Australian Broker Call

Citi rates ALU as Neutral (3) -

Citi assumes the acquisition of Ansys by Synopsis will have little impact on Altium, despite the existing partnership between Altium and Ansys.

The Altium and Ansys partnership, announced in July 2023, covers the integration of Altium Designer with Ansys' simulation tools. Rather, the broker expects the purchase of Ansys provides some valuation support for Altium.

The Neutral rating and target price of $46.65 are retained.

Target price is $46.65 Current Price is $46.32 Difference: $0.33
If ALU meets the Citi target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $46.41, suggesting downside 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: 0.3

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

UBS rates APM as Downgrade to Neutral from Buy (3) -

UBS had already been warnings its clientele on short-term headwinds for APM Human Services International in 2023, but yesterday's market update has forced the broker's hand; downgrade to Neutral from Buy.

The overall trading environment is too much for the company to cope with in the short term, the broker has concluded. APM Human Services International is still seen as a high quality, best-in-breed operator in its field but headwinds are too strong to ignore.

In addition, the broker argues, the share price valuation doesn't look compelling either. Higher interest rates and taxes are combining with low levels of unemployment in both the UK and Australia, UBS highlights.

Target price drops to $1.27 from $3 as forecasts have received the chainsaw treatment.

Target price is $1.27 Current Price is $1.33 Difference: minus $0.055 (current price is over target).
If APM meets the UBS target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.12, suggesting upside of 164.7% (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

Morgan Stanley rates BAP as Underweight (5) -

Morgan Stanley believes there is sufficient management depth at Bapcor to cover for the announced resignation of CFO Stefan Camphausen.

The broker observes the resignation follows an AGM update last October which had the effect of lowering consensus earnings expectations by around -10%.

Underweight. Target $5.30. Industry view: In-Line. 

Target price is $5.30 Current Price is $5.25 Difference: $0.05
If BAP meets the Morgan Stanley target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $6.64, suggesting upside of 23.6% (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

Citi rates BHP as Neutral (3) -

In an early look at BHP Group's December quarter result, Citi notes production was largely in line with expectations. Quarter-on-quarter, copper and nickel production fell -4% and -3% respectively, while iron ore, met coal and energy coal increased 4%, 2% and 7%.

Full year production guidance was maintained across the board, except for the BHP Mitsubishi Alliance (BMA), where production guidance was downgraded and costs increased.

The Neutral rating is retained and the target price increases to $49.00 from $45.00.

Target price is $49.00 Current Price is $46.57 Difference: $2.43
If BHP meets the Citi target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $47.25, suggesting upside of 3.1% (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: 0.2

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

Shaw and Partners rates BML as Buy (1) -

Boab Metals has continued its development of the Sorby Hills lead-silver project over the December quarter, extending its drilling program including drilling into the Keep seismic target where lead and zinc intercepts were encountered.

The successful drilling of Keep opens up new exploration targets for the company, according to Shaw and Partners. An optimised front-end engineering and design study is expected to be released in the second quarter of 2024. 

Shaw and Partners notes the demand outlook for lead is robust and silver demand is outstripping supply. 

The Buy rating and target price of 52 cents are retained.

Target price is $0.52 Current Price is $0.14 Difference: $0.38
If BML meets the Shaw and Partners target it will return approximately 271% (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

Citi rates EVN as Upgrade to Buy from Neutral (1) -

Evolution Mining's share price slipped close to -20% following the company's December quarter result, outlining an operational miss and ongoing issues at its Red Lake site, amid uncertainty as to whether the company can achieve its revised guidance.

Citi finds the reaction overdone, despite assuming the company reaches only the lower end of full year production guidance at 749 ounces and a modest miss of cost guidance at $1,430 per ounce.

Evolution Mining maintained group guidance, but guidance for Red Lake reduces -35,000-45,000 ounces off the weak half.

The broker sees the decline as an opportunity to own leverage to gold. The rating is upgraded to Buy from Neutral and the target price of $3.95 is retained.

Target price is $3.95 Current Price is $3.10 Difference: $0.85
If EVN meets the Citi target it will return approximately 27% (excluding dividends, fees and charges).

Current consensus price target is $3.68, suggesting upside of 18.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.6

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

Macquarie rates EVN as Outperform (1) -

A soft second quarter from Evolution Mining, according to Macquarie, with the company reporting production -11% lower than the broker's expectations and all-in sustaining costs 27% higher than expectations.

With first half production equating to just 40% of guidance at the midpoint, Macquarie expects a modest miss. While all operations were weaker than anticipated over the half, the broker particularly noted Red Lake as a key area of weakness.

The Outperform rating is retained and the target price decreases to $3.80 from $4.20.

Target price is $3.80 Current Price is $3.10 Difference: $0.7
If EVN meets the Macquarie target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $3.68, suggesting upside of 18.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.6

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

Morgan Stanley rates EVN as Equal-weight (3) -

Evolution Mining's 2Q gold production missed forecasts by Morgan Stanley and consensus by -16% and -14%, respectively, largely due to mine constraints and inclement weather.

Management also downgraded FY24 production guidance at the Red Lake operations by -24%. During the 2Q at Red Lake, production was negatively impacted by materials handling constraints (now resolved) and a seismic-related restriction, explains the broker.

FY24 group production guidance was maintained, despite the Red Lake downgrade.

Near-term guidance risk keeps Morgan Stanley cautious and Equal-weight-rated. The target falls to $3.45 from $4.50. Industry view is Attractive.

Target price is $3.45 Current Price is $3.10 Difference: $0.35
If EVN meets the Morgan Stanley target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $3.68, suggesting upside of 18.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.6

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

Ord Minnett rates EVN as Upgrade to Accumulate from Hold (2) -

Evolution Mining's 2Q production was around -16% shy of Ord Minnett's forecast (resulting in a -16% miss on costs) due to a poor grade performance at Red Lake and weather-related issues at both Cowal and Mt Rawdon.

Management downgraded FY24 production guidance at Red Lake by -24% though overall group guidance was maintained.

The analysts expect FY24 group guidance will be ultimately missed, given the 47% production uplift required in the 2H to meet the midpoint of the guidance range.

The broker sees a valuation opportunity given the -22% share price decline since January 3, and upgrades its rating to Accumulate from Hold. The target falls to $3.40 from $3.70.

Target price is $3.40 Current Price is $3.10 Difference: $0.3
If EVN meets the Ord Minnett target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $3.68, suggesting upside of 18.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.6

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

Morgan Stanley rates IAG as Equal-weight (3) -

While investors should be mindful of regulatory risks, Morgan Stanley believes both Suncorp Group and Insurance Australia Group are among the best stocks to own in early 2024.

The broker highlights personal lines pricing power and a favourable industry backdrop, with potential to over-earn in the short-term.

For Insurance Australia Group, the Equal-weight rating is maintained and the target rises to $5.50 from $5.45. Industry view: In-line.

Target price is $5.50 Current Price is $5.69 Difference: minus $0.19 (current price is over target).
If IAG meets the Morgan Stanley target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.97, suggesting upside of 3.8% (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

Morgans rates JDO as Add (1) -

Morgans continues to assume Judo Capital's metrics ramp-up towards its at-scale target. However, this will take longer than previously thought as recent APRA data indicates 1H loan growth for the company has fallen below historical levels.

The broker attributes slower loan growth to a greater focus on higher lending margins for new loans and a decrease in existing loans.

The Add rating is unchanged and the target falls to $1.39 from $1.43.

First half results are due on February 20.

Target price is $1.39 Current Price is $1.01 Difference: $0.38
If JDO meets the Morgans target it will return approximately 38% (excluding dividends, fees and charges).

Current consensus price target is $1.19, suggesting upside of 18.0% (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

Ord Minnett rates MP1 as Accumulate (2) -

A new analyst at Ord Minnett takes over research coverage of Megaport and is similarly effusive about the company's prospects, and maintains an above-consensus target of $15, down from $17. The Accumulate rating is maintained.

The analyst believes the market is underestimating embedded growth within the existing customer base and the efficiency of this growth.

The broker does, however, caution its margin expectations are constrained by the absence of an economic moat. Ultimately, the offering will be commoditised and there will be price-based competition between a relatively small number of scaled providers.

Target price is $15.00 Current Price is $9.12 Difference: $5.88
If MP1 meets the Ord Minnett target it will return approximately 64% (excluding dividends, fees and charges).

Current consensus price target is $12.44, suggesting upside of 35.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.6

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

Shaw and Partners rates MZZ as Buy (1) -

Matador Mining has outlined its 2024 exploration program, consisting of 2,000-3,000 metres of reverse circulation (RC) drilling and 5,000-7,000 metres of diamond drilling, to define drill-ready targets. 

The RC program will focus on major regional bend of the Cape Ray shear zone, through to the Malachite breakout structure, while the diamond drilling program will focus on new greenfield discoveries including the Window Glass Hill target.

With a cash balance of $3.2m at the end of the September quarter, and an additional $9.5m raised since, Shaw and Partners finds the company well funded to complete the full planned exploration works, which are budgeted to total -$5.0m. 

The Buy rating and target price of 19 cents are retained.

Target price is $0.19 Current Price is $0.04 Difference: $0.155
If MZZ meets the Shaw and Partners target it will return approximately 443% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

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

Ord Minnett rates NGI as Buy (1) -

The December quarter update by Navigator Global Investments was broadly in line with Ord Minnett's forecasts. While Lighthouse Partners experienced a slight outflow, asset under management (AUM) growth, due to performance, provided a greater offset. 

Now that the $200m capital raising and associated transaction with Dyal Trust has completed, the broker anticipates significant earnings growth over the forecast period.

The Buy rating and $1.90 target are unchanged.

Target price is $1.90 Current Price is $1.36 Difference: $0.54
If NGI meets the Ord Minnett target it will return approximately 40% (excluding dividends, fees and charges).

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: 1.0

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

Ord Minnett rates PPS as Buy, High Risk (1) -

Following Praemium's 2Q update, Ord Minnett lowers its target to 55c from 80c largely due to management's guidance for persistent Powerwrap outflows, implying further losses of at least -$500-750m. 

New business in the 2Q also missed the broker's forecast.

The analysts suggest the company is unlikely to achieve positive net flow in FY24, with separately managed account (SMA) flows insufficient to offset Powerwrap losses.

Despite the above challenges, valuation remains strongly in the stock’s favour, in Ord Minnett's view, and the Buy, High Risk rating rating is kept.

Target price is $0.55 Current Price is $0.37 Difference: $0.18
If PPS meets the Ord Minnett target it will return approximately 49% (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

Morgan Stanley rates PWR as Overweight (1) -

In a highly strategic deal, according to Morgan Stanley, Peter Warren Automotive will acquire four dealerships in Macarthur (southwestern Sydney) for -$27m, funded by cash and debt.

The broker suggests the acquired brands offer scope for future synergies/optionality, and highlights the transaction will be EPS accretive after allowing for funding costs.

Overweight and $3.40 target retained. Industry View: In-Line.

Target price is $3.40 Current Price is $2.34 Difference: $1.06
If PWR meets the Morgan Stanley target it will return approximately 45% (excluding dividends, fees and charges).

Current consensus price target is $3.40, suggesting upside of 42.3% (ex-dividends)

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 PXA as Outperform (1) -

Macquarie was left disappointed by Pexa Group's financial update and guidance late last year, largely on weaker than anticipated revenue from the company's emerging business segment, noting disappointing updates from the company are becoming a recurring theme.

While the company's full year targets were retained, Macquarie points out net cash flows from emerging business is tracking towards the top end of the provided $70-80m range. 

For Macquarie, the update also further tarnishes Pexa Group's credibility, given it comes a month after UK management had been reporting incrementally positive news to investors.

The Outperform rating is retained and the target price decreases to $14.65 from $15.65.

Target price is $14.65 Current Price is $10.75 Difference: $3.9
If PXA meets the Macquarie target it will return approximately 36% (excluding dividends, fees and charges).

Current consensus price target is $14.06, suggesting upside of 34.8% (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

Ord Minnett rates RDX as Accumulate (2) -

Ord Minnett anticipates management at Redox will reiterate FY24 guidance at 1H results on February 27, despite worsening lead indicators for pricing so far in the financial year.

The broker forecasts 1H revenue of $613m and a gross profit margin of 21%.

The analyst highlights several long-term growth opportunities via increasing domestic market share, offshore expansion and potential for M&A due to ongoing industry consolidation.

The Accumulate rating and $2.80 target are maintained.

Target price is $2.80 Current Price is $2.25 Difference: $0.55
If RDX meets the Ord Minnett 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: 0.8

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

Morgans rates RIO as Hold (3) -

While Morgans assesses a "healthy" 4Q operational result for Rio Tinto, which was largely in line with expectations, the Hold rating is kept as the result was largely factored into the share price.

Iron ore, copper and aluminium volumes were in line with the broker's estimates though the copper volume of 160kt fell short of the consensus forecast for 178kt.

The target rises to $128 from $127. Morgans remains bullish on iron ore, the key driver of earnings.

Target price is $128.00 Current Price is $126.54 Difference: $1.46
If RIO meets the Morgans target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $129.67, suggesting upside of 2.1% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY23:

Forecast for FY24:

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

Market Sentiment: 0.3

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

Morgans rates SDR as Add (1) -

Morgans now sets its price target at $6.25 (up from $4.60) at a 10% premium to the broker's valuation in the belief investors are currently receiving a free option for Dynamic Revenue Plus (DR+).

DR+ is the company's new revenue management system (RMS) product, which the broker believes can potentially deliver material share price upside. The product will be launched at the start of FY25.

Under the analysts' most conservative scenario, there is a potential internal rate of return (IRR) for investors of 24-31% from the current share price, assuming DR+ achieves a 35% penetration rate by the end of FY30. On this basis shares could reach between $20-$29.

The Add rating is maintained.

Target price is $6.25 Current Price is $5.52 Difference: $0.73
If SDR meets the Morgans target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $5.82, suggesting upside of 6.1% (ex-dividends)

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

Morgans rates SIG as Add (1) -

Following Sigma Healthcare's proposed merger (last December) with Chemist Warehouse Group, Morgans now applies a 20% premium to its valuation of 89c to arrive at a $1.07 target price, up from 85c. The Add rating is unchanged.

The broker suggests investors take up their 70c shares as per the entitlement offer, which closes tomorrow January 19.

The analysts are confident ACCC approval will be secured and believe the merger will be completed by July 31, which looks like an optimistic stance as company guidance is for completion in the 2H of 2024.

Target price is $1.07 Current Price is $0.96 Difference: $0.115
If SIG meets the Morgans target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $0.90, suggesting downside of -6.4% (ex-dividends)

The company's fiscal year ends in January.

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

Morgan Stanley rates SUN as Overweight (1) -

While investors should be mindful of regulatory risks, Morgan Stanley believes both Suncorp Group and Insurance Australia Group are among the best stocks to own in early-2024.

The broker highlights personal lines pricing power and a favourable industry backdrop, with potential to over-earn in the short-term.

For Suncorp Group, the analysts increase the FY24 cash profit forecast by 5% (after marking-to-market for positive investment returns), and assume the group will come in -5% below its CAT budget in H1.

The Overweight rating is maintained and the target rises to $16.20 from $15.70. Industry View: In-Line.

Target price is $16.20 Current Price is $13.82 Difference: $2.38
If SUN meets the Morgan Stanley target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $15.40, suggesting upside of 9.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.8

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