Australian Broker Call

Credit Suisse rates 29M as Underperform (5) -

29Metals has published an optimised feasibility study for the Gossan Valley Project at Golden Grove but Credit Suisse says the study reveals marginal economics; the study has opting for a downsized approach to reduce upfront capital expenditure, for example, excluding a mill expansion. 

So the broker turns to Cervantes as the better source of value, but little information has been provided from the prefeasibility study. The broker suspects Cervantes will start producing in late 2025.

Underperform rating and $1.60 target price retained.

Target price is $1.60 Current Price is $2.41 Difference: minus $0.81 (current price is over target).
If 29M meets the Credit Suisse target it will return approximately minus 34% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.28, suggesting downside of -8.4% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.1

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

Macquarie rates 29M as Outperform (1) -

Macquarie incorporates into its forecasts a deferral of capex for Gossan Valley at the Golden Grove copper-zinc operation to 2025 from 2023 and removes the prior mill expansion estimate. This follows the release of a feasability study.

A prefeasibility study for Cervantes at Golden Grove was also released. The broker summarises the viability of both Gossan Valley and Cervantes was confirmed.

The Outperform rating and $2.70 target are unchanged.

Target price is $2.70 Current Price is $2.41 Difference: $0.29
If 29M meets the Macquarie target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $2.28, suggesting downside of -8.4% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.1

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

Ord Minnett rates 29M as Accumulate (2) -

29Metals has released results from its Golden Grove project, which Ord Minnett feels reaffirms its growth thesis on the company. Project studies suggest Gossan Valley offers marginal short-term returns, while Cervantes remains in early days.

There is potential for a third mining front at the asset. Ord Minnett includes Gossan Valley into its valuation, assuming the project will deliver production of 300,000 tonnes per annum over a six-year mine life from 2026.

The Accumulate rating is retained and the target price increases to $2.75 from $2.70.

Target price is $2.75 Current Price is $2.41 Difference: $0.34
If 29M meets the Ord Minnett target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $2.28, suggesting downside of -8.4% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.1

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

Morgans rates AUA as Speculative Buy (1) -

Morgans feels a positive view by industry insiders of Audeara's product is demonstrated by the announcement of a $2.8m placement to a strategic investor who owns the largest audiology clinic in Taiwan.

The investor will now hold around 19.5% of the total shares in Audeara.

The target price falls to 27c fom 29c on the dilution caused by the share placement and the broker's Speculative Buy rating is unchanged.

The analyst points out the timely nature of the placement as the cash balance was receding and may have required a reduction in opex or a resort to trade finance.

Target price is $0.27 Current Price is $0.09 Difference: $0.183
If AUA meets the Morgans target it will return approximately 210% (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

Citi rates BAP as Buy (1) -

Bapcor management outlined better-than-expected gains (of $100m in FY25 - half of the company's annual earnings (EBIT), says Citi) from its transformation program at its Investor Day.

However, the broker says the company's trading update suggests a slight slowing since the AGM and inventory is higher than forecast.

Buy rating retained, Citi expecting Bapcor will outperform within a deteriorating macro context. Target price rises to $7.96 from $7.82

Target price is $7.96 Current Price is $6.81 Difference: $1.15
If BAP meets the Citi target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $7.71, suggesting upside of 15.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.6

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

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

Morgan Stanley sees little to excite investors in the near term from an investor day held by Bapcor that revealed softer trading and distribution centre inventory issues in Melbourne.

The broker's target is revised down to $7.00 from $7.20 on a one-off -$20m increase in opex, while the Equal-weight rating is unchanged. Industry view In-Line.

Management noted a softening of trading since the AGM as cost of living pressures constrain retail generally and New Zealand in particular. 

Target price is $7.00 Current Price is $6.81 Difference: $0.19
If BAP meets the Morgan Stanley target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $7.71, suggesting upside of 15.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.6

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

Macquarie rates BKW as Neutral (3) -

Management's commentary when releasing 1Q results for Brickworks was in line with Macquarie's expectations.

While US and Australian trading for Building Products was firm in the quarter, the analyst feels the outlook is becoming increasingly uncertain and retains a Neutral rating. Management cautioned that 2H visibilty is weak.

The broker assesses demand remains strong in the Property division. Taking the $300m sale of Oakdale East (to the Industrial Property joint venture) from significant items to underlying earnings is behind a 74.7% increase in Macquarie's FY23 EPS forecast.

The target falls to $22.50 from $22.80 on changes to earnings forecasts and a market-to-market of the Washington H Soul Pattinson ((SOL)) investment. Neutral.

Target price is $22.50 Current Price is $21.05 Difference: $1.45
If BKW meets the Macquarie target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $25.94, suggesting upside of 20.7% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.8

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

UBS rates BKW as Buy (1) -

Brickworks reports year-on-year building products sales and earnings growth in its first quarter.  The company continues to implement proactive price increases to offset inflationary pressures, despite labour and trade availability constraints easing.

UBS warns demand for building products looks to decline once current backlog work is complete, and anticipates a volume decline from the second half. UBS remains constructive on the outlook, noting building products accounts for only 9% of its valuation. 

The Buy rating and target price of $25.30 are retained.

Target price is $25.30 Current Price is $21.05 Difference: $4.25
If BKW meets the UBS target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $25.94, suggesting upside of 20.7% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.8

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

UBS rates BPT as Buy (1) -

UBS lifts east coast gas price assumptions 17-31% between 2023 and 2026, driving an 8% increase to its valuation on Beach Energy. The company retains an attractive exposure to rising prices, with 67% of its FY24 east coast gas volumes uncontracted or facing price resets. 

The broker does anticipate updates from the federal government on potential interventions to mitigate the impact of rising gas prices, but UBS does not see this as adding material downside risk to Beach Energy's outlook.

The Buy rating is retained and the target price increases to $2.10 from $1.95.

Target price is $2.10 Current Price is $1.71 Difference: $0.39
If BPT meets the UBS target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $1.90, suggesting upside of 7.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.5

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

Macquarie rates BSL as Neutral (3) -

Following a 1H trading update, Macquarie assesses the US operations of BlueScope Steel have performed better than expected since August, while destocking of channel inventories negatively impacted A&NZ.

Weather and labour constraints also impacted Australian Steel Products, while the US business was assisted by favourable currency moves and better outcomes for downstream margins, explains the analyst.

Improved downstream margins were also better than Macquarie expected for North Star.

Management confirmed 1H FY23 earnings (EBIT) guidance of $800-900m. The broker increases its target to $16.60 from $16.35. Neutral.

Target price is $16.60 Current Price is $16.93 Difference: minus $0.33 (current price is over target).
If BSL meets the Macquarie target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $19.93, suggesting upside of 15.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.7

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

Morgan Stanley rates BSL as Overweight (1) -

Given recent trading and steel market trends, Morgan Stanley believes reiteration of 1H FY23 earnings (EBIT) guidance by BlueScope Steel will be viewed positively by the market.

However, some caution may be warranted around the recent decline in spreads which may lead to consensus downgrades for the 2H of FY23, suggests the broker.

The 1H result for North star was expected to be one quarter of 2H FY22 results, but has now improved to one third, observes the analyst.

The Overweight rating and $24 target are unchanged. Industry view: In-Line.

Target price is $24.00 Current Price is $16.93 Difference: $7.07
If BSL meets the Morgan Stanley target it will return approximately 42% (excluding dividends, fees and charges).

Current consensus price target is $19.93, suggesting upside of 15.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.7

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

UBS rates BSL as Buy (1) -

BlueScope Steel has surprised UBS by reiterating first half earnings guidance of $800-900m, despite lags in the business. The broker does continue to see upside to the midpoint of guidance, expecting BlueScope Steel can continue to take share in the Australian steel products segment.

The Port Kembla project continues to make progress, with an update expected in February. The broker sees value in the stock on a one year basis, despite concerns over a subdued backdrop. 

The Buy rating and target price of $20.50 are retained.

Target price is $20.50 Current Price is $16.93 Difference: $3.57
If BSL meets the UBS target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $19.93, suggesting upside of 15.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.7

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

Macquarie rates BST as Neutral (3) -

Following a trading update for the first 20 weeks of FY23 by Best & Less at its AGM, Macquarie notes sales and profits were impacted by a wet start to spring. Sales growth of 22.8% was a slow down from 38% in the first eight weeks.

The broker suggests the company's customer base is likely under pressure from the economic backdrop and the 1H result is now dependent upon execution over the key Black Friday and Christmas trading periods. 

The target falls to $2.20 from $2.50, while the Neutral rating is unchanged.

Target price is $2.20 Current Price is $2.35 Difference: minus $0.15 (current price is over target).
If BST meets the Macquarie target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

The company's fiscal year ends in June.

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

Morgan Stanley rates CSL as Overweight (1) -

Morgan Stanley sees three reasons why consensus may upgrade forecasts for CSL, though vaccine fatigue may temper some enthusiasm.

The broker sees improvement in immunoglobulin yields and upside from the commencement of supply of Mircera, an Erythropoietin Stimulating Agent (ESA), to DaVita US dialysis centers in 2023.

In addition, the analyst believes the US FDA will soon announce a regulatory decision with respect to US marketing approval on CSL's gene therapy treatment for hemophilia B, called EtranaDez.

Overweight and $327 target retained. Industry view: In-Line.

Target price is $327.00 Current Price is $297.32 Difference: $29.68
If CSL meets the Morgan Stanley target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $324.78, suggesting upside of 8.6% (ex-dividends)

The company's fiscal year ends in June.

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

Morgans rates DXI as Add (1) -

Management at Dexus Industria REIT reiterated funds from operations (FFO) and DPS guidance and announced the divestment of a business park asset for $160.5m.

The sale proceeds will be redeployed to the development pipeline in line with management's previously stated strategy to focus on industrial/logistics, explains Morgans.

The broker's Add rating is unchanged, while the target rises to $3.26 from $3.25.

Target price is $3.26 Current Price is $2.87 Difference: $0.39
If DXI meets the Morgans target it will return approximately 14% (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

Macquarie rates FMG as Underperform (5) -

Macquarie retains its Underperform rating and $14.50 target following Fortescue Metals' reiteration of FY23 production guidance ranges. First production from Iron Bridge is now expected in the 1Q of 2023.

The company also confirmed its committment to its investment in Fortescue Future Industries (FFI) and highlighted the importance of rare earth elements, which are critical to FFI's decarbonisation plans.

Target price is $14.50 Current Price is $19.20 Difference: minus $4.7 (current price is over target).
If FMG meets the Macquarie target it will return approximately minus 24% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $15.25, suggesting downside of -19.9% (ex-dividends)

The company's fiscal year ends in June.

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: -0.6

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

Macquarie rates MND as Outperform (1) -

On the assumption Monadelphous Group wins its share of contracts, Macquarie weights its target price towards FY24, which
more fully reflects the earnings opportunity from the potential “new wave of construction projects”.

The target rises to $14.08 from $13.02, while the broker's Outperform rating is unchanged.

At its AGM, the company anticipated 1H revenue will fall by -10-15% versus the previous corresponding period, due to a decline in engineering construction revenue from delays in timing of awards and commencements.

The analyst forecasts a decline of -10% in 1H revenue.

Target price is $14.08 Current Price is $13.50 Difference: $0.58
If MND meets the Macquarie target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $13.93, suggesting upside of 1.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.5

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

Ord Minnett rates MND as Downgrade to Hold from Accumulate (3) -

Monadelphous Group has guided to first half revenue being -10-15% lower than the previous comparable period given contract timing in the engineering construction segment.

The company does anticipate strong growth across key end markets in FY24 which should drive a revenue and earnings rebound.

Following the update from Monadelphous, Ord Minnett has lowered its FY23 revenue estimate -5.4%, but increased FY24 and FY25 estimates 7.2% and 9.7%.

The broker found the update largely positive, with improved contract terms and end market opportunity underpinning the growth outlook.

The rating is downgraded to Hold from Accumulate and the target price increases to $13.70 from $12.80.

Target price is $13.70 Current Price is $13.50 Difference: $0.2
If MND meets the Ord Minnett target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $13.93, suggesting upside of 1.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.5

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

UBS rates MND as Neutral (3) -

In initial first half guidance, Monadelphous Group has suggested sales will decline -10-15% on the previous comparable period. This is in line with consensus, but ahead of UBS's assumed -23% decline given the broker had assumed more significant construction delays.

UBS now assumes a -12% decline in the first half, and full year revenue growth of 7%. While tendering opportunities remain strong in Construction and Maintenance, labour constraints are expected to limit capacity, but UBS expects the company can deliver solid contract wins.

The Neutral rating is retained and the target price increases to $13.85 from $12.00.

Target price is $13.85 Current Price is $13.50 Difference: $0.35
If MND meets the UBS target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $13.93, suggesting upside of 1.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.5

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

Morgans rates NAN as Upgrade to Add from Hold (1) -

As previously noted, Morgans was ahead of the game by upgrading forecasts for Nanosonics prior to a four month trading update at the company's AGM on November 18. The update revealed a 42% increase in revenue, along with an increase in the installed base.

In reaction to the AGM update, the broker then downgraded its rating to Hold from Add.

Now, as the share price has swooned by around -20% since the AGM, to be around -23% below the broker's $4.91 target price, the analyst decides to upgrade to Add from Hold.

Nothing left to say, other than to suggest promoting the analyst to a trading role.

Target price is $4.91 Current Price is $4.14 Difference: $0.77
If NAN meets the Morgans target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $4.12, suggesting downside of -1.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: -0.3

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

UBS rates QAN as Buy (1) -

Today's trading update yet again allowed Qantas Airways to upgrade guidance for underlying profits for the first half of FY23. UBS, upon initial assessment, says today's update shows "cash flow is flying".

In addition, the broker believes the board is giving hints the current share buyback will be followed up with more capital management initiatives.

UBS favours more share buybacks until the airline re-enters a tax-paying position that would allow franking of distributions.

UBS is confident strong momentum operationally will support Qantas' profits into FY24. Strong support for the share price is envisaged. Buy. Target $7.20.

Target price is $7.20 Current Price is $5.87 Difference: $1.33
If QAN meets the UBS target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $7.19, suggesting upside of 16.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.8

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

Ord Minnett rates QBE as Buy (1) -

QBE Insurance has exceeded its 2022 catastrophe cost budget by -$100m, but Ord Minnett described this an unsurprising given multiple catastrophe events across Australia and the US in the last year.

The broker expects the insurer will benefit from exposure adjusted rate increases in FY23, partly offset by inflationary impacts and increased reinsurance costs. Ord Minnett also expects combined operating ratios of 91.5% are achievable.

The Buy rating and target price of $17.00 are retained.

Target price is $17.00 Current Price is $12.66 Difference: $4.34
If QBE meets the Ord Minnett target it will return approximately 34% (excluding dividends, fees and charges).

Current consensus price target is $16.03, suggesting upside of 24.8% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

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 SGR as Downgrade to Neutral from Outperform (3) -

Macquarie downgrades its rating for Star Entertainment to Neutral from Outperform. Recent trading has been softer than expected and anticipated regulatory change may be more disruptive than first thought.

The analyst notes ongoing remediation costs are now around -$20m annually, up from -$12m and, additionally, there is
uncertainty on the level of monetary penalties. The target falls to $3.05 from $3.50.

The broker now forecasts $425m in FY23 earnings (EBITDA) compared to $459m previously, which factors-in a more severe impact at Star Sydney and higher remediation costs.

Target price is $3.05 Current Price is $2.88 Difference: $0.17
If SGR meets the Macquarie target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $3.23, suggesting upside of 20.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.4

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

Ord Minnett rates SGR as Buy (1) -

As Ord Minnett noticed in late September, Star Entertainment has flagged competitive pressure from Crown's Barangaroo operations. Performance in Sydney overall is trending -11% lower than in 2019 despite strong performance in other regions. 

Revenues from Brisbane and the Gold Coast are up 9% and 32% on 2019 respectively. Weaker than expected trading in Sydney has seen Ord Minnett lower its earnings forecasts -0.2% and -0.4% for FY23 and FY24 respectively. 

The Buy rating is retained and the target price decreases to $3.35 from $3.55.

Target price is $3.35 Current Price is $2.88 Difference: $0.47
If SGR meets the Ord Minnett target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $3.23, suggesting upside of 20.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.4

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

UBS rates SHV as Buy (1) -

Select Harvests continues to target a 30 metric tonne almond crop in FY23, but UBS anticipates a 29 metric tonne harvest given the risk presented by recent wet weather. 

Softening demand appears to be keeping almond prices at cyclical lows, which, combined with higher anticipated costs in the coming year, have seen UBS reduce its FY23 earnings per share forecast -71%. 

The Buy rating is retained and the target price decreases to $6.40 from $7.00.

Target price is $6.40 Current Price is $4.94 Difference: $1.46
If SHV meets the UBS target it will return approximately 30% (excluding dividends, fees and charges).

The company's fiscal year ends in September.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 1.0

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

Macquarie rates TNE as Neutral (3) -

In the wake of FY22 results, Macquarie believes the outlook remains solid for TechnologyOne though this is largely factored into current forecasts and a Neutral rating is retained. The target rises to $13.00 from $11.00.

FY22 Guidance was for SaaS annual recurring revenue (ARR) growth of around 40% and the company delivered a record 43%, though the analyst points out UK growth declined (partially due to currency) and looks weak.

Management reiterated the company's longer-term outlook and now expects ARR to surpass $500m by FY26.

Target price is $13.00 Current Price is $12.98 Difference: $0.02
If TNE meets the Macquarie target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $13.00, suggesting upside of 3.2% (ex-dividends)

The company's fiscal year ends in September.

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

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

Stronger economics from the SaaS transition meant FY22 results for TechnologyOne exceeded Morgan Stanley's expectations. Earnings and profit were beats of 6% and 8%, respectively.

The target rises to $12.50 from $11.50. Before upgrading the rating from Equal-weight, the broker would like to see ongoing momentum for the company's cash flows. Management is confident cash flow generation can reach 100% of profit by FY24.

The result confirmed Morgan Stanley's recent initiation of research on TechnologyOne due to superior profitability and free cash flow metrics. The company delivered 18% revenue growth, 31% profit (PBT) margins and over 20% free cash flow margins in FY22.

Industry view: Attractive.

Target price is $12.50 Current Price is $12.98 Difference: minus $0.48 (current price is over target).
If TNE meets the Morgan Stanley target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $13.00, suggesting upside of 3.2% (ex-dividends)

The company's fiscal year ends in September.

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

Morgans rates TNE as Downgrade to Hold from Add (3) -

FY22 results were slightly better than expected and did nothing to alter Morgans view TechnologyOne is one of the highest quality stocks on the ASX. 

A lower tax rate (post the Scentia acquisition) helped profit and EPS to exceed forecasts by 22%, explains the analyst. Should the SaaS/ARR growth trend persist, $500m of ARR target will be achieved 12 months prior to the FY26 target date.

The broker's target rises to $13.50 from $11.53, while the rating is downgraded to Hold from Add on valuation grounds following a 18% share price rally in the last six months.

Target price is $13.50 Current Price is $12.98 Difference: $0.52
If TNE meets the Morgans target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $13.00, suggesting upside of 3.2% (ex-dividends)

The company's fiscal year ends in September.

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