Australian Broker Call

Citi rates ALL as Buy (1) -

Upon initial assessment, it appears Aristocrat Leisure's FY23 result has slightly "missed" Citi's forecasts. The operational performance seems to be better-than-expected but management has stepped up its investment in design & development (D&D).

Citi analysts, upon initial response, think the market will focus on the higher D&D investment, and treat it as a negative.

The final dividend declared of 34c also misses the 38c forecast by the broker.

Target $42.80. Buy.

Target price is $42.80 Current Price is $39.86 Difference: $2.94
If ALL meets the Citi target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $44.66, suggesting upside of 13.1% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.8

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

Morgans rates ALQ as Add (1) -

Currency wins and acquisitions bolstered 1H underlying profit for ALS Ltd, which beat Morgans forecast. Environmental displayed ongoing strength, and Geochem margins were a highlight, offset by pockets of weakness in other areas, explains the broker.

FY24 guidance for profit of between $310-325m was close to existing consensus expectations, and implies to the analyst a flat 2H and  current weak spots could persist.

Management expects Geochem margins to hold above 30%, while Environmental should achieve mid-to high-single-digit organic growth and margin expansion, along with market share gains.

The broker makes only minor forecast changes and the Add rating and $13.35 target are maintained.

Target price is $13.35 Current Price is $11.59 Difference: $1.76
If ALQ meets the Morgans target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $11.66, suggesting downside of -3.7% (ex-dividends)

The company's fiscal year ends in March.

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

Bell Potter rates CAT as Buy (1) -

A better than expected revenue result from Catapult International's performance and health segment saw the company deliver 20% revenue growth in the first half to US$49.8m, which, alongside higher than expected margins, underpinned earnings of US$4.3m. 

Bell Potter noted free cash flow was positive, at US$1.4m, a turnaround on the negative cash flow result of the previous comparable period, although the company closed out the period with net debt of US$0.7m. 

The Buy rating and target price of $1.35 are retained.

Target price is $1.35 Current Price is $1.07 Difference: $0.28
If CAT meets the Bell Potter target it will return approximately 26% (excluding dividends, fees and charges).

The company's fiscal year ends in March.

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

Macquarie rates CBA as Underperform (5) -

CommBank's Q1 margins held up better than peers, but this win came at the cost of market share losses in mortgages, highlights Macquarie.

Higher funding costs due to an acceleration in deposit cost headwinds resulted in the net interest margin (NIM) falling by -5bps (broker estimate). Expenses increased by around -3% in the quarter, while lending margins were broadly stable, notes the analyst.

While Q1 underlying pre-provision earnings fell by around -3%, Macquarie forecasts these earnings will remain stable in Q2 as the November rate rise benefits flow through.

The analyst makes only minor forecast changes and the $87.50 target and Underperform rating are unchanged.

Target price is $87.50 Current Price is $102.28 Difference: minus $14.78 (current price is over target).
If CBA meets the Macquarie target it will return approximately minus 14% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $90.45, suggesting downside of -11.5% (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 CBA as Underweight (5) -

CommBank's 1Q pre-provision profit (ex notable items) was broadly in line with Morgan Stanley's forecast and there were no surprises for the broker on loan losses, credit quality or capital.

The analysts believe the net interest margin (NIM) fell by -5bps (compared to the 2H of FY23) to 2%, due to deposit pricing and mix, but lower home loan balances helped mortgage margins to stabilise.

The broker suggests there will be partial reassurance for investors from management's commentary that mortgage margins have indeed "stabilised" and the bank will be focused on "increasing our share of Australian home loan revenue".

Underweight. Target $85. Industry View: In-Line.

Target price is $85.00 Current Price is $102.28 Difference: minus $17.28 (current price is over target).
If CBA meets the Morgan Stanley target it will return approximately minus 17% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $90.45, suggesting downside of -11.5% (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

Morgans rates CBA as Hold (3) -

In the wake of CommBank's 1Q trading update, Morgans lowers cash EPS forecasts for FY24 and FY25 by -3% and -4%, respectively,  and the target falls to $92.70 from $97.97. The broker also makes smaller future buyback assumptions.

Revenue, pre-provision operating profit and cash profit were all flat, notes the analyst, compared to the quarterly average in the 2H of FY23.

In a faster rate of decline than Morgans anticipated, the net interest margin (NIM) fell by around -5bps to 200bps (implied by movements in net interest income). Opex - ex notable items - also rose by 3%, and was higher than the broker had forecast.

The Hold rating is unchanged.

Target price is $92.70 Current Price is $102.28 Difference: minus $9.58 (current price is over target).
If CBA meets the Morgans target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $90.45, suggesting downside of -11.5% (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 CBA as Hold (3) -

Ord Minnett assesses a "solid" trading update by CommBank, with a 1% rise in 1Q profit on the previous corresponding period, despite a lower net interest margin (NIM).

Loans declined moderately as the bank prioritised profitability over volumes, explains the analyst. Operating costs worsened by -3%, while bad debt expenses remained low and the capital position is strong, according to the broker.

While the broker forecasts CommBank will generate a "healthy" return on equity (ROE) of 15% by FY27, up from 14.2% in FY23, this outlook is considered more than priced into the current share price. The Hold rating is maintained. The $90 target is also unchanged.

Target price is $90.00 Current Price is $102.28 Difference: minus $12.28 (current price is over target).
If CBA meets the Ord Minnett target it will return approximately minus 12% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $90.45, suggesting downside of -11.5% (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

UBS rates CBA as Neutral (3) -

UBS  believes market consensus will have to lift EPS forecasts post the release of CommBank's Q1 trading update. One of the standout items is better-than-expected net interest income, the broker highlights.

And while the bank's asset asset quality seems to be holding up well, this, the broker points out, supports cash earnings growth. The latter is currently running at a pace firmer than what is embedded in consensus forecasts, says UBS.

UBS's price target of $105 remains well above its peers. On the broker's calculations, the shares are trading at 2.3x book value (FY24), which is in line with the historical +1 standard deviation level; the forward earnings multiple is around 18x.

It's the limited gap between target and share price that is keeping the rating on Neutral.

Target price is $105.00 Current Price is $102.28 Difference: $2.72
If CBA meets the UBS target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $90.45, suggesting downside of -11.5% (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

Morgans rates CUV as Initiation of coverage with Add (1) -

Morgans believes the current share market valuation for biopharmaceutical company Clinuvel Pharmaceuticals presents both a solid trading opportunity and a reasonable place to begin building positions in the stock.

The company's primary asset, called Scenesse, is used for the rare phototoxic condition called erythropoietic protoporphyria (EPP), which is approved for use in most major jurisdictions.

Lately, there has been weakness in the general sector and perception of an increasing competitive risk for Scenesse, but the broker believes the asset will provide plenty of cash beyond 2030.

The analysts feel there is a strong and growing specialist network and a monopoly held by Clinuvel in an under-penetrated market.

Target price is $22.00 Current Price is $16.00 Difference: $6
If CUV meets the Morgans target it will return approximately 38% (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 HLO as Buy (1) -

Shaw and Partners' view is that ABS overseas arrivals and departures data for September bode well for Helloworld Travel. Arrivals for the month exceeded 1.6m, up 50% on September 2022.

Over the September quarter, arrivals were up 54% on the previous comparable period and departures were up 56%, providing some reassurance that Helloworld Travel can achieve the broker's expected 45% revenue growth over the full year. 

The Buy rating and target price of $3.50 are retained.

Target price is $3.50 Current Price is $2.42 Difference: $1.08
If HLO meets the Shaw and Partners target it will return approximately 45% (excluding dividends, fees and charges).

Current consensus price target is $3.71, suggesting upside of 47.8% (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

Shaw and Partners rates IPG as Buy (1) -

With IPD Group growing its revenue share from data centre customers to 8% in FY23, from 2% in the year prior, Shaw and Partners expects IPD Group can continue to deliver solid sales growth within the data centre market beyond the broker's five-year forecast period.

The broker sees continued growth in Australian data centres, highlighted by the recent $5m data centre infrastructure investment commitment made by Microsoft.

It is predicted the domestic data centres market will grow to US$6.3bn by 2028, from a current US$4.82bn. The Buy rating is retained and the target price decreases to $4.90 from $5.00.

Target price is $4.90 Current Price is $4.01 Difference: $0.89
If IPG meets the Shaw and Partners 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 LOV as Neutral (3) -

While Citi believes Lovisa Holdings may have moderately accelerated the pace of its new store roll outs in recent weeks, it expects it would be difficult for the retailer to meet consensus expectations of operating a total 880 stores by the end of the first half.

As per Citi, this would imply an additional 18 stores per month through to the end of the year. The company added 21 new stores in the first seven weeks of the financial year, and Citi estimates a further 31 stores in the subsequent eleven weeks, or 10 stores per month. 

The Neutral rating is retained and the target price decreases to $20.68 from $22.30.

Target price is $20.68 Current Price is $18.94 Difference: $1.74
If LOV meets the Citi target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $23.73, suggesting upside of 21.2% (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 LOV as Neutral (3) -

Due to the risk of weak commentary at the upcoming AGM on November 22, Macquarie lowers its target for Lovisa Holdings to $18.70 from $22.35.

The broker points out proxies of demand for Lovisa's products are weak, and getting weaker, so far in the 1H, with increasing youth unemployment across the key US and Australian markets.

The 1H store rollout is also slower compared to FY23 run-rates, observes the analyst, though management's tendency to accelerate the rollout later in a given half may see this improve. The Neutral rating is unchanged.

Target price is $18.70 Current Price is $18.94 Difference: minus $0.24 (current price is over target).
If LOV meets the Macquarie target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $23.73, suggesting upside of 21.2% (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

Citi rates MHJ as Neutral (3) -

Michael Hill delivered a softer than expected update on sales, gross margin and store numbers at its recent annual general, and Citi expects consensus earnings downgrades could be forthcoming. 

The retailer reported moderate sales growth of 2.% over the last twelve weeks, an improvement on the 1.2% growth reported for the first seven weeks of the new financial year. Citi is anticipating the remaining seven weeks of the first half will see sales increase 14%. 

The broker would prefer to see evidence that macro risks are bottoming out before taking a more positive outlook on the stock. The Neutral rating and target price of 92 cents are retained.

Target price is $0.92 Current Price is $0.82 Difference: $0.105
If MHJ meets the Citi target it will return approximately 13% (excluding dividends, fees and charges).

Market Sentiment: 0.5

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

Macquarie rates MHJ as Outperform (1) -

Michael Hill's trading update for the first 19 weeks of FY24 revealed the underlying trend was broadly consistent with Macquarie's 1H forecast.

Christmas trading is considered key by the broker, and management has noted an encouraging start.

The analyst makes no forecast changes and the $1.40 target is maintained. Macquarie's unchanged Outperform rating is based on valuation and the relative defensiveness of gross profit margins, along with multi-channel growth initiatives.

Target price is $1.40 Current Price is $0.82 Difference: $0.585
If MHJ meets the Macquarie target it will return approximately 72% (excluding dividends, fees and charges).

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

Citi rates NUF as Neutral (3) -

Earlier today, Nufarm released "solid" FY23 financials, comments Citi analysts upon first glance appraisal. Despite challenging conditions pretty much everywhere, Seed Technologies achieved strong growth.

Guidance is for a year of two halves ahead, with adjustment to lower input costs and prices in H1, and a return to growth in H2.

Citi lauds the fact the balance sheet is in better shape, suggesting this will be positively received by investors.

The broker had expected management to be more cautious in its guidance. Instead, management has reiterated the company remains on track to achieve its FY26 revenue aspiration of $4.6bn.

Target $4.65. Neutral.

Target price is $4.65 Current Price is $4.45 Difference: $0.2
If NUF meets the Citi target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $6.12, suggesting upside of 26.7% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.5

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

UBS rates NWS as Buy (1) -

Key takeaways for UBS from 1Q results for News Corp included ongoing momentum for cost control, the beginning of a turnaround for Book Publishing and a continuation of growth execution for Dow Jones.

An offset to these positives was provided by the impact of ongoing macroeconomic weakness on News Media, explains the analyst.

The broker's FY24-26 earnings forecasts rise by an average of 5% partly due to lower costs for subscription video on demand (SVOD) and stronger growth at the Dow Jones professional information business.

The target rises by 7% to $40.20 and the Buy rating is unchanged.

Target price is $40.20 Current Price is $33.53 Difference: $6.67
If NWS meets the UBS target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $35.33, suggesting upside of 4.6% (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: 0.5

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

Bell Potter rates PNR as Upgrade to Hold from Sell (3) -

Pantoro will divest its lithium, nickel, copper and cobalt rights at the Norseman gold project to Mineral Resources ((MIN)) for a price of $60m, plus royalties.

Bell Potter states this will see Pantoro retain rights to precious and base metals and battery materials at the project.

Payment will involve a $30m upfront cash payment, $30m deferred payment due with a final investment decision, and a 2% royalty on nickel, copper and cobalt and a 0.75% royalty on lithium. 

Bell Potter finds the deal timely for Pantoro, which was facing a cash shortfall in coming quarters. The rating is upgraded to Hold from Sell and the target price increases to $0.042 from $0.025.

Target price is $0.04 Current Price is $0.04 Difference: minus $0.001 (current price is over target).
If PNR meets the Bell Potter target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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

UBS rates QUB as Neutral (3) -

UBS is not expecting too much share market reaction, given Qube Holdings' 1Q trading update was largely consistent with management's prior outlook commentary.

The analyst highlights earnings growth in all business units and margin improvement, but ongoing inflationary pressures including a lack of skilled labour availability.

While investor confidence in Qube has waned in recent months, the broker believes the trading update serves as a reminder of the company's diversification strategy into less cyclical income sources. Some confidence may thus be restored in growth for FY24 earnings.

The $3.33 target and Neutral rating are unchanged.

Target price is $3.33 Current Price is $2.95 Difference: $0.38
If QUB meets the UBS target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $3.44, suggesting upside of 16.2% (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

UBS rates REA as Neutral (3) -

UBS assesses a "solid" Q1 result by REA Group with volumes in line with expectations though yields were a miss, partly due to an -8% deferral impact which is expected to unwind over the year.

No changes are made to the broker's earnings forecasts and UBS remains confident on the earnings outlook. The $167 target and Neutral rating are maintained.

The broker's 17% yield growth forecast for FY24 is supported by management commentary around vendor marketing budgets remaining healthy, in the analyst's view.

Target price is $167.00 Current Price is $153.51 Difference: $13.49
If REA meets the UBS target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $157.50, suggesting upside of 0.0% (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

Macquarie rates RHC as Neutral (3) -

Macquarie highlights the around $895m (post-tax) proceeds from the sale (joint venture) of Ramsay Sime Darby Healthcare for circa $2bn will be used to pay down debt, resulting in lower leverage and interest savings of $55m.

However, digital investment will suppress margin improvement for Ramsay Health Care, cautions the broker.

Following a site tour of Australian operations, the analyst observes improving surgical, medical and rehab admissions trends, though
maternity and mental health both remain below pre-covid levels. Staffing availability has also improved, notes Macquarie.

On small EPS revisions, the broker's target rises to $53.50 from $52.50. Neutral.

Target price is $53.50 Current Price is $51.97 Difference: $1.53
If RHC meets the Macquarie target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $57.07, suggesting upside of 10.3% (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

Morgans rates RHC as Add (1) -

Following Ramsay Health Care's investor day and site tour, Morgans notes activity is rising across most specialities, with increasing volumes set to drive revenue growth.

The analysts also observe a complex and ambitious plan for the company's digital transformation, making forward projections on the outcome difficult.

Management also announced the sale of its 50% share in the Sime Darby joint venture for around $2bn.

The broker lowers underlying earnings forecasts across FY24-26 to reflect growing volumes, but on a shallower margin recovery, mainly due to digital/data spending. The target falls to $59.76 from $66.40. Add.

Target price is $59.76 Current Price is $51.97 Difference: $7.79
If RHC meets the Morgans target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $57.07, suggesting upside of 10.3% (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

UBS rates SEK as Neutral (3) -

In a first take on today's AGM presentation by Seek, UBS feels the maintenance of FY24 guidance for revenue, earnings (EBITDA) and adjusted profit is a positive, given a lower trend for new job advertisements over the last four months.

This guidance implies to the broker yields are holding up, at least in the high-single digits, over the last four months. Management notes yield growth is offsetting a moderation in job advertising volumes in A&NZ and most Asian markets.

The company also stated Platform Unification remains on track for completion in FY24

Target $26.50. Neutral.

Target price is $26.50 Current Price is $21.99 Difference: $4.51
If SEK meets the UBS target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $26.42, suggesting upside of 13.5% (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 SKO as Buy (1) -

Serko has exceeded expectations with a first half earnings loss of -NZ$0.8m, a notable beat to Citi's expected -NZ$3.0m loss.

In an initial response to the first half result, Citi points out platform revenue from Australia & New Zealand of NZ$9.6m was a beat to expecations, with online bookings up 18% year-on-year, with Serko citing new client wins. 

Operating cash flow was positive, and cash burn lower than the broker had anticipated. Costs are tracking to the lower end of updated guidance.

The Buy rating and target price of $4.75 are retained.

Target price is $4.75 Current Price is $4.20 Difference: $0.55
If SKO meets the Citi target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $4.89, suggesting upside of 15.1% (ex-dividends)

The company's fiscal year ends in March.

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: 1.0

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

UBS rates SUN as Buy (1) -

Suncorp Group's provision of September quarter Australian Prudential Standard - APS330- loans data implies to UBS a sharp slowdown in volume growth and a miss against the broker's expectation. It's felt near-term earnings risk in the Bank is skewed to the downside.

Quarter-on-quarter gross loans, housing loans and business loans fell by -0.3%, -0.1% and -0.9%, respectively, confirming the company's many recent references to "intense competition", in the broker's view.

The Buy rating and target price of $15.00 are retained.

Target price is $15.00 Current Price is $13.65 Difference: $1.35
If SUN meets the UBS target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $15.23, suggesting upside of 13.5% (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

Macquarie rates TLS as Outperform (1) -

At Telstra Group's investor day, management reaffirmed FY24 guidance, reports Macquarie, and cited an increase in subscriber share since last week's Optus outage.

The company's guidance has a 2H skew, partly due to lower earnings so far in FY24 for professional and management services, which the broker attributes to belt tightening by corporates.

Macquarie's target rises to $4.34 from $4.14 largely due to a higher assumed terminal growth rate, while the Outperform rating is kept based on the expectation for sustained mobile price increases.

Target price is $4.34 Current Price is $3.87 Difference: $0.47
If TLS meets the Macquarie target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $4.47, suggesting upside of 16.4% (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) -

UBS remains confident on mid-term growth prospects following Telstra Group's investor day.

The broker expects flattish FY24 Network Applications and Services (NAS) growth in FY24, given continuing softness in Professional and Managed services businesses. Ongoing cost pressure from rising electricity costs was also noted.

Management revealed the Intercity Fibre and Viasat projects are on track to deliver "mid-teens IRR or better", despite an increase in capex guidance for strategic fibre expenditure to -$1.6bn from the prior -$1.4-1.6bn range.

The Buy rating is maintained. The target falls to $4.55 from $4.65 as UBS sees risk for the targeted -$500m net cost-out by FY25, and lowers cost reduction forecasts accordingly. Management has also flagged energy costs will exceed initial expectations by $100m.

Target price is $4.55 Current Price is $3.87 Difference: $0.68
If TLS meets the UBS target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $4.47, suggesting upside of 16.4% (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

Citi rates XRO as Buy (1) -

Should Xero manage to deliver growth in its average revenue per use due to shift mix, says Citi, there is upside potential to consensus average revenue per use forecasts. 

Company management considers the focus on mix as an "evolution", noting that given its scale, Xero needs to consider additional growth levers. 

The Buy rating and target price of $129.40 are retained.

Target price is $129.40 Current Price is $99.76 Difference: $29.64
If XRO meets the Citi target it will return approximately 30% (excluding dividends, fees and charges).

Current consensus price target is $110.62, suggesting upside of 8.5% (ex-dividends)

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: 0.2

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