Australian Broker Call

Citi rates ALL as Buy (1) -

Following analysis of bookings data to September, Citi assesses downside risk to 2H consensus forecast that sees Social Casino bookings growth of 2% for Aristocrat Leisure.

Part of the weakness may be overlooked by the market as the digital ex-Social Casino portfolio is likely to be sold, though this may impact any sale proceeds, highlights the analyst.

Looking more widely, the broker sees potential upside to its FY25 group EBIT forecast from the recent court injunction on Light & Wonder’s ((LNW)) Dragon Train.

Buy. Target $59.

Target price is $59.00 Current Price is $58.54 Difference: $0.46
If ALL meets the Citi target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $57.47, suggesting downside of -1.3% (ex-dividends)

The company's fiscal year ends in September.

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

Morgan Stanley rates BHP as Overweight (1) -

Prior to the September quarter operational updates for Australian Materials companies on the ASX, Morgan Stanley highlights expectations for its coverage of stocks in the sector.

For BHP Group, the broker will be reviewing progress for the Rail Technology Program at the WA iron ore operations, which are a critical component of the 305Mtpa expansion. Any update on Samarco provisions will also be monitored.

Overweight. The target falls to $47.10 from $47.50. Industry View: Attractive.

Target price is $47.10 Current Price is $43.43 Difference: $3.67
If BHP meets the Morgan Stanley target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $45.40, suggesting upside of 3.7% (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

Bell Potter rates CAT as Upgrade to Buy from Hold (1) -

Bell Potter observes the upcoming 1H25 earnings report for Catapult International due on November 14. highlighting scope for tactics & coaching, (video business) to show stronger growth from new product releases, sideline video solutions for American football.

The broker notes this may give the division scope for improved growth compared to wearables business, performance & health.

The new video solutions are currently being employed by teams in Southeastern conference of the National Collegiate Athletes Association. The National Football League does not currently allow teams to use sideline video but the broker suggests this could change with success at the college level.

The stock is upgraded to Buy from Hold on the back of a rise in target price to $2.75 from $2.35 from a change in valuation. No changes to earnings forecasts.

Target price is $2.75 Current Price is $2.43 Difference: $0.32
If CAT meets the Bell Potter target it will return approximately 13% (excluding dividends, fees and charges).

The company's fiscal year ends in March.

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: 1.0

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

Macquarie rates CGF as Outperform (1) -

Macquarie marks-to-market the 1Q25 earnings estimates for Challenger including a fall in credit spreads of around -6bps and a decline in annuity spreads of circa -5bps, over the quarter compared to the previous quarter.

Earnings forecasts are accordingly lifted with a rise in FY25 by 0.8% and 1.3% in FY26.

Slight changes in valuation lift the target price to $7.20 from $7. No change to Outperform rating.

Target price is $7.20 Current Price is $6.72 Difference: $0.48
If CGF meets the Macquarie target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $7.94, suggesting upside of 17.9% (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

UBS rates CNU as Neutral (3) -

UBS assesses the loss of -10k lines in 1Q25 for Chorus as worse than expectation of a decline of -5k lines.

Some losses were the result of timing, the broker acknowledges. Annualising the rate would suggest a loss of -40k lines in FY25 compared to the analyst's estimate of -29k.

At this stage, it is "only one quarter" the broker notes, with Chorus expected to benefit from 10k new premises being constructed with fibre, which is included in UBS' forecasts.

Neutral retained. NZ$8.50 target price unchanged.

Current Price is $8.02. Target price not assessed.

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

Morgans rates COG as Speculative Buy (1) -

Morgans initiates coverage on COG Financial Services, Australia’s leading finance broker aggregator and equipment leasing business for small to medium-sized enterprises (SMEs), with a Speculative Buy rating.

A significant growth opportunity exists for the company across its segments of Broking and Aggregation, Novated Leasing and Asset Management and Lending, highlights the analyst.

The broker notes COG is the only acquirer of scale in the fragmented equipment broking and aggregation space, a market significantly leveraged to robust Australian business lending growth.

Morgans sets a $1.25 target price, noting shares are trading at a material discount to the broker's valuation and offer an attractive dividend yield.

Target price is $1.25 Current Price is $0.98 Difference: $0.275
If COG meets the Morgans target it will return approximately 28% (excluding dividends, fees and charges).

Current consensus price target is $1.54, suggesting upside of 57.5% (ex-dividends)

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

Citi rates CTD as Buy (1) -

Citi reiterates Corporate Travel Management appears "too cheap" with a price-to-earnings valuation around -30% below its 10-year pre-pandemic level.

The analyst acknowledges the company's recent issues and challenges but believes the October 31 AGM could offer a "positive" update.

The broker suggests a few factors including the reversal of American Airlines commissions and a suggested robust 4Q24 exit rate infer there is some basis to be more upbeat on the US in the near term.

Buy rated. Target price $13.50.

Target price is $13.50 Current Price is $13.07 Difference: $0.43
If CTD meets the Citi target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $14.49, suggesting upside of 15.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY25:

Forecast for FY26:

Market Sentiment: 0.6

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

UBS rates DMP as Neutral (3) -

UBS considers the US-listed Domino's Pizza 3Q24 results including a downgrade for 2024 and 2025 guidance in relation to Domino's Pizza Enterprises.

The company highlighted Domino's Pizza Enterprises impacted on the international same store sales growth for Domino's Pizza.

The international "master" franchisee is looking to assist in more promotional pricing for better value offerings, maximise orders from aggregators and look to carry out from delivery.

The broker retains a Neutral rating and $33 target price. 

Target price is $33.00 Current Price is $36.24 Difference: minus $3.24 (current price is over target).
If DMP meets the UBS target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $34.14, suggesting downside of -5.6% (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

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

Shaw and Partners raises its target for Duratec to $1.90 from $1.50 after incorporating FY25 contract wins of $102m. It's felt outcomes of Parkes and Diamantina contracts in Q2 of FY25 and H2 of FY25, respectively, will be catalysts for further earnings upgrades.

Most recently, management has won a $44m project from Rio Tinto ((RIO)) to install strengthening steelwork at the ore handling facility at the Tom Price mine in WA.

Buy rated. High risk. 

Target price is $1.90 Current Price is $1.59 Difference: $0.31
If DUR meets the Shaw and Partners target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $1.64, suggesting downside of -1.4% (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

Bell Potter rates LTM as Hold (3) -

Bell Potter highlights the takeover agreement reached between Arcadium Lithium and Rio Tinto ((RIO)) in an all-cash offer of US$5.85 per share, a 90% premium to Arcadium Lithium's  share price on October 4. 

The analyst notes Rio Tinto referred to the offer as "full and fair" and includes long term prices of US$1500/t for 6% Li2) spodumene concentrate and US$20,000/t for battery grade lithium carbonate.

The target price is raised to $8.70 from $6.55 reflecting the new offer price. Hold rating unchanged.

Target price is $8.70 Current Price is $8.18 Difference: $0.52
If LTM meets the Bell Potter target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $7.38, suggesting downside of -10.0% (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

Ord Minnett rates LYC as Accumulate (2) -

Intervention of rebel militia in a rare earth producing area of Myanmar due to the civil war is expected to result in a rise in prices according to Ord Minnett.

The broker observes China evacuated citizens and stopped imports from early September. A restart is anticipated by the analyst but not until early 2025.

For context, Myanmar supplied 50kt of rare earths to China in 2023 compared to China's quota of 19kt.

Ord Minnett raises NdPr prices by 13% for 2025 to US$66kg which is expected to lift Lynas Rare Earths earnings (EBITDA) by 64%.

Target price increases to $7.80 from $7.40. Accumulate rating remains.

Target price is $7.80 Current Price is $7.75 Difference: $0.05
If LYC meets the Ord Minnett target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $6.88, suggesting downside of -11.4% (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

Morgan Stanley rates MIN as Overweight (1) -

Prior to the September quarter operational updates for Australian Materials companies on the ASX, Morgan Stanley highlights expectations for its coverage of stocks in the sector.

For Mineral Resources, a key focus should be completion of the haul road in October at Onslow Iron.

Overall, iron ore  price realisation will remain a key focus alongside production and cost performance at Mt Marion, suggest the analysts.

The target rises to $56.00 from 55.50. Overweight. Industry View: Attractive.

Target price is $56.00 Current Price is $50.94 Difference: $5.06
If MIN meets the Morgan Stanley target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $49.43, suggesting downside of -2.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY25:

Forecast for FY26:

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 MMI as Buy, High Risk (1) -

Potentially benefiting Metro Mining, Shaw and Partners notes alumina prices have moved higher, rallying by 4.2% on the Shanghai futures market. This rally is based on media reports of bauxite exports from Guinea Alumina Corporation being suspended due to customs issues.

Guinea Alumina Corporation operates the 2.3Mt Al Taweelah alumina refinery in Abu Dhabi.

Unchanged Buy, High Risk rating and target of 14c. 

Target price is $0.14 Current Price is $0.04 Difference: $0.096
If MMI meets the Shaw and Partners target it will return approximately 218% (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

Citi rates MQG as Sell (5) -

Citi cautions against investors becoming too positive in the near term for earnings accretion from the successful AirTrunk sale.

The broker believes Macquarie Group has the potential to generate around $1bn in performance fees over time from data centre related assets including AirTrunk, but it is reliant on the performance of the assets in the funds which held the company.

Citi observes Macquarie Group holds other high growth data centre assets, Aligned and Neutrality which are in much longer-dated funds. The story is likely to extend to FY27 onward, the analyst stresses.

The stock is rated a Sell, and the target price is unchanged at $176.

Target price is $176.00 Current Price is $232.23 Difference: minus $56.23 (current price is over target).
If MQG meets the Citi target it will return approximately minus 24% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $209.62, suggesting downside of -10.6% (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

Citi rates NWH as Buy (1) -

After securing an iron ore development contract from BHP Group ((BHP)) at the Jimblebar mine in the Pilbara worth $109m, Citi assesses upside earnings risk for NRW Holdings with progressive guidance upgrades likely in store for FY25.

Assuming NRW’s civil order book has remained unchanged since FY24, this contract win implies to the broker the book has grown to $809m from $700m, when consensus for FY25 is $715m.

Target $4.05. Buy.

Target price is $4.05 Current Price is $3.63 Difference: $0.42
If NWH meets the Citi target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $3.77, suggesting upside of 2.4% (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

Bell Potter rates PTM as Hold (3) -

Platinum Asset Management reported funds under management of $12.465bn a rise of 1.9% in September from August with outflows of -2.8% or -$347m.

Bell Potter explains the outflows were higher than expectation of -0.7% and has resulted in a downgrade to EPS forecasts of -18.1% for FY25 and -14% for FY26,

Management also offered an update on the progress of the company's turnaround. The analyst links the increased details are related to the takeover approach from Regal Partners ((RPL)).

The asset management firm retained a robust balance sheet with $256m in cash and $64m in seed funds, the broker points out.

Hold rating with $1.21 target price maintained.

Target price is $1.21 Current Price is $1.20 Difference: $0.01
If PTM meets the Bell Potter target it will return approximately 1% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY25:

Forecast for FY26:

Market Sentiment: -0.5

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

Morgans rates PWH as Add (1) -

Morgans believes the long-term investment thesis remains intact for PWR Holdings but cautions investors may need some patience.

FY25 will be a "transition year", noted management at FY24 results in August, with near-term margins impacted as the company invests to set the business up for the long-term.

Productivity should improve when PWR completes its move to the new Australian manufacturing facility in FY26, believes the analyst, who anticipates FY25 revenue growth will slow to 9% from the 16% average over the past five years.

The Add rating and $11.00 target are maintained.

Target price is $11.00 Current Price is $9.64 Difference: $1.36
If PWH meets the Morgans target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $10.64, suggesting upside of 13.6% (ex-dividends)

The company's fiscal year ends in June.

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

Morgan Stanley rates REA as Overweight (1) -

Morgan Stanley resumes coverage of REA Group after a period of research restriction with a target of $250, up from $230. It's felt the wider market underestimates management's proven ability to achieve double-digit annual lifts in price/yield.

Recent AGM commentary de-risks FY25 earnings, in the broker's opinion, with news national listings in Australia are growing by 7% on the previous corresponding period so far in FY25 compared to the 1-2% consensus forecast for all of FY25.

The Overweight rating is maintained. Industry View: Attractive.

Target price is $250.00 Current Price is $217.92 Difference: $32.08
If REA meets the Morgan Stanley target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $229.03, suggesting upside of 4.3% (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

Ord Minnett rates RPL as Buy (1) -

Ord Minnett assesses the potential impacts of the acquisition of Platinum Asset Management ((PTM)) by Regal Partners, concluding the results could be as much as a circa 20% EPS accretion with "ample cost synergies".

Regal Partners also reported 3Q24 trading update which was better than the analyst expected. Net inflows of $444m came in above the estimate of $250m.

Ord Minnett believes the stock's rating is not excessive at a 13.1x FY24 price-to-earnings ratio with an estimated 5.3% dividend yield.

Buy rating with an upgraded target price of $4.50 from $4.30.

Target price is $4.50 Current Price is $3.75 Difference: $0.75
If RPL meets the Ord Minnett target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $4.55, suggesting upside of 19.7% (ex-dividends)

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 TWR as Outperform (1) -

Tower has announced FY24 updated earnings guidance of underlying net profit of NZ$85m compared to NZ$43m previously.

Macquarie explains the lack of large events removed the NZ$45m allowance formerly in the guidance and lifted net profit by NZ$32m, net of tax.

The broker also notes a better-than-expected performance specifically from claims.

There is no change to NZ$1.30 target price. Outperform rating remains. Tower remains one of the few insurance companies in the region which is generating organic growth allowing for strong dividend growth and capital returns, Macquarie stresses.

Current Price is $1.24. Target price not assessed.

The company's fiscal year ends in September.

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: 1.0

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

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

Morgan Stanley suggests key issues at upcoming 2H results for Westpac will include the outlook for costs, an update on Project
'Unite' and margin trends, along with capital management decisions.

The broker forecasts a 2 cent half-on-half increase in the dividend to 77c, another 15c special dividend plus a $1bn top-up to the buyback.

The Equal-weight rating and $29.70 target are maintained. Industry View In-Line.

Target price is $29.70 Current Price is $30.86 Difference: minus $1.16 (current price is over target).
If WBC 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 $27.92, suggesting downside of -9.7% (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 WEB as Buy (1) -

Citi's first take on WEB Travel's preliminary 1H25 trading update released this morning is a miss with bookings coming in below expectations at 22% growth versus 26% forecast.

Revenue margin came in at 6.4% against around 7% expected with sales results missing by around -10% versus consensus. Estimated EBITDA is some -22% below consensus.

Assessing all the metrics, Citi concludes the European market appears robust with disruptions from Olympics and the Euros. The broker doesn't believe the geographic mix has changed since the AGM.

The analyst points to a change in the industry rates as the culprit for the "material downgrades". Long-term revenue margins are not in line with taking out one-off items.

Buy. Target price $8.25.

Target price is $8.25 Current Price is $7.03 Difference: $1.22
If WEB meets the Citi target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $8.82, suggesting upside of 91.8% (ex-dividends)

The company's fiscal year ends in March.

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 WEB as Neutral (3) -

Macquarie observes WEB Travel reported total travel volumes and bookings as part of the preliminary 1H25 trading update which aligned with the AGM update. 

The broker points to a downgrade in revenue margins "again" to around 6.4% versus consensus of 7.1% and the analyst's forecast at 7%. This is below the AGM guidance of 7% and reflects softer European trading due to Olympics, Euros, the FTI Group collage.

Revenue margins are expected to consolidate around 6.5%, but the downgrade directly impacts on the company's bottom line, Macquarie emphasises.

Neutral rating and $7.63 target price.

Target price is $7.63 Current Price is $7.03 Difference: $0.6
If WEB meets the Macquarie target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $8.82, suggesting upside of 91.8% (ex-dividends)

The company's fiscal year ends in March.

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

UBS rates WEB as Buy (1) -

UBS has spotted WEB Travel Group using a preliminary update on H1 to issue a profit warning. The broker blames lower revenues and margins.

The business has been impacted by sluggish activity in the EU and the need to incentivise customers, UBS explains.

The broker hasn't as yet re-modelled post today's update. Buy. Target $10.

Target price is $10.00 Current Price is $7.03 Difference: $2.97
If WEB meets the UBS target it will return approximately 42% (excluding dividends, fees and charges).

Current consensus price target is $8.82, suggesting upside of 91.8% (ex-dividends)

The company's fiscal year ends in March.

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