Australian Broker Call

UBS rates ALL as No Rating (-1) -

Based on recent reporting by Aristocrat Leisure's peers, UBS concludes overall industry sales volumes are down, marking the first negative quarter since covid.

It's still possible Aristocrat Leisure gained market share, notes the analyst.

The broker is currently under research restriction due to acting as a financial advisor to Aristocrat Leisure on the NeoGames transaction. No target or rating are offered.

Current Price is $46.86. Target price not assessed.

Current consensus price target is $47.20, suggesting upside of 2.5% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.9

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

Macquarie rates ANZ as Downgrade to Underperform from Neutral (5) -

Macquarie downgrades the ratings for all banks under research coverage to Underperform given they are trading at peak multiples without a clear fundamental reason. The analyst sees limited scope for banks to surprise in the medium-term.

The broker suggests the recent rally for bank shares into expensive territory is more reflective of weight of money and various issues impacting alternative investment opportunities.

In the event of the expected interest rate cuts in Australia, Macquarie sees downside to earnings as it will be difficult for banks to offset
margin headwinds associated with those lower rates. It will be difficult to reprice mortgages, particularly in an election year.

The broker's order of preference is National Australia Bank, Westpac, ANZ Bank and CommBank. Targets across the major banks rise by 4-8% mostly due to an increase in the applied market multiple.

ANZ Bank is downgraded to Underperform from Neutral, while the target rises to $27 from $25.

Target price is $27.00 Current Price is $29.80 Difference: minus $2.8 (current price is over target).
If ANZ meets the Macquarie target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $27.72, suggesting downside of -3.3% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.1

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

Bell Potter rates AVG as Hold (3) -

A final decision is due by the end of March, notes Bell Potter, after the Chinese Ministry of Commerce (MOFCOM) released an interim determination outlining the proposed removal of tariffs on Australian bottled wine imports.

Since FY20, under the direction of new management, Australian Vintage has shifted from production of largely bulk wine into branded fast-moving consumer goods (FMCG) bottled sales, note the analysts.

As a result of this change, premium bottled brands now represent more than 36% of gross profit, up from around 12% in FY20. This greater exposure offers Australian Vintage higher leverage should the domestic supply-demand balance improve, explains the broker.

The Hold rating and 41c target are unchanged.

Target price is $0.41 Current Price is $0.41 Difference: minus $0.002 (current price is over target).
If AVG meets the Bell Potter target it will return approximately minus 0% (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

Bell Potter rates BDM as Buy (1) -

Bell Potter explains a potential near-term cash flow burden for Burgundy Diamond Mines has been removed now that in-principle agreement has been reached with surety providers to extend the current repayment schedule.

Surety payments, explain the analysts, relate to reclamation liabilities for the Ekati diamond mine, as required by Canadian state and federal legislation. 

Buy rating retained. Target price falls to 40c from 45c after Bell Potter adjusts surety payment forecasts and allows for the recent FY23 result.

Target price is $0.40 Current Price is $0.18 Difference: $0.225
If BDM meets the Bell Potter target it will return approximately 129% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

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) -

Macquarie downgrades the ratings for all banks under research coverage to Underperform given they are trading at peak multiples without a clear fundamental reason. The analyst sees limited scope for banks to surprise in the medium-term.

The broker suggests the recent rally for bank shares into expensive territory is more reflective of weight of money and various issues impacting alternative investment opportunities.

In the event of the expected interest rate cuts in Australia, Macquarie sees downside to earnings as it will be difficult for banks to offset
margin headwinds associated with those lower rates. It will be difficult to reprice mortgages, particularly in an election year.

The broker's order of preference is National Australia Bank, Westpac, ANZ Bank and CommBank. Targets across the major banks rise by 4-8% mostly due to an increase in the applied market multiple.

The Underperform rating is kept for CommBank and the target rises to $95 from $88.

Target price is $95.00 Current Price is $117.55 Difference: minus $22.55 (current price is over target).
If CBA meets the Macquarie target it will return approximately minus 19% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $92.71, suggesting downside of -20.1% (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

Bell Potter rates CMM as Buy (1) -

There has been a temporary cessation of mining activities at Capricorn Metals' Karlawinda Gold Project (KGP) for more than eight full days during the March quarter so far due to significant rain.

Bell Potter's earnings downgrades as a result of this interruption are just -7% for FY24, thanks to the company's  low operating costs, which provide a significant buffer in such circumstances.

The broker defers forecasts for the mining of higher grade ore to FY25 from FY24 and allows for remediation costs needed to restore operations.

Buy rating retained. Target falls to $5.95 from $6.00.

Target price is $5.95 Current Price is $4.86 Difference: $1.09
If CMM meets the Bell Potter 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: 0.5

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

Citi rates CXO as Sell (5) -

Core Lithium had already suspended operations at its open pit mine and put discretionary spending under review. Yesterday's H1 release revealed a shock loss to the tune of -$168m, including -$120m impairment for Finniss.

The CEO has exited. A non-exec director has resigned. There's currently no intention to resume mining when stockpiles have run down, estimated by mid-year.

Some good news: the company doesn't think there will be a requirement to pay Tesla under the lawsuit. There's no debt and $125m held in cash.

Incorporating costs for care and maintenance, Citi analysts do not see positive free cash flow in H2. The broker had explained previously Core Lithium is the highest cost producer in its coverage of the lithium sector on the ASX.

Sell. Target price drops to 11c from 13c.

Target price is $0.11 Current Price is $0.20 Difference: minus $0.09 (current price is over target).
If CXO meets the Citi target it will return approximately minus 45% (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

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

Morgan Stanley believes the near-term consensus forecast for neodymium and praseodymium (NdPr) prices are too high given potentially slower electric vehicle growth in 2024/25.

The broker does anticipate a growing deficit in the NdPr market by 2030 and forecasts a US$113/kg price, 12% ahead of the consensus estimate.

Equal-weight rating is retained for Iluka Resources.Target is raised to $7.20 from $7.15. Industry view is Attractive.

Target price is $7.20 Current Price is $6.71 Difference: $0.49
If ILU meets the Morgan Stanley target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $7.72, suggesting upside of 12.9% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: -0.1

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

Bell Potter rates LTR as Speculative Buy (1) -

New debt conditions and covenants provide some confidence in Kathhleen Valley's status, suggests Bell Potter, following the execution by Liontown Resources of a $550m senior secured syndicated debt facility.

Now, Kathleen Valley will be funded to first production and ramp-up to 3mtpa (the throughput base case), notes the broker.

The Speculative Buy rating is retained and the target price increases to $1.90 from $1.60 due to a reduction in the near-term funding overhang forecast, explain the analysts.

Target price is $1.90 Current Price is $1.40 Difference: $0.505
If LTR meets the Bell Potter target it will return approximately 36% (excluding dividends, fees and charges).

Current consensus price target is $1.23, suggesting downside of -9.6% (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

Citi rates LTR as Sell (5) -

Liontown Resources has secured $550m in syndicated debt from five lenders and Citi analysts see this as a confidence booster for the lithium sector overall.

The miner remains on track for first production by mid-year, and the broker expresses its positive view, but simply cannot get past the valuation. Forecasts for a market surplus this year don't help either.

Sell rating retained wth an unchanged $1 target price.

Target price is $1.00 Current Price is $1.40 Difference: minus $0.395 (current price is over target).
If LTR meets the Citi target it will return approximately minus 28% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $1.23, suggesting downside of -9.6% (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 LYC as Initiation of coverage with Underweight (5) -

Morgan Stanley initiates coverage on Lynas Rare Earths with an Underweight rating.

Costs could rise and available cash may be needed as a buffer (instead of dividends) given the potential for lower neodymium and praseodymium (NdPr) prices, explain the analysts.

The broker sees around -15% valuation downside from the current Lynas stock price to the analyst's target set at $5.00. Since a January 14 peak in 2022, the share price has fallen by around -45%.

Morgan Stanley believes costs will be greater than the consensus forecast given the combined impact of operating in higher-cost jurisdictions (Australia, US) and falling mine grades.

Target price is $5.00 Current Price is $5.80 Difference: minus $0.8 (current price is over target).
If LYC meets the Morgan Stanley target it will return approximately minus 14% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $6.88, suggesting upside of 18.6% (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 MP1 as Outperform (1) -

Macquarie highlights Megaport's high-fixed cost base and points to strong near-term operating leverage and expansion in free cash flow (FCF) margin.

These positive outcomes should be driven by core capacity deals and potential upside from the current low penetration of Megaport Cloud Router (MCR) and Megaport Virtual Edge (MVE). Changes to the sales strategy and a tailwind from AI are also expected to assist.

Regarding the AI opportunity, the analyst notes bandwidth associated with GPU cloud is 10-100 times Megaport 's traditional compute networking business.

The target rises to $18 from $15.50 on increased earnings forecasts and higher outer-year annual recurring revenues. Outperform.

Target price is $18.00 Current Price is $15.32 Difference: $2.68
If MP1 meets the Macquarie target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $14.67, suggesting downside of -5.3% (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

UBS rates MTS as Buy (1) -

Following Metcash's investor day and store tours for stockbroking analysts, UBS notes store investment for the Food division is driving sales with a new distribution centre potentially providing a lift for earnings.

In the Hardware segment, Electronic shelf labelling (ESL) is being rolled out nationally for Total Tools, providing benefits of cost savings (labour, markdown management) and customer price trust, explains the analyst.

The broker remains Buy-rated partly due to Food resilience and a strong Total Tools outlook. The $4.25 target is maintained.

Target price is $4.25 Current Price is $3.97 Difference: $0.28
If MTS meets the UBS target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $4.14, suggesting upside of 3.7% (ex-dividends)

The company's fiscal year ends in April.

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 NAB as Downgrade to Underperform from Neutral (5) -

Macquarie downgrades the ratings for all banks under research coverage to Underperform given they are trading at peak multiples without a clear fundamental reason. The analyst sees limited scope for banks to surprise in the medium-term.

The broker suggests the recent rally for bank shares into expensive territory is more reflective of weight of money and various issues impacting alternative investment opportunities.

In the event of the expected interest rate cuts in Australia, Macquarie sees downside to earnings as it will be difficult for banks to offset
margin headwinds associated with those lower rates. It will be difficult to reprice mortgages, particularly in an election year.

The broker's order of preference is National Australia Bank, Westpac, ANZ Bank and CommBank. Targets across the major banks rise by 4-8% mostly due to an increase in the applied market multiple.

National Australia Bank is downgraded to Underperform from Neutral, while the target rises to $32.50 from $30.

Target price is $32.50 Current Price is $34.45 Difference: minus $1.95 (current price is over target).
If NAB meets the Macquarie target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $29.79, suggesting downside of -10.9% (ex-dividends)

The company's fiscal year ends in September.

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 NXT as Buy (1) -

It is Citi's view NextDC has paid a premium price for it, but the acquisition of a recently developed and powered ‘core and shell’ building does accelerate the company's delivery of its very first AI factory ever in Sydney.

The key question, the broker says, is what pricing such a development can attract. Citi analysts expect pricing to be in between hyperscale and retail/enterprise; the end return will depend on the client mix.

The broker also highlights the point NextDC will need to spend most of the fit-out capex to get 13.5 MWs available for sale.

Target $19.75. Buy.

Target price is $19.75 Current Price is $17.47 Difference: $2.28
If NXT meets the Citi target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $18.77, suggesting upside of 7.0% (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

Morgan Stanley rates ORA as Overweight (1) -

Management at Orora has previously noted an around -$20m EBIT impact from the current Chinese import tarrifs on Australian wine, though this impact has been halved as glass volumes were diverted to other products and customers.

Happily, the broker notes Orora would retain the $10m in EBIT from these other products/customers, along with upside should the final determination (due in coming weeks) approve the lifting of tariffs. Their removal is proposed in an interim draft by the Chinese Ministry of Commerce (MOFCOM).

The Overweight rating and $3.20 target are unchanged. Industry view: In Line.

Target price is $3.20 Current Price is $2.60 Difference: $0.6
If ORA meets the Morgan Stanley target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $3.03, suggesting upside of 17.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.6

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

Morgan Stanley rates PSI as Overweight (1) -

Morgan Stanley notes management has not commented regarding media speculation around a potential takeover of PSC Insurance by one of several oveseas insurance brokers.

The report in the Australian Financial Review (March 13) suggested the board is seeking a bid pitched at around $6.30/share.

Overweight rating, $5.85 target and In-Line industry view.

Target price is $5.85 Current Price is $5.15 Difference: $0.7
If PSI meets the Morgan Stanley target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $5.61, suggesting upside of 3.4% (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 RHC as Neutral (3) -

In a review of the investment thesis for Ramsay Health Care, Macquarie continues to see the sale of Ramsay Sante, and a change of control transaction for the group, as catalysts for material share price upside.

The change of control is required in order to realise the value of Australian property, explains the broker.

As the outlook for France is uncertain, and digital investments are constraining Australian margin improvement over the forecast period, Macquarie keeps a Neutral rating and $53.35 target.

Target price is $53.35 Current Price is $55.17 Difference: minus $1.82 (current price is over target).
If RHC meets the Macquarie target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $58.60, suggesting upside of 7.5% (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

Morgan Stanley rates SDR as Overweight (1) -

Morgan Stanley sees scope for a re-rating of SiteMinder's share price on improving profitability, upside from new products and a broader re-rating of high-growth recurring revenue businesses. The target is increased to $6.45 from $5.70.

The broker considers the company's current trading multiple is low and also points to a more prosperous hotel customer base. SiteMinder will also be included in the ASX200 index from March 18, note the analysts.

Overweight retained. Industry view: In-Line.

Target price is $6.45 Current Price is $5.74 Difference: $0.71
If SDR meets the Morgan Stanley target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $6.33, suggesting upside of 11.9% (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

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

Citi analysts continue to see earnings risks for Sims' FY24, with another tough half year in the making, but the share price has fallen too far from a longer term perspective, hence the upgrade to Buy from Neutral. Target $13.50.

The broker points out, management at Sims is putting in place a new cost-out program targeting -$70-$90m of savings, to be fully realised in FY26, with -$25m anticipated in 2H FY24.

Target price is $13.50 Current Price is $11.83 Difference: $1.67
If SGM meets the Citi target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $13.78, suggesting upside of 16.0% (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 SXL as Neutral (3) -

After a further review of 1H results by Southern Cross Media, UBS lowers forecasts to reflect both a radio market decline and a lower metro radio share.

After management's updated cost guidance, the broker allows for -$20m of underlying cost reduction over FY24-25.

The target rises to 96c from 74c (despite forecast earnings cuts) largely due to lower capital intensity, explains the analyst. The Neutral rating is maintained.

Target price is $0.96 Current Price is $0.99 Difference: minus $0.03 (current price is over target).
If SXL meets the UBS target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $1.08, suggesting upside of 12.0% (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 TAH as Outperform (1) -

Macquarie highlights Tabcorp Holdings has stabilised its digital market share with a more competitive offering, and has high operating leverage to improved volumes.

The analyst sees an inflection point for a re-rating of the company's share price given current market views the company is structurally challenged and the management team is lacking in capability.

The broker's target rises to $1.00 from 85c due to a lower assumed weighted average cost of capital (WACC) of 8.9%, down from 10.3%. Outperform.

Target price is $1.00 Current Price is $0.79 Difference: $0.21
If TAH meets the Macquarie target it will return approximately 27% (excluding dividends, fees and charges).

Current consensus price target is $0.97, suggesting upside of 27.6% (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

Morgans rates VHT as Hold (3) -

An independent report has valued Volpara Health Technologies well below the $1.15/share offered by South Korean-based Lunit Inc.

The board of Volpara Health Technologies has unanimously recommended shareholders vote in favour of the Scheme Implementation Agreement with Lunit Inc.

The Scheme is now subject to approval from shareholders at a meeting on April 12, notes Morgans.

The broker's Hold rating and $1.15 target are unchanged.

Target price is $1.15 Current Price is $1.13 Difference: $0.02
If VHT meets the Morgans target it will return approximately 2% (excluding dividends, fees and charges).

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: 0.0

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

Macquarie rates WBC as Downgrade to Underperform from Outperform (5) -

Macquarie downgrades the ratings for all banks under research coverage to Underperform given they are trading at peak multiples without a clear fundamental reason. The analyst sees limited scope for banks to surprise in the medium-term.

The broker suggests the recent rally for bank shares into expensive territory is more reflective of weight of money and various issues impacting alternative investment opportunities.

In the event of the expected interest rate cuts in Australia, Macquarie sees downside to earnings as it will be difficult for banks to offset
margin headwinds associated with those lower rates. It will be difficult to reprice mortgages, particularly in an election year.

The broker's order of preference is National Australia Bank, Westpac, ANZ Bank and CommBank. Targets across the major banks rise by 4-8% mostly due to an increase in the applied market multiple.

Westpac is downgraded to Underperform from Outperform, while the target rises to $26 from $25.

Target price is $26.00 Current Price is $27.50 Difference: minus $1.5 (current price is over target).
If WBC meets the Macquarie target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $24.08, suggesting downside of -8.9% (ex-dividends)

The company's fiscal year ends in September.

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