Australian Broker Call

Ord Minnett rates AD8 as Initiation of coverage with Accumulate (2) -

Ord Minnett/Morningstar initiates coverage on Audinate Group with an Accumulate rating and $23 target. It's considered a well managed, high-quality company with a large and highly-winnable market opportunity.

The group's network effects, existing customer relationships, along with the scale of R&D, should accelerate the AV industry's transition toward digital audio networking, according to the broker.

The analyst believes Audinate will gradually usher more AV professionals into higher-tier software subscriptions and increase prices per tier over time. The nascent video networking business is also viewed as holding significant promise.

Target price is $23.00 Current Price is $15.00 Difference: $8
If AD8 meets the Ord Minnett target it will return approximately 53% (excluding dividends, fees and charges).

Current consensus price target is $20.72, suggesting upside of 32.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.5

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

Ord Minnett rates AZJ as Accumulate (2) -

Aurizon Holdings has made no ASX announcements since early-April, but Ord Minnett upgrades its FY24 earnings forecast by 2% on the back of a slightly-better-than-expected rebound in coal industry export volumes.

These volumes are up by 8.7% in the 10 months to April in FY24 compared to the previous corresponding period.

The broker points out coal usage in China continues to rise and the demand outlook is positive in Southeast Asia and India.

The Accumulate rating and $4.70 target are maintained.

Target price is $4.70 Current Price is $3.63 Difference: $1.07
If AZJ meets the Ord Minnett target it will return approximately 29% (excluding dividends, fees and charges).

Current consensus price target is $3.91, suggesting upside of 6.3% (ex-dividends)

The company's fiscal year ends in June.

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 BHP as Buy (1) -

After a hiatus in coverage of BHP Group, Citi resumes with the same Buy rating but a target of $48.50, up from $48, following news a firm offer for Anglo American will not occur. The deal cannot be revisited for six months unless there is a rival offer.

Regardless, the broker points out BHP has the greatest earnings leverage to copper of the Australian diversifieds, and believes the consensus long-term copper price estimate is too low.

Target price is $48.50 Current Price is $45.08 Difference: $3.42
If BHP meets the Citi target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $45.06, suggesting upside of 1.3% (ex-dividends)

The company's fiscal year ends in June.

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: 0.4

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

Morgan Stanley rates BHP as No Rating (-1) -

Morgan Stanley notes the Anglo American Board has unanimously agreed there is no basis for a further extension to the offer deadline for BHP Group.

The Board felt fundamental concerns relating to the execution and value risks of the proposed transaction structure were not addressed by BHP.

Morgan Stanley is currently under research restriction for BHP Group. No rating or target are provided.

Current Price is $45.08. Target price not assessed.

Current consensus price target is $45.06, suggesting upside of 1.3% (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: 0.4

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

Ord Minnett rates BHP as Hold (3) -

Ord Minnett reverts to its unchanged standalone $40.50 valuation for BHP Group, up from $39.50, after the failed bid for Anglo American.

The broker agrees with BHP's decision to walk away rather than making a higher offer.

The Hold rating is maintained.

Target price is $40.50 Current Price is $45.08 Difference: minus $4.58 (current price is over target).
If BHP meets the Ord Minnett target it will return approximately minus 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $45.06, suggesting upside of 1.3% (ex-dividends)

The company's fiscal year ends in June.

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: 0.4

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

Bell Potter rates CAT as Hold (3) -

According to Bell Potter, Catapult International reported mixed FY24 results. Revenue was better than expected and EBITDA was higher than forecast as gross profit came in above above estimates.

Free cash flow surprised to the upside highlights the broker at US$4.6m versus the analyst's forecast of US$1.6m, inferring the 2H24 was particularly robust.

Management offered no guidance, just some statements around the outlook, of which two were the same as FY24.

Bell Potter upgrades revenue forecasts for FY25 and FY26, while  EBITDA estimates have been downgraded due to higher share-based payments and purchase considerations.

Hold retained. Target price lifted to $1.75 from $1.50.

Target price is $1.75 Current Price is $1.55 Difference: $0.2
If CAT meets the Bell Potter target it will return approximately 13% (excluding dividends, fees and charges).

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: 0.0

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

Morgans rates CHL as Add (1) -

Morgans assesses the recent Camplify Holdings investor day where management provided strategic priorities for its core marketplace and newly created insurance segment, MyWay.

The broker notes the potential of the MyWay segment, expecting its licensing to be completed for the UK, Australia and New Zealand by the end of August 2024.

Management's 3Q24 trading update revealed a 17% increase in GTV to $35.6m and a 17% rise in revenue to $10.5m, excluding the Temporary Accommodation Program (TAP), with core revenue up 29% on previous corresponding period (pcp), notes the broker.

The RV fleet size increased by 18% to 31.2k, with future bookings at $19.5m as of May 20, reflecting an 8% increase in GTV and a 20% increase in bookings on pcp.

No changes to earnings forecasts and  the Add rating and $2.55 target price retained.

Target price is $2.55 Current Price is $1.55 Difference: $1
If CHL meets the Morgans target it will return approximately 65% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 1.0

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

Macquarie rates CNB as Outperform (1) -

Carnaby Resources has released its Scoping Study for the Greater Duchess copper project, outlining third-party and stand-alone processing options.

Life-of-mine (LOM) copper and gold production was only -4% below Macquarie's expectations and operating costs were in line, while pre-production capex is lower-than-expected.

The Scoping Study only included currently delineated resources, notes the analyst, with further exploration success potentially
increasing mine life past the nine years outlined.

The target for Carnaby Resources falls to $1.13 from $1.25. Outperform.

Target price is $1.13 Current Price is $0.76 Difference: $0.375
If CNB meets the Macquarie target it will return approximately 50% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 1.0

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

Ord Minnett rates IAG as Hold (3) -

Higher interest rates are boosting income for Australia's largest general insurers, notes Ord Minnett, while underwriting is becoming more profitable on material premium rate increases.

While premium rate increases have continued at a higher-than-expected level in 2024, the broker understands these growth rates are easing back to mid-single digits from double digits in recent years.

The broker's target for Insurance Australia Group rises by 5% to $6.00 on stronger near-term earnings forecasts, and the Hold rating is maintained.

Target price is $6.00 Current Price is $6.21 Difference: minus $0.21 (current price is over target).
If IAG meets the Ord Minnett target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $6.21, suggesting upside of 0.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.3

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

Bell Potter rates IPG as Buy (1) -

IPD Group provided updated FY24 guidance with revenue expected to be $294m and EBITDA in the range of  $39.0m to $39.5m, slightly below previous forecasts, according to Bell Potter.

The broker views the update as solid given some near term uncertainty on the company's project pipeline.

Differences in the CMI guidance versus the analyst's forecasts appear to be the reason for the slight miss on FY24 expectations

Looking ahead, Bell Potter views there is robust potential in EV charging installations with  IPD Group's exclusive distribution agreements in Australia.

Earnings forecasts are tweaked slightly and the target adjusted to $5.60 from $5.70.

Buy rating unchanged.

Target price is $5.60 Current Price is $4.53 Difference: $1.07
If IPG meets the Bell Potter target it will return approximately 24% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 1.0

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

Macquarie rates PDN as Outperform (1) -

Commissioning on site is complete for Langer Heinrich and the production ramp-up is now underway, highlights the analyst at Macquarie, upon return from visiting the operations.

The broker believes exploration upside could extend the mining phase and maintain the 6mlb per annum run-rate for longer than the current seven-year period.

The $15 target and Outperform rating are maintained.

Target price is $15.00 Current Price is $15.75 Difference: minus $0.75 (current price is over target).
If PDN meets the Macquarie target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $16.31, suggesting upside of 2.4% (ex-dividends)

The company's fiscal year ends in June.

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: 0.8

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

Bell Potter rates PME as Upgrade to Hold from Sell (3) -

While  Bell Potter continues to struggle with the valuation ascribed to Pro Medicus, the analyst acknowledges the recent announcement of five new clients, adding $45m in revenue over eight years, enhances the company's revenue visibility for FY25.

Full revenue realisation from these contracts is anticipated in the 2H25, with the broker noting consensus FY25 revenue estimates are in a tight range around $200m, representing 25% growth on FY24.

The target price is raised to $115 from $75 and rating upgraded to Hold from Sell.

Target price is $115.00 Current Price is $115.89 Difference: minus $0.89 (current price is over target).
If PME meets the Bell Potter target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $88.40, suggesting downside of -26.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: -0.2

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

Ord Minnett rates RWC as Accumulate (2) -

After a new analyst takes over coverage of Reliance Worldwide at Ord Minnett/Morningstar, the target rises by 33% to $5.60 as earnings are not expected to be as cyclical as new housing construction.

The broker notes around 75% of the company's revenue derives from the repair, maintenance and renovation category.

The target was already at $5.60 in the FNArena database, based on the prior analyst's research published under Ord Minnett's own banner.

The Accumulate rating is retained.

Target price is $5.60 Current Price is $4.71 Difference: $0.89
If RWC meets the Ord Minnett target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $5.52, suggesting upside of 13.7% (ex-dividends)

The company's fiscal year ends in June.

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: 0.8

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

UBS rates SHV as Buy (1) -

Select Harvests has released interim financials and UBS, upon first glance, believes earnings missed forecasts, with higher costs to blame, but pricing and volumes outperformed expectations.

EBIT came out as $3.8m and was inclusive of a -$2.1m write off, the broker highlights.

Management at the almond harvester noted a strengthening in prices recently. Regarding the FY25 crop, early indications are the crop will be in line with targeted results, according to company management, including improved yields from NSW orchards.

It's not clear whether UBS is happy with today's outcome (it seems not). The broker continues to point to higher costs guidance which is only partially offset by higher pricing and larger volumes.

Target $4.70. Buy.

Target price is $4.70 Current Price is $3.18 Difference: $1.52
If SHV meets the UBS target it will return approximately 48% (excluding dividends, fees and charges).

Current consensus price target is $4.68, suggesting upside of 43.7% (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

Shaw and Partners rates SLH as Buy, High Risk (1) -

On the one hand, Shaw and Partners is conscious of the impact on Silk Logistics of container freight rates which have more than doubled since December 2023, in part due to conflict in the Red Sea.

On the other hand, Twenty-foot Equivalent Unit (TEU) container volumes through Australian ports have materially recovered from December 2023, notes the broker.

The Buy, High Risk rating is maintained and the target falls to $2.10 from $2.30 after the analyst reduces FY25/FY26 EPS forecasts by around -8%.

Target price is $2.10 Current Price is $1.30 Difference: $0.8
If SLH meets the Shaw and Partners target it will return approximately 62% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 1.0

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

Ord Minnett rates SUN as Hold (3) -

Higher interest rates are boosting income for Australia's largest general insurers, notes Ord Minnett, while underwriting is becoming more profitable on material premium rate increases.

While premium rate increases have continued at a higher-than-expected level in 2024, the broker understands these growth rates are easing back to mid-single digits from double digits in recent years.

The broker's target for Suncorp Group rises by 7% to $14.50 on stronger near-term earnings, and after a financial model update to include the sale of Suncorp Bank. The Hold rating is maintained.

Target price is $14.50 Current Price is $15.88 Difference: minus $1.38 (current price is over target).
If SUN meets the Ord Minnett target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $16.78, suggesting upside of 5.9% (ex-dividends)

The company's fiscal year ends in June.

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

Macquarie rates TCL as Neutral (3) -

Transurban Group's revised dividend policy (announced at the investor day in early-May) has minimal impact on Macquarie's valuation for the company.

The broker re-sets its dividend forecasts to around $0.035 per annum dividend growth over FY25-FY27.

The target rises to $13.74 from $13.69 and the Neutral rating is maintained.

Target price is $13.74 Current Price is $12.37 Difference: $1.37
If TCL meets the Macquarie target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $13.63, suggesting upside of 9.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.3

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

Citi rates TWE as Neutral (3) -

Sales for DAOU Vineyards increased by 17% on the previous corresponding period in the four weeks ending May 18, a slight moderation relative to the 20% growth in the prior four weeks, notes Citi.

DAOU Vineyards represents around 12% of Treasury Americas' retail moving annual total (MAT).

The broker notes Frank Family has softened, and 19 Crimes sales remain challenging, according to the latest US Nielsen data.

The analysts need to see evidence of better operating momentum in Treasury's core business before upgrading from the current Neutral rating. The $12.40 target is also unchanged.

Target price is $12.40 Current Price is $11.10 Difference: $1.3
If TWE meets the Citi target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $13.58, suggesting upside of 20.1% (ex-dividends)

The company's fiscal year ends in June.

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

Morgans rates WPR as Hold (3) -

Morgans notes Waypoint REIT management expressed cautious optimism about the outlook for 2024, highlighting uncertainty around the timing of interest rate cuts has kept buyers on the sidelines.

The REIT also reconfirmed 2024 EPS guidance at 16.32cents-16.48cents, assuming -$80m in non-core asset sales or none at all.

The broker assesses an expansion in the portfolio cap rate by 39bps in 2023 to 5.68%, resulting in a -6% decline in the portfolio value.

Currently, Waypoint REIT has $9m of assets under due diligence with further sales underway and the gearing stands at 32.8% with around $100m in liquidity, and new financing due in April 2025, the analyst highlights.

Hold rating unchanged and the target lowered to $2.49 from $2.57.

Target price is $2.49 Current Price is $2.42 Difference: $0.07
If WPR meets the Morgans target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $2.45, suggesting upside of 2.9% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: -0.2

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

Citi rates XRO as Buy (1) -

Xero has announced price increases in the UK, and also put through packaging changes similar to the changes made in Australia. While the latter were already included in Citi's forecasts, the broker sees potential upside to consensus estimates.

The pricing changes provide more value/inclusions in the higher-tier plans which aligns with Xero’s strategy to move customers up the ladder, explains the analyst.

Buy. Target $158.20.

Target price is $158.20 Current Price is $132.66 Difference: $25.54
If XRO meets the Citi target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $140.82, suggesting upside of 4.9% (ex-dividends)

Forecast for FY25:

Forecast for FY26:

This company reports in NZD. 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

UBS rates XRO as Buy (1) -

UBS suggests the 7%-10% price increase for the Xero UK Starter plans and Standard plans, respectively, commencing in September this year and mirroring the price adjustments undertaken in Australia, are in line with expectations.

The broker forecasts ARPU growth in the UK of 12%, driven by price increases and tier migration, alongside exiting lower-value idle subscriptions by 1H25.

The implementation of Making Tax Digital (MTD) Phase 3 in April 2026 is anticipated to re-accelerate UK subscriber growth in FY27, following an assumed one-year delay.

No changes to the UBS earnings forecasts. Buy rating and $156 target unchanged.

Target price is $156.00 Current Price is $132.66 Difference: $23.34
If XRO meets the UBS target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $140.82, suggesting upside of 4.9% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY25:

Forecast for FY26:

This company reports in NZD. 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