Australian Broker Call

Bell Potter rates AMA as Speculative Buy (1) -

Bell Potter views the update from AMA Group as "mixed" at best.

The refinancing of senior debt maturing in October 2024, with convertible bonds maturing in March 2025, remains a concern for the analyst.

AMA Group upgraded FY24 EBITDA guidance at the lower end of the range between $44m and $42m, with Bell Potter's forecast EBITDA at $44m.

The analyst highlights the potential need for an equity raise due to the refinancing delay as a risk, despite business improvements and a board restructure.

Speculative Buy rating unchanged. Target price lowered to 7c from 8c.

Target price is $0.07 Current Price is $0.04 Difference: $0.028
If AMA meets the Bell Potter target it will return approximately 67% (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 APA as Outperform (1) -

Macquarie adjusts the earnings outlook for APA Group on the back of more a more subdued contribution from the South West Queensland Pipeline (SWQP) and a reduction in contracting for the Northern Goldfield interconnect (NGI), due to softer commodity prices.

The broker envisages growth potential from the Pilbara project, with near-term opportunities in Port Hedland and medium-term projects in Newman.

Despite softer FY25 and FY26 EBITDA outlooks, dividend growth of 1c-2c p.a. is expected over the next 2-3 years.

Macquarie anticipates approvals and developments in the Pilbara grid by February 2025.

The analyst adjusts estimates for EPS forecasts by -0.3% for FY24 and -16% for FY25.

An Overweight rating and $9.40 remain unchanged.

Target price is $9.40 Current Price is $8.42 Difference: $0.98
If APA meets the Macquarie target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $8.81, suggesting upside of 5.5% (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

Ord Minnett rates CRN as Hold (3) -

Ord Minnett upgrades its commodity price assumptions to reflect historical seasonality of metallurgical coal markets and to align more closely with the consensus view.

The broker's hard coking coal (HCC) and pulverised coal injection (PCI) grade coal forecasts for 2024-26 increase by between 5-6% and 2-4%, respectively.

The target for Coronado Global Resources rises to $1.35 from $1.30 and the Hold rating is retained. 

Target price is $1.35 Current Price is $1.18 Difference: $0.175
If CRN meets the Ord Minnett target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $1.67, suggesting upside of 44.0% (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: 0.8

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

Morgan Stanley rates CSL as Overweight (1) -

Morgan Stanley believes CSL's "Horizon 2" plans will result in a step-change in Ig yield. As a result, a step change is expected for the gross margin that could exceed 60% compared to the consensus forecast peak of around 58% in FY28.

The analysts expect details regarding the Ig-yield revolution ("Horizon 2") will be provided by CSL in 12-24 months. It's conservatively felt Ig yield could improve by around 25%. This outcome is still well shy of 100% Ig recovery within starting plasma, notes the broker.

Assuming Horizon 2 success was fully pro-rated in FY28 (i.e. a further 6.8ppt added to consensus FY28 plasma gross margin), Morgan Stanley entertains the thought of a 91% share price increase to around $561.

Morgan Stanley makes no changes at this stage. Overweight and $310 target retained. Industry view: Attractive.

Target price is $310.00 Current Price is $293.00 Difference: $17
If CSL meets the Morgan Stanley target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $316.73, suggesting upside of 9.0% (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

Morgan Stanley rates EVN as Overweight (1) -

Mine plans at Northparkes were better-than-expected by Morgan Stanley leading management to estimate production of 25kt per year compared to the 22kt forecast by the analysts.

The capex estimate was higher than the broker's forecast likely due to the E22 ore body capex, where first capital is planned for FY27 over five years. Morgan Stanley expected first capital in FY31 and spread over two years.

The Overweight rating and $4.20 target are unchanged. Industry View: Attractive.

Target price is $4.20 Current Price is $3.63 Difference: $0.57
If EVN meets the Morgan Stanley target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $4.31, suggesting upside of 20.7% (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

Shaw and Partners rates FFM as Buy (1) -

Shaw and Partners reaffirms the positive view on FireFly Metals post the recent copper and gold results, which improve the outlook for the resource and may result in an upgrade at the September quarter.

The company recently raised $52m leaving it cashed up for expenditure programs and future works, the broker states.

There are no changes to the analyst's earnings forecasts.

A Buy rating is retained with a $1.10 target price. High Risk

Target price is $1.10 Current Price is $0.79 Difference: $0.31
If FFM meets the Shaw and Partners target it will return approximately 39% (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 HLI as Upgrade to Outperform from Neutral (1) -

Macquarie believes Helia Group is likely to become the exclusive lenders mortgage insurance provider for Commonwealth Bank ((CBA)) including Bankwest,  which is currently insured with QBE.

As a result, gross written premium could rise by around 9% the broker highlights.

With the stock having fallen, the rating is upgraded to Outperform from Neutral with an unchanged target price of $3.90. 

The lower share price should also assist with a quickening in the $100m buyback, the broker notes.

Target price is $3.90 Current Price is $3.34 Difference: $0.56
If HLI meets the Macquarie target it will return approximately 17% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

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 HLI as Hold (3) -

Following a sharp share price sell off after CommBank ((CBA) issued a request for proposal for its mortgage insurance contract with Helia Group, Ord Minnett considers Helia Group shares are undervalued.

CommBank is weighing up whether to combine its insurance dealings with the Bankwest branded loans. The broker notes Helia Group could in fact win new business with Bankwest, or lose the current contract.

The analyst assumes the current contract will be extended and the Hold rating and $4.00 target are retained.

Target price is $4.00 Current Price is $3.34 Difference: $0.66
If HLI meets the Ord Minnett target it will return approximately 20% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

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

Citi rates JHX as Neutral (3) -

Citi highlights homeowners in the US are being disincentivised to either sell their existing homes and/or draw down on equity because the margin between equity drawdown rates and the 10-year treasury yield has widened to record levels (9%:4%).

The broker suggests the key topics at James Hardie Industries' investor day tomorrow will likely be the state of the R&R market, and return on the company's advertising spend.

The Neutral rating and $53.40 target are maintained.

Target price is $53.40 Current Price is $48.45 Difference: $4.95
If JHX meets the Citi target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $55.48, suggesting upside of 17.1% (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: 0.6

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

Citi rates MIN as Buy (1) -

Citi increases its target for Mineral Resources by $1.00 to $80.00 upon news management will curtail operations at Yilgarn, and future royalty payments at the Pilbara Hub have been reduced. Minor changes to commodity price assumptions also impacted the target price.

The broker had already forecast a cessation of operations at Yilgarn by the 2Q of 2025.

To reduce royalty payments, management has consolidated ownership of the Iron Valley operations (Pilbara Hub) via a $72.6m transaction with BCI Minerals ((BCI)).

The Buy rating is maintained.

Target price is $80.00 Current Price is $60.57 Difference: $19.43
If MIN meets the Citi target it will return approximately 32% (excluding dividends, fees and charges).

Current consensus price target is $74.57, suggesting upside of 24.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.4

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

Morgan Stanley rates MIN as Overweight (1) -

From the end of 2024, Mineral Resources will no longer ship iron ore from Yilgarn Hub as it will be no longer financially viable, and the assets will be either rehabilitated or sold.

Morgan Stanley views this announcement positively as the broker had forecast negative cash flow by the March quarter of 2025, and expects a transition to the ramping-up, low-cost and long-life Onslow Iron asset.

The Overweight rating and $85 target are maintained. Attractive sector view.

Target price is $85.00 Current Price is $60.57 Difference: $24.43
If MIN meets the Morgan Stanley target it will return approximately 40% (excluding dividends, fees and charges).

Current consensus price target is $74.57, suggesting upside of 24.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.4

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

Citi rates QBE as Buy (1) -

In positive news, according to Citi, QBE Insurance will commence an orderly closure of its North American middle-market segment, which has experienced performance challenges over several years.

Ahead of 1H results, management expects group constant currency gross written premium growth in the mid-single digits and a FY24 group combined operating ratio (COR) of around 93.5%.

The Buy rating and $20 target are maintained.

Target price is $20.00 Current Price is $17.59 Difference: $2.41
If QBE meets the Citi target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $18.80, suggesting upside of 6.3% (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: 0.4

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

Morgan Stanley rates QBE as Overweight (1) -

Morgan Stanley believes investors will welcome QBE Insurance's exit from the North American mid-market business due to performance issues.

While the 1H is a little softer-than-anticipated by the analysts, management re-affirmed FY24 guidance for gross written premium (GWP) mid-single-digit growth, and an around 93.5% combined operating ratio (COR).

Overweight rating and $20.10 target maintained. Industry View: In-Line.

Target price is $20.10 Current Price is $17.59 Difference: $2.51
If QBE meets the Morgan Stanley target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $18.80, suggesting upside of 6.3% (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: 0.4

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

Ord Minnett rates QBE as Lighten (4) -

QBE Insurance will be foregoing around -2% of group gross written premiums, assesses Ord Minnett, due to announcing an exit from the middle-market segment in North America.

Management is anticipating a limited impact on the group's combined operating ratio (COR), while the broker expects a modest positive impact in FY25.

Ord Minnett retains a Lighten rating. The $14 target is also unchanged.

Target price is $14.00 Current Price is $17.59 Difference: minus $3.59 (current price is over target).
If QBE meets the Ord Minnett target it will return approximately minus 20% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $18.80, suggesting upside of 6.3% (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: 0.4

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

Macquarie rates RMD as Outperform (1) -

Macquarie considers the upcoming SURMOUNT-OSA trial data release by Eli Lilly on 21 June 2024 which is expected to provide insights into the efficacy of GLP-1s in treating sleep apnoea.

The broker highlights its earnings forecasts for ResMed already include the potential impacts of GLP-1 drugs.

On balance, a 50% uptake of GLP-1s with ongoing 35% therapy use (in line with current data) suggests ResMed would continue to generate 5% p.a. device growth between FY24 and FY33, down -130bps pre GLP-1 assumptions, the analyst calculates.

Outperform rating retained with a $34.85 target.

Target price is $34.85 Current Price is $32.02 Difference: $2.83
If RMD meets the Macquarie target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $35.73, suggesting upside of 12.6% (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

Ord Minnett rates SMR as Buy (1) -

Ord Minnett upgrades its commodity price assumptions to reflect historical seasonality of metallurgical coal markets and to align more closely with the consensus view.

The broker's hard coking coal (HCC) and pulverised coal injection (PCI) grade coal forecasts for 2024-26 increase by between 5-6% and 2-4%, respectively.

The target for Stanmore Resources rises to $4.10 from $3.90 and the Buy rating is retained. 

Target price is $4.10 Current Price is $3.33 Difference: $0.77
If SMR meets the Ord Minnett target it will return approximately 23% (excluding dividends, fees and charges).

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: 1.0

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

Ord Minnett rates SWM as Buy (1) -

Ord Minnett points out market pessimism has shares of Seven West Media trading lower than when news of covid first hit, but acknowledges picking the turning point of the current advertising cycle is nigh on impossible.

The analyst is not convinced market sentiment is as bad as at the onset of covid, and believes Seven West Media's earnings are likely near the nadir for the cycle. Net debt/EBITDA is also expected to peak by the end of 2024.

The Buy rating and 40c target are maintained.

Target price is $0.40 Current Price is $0.17 Difference: $0.23
If SWM meets the Ord Minnett target it will return approximately 135% (excluding dividends, fees and charges).

Current consensus price target is $0.28, suggesting upside of 55.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.0

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

Bell Potter rates WA1 as Speculative Buy (1) -

WA1 Resources surpassed a major hurdle in the confirmation of niobium minerals at its Luni project, and now has scope to become a globally important niobium project, Bell Potter highlights.

The recent test results show a niobium concentrate of 57.9% Nb2O5 at a 53.5% recovery, indicating the project’s high potential and reducing the previous recovery risk assumptions, notes the broker.

A maiden mineral resource estimate for the Luni project is now expected in 4Q2024.

Bell Potter substantially readjusts the company's valuation and reduces the expected loss generation estimates for FY24 and FY25. 

Target price raised to $28 from $17.65 and the Speculative Buy rating retained.

Target price is $28.00 Current Price is $20.69 Difference: $7.31
If WA1 meets the Bell Potter target it will return approximately 35% (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 WHC as Buy (1) -

Ord Minnett upgrades its commodity price assumptions to reflect historical seasonality of metallurgical coal markets and to align more closely with the consensus view.

The broker's hard coking coal (HCC) and pulverised coal injection (PCI) grade coal forecasts for 2024-26 increase by between 5-6% and 2-4%, respectively.

The target for Whitehaven Coal rises to $9.30 from $8.80 and the Buy rating is retained. The company is also added to the broker's 'Analysts Conviction List' as the preferred met coal miner.

Target price is $9.30 Current Price is $7.66 Difference: $1.64
If WHC meets the Ord Minnett target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $8.98, suggesting upside of 15.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.9

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