Australian Broker Call

Bell Potter rates 4DX as Buy (1) -

4DMedical has made first steps towards a distribution agreement with Philips, announcing a memorandum of understanding between the parties to expand federal and commercial sales opportunities in the US. 

The major commercial benefit of this partnership to 4DMedical, says Bell Potter, is Philips' established relationship with the US Department of Veteran Affairs, a key target for 4DMedical.

Offering 4DMedical's XV LVAS scan as part of Philips' catalogue from 2024 will allow 4DMedical to engage with veterans across dozens of sites. The Buy rating is retained and the target price increases to $1.40 from $1.10.

Target price is $1.40 Current Price is $0.96 Difference: $0.445
If 4DX meets the Bell Potter target it will return approximately 47% (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

Shaw and Partners rates A1M as Buy, High Risk (1) -

AIC Mines provides very cheap exposure to a strengthening copper price near the end of the interest rate hike cycle, according to Shaw and Partners. It's felt both higher interest rates and a stronger US dollar have been headwinds for the copper price.

The broker reiterates this view following reported high grade drill results from the Jumbuck, Squatter and Billabong shoots for the high-grade Jericho deposit, at the Eloise Copper mine in WA.

The Buy, High Risk rating and target price of 80 cents are retained.

Target price is $0.80 Current Price is $0.35 Difference: $0.45
If A1M meets the Shaw and Partners target it will return approximately 129% (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 AIA as Outperform (1) -

After Auckland International Airport announced its PSE4 aeronautical pricing schedule in June, the NZ Commerce Commission has published a Process and Issues paper for its review.

A draft decision will be released in May 2024, and the key focus will be on the Commission's assessment of the company's weighted average cost of capital (WACC) determination, notes Macquarie. Passenger growth assumptions will also be reviewed.

Depending on the review outcome, management will finalise/amend its pricing schedule, explains the broker.

The NZ$9.56 target and Outperform rating are unchanged.

Current Price is $7.43. Target price not assessed.

Current consensus price target is $7.85, 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 NZD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: 0.0

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

Macquarie rates ALD as Outperform (1) -

Providing a relevant benchmark for Ampol's convenience retail business as it grows, notes Macquarie, 7-Eleven International LLC has agreed to purchase 7-Eleven Australia for 9x EBITDA on FY23.

7-Eleven Australia makes the majority of its profit in non-fuels. There are some important differences compared to Ampol's franchisee model, which the broker will take into account.

The Outperform rating and $38 target are retained.

Target price is $38.00 Current Price is $34.23 Difference: $3.77
If ALD meets the Macquarie target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $35.60, suggesting upside of 3.0% (ex-dividends)

The company's fiscal year ends in December.

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 BSL as Buy (1) -

Current spot mill margins are -US$40/t below breakeven, UBS notes, and suggest BlueScope's Australian steelmaking business will be loss-making in the second half. However, the contribution from the value-added business has grown significantly in the last five years.

This provides a natural hedge to the Australian steelmaking earnings. UBS' analysis shows the steelmaking business losing some -$124m
in the 2H but more than offset by a value-added and non-steel earnings of $217m.

Despite the recent rise in BlueScope's share price, this is largely market driven and hasn't captured the change in steel markets, the broker suggests. Buy and $24 target retained.

Target price is $24.00 Current Price is $20.78 Difference: $3.22
If BSL meets the UBS target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $19.78, suggesting downside of -6.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.0

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

Bell Potter rates DRO as Buy (1) -

It's been a transformative year for DroneShield says Bell Potter, with the company expected to report its first profitable year in 2023. The broker is expecting record revenues to increase fourfold on the previous to $69.9m, alongside a maiden net profit of $15.2m.

The company retains a contracted backlog totaling $38m, a sales pipeline of around $400m, and a cash balance of $62.5m as it approaches the end of the year. DroneShield has commenced scaling of its supply chain, support and manufacturing operations. 

The Buy rating is retained and the target price increases to 50 cents from 45 cents.

Target price is $0.50 Current Price is $0.31 Difference: $0.19
If DRO meets the Bell Potter target it will return approximately 61% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

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

Ord Minnett rates EML as Hold (3) -

Following a strategic review update that raised just as many questions as answers, Ord Minnett retains its 80c target price on an equal-weighted chance EML Payments will retain its troubled European reloadable cards business.

The broker is surprised management is contemplating selling its real-time payments business, Sentenial, which may impair the company's future competitive position. The additional concern for the analyst is the business may be underperfoming.

The Hold rating is unchanged.

Target price is $0.80 Current Price is $0.86 Difference: minus $0.055 (current price is over target).
If EML meets the Ord Minnett 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 FY24:

Forecast for FY25:

Market Sentiment: 0.0

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

Ord Minnett rates GNE as Hold (3) -

Partly funded by a -20% cut to dividends, Genesis Energy announced at its investor day an intention to accelerate investment to transition to 95% renewable energy by 2035, a decision Ord Minnett supports.

The broker suggests the greater investment will better offset longer-term headwinds from the depletion of the Kupe oil and gas field joint venture, and closure of thermal power stations.

Management also reaffirmed FY24 earnings (EBITDA) guidance and provided FY25 earnings guidance for around NZ$500m.

The Hold rating is unchanged and the target rises to $2.50 from $2.40.

Target price is $2.50 Current Price is $2.15 Difference: $0.35
If GNE meets the Ord Minnett target it will return approximately 16% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.0

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

Bell Potter rates GNP as Buy (1) -

GenusPlus Group has announced a number of battery project contract wins. The company was awarded three contracts, through a joint venture with Samsung C&T, for the engineering, procurement, construction and commissioning of a battery storage project with the Melbourne Renewable Energy Hub.

These contracts, points out Bell Potter, are valued at around $200m, with GenusPlus Group's interest in the joint venture around 30%. The company was also awarded a contract for civil and electrical works as part of a West Australian battery storage facility, valued at $90m.

The Buy rating is retained and the target price increases to $1.40 from $1.33.

Target price is $1.40 Current Price is $1.19 Difference: $0.21
If GNP meets the Bell Potter target it will return approximately 18% (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

UBS rates HVN as Neutral (3) -

Harvey Norman's AGM trading update showed AUD sales growth across all countries remained negative for the first 21 weeks of FY24, yet there has been improvement in weeks 14-21 compared to reported first quarter sales in Australia, UBS notes.

There has been a deterioration in New Zealand and mixed performance in other markets. Reported sales growth rates are enjoying a tailwind from the rising currency.

Looking forward, comparables become easier for Harvey Norman although UBS retains concerns regarding category headwinds and market share loss. Neutral and $3.75 target retained.

Target price is $3.75 Current Price is $3.93 Difference: minus $0.18 (current price is over target).
If HVN meets the UBS target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.91, suggesting upside of 3.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.0

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

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

Iress has upgraded guidance for FY23, FY24 and the FY24 exit rate by 4.6%, 8.5% and 6.7%, respectively. The revenue environment appears to have stabilised, notes Macquarie, with monthly average revenue (for the 2H) 2.6% ahead of the 1H average.

October 31 net debt was $308m, down from $375m at 30 June, aided by the previously announced $52m sale of the Managed Funds Administration business, explains the broker.

The rating for Iress is upgraded to Outperform from Neutral, while the target rises to $8.35 from $6.85 on earnings upgrades, and a lower beta due to reduced balance sheet risk.

Target price is $8.35 Current Price is $7.03 Difference: $1.32
If IRE meets the Macquarie target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $8.46, suggesting upside of 15.0% (ex-dividends)

The company's fiscal year ends in December.

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

Morgans rates IRE as Add (1) -

As part of the Iress strategy update, management upgraded 2H/FY24 earnings (EBITDA) guidance by 8% and 9%, respectively, on stable revenue but lower staff costs, explains Morgans.

The company also upgraded the FY24 earnings exit run-rate by circa 7% to $150-170m from $142-158m. The higher end of the range is dependent upon achieving revenue initiatives for the core business, explains the broker.

No short-term equity raise will be needed, note the analysts, as the company plans to divest one UK business in the 1H of 2024, which  will materially reduce debt.

While risks remain, Morgans notes Iress is at the start of a significant turnaround strategy. The Add rating is retained and the target rises to $8.60 from $8.10.

Target price is $8.60 Current Price is $7.03 Difference: $1.57
If IRE meets the Morgans target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $8.46, suggesting upside of 15.0% (ex-dividends)

The company's fiscal year ends in December.

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 JHG as Hold (3) -

Ord Minnett retains its Hold rating and $39 target for Janus Henderson following a review of current industry trends and other issues impacting both traditional and alternative US-based asset managers.

In summary, revenue and profits will not recover quickly, in the broker's opinion, despite the tailwind provided for assets under management (AUM) via the recent share market rally.

Most of the traditional US-based asset managers are suffering from a lack of organic (AUM) growth, notes the analyst, and are now more dependent on equity market gains.

Target price is $39.00 Current Price is $38.82 Difference: $0.18
If JHG meets the Ord Minnett target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $40.33, suggesting upside of 2.5% (ex-dividends)

The company's fiscal year ends in December.

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: 0.3

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

Citi rates LFS as Sell (5) -

Latitude Group has reiterated net profit guidance at its AGM earlier today, but Citi analysts do not think that's necessarily a positive.

What is missing, point out the analysts, is any comment about the impact of likely further below-the-line items. Such comments were prevalent when guidance was originally provided back in May.

On Citi's reading, this likely implies consensus forecasts are too high. Funding costs have continued to rise and personal credit demand has been slow to improve, the broker highlights.

Citi's profit forecast for FY24 remains some -15% below market consensus, and no less than -30% below the top forecasters in the market.

The implications are clear. Citi sticks with its Sell rating. Target 95c.

Target price is $0.95 Current Price is $1.17 Difference: minus $0.22 (current price is over target).
If LFS meets the Citi target it will return approximately minus 19% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $1.00, suggesting downside of -14.2% (ex-dividends)

The company's fiscal year ends in December.

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 MP1 as Buy (1) -

To reflect a stronger Australian dollar in the 2H, along with lower gross margins, Citi lowers its target for Megaport to $12.25 from $12.50.

The broker provides no further detail in its latest research note, other than the retention of a Buy rating.

Target price is $12.25 Current Price is $9.73 Difference: $2.52
If MP1 meets the Citi target it will return approximately 26% (excluding dividends, fees and charges).

Current consensus price target is $12.81, suggesting upside of 33.6% (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 PMV as Neutral (3) -

In an early response to today's AGM update, Macquarie highlights guidance for $200m in H1 EBIT (pre-AASB 16) is some 30% ahead of its own forecast and 8% better than market consensus.

In addition, Macquarie notes the strategic review is now completed and its conclusion points towards "significant future growth opportunities" for Smiggle, Peter Alexander and the core apparel brands in the group.

Guided EBIT is still -10% below last year's result, with the broker pointing towards a challenging discretionary retail environment which is putting pressure both on sales and on margins.

Neutral. Target $23.

Target price is $23.00 Current Price is $24.42 Difference: minus $1.42 (current price is over target).
If PMV meets the Macquarie target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $25.27, suggesting upside of 0.7% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.0

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

Ord Minnett rates PWH as Initiation of coverage with Lighten (4) -

Ord Minnett initiates coverage on PWR Holdings and an initial target of $8.50 is set. Because the share price currently screens as expensive, a Lighten recommendation is adopted, even though the company is considered high-quality.

The broker highlights a "formidable" position in the high performance automotive cooling niche business. The company has a presence across nearly all motorsport competitions, including supply to all Formula One teams.

As a result of this dominance, PWR commands top-tier aftermarket pricing, and the trusted motor sport performance has also opened up opportunities in the defence and aerospace industries, notes Ord Minnett.

Target price is $8.50 Current Price is $9.98 Difference: minus $1.48 (current price is over target).
If PWH meets the Ord Minnett target it will return approximately minus 15% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $10.63, suggesting upside of 7.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.2

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

Ord Minnett rates SSM as Buy (1) -

Ord Minnett has a preference for companies like Service Stream with nearer-term earnings visibility and positive earnings momentum. It's felt the company's free cash flow generation deserves a higher multiple, and the target is raised to $1.09 from $1.02 as a result.

The recent investor day highlighted to the broker many positives including the company's increasingly diverse portfolio of infrastructure maintenance projects, and opportunities in both industrial and defence markets.

The Buy rating is maintained.

Target price is $1.09 Current Price is $0.90 Difference: $0.19
If SSM meets the Ord Minnett target it will return approximately 21% (excluding dividends, fees and charges).

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

Bell Potter rates TPW as Hold (3) -

A trading update from Temple & Webster has revenue up 23% year-on-year to date, with the second quarter up 42% year-on-year to date. The retailer reaffirmed earnings margins of 1-3%, given a focus on additional brand and performance investment to grow market share.

Given the outperformance to Bell Potter's expectations, the broker has upgraded its revenue assumptions and is anticipating 35% revenue growth in the second quarter.

The Hold rating is retained and the target price increases to $8.00 from $6.40.

Target price is $8.00 Current Price is $8.12 Difference: minus $0.12 (current price is over target).
If TPW meets the Bell Potter target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $7.21, suggesting downside of -10.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.2

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

Macquarie rates VEA as Outperform (1) -

Providing a relevant benchmark for Viva Energy's convenience retail business as it grows, notes Macquarie, 7-Eleven International LLC has agreed to purchase 7-Eleven Australia for 9x EBITDA on FY23.

7-Eleven Australia makes the majority of its profit in non-fuels. There are some important differences compared to Viva Energy's franchisee model, which the broker will take into account.

The Outperform rating and $3.50 target are retained.

Target price is $3.50 Current Price is $3.08 Difference: $0.42
If VEA meets the Macquarie target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $3.39, suggesting upside of 8.0% (ex-dividends)

The company's fiscal year ends in December.

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