTTERY CORPORATION LIMITED ((TLC)) Downgrade to Underweight from Neutral by Jarden.B/H/S: 0/0/0
Jarden notes Lottery Corp's share price has outperformed in the past month, rising 9%, with the FY25 result providing an additional boost.
The share price is up 18% year-to-date. As a result, rating downgraded to Underweight from Neutral. Target unchangedat $5.65.
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