Australian Broker Call

Morgan Stanley rates ABB as Upgrade to Overweight from Underweight (1) -

Morgan Stanley believes shares of Aussie Broadband are still materially undervalued despite a 15% rally since 1H results on February 23. It's recommended investors build a share position in anticipation of multi-year growth.

The broker's target rises to $5.50 from $2.40 and the rating is raised by two gradings to Overweight from Underweight. Industry View: In-Line.

Aussie Broadband's 1H results far exceeded consensus forecasts, note the analysts, and there was 2H acceleration for customer additions, earnings and revenue. 

Based on experience Morgan Stanley states "an operator able to gain market share over a sustained period, in a profitable and FCF-positive way, can create meaningful shareholder value".

Target price is $5.50 Current Price is $4.39 Difference: $1.11
If ABB meets the Morgan Stanley target it will return approximately 25% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.8

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

Bell Potter rates ALC as Hold (3) -

Despite an 8% rise in A&NZ revenue in the 1H on the previous corresponding period, total revenue for Alcidion Group fell -15% short of Bell Potter's forecast due to an -8% decline in UK revenues. 

The UK disappointment was due to ongoing delays for National Health Service electronic patient record (EPR) tenders, explains the broker. Due to these delays, the company is reducing headcount to realise an annual reduction in operating expenses of -$6.4m.

Should 2H revenue equal that of the 1H, as management expects, total FY24 revenue will be down -6% on FY23, notes the analyst.

"It will not be possible to deliver positive EBITDA in FY24" as previously guided, stated the company.

The target falls to 5c from 8c and the Hold rating is unchanged.

Target price is $0.05 Current Price is $0.05 Difference: $0.003
If ALC meets the Bell Potter target it will return approximately 6% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.0

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

Morgan Stanley rates ART as Underweight (5) -

Airtasker's 1H results suggest to Morgan Stanley important progress has been made with the generation of positive free cash flows (FCF) and breakeven for earnings (EBITDA).

For additional improvement, the broker wants to not only see ongoing improvement for FCF and earnings, but also a return to strong positive gross marketplace volume (GMV) and revenue growth.

Compared to the previous corresponding period, first half revenue and earnings increased by 6.8% and 140%, respectively.

The broker's target rises to 20c from 18c and the Underweight rating is maintained. Industry view is Attractive.

Target price is $0.20 Current Price is $0.27 Difference: minus $0.065 (current price is over target).
If ART meets the Morgan Stanley target it will return approximately minus 25% (excluding dividends, fees and charges - negative figures indicate an expected loss).

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.0

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

Shaw and Partners rates B4P as Buy (1) -

Beforepay Group has revealed further detail about its new venture, Carrington Labs, a business-to-business offering that will make the company's risk assessment and distribution technologies available to other financial firms.

Carrington Labs is set to offer two products, an AI-powered risk management model that measures the credit worthiness of borrowers, and an automated end-to-end loan origination and servicing platform.

The company has already sounded out customers in the US, and other geographies, during the development of these products, but no formal agreements are in place.

The Buy rating and target price of $1.00 are retained.

Target price is $1.00 Current Price is $0.62 Difference: $0.38
If B4P meets the Shaw and Partners target it will return approximately 61% (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

Ord Minnett rates BLD as Lighten (4) -

Based on Ord Minnett's fair value estimates for Seven Group and Boral, the broker recommends Boral shareholders accept the offer by Seven Group.

The broker calculates between $4.90-$5.10 of value per share, an around 11-16% premium to Ord Minnett's stand alone value for Boral of $4.40/share. The premium rises to 38-42% at the current Seven Group share price, which can readily retrace, cautions the analyst.

The offer is open and scheduled to close on April 4.

Boral shareholders now have the option to accept Seven Group's offer on a conditional basis i.e. accept only on the condition that the cash component of the offer reaches $1.60 rather than the minimum $1.50, explains the broker.

The Lighten rating and $4.70 target are maintained.

Boral has advised shareholders take no action until its target statement has been released.

Target price is $4.70 Current Price is $6.08 Difference: minus $1.38 (current price is over target).
If BLD meets the Ord Minnett target it will return approximately minus 23% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.57, suggesting downside of -9.8% (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 BSL as Underweight (5) -

Morgan Stanley highlights a -27% decline in US hot rolled coil (HRC) prices has caused spreads to decline by around -46% since the beginning of 2024, and leading indicators remain soft.

The broker points out these declining spreads contrast with BlueScope Steel buoyant share price performance, and an Underweight rating is maintained.

The broker believes there is potentially -20% downside to the midpoint of management's 2H guidance for earnings (EBIT) of between $620-690m.

The $20 target is unchanged. Industry view: In-Line.

Target price is $20.00 Current Price is $22.35 Difference: minus $2.35 (current price is over target).
If BSL meets the Morgan Stanley target it will return approximately minus 11% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $21.86, suggesting upside of 2.5% (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

Morgans rates CBL as No Rating (-1) -

A first half net loss of -$2.2m from Control Bionics in the first half was an improvement year-on-year, points out Morgans. The company reported revenue of $3.0m and an earnings loss of -$1.8m.

The company is anticipating growth in the second half, and, with a cash balance of $1.3m and no debt as of the end of the first half, Morgans considers there to be sufficient cash to fund operations through to the end of the year.

Current Price is $0.05. Target price not assessed.

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

UBS rates DGL as Neutral (3) -

UBS was left surprised by a first half miss from DGL Group given the "generally upbeat" commentary from the company during the period. The miss was largely concentrated in the ag chem and used lead acid battery recycling segments, and weighed on the group result.

More positively, the broker anticipates an earnings improvement from the environmental segment in FY25 as the Unanderra expansion comes online.

The Neutral rating is retained and the target price decreases to 75 cents from 92 cents.

Target price is $0.75 Current Price is $0.64 Difference: $0.11
If DGL meets the UBS target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $0.76, suggesting upside of 18.2% (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

Bell Potter rates DRO as Upgrade to Buy from Hold (1) -

Bell Potter seizes upon the opportunity afforded by a recent share price fall to reinstate its rating for DroneShield to Buy from Hold.

The broker is confident the company's earnings will continue to grow in 2024, especially after the recent management presentation illustrating an ever-growing pipeline which currently stands at $388m for FY24, and $510m in total.

DroneShield had its first profitable year in 2023 and the broker notes the increasing risk of drones and the relevance of the company's AI/machine learning technology to counter the risk.

The 90c target is unchanged.

Target price is $0.90 Current Price is $0.62 Difference: $0.285
If DRO meets the Bell Potter target it will return approximately 46% (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

Citi rates FCL as Buy (1) -

Citi was left disappointed by reiterated guidance from Fineos Corp, which the broker points out implies a downgrade to the second half outlook.

The broker has lowered its own full year revenue forecast to be in line with the lower end of guidance, now anticipating EUR131m.

The broker's forecast assumes 13% subscription growth, alongside a -3% decline in services revenue. Citi does anticipate the company becoming cash flow positive in the coming half, before reverting to cash flow negative in the first half of FY25.

The Buy rating is retained and the target price decreases to $2.25 from $2.70.

Target price is $2.25 Current Price is $1.61 Difference: $0.64
If FCL meets the Citi target it will return approximately 40% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

Forecast for FY24:

Forecast for FY25:

This company reports in EUR. 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

Shaw and Partners rates FFM as Buy (1) -

Following first drilling into the Footwall Zone at Green Bay, FireFly Metals has reported very high grades and wide mineralisation intervals. As per Shaw and Partners, the results validate historical drilling, and show potential to grow the resource. 

With two rigs currently on site and undertaking drilling from new underground exploration platforms, further results are anticipated in coming weeks.

The Buy rating and target price of $1.20 are retained.

Target price is $1.20 Current Price is $0.52 Difference: $0.685
If FFM meets the Shaw and Partners target it will return approximately 133% (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

Bell Potter rates IGL as Buy (1) -

Following a further review of last week's 1H results for IVE Group, Bell Potter increases its target to $2.70 from $2.65 and maintains a Buy rating.

The broker now forecasts an underlying EBITDA margin of 13.1% in the 2H. While this is considered conservative, allowance is made for some potential seasonality.

Strong growth is forecast for FY25 as it will be the first year of Ovato (post integration) and the realisation of revenue and earnings synergies, explain the analysts. It will also be the first full year of the JacPack acquisition.

Target price is $2.70 Current Price is $2.23 Difference: $0.47
If IGL meets the Bell Potter target it will return approximately 21% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 1.0

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

Morgans rates LVH as Speculative Buy (1) -

LiveHire reported a improved net profit result in the first half, Morgans comments, demonstrating the impact of the company's heavy cost-out initiatives. 

Morgans points out the improved result of -$4.6m was achieved in spite of lower overall revenue in the period.

The company successfully lowered operating costs -30% in the half, and according to the broker these cost reductions have allowed the company flexibility to progress strategic initiatives. 

Morgans considers the foundations in place for a push from LiveHire into the US direct sourcing market. The broker expects the time needed to onboard clients and ramp up operations will be a swing factor concerning topline growth. 

The Speculative Buy rating is retained and the target price decreased to 11 cents from 15 cents.

Target price is $0.11 Current Price is $0.04 Difference: $0.07
If LVH meets the Morgans target it will return approximately 175% (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 NSR as Buy (1) -

Recent discussions with management at National Storage REIT have left Citi with the impression it is economic growth and strong underlying demand from both retail and corporate tenants that will underpin targeted top like-for-like growth of 4-8% for the REIT.

Sector-wide, the broker expects it is likely there will be the same amount of listed property companies in a year's time, and the REIT will continue to focus on development and acquisition strategies.

The Buy rating and target price of $2.60 are retained.

Target price is $2.60 Current Price is $2.28 Difference: $0.32
If NSR meets the Citi target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $2.37, suggesting upside of 4.2% (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

Ord Minnett rates PTM as Hold (3) -

Last week's 1H results for Platinum Asset Management revealed a -5% fall in underlying profit from the previous corresponding period on lower revenue due to lower funds under management (FUM), explains Ord Minnett.

The broker points out profitability in the core funds management division has deteriorated further, as shown by the net profit margin of 34%, down from 36% in the previous corresponding period.

Net outflows from higher-margin retail FUM were also worse than the broker anticipated, resulting in a faster-than-expected compression in management fees.

Ord Minnett sees a challenging path to a return to net inflows for Platinum Asset Management, given underperformance relative to comparable peers. The target is slashed to $1.25 from $1.90. Hold.

Target price is $1.25 Current Price is $1.21 Difference: $0.045
If PTM meets the Ord Minnett target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $1.15, suggesting downside of -4.3% (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

UBS rates RMD as Neutral (3) -

ResMed's shares have recently come under pressure yet again and UBS analysts suspect the trigger has been a market update by US distributor AHCO suggesting slowing revenue growth in their sleep segment in 2024.

The short insight is this does not by definition imply slowing growth because of GLP-1s or other competing products. Also: it is not known how much of ResMed's products are distributed through AHCO.

UBS's loosely formulated conclusion is that share price weakness is probably not warranted and it's now generally accepted opinion GLP-1s are a longer dated threat to ResMed's CPAP business.

Neutral. Target US$180.

Current Price is $26.95. Target price not assessed.

Current consensus price target is $34.21, suggesting upside of 23.0% (ex-dividends)

The company's fiscal year ends in June.

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: 0.8

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

Ord Minnett rates STX as Accumulate (2) -

In a disappointing and unexpected outcome, notes Ord Minnett, Strike Energy has reported discouraging results at the South Erregulla gas field, with appraisal wells SE-2 and SE-3 failing to flow.

As a consequence, the broker reduces the prior 1,000 petajoule reserve and resource base forecast for Strike Energy by -40%, and the target also falls by -40% to 30c. 

More positively, the analyst notes the Walyering performance has been excellent and (unlike the market) believes the South Erregulla result is an isolated event and doesn't impact on the company's other resource positions. Accumulate.

The company's 1H earnings were largely as the broker expected.

Target price is $0.30 Current Price is $0.22 Difference: $0.08
If STX meets the Ord Minnett target it will return approximately 36% (excluding dividends, fees and charges).

Current consensus price target is $0.28, suggesting upside of 31.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.5

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

Ord Minnett rates SVW as Lighten (4) -

Based on Ord Minnett's fair value etimates for Seven Group and Boral, the broker recommends Boral shareholders accept the offer by Seven Group.

The broker calculates between $4.90-$5.10 of value per share, an around 11-16% premium to Ord Minnett's stand alone value for Boral of $4.40/share. The premium rises to 38-42% at the current Seven Group share price, which can readily retrace, cautions the analyst.

The offer is open and scheduled to close on April 4.

Boral shareholders now have the option to accept Seven Group's offer on a conditional basis i.e. accept only on the conditiion that the cash component of the offer reaches $1.60 rather than the minimum $1.50, explains the broker.

Boral has advised shareholders take no action until its target statement has been released.

The Lighten rating and $30.50 target are maintained for Seven Group.

Target price is $30.50 Current Price is $39.72 Difference: minus $9.22 (current price is over target).
If SVW meets the Ord Minnett target it will return approximately minus 23% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $40.23, suggesting downside of -2.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.5

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