Australian Broker Call

Citi rates 29M as Downgrade to Sell from Neutral (5) -

Citi downgrades 29Metals to Sell (High risk) from Neutral (High risk), and the target price is cut to 25c from 45c.

The analyst is disappointed $112m of the $180m capital raising is allocated to Gossan Valley instead of strengthening the balance sheet. Gossan is viewed as a "modest" project with sensitivity to commodity prices.

Debt issues remain a concern for the broker, with questions surrounding the US$80m due in 2028. Citi estimates there is insufficient capital to restart Capricorn Capital, based on forecasts.

Citi cuts 2024 EPS by -11.3%.

Target price is $0.25 Current Price is $0.26 Difference: minus $0.005 (current price is over target).
If 29M meets the Citi target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $0.38, suggesting upside of 51.0% (ex-dividends)

The company's fiscal year ends in December.

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 ASX as Neutral (3) -

Citi notes higher-than-expected volumes for ASX, particularly in futures. The broker observes year-to-date futures and options volumes have risen 21% compared to the previous year. November saw an increase in IPOs and a 6% rise in secondaries.

ASX is balancing regulators and stakeholders for three complex IT projects to upgrade its technology stack, which Citi believes places shareholders lower on the priority list.

The cost and complexity of these projects increase risks of delays and capex overruns, with the ASIC case remaining an overhang.

Citi raises EPS forecasts by 3% for FY25/FY26 due to volume updates. The target price increases to $66.70 from $62.30.

No change to the Neutral rating.

Target price is $66.70 Current Price is $68.44 Difference: minus $1.74 (current price is over target).
If ASX meets the Citi target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $62.74, suggesting downside of -8.4% (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 CHL as Buy (1) -

The recent Camplify Holdings AGM provided further evidence to Ord Minnett that the problems holding back the group over recent periods are still lurking. At the same time, economic conditions in key markets are contributing to a softer demand outlook.

Despite a series of setbacks, the broker detects an increased level of management confidence in its ability to drive material upside to group revenue, driven by a combination of the incremental impact of the new insurance products and a recovery in the core RV rental business.

Ord Minnett has lowered its short-term earnings forecasts despite confidence in the long-term investment thesis. Target falls to $1.83 from $2.02. The broker retains its Buy rating, noting “it all hinges on insurance".

Target price is $1.83 Current Price is $0.88 Difference: $0.955
If CHL meets the Ord Minnett target it will return approximately 109% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY25:

Forecast for FY26:

Market Sentiment: 1.0

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

Macquarie rates DMP as Downgrade to Underperform from Neutral (5) -

Macquarie downgrades Domino's Pizza Enterprises to Underperform from Neutral, with the target price reduced by -8% to $29.50.

The analyst highlights ongoing pressures on franchisee profits since FY21, driven by falling revenues. Earnings margins for franchisees have declined to 7.3% from 11.5% post-covid, compared to most managers' targets of 11%-12%.

The average cost per store has remained steady, which Macquarie suggests indicates declining revenue as the primary issue, impacting the ability to support new store openings.

Macquarie forecasts below-consensus new store roll-outs and sees medium-term risks to earnings estimates.

The analyst reduces EPS forecasts by -0.2% for FY25 and -9.6% for FY26.

Target price is $29.50 Current Price is $33.23 Difference: minus $3.73 (current price is over target).
If DMP meets the Macquarie target it will return approximately minus 11% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $34.28, suggesting upside of 5.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY25:

Forecast for FY26:

Market Sentiment: 0.2

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

Citi rates EDV as Neutral (3) -

Citi highlights the impacts of strike action at Woolworths Group's ((WOW)) distribution centres, which are beginning to affect Endeavour Group's Victorian stores.

Anecdotally, the broker notes evidence of some stores not receiving stock deliveries over the past two to three weeks, with shortages most apparent in beer and cask wine.

With 24% of Endeavour's liquor sales in the December half made during December, the strikes have occurred at a very "unfavourable" time.

No change to the Neutral rating or the $4.89 target price.

Target price is $4.89 Current Price is $4.36 Difference: $0.53
If EDV meets the Citi target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $5.01, suggesting upside of 15.2% (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

Morgans rates MX1 as Speculative Buy (1) -

Micro-X has been awarded a $12.5m US government contract with the Advanced Research Projects Agency for Health for the development of a lightweight and portable full-body CT scanner.

Morgans views this win as a validation of the company's cold cathode X-ray technology.

The Speculative Buy rating and 19c target price remain unchanged. No changes to Morgans' earnings forecasts.

Target price is $0.19 Current Price is $0.10 Difference: $0.094
If MX1 meets the Morgans target it will return approximately 98% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY25:

Forecast for FY26:

Market Sentiment: 1.0

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

Bell Potter rates PPT as Buy (1) -

The recent bump higher in the share price notwithstanding, 2024 has left a rather sour taste in the mouth of loyal shareholders in Perpetual.

Bell Potter thinks 2025 could be a better year. Key catalysts are the tax ruling on the planned de-merger, then the de-merger itself, of course.

As what will be left after the de-merger, the broker refers to the incoming CEO reiterating cost reduction intentions of -$25-35m, with more reductions to follow on top.

Buy rating reiterated. Target unchanged at $24.76. The analyst believes even a small shift in positive sentiment could support the share price.

Target price is $24.76 Current Price is $21.82 Difference: $2.94
If PPT meets the Bell Potter target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $22.70, suggesting upside of 3.8% (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 RIO as Neutral (3) -

Rio Tinto's investor seminar did not provide clarity on Kennecott, with Citi noting questions remained unanswered. Production guidance for Pilbara is flat compared to 2024 guidance, with a mixed outlook as depletion is offset by an uplift from Safe Production System.

Copper is expected to receive a boost from the Oyu Tolgoi ramp-up, with guidance of 780-850kt, excluding Kennecott's purchased concentrate. The guidance of 2% growth in 2025 is below the analyst's expectations.

Capex is flagged as increasing to -US$11bn in 2025, higher than -US$9.5bn in 2024 and previous guidance of -US$10bn.

Management believes lithium demand will grow six-fold by 2025, with potential production of around 460ktpa following the Arcadium Lithium ((LTM)) acquisition.

Citi lowers EPS forecasts for 2025/2026 by -5%. The stock remains Neutral-rated with a $123 target price and is likely to benefit from firmer iron ore prices, the analyst states.

Target price is $123.00 Current Price is $120.78 Difference: $2.22
If RIO meets the Citi target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $126.83, suggesting upside of 5.9% (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: 0.5

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

Morgan Stanley rates RIO as Overweight (1) -

Rio Tinto's investor day revealed costs outweigh benefits of a dual-listing collapse, Morgan Stanley reports. The share of low-grade iron ore will remain elevated (currently around 20%) until all replacement mines are online.

The Arcadium Lithium ((LTM)) takeover is progressing faster than expected, and while Simandou is on time and on budget, further expansion is unlikely.

Replacement capex is the key driver of the flagged increase that adds some -US$1bn per annum. Further copper M&A is off the table as it is considered too expensive.

Morgan Stanley retains an Overweight rating and $135 target. Industry view: Attractive.

Target price is $135.00 Current Price is $120.78 Difference: $14.22
If RIO meets the Morgan Stanley target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $126.83, suggesting upside of 5.9% (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: 0.5

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

Ord Minnett rates RIO as Buy (1) -

Rio Tinto's investor day provided mixed guidance on 2025 production volumes, with a copper target around -10% below market expectations, Ord Minnett reports. Iron ore production guidance suggests an earnings forecast downgrade of -4%.

Rio reaffirmed its faith in the long-term outlook for lithium. Combined with existing projects, the Arcadium Lithium ((LTM)) acquisition would take the company to world number three producer, Ord Minnett notes.

Lower copper and iron ore guidance see the broker's target fall to $131 from $133, Buy retained.

Target price is $131.00 Current Price is $120.78 Difference: $10.22
If RIO meets the Ord Minnett target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $126.83, suggesting upside of 5.9% (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: 0.5

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

Ord Minnett rates SSM as Downgrade to Accumulate from Buy (2) -

Service Stream has extended two large programs of work with NBN Co and won a major new water maintenance contract with Urban Utilities in Queensland.

The new utilities contract boosts Ord Minnett's earnings forecasts by 2% in FY26, further extending the duration of work-in-hand. The broker believes this supports an improved margin profile in utilities.

Service Stream now has long term contracts with six of Australia’s top ten water authorities, ranked by annual capex. Ord Minnett increases its target to $1.70 from $1.67 but pulls back to Accumulate from Buy ahead of the first half result and further contract news.

Target price is $1.70 Current Price is $1.62 Difference: $0.08
If SSM meets the Ord Minnett target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $1.60, suggesting upside of 2.1% (ex-dividends)

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

Citi rates TLC as Buy (1) -

Citi details that lottery revenue for 1H25 year-to-date has risen around 3% year-on-year, below the broker's estimate of 9% but in line with consensus expectations.

The declining performance of the $100m jackpot is attributed to either jackpot "fatigue" or impacts from cost-of-living pressures.

The analyst explains a likely test of consumers' resilience comes next week with Oz Lotto's $50m jackpot, the first major jackpot of this half.

Citi retains its Buy rating with a $5.60 target price. No changes to earnings forecasts.

Target price is $5.60 Current Price is $5.20 Difference: $0.4
If TLC meets the Citi target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $5.54, suggesting upside of 7.6% (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

Macquarie rates VNT as Outperform (1) -

Macquarie anticipates a "solid" result and outlook when Ventia Services reports 2024 earnings in February.

The analyst believes the company is well-positioned to secure a significant portion of defense estate management work. Despite potentially tighter government spending, demand for support services is expected to remain resilient.

Macquarie forecasts net profit after tax growth of 10%-11% in 2024, upgraded from 7%-10% at the 1H24 results. For 2025, the analyst anticipates 10% EPS growth, supported by a robust balance sheet.

The broker estimates every $100mpa of defense revenue adds 2% to EPS.

The target price increases to $4.66 from $4.53 due to higher "peer" valuations. The Outperform rating is retained.

Target price is $4.66 Current Price is $4.37 Difference: $0.29
If VNT meets the Macquarie target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $4.60, suggesting upside of 8.1% (ex-dividends)

The company's fiscal year ends in December.

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 WDS as Sell (5) -

Woodside Energy announced the completion of the EPC contract with Bechtel for Louisiana LNG, with Citi noting capex guidance of -US$1.3bn for the first four months of 2025, ending in March.

The broker views the completion of the EPC contract as positive for prospective buyers but questions the shape of the project, with management confirming a site visit and ongoing negotiations with Tokyo Gas.

Citi believes investors should avoid accumulating shares until there is greater clarity on the future of the US portfolio.

No change to the Sell rating and $23 target price.

Target price is $23.00 Current Price is $24.59 Difference: minus $1.59 (current price is over target).
If WDS 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 $27.63, suggesting upside of 14.9% (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