Australian Broker Call

Citi rates A2M as Buy (1) -

Citi observes the latest NZ port data for a2 Milk Co with supply disruptions from Synlait the potential explanation for a fall of -16% in NZ infant formula volumes to China in August on the previous corresponding period.

The broker stresses the growth over a three-month rolling period remains robust up 70% versus 7% growth in 2H24.

English label (China) to Hong Kong rose 178% in August on the same period a year ago versus up 98% in 2H24. Volume exports to Australia for English label advanced 300% off a low base on the previous year.

No change to Buy rating and $7.04 target.

Target price is $7.04 Current Price is $5.20 Difference: $1.84
If A2M meets the Citi target it will return approximately 35% (excluding dividends, fees and charges).

Current consensus price target is $6.25, suggesting upside of 15.1% (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: 0.4

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) -

Direct Chinese ownership of the Sorby Hills lead-silver-zinc project has now been removed, notes Shaw and Partners, after Boab Metals announced an agreement with joint venture partner Henan Yuguang to acquire its 25% share.

Boab is now the 100%-owner facilitation easier funding from Australian government entities such as the Northern Australia Infrastructure Facility (NAIF), suggests the broker.

Importantly, note the analysts, no up-front payment is required from Boab until -$12.5m at the time of the final investment decision (FID) and further payments at later dates according to shipping schedules.

Buy, High Risk rating. The target falls to 40c from 44c due to a delay for first production.

Target price is $0.40 Current Price is $0.09 Difference: $0.308
If BML meets the Shaw and Partners target it will return approximately 335% (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

Ord Minnett rates BXB as Buy (1) -

Following a further review of Brambles' US investor tour outlining the company's targets for FY26-FY28, Ord Minnett sees more sustainable medium-term free cash flow (FCF). The target is increased to $20.80 from $20.30.

The Serialisation Plus initiative -which aims to tag 100% of the pallet pool with unique identifiers to track individual assets at key points of the supply chain- is just one digital method allowing a clearer view of the business network, explains the broker.

The benefits of Serialisation Plus include less customers reusing pallets without paying, fewer pallet losses, and a better overall customer experience, highlights the analyst.

Management is also identifying potential segments of its network with opportunities to upsell or cross-sell more extensive services, such as reusing and sharing pallets in its primary growth markets, observes Ord Minnett.

Target price is $20.80 Current Price is $18.67 Difference: $2.13
If BXB meets the Ord Minnett target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $19.03, suggesting upside of 1.1% (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: 0.7

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

Shaw and Partners rates C79 as Buy, High Risk (1) -

Chrysos remains a stand-out ASX tech growth stock and Shaw and Partners envisages a scenario where the share price rises to $13 or more than double today’s price.

Evident within the company's 4Q update on July 25, management is successfully broadening its contract book and deepening its relationship with SGS, one of the world’s leading laboratory companies.

As SGS is a leading on-site lab company, it becomes an increasingly strategic customer for C79 with a large existing base of mine-site customers, explains the broker.

The analysts also note management has not assumed an improvement of industry volumes in FY25 guidance. For the longer-term, it'[s believed record-high gold prices and the prospect of lower global rates should provide a tailwind for the company.

Buy, High Risk rating and $7.20 target retained. 

Target price is $7.20 Current Price is $5.29 Difference: $1.91
If C79 meets the Shaw and Partners target it will return approximately 36% (excluding dividends, fees and charges).

Current consensus price target is $6.33, suggesting upside of 15.5% (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

Macquarie rates FBU as Underperform (5) -

Fletcher Building announced a NZ$700m equity issue at NZ$2.40 a share or a -17% discount to the previous closing price.

Macquarie highlights the raising will strengthen the balance sheet resulting in a fall in leverage to 1.22x from 1.99x.

Management's FY25 volume guidance remains unchanged. The broker notes the 1Q trading update for July/Aug volumes meet the FY25 expectations of a fall in residential sales of -17% estimate.

Macquarie lowers the EPS forecasts by -13% and -13% for FY25/FY26, accounting for the additional share on issue. The company's new CEO starts on Sept 30 with the CFO and Chair positions yet to be announced.

Underperform rating unchanged with a NZ$2.37 target price.

Current Price is $2.60. Target price not assessed.

Current consensus price target is $2.48, suggesting downside of -8.8% (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: -0.7

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

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

Upon completion of a NZ$700m equity raise, Fletcher Building will pay down NZ$678m of long-term debt, but the risk from challenging end markets in the A&NZ region remain, cautions Morgan Stanley.

For FY25, management also discussed NZ$180m (up from NZ$150m at FY24 results) of gross overhead cost savings designed to offset inflation and market weakness.

The broker sees a risk of lower earnings as management commentary suggested volumes will be at the low end of the FY25 guidance range. An update on strategic direction is awaited. 

Morgan Stanley's target falls to $2.48 from $2.66. Equal-weight. Industry View: In-line.

Target price is $2.48 Current Price is $2.60 Difference: minus $0.12 (current price is over target).
If FBU meets the Morgan Stanley target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.48, suggesting downside of -8.8% (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: -0.7

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

Citi rates HLS as Sell (5) -

Citi continues to remain cautious on the pathology margins for Healius while acknowledging the core business will be well capitalised post the divestment of Lumus imaging to Affinity Equity Partners.

The sale is expected to generate over $800m in net proceeds and complete in 1Q25 with the funds used to "right size" debt and reinvest in pathology, the broker notes.

Excess capital is expected to be returned to shareholders with more details closer to the completion time.

The stock retains a Sell rating with a $1.50 target price with the expectation Healius' margins will advance nearer its peers by FY27.

Target price is $1.50 Current Price is $1.73 Difference: minus $0.23 (current price is over target).
If HLS meets the Citi target it will return approximately minus 13% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $1.49, suggesting downside of -12.2% (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

Macquarie rates HLS as Neutral (3) -

Macquarie assesses the sale of Lumus Imaging for net consideration of over $800m to Affinity is higher than expected for Healius.

The funds are expected to repay debt facilities and lower corporate costs with management suggesting a possible return of capital, some $400m in a buyback over three years from FY25 and investment in the company's pathology strategy.

The broker is awaiting further details before changing earnings forecasts to account for the loss of earnings from Lumus against changes to interest expenses, depreciation/amortisation charges as well as capital returns and investment.

Neutral rating and $1.60 target price unchanged.

Target price is $1.60 Current Price is $1.73 Difference: minus $0.13 (current price is over target).
If HLS meets the Macquarie target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $1.49, suggesting downside of -12.2% (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

Macquarie rates IEL as Neutral (3) -

Macquarie believes the Canadian regulatory position around international students is starting to normalise with the target permits falling -10% in 2025 compared to 2024 with flat targets for 2026.

The broker estimates Canadian students are around 16% of IDP Education's student placement volumes in FY24 or circa 46% of non-Australian multi-destination.

The changes translate to around a 3% hit to the company's volumes as less candidates head to Canada.

Adjusting for the change in Canadian study permit targets, Macquarie lowers EPS forecasts by -1% in FY25 and -12% in FY26 due to weaker volumes into 2025 and the 2H26 earnings.

Neutral rating. Target $16 retained.

Target price is $16.00 Current Price is $15.36 Difference: $0.64
If IEL meets the Macquarie target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $18.04, suggesting upside of 13.7% (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

Bell Potter rates IMD as Upgrade to Hold from Sell (3) -

Post a reassessment on the outlook for exploration markets, Bell Potter becomes more positive on Imdex.

The analyst points to an increase in exploration budgets for major gold companies in 2025 as inflation pressures ease and higher realised gold price boost earnings. Recovery in junior explorers is unlikely however the broker anticipates until early FY26.

The broker makes no changes to earnings forecasts.

Bell Potter upgrades the stock to Hold from Sell and raises the target price to $2.05 from $1.90 due to changes in the forecast cost of capital on the valuation.

Target price is $2.05 Current Price is $2.12 Difference: minus $0.07 (current price is over target).
If IMD meets the Bell Potter target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.19, suggesting downside of -0.5% (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

Citi rates IMD as Sell (5) -

Based on several sources including peers of Imdex, Citi suspects a meaningful recovery in exploration spend will have to wait until FY26 as the 1Q FY25 level is a step-down from the prior quarter.

The timing of juniors commencing and ramping-up exploration is considered crucial.

An earnings rebase lower seems inevitable for Imdex, in the analyst's view, and the target falls to $1.95 from $2.00. Sell.

Target price is $1.95 Current Price is $2.12 Difference: minus $0.17 (current price is over target).
If IMD meets the Citi target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.19, suggesting downside of -0.5% (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

Bell Potter rates IPX as Speculative Buy (1) -

Bell Potter is encouraged by the conversion of an early-stage agreement with Ford Motor Company to the announcement of a contract in the supply of titanium powders and vehicle components for Iperionx.

The contract is expected to produce around $11m in revenues and will last 45-months, starting in 2025.

There are no changes to the broker's forecasts, but the analyst believes Iperionx has the potential to disrupt supply chain s in titanium due to the reduction in production costs and waste.

The Speculative Buy rating retained with a lift in the target price to $3.95 from $3.85.

Target price is $3.95 Current Price is $2.87 Difference: $1.08
If IPX meets the Bell Potter target it will return approximately 38% (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 JLG as Outperform (1) -

Johns Lyng announced the acquisition of Queensland based Keystone Group for $47.7m, an 87.5% stake. 

Macquarie highlights the company operates in make safe residential/commercial property restoration; complete restoration solutions for commercial/residential and a suite of hazardous remediation solutions.

The analyst believes the acquisition is a "good fit" for the company, enhancing its market position in Queensland.

Macquarie makes minor upgrades to EPS forecasts of 2.6% in both FY25 and FY26 estimates. The acquistion is earnings positive but increased gearing raising interest costs.

Outperform rating is unchanged. Target price lowered to $4.90 from $5.10.

Target price is $4.90 Current Price is $3.42 Difference: $1.48
If JLG meets the Macquarie target it will return approximately 43% (excluding dividends, fees and charges).

Current consensus price target is $4.63, suggesting upside of 28.6% (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

Morgans rates JLG as Add (1) -

In a highly complementary transaction, according to Morgans, Johns Lyng will extend its domestic Insurance Building and Restoration Services (IB&RS) business via the acquisition of an around 87.5% interest in Keystone Group.

The broker explains the deal will add further scale to the group’s domestic operations (particularly within Queensland) as well as increasing exposure to commercial and large loss claims work.

The group will initially outlay -$47.7m, with an earnout of up to -$21.4m over FY25/26.

The Add rating and $5.10 target are retained.

Target price is $5.10 Current Price is $3.42 Difference: $1.68
If JLG meets the Morgans target it will return approximately 49% (excluding dividends, fees and charges).

Current consensus price target is $4.63, suggesting upside of 28.6% (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

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

The outlook for Australian horticulture is more positive, observes Shaw and Partners, after challenging industry conditions in FY24 cost Lindsay Australia around $6m in earnings (EBITDA).

Noting the share price is trading at a material discount to the analyst's unchanged $1.20 target, the broker sees potential upside to its own forecasts should horticulture and refrigerated transport volumes surprise on the upside.

Another positive indicator is good early-FY25 trading updates by the likes of Coles Group ((COL)) and Woolworths Group ((WOW)), highlights Shaw.

Buy (High risk). Unchanged target price of $1.20.

Target price is $1.20 Current Price is $0.93 Difference: $0.27
If LAU meets the Shaw and Partners target it will return approximately 29% (excluding dividends, fees and charges).

Current consensus price target is $1.22, suggesting upside of 29.4% (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

Shaw and Partners rates LM8 as Buy, High Risk (1) -

Shaw and Partners retains its Buy, High risk rating and 60c target for Lunnon Metals after the release of gold results from drilling at the Kambalda nickel and gold project in WA.

The Lady Herial deposit is shaping as an excellent opportunity to define a zone of gold mineralisation suitable for open pit operations and a Mineral Resource, in the broker's view.

Target price is $0.60 Current Price is $0.15 Difference: $0.45
If LM8 meets the Shaw and Partners target it will return approximately 300% (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 LNW as Outperform (1) -

Light & Wonder's CFO was hosted by Macquarie for two days of investor meetings in the US west coast where the company confirmed FY25 EBITDA guudance of $1.4bn post the robust 2Q24 results.

The analyst points to the "rollout" of Dragon Train and Squid Game which are believed to be a growth driver for fee generation and the installed base.

Macquarie views the stock's valuation as too low when considering the growth profile Light & Wonder has compared to other higher growth names. More meetings are scheduled for Oct 7-9 where management will showcase product updates and demonstrations. 

Outperform rating with a $186 target price maintained.

Target price is $186.00 Current Price is $164.90 Difference: $21.1
If LNW meets the Macquarie target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $179.80, suggesting upside of 33.7% (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

Citi rates LTM as Buy (1) -

Continuing the site visits for Arcadium Lithium, Citi's key takeaways from Bessemer City and Becancour revealed a first mover advantage according to the analyst with propriety knowledge and experienced site teams.

The company exhibited "capital discipline" as Galaxy is sold down to generate cash and Whabouchi is not expected to commence until Nemaska requires volumes.

The second 5kt line at Bessember City has been fitted to meet demand with management highlighting it could have been bigger.

The Buy rating and $6.50 target are maintained. No changes to the broker's earnings forecasts.

Target price is $6.50 Current Price is $3.69 Difference: $2.81
If LTM meets the Citi target it will return approximately 76% (excluding dividends, fees and charges).

Current consensus price target is $5.60, suggesting upside of 46.2% (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

Citi rates PMT as Buy (1) -

Citi highlights the site visit to Patriot Battery Metals' Shaakichiuwaanaan project offered an insight into the scale and size of the resource, as well as the propinquity of infrastructure and the permitting schedule.

Management is receptive to all types of potential funding including funds for offtake or an equity interest at the appropriate price.

Overall, the company anticipates both an open cut and underground mine with two stage 400ktp.a. trains of 2.5mtp.a. each to manage cashflows. All-in-sustaining costs are forecast at US$600/t with stage 1 capex of C$870m and stage 2 around C$500m.

Buy rating, High risk and 75c target unchanged.

Target price is $0.75 Current Price is $0.35 Difference: $0.4
If PMT meets the Citi target it will return approximately 114% (excluding dividends, fees and charges).

Current consensus price target is $0.96, suggesting upside of 166.7% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY25:

Forecast for FY26:

This company reports in CAD. 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 REA as Buy (1) -

Bell Potter observes the Rightmove board have yet to engage with REA Group and are currently considering the third takeover offer of a cash, equity split which values the company at GBP6.1bn versus the initial bid valued at around GBP5.6bn.

The broker highlights the REA board is keen to engage with Rightmove before the September 30 deadline under the UK code with the use of scrip to enable existing Rightmove shareholders to retain exposure to the potential value creation.

Bell Potter expects EPS accretion of around 10% in FY26 or 5% for net synergies at the current offer price, decreasing to around 6% if the takeover premium rises to 45%.

Buy rating and $226 target price remain.

Target price is $226.00 Current Price is $194.00 Difference: $32
If REA meets the Bell Potter target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $218.46, suggesting upside of 12.8% (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

UBS rates SHV as Downgrade to Neutral from Buy (3) -

Select Harvests announced an $80m capital raising at $3.80 or an -16% discount to the last close which represents 17% of issued capital, UBS notes.

The analyst highlights delay issues in export documentation and customer deliveries with the addition of a new logistics provider to help resolve the company's internal processes despite an increase in sales volume. A cash collection of $54m has been delayed until Dec 2024 from Sept.

UBS increases FY25 earnings by 5% and EPS by 1% due to lower interest costs. The broker's FY26 EPS forecasts are lowered by -11% for increased production cost assumptions offset by higher volumes.

The rating is downgraded to Neutral from Buy with a $4 target maintained.

Target price is $4.00 Current Price is $3.65 Difference: $0.35
If SHV meets the UBS target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $4.43, suggesting upside of 22.1% (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 TUA as Buy (1) -

Citi's initial assessment of today's FY24 result for Tuas is that Broadband has gained solid traction, and the Mobile result was ahead of expectation. Compared to the broker's forecasts, revenue and earnings (EBITA) were beats of 5.5% and 13%, respectively.

Shares are expected to trade higher today given these strong beats and higher-than-expected subscriber growth in both Mobile (9% beat against the broker's forecast) and Broadband (more than 4,000; 1,200 forecast).

The analyst highlights early encouraging evidence of 10Gbps broadband take-up in the residential market.  Despite the ramp-up associated with Broadband, the mid-point of capex guidance is only 4% ahead of FY24 capex of $48m, notes Citi.

Target $5.25. Buy.

Target price is $5.25 Current Price is $4.22 Difference: $1.03
If TUA meets the Citi target it will return approximately 24% (excluding dividends, fees and charges).

The company's fiscal year ends in August.

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 WEB as Neutral (3) -

Macquarie highlights Webjet's updated financial outlook with revenue margins expected to be around 7.2%/7% compared to 8.2% in FY24 for FY25 through to FY30. This compares with management's guidance of 7%-7.5%.

The company is aiming for volume growth in lower margin areas and ongoing hotel investment in direct channel, the broker notes with an aim of doubling total transaction volumes by FY30.

Macquarie's EPS forecasts decline accounting for the removal of B2C earnings, the allocation of group overheads and the demerger "dis-synergies". The estimates fall by -21% in FY25 and -22% in FY26.

Accordingly. the Webjet target price falls to $7.63 from $8.72. Neutral rating unchanged.

Target price is $7.63 Current Price is $7.35 Difference: $0.28
If WEB meets the Macquarie target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $9.71, suggesting upside of 35.8% (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