Australian Broker Call

Bell Potter rates 360 as Buy (1) -

Bell Potter expects another solid quarter for Life360 when it reports Q2/H1 results on August 15, though paying circles growth may be moderated by Q1 price rises for android users.

Because of this slower growth, the broker expects management to only reiterate 2023 guidance yet sees potential for an upgrade following the Q3 result.

The price target rises to $9.25 from $9.00 on favourable currency movements and time creep. Buy.

Target price is $9.25 Current Price is $7.82 Difference: $1.43
If 360 meets the Bell Potter target it will return approximately 18% (excluding dividends, fees and charges).

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: 1.0

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

UBS rates ALX as Neutral (3) -

June quarter toll revenue across Atlas Arteria assets was slightly better than UBS expected. The company is due to report its first half results on August 31.

The broker believes the focus will be on updates to distribution guidance, composition of cash flow, operating costs and updates on negotiations relating to Dulles Greenway.

Traffic and toll revenue have not materially changed the valuation or the view on operations, UBS asserts.

Following recent share price weakness some value is emerging but not enough as yet and the broker retains a Neutral rating with the target rising to $6.65 from $6.55.

Target price is $6.65 Current Price is $6.26 Difference: $0.39
If ALX meets the UBS target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $6.48, suggesting upside of 3.0% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.0

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

Shaw and Partners rates AZY as Buy (1) -

Antipa Minerals has provided FY24 exploration plans for the Paterson and Wilki farm-in projects, to be funded by IGO ((IGO)) and Newcrest Mining ((NCM)), respectively.

With these two companies currently on the Antipa register, Shaw and Partners considers exploration success from the farm-in, or ongoing growth in the Minyari Dome project, as potential catalysts for corporate activity.

While the share prices of most emerging gold companies have been weak over the past year,  the broker believes the second half of 2023 is set to be a more constructive period for small cap gold stocks.

Buy rating and 6c target maintained.

Target price is $0.06 Current Price is $0.02 Difference: $0.044
If AZY meets the Shaw and Partners target it will return approximately 275% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

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

Morgan Stanley rates BRG as Overweight (1) -

Breville Group is added to the list of key small/mid cap ideas where Morgan Stanley has high conviction on earnings heading into reporting season along with outperformance into FY24.

FY23 earnings (EBIT) guidance implies a 1H/2H split of 72%:28% and provides assurance for the analyst (given the five-year average is 68%:32%), while the long runway for growth remains.

The consensus FY24 EBIT margin of 11.6% is below the FY19 level of 12.8% because management has reinvested aggressively in R&D and marketing, explains Morgan Stanley. Should demand soften, it's thought costs could be reduced to drive margin expansion.

Overweight rating. Target price of $25. Industry view: In-Line.

Target price is $25.00 Current Price is $21.61 Difference: $3.39
If BRG meets the Morgan Stanley target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $23.18, suggesting upside of 7.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.7

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

Citi rates CXO as Sell (5) -

Following Core Lithium's 4Q activities report, Citi lowers its target to 50c from 80c and retains its Sell rating. Various moving parts are highlighted including the uncertainty and cost of future ore sources.

Management expects to run at an around 50% recovery rate next year and has flagged potential for a costly flow sheet addition. Moreover,  there will be -$40-50m in pre-development surface works for the BP33 underground lithium mine.

Guidance is for 80,000-90,000t of spodumene production in FY24, 34,000-44,000t above the consensus forecast, according to the analyst.

Target price is $0.50 Current Price is $0.72 Difference: minus $0.22 (current price is over target).
If CXO meets the Citi target it will return approximately minus 31% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $0.72, suggesting upside of 0.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.0

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

Macquarie rates CXO as Outperform (1) -

Core Lithium expects Finniss to produce 80-90,000t of spodumene concentrate in FY24, with FY25 output expected to be marginally lower. Macquarie had previously assumed volume growth would be stronger and has slowed its forecast for the ramp up by two years.

Peak production rates of 170,000tpa are expected in FY27 now and the ramp up of the BP33 underground is key to achieving this. Target is reduced to $0.90 from $1.20. Outperform maintained.

Target price is $0.90 Current Price is $0.72 Difference: $0.18
If CXO meets the Macquarie target it will return approximately 25% (excluding dividends, fees and charges).

Current consensus price target is $0.72, suggesting upside of 0.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.0

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

Morgans rates CXO as Hold (3) -

Morgans slashes its target for Core Lithium to 75c from $1.05 and suggests investors wait for a better entry point, or more clarity on long-term economics before adding to positions. Hold.

This advice follows management's materially lower-than-expected production outlook for FY24 and FY25. The broker notes lithium recoveries are currently quite low with a large portion of fine material being diverted from the plant. 

Moreover, there are mismatches between mining rates and the processing plant capacity in FY25, explains Morgans. 

The broker's production forecast for FY24 is lowered by -22% towards the lower range of guidance, while forecast production for FY25 is significantly reduced to a level -4% lower than FY24. 

Target price is $0.75 Current Price is $0.72 Difference: $0.03
If CXO meets the Morgans target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $0.72, suggesting upside of 0.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.0

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

UBS rates DOW as Neutral (3) -

UBS upgrades FY23 estimates for Downer EDI by 6% and now expects underlyingg net profit of $180m, at the midpoint of guidance. This reflects stronger earnings for the transport business.

The company recently reached contractual close on the Queensland train manufacturing program and will be responsible for the delivery of 65 six-car passenger trains, two training simulators, a train manufacturing facility at Torbanlea, the maintenance facility at Ormeau and maintenance for up to 35 years.

The broker upgrades FY24 and FY25 estimates for EPS by 5% and 4%, respectively, reflecting the initial manufacturing component of the contract. Neutral maintained. Target is raised to $4.65 from $3.60.

Target price is $4.65 Current Price is $4.57 Difference: $0.08
If DOW meets the UBS target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $4.52, suggesting upside of 0.4% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.2

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

Macquarie rates GLN as Outperform (1) -

Galan Lithium has produced lithium chloride concentrate from its pilot plant in line with the design. The first batch consisted of 350 litres of concentrate with 6% lithium. Samples are being sent to potential offtake customers.

Engineering works have now commenced for a pilot carbonate plant to process the lithium from Hombre Muerto West. Once all approvals are received Macquarie expects the company will lodge development plans and permits for a full-scale plan.

Outperform maintained. Target is $1.70.

Target price is $1.70 Current Price is $0.81 Difference: $0.895
If GLN meets the Macquarie target it will return approximately 111% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

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

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

Morgan Stanley feels it may be more prudent for Lendlease Group to preserve capital rather than to deploy into new ventures.

Gearing is at the high end of management's 10-20% target, explains the analyst, and the profitability of new projects is uncertain due to the macroeconomic backdrop.

Given the company has just confirmed the retrenchment of around -10% of staff, the broker suggests some production and profitability targets (formulated back in 2021) may need to be reset.

Equal-weight rating and $9.41 target price are maintained. Industry View: In-Line.

Target price is $9.41 Current Price is $8.31 Difference: $1.1
If LLC meets the Morgan Stanley target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $10.41, suggesting upside of 25.0% (ex-dividends)

The company's fiscal year ends in June.

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

Citi rates MND as Buy (1) -

Monadelphous Group has today announced the securing of a contract with Albermarle valued at around $200m for the expansion of the Kemerton lithium hydroxide plant in WA.

The expected annual contribution from the contract represents 15% of Citi's FY24 engineering and construction (E&C) revenue forecast  and 13% of its FY25 estimate for Monadelphous.

In its initial response following the contract annuncement, the broker suggests a "floodgate" of (E&C) contract awards could now be opened up, and the group will likely reaffirm its E&C revenue ramp up outlook statement at the full year result.

Industry feedback highlights an increased urgency to lock in capacity before it is too late, points out the analyst.

Target $14.45. Buy.

Target price is $14.45 Current Price is $12.50 Difference: $1.95
If MND meets the Citi target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $13.93, suggesting upside of 5.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.4

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

Citi rates PLS as Buy (1) -

Stronger 4Q volumes and lesser costs than expected for Pilbara Minerals offset realised pricing that missed the consensus estimate by -12%, explains Citi. Operational guidance is expected with the FY23 result.

Management noted the P680 (expansion project) primary rejection facility is on track for Q1 FY24 and full capacity by the end of FY24.

The broker's Buy rating remains and the target falls to $5.10 from $5.40 on lower forecast lithium prices and after taking a more conservative stance on the expansion ramp-up.

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

Current consensus price target is $5.35, suggesting upside of 10.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.4

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

Macquarie rates PLS as Outperform (1) -

Pilbara Minerals produced 163,000t and shipped 176,000t of spodumene in the June quarter, beating Macquarie's forecasts. The reported realised price of US$3256/dmt was lower than expected.

The P680 project is underway with commissioning to begin in the first quarter of FY24 and near-term catalysts include further spodumene spot sales or toll treatment.

Outperform rating and $7.30 target maintained.

Target price is $7.30 Current Price is $4.59 Difference: $2.71
If PLS meets the Macquarie target it will return approximately 59% (excluding dividends, fees and charges).

Current consensus price target is $5.35, suggesting upside of 10.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.4

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

UBS rates PLS as Neutral (3) -

Pilbara Minerals posted a strong June quarter, with production in line with expectations and shipments even better. UBS notes the P680 project is on track and forecasts 670,000t in FY24.

Despite fairly robust EV sales numbers, Chinese chemical prices have been weak and UBS is investigating the extent of any recent supply response. Neutral maintained. Target is $5.20.

Target price is $5.20 Current Price is $4.59 Difference: $0.61
If PLS meets the UBS target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $5.35, suggesting upside of 10.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.4

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

Macquarie rates RIO as Neutral (3) -

Macquarie observes, while Rio Tinto has progressed with projects in copper and green aluminium over the last few months, near-term earnings remain dominated by iron ore, with EBITDA from the Pilbara representing more than 65% of group EBITDA for the first half of 2023.

The broker expects the upcoming results will be reflecting improved profitability in most key commodities and anticipates an interim dividend of US$1.85. Neutral rating and $114 target.

Target price is $114.00 Current Price is $115.25 Difference: minus $1.25 (current price is over target).
If RIO meets the Macquarie target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $113.17, suggesting downside of -5.0% (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: 0.2

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

Citi rates RMD as Buy (1) -

Citi reviews Q2 results for ResMed's largest competitor Philips and suggests the latter may be losing market share in sleep masks as Sleep & Respiratory Care sales declined year-on-year.

Philips is currently in negotiations with the Department of Justice/FDA in the US on a proposed consent decree and the broker assumes the company resumes selling sleep devices in the 1Q of 2024. However, there are a wide range of potential outcomes.

The $40.50 target and Buy rating for ResMed are maintained.

Target price is $40.50 Current Price is $32.66 Difference: $7.84
If RMD meets the Citi target it will return approximately 24% (excluding dividends, fees and charges).

Current consensus price target is $38.00, suggesting upside of 17.1% (ex-dividends)

The company's fiscal year ends in June.

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: 0.8

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

Citi rates S32 as Neutral (3) -

South32's June quarter production was in line with Citi's estimate and cost guidance for FY24 was largely maintained.

However, there was a -US$1.3bn Hermosa non-cash impairment for the Taylor deposit and management also flagged higher capex for Taylor. On the flipside, the measured mineral resource for Taylor increased by 41%.

Neutral rating. The broker's $4.05 target is retained depite an around -5% cut to its FY24 earnings forecast.

Group copper equivalent production increased by 9% in the 4Q on a return to stable operations following adverse weather and other temporary impacts in the September quarter, explains the analyst.

Target price is $4.05 Current Price is $3.72 Difference: $0.33
If S32 meets the Citi target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $4.58, suggesting upside of 18.7% (ex-dividends)

The company's fiscal year ends in June.

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: 0.7

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

Macquarie rates S32 as Outperform (1) -

June quarter production was mixed, Macquarie observes, with alumina -5% lower than estimated and aluminium in line. Manganese, nickel and silver were also stronger, offsetting weaker-than-expected copper, lead, zinc and coal.

South32 has indicated it will incur a non-cash impairment expense in relation to the Taylor deposit due to curtailed development activity in 2020/21 and significantly higher de-watering requirements.

The mineral resource for the deposit has also been updated, with contained zinc increasing 2%. Outperform rating and $4.60 target maintained.

Target price is $4.60 Current Price is $3.72 Difference: $0.88
If S32 meets the Macquarie target it will return approximately 24% (excluding dividends, fees and charges).

Current consensus price target is $4.58, suggesting upside of 18.7% (ex-dividends)

The company's fiscal year ends in June.

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: 0.7

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

Morgan Stanley rates S32 as Overweight (1) -

South32 has announced a non-cash impairment of -US$1.3bn to the asset value for Hermosa, due to inflation and covid-related delays.

The valuation is now down to US$1bn compared to Morgan Stanley's net present value estimate for Hermosa of US$1.16bn, and the impact on valuation for the broker's base case is only -5cps.

Fourth quarter production was broadly in line with Morgan Stanley's forecast though lower realised prices impact its FY23 earnings forecast  by around -2%. FY24 guidance changes were considered minor.

The Overweight rating and $4.25 target are maintained. Industry view: Attractive. 

Target price is $4.25 Current Price is $3.72 Difference: $0.53
If S32 meets the Morgan Stanley target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $4.58, suggesting upside of 18.7% (ex-dividends)

The company's fiscal year ends in June.

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: 0.7

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

Macquarie rates SHL as Underperform (5) -

Macquarie updates forecasts to incorporate the acquisitions in Germany and Switzerland. The composition of growth over time is also reviewed as well as a capacity for further acquisitions.

The broker calculates acquisitions accounted for 35% of base business revenue growth between FY09-19 and 50% of EBITDA/EPS growth. While noting capacity for further acquisitions, Macquarie believes the larger earnings base will impact accretion.

With sum-of-the-parts (SOTP) valuation highlighting the downside to the current share price, the broker retains an Underperform rating for Sonic Healthcare. Target is raised to $33.50 from $32.00.

Target price is $33.50 Current Price is $35.50 Difference: minus $2 (current price is over target).
If SHL 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 $35.87, suggesting upside of 2.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.2

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

Shaw and Partners rates STA as Buy (1) -

Strandline Resources is commissioning the Coburn mineral sands project in Western Australia in stages. Progress has been slowed by a series of minor availability issues but Shaw and Partners expects the project will still reach nameplate capacity in FY24.

Hence, the recent sell-off in the stock is considered overdone, creating an opportunity for investors. The broker points out Coburn is a world-class mineral sands project that should generate over $100m of EBITDA per annum when in full production.

A loss in FY23 is now expected rather than a small profit because of the delays, and the broker downgrades FY24 and FY25 net profit estimates by -53% and -48%, respectively. Target is reduced to $0.65 from $0.80. Buy retained.

Target price is $0.65 Current Price is $0.23 Difference: $0.425
If STA meets the Shaw and Partners target it will return approximately 189% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

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

UBS rates SVW as Buy (1) -

Ahead of the results on August 17, UBS highlights its forecasts are underpinned by strong EBIT growth from key segments WesTrac and Coates because of strong mining and infrastructure demand.

FY24 guidance is expected in the results and the broker currently expects EBIT of $1.3bn, up 12%. The broker retains a Buy rating and raises the target to $29.40 from $27.00.

Target price is $29.40 Current Price is $25.86 Difference: $3.54
If SVW meets the UBS target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $27.37, suggesting upside of 5.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.7

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