Australian Broker Call

Morgan Stanley rates ASX as Underweight (5) -

ASIC has announced interim review findings of ASX which Morgan Stanley believes will add to both costs and capital and lowers the company's return to shareholders.

The final review is due on March 26 with ASIC highlighting the "view that current activities will not resolve the serious shortcomings that have been identified."

Management updated guidance with a -5 to -10% cut in dividend payout and -0.5% lower return on equity target with no changes to total costs in FY26 or to capex for FY26-27 the analyst explains.

The broker retains an Underweight rating and sees further risks to return on equity despite recent strength in trading volumes. No change to $54.05 target. Industry View: In-line.

Target price is $54.05 Current Price is $57.54 Difference: minus $3.49 (current price is over target).
If ASX meets the Morgan Stanley target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $59.76, suggesting upside of 11.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY26:

Forecast for FY27:

Market Sentiment: -0.2

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

Ord Minnett rates ASX as Downgrade to Hold from Accumulate (3) -

ASX notified its payout ratio will sit at the low end of its 75-85% target for at least the next three dividends as it sets aside an extra $150m of capital required by ASIC after operational and governance failings.

Ord Minnett notes the ASIC-mandated capital buffer remains until remediation is proven, following reviews citing CHESS replacement issues, outages and underinvestment.

ASX is responding via tech modernisation and an “Accelerate” risk program, likely flowing through opex rather than capex, plus new board independence requirements for clearing/settlement entities. 

The company guided to a 4-7% rise in FY26 opex plus a further 6-8.5% for ASIC compliance. The broker has modelled a $150m penalty as the ASIC legal action continues.

FY26 EPS forecasts unchanged but FY27-28 trimmed by -1.2% each. Dividend payout ratio downgraded to 75% from 85% across the forecast horizon.

Target cut to $58.60. Rating downgraded to Hold from Accumulate.

Target price is $58.60 Current Price is $57.54 Difference: $1.06
If ASX meets the Ord Minnett target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $59.76, suggesting upside of 11.4% (ex-dividends)

Forecast for FY26:

Forecast for FY27:

Market Sentiment: -0.2

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

UBS rates ASX as Sell (5) -

ASIC's interim review poses risks to ASX's cost base for FY27 which UBS reckons will overhang the stock over the next six months.

Part of the review flagged an additional $150m of CET1 to be built up over the next 18 months with management pointing to a lower dividend payout ratio at a 75%-85% range versus 80%-90%, previously, as well as a dilutive DRP.

The analyst believes other financial impacts are less transparent with the ASX not updating the market on costs for its Accelerate reset until Investor Day (June 26).

UBS envisages downside risks to consensus earnings forecasts with the broker's FY27 cost growth at 8.5% including D&A versus consensus at 4.2%.

No change to Sell rating. Target lowered to $53 from $62.15.

Target price is $53.00 Current Price is $57.54 Difference: minus $4.54 (current price is over target).
If ASX meets the UBS target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $59.76, suggesting upside of 11.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY26:

Forecast for FY27:

Market Sentiment: -0.2

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

Ord Minnett rates BHP as Accumulate (2) -

November coal exports from the Port of Newcastle were 12.6Mt (mostly thermal), up 1% y/y, implying an annualised run-rate of 154Mtpa, Ord Minnett notes.

Using the five-year average for December, the broker estimates December-quarter shipments at 40.2Mt, up 1% q/q and -1% y/y,  broadly consistent with expectations for flat BHP Group volumes.

FY26 EPS forecast lifted by 1%, with FY27-FY28 left unchanged. Accumulate retained, and target rises to $48 from $47.

Target price is $48.00 Current Price is $44.27 Difference: $3.73
If BHP meets the Ord Minnett target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $45.82, suggesting upside of 3.6% (ex-dividends)

Forecast for FY26:

Forecast for FY27:

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

Bell Potter rates BIO as Buy (1) -

Biome Australia is launching the first human trial of its proprietary probiotic strain, Lactobacillus plantarum BMB18, a 240-person randomised, double-blind, placebo-controlled study. 

It targets digestive symptoms and sleep/mood issues, and the trial starts in Feb 2026 and will last around 12 months at  $140k via La Trobe University. Bell Potter notes the trial follows promising lab results, and a positive outcome could drive peer-reviewed publications and bolster Biome's credibility.

Strategically, owning a proprietary probiotic strain strengthens the company's moat, supports new product/formulation innovation, and expands its GI growth opportunity, in the broker's view.

Buy and $1 target are unchanged.

Target price is $1.00 Current Price is $0.40 Difference: $0.605
If BIO meets the Bell Potter target it will return approximately 153% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY26:

Forecast for FY27:

Market Sentiment: 1.0

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

Macquarie rates BRG as Outperform (1) -

Macquarie notes small-cap consumer stocks had a volatile Oct/Nov AGM season as September retail spending softened and rate-hike fears rose. This left the group's share price -16ppts down since FY25 results after strong Jul/Aug outperformance.

While furniture spend was strong, potential rate hikes in 2026 keep the broker more cautious. Preference is for discretionary exposure over Telco and Household Retail, with the broker noting Black November data points to a solid discretionary backdrop.

With the sector around 4x P/E cheaper since FY25 results, the broker sees a valuation opportunity into Feb-26 reporting.

The order of preference is Breville Group, Nick Scali ((NCK)), Superloop ((SLC)), Universal Store ((UNI)), Lovisa Holdings ((LOV)), Temple & Webster ((TPW)), Baby Bunting ((BBN)), Premier Investments ((PMV)), Aussie Broadband ((ABB)) and Super Retail ((SUL)).

Outperform rating and $39.20 target unchanged for Breville.

Target price is $39.20 Current Price is $29.64 Difference: $9.56
If BRG meets the Macquarie target it will return approximately 32% (excluding dividends, fees and charges).

Current consensus price target is $37.38, suggesting upside of 25.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY26:

Forecast for FY27:

Market Sentiment: 0.8

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

Ord Minnett rates CSL as Hold (3) -

Ord Minnett observes CDC data showed flu vaccine distribution to 6 December is at its lowest since 2013-14. Assuming 95% delivered by early December implies 136.4m doses for 2025-26, down -8% y/y.

This aligns with expectations for weaker uptake, the broker remarked, noting CSL had flagged -12% y/y decline. It suggests a deeper Seqirus revenue decline, and the broker is now forecasting -14% y/y fall.

FY26 EPS forecast unchanged, and minor tweaks made to FY27-28. Hold rating and $235 target remains.

Target price is $235.00 Current Price is $179.31 Difference: $55.69
If CSL meets the Ord Minnett target it will return approximately 31% (excluding dividends, fees and charges).

Current consensus price target is $231.93, suggesting upside of 30.5% (ex-dividends)

Forecast for FY26:

Forecast for FY27:

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

Market Sentiment: 0.6

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

Citi rates DBI as Buy (1) -

Dalrymple Bay Infrastructure's recent $1.07bn refinancing signals improved lender receptiveness after it previously faced ESG headwinds, Citi observes. Margins improved by -170bps, and savings of $75m through FY30 were achieved.

The broker notes higher FFO/cash should materially strengthen dividend sustainability, with dividends potentially growing around 2x plus inflation. The broker lifted base-case medium-term distribution growth 6% p.a. on a 70% payout, with upside if payout rises toward 80% on further debt refinancing.

FY26-27 net profit forecasts lifted by 5-7%. Buy maintained, and target rises to $5.30 from $5.20.

The broker added a 90-day upside watch, with the FY26 result on February 24 seen as a catalyst.

Target price is $5.30 Current Price is $4.80 Difference: $0.5
If DBI meets the Citi target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $5.24, suggesting upside of 7.9% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY25:

Forecast for FY26:

Market Sentiment: 0.8

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

Bell Potter rates EOS as Buy (1) -

Electro Optic Systems signed a binding conditional US$80m agreement with a Korean customer to supply a 100kW High Energy Laser Weapon  (HELW). The contract involves forming a JV for the Korean market, which will hold IP licensing for the development and supply of 100kW HELWs.

Bell Potter reckons the award, delayed from 2026, reinforces Electro Optic's strong positioning in the counter-drone directed energy market, where it is currently the only supplier to win an export contract for a 100kW system.

Competitive dynamics are favourable, in the broker's view, with US firms unable to export, the UK limited to 50kW systems, and uncertainty around Israel’s Iron Beam exportability.

EPS forecasts for FY26-27 upgraded by 15% and 42%, respectively, on higher HELW revenue, margin expansion, and improved working capital. The broker believes further upside is likely from additional large HELW contracts.

Buy retained. Target rises to $9.00 from $8.10.

Target price is $9.00 Current Price is $6.46 Difference: $2.54
If EOS meets the Bell Potter target it will return approximately 39% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

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 EOS as Speculative Buy (1) -

Electro Optic Systems secured a $120m conditional contract to supply a 100kW High Energy Laser Weapon to a Korean customer. It also includes plans for a JV to develop and supply additional 100kW systems in Korea.

Ord Minnett highlights unlike the company's long-conditional Ukraine deals, this contract conditions are expected to be cleared by end-Jan 2026. This would lift the order book to $525m from $136m at the end of December 2024.

FY26 and FY27 EBITDA forecasts upgraded by 4% and 14%, respectively. Speculative Buy and $11.18 target are unchanged.

Target price is $11.18 Current Price is $6.46 Difference: $4.72
If EOS meets the Ord Minnett target it will return approximately 73% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

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 FLT as Buy (1) -

Flight Centre Travel has bought UK online cruise agent Iglu and lifted FY26 underlying profit before tax guidance to $315-350m. Ord Minnett reckons this adds scale in the higher-margin cruise segment and strengthens the company's diversified Leisure mix.

With corporate travel competitors disrupted, the broker believes Flight Centre has a strong opening to win new corporate accounts.

FY26 EPS forecast upgraded by 2% and FY27 by 5%, following the acquisition and revised guidance. Buy maintained, with upside if corporate accounts are successfully converted.

Target rises to $16.86 from $13.60.

Target price is $16.86 Current Price is $15.04 Difference: $1.82
If FLT meets the Ord Minnett target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $16.15, suggesting upside of 8.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY26:

Forecast for FY27:

Market Sentiment: 1.0

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

Citi rates KAR as Buy (1) -

After meeting with Karoon Energy's new CEO, Carri Lockhart, Citi is more positive about the company's next stage, given her strong operational and leadership background and her push to enhance data, AI, and digital capabilities.

Lockhart also has valuable US capital markets links, the broker highlights. 

The next six months are seen as pivotal, with potential for sentiment to improve if Karoon delivers on three priorities: Bauna FPSO operatorship transition, the 1Q26 flotel campaign, and Neon farm-down/progress.

Management’s near-term agenda is execution-led and aimed at rebuilding market confidence, consistent with the broker's Buy thesis.

Target trimmed to $2.10 from $2.20.

Target price is $2.10 Current Price is $1.64 Difference: $0.465
If KAR meets the Citi target it will return approximately 28% (excluding dividends, fees and charges).

Current consensus price target is $1.87, suggesting upside of 17.3% (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: 0.3

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

Ord Minnett rates LAU as Buy (1) -

Following a site visit to Lindsay Australia's recently acquired SRT Transport business in Tasmania, Ord Minnett notes SRT's edge comes from statewide coverage and round-trip freight capability.

SRT provides an integrated grower-to-mainland solutions via the Bass Strait network, with customers citing trust, speed and efficiency.  It has over 30% share in food transport and structural advantages that should support steady earnings growth, the broker observes.

Growth drivers include higher horticulture volumes, new accounts, more year-round grocery freight and capacity upgrades on the Trans Bass network. The broker forecasts 6% EBITDA growth in FY26, including partial synergy benefits with Lindsay.

Buy. Target unchanged at 98c.

Target price is $0.98 Current Price is $0.67 Difference: $0.31
If LAU meets the Ord Minnett target it will return approximately 46% (excluding dividends, fees and charges).

Current consensus price target is $0.93, suggesting upside of 34.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY26:

Forecast for FY27:

Market Sentiment: 1.0

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

Bell Potter rates PPS as Buy (1) -

Bell Potter considers Praemium's $7.5m acquisition of Technotia Laboratories as strategically sound and value-accretive, with AI-driven product development offering potential upside if demand emerges.

The deal is funded via equity under existing placement capacity and is expected to be completed in Jan 2026. Minimal FY26 impact is expected, with earnings accretion seen from FY27 via operational and tech-related cost efficiencies.

More details will be provided at the interim results. The broker factored in the $7.5m equity raise and lifted FY26 capex estimate to $15.6m from $11.6m, trimming FY26 EPS forecast by -1% but nudging FY28 by 1%, while leaving FY27 unchanged.

Buy. Target unchanged at $1.05.

Target price is $1.05 Current Price is $0.79 Difference: $0.265
If PPS meets the Bell Potter target it will return approximately 34% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY26:

Forecast for FY27:

Market Sentiment: 1.0

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

Ord Minnett rates PPS as Buy (1) -

Praemium is acquiring Technotia, a technology solutions firm which has been assisting in the development of its superannuation product based on machine learning, Ord Minnett explains.

At $7.5m the transaction is relatively small with scrip as consideration, and Praemium bringing a small team on board. The analyst is flagging some higher costs initially before cost savings start to kick in.

The broker estimates a minor negative impact in FY26, while FY27 should see the cost-out impacts. Ord Minnett lowers EPS forecasts by -0.8% for FY26 and raises FY27 by 0.3%.

No change to Buy rating and $1.15 target.

Target price is $1.15 Current Price is $0.79 Difference: $0.365
If PPS meets the Ord Minnett target it will return approximately 46% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY26:

Forecast for FY27:

Market Sentiment: 1.0

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

Citi rates REA as Neutral (3) -

Citi notes Zillow's share price fell -10% after Google began showing sponsored “Homes for Sale” search results in some markets. This raises concerns about pressure on Australian portals like REA Group via less search-driven traffic and more fragmented vendor ad spend.

The broker reckons traffic risk is limited because 80% of REA's website visits are direct, but budget fragmentation is the bigger watch-out. It could also simply become another channel REA can bundle via products like Audience Maximiser, in the broker's view.

Domain’s CEO (ex-Google) comments, noting Google has tested similar real-estate listings before, with adoption hindered by the difficulty of onboarding real-estate agencies, also provides comfort.

Neutral. Target price $279.25.

Target price is $279.25 Current Price is $189.08 Difference: $90.17
If REA meets the Citi target it will return approximately 48% (excluding dividends, fees and charges).

Current consensus price target is $256.46, suggesting upside of 38.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY26:

Forecast for FY27:

Market Sentiment: 0.5

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

Macquarie rates RSG as Outperform (1) -

Resolute Mining's DFS for the Doropo project in Cote d'Ivoire outlined 2.2Moz life of mine (LOM) production at US$1,406/oz AISC, with mill capacity lifted to 4.9Mtpa from 4Mtpa. Capex estimate is raised to US$516m vs US$373m prior, Macquarie notes.

The broker incorporated the DFS into its forecasts, resulting in LOM extension to 2040 from 2037 previously. NAV rose 51% to $1.633bn, with the broker noting Doropo is becoming Resolute's largest value driver.

The broker expects a mining permit in 1Q2026, with FID and construction targeted for 2Q2026-2Q2028, funded by US$360m debt plus cashflow and net cash ($136.6m).

Outperform. Target rises to $1.45 from $1.35.

Target price is $1.45 Current Price is $1.10 Difference: $0.355
If RSG meets the Macquarie target it will return approximately 32% (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: 0.8

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

Macquarie rates SEK as Outperform (1) -

Seek's latest report showed Australian job ads fell -2% y/y in November and were down -1% m/m, with the y/y decline moderating. FY26 year-to-date is down -3%, Macquarie notes.

The broker reckons 1H26 A&NZ volumes may be around -2 lower and will require a stronger 2H to meet the flat FY26 guidance. Likely interest rate hikes put this at risk, the broker remarked, noting historical correlation to job volumes.

Still, the broker thinks FY26 earnings should be driven mainly by higher yields from the April 2025 ad-ladder changes and operating leverage as the platforms are unified.

Outperform. Target price $32.50.

Target price is $32.50 Current Price is $22.84 Difference: $9.66
If SEK meets the Macquarie target it will return approximately 42% (excluding dividends, fees and charges).

Current consensus price target is $31.56, suggesting upside of 39.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY26:

Forecast for FY27:

Market Sentiment: 0.9

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

UBS rates SEK as Buy (1) -

UBS notes Seek's November Australian new job index slipped -1.1% y/y with total A&NZ flat y/y and NZ accelerating 8.9% over the period.

If the current momentum trend is retained, the analyst expects A&NZ volume to be slightly below flat y/y growth, which is in line with expectations and slightly lower than consensus forecast at 1% growth y/y.

Buy. Target price $31.

Target price is $31.00 Current Price is $22.84 Difference: $8.16
If SEK meets the UBS target it will return approximately 36% (excluding dividends, fees and charges).

Current consensus price target is $31.56, suggesting upside of 39.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY26:

Forecast for FY27:

Market Sentiment: 0.9

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

Bell Potter rates TTT as Speculative Buy (1) -

Titomic won a US$1.7m contract from a leading US defence prime to produce “next-gen” defence components at its Huntsville (Alabama) plant using its Titomic Kinetic Fusion cold-spray additive manufacturing.

Bell Potter reckons that while the contract is still at a proof-of-concept stage, successful execution could unlock qualification and follow-on low-rate production deals. 

Speculative Buy and 50c target are unchanged.

Target price is $0.50 Current Price is $0.22 Difference: $0.285
If TTT meets the Bell Potter target it will return approximately 133% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY26:

Forecast for FY27:

Market Sentiment: 1.0

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

Morgan Stanley rates TUA as Overweight (1) -

Morgan Stanley views the completion of the M1 deal can remove uncertainty over the transaction, paving the way for consensus to reset earnings expectations for Tuas.

The analyst has undertaken a 'what if' earnings outlook of the merged Tuas/M1, including possible synergies from cost optimisation, the mix of the best of M1 and Simba's existing strengths, capex and cost of doing business.

The conclusion is Tuas could "realistically" generate EPS of 23.5cps in FY28 and free cash flow of 33.3cps.

These are not specific broker forecasts but a potential earnings "thought exercise" of what could transpire where free cash flow can outsize net profit after tax materially due to the differential between capex and D&A.

Overweight. Target lifted to $10 from $9.50. Industry View: In-line.

Target price is $10.00 Current Price is $7.03 Difference: $2.97
If TUA meets the Morgan Stanley target it will return approximately 42% (excluding dividends, fees and charges).

The company's fiscal year ends in July.

Forecast for FY26:

Forecast for FY27:

Market Sentiment: 1.0

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