Australian Broker Call

Bell Potter rates ASB as Buy (1) -

Austal provided a trading update at its AGM with FY25 EBIT guidance of $80m, which meets Bell Potter's forecast but is below consensus, the analyst highlights.

An order book of $12.7bn is expected to support earnings, driven by a recovery in shipbuilding, growth in the support business, and development in the towing, salvage, and rescue ship program.

The broker notes that guidance represents 42% growth on the previous corresponding EBIT, with potential for further "upside" from the $450m submarine contract announced on September 16. Management is working on appropriate accounting treatment.

The target price increases by 19% to $3.75. Buy rating retained.

Target price is $3.75 Current Price is $3.25 Difference: $0.5
If ASB meets the Bell Potter target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $3.46, suggesting upside of 1.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY25:

Forecast for FY26:

Market Sentiment: 0.7

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Citi rates DHG as Buy (1) -

Judging from Citi's initial response, it looks like Domain Holdings Australia's Q1 update this morning has missed expectations with digital revenues growing by 9% against the broker's estimate of 15% growth.

Both residential yield and Domain Insights have been identified as key disappointments.

The broker does counter management's adjacent guidance for margins and costs implies only marginal downgrades apply for consensus' FY25 revenue estimate, although the analysts believe there will be a debate about it all among analysts.

Target $3.65. Buy.

Target price is $3.65 Current Price is $3.04 Difference: $0.61
If DHG meets the Citi target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $3.34, suggesting upside of 16.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY25:

Forecast for FY26:

Market Sentiment: 0.3

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Citi rates DMP as Buy (1) -

While there was a marginal improvement in same-store sales (SSS) for Domino's Pizza Enterprises since the August 2024 update, Citi notes that the figure still missed the consensus forecast.

The transition to a new CEO, though expected, occurred sooner than the broker anticipated. However, it is viewed positively, as it may widen the pool of potential stock investors.

Citi retains a Buy rating with a $37.50 target, down from $38.50 due to lower forecast earnings.

Target price is $37.50 Current Price is $31.60 Difference: $5.9
If DMP meets the Citi target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $35.15, suggesting upside of 8.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY25:

Forecast for FY26:

Market Sentiment: 0.3

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Macquarie rates DMP as Neutral (3) -

Domino's Pizza Enterprises announced CEO Don Meij will retire after 22 years at the helm, and he will work with the incoming CEO, Mark van Dyck, for the next 12 months.

Van Dyck will assume the CEO role on November 6. Macquarie notes Management also provided a trading update, with group same-store sales down -1.2% for the first 17 weeks. Australia is growing, while Germany, France, and Japan are posting negative results.

Macquarie lowers EPS forecasts by around -7% to -10% for FY25 to FY27 due to weaker sales estimates and reduced margins, slightly offset by favourable FX changes.

Neutral rating. Target price decreases to $32.20 from $35.

Target price is $32.20 Current Price is $31.60 Difference: $0.6
If DMP meets the Macquarie target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $35.15, suggesting upside of 8.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY25:

Forecast for FY26:

Market Sentiment: 0.3

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Morgan Stanley rates DMP as Overweight (1) -

Morgan Stanley notes the transition plan at Domino's Pizza Enterprises, with long-standing CEO Don Meij set to retire and Mr. van Dyck to succeed him effective November 6, including a 12-month crossover period.

Van Dyck was previously with Compass Group and has served as an advisor to Domino's Pizza Enterprises over the past 12 months.

Management also provided a trading update, with same-store sales down -1.2% for the first 17 weeks of FY25, which the analyst notes is below consensus.

Australia, Singapore, and Taiwan reported positive growth, while Germany, France, and Japan reported negative growth.

The Overweight rating is retained with a $44 target price. Industry view: In-Line.

Target price is $44.00 Current Price is $31.60 Difference: $12.4
If DMP meets the Morgan Stanley target it will return approximately 39% (excluding dividends, fees and charges).

Current consensus price target is $35.15, suggesting upside of 8.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY25:

Forecast for FY26:

Market Sentiment: 0.3

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Ord Minnett rates DMP as Hold (3) -

Ord Minnett suggests that the appointment of an external CEO, Mark van Dyck, to replace Don Meij is likely to be well received by investors.

Separately, a trading update revealing same-store sales growth of -1.2% for the first 17 weeks of FY25 falls short of the consensus estimate of 1.3% growth for the first half.

As comparative figures become more favourable in the final nine weeks of the first half, Ord Minnett believes the trading update broadly met expectations.

Hold rating. Target $31.

Target price is $31.00 Current Price is $31.60 Difference: minus $0.6 (current price is over target).
If DMP meets the Ord Minnett target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $35.15, suggesting upside of 8.1% (ex-dividends)

Forecast for FY25:

Forecast for FY26:

Market Sentiment: 0.3

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Citi rates ELD as Buy (1) -

Citi forecasts FY24 EBIT of $131m for Elders, meeting the midpoint of the guidance range. The broker believes the second half of FY24 will mark a turning point, with momentum continuing into early FY25.

The Buy rating remains unchanged, and the target is lifted to $9.75 from $9.65 on a valuation roll-forward.

Target price is $9.75 Current Price is $8.39 Difference: $1.36
If ELD meets the Citi target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $9.11, suggesting upside of 3.2% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.7

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Citi rates GMG as Buy (1) -

Citi suggests Goodman Group’s superior medium- to long-term growth remains intact after an early look at today's "stable" 1Q operational update. Management anticipates substantial project commencements in 2025.

The analyst's "stable" assessment stems from relatively flat development work in progress and steady guidance.

Demand for data centres continues to grow, with work in progress figures showing the group's exposure has increased to 42% from 40% in August, highlights the broker.

Management notes that demand for industrial space remains moderate, and while property fundamentals in mainland China are weaker, this is being offset by strength in other regions.

Buy rating. Target $40.

Target price is $40.00 Current Price is $36.30 Difference: $3.7
If GMG meets the Citi target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $37.53, suggesting upside of 3.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY25:

Forecast for FY26:

Market Sentiment: 0.4

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Macquarie rates GMG as Outperform (1) -

Macquarie points out, consistent with history, Goodman Group today reaffirmed its FY25 OEPS guidance during a 1Q operational update.

In an initial assessment, the broker believes management will eventually raise guidance from a 9% year-on-year increase to more closely align with Macquarie and consensus forecasts of 12% and 13%, respectively.

According to the analyst, the group had a soft start, commencing $0.2bn of developments in 1Q25, primarily related to early-stage infrastructure works at cost.

Work in progress (WIP) of $12.8bn was broadly in line with $13.0bn last June, with the production rate also stable at $6.5bn, notes the broker. Assets under management (AUM) remained stable at $78.8bn at the quarter’s end.

Outperform rating. Target $36.47.

Target price is $36.47 Current Price is $36.30 Difference: $0.17
If GMG meets the Macquarie target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $37.53, suggesting upside of 3.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY25:

Forecast for FY26:

Market Sentiment: 0.4

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Citi rates JHX as Neutral (3) -

Pondering the US election result, Citi sees limited impact from either Democratic or Republican policies on James Hardie Industries. It believes any macroeconomic rebound for the company will continue to be driven by interest rates and home equity withdrawals.

While Trump plans to address housing affordability through several measures, the broker is surprised by the lack of specific, quantifiable housing policies.

The Neutral rating and $50.90 target price remain unchanged.

Target price is $50.90 Current Price is $47.99 Difference: $2.91
If JHX meets the Citi target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $56.98, suggesting upside of 17.0% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY25:

Forecast for FY26:

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: 0.7

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Citi rates LIC as Neutral (3) -

Citi opens a short-term positive view on Lifestyle Communities (though an overall Neutral rating is maintained) following news that HMC Capital Partners Holdings Pty Ltd has acquired a 2.69% stake in the company.

HMC is known as an activist investor focused on making business changes to achieve positive returns, and the broker sees potential for positive news on Lifestyle's business review at the AGM on November 12.

The $9.50 target remains unchanged.

Target price is $9.50 Current Price is $9.10 Difference: $0.4
If LIC meets the Citi target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $9.78, suggesting upside of 5.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY25:

Forecast for FY26:

Market Sentiment: 0.1

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Citi rates NUF as Sell (5) -

Citi is forecasting $307m of underlying earnings (EBITDA) in FY24 for Nufarm, meeting the lower end of the guidance range.

The broker does not expect a near-term surge in pricing due to prolonged delayed purchasing decisions, just-in-time inventory management, heightened competition for generic products, and increasing manufacturing capacity from China.

Target $3.65. Sell.

Target price is $3.65 Current Price is $3.88 Difference: minus $0.23 (current price is over target).
If NUF meets the Citi target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.59, suggesting upside of 17.1% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: -0.1

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Citi rates RHC as Neutral (3) -

Citi lowers its EPS forecasts for Ramsay Health Care across FY25-27, given that both IT investments and nurse wage inflation are likely to remain elevated.

Management expects IT investments (net of savings) to decline from FY26 and become net positive from FY28.

The broker lowers its target price to $42 from $44 and maintains a Neutral rating.

Target price is $42.00 Current Price is $39.27 Difference: $2.73
If RHC meets the Citi target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $44.00, suggesting upside of 15.0% (ex-dividends)

Forecast for FY25:

Forecast for FY26:

Market Sentiment: 0.0

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Morgan Stanley rates RIO as Overweight (1) -

Morgan Stanley maintains an Overweight rating on Rio Tinto, with a target price of $135.00, reflecting its positive outlook on the Oyu Tolgoi mine expansion and the company's long-term copper production growth.

Morgan Stanley highlights ongoing negotiations with the Mongolian government and Entree Resources are critical to consolidating tenements at the Hugo North Extension, which comprises around 10% of Oyu Tolgoi’s reserves for Rio Tinto.

The broker notes a successful agreement is expected to increase copper output significantly, with production rising to 340kt by 2025 from the current 210kt level.

While negotiations carry risks and may impact 2025 production sequencing, Morgan Stanley remains confident in a resolution and the mine’s output potential.

Overweight rating with a target price of $135.00, reflecting its positive outlook on the Oyu Tolgoi mine expansion and on long-term copper production growth. Industry View: Attractive.

Target price is $135.00 Current Price is $119.42 Difference: $15.58
If RIO meets the Morgan Stanley target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $126.83, suggesting upside of 6.4% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY24:

Forecast for FY25:

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: 0.5

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Macquarie rates SBM as Upgrade to Outperform from Neutral (1) -

Macquarie observes St. Barbara is raising $100m at 38c per share, with the proceeds expected to be used for the development of the Simberi Sulphide Project.

Management aims for first gold production at the project in the first quarter of FY28, with expected capex of -US$258m, while the broker estimates -US$300m.

Following the -22% decline in the share price, the stock is upgraded to Outperform from Neutral. The target price remains at 49c.

Target price is $0.49 Current Price is $0.34 Difference: $0.15
If SBM meets the Macquarie target it will return approximately 44% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY25:

Forecast for FY26:

Market Sentiment: 0.5

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Ord Minnett rates STO as Buy (1) -

Following Santos' annual Investor Day on November 19, Ord Minnett anticipates greater confidence in management's projected free cash flow (FCF) yield of 12-20%.

In the broker's view, this confidence should underscore the company's strategic shift towards prioritising dividends after the Barossa and Pikka projects.

Updates on growth projects such as Dorado, Pikka Phase 2, and Papua LNG are also expected by the analyst.

Buy rating. Target $8.50.

Target price is $8.50 Current Price is $6.79 Difference: $1.71
If STO meets the Ord Minnett target it will return approximately 25% (excluding dividends, fees and charges).

Current consensus price target is $8.21, suggesting upside of 23.9% (ex-dividends)

Forecast for FY24:

Forecast for FY25:

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: 0.7

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Macquarie rates SUN as Neutral (3) -

The analyst at Macquarie is attending today's Suncorp Group investor day and reports guidance is unchanged for FY25.

Management plans to operate capital in the "top half of the target range" and intends on periodically returning capital "in excess of the needs of the business" via an active on-market buy-back facility.

Net proceeds of the Bank sale of around $4.1bn will be returned to shareholders around the end of 1Q of 2025, "subject to the capital needs of the business".

The analyst concedes understanding market expectations is proving difficult after the Bank and Life sales and sticks with its Neutral rating. Target $17.00.

Target price is $17.00 Current Price is $17.73 Difference: minus $0.73 (current price is over target).
If SUN meets the Macquarie target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $18.80, suggesting upside of 2.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY25:

Forecast for FY26:

Market Sentiment: 0.6

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Citi rates TLC as Buy (1) -

Lottery Corp's lottery revenue in FY25 to date is down by -4% compared to the previous corresponding period and is tracking well below forecasts by Citi and consensus.

However, the broker is banking on improved jackpots and Powerball numbers, which showed improvement in October. Comparisons for Powerball are soft for the rest of the half, leaving room for catch up, explains Citi.

Citi's Buy rating and $5.60 target remain unchanged.

Target price is $5.60 Current Price is $5.01 Difference: $0.59
If TLC meets the Citi target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $5.54, suggesting upside of 9.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY25:

Forecast for FY26:

Market Sentiment: 0.8

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Morgan Stanley rates VCX as Underweight (5) -

Morgan Stanley notes potential benefits from a possible sale of the Box Hill Central North site for Vicinity Centres.

This site, planned as a large mixed-use development, could yield up to $275m in proceeds if divested, more than double its book value of $122m as of June 2023, the analyst explains.

The broker suggests divestment may alleviate the REIT's high gearing (currently at 28.3%) and increase funds from operations by around 2%. 

Morgan Stanley expresses caution on the heavy development pipeline, especially amid challenging interest rate conditions. 

Underweight. Target price unchanged at $2.35. Industry View: In-Line. Vicinity Centres' track record of under-delivering on projects could impact investor sentiment, the broker suggests.

Target price is $2.35 Current Price is $2.15 Difference: $0.2
If VCX meets the Morgan Stanley target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $2.23, suggesting upside of 5.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY25:

Forecast for FY26:

Market Sentiment: -0.1

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Citi rates WDS as Sell (5) -

The analyst at Citi will be attending a site visit tomorrow to the under-construction Pluto T2. The broker expects management will reiterate guidance for first gas in 2026 and the budget.

While unlikely to be a topic of discussion by management tomorrow, Citi sees a risk that consensus is overestimating Pluto production by around 5% in the longer term.

Target $23. Sell.

Target price is $23.00 Current Price is $23.90 Difference: minus $0.9 (current price is over target).
If WDS meets the Citi target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $27.80, suggesting upside of 17.9% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY24:

Forecast for FY25:

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: 0.0

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources