Australian Broker Call

Bell Potter rates APE as Buy (1) -

Bell Potter asserts consensus estimates for 2024 underlying operating profit of around $363m for Eagers Automotive imply a flat or slightly lower second half, which it considers unlikely.

The broker expects the second-half result will be slightly stronger for two main reasons: the profit from the BYD retail joint venture should improve to around $16m (from circa $9m in H1) or more, given excess inventory has been cleared, and the company will also receive its annual payment from Toyota during the half.

One potential catalyst is forecast upgrades over the next few months, which may occur if the market remains robust. Buy rating and $13 target.

Target price is $13.00 Current Price is $10.76 Difference: $2.24
If APE meets the Bell Potter target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $11.89, suggesting upside of 12.3% (ex-dividends)

The company's fiscal year ends in December.

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

Shaw and Partners rates AVL as Buy (1) -

Shaw and Partners continues to beat the positive drum on Australian Vanadium as vanadium flow batteries are more suitable for grid scale storage, highlighting the US Dept of Energy has selected flow batteries as the best long duration and low-cost energy storage.

A recent study from the Dept showed flow batteries achieved the best rates between cost and performance, the broker states, even lower than lithium.

Australian Vanadium has completed the first phase of the optimised feasibility study for its project.

Buy rating and 8c target unchanged. High risk.

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 AW1 as Buy (1) -

Shaw and Partners notes American West Metals released further assay results from its summer drilling program at Storm Copper.

The results from combined infill and extensional drilling offered increased confidence of the existing Resource and its potential extension.

The maiden Mineral Resource for Storm Copper is 17.5Mt at 1.2% copper and 3.4g/t silver (1.3% copper equivalent) as at Jan 2024.

Buy. 32c target. High Risk

Target price is $0.32 Current Price is $0.13 Difference: $0.195
If AW1 meets the Shaw and Partners target it will return approximately 156% (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 BHP as Accumulate (2) -

Ord Minnett observes the recent forum on BHP Group's future plans with Mike Henry and Geraldine Slattery.

Copper and capturing the energy transition remain top targets with SA operations expected to expand to 650kt p.a. from 320kt p.a. with Chile production reaching 1.4mt p.a. by the end of the decade.

Iron ore production at 305mt p.a. is on track with higher rail capacity expected to be commissioned in FY26. Henry expects the iron ore market to shrink depending on price and expansion of Simandou as it comes on stream.

The company has no plans to sell Qld coal operations and has no plans to expand the business.

Accumulate rating and $45 target unchanged.

Target price is $45.00 Current Price is $39.63 Difference: $5.37
If BHP meets the Ord Minnett target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $45.10, suggesting upside of 16.7% (ex-dividends)

Forecast for FY25:

Forecast for FY26:

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: 0.4

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

UBS rates BXB as Buy (1) -

UBS observes the outlook for Brambles in UK/Europe post analysis of a survey report on the outlook for CHEP.

The broker highlights customers expect pooled pallet prices to advance 2% post a 12% rise in FY24 with 3% volume growth.

70% of customers reported availability challenges in UK/Europe, unlike the US where availability headwinds declined -40%.

UBS remains upbeat on Brambles, believing there is more value to be extracted as the market becomes more comfortable with cashflow generation.

Buy rating and $19.10 unchanged target price.

Investor Day is slated for September 12.

Target price is $19.10 Current Price is $18.17 Difference: $0.93
If BXB meets the UBS target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $18.76, suggesting upside of 3.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY25:

Forecast for FY26:

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: 0.7

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

Shaw and Partners rates FFM as Buy (1) -

Shaw and Partners notes FireFly Metals reported more high grades and wide intervals of mineralistion from the WMS and Footwall Zone at Green Bay.

Resource updates are expected from Green Bay in Sept quarter and March quarter 2025 because of the 100,000m drill program.

The company is well funded with $38.1m in cash.

Buy rating. High risk, No change to $1.10 target price.

Target price is $1.10 Current Price is $0.95 Difference: $0.15
If FFM meets the Shaw and Partners target it will return approximately 16% (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 GNC as Buy (1) -

Bell Potter notes the ABARES September east coast winter crop forecast reflects a 6% upgrade relative to the June estimate, and a record forecast for this time of year. Upgrades to the crop estimates have been driven by NSW and Queensland, with a slight downgrade in Victoria.

Bell Potter observes the more material upgrade in the north-east is particular positive for GrainCorp as it tends to have a higher market share and generates higher returns in these markets.

The broker updates forecasts to reflect the upgraded crop, grain price movements and current forward curves in crush margins. Buy rating unchanged. Target rises to $10.20 from $9.90.

Target price is $10.20 Current Price is $8.92 Difference: $1.28
If GNC meets the Bell Potter target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $9.83, suggesting upside of 10.6% (ex-dividends)

The company's fiscal year ends in September.

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 GNC as Downgrade to Hold from Add (3) -

Providing a boost for GrainCorp's FY25 earnings, notes Morgans, ABARES has upgraded its 2024/25 winter crop forecast. It is the fourth largest crop on record and around 50% above an average year, explain the analysts.

While upgrading forecasts, the broker explains below average grain trading margins and weak crush margins result in materially smaller upgrades than for past big crop years.

The target rises to $9.45 from $9.38 but the rating is downgraded to Hold from Add as the share price is approaching Morgans' valuation.

Target price is $9.45 Current Price is $8.92 Difference: $0.53
If GNC meets the Morgans target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $9.83, suggesting upside of 10.6% (ex-dividends)

The company's fiscal year ends in September.

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

Ord Minnett rates GNC as Buy (1) -

The ABARES Sept crop report confirmed to Ord Minnett the winter crop would come in higher than market expectations with a further 7.6% upgrade to 55.2mt if achieved. 

The analyst highlights this would be the fifth largest crop ever recorded in Australia.

For GrainCorp the broker has upgraded EY25 EBITDA forecast by 2% with the company's earnings and port assets believed to be undervalued.

Buy rating (High risk) unchanged. Target price raised 1% to $10.05.

Target price is $10.05 Current Price is $8.92 Difference: $1.13
If GNC meets the Ord Minnett target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $9.83, suggesting upside of 10.6% (ex-dividends)

The company's fiscal year ends in September.

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 GSS as Speculative Buy (1) -

Genetic Signatures produced FY24 results that were in line with expectations, given pre-releases at the fourth quarter update.

There were declines in domestic revenues because of a reduction in covid-only test sales, and lower respiratory sales due to test issues which have since been resolved.

Operating cash flow improved. Bell Potter makes negligible changes to expense forecast and no changes to revenue, expecting FY25 will be a better year for the company both domestically and abroad.

The Speculative Buy rating and $1.10 target are maintained.

Target price is $1.10 Current Price is $0.71 Difference: $0.39
If GSS meets the Bell Potter target it will return approximately 55% (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

Morgans rates IME as Speculative Buy (1) -

First half earnings (EBITDA) for ImExHS were in line with Morgans forecast but earnings guidance was downgraded toward the bottom end of the 2024 guidance range. 

The broker suspects forward investments in product and support are providing a short-term drag and radiology services are taking longer-than-anticipated to implement revised pricing structures.

While annual recurring revenue (ARR) growth is "solid, the analysts note growth is weighted heavily toward the low/no margin services
division.

Speculative Buy. The target falls to $1.15 from $1.50.

Target price is $1.15 Current Price is $0.46 Difference: $0.695
If IME meets the Morgans target it will return approximately 153% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 1.0

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

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

The outlook for Incitec Pivot, according to Morgan Stanley, revolves around prospects for the Fertiliser business (now that a sale is off the table) and upside potential from the Dyno Nobel explosives business.

For Dyno Nobel, the broker believes the business is well positioned to benefit from favourable industry structures and positive end-market dynamics.

More information on both Dyno Nobel and the Fertiliser business should emanate from the upcoming investors days on September 15-17, which may prove a key catalyst for the share price, in the analysts' view.

Equal-weight rating. Target $3.00. Industry view: In-Line.

Target price is $3.00 Current Price is $3.04 Difference: minus $0.04 (current price is over target).
If IPL meets the Morgan Stanley target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.07, suggesting upside of 1.6% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.3

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

Macquarie rates JIN as Outperform (1) -

Macquarie cuts its target for Jumbo Interactive by -15% to $14.75 after risk-weighting the Australian lotteries reseller's renewals at 75%.

These reseller agreements account for more than 80% of Jumbo's earnings, leading to renewal risks which may negatively impact on both earnings and valuation, explains the broker.

Management's progress has been slow in diversifying earnings away from these agreements, but ongoing self-funded M&A is expected to lower renewal risk over time.

Since late-2019, -$60m has been deployed into three Managed Services acquisitions in the UK and Canada. The Outperform rating is kept.

Target price is $14.75 Current Price is $14.01 Difference: $0.74
If JIN meets the Macquarie target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $15.93, suggesting upside of 17.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY25:

Forecast for FY26:

Market Sentiment: 0.2

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

Macquarie rates KAR as Outperform (1) -

After reviewing production data (showing soft July output) from the Brazilian National Agency of Petroleum, Natural Gas, and Biofuels, Macquarie lowers its 2024 production forecast for Karoon Energy. Capex estimates for 2025 are also increased.

Outperform rating retained. Target price falls by -8.5% to $2.15. 

Target price is $2.15 Current Price is $1.70 Difference: $0.45
If KAR meets the Macquarie target it will return approximately 26% (excluding dividends, fees and charges).

Current consensus price target is $2.32, suggesting upside of 44.8% (ex-dividends)

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: 0.8

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

Shaw and Partners rates LM8 as Initiation of coverage with Buy (1) -

Shaw and Partners initiates a Buy rating (High risk) on Lunnon Metals with a 60c target price.

The company is developing the Kambalda nickel and gold project in WA and has increased the nickel sulphide mineral resource to over 113kt from 39kt at listing in June 2021.

Despite the near-term headwinds in the nickel markets from Indonesia, Shaw and Partners is bullish on the medium-term nickel outlook because of the energy transition.

Lunnon Metals has $22m cash on hand.

Buy, High risk. Target 60c.

Target price is $0.60 Current Price is $0.17 Difference: $0.43
If LM8 meets the Shaw and Partners target it will return approximately 253% (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 LOT as Speculative Buy (1) -

Lotus Resources has two offtake agreements for a total of 1.5m lbs of uranium to be delivered between 2026 and 2029. The first is with PSEG, which operates three nuclear units in southern New Jersey and the second is with commodity traders Curzon Uranium.

Bell Potter assesses, assuming risk discounts for Kayelekera and Letlhakane and a diluting equity raising, the company is pricing a US$63/lb spot uranium prices into perpetuity.

Thus assuming these two contracts are at or near the current long-term offtake level of US$80/lb, this implies there is deep value. Speculative Buy rating maintained. Target rises to $0.70 from $0.65.

Target price is $0.70 Current Price is $0.23 Difference: $0.475
If LOT meets the Bell Potter target it will return approximately 211% (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 LOT as Buy (1) -

Lotus Resources has announced its first uranium offtake agreement for the restart of Kayelekera uranium project in Malawi.

Shaw and Partners highlights two offtake agreements for 1.5Mlb of uranium slated for 2026-2029 at a fixed price.

Curzon Uranium will buy 700klb of uranium with an unsecured loan facility of US$15m with an option for another 100kld from 2030-2032. The loan is due for repayment in 12-months.

A non-binding term sheet was also signed with PSEG Nuclear LLC for 800klb. The company operates nuclear reactors in New Jersey. This contract is conditional including the restart of Kayelekera.

The Buy rating is maintained with a target price of $0.72. High Risk.

Target price is $0.72 Current Price is $0.23 Difference: $0.495
If LOT meets the Shaw and Partners target it will return approximately 220% (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 MIN as Downgrade to Hold from Add (3) -

Following FY24 results, Morgans lowers its target for Mineral Resources to $39 from $53 and downgrades its rating to Hold from Add on a higher assessment of near-term balance sheet and commodity risk.

The analysts' risk assessment is balanced against existing debt levels and upcoming capex commitments.

The broker also highlights further mine closures or production cuts across the lithium and iron ore businesses will reduce internal Mining Services volumes, which will further negatively impact earnings and cash flows.

Target price is $39.00 Current Price is $36.17 Difference: $2.83
If MIN meets the Morgans target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $53.66, suggesting upside of 56.2% (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

Bell Potter rates NST as Initiation of coverage with Buy (1) -

Bell Potter initiates coverage on Northern Star Resources, the largest solely ASX-listed gold miner. Total resource to reserve conversion is 35%, highlighting the opportunity to extend current mine lives following further exploration and resource development.

Bell Potter believes the business compares well to international companies, particularly following the expansion of KCGM and there is upside to the current share price from the very large mineral resource base, gold price leverage and growth. Buy rating and $17.50 target.

Target price is $17.50 Current Price is $14.87 Difference: $2.63
If NST meets the Bell Potter target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $15.78, suggesting upside of 8.5% (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

Citi rates ORA as Neutral (3) -

Citi believes Orora achieved a "solid" result with net proceeds of $1.69bn on the sale of OPS to Vertiv.

The broker highlights a reduction in net debt to 2x EBITDA which will allow for an increase investment in Cans capacity with surplus proceeds distributed to shareholders.

Neutral rating with a $2.55 target price.

Target price is $2.55 Current Price is $2.50 Difference: $0.05
If ORA meets the Citi target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $2.60, suggesting downside of -4.1% (ex-dividends)

Forecast for FY25:

Forecast for FY26:

Market Sentiment: 0.3

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

Bell Potter rates RAD as Speculative Buy (1) -

Radiopharm Theranostics is now funded to execute on its clinical pipeline for the next 18-24 months following a $70m institutional placement and the target is reduced to $0.07 from $0.25.

At the end of that period Bell Potter expects the two imaging assets would have generated sufficient data to support a partnering transaction or asset sale.

Lantheus, which now owns 7% of the stock, is one of the largest providers of radiopharmaceuticals in the US. The assets with potentially higher value are therapeutics for lung, brain and pancreatic cancer albeit these are yet to generate data in humans. Speculative Buy rating.

Target price is $0.07 Current Price is $0.03 Difference: $0.036
If RAD meets the Bell Potter target it will return approximately 106% (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

Ord Minnett rates RSG as Lighten (4) -

Ord Minnett observes 1H24 results for Resolute Mining were broadly as expected with many of the metrics pre-announced.

Post the result the broker revises down EPS forecasts by -8% and -9% for FY24 and FY25, respectively, due to changes in the treatment of minority interests.

At current price levels, Ord Minnett believes the market is discounting the expansion at Syama and Mako with a gold price around US$2210oz, which is above the analyst's longer-term price of US$2100oz.

Lighten rating and 55c target remain.

Target price is $0.55 Current Price is $0.66 Difference: minus $0.11 (current price is over target).
If RSG meets the Ord Minnett target it will return approximately minus 17% (excluding dividends, fees and charges - negative figures indicate an expected loss).

This company reports in USD. 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 STX as Neutral (3) -

Strike Energy has reported 28m net pay at Erregulla Deep - which refers to the total thickness of the gas-bearing formations that can potentially produce gas. 

Should flow tests be successful, prospectivity will increase for Strike's exploration acreage, notes Macquarie.

The potential West Erregulla final investment decision (FID) would also be strengthened, in the broker's view.

Neutral rating unchanged. Target rises to 23c from 22c.

Target price is $0.23 Current Price is $0.20 Difference: $0.03
If STX meets the Macquarie target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $0.28, suggesting upside of 44.7% (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 WES as Sell (5) -

UBS continues to thump the table on Wesfarmers, believing investors are paying "too much" for Bunnings at a forward 34x multiple and the stock is trading at historically high valuations.

The broker also stresses the downgraded lithium price outlook with UBS resources reducing price forecasts by -3% to -26% from 2025 to 2028 on the back of African and Chinese supply.

UBS points to lithium as a future earnings support for Wesfarmers which has now been deferred until the late 2020s at a time when there are increasing challenges for its chemicals/fertiliser and energy business from changing consumer demand and gas costs.

UBS revises FY26 EPS by -1%, FY25 is unchanged. Sell rating and $66 target price retained.

Target price is $66.00 Current Price is $71.39 Difference: minus $5.39 (current price is over target).
If WES meets the UBS target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $64.33, suggesting downside of -8.3% (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

Morgans rates WPR as Hold (3) -

Reviewing Waypoint REIT's 1H results from August 29, Morgans notes portfolio metrics remain "solid". Management also noted the market is showing signs of increased momentum with cap rates starting to stabilise.

EPS guidance for 2024 was tightened to the top end of the previous range at 16.48cpu even though 2H24 EPS will be lower versus H1 due to the impact of higher interest costs, explains the broker.

The analysts expects further asset sales (around $85m) with proceeds applied to debt reduction over the 2H and during 2025.

Hold maintained. Target rises to $2.66 from $2.49.

Target price is $2.66 Current Price is $2.69 Difference: minus $0.03 (current price is over target).
If WPR meets the Morgans target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.65, suggesting downside of -0.1% (ex-dividends)

The company's fiscal year ends in December.

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