Weekly Reports | 9:59 AM
Weekly update on stockbroker recommendation, target price, and earnings forecast changes.
By Mark Woodruff
Guide:
The FNArena database tabulates the views of seven major Australian and international stockbrokers: Citi, Bell Potter, Macquarie, Morgan Stanley, Morgans, Ord Minnett, 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 1 to Friday June 5, 2026
Total Upgrades: 4
Total Downgrades: 9
Net Ratings Breakdown: Buy 66.37%; Hold 27.05%; Sell 6.59%
For the week ending Friday, June 5, 2026, FNArena recorded four upgrades and nine downgrades in ratings for individual ASX-listed stocks from seven brokers monitored daily.
Falls in average target prices (valuations) broadly match increases in the tables below, while declining average earnings forecasts materially outweigh the positive adjustments.
The average broker target for network-as-a-service and infrastructure-as-a-service provider Megaport increased by 18% last week.
The Megaport share price has rallied to close last Friday at $18.48 from around $10.00 in mid-May on increasing market confidence around infrastructure-as-a-service contract wins stemming from the company’s acquisition of Latitude.sh in November last year, as summarised at https://fnarena.com/index.php/2026/05/19/latitude-contracts-transform-megaports-outlook/
Since this May 19 article, the company has simultaneously announced even larger AI-infrastructure contract wins of $459m along with a $827m capital raise to fund circa -$370m of expenditure for high-performance Nvidia GPUs, network, and storage infrastructure.
Another -$350m will be spent establishing an on-demand GPU Pool, providing enterprise customers access to AI infrastructure through both contracted and consumption-based commercial models.
UBS' conclusion is Megaport's acquisition of Latitude has materially strengthened the company's earnings outlook, with contracts secured since November carrying annual recurring revenue 6.4 times larger than the acquired business.
The broker highlighted accelerating AI and cloud demand, cross-selling opportunities with the network business, and balance sheet capacity to support further contract wins and growth investment.
Morgan Stanley suggested to investors "don't fight the momentum", given an around 20% internal rate of return on contracts, with the stock offering AI exposure with shorter lead times and lower capex requirements than data centres and neoclouds.
Equally, Citi felt Megaport's latest contract wins provide a meaningful earnings tailwind, noting management's outlook may prove conservative, particularly if demand remains strong and growth in the core Network business continues to accelerate.
Diversified engineering, construction and maintenance services company SRG Global also announced a series of contracts last week to the value of $1.85bn across water, defence, energy, industrial marine and data centre sectors, resulting in a 12% lift in average target by brokers.
Management upgraded FY26 earnings guidance to the top end of the $164m-168m range and provided first-time FY27 guidance for between $190m-200m.
Bell Potter increased its target to $4.25 from $3.15 on more favourable medium- and long-term earnings assumptions and a lower assumed weighted average cost of capital.
This broker retained its Buy rating, arguing the company's 27% premium to industrial services peers looks justified.
The average target for Sims, one of the world's largest metal recycling and circular economy companies, increased by nearly 10% last week after Morgan Stanley raised its target to $24.00 from $15.50.
The business is involved in collecting, processing and selling ferrous and non-ferrous scrap metal, as well as providing electronics recycling and data destruction services.
The broker upgraded its rating to Equal-weight from Underweight, noting the structural improvement in IT asset recovery and re-sale business Sims Lifecycle Services (SLS) amid stronger-for-longer Double Data Rate 4 (DDR4) pricing and higher scrap pricing.
Yet, the broker remains cautious about capitalising the current DDR4-driven resale margins. DDR4 is the fourth-generation DRAM memory standard used in computers, servers and data centres.
While part of the earnings growth at SLS appears durable, the current DDR4-related resale margins are not viewed as representative of sustainable medium-term earnings power.
Sims also appears second on the week's table for positive change to average earnings with a rise of circa 11%, behind the 12% rise for transport-fuels exposure Ampol.
The ACCC has approved Ampol’s acquisition of EG Australia's 512 service stations, subject to 41 sites being on-sold to independent operator Metro Petroleum in order to alleviate concerns about reduced competition.
Ampol will take up the option to swap the planned scrip portion for cash, which means the final price paid to EG Group will be slightly higher at $1.115bn.
Ord Minnett notes management commentary on the company's financial performance and balance sheet augurs well for the first half results due in August, although limited information provided means it was not possible for this analyst to translate into hard numbers.
Ord Minnett has now assumed special dividends will resume in 2027, likely commencing with the 2026 results in February, implying an attractive dividend yield.
On the flipside, Lendlease Group heads up the week's list for negative change to forecast earnings as Morgan Stanley lowered its target to $3.25 from $3.89 following news the Milano Santa Giulia North development site in Italy had been divested for a loss of -$175m.
It’s felt management is unlikely to achieve its target of reducing gearing to around 15% by the end of June 2026, unless the group receives a significant amount of cash from uncontracted asset sales over the coming weeks.
This broker also sees a risk that gearing at year’s end exceeds the 32.9% reported at the first half result, highlighting ongoing balance sheet pressure despite recent asset sale activity.
Ord Minnett calculated a reduced valuation for the group’s capital release unit (CRU) established to divest offshore assets, prompting a reduction in target to $2.85 from $3.05.
GrainCorp and Peter Warren Automotive appear in third and fourth positions, respectively, with average falls of -27% and -21%, respectively.
Bell Potter lowered its forecasts for GrainCorp following the June crop report by the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES), which projects a -27% year-on-year decline in the east coast winter crop. A -19% fall in southeastern canola production is also forecast.
This broker expects lower crop receivals and reduced canola crush volumes, although stronger crush margins should provide a partial offset.
In contrast, Ord Minnett viewed the ABARES forecast as a significant positive, having anticipated a much weaker outlook due to below-average rainfall, elevated El Nino risks and ongoing fertiliser cost and availability pressures stemming from the Middle East conflict.
Peter Warren Automotive is a predominantly east coast dealership operator focused on NSW and Queensland, while Eagers Automotive is the dominant automotive retailer across Australia and New Zealand, offering broader geographic, brand and earnings diversification.
As discussed here https://fnarena.com/index.php/2026/06/04/eagers-automotive-geared-for-better-second-half/ Eagers continues to outperform despite weakening sector conditions. Peter Warren Automotive, by contrast, reported a sharp decline in new vehicle margins and issued FY26 guidance well below market expectations.
Peter Warren also suffered the second largest fall (-10%) in consensus target, behind the -22% fall for Tourism Holdings Rentals. Management at the latter revised FY26 net profit guidance to NZ$40-NZ$43m from NZ$43-$47m, reflecting the conflict in the Middle East.
The business has been affected by both global disruption to international travel and weaker consumer confidence.
Tourism Holdings is the world's largest recreational vehicle rental operator, renting, selling and manufacturing motorhomes, campervans and caravans across A&NZ, North America and Europe.
In the coming days an article will be published on the FNArena website explaining broker views on Australia's largest natural gas infrastructure business APA Group, which received a 4% increase in average target from brokers last week.
As a teaser, the group offers not only potential share price upside from rising energy demand driven by AI and data centre growth, but also what Morgan Stanley considers the safest dividend yield across its ASX research coverage.
Total Buy ratings remain historically elevated at 66.37%, with Sell ratings at just 6.59%, leaving 27.05% on Neutral/Hold.
Upgrade
ENDEAVOUR GROUP LIMITED ((EDV)) Upgrade to Buy from Neutral by Citi .B/H/S: 2/3/1
Citi lowers its target for Endeavour Group by -20c to $3.25 and upgrades to Buy from Neutral, despite elevated near-term uncertainty. The group's investor day also provided limited quantitative targets beyond cost reduction initiatives.
Putting aside these negatives, the broker sees potential for market share gains in the Retail division under new management's price leadership strategy and believes the company's scale positions it well in a competitive market.
Citi also identifies Coles Group's ((COL)) upcoming FY26 result in August as a potential catalyst, with the supermarket group currently reviewing the role of large-format liquor stores within its broader retail network.
GRAINCORP LIMITED ((GNC)) Upgrade to Buy from Accumulate by Ord Minnett .B/H/S: 2/2/0
Ord Minnett upgrades GrainCorp to Buy from Accumulate, with an unchanged target price of $7.25.
The analyst points to rainfall across northern NSW and Queensland over the last two weeks, which should support the FY27 winter crop after being highlighted as a potential concern at the 1H26 result on May 14.
While the crop is still likely to be smaller than FY26, the broker no longer expects a poor outcome.
SIMS LIMITED ((SGM)) Upgrade to Equal-weight from Underweight by Morgan Stanley .B/H/S: 2/2/0
Morgan Stanley observes Sims is executing strongly as the shares have rallied 75% over the past year. The broker upgrades to Equal-weight from Underweight, noting the structural improvement in SLS amid stronger-for-longer DDR4 pricing and higher scrap pricing.
Yet the broker is cautious about capitalising the current DDR4-driven resale margins, questioning whether these are sustainable in terms of medium-term earnings.
Commentary explains SLS is primarily an IT asset recovery and re-sale business that is benefiting from structural tailwinds including AI-driven server replacement and increasing hyper-scale activity. The target is raised to $24.00 from $15.50.
The full story is for FNArena subscribers only. To read the full story plus enjoy a free two-week trial to our service SIGN UP HERE
If you already had your free trial, why not join as a paying subscriber? CLICK HERE