Australian Broker Call

Citi rates ABG as Buy (1) -

At Abacus Group's AGM, FY24 distribution guidance of 8.5cpu was maintained. In line with the rest of the sector, notes Citi, incentives remain elevated and occupancy reduced slightly.

Encouragingly, office leasing spreads were positive in the 1Q, note the analysts.

Management commented leasing deals are taking longer to finalise due to heightened market uncertainty.

The $1.45 target and Buy rating are unchanged.

Target price is $1.45 Current Price is $1.06 Difference: $0.39
If ABG meets the Citi target it will return approximately 37% (excluding dividends, fees and charges).

Current consensus price target is $1.52, suggesting upside of 47.2% (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 ALQ as Neutral (3) -

While ALS Ltd's 1H underlying profit result was a 2% beat against forecasts by consensus and UBS, the broker suggests EPS growth in FY24 will be difficult for management to deliver.

The analyst anticipates a more muted geochemistry volume outlook and a challenging macroeconomic outlook will weigh on the Life Sciences segment.

UBS attributes the 1H beat to a stronger Commodities segment performance, underpinned by strong price management, supportive base metals demand and value-added services.

The Neutral rating is unchanged and the target rises to $13 from $12.10.

Target price is $13.00 Current Price is $12.14 Difference: $0.86
If ALQ meets the UBS target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $11.94, suggesting downside of -4.5% (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

Citi rates AX1 as Downgrade to Neutral from Buy (3) -

Following a review of the trading update provided by Accent Group for the first 19 weeks of FY24, Citi was disappointed by softer-than-anticipated gross margins and cost-of-doing-business (CODB) pressure.

Lower gross margins and a higher CODB offsets the rollout of more stores in the broker's forecasts, and the target falls by -9% to$1.93. Store rollout guidance was increased to 70 new stores in the 1H, up from at least 50 in FY24.

Citi's rating for Accent Group is downgraded to Neutral from Buy.

Target price is $1.93 Current Price is $1.94 Difference: minus $0.005 (current price is over target).
If AX1 meets the Citi target it will return approximately minus 0% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.18, suggesting upside of 22.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.2

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

Morgan Stanley rates AX1 as Equal-weight (3) -

While demand remains soft for Accent Group's range of products, Morgan Stanley sees no deterioration in trend evident in sales growth figures for the first 19 weeks of FY24, which were broadly consistent with the August update.

Gross and opex margins were in line with the broker's forecasts, while new stores are on track for a beat against management's 1H guidance.

The Equal-weight rating and target price of $2.20 are unchanged.. Industry view: In-Line.

Target price is $2.20 Current Price is $1.94 Difference: $0.265
If AX1 meets the Morgan Stanley target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $2.18, suggesting upside of 22.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.2

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

UBS rates AX1 as Sell (5) -

Following an AGM trading update for the first 19 weeks of FY24, UBS reduces its FY24 and FY25 EPS forecasts for Accent Group due to lower wholesale sales forecasts, lower gross margins and a higher cost-of-doing-business (CODB)/sales ratio.

The above negative impacts on the broker's forecasts were moderated due to a higher store rollout forecast. Management's rollout guidance was increased to 70 new stores in the 1H, up from at least 50 in FY24.

The target falls to $1.85 from $2.00. The Sell rating is retained on risks posed to retail/wholesale sales and gross margins from the rising CODB, explains UBS.

Target price is $1.85 Current Price is $1.94 Difference: minus $0.085 (current price is over target).
If AX1 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 $2.18, suggesting upside of 22.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

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 BCB as Buy, High Risk (1) -

Bowen Coking Coal Bowen has completed a $50m capital raise comprising a $17m placement and a 1-for-6 pro-rata non-renounceable entitlement offer for $33m at 9cps.

The funds will be used to strengthen the balance sheet and provide operational flexibility to take advantage of strong coking coal
markets, explained management.

Shaw and Partners expects margins will expand toward $100/t as the closure of Bluff and focus on Ellensfield South will reduce costs.

The Buy, High Risk rating is retained and the target falls to 23c from 27c.

Target price is $0.23 Current Price is $0.10 Difference: $0.13
If BCB meets the Shaw and Partners target it will return approximately 130% (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 COS as Buy (1) -

First half revenue guidance provided at Cosol's AGM was in line with Bell Potter's forecast but earnings (EBITDA) margin guidance was a miss.

Management expects the margin will be lower than the 14.2% achieved in the previous corresponding period because of “investment in business development resources in A&NZ”.

Guidance was for 40-45% growth in revenue and an earnings operating margin of between 13.5-14%.

After the broker allows for the lower margin guidance and assumes a higher discount rate, the target falls to $1.08 from $1.10. Buy.

Target price is $1.08 Current Price is $0.83 Difference: $0.25
If COS meets the Bell Potter target it will return approximately 30% (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

Morgans rates CYL as Initiation of coverage with Speculative Buy (1) -

Morgans initiates coverage on junior gold producer Catalyst Metals with a Speculative Buy rating and 90c target.

While the company has exploration upside at the Plutonic gold mine in Western Australia and the Henty gold mine in Tasmania, exploration in Victoria has potential to create substantial wealth for shareholders, in the broker's view.

This wealth may arise from evaluation of high-grade gold mineralisation, along the Whitelaw structure, extending north from the Bendigo Gold Field, explains the analyst.

Production from Plutonic and Henty is projected to exceed 90,000oz in FY24, notes the broker, generating a small positive cashflow. Morgans forecasts gold production above 150,000oz per year over the next two years, reducing cash costs per ounce.

Target price is $0.90 Current Price is $0.80 Difference: $0.1
If CYL meets the Morgans target it will return approximately 12% (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 HUM as Hold (3) -

Ord Minnett notes Humm Group's higher 8% volume growth (first three months FY24) and higher volumes per customer (last 12 months) compared to the prior period contrasts with BNPL declines in the same metrics for peer Zip Co ((ZIP)).

Following the recent AGM and commentary, the broker believes Humm Group can navigate through the period of rising interest rates and remain profitable.

The Hold rating and 50c target are unchanged.

Target price is $0.50 Current Price is $0.46 Difference: $0.045
If HUM meets the Ord Minnett target it will return approximately 10% (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

Ord Minnett rates JHG as Hold (3) -

Ord Minnett lowers its target for Janus Henderson to $39 from $41 after revising near-term expectations for assets under management (AUM), revenue and profitability following a review of recent quarterly results by US-based asset managers.

The analyst believes most of the traditional asset managers have become dependent upon equity market gains to boost AUM.

The broker draws attention to the amount of operating leverage inherent in asset managers' business models and the consequent large impact on revenue and profitability resulting from the precipitous decline in industry managed assets that occurred in 2022.

The Hold rating is retained.

Target price is $39.00 Current Price is $39.75 Difference: minus $0.75 (current price is over target).
If JHG meets the Ord Minnett target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $40.33, suggesting upside of 2.3% (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

Ord Minnett rates KAR as Accumulate (2) -

Ord Minnett assesses Karoon Energy's US$720m acquisition of 30% interests in two offshore oil and gas fields in the Gulf Of Mexico is value neutral. 

The broker's target falls by -3.5% to $2.65 due to the $480m equity raising to fund the transaction. It's believed the acquisitions make logical sense given they diversify the production base and lessen sovereign risk.

Management expects the acquisitions will be mid-teens accretive for cash flow per share and there will be (unquantified) EPS accretion. The Accumulate rating is unchanged.

Target price is $2.65 Current Price is $2.05 Difference: $0.6
If KAR meets the Ord Minnett target it will return approximately 29% (excluding dividends, fees and charges).

Current consensus price target is $2.99, suggesting upside of 40.4% (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: 0.9

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

Bell Potter rates NEU as Buy (1) -

As commercial partner Acadia is guiding to circa US$175m (after only eight months) in DaybueTM sales for 2023 after an impressive launch, Bell Potter expects large sums of ongoing royalties for Neuren Pharmaceuticals.

In the longer term, the analysts also envisages the triggering of further sales-based milestones and royalties for the company.

The broker points to additional positives: 80% of US patients are now covered by insurers; and treatment persistence of circa 75-80% after four months is higher than the clinical trial setting.

The $17.50 target and Buy rating are unchanged.

Target price is $17.50 Current Price is $14.68 Difference: $2.82
If NEU meets the Bell Potter target it will return approximately 19% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

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 SDF as Accumulate (2) -

Steadfast Group will outlay $280m ($149m up front) to acquire fast-growing Queensland underwriting agency Sure, which Ord Minnett notes is successfully and profitably taking market share with policies better suited to high-risk markets.

The broker points out the relatively small up front payment helps de-risk the purchase and also reduces debt and finance costs before earn out payments (over two years) are incurred.

Management upgraded FY24 underlying profit guidance to $300m from $290m, with about 8% attributable to Sure, points out the analyst.

The Hold rating is retained and the target price rises to $6.30 from $6.00 after the broker incorporates the acquisition and $310m equity raise, comprising a $280 placement and $30m share purchase plan at $5.14/share. The analyst recommends investors participate in the latter.

Target price is $6.30 Current Price is $5.23 Difference: $1.07
If SDF meets the Ord Minnett target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $6.45, suggesting upside of 20.1% (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 TWE as Neutral (3) -

Following the recent equity raise by Treasury Wine Estates associated with the acquisition of DAOU Vineyards, Citi allows for the share count dilution within forecasts and lowers its target to $11.80 from $12.87. Lower market multiples were also taken into account.

The Neutral rating is maintained.

Target price is $11.80 Current Price is $10.61 Difference: $1.19
If TWE meets the Citi target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $13.14, suggesting upside of 26.0% (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

Morgans rates VEE as Add (1) -

Singapore-based shipbuilder Strategic Marine will now fit the gyro VG140 as standard on its fourth-generation fast crew boat (FCB).

Because of this decision, Strategic Marine will accelerate delivery dates for the 12 gyros ordered, under an exclusive agreement with Veem back in June to supply three types of gyros (including the VG140), explains Morgans.

Management now expects FY24 gyro revenue in excess of $10m compared to the broker's $7m forecast.

Morgans target rises to 91c from 84c and the Add rating is unchanged.

Target price is $0.91 Current Price is $0.70 Difference: $0.21
If VEE meets the Morgans target it will return approximately 30% (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