Australian Broker Call

Ord Minnett rates ABB as Buy (1) -

Ord Minnett notes Aussie Broadband has sold its 12% equity stake in Superloop ((SLC)) for gross proceeds of $99.8m, recording a $42.7m gain on the sale.

The proceeds are to be applied against the existing corporate debt balance, taking the company close to a net cash position (excluding
leases).

Ord Minnett is forecasting a share buyback to be announced, followed by a special dividend. Earnings estimates have been lifted. Valuation rises to $4.18 from $4.16.

Target price is $4.18 Current Price is $3.44 Difference: $0.74
If ABB meets the Ord Minnett target it will return approximately 22% (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 AFG as Neutral (3) -

Citi observes the performance of non-bank lenders is closely linked to interest rates with the downward move in the longer dated yields coinciding with a possible trough in earnings.

The recent underperformance of the sector reflects concerns around a deterioration in asset quality and increased competition.

Historically, non-bank lenders either pick up market share or expand net interest margins as the cycle turns, but not usually both, Citi highlights.

On balance tailwinds are developing for the sector but a "nuanced" approach is suggested.

Neutral rating on Australian Finance Group. Target $1.65.

Target price is $1.65 Current Price is $1.60 Difference: $0.055
If AFG meets the Citi target it will return approximately 3% (excluding dividends, fees and charges).

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

Ord Minnett rates ALL as Upgrade to Accumulate from Hold (2) -

Ord Minnett has yet again reviewed prospects and outlook for Aristocrat Leisure and the exercise has concluded with an upgrade to forecasts to the tune of 2-3% for this financial year and next.

The broker also believes the shares should trade on a 20% premium versus its Industrials peers listed on the ASX. With the company about to revert back to its core (selling off non-core), Ord Minnett anticipates the shares will revert back to their previous premium.

The company's buybacks are expected to continue at a rate of $1.5bn per annum.

Ord Minnett's valuation has risen to $59 from $52. Accumulate (up from Hold).

Target price is $59.00 Current Price is $54.37 Difference: $4.63
If ALL meets the Ord Minnett target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $56.22, suggesting upside of 4.5% (ex-dividends)

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.9

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

Macquarie rates APE as Neutral (3) -

Macquarie highlights excess supply in the domestic automotive sector is putting pressure on profit margins, via price discounting and higher interest costs.

The broker notes August dealer volumes rose 5.5% year-to-date for with growth rates expected to slow further, placing increasing pressure on margins.

Eagers Automotive is Neutral rated. Target price $10.50.

Target price is $10.50 Current Price is $10.58 Difference: minus $0.08 (current price is over target).
If APE 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 $11.89, suggesting upside of 14.6% (ex-dividends)

The company's fiscal year ends in December.

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

Macquarie rates ASG as Outperform (1) -

Macquarie highlights excess supply in the domestic automotive sector is putting pressure on profit margins, via price discounting and higher interest costs.

The broker notes August dealer volumes rose 5.5% year-to-date for with growth rates expected to slow further, placing increasing pressure on margins.

Outperform retained. Target $2.80.

Target price is $2.80 Current Price is $2.13 Difference: $0.67
If ASG meets the Macquarie target it will return approximately 31% (excluding dividends, fees and charges).

Current consensus price target is $2.63, suggesting upside of 25.4% (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

Bell Potter rates CVB as Speculative Buy (1) -

The 10 purchase orders for new devices in the 4Q of FY24 are yet to be delivered and installed, resulting in a material miss for Curvebeam AI's FY24 revenue against Bell Potter's forecast.

Sales of the HiRise (foot and ankle) in FY24 were well below management's expectation, but validation of the Enhanced HiRise (aka HiRise 2.0) for the more lucrative hip and knee surgeries will drive sales, suggest the analysts.

In early-FY25, management placed shares of $11.58m taking the effective cash balance to $18.1m. The company is now funded for FY25 and possibly well beyond, suggests the broker.

The Speculative Buy rating is unchanged, and the broker's target decreased to 26c from 35c.

Target price is $0.26 Current Price is $0.19 Difference: $0.075
If CVB meets the Bell Potter target it will return approximately 41% (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

UBS rates GMD as Neutral (3) -

Genesis Minerals offered FY25 guidance which includes an early restart of Laverton. UBS notes first gold is expected in the upcoming Dec quarter.

Management estimates FY25 production of 190-210koz with all-in-sustaining costs of $2200-$2400/oz, which is basically in line with expectations.

UBS believes the company will remain rated as a "premium" stock due its growth profile and management quality.

Neutral rating unchanged. Target price lifts to $2.30 from $2.25.

Target price is $2.30 Current Price is $2.07 Difference: $0.23
If GMD meets the UBS target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $2.38, suggesting upside of 11.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY25:

Forecast for FY26:

Market Sentiment: 0.5

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

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

Morgan Stanley raises its target for preferred Office exposure GPT Group to $5.60 from $4.80 and upgrades to Overweight from Equal-weight. Industry view: In Line. The REIT is considered an ideal play for investors seeking low risk exposure to the Real Estate sector.

The broker expects rent-paying office occupancy will trend upwards from less than 87%, and notes the REIT has limited committed capex, meaning it is not encumbered by major projects at a time when cost of funds is elevated.

Additionally, GPT has taken the most cap rate expansion, and harshest asset devaluations, across Office, Retail, and Industrial compared to other large cap REITs since June 2022, explains Morgan Stanley.

Target price is $5.60 Current Price is $4.91 Difference: $0.69
If GPT meets the Morgan Stanley target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $4.99, suggesting downside of -1.2% (ex-dividends)

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 LFG as Buy (1) -

Citi observes the performance of non-bank lenders is closely linked to interest rates with the downward move in the longer dated yields coinciding with a possible trough in earnings.

The recent underperformance of the sector reflects concerns around a deterioration in asset quality and increased competition.

Historically, non-bank lenders either pick up market share or expand net interest margins as the cycle turns, but not usually both, Citi highlights.

On balance tailwinds are developing for the sector but a "nuanced" approach is suggested.

Buy rating on Liberty Financial. Target $4.15.

Target price is $4.15 Current Price is $3.46 Difference: $0.69
If LFG meets the Citi target it will return approximately 20% (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 ORA as Neutral (3) -

Citi assesses the divestment of the OPS business, concluding there is a potential circa 10% upside to Orora's valuation multiples as the residual operations are of a higher quality with improved margins and more stable earnings.

The analyst expects a lowering in gearing to around two times with an estimated $600-$700m share buyback in lieu of dividends due to a shortage of franking credits.

Given the 30% stock price appreciation, Citi believes earnings growth will be the driver of performance.

Neutral rating with a $2.55 target price.

Target price is $2.55 Current Price is $2.68 Difference: minus $0.13 (current price is over target).
If ORA meets the Citi target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.55, suggesting downside of -2.3% (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

Macquarie rates ORA as No Rating (-1) -

The sale of Orora's North American packaging solutions business to Veritiv for US$1.2bn has come in sooner than Macquarie expected.

With no notable capital gains tax impairment, the company is anticipated to pull forward investment in cans with a $130m expansion at Rocklea (Qld) and degear the balance sheet, the broker notes.

Macquarie adjusts EPS forecasts by -9% and -15% for FY25/FY26. respectively post sale of the OPS business.

The broker is under research restrictions.

Current Price is $2.68. Target price not assessed.

Current consensus price target is $2.55, suggesting downside of -2.3% (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

Morgan Stanley rates ORA as No Rating (-1) -

With the net cash proceeds of around $1.687bn from the sale of the OPS business, management at Orora intends to reduce debt, invest for organic growth and distribute any surplus to investors over time in a tax efficient way, explains Morgan Stanley.

Management expects the deal to complete by late-2024.

Morgan Stanley is currently under research restriction and provides no target or rating. Industry view: In Line.

Current Price is $2.68. Target price not assessed.

Current consensus price target is $2.55, suggesting downside of -2.3% (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

Morgans rates ORA as Hold (3) -

Exceeding Morgans valuation, Orora has sold its Packaging Solutions (OPS) business in North America for $1.775bn. Proceeds from the sale will be used to reduce debt and invest in organic growth opportunities, and any surplus returned to shareholders.

The analyst likes that management may now focus on the Australasia and Saverglass businesses.

Despite regulatory approval risks, the broker expects the sale to complete and removes OPS from forecasts.

Hold rating unchanged. Target price advances to $2.60 from $2.50.

Target price is $2.60 Current Price is $2.68 Difference: minus $0.08 (current price is over target).
If ORA meets the Morgans target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.55, suggesting downside of -2.3% (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

Ord Minnett rates ORA as Hold (3) -

A renewed whitelabeling research agreement has pulled Orora back under Ord Minnett's research coverage.

The broker believes Orora has sold its North American business for a good price with Atlanta-based rival Veritiv forking out $1.8 bn for the business.

Earnings estimates have been reduced as management will use the lion's share of the proceeds to reduce debt. Ord Minnett is banking on a share buyback to the tune of circa $600m.

Hold rating with the price target lifting to $2.60 from $2.30.

Target price is $2.60 Current Price is $2.68 Difference: minus $0.08 (current price is over target).
If ORA 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 $2.55, suggesting downside of -2.3% (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

UBS rates ORA as Neutral (3) -

UBS notes the divestment of Orora's US packaging distribution business will allow for debt repayment and a degearing of the balance sheet to below the target range, with capex of -$130m pulled forward on the expansion of Cans at Rocklea.

The company will now be more concentrated on beverage packaging, the analyst highlights, with around 50% of earnings before interest and tax from Australasian operations.

Saverglass represents the other 50% with exposure to the premium spirit and wine markets in EU/US. Production is currently running at 60% because of Spirits market de-stocking.

Neutral retained with $2.45 target price with possible capital returns for shareholders.

Target price is $2.45 Current Price is $2.68 Difference: minus $0.23 (current price is over target).
If ORA meets the UBS target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.55, suggesting downside of -2.3% (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

UBS rates PMT as Buy (1) -

UBS has updated the forecasts for the Shaakichiuwaanaan project to include the broker's lower lithium price forecasts and including preliminary economic assessment outcomes,

Caution on lithium prices remains with reports of increased supply from Africa and China or incremental volumes of 133/182kt LCE over 2024/2025 to 36%-38% of global supply.

The broker also points to higher capex for the project due to a slower ramp up at an additional -US$500m cost. The target price is revised to 65c from $1. Buy.

Target price is $0.65 Current Price is $0.39 Difference: $0.265
If PMT meets the UBS target it will return approximately 69% (excluding dividends, fees and charges).

Current consensus price target is $1.00, suggesting upside of 150.0% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY25:

Forecast for FY26:

This company reports in CAD. 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

Macquarie rates REA as Outperform (1) -

Macquarie assesses the possible takeover of Rightmove and throws in the pun "Is Rightmove the right move?" for good measure.

The broker believes the deal would be financially rational and could lift REA Group to a number one global position.

Around $6.1bn in equity is estimated as required for the deal which assumes a 20% premium for Rightmove. The analyst believes an all-cash deal would be required with $4.1bn in debt resulting in 14% EPS accretion and net debt/equity of around one times.

REA Group's prior UK experience is not considered as comparable with this potential move. Strategically Macquarie doesn't believe the acquisition would allow for considerable operational upside. Rightmove is already the number one operator in the UK market.

Outperform. Target is tweaked to $229 from $228.

Target price is $229.00 Current Price is $201.00 Difference: $28
If REA meets the Macquarie target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $218.03, suggesting upside of 6.0% (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

Macquarie rates SIQ as Outperform (1) -

Macquarie observes Smartgroup Corp reported results which were broadly in line with expectations with essentially unchanged forecasts.

Overall, the fleet and novated FY24 results were mixed according to the analyst. With McMillan Shakespeare ((MMS)) FY24 results below expectations and resulting in earnings downgrades.

SG Fleet Group ((SGF)) reported slightly better earnings but FY25 guidance was below expectations.

Macquarie prefers Smartgroup Corp in the novated lease sector. 

Outperform rated with a $9.60 target price.

Target price is $9.60 Current Price is $8.60 Difference: $1
If SIQ meets the Macquarie target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $9.74, suggesting upside of 10.0% (ex-dividends)

The company's fiscal year ends in December.

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

Shaw and Partners rates SMP as Buy (1) -

In a scenario factoring in any potential surcharging changes, Shaw and Partners still comes up with a valuation for SmartPay 15% ahead of the current share price.

The broker explains media speculation has intensified since the RBA (in mid-August) announced they had "agreed to commence consultation on merchant card payment costs and surcharging".

Assuming the status quo changes, the analysts note likely outcomes are bans on debit surcharge or caps on surcharge at 1.5%.

Buy and $2.20 target retained.

Target price is $2.20 Current Price is $1.07 Difference: $1.13
If SMP meets the Shaw and Partners target it will return approximately 106% (excluding dividends, fees and charges).

The company's fiscal year ends in March.

Forecast for FY25:

Forecast for FY26:

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

Market Sentiment: 0.5

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

Citi rates WDS as Downgrade to Sell from Neutral (5) -

Citi reviews the earnings outlook for Woodside Energy, leading the broker to downgrade the stock to Sell from Neutral.

The analyst depicts multiple headwinds the company is facing, including a deterioration in the outlook for dividends and possible M&A activity, overlaid with a deteriorating macro picture working against oil prices.

Citi's analysis reveals a P&L which is heavily exposed to much higher depreciation charges (considerably above consensus), leading to DPS forecasts which sit respectively -26% and -47% below consensus in 2025/2026.

Consensus earnings are expected to be downgraded over the next six months. Target price is lowered to $24.50, down -2%.

Target price is $24.50 Current Price is $26.83 Difference: minus $2.33 (current price is over target).
If WDS meets the Citi target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $29.83, suggesting upside of 19.3% (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: 0.2

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

Ord Minnett rates XRO as Downgrade to Accumulate from Buy (2) -

Ord Minnett has returned from the Xerocon event in Nashville in mid-August with increased optimism regarding Xero's plans and prospects in the key US market.

Several shortfalls vis a vis key incumbent Quickbooks are being addressed and the broker reports general commentary from US accountants is positive.

Xero currently has a 4% market share in the US with Intuit's share 80% but only 20-25% of the 35m SMB's in the country are currently using cloud accounting.

Ord Minnett believes the US could grow into Xero's third largest market by FY30, and with forecasts below management's ambition, the price target is lifted to $160 from $150. Following recent share price appreciation, the rating is pulled back to Accumulate from Buy.

Target price is $160.00 Current Price is $141.09 Difference: $18.91
If XRO meets the Ord Minnett target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $161.43, suggesting upside of 12.2% (ex-dividends)

Forecast for FY25:

Forecast for FY26:

This company reports in NZD. 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