Australian Broker Call

Citi rates AIA as Buy (1) -

Citi believes the bigger-than-expected equity raising from Auckland International Airport alleviates the overhang on the stock and opens the door to a possible capital return in the medium term.

The broker highlights some share price weakness due to the potential sale of an 11% stake from the Auckland Council but emphasises the longer-term growth in EBITDA of around 10% p.a. out to 2030.

The stock remains Buy rated with an NZ$8.70 target price.

Current Price is $6.65. Target price not assessed.

Current consensus price target is N/A

The company's fiscal year ends in June.

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

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

Macquarie highlights the potential for French tax increases back to the historic levels of 34.4% due to budgetary pressures. The broker notes the French deficit at -5.5% which is more than EU limits of -3%.

At current share price levels, the analyst believes the potential for a higher tax rate is already discounted in Atlas Arteria's stock.

The broker observes traffic rose 1% over the first two months of FY24 for Autoroutes Paris-Rhin-Rhone (APRR) versus growth of around 0.3% for Vinci and SENEF up 1.5%.

Macquarie tweaks EPS forecasts by -0.5% for FY24 and 0.1% for FY25 with a forecast 40c dividend supported by cash from APRR and reserves of around 11c.

The stock is upgraded to Outperform from Neutral with a $5.26 target price, up from $5.10.

Target price is $5.26 Current Price is $4.74 Difference: $0.52
If ALX meets the Macquarie target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $5.31, suggesting upside of 9.4% (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

Shaw and Partners rates AVL as Buy (1) -

Australian Vanadium has announced it received a letter of interest from the export-import bank of the US for up to US$31m.

Shaw and Partners believes the letter highlights a growing interest in the development of vanadium projects with an increasing strategic emphasis on flow batteries.

The broker retains a Buy rating with an 8c target price.

Target price is $0.08 Current Price is $0.02 Difference: $0.065
If AVL meets the Shaw and Partners target it will return approximately 433% (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

Shaw and Partners rates BCB as Buy (1) -

Bowen Coking Coal announced FY24 financial reports including a FY25 trading update.

As per Shaw and Partners, the company reported an annual net loss but the 2H24 was a turnaround to profitability. The broker notes higher mining rates over the last four months of an average 311kt p.a. are well above the 250kt p.a. target.

Shaw and Partners cuts EBITDA forecasts by -20% and -36% for FY25/FY26, respectively, because of increased cost estimates and a delay in the refurbishment of the second stage of Burton CHPP until FY24.

Target price at 5c and Buy rating, High risk unchanged with an upbeat outlook on coking coal.

Target price is $0.05 Current Price is $0.01 Difference: $0.04
If BCB meets the Shaw and Partners target it will return approximately 400% (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

Citi rates FBU as Sell (5) -

In net positive for the business, according to Citi, Fletcher Building will raise around NZ$700m (placement NZ$282m/non-renouncable offer NZ$418m).

The analyst sees positives in clearing the overhang around the balance sheet and improving the ability to ride out legacy issues/macro concerns for the business.

A trading update revealed year-to-date revenues have fallen by -7% year-on-year compared to the -8% expected by consensus for the 1H, highlights the broker.

Management is aiming to achieve -NZ$180m of cost-out phased 40%:60% over the first and second halves of FY25. 

Current Price is $2.60. Target price not assessed.

Current consensus price target is $2.66, suggesting upside of 2.3% (ex-dividends)

The company's fiscal year ends in June.

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: -0.7

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

Macquarie rates FBU as Underperform (5) -

Macquarie highlights the NZ preliminary building consents for July and August as stronger than expected, resulting in a lift in the broker's FY25 A&NZ manufacturing/distribution volume forecast to -7% from -8%, which is broadly in line with FY25 guidance from Fletcher Building.

Due to the business' operating leverage, the company is very sensitive to volume changes with steady fixed costs, the analyst emphasises.

Macquarie upgrades EPS forecasts by 8% and 6% for FY25/FY26, respectively but stresses the most important number for investors is the company's over-earn in NZ wallboard and cement business, which resulted in the strategies underpinning Fletcher Building's contingent liabilities.

The target price is lifted to NZ$2.37, up NZ26c. Underperform rating unchanged.

Current Price is $2.60. Target price not assessed.

Current consensus price target is $2.66, suggesting upside of 2.3% (ex-dividends)

The company's fiscal year ends in June.

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: -0.7

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

Citi rates JDO as Sell (5) -

Judo Capital's share price rally over the last year is reflecting an upbeat view from the market, Citi comments, with investors expecting management to report financial "metrics at scale".

The expectation is predicated on improving net interest margins, trending to the long-term guided target of 3%.

Citi remains concerned over asset quality and FY25 bad and doubtful debts, particularly in conjunction with growth in the bank's loan book.

The broker cuts cash earnings forecasts by -6% and -3% for FY25/FY26, respectively to include increased bad and doubtful debt provisions.

Sell rating with a $1.35 target unchanged.

Target price is $1.35 Current Price is $1.78 Difference: minus $0.425 (current price is over target).
If JDO meets the Citi target it will return approximately minus 24% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $1.64, suggesting downside of -7.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY25:

Forecast for FY26:

Market Sentiment: 0.4

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

Citi rates JLG as Neutral (3) -

Citi points to incremental growth from "bolt-on" acquisitions for Johns Lyng with the company announcing it purchased an 87.5% stake in Keystone Group, a Queensland insurance repairs, restoration and hazardous material removal company.

The consideration includes -$44.1m in cash and -$3.6m in Johns Lyng shares. The company has little debt, so the broker expects the acquisition to be around 5% to 6% earnings positive.

Neutral rating unchanged. Target price $4.55.

Target price is $4.55 Current Price is $3.45 Difference: $1.1
If JLG meets the Citi target it will return approximately 32% (excluding dividends, fees and charges).

Current consensus price target is $4.67, suggesting upside of 36.5% (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

Bell Potter rates LOT as Speculative Buy (1) -

Bell Potter lowers its target for Lotus Resources to 50c from 70c after management released "disappointing" scoping study results for the Letlhakane Uranium Project.

The broker's un-risked net present value (NPV) for the project is reduced to $322m from $684m due to higher-than-expected costs (both capital and operating) relative to peers.

The Speculative Buy rating is kept as Bell Potter sees material upside with the progression of Kayelekera which is due to recommence production over the coming year.

Target price is $0.50 Current Price is $0.23 Difference: $0.27
If LOT meets the Bell Potter target it will return approximately 117% (excluding dividends, fees and charges).

Current consensus price target is $0.54, suggesting upside of 125.0% (ex-dividends)

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 LOT as Initiation of coverage with Outperform (1) -

Macquarie initiates coverage on Lotus Resources with an Outperform rating and a 40c target price.

The analyst suggests the company's investment case is like Paladin Energy ((PDN)) a few years back as the Kayelekera project in Malawi (acquired from Paladin in 2020) is a relatively low capex restart.

Lotus Resources' larger greenfield project, Letlhakane is a larger project, 118.2mlb of U308 with lower grades and can be developed once Kayelekera is up and running.

Macquarie emphasises the "bullish" outlook for uranium, highlighting the company as the next logical stock for bringing an idled asset back on stream.

Outperform rating with a 40c target price.

Target price is $0.40 Current Price is $0.23 Difference: $0.17
If LOT meets the Macquarie target it will return approximately 74% (excluding dividends, fees and charges).

Current consensus price target is $0.54, suggesting upside of 125.0% (ex-dividends)

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 LTM as Buy (1) -

Following Arcadium Lithium's investor day, Bell Potter retains its Buy rating, citing a large and diversified exposure to lithium in terms of mode of production, asset location, downstream processing and end markets.

To align with management's production and capital cost outlook, the broker's EPS forecasts across 2024-26 fall by -13%, -11% and -25%, respectively. The target is reduced to $6.25 from $7.25.

These forecasts changes allow for Mt Cattlin being placed on care-and-maintenance beyond 2025, tapering of near-term production growth across the brine portfolio, and deferring the ramp-up of Whabouchi by a year, explains Bell Potter.

The analysts highlight Arcadium's asset base is readily expandable into strengthening markets and the company has a strong balance sheet to support such growth.

Target price is $6.25 Current Price is $3.69 Difference: $2.56
If LTM meets the Bell Potter target it will return approximately 69% (excluding dividends, fees and charges).

Current consensus price target is $5.60, suggesting upside of 50.9% (ex-dividends)

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

Citi rates LTM as Buy (1) -

Citi points to the key takeaways from Arcadium Lithium's investor day where management stressed the scale of the company's resource and the first mover advantage in hydroxide technology.

The analyst believes the company wanted to display to the market a response to the request for more detailed information, including how each brine asset has 100 years of life, with wave 1 to double production in four years, and wave 2 generating 10-years of volume growth.

Site visits and a sell-side presentation at Bessamer City and Becancour are also taking place. The Buy rating and $6.50 target are maintained.

Target price is $6.50 Current Price is $3.69 Difference: $2.81
If LTM meets the Citi target it will return approximately 76% (excluding dividends, fees and charges).

Current consensus price target is $5.60, suggesting upside of 50.9% (ex-dividends)

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

Bell Potter rates OPT as Speculative Buy (1) -

While leaving forecasts unchanged for Opthea, Bell Potter raises the probability of success. Along with ongoing clinical trials, management has now completed multiple commercial scale manufacturing batches of the sozinibercept drug substance.

Manufacturing has been at a commercial scale using a reproducible process that generated consistent product quality, explains the broker.

This progress suggests to the analysts management should be well placed to submit a Biologics Licence Application (BLA) package to the FDA relatively swiftly after Phase 3 topline results are available.

The Speculative Buy rating is maintained, and the target is increased to $1.30 from 70c.

Target price is $1.30 Current Price is $0.71 Difference: $0.59
If OPT meets the Bell Potter target it will return approximately 83% (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

Citi rates REA as Buy (1) -

Citi's recent discussion with the former Commercial Director of Estate Agency division of Rightmove offers some interesting insights to the potential value-add from REA Group.

Mr Whittall believes REA could "reset" the strained relationship between Rightmove and real estate agents in the UK with better marketing tools to accelerate the home sale process and work more in a partnership relationship.

The analyst observes this is an interesting takeaway as REA has a good working relationship with agents in Australia opening opportunities to leverage its intellectual property into Rightmove.

Buy rated with a $230 target unchanged.

Target price is $230.00 Current Price is $198.99 Difference: $31.01
If REA meets the Citi target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $218.46, suggesting upside of 12.1% (ex-dividends)

Forecast for FY25:

Forecast for FY26:

Market Sentiment: 0.7

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

Ord Minnett rates SHV as Downgrade to Hold from Buy (3) -

Due to "freight delays", according to management, the net debt position at Select Harvests is -$75m worse than guidance provided in May, observes Ord Minnett.

The company has initiated an $80m capital raise and will apply $71.6m of the funds raised against debt.

The broker is particularly frustrated by this news as the company has experienced a return of volumes, crop quality, and a boost from the recent significant increase in global almond prices.

The target is lowered to $4.35 from $5.15 and the rating is downgraded to Hold from Buy, with Ord Minnett highlighting an increased execution risk.

Target price is $4.35 Current Price is $4.50 Difference: minus $0.15 (current price is over target).
If SHV 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 $4.52, suggesting upside of 22.1% (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

Morgan Stanley rates SWM as Underweight (5) -

Morgan Stanley's Underweight rating for Seven West Media reflects concerns around both structural audience declines and the negative cyclical advertising impacts on the free-to-air TV and print assets. It's felt consensus forecasts remain too optimistic.

Not only is TV operating leverage high, but this is further amplified by the debt load with net debt on the rise, explain the analysts.

The broker also suggests the underrated risk of the long-term commitment for programming rights set against consistently falling revenue and earnings power of the business.

The target falls to 16c from 22. Industry view: Attractive.

Target price is $0.16 Current Price is $0.18 Difference: minus $0.015 (current price is over target).
If SWM meets the Morgan Stanley target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $0.15, suggesting downside of -14.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY25:

Forecast for FY26:

Market Sentiment: -0.7

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