Australian Broker Call

Citi rates AKE as Buy (1) -

Citi analysts remain believers in the rerate potential once Allkem's proposed merger has been finalised. In the short term, the broker suggests investors keep an eye out for October EV sales numbers.

A general market update on the company's projects has led the analysts to reduce their Net Asset Value (NAV) calculation to $13.92 (-$1.21). The broker's target price has thus fallen to $16.50 from $18.50. Buy.

The delayed timing for Sal de Vida in particular has triggered a negative adjustment to forward-looking numbers.

Target price is $16.50 Current Price is $11.40 Difference: $5.1
If AKE meets the Citi target it will return approximately 45% (excluding dividends, fees and charges).

Current consensus price target is $16.85, suggesting upside of 48.9% (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

Shaw and Partners rates BC8 as Buy (1) -

Black Cat Syndicate has $60m in funding to re-start Paulsens, secured from two Chinese investment groups. This fully funds to first production for Paulsens in FY25.

Following recent drilling, Shaw and Partners expects additional resources will extend the mine life and assumes an additional two years beyond the current plan. The re-start is pushed to FY25 from late FY24 which results in a downgrade to FY24 forecasts.

Buy rating retained. Target is reduced to $0.55 from $0.83 to allow for the dilution impact of the placement.

Target price is $0.55 Current Price is $0.24 Difference: $0.315
If BC8 meets the Shaw and Partners target it will return approximately 134% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

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 BSL as Lighten (4) -

BlueScope Steel shares screen overvalued, Ord Minnett asserts, assessing the steel spreads of the last three years are "untenably high". Spreads are expected to return to historical averages over the longer term as higher interest rates weigh on activity, prices and margins.

The broker observes many challenges for the business over the next few years, in particular the plan to decarbonise Port Kembla, its main Australian operating asset that accounts for 35% of revenue.

In the short term, buildding approvals across Australia have fallen since 2021 and will probably stay relatively soft, the broker observes.  Lighten rating retained. Target is $16.50.

Target price is $16.50 Current Price is $19.04 Difference: minus $2.54 (current price is over target).
If BSL meets the Ord Minnett target it will return approximately minus 13% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $21.36, suggesting upside of 11.5% (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

UBS rates CLV as Neutral (3) -

Clover's second half profit was ahead of UBS, but compositionally mixed with softer gross margins offset by cost savings and continued sales momentum in Europe.

Commentary on China infant formula market conditions was soft, as expected, with manufacturer inventory balances remaining elevated amid subdued birth rates.

The key opportunity for Clover, UBS suggests, is monetising new Chinese customers following the increased DHA requirements, with three clients now purchasing from the company, up from one in March.

However near-term visibility around a market recovery is challenging and the broker retains Neutral. Target falls to $1.10 from $1.30.

Target price is $1.10 Current Price is $1.08 Difference: $0.02
If CLV meets the UBS target it will return approximately 2% (excluding dividends, fees and charges).

The company's fiscal year ends in July.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.0

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

UBS rates CRN as Buy (1) -

Czech-based investment group Sev.en Global Investments has acquired Energy Minerals Group's 51% stake in Coronado Global Resources.

With the Coronado board only becoming aware of the transaction yesterday, UBS flags uncertainty, with questions remaining, and expects the change to be incrementally negative for liquidity headwinds, positive for growth ambitions and unclear beyond.

UBS has otherwise increased its met coal price forecasts. Buy and $1.90 target retained.

Target price is $1.90 Current Price is $1.88 Difference: $0.02
If CRN meets the UBS target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $2.00, suggesting upside of 4.2% (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: 0.9

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

Bell Potter rates DYL as Speculative Buy (1) -

Bell Potter assesses Deep Yellow is in a position to capitalise on momentum and advance its two projects to production within the next 3-4 years. Uranium prices continue to rise as limited supply for the near term invigorates the spot market.

The next catalyst could be the release of the mineral resource estimate for Tumas at the end of the year that could support an extension to production, although the broker suspects the main focus will be on a final investment decision, expected in March.

Buy rating retained. Target rises to $1.84 from $1.06.

Target price is $1.84 Current Price is $1.28 Difference: $0.56
If DYL meets the Bell Potter target it will return approximately 44% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

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 ECF as Hold (3) -

Elanor Commercial Property Fund's divestments of Limestone Centre has been cancelled while the purchaser still plans to proceed with the acquisition of Nexus Centre, subject to successfully raising capital.

Ord Minnett assesses this is a "slight negative" although the company's loan-to-value ratio is still expected to reduce to 40% if the latter is settled. That said, there remains a risk that Quantuna may not progress with the acquisition of Nexus Centre as capital markets remain constrained.

Retaining Limestone Centre on the other hand is accretive. Hold retained. Target rises to $0.84 from $0.83.

Target price is $0.84 Current Price is $0.77 Difference: $0.07
If ECF meets the Ord Minnett target it will return approximately 9% (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

Morgan Stanley rates IPH as Overweight (1) -

IPH shares are down -10% since the FY23 result, which has surprised Morgan Stanley given the result delivered a small beat to expectations and M&A continues, with a bolt on addition in Canada. Organic growth is also improving in Australasia.

As a result, the broker believes the risk/reward is attractive and retains an Overweight rating. Further M&A and regional expansion over the medium term, are expected to be catalysts, while the AGM in November should provide a trading update.

Target is $10.50. Industry view: In-Line.

Target price is $10.50 Current Price is $7.23 Difference: $3.27
If IPH meets the Morgan Stanley target it will return approximately 45% (excluding dividends, fees and charges).

Current consensus price target is $10.49, suggesting upside of 42.3% (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

Citi rates MIN as Buy (1) -

Things will get better for lithium prices, analysts at Citi assure, it's simply a case of time/timing.

Meanwhile, the price of lithium is still under pressure and Mineral Resources is offering US$850m in unsecured notes due 2028, of which the terms are still unknown.

Citi suggests the reason for lithium price weakness relates to weaker-than-projected battery production plans across the globe.

The combination of the multiple factors above has led to reduced forecasts. Buy. Target $79.

Target price is $79.00 Current Price is $66.83 Difference: $12.17
If MIN meets the Citi target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $78.57, suggesting upside of 19.2% (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

Bell Potter rates PME as Hold (3) -

Pro Medicus has signed its largest deal ever in the US with a 10-year contract to provide services to Baylor Scott & White Health.

The deal includes services to cardiology and radiology, covering the full suite of products provided by the company and based on the standard fee-for-service arrangement.

Contract revenue is $140m over the duration which compares with an average $19m for new contracts over the last 12 months.

Bell Potter asserts revenue for FY24, forecast at around $156m, is likely well within reach. Further announcements are also expected although these will not impact current earnings. Hold retained. Target is raised to $75 from $70.

Target price is $75.00 Current Price is $80.01 Difference: minus $5.01 (current price is over target).
If PME meets the Bell Potter target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $63.63, suggesting downside of -21.1% (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

Citi rates PME as Neutral (3) -

Pro Medicus has announced its biggest ever contract win, valued at $140m over 10 years, with the largest not-for-profit healthcare system in Texas, Baylor Scott & White Health.

Citi highlights the contract is for the full stack of the company's cloud-based Visage software: Viewer, Open Archive and Workflow.

The broker argues this announcement should be viewed as a strong endorsement of Pro Medicus' technology and ability to service customers.

As the share price is already pricing in contract wins, Citi's rating remains Neutral. Target $72.

Target price is $72.00 Current Price is $80.01 Difference: minus $8.01 (current price is over target).
If PME meets the Citi target it will return approximately minus 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $63.63, suggesting downside of -21.1% (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 PME as Hold (3) -

Pro Medicus has signed its largest deal to date in the US in a 10-year contract with Baylor Scott & White Health, one of the largest not-for-profit healthcare systems in Texas. Contract revenue is $140m over the duration and includes a full suite of services, fully cloud-based.

Morgans classifies the contract as a one-off and asserts this does not roll through to long-term assumptions for new contracts growth, although it does signal the potential "monster" contracts that lay within the US health system.

The broker's main concern is valuation and will, therefore, wait for some share price weakness to add to positions. Hold maintained. Target is $74, raised from $66, as upgraded assumptions are rolled through.

Target price is $74.00 Current Price is $80.01 Difference: minus $6.01 (current price is over target).
If PME meets the Morgans target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $63.63, suggesting downside of -21.1% (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

Ord Minnett rates PME as Sell (5) -

Ord Minnett raises the target by 8% to $33.50 given an uplift in contracted revenue for Pro Medicus following a significant contract gain. The contract with Baylor Scott & White Health is for $14m a year over 10 years.

The broker notes this is the latest in an impressive list of academic hospitals that are clients of the company and assumes a six-month earnings contribution in FY24.

The shares still appear materially overvalued and Ord Minnett suspects the market is underestimating the competitive pressures. Sell rating retained.

Target price is $33.50 Current Price is $80.01 Difference: minus $46.51 (current price is over target).
If PME meets the Ord Minnett target it will return approximately minus 58% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $63.63, suggesting downside of -21.1% (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 PMV as Sell (5) -

With Premier Investments reporting tomorrow, UBS retains a Sell rating and $23.00 target.

The August Strategic Review has been a key topic of discussion for investors, but no update is expected at the FY23 result given how recently it was announced.

There will be key questions from investors, the broker suggests, around Apparel Brands, Peter Alexander and Smiggle, and what the plans are for Premier's stakes in Breville Group ((BRG)) and Myer ((MYR)).

Target price is $23.00 Current Price is $24.87 Difference: minus $1.87 (current price is over target).
If PMV 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 $24.82, suggesting upside of 0.4% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.0

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

Ord Minnett rates PSI as Initiation of coverage with Buy (1) -

Ord Minnett is now covering PSC Insurance after white labelling previously from Morningstar. The broker initiates its own coverage with a Buy rating and $5.35 target and asserts, given the strong track record and growth outlook, the stock should trade at a premium to the sector.

General insurance is in the midst of a super cycle as premiums have grown every quarter since 2017 and Ord Minnett expects this will continue, driven by the increased frequency and cost of natural disasters and inflation.

This should translate to strong revenue and earnings growth for insurance brokers and the company is considered well-positioned in this regard.

Target price is $5.35 Current Price is $4.78 Difference: $0.57
If PSI meets the Ord Minnett target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $5.72, suggesting upside of 18.8% (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

Ord Minnett rates SGR as Accumulate (2) -

Ord Minnett reduces the target for Star Entertainment by -33% to $1.20 because of the dilution from a $750m capital raising that comprises a $589m 1-for-1.65 pro rata non-renounceable rights offer and $161m institutional placement.

A further $450m in new debt should wipe out all existing debt and provide headroom for any near-term payments, the broker adds, including the penalty from AUSTRAC.

While being surprised that a capital raising occurred just seven months after raising capital in February, the broker considers the rights issue appealing on valuation grounds. Accumulate maintained.

Target price is $1.20 Current Price is $0.75 Difference: $0.45
If SGR meets the Ord Minnett target it will return approximately 60% (excluding dividends, fees and charges).

Current consensus price target is $1.03, suggesting upside of 60.2% (ex-dividends)

The company's fiscal year ends in June.

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

UBS rates SGR as Buy (1) -

Star Entertainment is raising $750m, with the proceeds to be used to repay existing debt to be replaced with new four-year debt facilities of $450m. The rate is relatively high, notes UBS, however the broker's base case assumes that not much will be drawn over the four years,

The additional headroom provides flexibility given the uncertainties around demand recovery, the AUSTRAC fine, the size/timing of asset sales, Queen's Wharf Brisbane casino trading, and QWB refinancing in 2025, the broker suggests.

No FY24 earnings guidance has been offered, but UBS expects earnings growth versus the annualised June quarter from seasonal strength in summer, returning inbound tourism, benefits from the return of complimentary drinks and rebated play, and full year cost saving benefits.

Buy retained. Target falls to 95c from $1.45 on dilution.

Target price is $0.95 Current Price is $0.75 Difference: $0.2
If SGR meets the UBS target it will return approximately 27% (excluding dividends, fees and charges).

Current consensus price target is $1.03, suggesting upside of 60.2% (ex-dividends)

The company's fiscal year ends in June.

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

Shaw and Partners rates SLH as Buy (1) -

Shaw and Partners transfers coverage to a new analyst and maintains a Buy rating. Target is reduced to $3.00 from $3.50.

The broker observes Australia's logistics sector is highly fragmented, which presents a great opportunity for Silk Logistics, given economies of scale as well as the ability to respond quickly to changing market dynamics.

Earnings forecasts are now revised to reflect current market conditions, the Secon acquisition and higher debt. Revenue growth in FY24 is forecast at 13%.

Target price is $3.00 Current Price is $1.70 Difference: $1.3
If SLH meets the Shaw and Partners target it will return approximately 76% (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