Australian Broker Call

Morgans rates AQZ as Add (1) -

Alliance Aviation Services is set to report another record when reporting FY24 results on August 14, highlights Morgans. It's felt the consensus underlying profit (NPBT) of $83.9m will be exceeded.

The analysts forecast $85.5m, up from $56.9m in the previous corresponding period.

Within the broker's coverage of airlines, Alliance is preferred over Qantas Airways given its superior contract business model and stronger organic earnings growth profile.

The Add rating and $4.75 target are retained.

Target price is $4.75 Current Price is $3.08 Difference: $1.67
If AQZ meets the Morgans target it will return approximately 54% (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 AUB as Outperform (1) -

Macquarie reviews the insurance brokers with the latest changes in premium rates for small and medium enterprises (SMEs) for the June quarter, which have risen 7.5% against a 10% increase in the March quarter.

The analyst assumes AUB Group and Steadfast Group had increases of 8.6% and 9.4%, respectively for Australia,

Macquarie believes AUB Group is offering the best value, trading at a -16.4% discount to international peers as well as a lower PEG ratio (valuation metric) of 0.8x compared to Steadfast at 1.6x.

Outperform rating and $33.84 target retained. No changes to earnings forecasts.

Target price is $33.84 Current Price is $31.50 Difference: $2.34
If AUB meets the Macquarie target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $34.85, suggesting upside of 9.7% (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

UBS rates BAP as No Rating (-1) -

On a big day for Bapcor, UBS highlights the appointment of Angus McKay, formerly of 7-Eleven Australia, as both executive Chair and CEO of the group, starting on August 22.

The company also reconfirmed FY24 net profit guidance of $93m-$97m which was issued in May and rejected a takeover bid from Bain & Company of $5.40 per share. The proposal is not considered as offering fair value for Bapcor.

UBS is under restriction with no target or rating.

Current Price is $5.06. Target price not assessed.

Current consensus price target is $4.86, suggesting downside of -2.6% (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

Macquarie rates CNU as Outperform (1) -

Macquarie observes the Chorus 4Q connections update, showing a 0.4%-point increase in fibre uptake to 71.4%, with broadband connections steady at 1,185,000.

Notably, the broker states, is the acceleration in copper withdrawal with -82k cumulative notifications issued and the regulator ComCom released the Chorus WACC for the regulatory period 2.

Chorus also reported a shift in annual pricing adjustments for fibre services to January 2025 aligning with the regulatory period, as highlighted by the analyst.

No changes to the broker's earnings forecasts. Outperform rating and a NZ$8.32 target price unchanged.

Current Price is $7.00. Target price not assessed.

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

This company reports in NZD. 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

Macquarie rates CSC as Outperform (1) -

Macquarie highlights quarterly production previews for Capstone Copper, Sandfire Resources and South32 ((S32)).

Capstone Copper remains the preferred copper exposure play for Macquarie due to the company's robust organic growth, potential inclusion in the ASX300 in the September rebalance, and possible asset divestments.

The broker forecasts 2Q2024 realised copper prices of US$4.45/lb, some 16% above the 1Q2024 price of US$3.83/lc.

Accordingly, the quarter-on-quarter EBITDA is expected to rise 57% to US$122m for Capstone Copper. Total production is forecast at 42.6kt in the June quarter.

The company is due to report the June quarter results on August 2. Outperform rating and $12.80 target retained.

Target price is $12.80 Current Price is $11.32 Difference: $1.48
If CSC meets the Macquarie target it will return approximately 13% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

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

Bell Potter rates CVB as Speculative Buy (1) -

Curvebeam AI has received purchase orders for 10 new devices in Q4, representing the best period since the IPO, observes Bell Potter. The company makes medical imaging software and devices.

In the short-term, the analysts highlight the hip and knee validation for Mako is important for sales capture and conversion of working capital into cash.

Mako is ownd by Stryker Corp, which also acts as a distributor for Curvebeam AI. Mako developed a robotic-arm-assisted surgical system that is used for total knee, total hip, and partial knee replacements, incorporating 3D CT-based planning.

The Speculative Buy rating is unchanged, and the broker's target increased to 35c from 33c on a 10% upgrade to the FY25 revenue forecast.

Target price is $0.35 Current Price is $0.23 Difference: $0.12
If CVB meets the Bell Potter target it will return approximately 52% (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

Bell Potter rates GNP as Buy (1) -

The major contract win by GenusPlus Group from Western Power for maintenance and upgrade works of its South West Interconnected System (SWIS) was already largely allowed for in Bell Potter's forecasts.

In terms of a major earnings growth catalyst for the group, the analysts are expecting peak build activity in FY26 for the HumeLink East project.

The broker's Buy rating remains. It's noted GenusPlus Group is trading at a material discount to close peer Southern Cross Electrical Engineering ((SXE)), despite similar EPS compound annual growth rates (CAGR).

The target rises to $2.40 from $2.20 to reflect time creep in Bell Potter's valuation model.

Target price is $2.40 Current Price is $2.10 Difference: $0.3
If GNP meets the Bell Potter target it will return approximately 14% (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 HAS as Hold (3) -

While Ord Minnett is forecasting a $103m equity raise this quarter, as part of the Yangibana mine funding, this requirement has been potentially reduced by JL MAG Rare-Earth Co's investment in Hastings Technology Metals.

Another positive from this $7m placement, suggests the broker, is the addition of a cornerstone investor for the equity raise. The target is increased to 36c from 28c.

The analysts caution Hastings is a very difficult investment proposition until the funding is settled, as the current share price at discount controls the share dilution. Hold. 

Target price is $0.36 Current Price is $0.35 Difference: $0.015
If HAS meets the Ord Minnett target it will return approximately 4% (excluding dividends, fees and charges).

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 JHX as Neutral (3) -

Despite potential rate cuts, Citi believes home equity drawdowns will take time to normalise, pushing a material renovation and repair (R&R) recovery further into FY26 than consensus is currently expecting.

Mortgage rates would need to fall by around -150bps before this form of funding begins to look more appealing again, in the broker's view.

The analysts explain high interest rates in combination with fixed, long duration loans are discouraging US mortgage holders from both moving house and/or renovating their existing one.

The Neutral rating is maintained and the target lowered to $51.10 from $53.40.

Target price is $51.10 Current Price is $46.71 Difference: $4.39
If JHX meets the Citi target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $57.14, suggesting upside of 24.9% (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

Morgan Stanley rates MQG as Overweight (1) -

Commodity revenues from Macquarie Group's Commodities and Global Markets (CGM) division comprise 20% of group revenues, explains Morgan Stanley.

While forecasting no growth for FY25 commodities income, the analysts are keeping an eye open for potential upside, noting the broker's gas price dispersion index is up by 43% year-on-year for the June quarter, albeit from a low base.

The Overweight rating and $215 target are maintained. Industry view: In-Line.

Target price is $215.00 Current Price is $202.82 Difference: $12.18
If MQG meets the Morgan Stanley target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $193.08, suggesting downside of -4.7% (ex-dividends)

The company's fiscal year ends in March.

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

Macquarie rates NCK as Outperform (1) -

Macquarie reports home furniture spend improved into the end of June 2024 with promotional activity, and was in line with the prior period despite macro headwinds.

The broker also highlights the foot traffic at Nick Scali rose from mid-May 2024, aligning with the previous corresponding period.

The analyst forecasts a lift in margins for Fabb furniture, which is expected to be profitable by FY26

Nick Scali is due to report FY24 earnings on August 9.

Outperform rating unchanged with a target price of $16.10.

Target price is $16.10 Current Price is $13.18 Difference: $2.92
If NCK meets the Macquarie target it will return approximately 22% (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 NST as Upgrade to Buy from Neutral (1) -

Citi previews the Australian gold sector's upcoming results, stating equities "look attractive" relative to the physical metal.

The global Citi team is bullish on gold prices with the Fed expected to lower rates at the September meeting.

Northern Star Resources has underperformed both Evolution Mining ((EVN)) and the AUD gold price by -7% and -13%, respectively for the quarter to date., the analyst states.

The broker applies a US$2500/oz gold price to the earnings forecasts, lower than the Citi global team's US$3000 forecast,

The Northern Star Resources price target is raised to $15.90 from $15.20 and the stock upgraded to Buy from Neutral.

Target price is $15.90 Current Price is $12.98 Difference: $2.92
If NST meets the Citi target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $15.82, suggesting upside of 21.2% (ex-dividends)

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 ORA as Outperform (1) -

As per the April 2024 trading update, Macquarie expects Orora will meet the revised guidance of earnings before interest and tax of $307m-$317m and Saverglass EBITDA of EUR84-EUR88m.

The broker expects the company to continue to experience challenging conditions in 1H25 but the analyst anticipates a recovery in 2H25.

Macquarie states the Australian canning business is trading well but the commercial wine market remains soft, with mixed views around the destocking of inventories.

The analyst's EPS estimates have been adjusted by -1% for FY24 and -8% for FY25.

An Outperform rating is maintained and the target price adjusted to $2.45 from $2.62.

Target price is $2.45 Current Price is $2.00 Difference: $0.45
If ORA meets the Macquarie target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $2.61, suggesting upside of 36.9% (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

Citi rates PRU as Neutral (3) -

Citi previews the Australian gold sector's earnings results with a revised gold price forecast of US$2500/oz.

The analyst highlights the forecast is lower than the Citi global team's bullish estimate of US$3000/oz with the Fed expected to cut rates at the upcoming September meeting.

Citi adjusts the target price for Perseus Mining to $2.80 from $2.30.

Target price is $2.80 Current Price is $2.45 Difference: $0.35
If PRU meets the Citi target it will return approximately 14% (excluding dividends, fees and charges).

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

Morgans rates QAN as Add (1) -

Qantas Airways is set to report its second strongest result on record (for FY24) on August 29, highlights Morgans. Management is expected to announce a $300m share buyback, while fully franked dividends are set to resume in FY25.

The broker forecasts FY24 underlying profit (NPBT) of $2.075bn, down -16% on the record previous corresponding period, compared to the consensus estimate of $2.09bn.

Within the broker's coverage of airlines, Alliance is preferred over Qantas Airways given its superior contract business model and stronger organic earnings growth profile.

The Add rating is retained and the broker's target rises to $7.00 from $6.75 after minor upgrades to FY24-26 profit forecasts and a valuation roll-forward.

Target price is $7.00 Current Price is $6.12 Difference: $0.88
If QAN meets the Morgans target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $6.73, suggesting upside of 9.5% (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

Bell Potter rates RMC as Buy (1) -

The departure of Scott McWilliam after six years as CEO doesn't appear to be a planned move, in Bell Potter's view, as management noted the search for a replacement had started immediately.

No reason was given for the sudden exit and the timing is unfortunate given looming FY24 results, suggests the broker, and the recent arrival of the new CFO, James Spurway.

The Buy rating and $1.30 target are unchanged, though the analysts expect near-term share price sentiment will be negatively impacted by the above.

Target price is $1.30 Current Price is $0.82 Difference: $0.485
If RMC meets the Bell Potter target it will return approximately 60% (excluding dividends, fees and charges).

Current consensus price target is $1.13, suggesting upside of 41.7% (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

Macquarie rates SDF as Outperform (1) -

Macquarie reviews the insurance brokers with the latest changes in premium rates for small and medium enterprises (SMEs) for the June quarter, which have risen 7.5% against a 10% increase in the March quarter.

The analyst assumes AUB Group and Steadfast Group had increases of 8.6% and 9.4%, respectively for Australia,

Macquarie believes AUB Group is offering the best value, trading at a -16.4% discount to international peers as well as a lower PEG ration (valuation metric) of 0.8x compared to Steadfast Group at 1.6x.

Outperform and $6.70 target retained.

Target price is $6.70 Current Price is $6.29 Difference: $0.41
If SDF meets the Macquarie target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $6.63, suggesting upside of 3.3% (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 SEK as Buy (1) -

Yesterday's job advertisement data from Seek show a decrease in volumes for Australia in June 2024 by -17% year-on-year (yoy), and -1.5% month-on-month. Corresponding numbers for New Zealand were falls of -35% and -8%, respectively.

Combining this information with ABS statistics on job mobility and voluntary job churn, Ord Minnett concludes overall job advertisements have returned to ‘mid-cycle’ in FY24.

Due to the soft job ads volumes data from Seek, the broker lowers its forecasts for the company, and now predicts Seek ANZ job advertisements will fall below ‘mid-cycle’ next year, with a forecast decrease of -6% yoy in FY25.

The Buy rating and $29.50 target are maintained.

Target price is $29.50 Current Price is $19.84 Difference: $9.66
If SEK meets the Ord Minnett target it will return approximately 49% (excluding dividends, fees and charges).

Current consensus price target is $29.20, suggesting upside of 46.4% (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 SFR as Outperform (1) -

Macquarie highlights quarterly production previews for Capstone Copper, Sandfire Resources and South32 ((S32)).

The broker forecasts 4Q24 copper production of 27.2kt, some 2% above consensus estimates for Sandfire Resources.

Also, the realised copper price for 2Q2024 is expected to be 16% higher at US$4.45/lb against the 1Q2024 at US$3.83/lb, with forecast  EBITDA up 79% on the quarter to US$136m.

Macquarie prefers Capstone Copper over Sandfire Resources.

Nevertheless, the stock is rated Outperform with an $11.20 target and is due to report June quarter results on July 25.

Target price is $11.20 Current Price is $9.14 Difference: $2.06
If SFR meets the Macquarie target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $9.51, suggesting upside of 6.1% (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: 0.2

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

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

Macquarie does a mea culpa and confesses a misinterpretation of the "step-away of inflation-lined pricing" for Telstra Group as a negative.

The broker believes the price increases across the three major retail brands (Telstra, Belong and JB Hi-Fi) confirms the telco will remain a price leader.

Equally, the outlook for Telstra Group's dividend improves, states the analyst, with a better-than-expected mobile pricing decision.

Macquarie now forecasts a 1H25 dividend per share of 9.5c and higher tax paid should assist with franking credit issues.

The target price is raised to $4.40 from $3.70 and the rating upgraded to Outperform.

Target price is $4.40 Current Price is $3.73 Difference: $0.67
If TLS meets the Macquarie target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $4.12, suggesting upside of 8.0% (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 TLS as Buy (1) -

Ord Minnett notes the average increase across all mobile pricing tiers is around $2.50 per month following Telstra Group's recent pricing update.

The broker now has greater confidence in its earnings (EBITDA) forecast of $8.6bn (consensus $8.5bn) for FY25 and wouldn't be surprised if management narrowed its current FY25 earnings guidance range of $8.4-$8.7bn.

The Buy rating and $4.50 target are maintained.

Target price is $4.50 Current Price is $3.73 Difference: $0.77
If TLS meets the Ord Minnett target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $4.12, suggesting upside of 8.0% (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

UBS rates TLS as Buy (1) -

Consolidating on yesterday's mobile price plans increases, UBS highlights Telstra Group should benefit from previous mobile increases into the 2H24 with better ARPU,

The analyst believes investors will focus on the ability for Telstra Group to capture the higher prices without impacting on subscriber share and churn rates.

Risks remain around Enterprise for Telstra Group with some major projects possibly being deferred or delayed on macro uncertainties, and competition in fixed with Aussie Broadband ((ABB)) and Superloop ((SLC)) continuing to take market share are flagged by UBS.

Buy rating and $4.40 target unchanged.

Target price is $4.40 Current Price is $3.73 Difference: $0.67
If TLS meets the UBS target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $4.12, suggesting upside of 8.0% (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

UBS rates TPG as Neutral (3) -

UBS expects both TPG Telecom and Telstra Group will benefit at the upcoming August earnings reports from previous mobile price rises in the 2H24 average revenue per user for mobile services.

The broker also expects the market to focus on any commentary around price rises impacting on market share or mobile churn rates.

Higher interest rates, with a possible rate hike from the RBA in August is viewed by UBS as a risk for TPG Telecom in particular.

Neutral rating with $4.80 target price retained.

Target price is $4.80 Current Price is $4.66 Difference: $0.14
If TPG meets the UBS target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $5.28, suggesting upside of 13.8% (ex-dividends)

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

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

Ord Minnett initiates coverage on West African Resources with an Accumulate rating and $1.60 target.

Last week, management unexpectedly raised $150m to cover additional capital costs associated with the Kiaka project in Burkina Faso and ensure a substantial cash reserve for the ramp-up phase.

The broker forecasts a $142m cash buffer above the available liquidity at the peak net-debt point, which is expected just before Kiaka begins production in June 2025.

A discount rate of -10% is applied by the analyst to both the Sanbrado and Kiaka projects, reflecting the increased perceived risks of operating in Burkina Faso.

Target price is $1.60 Current Price is $1.42 Difference: $0.185
If WAF meets the Ord Minnett target it will return approximately 13% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

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

Morgan Stanley rates WES as Underweight (5) -

Morgan Stanley lowers earnings forecasts for Wesfarmers on lower medium-term lithium spodumene and lithium hydroxide pricing expectations.

The broker highlights Hardware data points continue to weaken. The Underweight rating is kept partly due to a limited opportunity for earnings upgrades and ongoing pressure on the consumer.

The $56.20 target is unchanged.Industry view: In line.

Target price is $56.20 Current Price is $66.55 Difference: minus $10.35 (current price is over target).
If WES meets the Morgan Stanley target it will return approximately minus 16% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $60.18, suggesting downside of -9.3% (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