Australian Broker Call

Ord Minnett rates 360 as Buy (1) -

Although Life360 started trading in US markets overnight, the analyst at Ord Minnett does not view the listing as significant.

The stock closed at US$27, the equivalent of $13.50 on the ASX.

Highlighting recent discussions with investors, the broker notes a split between positive and negative views on the US listing and in the analyst's assessment it is unlikely to alter fundamentals.

Buy rating and the target lowers -2% to $16.42.

Target price is $16.42 Current Price is $14.69 Difference: $1.73
If 360 meets the Ord Minnett target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $17.22, suggesting upside of 25.9% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY24:

Forecast for FY25:

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: 1.0

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

Shaw and Partners rates BML as Buy (1) -

Boab Metals' front-end engineering and design study results for its Sorby Hills lead-silver-zinc project are in and Shaw and Partners says they strongly enhance the January definitive feasibility study.

Highlights included: updated metal recovery for the Norton deposit; above-ground tailings strategy (previously in-pit); and revised pricing for the process plant EPC contract provided by GR Engineering ((GNG)), and for the mining and bulk earthworks project.

Pre-production capital expenditure rose to -$264m from -$245m but Shaw and Partners expected this increase given inflation.

The broker observes solar panel demand has driven the silver market into a supply deficit and expects the company's product to be well bid by global smelters. Boab Metals is finalising binding offtake agreements, some of which come with financing options.

Shaw and Partners believes the company is also likely to source part or all of its debt funding from Commonwealth Government financiers at concessional rates.

FY24 and FY25 EPS forecasts fall sharply from April levels.

The broker is reviewing its Buy rating and 44c target price.

Target price is $0.44 Current Price is $0.12 Difference: $0.32
If BML meets the Shaw and Partners target it will return approximately 267% (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

Citi rates BPT as Downgrade to Neutral from Buy (3) -

Citi downgrades Beach Energy to Neutral from Buy, initiating a negative catalyst watch ahead of the strategic review that is due on June 18. 

The broker suspects the equity market will reward the stock ahead of execution and its transformation will allow the business to undertake novel solutions in Australia's energy markets over time.

Yet, the good news story will likely be offset by a disappointing outlook for FY25 and beyond. Citi assesses consensus is positioned too "high" on production and too "low" on SIB capital expenditure. Target is reduced to $1.60 from $1.70.

Target price is $1.60 Current Price is $1.63 Difference: minus $0.03 (current price is over target).
If BPT meets the Citi target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $1.93, suggesting upside of 21.1% (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

Ord Minnett rates BRE as Speculative Buy (1) -

Brazilian Rare Earths reported positive exploration results from the Sulista prospect, notes Ord Minnett.

The analyst views the results as significant for revealing a larger monazite sand resource than Monte Alto, which has 25Mt valued at some  $470m.

It is the first detailed information about the Sulista tenements which the company acquired earlier this year, highlights the analyst.

Management expects sand mining to commence around 2028.

Speculative Buy. $6.10 target price unchanged.

Target price is $6.10 Current Price is $3.61 Difference: $2.49
If BRE meets the Ord Minnett target it will return approximately 69% (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

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

The bull case for office from Morgan Stanley's latest survey is the small drift towards full-time work from the office as opposed to working from home.

It appears working from home is "somewhat entrenched" in the Australian office culture with the impact of the pandemic settling into a new normal. Market vacancy is expected to remain in the mid teens in Sydney and Melbourne CBDs for the next few years.

Equal-weight retained for Charter Hall Long WALE REIT given it is more diversified, with material office exposure. Target is $4.08. Industry view: In-Line. 

Target price is $4.08 Current Price is $3.55 Difference: $0.53
If CLW meets the Morgan Stanley target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $3.88, suggesting upside of 9.5% (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

Morgan Stanley rates COF as Underweight (5) -

The bull case for office from Morgan Stanley's latest survey is the small drift towards full-time work from the office as opposed to working from home.

It appears working from home is "somewhat entrenched" in the Australian office culture with the impact of the pandemic settling into a new normal. Market vacancy is expected to remain in the mid teens in Sydney and Melbourne CBDs for the next few years.

The broker does not believe this is material enough to become bullish on Centuria Office REIT, or rival Dexus ((DXS)) for that matter, despite the stocks offering good value. Underweight. Target is $1.40. Industry view: In-Line. 

Target price is $1.40 Current Price is $1.22 Difference: $0.18
If COF meets the Morgan Stanley target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $1.41, suggesting upside of 16.7% (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 IEL as Neutral (3) -

Macquarie downgrades earnings forecasts for IDP Education due to ongoing regulatory concerns, particularly in volumes control on student placements.

The broker envisages the elections outcomes for the UK in July, Australian in May 2025 and Canada in October 2025, as offering some certainty around immigration policies and a possible reduction in the regulatory pressures on student visas.

Earnings forecasts are lowered with FY24 EPS down -18%, and FY25 EPS estimates down -38%, but Macquarie points to further downside risks to earnings due to regulatory caps in Australia and Canada.

Consensus earnings estimates are also viewed by the analyst of being too high and subject to further downgrades over the next year.

The target price is adjusted to $16 from $22. Neutral rating unchanged.

Target price is $16.00 Current Price is $14.51 Difference: $1.49
If IEL meets the Macquarie target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $20.15, suggesting upside of 30.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.3

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

Morgan Stanley rates IEL as Overweight (1) -

IDP Education has guided to FY24 adjusted EBIT broadly in line with FY23 with a 15-20% increase in IELTS testing and a -15-20% decline in volumes. A cost reduction program will be implemented to align expenses to the near-term revenue outlook.

The company acknowledges a more restrictive policy environment in key markets has negatively affected volumes in the second half. Morgan Stanley retains a $22.50 target and Overweight rating. Industry View: In-Line.

Target price is $22.50 Current Price is $14.51 Difference: $7.99
If IEL meets the Morgan Stanley target it will return approximately 55% (excluding dividends, fees and charges).

Current consensus price target is $20.15, suggesting upside of 30.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.3

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

Ord Minnett rates IEL as Accumulate (2) -

Tougher immigration and visa settings are expected to have a negative impact on short term student placements and consequently the earnings outlook for IDP Education, according to Ord Minnett.

The analyst lowers earnings forecasts by -20% on average for FY24. FY25 and FY26 which results in a decline in the target price of -8% to $22.50.

The broker is more upbeat on the longer term outlook. Although governments in the company's three key markets are reducing immigration targets, the resulting rebasing is still expected to be higher than pre-pandemic levels, says Ord Minnett.

Accumulate rating. $22.50 target.

Target price is $22.50 Current Price is $14.51 Difference: $7.99
If IEL meets the Ord Minnett target it will return approximately 55% (excluding dividends, fees and charges).

Current consensus price target is $20.15, suggesting upside of 30.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.3

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

UBS rates IEL as Neutral (3) -

UBS cuts IDP Education's share price target to $16.10 from $17.65 observing market conditions are tougher than even it had forecast (it previously flagged consensus forecasts were too high).

This has coincided with a more restrictive policy environment in Australia, Britain and Canada. UBS expects consensus will be forced to rebase forecasts.

The broker holds a positive view on the long term, citing the company's ability to outpace peers.

EPS forecasts fall -5% in FY24; -18% in FY25; -24% in FY26; and -25% in FY27. UBS warns of further EPS cuts should stricter policies be implemented.

Neutral rating retained.

Target price is $16.10 Current Price is $14.51 Difference: $1.59
If IEL meets the UBS target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $20.15, suggesting upside of 30.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.3

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

Macquarie rates ILU as Neutral (3) -

Macquarie views the funding for the Eneabba Phase-3 (EP3) project remains unresolved for Iluka Resources, as the project is taking longer than expected with the government's debt funding of $1.25bn, which covers around 70% of the revised capital budget.

The broker highlights the preferred pathway is to delay or use third part commercialisation of the project, which would either reduce the cash needed by -$250m over the next two years or a one-year delay would up the net present value.

Post an adjustment for updated commodity prices, the FY24 EPS estimate lifts 7%. Neutral rating unchanged. Target price revised to $7.40.

Target price is $7.40 Current Price is $7.12 Difference: $0.28
If ILU meets the Macquarie target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $7.92, suggesting upside of 10.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.1

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

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

Morgan Stanley's latest survey indicates intentions to buy or sell a property are now amongst the lowest levels recorded since the survey commenced.

Indications are market participants are uncertain about the residential outlook, even though 75% of respondents believe prices will increase over the next 12 months.

The broker believes residential pre-sales by developers such as Mirvac Group may need a catalyst to improve materially.

The clear preference for affordable options may mean the company's apartment strategy may take time to gain momentum. Rival Stockland ((SGP)) is preferred for its clear sequential improvement in sales, driven by location bias.

Equal-weight. The target is $2.35. Industry view: In-Line.

Target price is $2.35 Current Price is $2.00 Difference: $0.355
If MGR meets the Morgan Stanley target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $2.43, suggesting upside of 21.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.3

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

Morgan Stanley rates MIN as Overweight (1) -

Morgan Stanley considers the sale of equity in Onslow Haul Road a key positive catalyst for Mineral Resources as the proceeds will alleviate pressure on the balance sheet.

The broker also points out the sale price is around 8% better pre-tax, and 15% post tax, compared with analysis undertaken in its recent upgrade of the stock.

The sale will enable the business to transition into a "weatherproof long-life iron ore business" without needing additional capital, the broker adds.

The Overweight rating and $83 target are maintained. Attractive sector view.

Target price is $83.00 Current Price is $69.35 Difference: $13.65
If MIN meets the Morgan Stanley target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $74.29, suggesting upside of 8.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.4

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

Ord Minnett rates MIN as Hold (3) -

Mineral Resources reported the sale of a 49% interest in the Onslow Iron project's haul road to Morgan Stanley Infrastructure Partners for $1.3bn in consideration.

Ord Minnett highlights the result is as expected and the company will receive $1.1bn in the 2H2024 and another $200m when the Onslow mine ramps up to 35mt at the end of FY25.

The broker expects the cash injection will strengthen the balance sheet and allow for investments in new projects and enhance shareholder returns.

Hold maintained. Target is $67.

Target price is $67.00 Current Price is $69.35 Difference: minus $2.35 (current price is over target).
If MIN meets the Ord Minnett target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $74.29, suggesting upside of 8.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.4

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

Ord Minnett rates NTU as Upgrade to Speculative Buy from Hold (1) -

Post the delayed 2023 AGM for Northern Minerals, Ord Minnett upgraded the stock to a Speculative Buy rating from Hold due to the perceived de-risking of the company's profile, with four Chinese national failing to achieve director endorsement at the AGM.

The broker expects management to remain focused on completing the feasibility study into Browns Range and on the Wolverine deposit in the latter part of 2024.

The 2024 AGM is presumed to be in four months time, states the broker.

Speculative Buy rating, upgraded from Hold and a 5.2c target price.

Target price is $0.05 Current Price is $0.05 Difference: $0.007
If NTU 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: 1.0

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

Citi rates PME as Sell (5) -

Citi assesses Pro Medicus is ahead of the competition in terms of revenue growth, margins and transition to the cloud.

The company announced five contracts worth $45m in the previous week, implying annual revenue of $7.7m and taking the year to date total to $30m, in line with forecasts.

While expecting significant growth to the end of the decade, the broker asserts the current share price implies growth of 32% and considers this unlikely. Sell retained based on valuation and the target remains steady at $80.

Target price is $80.00 Current Price is $122.53 Difference: minus $42.53 (current price is over target).
If PME meets the Citi target it will return approximately minus 35% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $88.40, suggesting downside of -29.8% (ex-dividends)

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

Morgans rates PWR as Hold (3) -

Morgans observes Peter Warren Automotive's recently downgrade profit-before-tax guidance is -20% consensus forecasts, implying a -40% decline in the June half. Morgans expects further falls in FY25.

The company cited lower gross profit margins on new vehicles, particularly in certain brands where inventories are failing to shift, as the higher cost of living bites into new-vehicle demand and interest rates and inventories remain elevated.

Morgans believes the company is more exposed than peers due to its underweight and overweight positions to certain OEMs.

EPS forecasts fall -16.8% in FY24; -28% in FY25; and -25% in FY26.

Hold rating retained. Target price falls to $1.98 from $2.50 in February.

Target price is $1.98 Current Price is $1.75 Difference: $0.23
If PWR meets the Morgans target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $1.88, suggesting upside of 7.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: -0.3

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

Morgan Stanley rates RGN as Upgrade to Overweight from Equal-weight (1) -

Morgan Stanley upgrades Region Group to Overweight from Equal-weight, raising the target to $2.50 from $2.44.

The broker's latest survey suggests there are multiple tailwinds for the supermarket segment, with shoppers primed to spend more on groceries and least likely to cut back on such expenditure.

The broker considers Region Group the way to play the thematic, given supermarket/groceries make up 43% of its rental base.

The survey also suggests there is positive momentum for in-store retail sales over the next 12 months, as 70% of shoppers primarily shop in-store and another 24% intend to increase in-store grocery shopping relative to online in FY25. Industry view: In-Line.

Target price is $2.50 Current Price is $2.16 Difference: $0.34
If RGN meets the Morgan Stanley target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $2.51, suggesting upside of 13.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.7

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

Citi rates SGP as Buy (1) -

Citi updates estimates to reflect the recent land lease acquisition information from Stockland.

The broker incorporates earnings dilution from retail sales from the second half of 2024, along with lower growth in residential volumes and industrial NPI, given income loss from brownfield developments.

Estimates for earnings in FY24 increase slightly, by 1.2%, given land lease development profits, but FY25 reduces -5.4% and FY26 -8.3%.

The broker still expects a more positive medium-term outlook for the company in terms of earnings growth. Buy rating retained. Target is reduced to $5.10 from $5.20.

Target price is $5.10 Current Price is $4.59 Difference: $0.51
If SGP meets the Citi target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $5.01, suggesting upside of 9.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.7

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

Macquarie rates SKC as Outperform (1) -

SkyCity Entertainment provided a guidance update with a lower than expected trading outlook for FY24/FY25, otherwise known as a "profit warning".

Macquarie highlights the FY25 guidance update is notably earlier than is usually case for the company, and points to the impact of rising costs, excluding one-off items and a softening in the outlook for revenues.

Question marks around the balance sheet are likely to be in focus, the broker highlights, given the weaker outlook for earnings and fines under a worst case scenario of NZ$198m (excluding a possible licence suspension).

Macquarie lowers EBITDA forecasts by -3% and -19% for FY24 and FY25, including -NZ$25m in one-off costs. No dividend is expected in FY25.

Outperform rating maintained, The target is revised to NZ$1.85 from NZ$2.45.

Current Price is $1.39. Target price not assessed.

Current consensus price target is $2.90, suggesting upside of 107.1% (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: 1.0

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

Ord Minnett rates SKC as Buy (1) -

SkyCity Entertainment downgraded FY24 guidance and Ord Minnett points to a weaker discretionary spending outlook, the dissolution of the high-roller business and higher costs as the factors contributing to profit warning.

Management also offered FY25 guidance, including -NZ$20m-NZ$30m in one-off costs, including the delay in the Horizon Hotel opening and digital investments for online gaming regulatory changing in New Zealand.

The broker lowers the earnings forecast by -28% for FY25 and highlights it sits well below company guidance.

The target is revised by -6% to $2.90.

Target price is $2.90 Current Price is $1.39 Difference: $1.51
If SKC meets the Ord Minnett target it will return approximately 109% (excluding dividends, fees and charges).

Current consensus price target is $2.90, suggesting upside of 107.1% (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: 1.0

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

Shaw and Partners rates SRG as Buy (1) -

SRG Global has secured $125m of contracts in the Energy, Resources and Transport sectors across Australia, taking financial year to date contract wins to roughly $776m observes Shaw and Partners. It follows $1.2bn of wins in FY23.

The broker observes the company's tenders and pipeline totals roughly $6.5bn.

The broker forecasts SRG to deliver earnings growth of 22.7% in FY24 versus comparable companies which are expected to deliver growth of about 15%. Despite this, SRG trades at an enterprise multiple discount to peers.

Buy rating and $1.20 target retained.

Target price is $1.20 Current Price is $0.90 Difference: $0.3
If SRG meets the Shaw and Partners target it will return approximately 33% (excluding dividends, fees and charges).

Current consensus price target is $1.15, suggesting upside of 29.6% (ex-dividends)

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

Morgans rates SUL as Add (1) -

Super Retail's trading update revealed softer like-for-like sales in the first 17 weeks of the June half, which management sheeted back to cost-of-living impacts.

Morgans believes the company's diversified portfolio offers greater resilience to macro trends than peers and believes Super Retail's customer loyalty will prove a strong advantage.

EPS forecasts fall -0.8% in FY24; -3.3% in FY25; and -7.2% in FY26.

Add rating retained. Target price falls to $17.11 from $17.50 in February.

Target price is $17.11 Current Price is $13.23 Difference: $3.88
If SUL meets the Morgans target it will return approximately 29% (excluding dividends, fees and charges).

Current consensus price target is $14.58, suggesting upside of 10.1% (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 TNE as Buy (1) -

Bell Potter likens investment in TechnologyOne to compound interest, citing profit-before-tax growth over the past four years at 13% (FY20); 14% (FY21); 15% (FY22); and 16% (FY23).

The broker expects this trend will continue in the near to medium term, citing consensus forecasts for 16% growth in FY24; 18% in FY25 and 18% in FY26 (Bell Potter's forecasts are about 1 percentage point higher).

Bell Potter expects this could drive the company's price-earnings multiple from 30x to 40x before tracking up towards 50x.

Buy rating retained. Target price rises 7% to $20.25 from $19.

Target price is $20.25 Current Price is $18.14 Difference: $2.11
If TNE meets the Bell Potter target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $17.29, suggesting downside of -5.1% (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