Australian Broker Call

Citi rates ANZ as Sell (5) -

Citi highlights ANZ Bank's differentiated deposit mix leaves it more exposed than peers to offshore interest rate cuts. The bank has a larger New Zealand franchise and institutional business in Asia, where rates are linked to the US, explain the analysts.

Deposits in these regions have a higher mix towards transaction accounts, leaving them adversely impacted by rate cuts, points out the broker, potentially creating a stock-specific headwind,

The Sell rating and $25 target are retained.

Target price is $25.00 Current Price is $31.79 Difference: minus $6.79 (current price is over target).
If ANZ meets the Citi target it will return approximately minus 21% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $27.16, suggesting downside of -13.8% (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

Citi rates ARB as Buy (1) -

Earlier this morning, ARB Corp announced ORW (30% owned by ARB) is acquiring four Wheel Parts (4WP) from Hoonigan for -US$30m.

The deal will give ARB a 50% interest in 53 aftermarket stores in the US, up from a 30% interest in 11 ORW stores prior to the deal.

Citi analysts, in a quick response to the announcement, state they see the deal as very positive as it would give the company greater control of its US based distribution, ARB's key growth market.

The transaction also increases the likelihood that the exports division (1/3 of group sales) will deliver strong growth in FY25, noting US sales in the 1Q25 have begun positively, the analysts add.

Buy. Target $48.

Target price is $48.00 Current Price is $39.85 Difference: $8.15
If ARB meets the Citi target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $41.88, suggesting downside of -1.5% (ex-dividends)

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

Morgan Stanley rates AX1 as Overweight (1) -

For Accent Group, Morgan Stanley sees near-term upside from higher margins due to fixed-cost leverage and in the longer-term benefits from a protracted store rollout strategy. The company is one of the broker's key small/mid cap ideas under coverage.

New formats such as Nude Lucy and Stylerunner are gaining traction, note the analysts, while established formats like Skechers and Platypus continue to grow.

Accent's younger customer demographic has been most negatively impacted by the macroeconomic backdrop over the last two years and should benefit the most in a cyclical upturn, suggests Morgan Stanley.

Overweight. Target is raised to $2.75 from $2.50. Industry view: In-Line.

Target price is $2.75 Current Price is $2.30 Difference: $0.45
If AX1 meets the Morgan Stanley target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $2.48, suggesting upside of 8.0% (ex-dividends)

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

Macquarie rates CGF as Upgrade to Outperform from Neutral (1) -

Macquarie observes the sale of Apollo's stake in Challenger to 9.9% from 20.1% and suggests there is no reason why the remaining holding would not be divested.

The fall in the share price, -11%, offers an entry point with the company's fundamentals intact. There is no change to the working partnership between the two companies, the analyst highlights.

Rating upgraded to Outperform from Neutral. Target price retained at $7.

The company is expected to report 1Q25 update on Oct 16.

Target price is $7.00 Current Price is $6.24 Difference: $0.76
If CGF meets the Macquarie target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $7.88, suggesting upside of 27.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY25:

Forecast for FY26:

Market Sentiment: 0.8

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

Macquarie rates FBU as Underperform (5) -

Macquarie adjusts the expected contingent liabilities for Fletcher Building by NZ$187m or NZ$0.24 because of the proposed settlement for Iplex Pro-fit pipes based on agreement with the WA government (Aug 30) to refund costs of leaking WA homes built with its Iplex pipes.

The broker expects group contingent liabilities post completion of NZ$100m in construction and silicosis claims of NZ$100m at NZ$487m.

An equity raise is believed to be a probable priority for new management.

Underperform rating unchanged. Target price of NZ$2,21 from NZ$2.43 due the change in contingent liabilities.

Current Price is $2.60. Target price not assessed.

Current consensus price target is $2.68, suggesting upside of 4.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY25:

Forecast for FY26:

This company reports in NZD. 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

Morgan Stanley rates MQG as Overweight (1) -

Morgan Stanley explains larger differentials in US gas prices is one indicator of commodity revenue opportunities for Macquarie Group's Commodities and Global Markets (CGM) division.

While the broker's US gas price dispersion index is tracking down -15% year-on-year in the September quarter, US gas pipeline bottlenecks could create upside risk.

Overweight and $234 target retained. Industry view: In-Line.

Target price is $234.00 Current Price is $225.17 Difference: $8.83
If MQG meets the Morgan Stanley target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $206.42, suggesting downside of -7.7% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY25:

Forecast for FY26:

Market Sentiment: 0.1

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

Ord Minnett rates MQG as Accumulate (2) -

Post the sale of data centres business AirTrunk, Ord Minnett has taken another look into the prospects and outlook for Macquarie Group.

The broker needs to make a number of assumptions, but ultimately estimates MAIF2, the fund that owned the asset, will contribute circa $1.0–1.2bn in performance fees to Macquarie in FY26 and FY27.

That number equals Ord Minnett's forecast for total performance fees, suggesting it will be bettered. Ord Minnett sings the praises of Macquarie and sees this latest deal as more evidence of potential pay offs that are embedded inside.

Target price has been lifted to $230 (was $210). Accumulate rating reiterated.

Target price is $230.00 Current Price is $225.17 Difference: $4.83
If MQG meets the Ord Minnett target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $206.42, suggesting downside of -7.7% (ex-dividends)

Forecast for FY25:

Forecast for FY26:

Market Sentiment: 0.1

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

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

Morgans initiates coverage on Northern Star Resources with an Add rating and $16.90 target price, well above the $15.77 average of six covering brokers in the FNArena database.

Apart from the benefit of an ongoing strong gold price, the analysts anticipate KCGM (currently under a $1.5bn expansion) will become a globally significant asset. The company operates and wholly owns the KCGM, Kalgoorlie and Yandal operations plus Pogo in Alaska.

The broker forecasts production in Western Australia and North America will grow to 2moz from around 1.6moz by FY26 before increasing to between 2-2.2mozpa following the KCGM expansion.

Target price is $16.90 Current Price is $14.73 Difference: $2.17
If NST meets the Morgans target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $15.94, suggesting upside of 8.8% (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

Ord Minnett - Cessation of coverage

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 REA as Buy (1) -

Bell Potter suggests the 20% rally in UK's RightMove share price post the announcement of a possible bid from REA Group infers the market is ascribing a 69% probability at a 30% premium of the deal going through.

The analyst believes the purchase would be EPS positive by around 12% in FY26 but the risk/reward, synergy extraction/value creation versus price paid is challenging to assess. The deal would expand exposure to the UK property market at a low cyclical point.

REA Group must announce its intention by 5pm London time, Sept 30.

Buy rating unchanged. Target price shifts to $226 from $223.

Target price is $226.00 Current Price is $204.66 Difference: $21.34
If REA meets the Bell Potter target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $218.46, suggesting upside of 8.4% (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 REA as Buy (1) -

While diversification benefits are acknowledged, investor feedback obtained by Citi highlights concerns around REA Group's potential takeover offer for Rightmove based on the likelihood of paying too much.

Following on from two recent media transactions, the broker's UK investor feedback suggests a 40-50% premium may be required for a deal to take place.

Target $230. Buy.

Target price is $230.00 Current Price is $204.66 Difference: $25.34
If REA meets the Citi target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $218.46, suggesting upside of 8.4% (ex-dividends)

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

Macquarie rates RIO as Neutral (3) -

The Macquarie commodities team revises the alumina price forecast by 17% and 11% for 2025 and 2026, respectively, resulting from supply shortages, which is a "sugar hit" to Rio Tinto and South 32 ((S32)).

Macquarie highlights Rio Tinto is less exposed than South 32 to the alumina updated prices in 2024 but resolution to the production impacts related to the Qld gas pipeline should assist with QAL and Yarwun in the future.

EPS forecasts are adjusted by 2% in 2025.

Target price moves to $118 from $117.

Target price is $118.00 Current Price is $107.02 Difference: $10.98
If RIO meets the Macquarie target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $127.42, suggesting upside of 19.3% (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: 0.5

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

Macquarie rates S32 as Outperform (1) -

The Macquarie commodities team revises the alumina price forecast by 17% and 11% for 2025 and 2026, respectively, resulting from supply shortages, which is a "sugar hit" to South32 and Rio Tinto ((RIO)).

South32 is more exposed to higher alumina prices which is expected to somewhat offset production "scale-backs".

The broker lifts EPS forecasts by 7% higher in FY25 and FY26. Outperform reiterated. Target edges up to $4.25 from $4.

Target price is $4.25 Current Price is $2.98 Difference: $1.27
If S32 meets the Macquarie target it will return approximately 43% (excluding dividends, fees and charges).

Current consensus price target is $3.69, suggesting upside of 23.9% (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: 0.8

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

Citi rates SCG as Neutral (3) -

Scentre Group has lowered its overall finance costs by around -15bps from September 10 onwards, estimates Citi, after buying back existing subordinated notes and issuing new notes of $900m.

The broker highlights Scentre has the highest weighted average interest rate in the sector of 5.6%, which creates a finance cost tailwind as interest rates decline and additional subordinated notes ($3.7bn) are refinanced.

Target rises to $3.60 from $3.50. Neutral.

Target price is $3.60 Current Price is $3.50 Difference: $0.1
If SCG meets the Citi target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $3.47, suggesting downside of -1.7% (ex-dividends)

The company's fiscal year ends in December.

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 SCG as Overweight (1) -

Morgan Stanley forecasts around 1.7% accretion to its 2025 funds from operations (FFO) forecast as Scentre Group repurchases outstanding subordinated debt (hybrids) and replaces it with Australian dollar denominated debt.

This new forecast by the broker follows the announced pricing of an offering of $900m subordinated-debt packages at an around 240bps margin.

Target $3.79. Overweight. Industry view: In-Line.

Target price is $3.79 Current Price is $3.50 Difference: $0.29
If SCG meets the Morgan Stanley target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $3.47, suggesting downside of -1.7% (ex-dividends)

The company's fiscal year ends in December.

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