Australian Broker Call

Morgan Stanley rates 360 as Overweight (1) -

Morgan Stanley highlights Life360’s successful US$320m convertible note issuance, structured with a 0% coupon and no dilution unless the share price exceeds US$122.22, well above current levels.

The broker sees the transaction as opportunistic, leveraging favourable market conditions to strengthen the balance sheet through FY30 without requiring near-term capital deployment.

Morgan Stanley maintains an Overweight rating and $32 target. Industry View: In-Line.

Target price is $32.00 Current Price is $33.25 Difference: minus $1.25 (current price is over target).
If 360 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 $30.12, suggesting downside of -8.3% (ex-dividends)

The company's fiscal year ends in December.

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

Citi rates CBA as Sell (5) -

Citi believes CommBank's valuation, along with that of other banks to some extent, reflects a rotation into the sector driven by investors chasing earnings momentum, compounded by passive flows contributing to a structural squeeze.

This dynamic is unlikely to be permanent. The broker believes the trigger for a reversal in bank share price outperformance will most likely emerge from outside the sector, as investors reallocate capital toward higher-conviction opportunities.

Renewed confidence in the materials sector is the most probable catalyst, suggest the analysts, with glimpses of such rotation already evident in parts of 2024.

The Sell rating and $100 target are maintained for CommBank.

Target price is $100.00 Current Price is $179.90 Difference: minus $79.9 (current price is over target).
If CBA meets the Citi target it will return approximately minus 44% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $109.25, suggesting downside of -39.8% (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

Ord Minnett rates CCL as Buy (1) -

Ord Minnett expects Cuscal to exceed FY25 prospectus forecasts, supported by stable operating conditions in the second half and strong structural tailwinds in its issuing and payments segments.

The broker highlights a four-year EPS compound annual growth rate (CAGR) of 9.5% and sees Cuscal as undervalued despite recent share price gains, citing an attractive valuation multiple and dividend yield.

The analyst makes minor forecast changes, with segment mix slightly adjusted and a modest tweak to the three-year interest rate outlook, lifting the target price to $3.75 from $3.61.

A Buy rating is retained.

Target price is $3.75 Current Price is $2.94 Difference: $0.81
If CCL meets the Ord Minnett target it will return approximately 28% (excluding dividends, fees and charges).

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

Citi rates DMP as Neutral (3) -

Citi views Deutschland’s (Germany's) record sales week in early June for Domino's Pizza Enterprises as an encouraging sign, with gains across total sales, average unit volumes, and order counts, and 72 stores setting individual records.

The broker considers this update as supportive of the February trading update, which noted improvement in Germany during the second half of 2025.

While the development is seen as incrementally positive, Citi remains cautious, noting Germany represents just 11% of total stores.

Concerns persist for the analysts around Japan, the company’s largest market by store count (22%), which may still be underperforming following recent management changes.

Citi retains a Neutral rating and $23.82 target.

Target price is $23.82 Current Price is $21.30 Difference: $2.52
If DMP meets the Citi target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $27.29, suggesting upside of 29.9% (ex-dividends)

Forecast for FY25:

Forecast for FY26:

Market Sentiment: 0.0

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

Morgan Stanley rates DMP as Downgrade to Equal-weight from Overweight (3) -

Morgan Stanley notes Domino's Pizza Enterprises' failed to meet its same-store sales outlook of 3-6% growth over FY22-24 and is set to miss it once again in FY25.

The broker now considers the underperformance as a structural shift rather than a post-covid reconfiguration.

As a result, the analyst has lowered its medium-term same-store sales and network growth forecasts to 1-3%. This led to a downgrade to FY26-29 top-line growth forecasts to an average 3.4% from 5.4% before.

For the longer term, the broker cut top-line growth forecasts to 3.5% from 4.0%. Rating downgraded to Equal-weight from Overweight. Target cut to $24.

Target price is $24.00 Current Price is $21.30 Difference: $2.7
If DMP meets the Morgan Stanley target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $27.29, suggesting upside of 29.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY25:

Forecast for FY26:

Market Sentiment: 0.0

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

Bell Potter rates DVP as Buy (1) -

Bell Potter has brought forward its forecast for Develop Global to achieve the nameplate copper concentrate production rate at Woodlawn to the September quarter from the December quarter. The broker also noted underground mining ramp-up is on track to hit over 800ktpa by the December quarter.

For the Pioneer Dome project, the broker pushed back the first production expectation to the September 2028 quarter. The result is a 17% lift in EPS forecast for FY26, and a -6% cut to FY27 forecast.

Buy. Target rises to $5 from $4 on EPS revisions, valuation roll-forward and a lower cost of capital of 9.5% from 10.5%.

Target price is $5.00 Current Price is $4.23 Difference: $0.77
If DVP 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 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

Bell Potter rates EBR as Speculative Buy (1) -

EBR Systems announced the two commercial implants of its WiSE-CRT product seven weeks after receiving FDA approval, which Bell Potter considers a positive development.

Both hospitals generate a high volume of cardiac procedures, and the lead physicians strongly endorsed the product.

The broker notes hospitals like these can provide a good indicator of the product's sales potential, which is important given CRT failure rates can be as high as 30%.

Next catalyst is CMS' final ruling on reimbursements in August, with effective coverage expected to be from October.

No change to forecasts. Speculative Buy and unchanged target price of $2.25.

Target price is $2.25 Current Price is $1.17 Difference: $1.085
If EBR meets the Bell Potter target it will return approximately 93% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

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

Citi rates EVN as Neutral (3) -

Evolution Mining has released its Mineral Resource and Ore Reserve update, with a -4.5moz downgrade at Red Lake largely attributed to modelling and estimation changes, though no impairment is expected, highlights Citi.

The broker considers Ernest Henry as the key positive, with the Bert zone adding 3.5mt at 1% copper and 0.9g/t gold, and further upside expected from Ernie Junior, ahead of a pre-feasibility study due in the December quarter.

Mungari added ounces and extended open-pit mine life, while Cowal replaced depletion, though underground development remains constrained, note the analysts.

Citi's gold price assumptions are raised to $2,500/oz for reserves and $3,000/oz for resources, lifting its FY25 earnings (EBITDA) forecast by 2%, with FY26 and beyond increased by approximately 1%.

Citi retains its target price at $8.50 and maintains a Buy rating.

Target price is $8.50 Current Price is $8.89 Difference: minus $0.39 (current price is over target).
If EVN meets the Citi target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $7.32, suggesting downside of -14.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY25:

Forecast for FY26:

Market Sentiment: -0.4

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

Morgan Stanley rates EVN as Underweight (5) -

Morgan Stanley highlights a significant downgrade to Evolution Mining’s Red Lake resource and reserve base, with total contained gold falling by -34% and average grade down -29% year-on-year.

The broker explains the changes are largely due to model refinement by the company and estimation changes. This is expected to negatively impact mine life and operating costs, with the broker's group forecast FY26-FY28 earnings revised lower by -3-7%.

While group gold reserves remain flat at circa 11moz, the downgrade at Red Lake was partially offset by increases at Mungari (1.3moz), Ernest Henry (0.4moz), and Northparkes (0.4moz).

Morgan Stanley maintains an Underweight rating and a $5.60 target price. Industry View: In-Line.

Target price is $5.60 Current Price is $8.89 Difference: minus $3.29 (current price is over target).
If EVN meets the Morgan Stanley target it will return approximately minus 37% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $7.32, suggesting downside of -14.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY25:

Forecast for FY26:

Market Sentiment: -0.4

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

Morgan Stanley rates GYG as Overweight (1) -

Morgan Stanley notes consumers' perception of quick service restaurants is changing with more focus now on quality, convenience, and digital channels.

Guzman y Gomez remains the broker's preferred exposure to the sector, given its long run of growth domestically. The analyst forecasts over 20% compounded annual sales growth rate over FY25-30 on network growth and market share gains.

Overweight retained. Target price $41.90.

Target price is $41.90 Current Price is $29.47 Difference: $12.43
If GYG meets the Morgan Stanley target it will return approximately 42% (excluding dividends, fees and charges).

Current consensus price target is $37.97, suggesting upside of 31.5% (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

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

Morgan Stanley highlights Rio Tinto’s Jadar lithium project in Serbia has been included in the EU’s updated list of strategic raw material projects.

This potentially unlocks development support and financing from the European Commission, explain the analysts.

The broker expects revised cost estimates for the project, which was previously halted due to regulatory issues but could restart with development beginning in 1H 2026 and production by 2030.

Jadar is modeled by the analysts to produce circa 58ktpa of lithium carbonate and generate a project NPV of US$3.9bn.

Morgan Stanley conservatively attributes 25% of this value (US$1bn or $1.10/share) in its base case to reflect ongoing approval risks.

The broker retains an Equal-weight rating and a $119.50 target price. Industry View: In-line.

Target price is $119.50 Current Price is $109.60 Difference: $9.9
If RIO meets the Morgan Stanley target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $121.58, suggesting upside of 11.6% (ex-dividends)

The company's fiscal year ends in December.

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: 0.3

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

Morgans rates RRL as Hold (3) -

Following visits to Regis Resources' Duketon and Tropicana projects, Morgans lifted FY26 and FY27 production forecasts to reflect the shift towards underground operations at both sites.

The broker also raised processing costs for Duketon from FY27 onwards and from FY28 for Tropicana.

Overall, the analyst is confident in Duketon's long-term viability, given its underground reserves rose 550% vs five years ago, when the expectation then was for the end of mine life to be FY25.

At Tropicana, the broker is impressed with the collaborative working relationship between the company and its JV partner, AngloGold Ashanti, which has led to efficient operations.

Hold. Target cut to $5.20 from $5.24.

Target price is $5.20 Current Price is $4.85 Difference: $0.35
If RRL meets the Morgans target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $4.23, suggesting downside of -11.7% (ex-dividends)

The company's fiscal year ends in June.

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

Macquarie rates SDF as Outperform (1) -

Macquarie observes the increasing offshore investment by Steadfast Group, which generates circa 7.5% of the group's earnings, with greater disclosure anticipated when the contribution reaches around 15% of group earnings, the analyst explains.

At current valuation levels, the stock trades around a -24.6% discount to international peers, including TWFG (The Woodlands Financial Group), which trades at circa 40x two-year forward price-to-earnings ratio, a premium to Steadfast of 135%.

Macquarie highlights that TWFG is the only one of eight listed insurance brokers outside of Australia with a network and possible "pathway" to M&A and integration.

The analyst retains an Outperform rating on Steadfast Group and a $6.80 target price.

Target price is $6.80 Current Price is $5.88 Difference: $0.92
If SDF meets the Macquarie target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $6.75, suggesting upside of 13.1% (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

Morgan Stanley rates SUN as Overweight (1) -

Suncorp Group has become Morgan Stanley's top pick in the insurance space. The broker has retained an Overweight rating and lifted its target price to $25.00 from $22.65.

The broker notes that despite better earnings quality and revenue growth versus Insurance Australia Group ((IAG)), the stock is trading at a discount.

Among the reasons for this is a sub-optimal capital structure and a lack of aggregate reinsurance cover, the report suggests.

The broker believes a long-term perils protection cover would impact earnings by -4-6% but would deliver share price gains of 5-7%. 

The analyst also believes the company can reduce its CET1 intensity to 23% of gross earnings premium through a 30% quota share insurance. This would unlock over $1.4bn in equity capital or $1.29/share.

Target price is $25.00 Current Price is $21.17 Difference: $3.83
If SUN meets the Morgan Stanley target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $21.53, suggesting downside of -1.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY25:

Forecast for FY26:

Market Sentiment: 0.4

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

UBS rates TLC as Buy (1) -

UBS emphasises Lottery Corp has a "compelling growth formula" which is currently not discounted in consensus earnings forecasts for the next few years.

The broker anticipates the company can generate high single-digit EPS growth from lottery top-line growth related to GDP, growth in sales via digital channels, and an ability to scale the cost base with scope for leverage and buybacks post the Victoria license renewal.

UBS estimates EPS to be 11% higher than consensus by FY31 due to digital sales and the variable contribution margin (which measures the profitability of sales after variable costs are subtracted).

The analyst proposes the market will be more favourable towards the company with an early Victorian license renewal.

Target price is raised to $6.20 from $5.80 with Buy rating retained.

Target price is $6.20 Current Price is $5.10 Difference: $1.1
If TLC meets the UBS target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $5.58, suggesting upside of 7.0% (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 TPW as Sell (5) -

Ord Minnett significantly raises its target price for Temple & Webster to $20.00 from $14.00, following a reassessment of the company’s long-term potential through peer and industry analysis.

The broker acknowledges the company's proven direct-ship model in the online homewares and furniture segment, which is expected to contribute over $500m, or 85% of FY25 revenue.

Despite this, the company remains a minor player in the B2B and home improvement segments, explains the analyst, with both forecast to generate under $50m in FY25.

Ord Minnett believes the market is overly optimistic, pricing in aggressive growth and margin expansion in these areas, despite limited precedent and rising competitive risk. A Sell rating is maintained.

Target price is $20.00 Current Price is $22.76 Difference: minus $2.76 (current price is over target).
If TPW meets the Ord Minnett target it will return approximately minus 12% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $18.95, suggesting downside of -17.3% (ex-dividends)

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