Australian Broker Call

Macquarie rates AGI as Outperform (1) -

Macquarie expects overall US casino revenue will deliver flat to modest growth following the release of US casino gaming revenues showing a 4% year-on-year increase in February.

As underlying operating conditions are stable in the North American land-based segment, according to the broker, a positive view on Australian slot manufacturers is retained.

Aristocrat Leisure and Light & Wonder are two suppliers forming a duopoly within the industry's oligopoly, highlights the analyst.

The Outperform rating and $1.45 target are retained for Ainsworth Game Technology.

Target price is $1.45 Current Price is $1.25 Difference: $0.205
If AGI meets the Macquarie target it will return approximately 16% (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

Macquarie rates ALL as Outperform (1) -

Macquarie expects overall US casino revenue will deliver flat to modest growth following the release of US casino gaming revenues showing a 4% year-on-year increase in February.

As underlying operating conditions are stable in the North American land-based segment, according to the broker, a positive view on Australian slot manufacturers is retained.

Aristocrat Leisure and Light & Wonder are two suppliers forming a duopoly within the industry's oligopoly, highlights the analyst.

The Outperform rating and $48.50 target are retained for Aristocrat Leisure.

Target price is $48.50 Current Price is $43.09 Difference: $5.41
If ALL meets the Macquarie target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $47.60, suggesting upside of 13.3% (ex-dividends)

The company's fiscal year ends in September.

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

Ord Minnett rates APM as Accumulate (2) -

In a surprise to Ord Minnett, given the broker's standalone fair value for APM Human Services International of $2.40/share, CVC Asia Pacific has withdrawn its non-binding cash offer of $2/share for the company.

The $2 broker's target is retained due to approaches from other potential bidders. Despite the inherently cyclical nature of the business, Ord Minnett is confident around the medium-term outlook.

Unemployment and caseloads in Australia have been gradually rising since last September. An increase in unemployment would provide an overall boost to the company's revenues and profitability, explains the analyst.

The Accumulate rating is maintained.

Target price is $2.00 Current Price is $1.63 Difference: $0.37
If APM meets the Ord Minnett target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $1.78, suggesting upside of 9.0% (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

Shaw and Partners rates BML as Buy, High Risk (1) -

Shaw and Partners explains the gold price and silver price are historically strongly correlated, yet silver has lagged this year's surge in the gold price.

As supply/demand fundamentals for silver are supportive, a catch-up rally is expected. The analyst explains demand for silver in the production of solar panels drove the silver market into a supply deficit in 2023.

The broker's view is relevant for Boab Metals, which provides exposure to silver via its Sorby Hills lead-silver-zinc project in WA.

Shaw and Partners maintains a Buy, High Risk rating but reduces the target to 44c from 52c after updating its financial model due to a delay for first production to FY26 from FY25.

Target price is $0.44 Current Price is $0.14 Difference: $0.305
If BML meets the Shaw and Partners target it will return approximately 226% (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

Macquarie rates BPT as Outperform (1) -

Last week, Beach Energy announced an around -30% headcount reduction (targeted for the near term and mainly related to contractors) suggesting to Macquarie a transformation at the company is underway.

The Outperform rating is unchanged and the broker's target rises by 5% to $2.05 due to the lower headcount and slightly higher projected long-term gas prices.

Target price is $2.05 Current Price is $1.86 Difference: $0.195
If BPT meets the Macquarie target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $2.02, suggesting upside of 8.6% (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

Macquarie rates GOR as Downgrade to Neutral from Outperform (3) -

A timely restart of the Gruyere gold mine in WA is now critical to meet management's 2024 guidance, suggests Macquarie. This comment follows news further rain has caused supply road closures leading to a cessation of processing activities at the mine.

As a result of rain impacts, management expects production and costs (AISC) towards the lower and higher end of the prior respective guidance ranges.

The broker downgrades Gold Road Resources to Neutral from Outperform following a recent share price rally. The $1.70 target is unchanged.

Target price is $1.70 Current Price is $1.65 Difference: $0.05
If GOR meets the Macquarie target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $1.81, suggesting upside of 12.6% (ex-dividends)

The company's fiscal year ends in December.

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

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

As asset valuations are hard to predict, Morgan Stanley was unsurprised the net tangible assets (NTA) metric was removed as a long-term incentive (LTI) performance measure for the new CEO at GPT Group.

The release of the Notice of 2024 AGM for the group contains two equally weighted LTI benchmarks: adjusted funds from operations (AFFO) and total shareholder return relative to the ASX200 AREIT - but ex Goodman Group ((GMG)).

The Equal-weight rating and $4.50 target are retained. Industry view: In-Line.

Target price is $4.50 Current Price is $4.51 Difference: minus $0.01 (current price is over target).
If GPT meets the Morgan Stanley target it will return approximately minus 0% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.91, suggesting upside of 14.1% (ex-dividends)

The company's fiscal year ends in December.

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

Macquarie rates IAG as Outperform (1) -

Macquarie reviews Youi’s 1H FY24 Australian results as a readthrough for Insurance Australia Group and Suncorp Group, noting supply chain issues and reinsurance renewals continue to impact risk appetites.

The broker concludes affordability issues could increase churn and once again pressure market share for incumbents.

Underlying insurance trading ratio (ITR) margin improvement will be easier for Insurance Australia Group to achieve than Suncorp Group, believes the analyst.

The Outperform rating and $6.40 target for Insurance Australia Group are maintained.

Target price is $6.40 Current Price is $6.41 Difference: minus $0.01 (current price is over target).
If IAG meets the Macquarie target it will return approximately minus 0% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $6.08, suggesting downside of -5.9% (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

Macquarie rates LNW as Outperform (1) -

Macquarie expects overall US casino revenue will deliver flat to modest growth following the release of US casino gaming revenues showing a 4% year-on-year increase in February.

As underlying operating conditions are stable in the North American land-based segment, according to the broker, a positive view on Australian slot manufacturers is retained.

Aristocrat Leisure and Light & Wonder are two suppliers forming a duopoly within the industry's oligopoly, highlights the analyst.

The Outperform rating and $176 target are retained for Light & Wonder.

Target price is $176.00 Current Price is $157.56 Difference: $18.44
If LNW meets the Macquarie target it will return approximately 12% (excluding dividends, fees and charges).

Market Sentiment: 0.5

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

Citi rates MGR as Neutral (3) -

According to a recent article in the Australian Financial Review, Mirvac Group has sold a -50% stake in an office tower to Keppel REIT at a -9% discount to its most recent book value. The guided investment yield is around 6%.

The discount to book value is evidence of further valuation declines that Citi expects in the June reporting season. Further sell downs by funds are expected in reaction to redemption requests.

More positively, the 6% guided yield is slightly better than where the analyst expected yields to settle.

The Neutral rating and $2.30 target are retained.

Target price is $2.30 Current Price is $2.37 Difference: minus $0.07 (current price is over target).
If MGR meets the Citi target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.47, suggesting upside of 6.5% (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

Ord Minnett rates NUF as Accumulate (2) -

In what appears to be a review of the investment thesis for Nufarm, Ord Minnett notes challenging 1H FY24 conditions do not derail management's "aggressive" 2026 revenue targets.

Management has said it remains on track to meet FY26 revenue of $4.6bn, in line with the broker's unchanged forecast.

Regarding FY24, the company is also on track for between $50-70m of revenue from omega-3. There is potential upside from wider growth opportunities for the omega-3 canola technology in both animal and human nutrition, according to the broker.

The Accumulate rating and target price of $7.70 are retained.

Target price is $7.70 Current Price is $5.45 Difference: $2.25
If NUF meets the Ord Minnett target it will return approximately 41% (excluding dividends, fees and charges).

Current consensus price target is $6.10, suggesting upside of 12.9% (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 ORA as Buy (1) -

While Citi lowers earnings (EBIT) forecasts for Orora by -8-14% across FY24-FY26 following a trading update including profit warning, the Buy rating is kept in anticipation of materially higher earnings/share price in 12-18 months time.

The target is reduced to $2.86 from $3.16.

The analyst notes FY24 Legacy EBIT guidance (ex Saverglass) of $307-317m is around -6% lower (at the midpoint) than the $333m expected by consensus. 

The broker cautiously suggests this should be the last downgrade by management due to an increasing amount of industry data showing sequential improvement/stabilisation in conditions for both paper and glass.

Target price is $2.86 Current Price is $2.32 Difference: $0.54
If ORA meets the Citi target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $2.73, suggesting upside of 21.5% (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

Macquarie rates ORA as Outperform (1) -

Macquarie lowers its FY24-27 EPS forecasts for Orora by -11%, -18%, -14% and -11%, respectively, following downgrades to 2H earnings guidance by management for the base business and Saverglass.

A weaker North American performance resulted in a -6% miss on earnings (EBIT) against the broker's forecast, while earnings for Saverglass are now expected to be -12% adrift of prior flat earnings guidance. 

While the Saverglass downgrade was not entirely unexpected by the analyst, 2H volumes are now expected to be down -11% compared to the high-single-digit decline in the 1H.

More positively, Macquarie notes signs of cyclical improvement in the North American box market and spirits volumes are bottoming out, though timing for the end of destocking is uncertain.

Outperform rating retained. Target price falls to $2.75 from $3.17.

Target price is $2.75 Current Price is $2.32 Difference: $0.43
If ORA meets the Macquarie target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $2.73, suggesting upside of 21.5% (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) -

Orora's trading update implies to Morgan Stanley consensus will need to make mid-to high-single-digit forecast earnings downgrades due largely to softness in North America and the recently acquired Saverglass.

This softness in volumes, which was ongoing through the March quarter, was driven by Distribution and price deflation, explains the broker. There was also ongoing de-stocking for Saverglass.

While the share price prior to management's trading update implied a downgrade, the analysts suspect the actual downgrade was a little worse-than-expected.

Overweight rating. Target $3.20. Industry view: In Line.

Target price is $3.20 Current Price is $2.32 Difference: $0.88
If ORA meets the Morgan Stanley target it will return approximately 38% (excluding dividends, fees and charges).

Current consensus price target is $2.73, suggesting upside of 21.5% (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 ORA as Hold (3) -

Orora has downgraded FY24 earnings (EBIT) guidance to between $307-317m which compares to Morgans original forecast for $328m. The analyst lowers the FY24-26 earnings forecasts by -9-13% and the target falls to $2.30 from $2.70.

The broker attributes the downgrade largely to ongoing volume softness and price deflation in North America (particularly in Distribution) and continuing de-stocking by customers of Saverglass.

The performance of Saverglass since acquisition has been underwhelming, in Morgans view, and the overall operating outlook remains weak. The Hold rating is maintained.

Target price is $2.30 Current Price is $2.32 Difference: minus $0.02 (current price is over target).
If ORA 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 $2.73, suggesting upside of 21.5% (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

UBS rates ORA as Neutral (3) -

Orora has issued a profit warning, downgrading FY24 EBIT guidance by some -8% relative to the market consensus forecast, UBS reports, with heightened volume and pricing weakness from the North American Distribution business to blame.

The broker observes the outlook for Australasia is little changed, with the removal of China's tariffs on Australian wine set to support volume growth in FY25.

The reduced outlook for Saverglass is broadly consistent with the broker's forecast, but misses consensus by some -3%. EPS forecasts have been reduced by between -9.5% and -14.7% for FY24-FY26.

UBS finds the demand outlook for Europe and North America still unclear. Price target drops to $2.56 from $2.90 on reduced estimates. Neutral.

Target price is $2.56 Current Price is $2.32 Difference: $0.24
If ORA meets the UBS target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $2.73, suggesting upside of 21.5% (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

Bell Potter rates PDN as Buy (1) -

Paladin Energy's Langer Heinrich mine has produced the first drums of U3O8, otherwise known as uranium concentrate and Bell Potter reminds investors this is in line with March quarter guidance provided by management at the uranium company.

The broker describes this as "an important milestone", as well as the first step towards targeting a 6Mlb pa run-rate. The company will now start building inventory for the next three months.

Bell Potter has incorporated a slower rate of sales, and this increases the loss forecast for FY24 by quite some margin. The analyst reminds investors Paladin Energy will provide FY25 guidance in July.

Buy. Target $1.65 (up 5c).

Target price is $1.65 Current Price is $1.44 Difference: $0.215
If PDN meets the Bell Potter target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $1.53, suggesting upside of 4.5% (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: 1.0

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

Bell Potter rates SM1 as Hold (3) -

Synlait Milk's H1 loss proved in line with Bell Potter's forecast and the company's previous guidance, but FY24 guidance has -yet again- been downgraded to negative from a prior flat forecast.

Bell Potter has taken the chainsaw and reduced EBITDA forecasts by -38% in FY24 and -20% in FY25. The company has sealed an agreement with Bright Dairy and banks that allows management to work on debt reduction.

Bell Potter sees asset sales and fresh equity looming on the horizon. Revised forecasts imply continued losses for FY24-FY26.

Target falls to 66c from 75c. Hold rating retained.

Target price is $0.66 Current Price is $0.67 Difference: minus $0.005 (current price is over target).
If SM1 meets the Bell Potter target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

The company's fiscal year ends in July.

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: -0.5

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

Macquarie rates SM1 as Underperform (5) -

While Synlait Milk's 1H profit was in line with downgraded management guidance, Macquarie notes guidance for FY24 earnings (EBITDA) was lowered to between NZ$45-60m from around NZ$90m.

Management explained the downgrade was due to a weakening lactoferrin market, currency impact, discounting of inventory, plus higher expenses.

The analyst notes operations are still challenged and the expected medium-term recovery is now more muted. Asset sales are considered key to the going concern status, and an equity raise would require a steep discount, in Macquarie's opinion.

Underperform retained. The broker's target falls to NZ60c from NZ68c on lower short and medium-term earnings and free cash flow forecasts, partially offset by a model roll-forward.

Current Price is $0.67. Target price not assessed.

The company's fiscal year ends in July.

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: -0.5

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

Macquarie rates STX as Neutral (3) -

Macquarie points out lower-than-expected production at the Walyering gas project should be resolved in late-2024 with the Dampier to Bunbury Gas Pipeline (DBNGP) access agreement. Access is expected to allow increased volumes from 2025.

The broker's target for Strike Energy rises to 22c from 21c on a higher West Erregulla valuation, partially offset by lower South Erregulla volumes. The Neutral rating is unchanged.

Target price is $0.22 Current Price is $0.26 Difference: minus $0.04 (current price is over target).
If STX meets the Macquarie target it will return approximately minus 15% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $0.27, suggesting upside of 6.7% (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

Macquarie rates SUN as Outperform (1) -

Macquarie reviews Youi’s 1H FY24 Australian results as a readthrough for Insurance Australia Group and Suncorp Group, noting supply chain issues and reinsurance renewals continue to impact risk appetites.

The broker concludes affordability issues could increase churn and once again pressure market share for incumbents.

Underlying insurance trading ratio (ITR) margin improvement will be easier for Insurance Australia Group to achieve than Suncorp Group, believes the analyst.

The Outperform rating and $17 target for Suncorp Group are maintained.

Target price is $17.00 Current Price is $16.19 Difference: $0.81
If SUN meets the Macquarie target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $16.31, suggesting downside of -0.8% (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