Australian Broker Call

Morgans rates ARX as Add (1) -

In a positive read-through for Aroa Biosurgery, according to Morgans, the company's US marketing partner for its hernia and breast reconstruction products, TelaBio, reported 2024 revenue growth guidance of circa 30%.

This outcome provides the broker with confidence Aroa can achieve average revenue growth of 20% per annum. Aroa receives 27% on net product sales from TelaBio of Ovitex products.

The analysts makes no changes to forecasts and the Add rating and $1.20 target are unchanged.

Target price is $1.20 Current Price is $0.57 Difference: $0.63
If ARX meets the Morgans target it will return approximately 111% (excluding dividends, fees and charges).

The company's fiscal year ends in March.

Forecast for FY24:

Forecast for FY25:

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

Market Sentiment: 1.0

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

Citi rates BEN as Sell (5) -

Citi is anticipating a slow release of capital for Bendigo & Adelaide Bank as it winds down its Homesafe business. The broker is estimating around $400m in CET1 is tied up in Homesafe, and will be released over eight years. 

The broker expects this to leave the bank's balance sheet in good shape, and notes potential for special dividend payments. 

The Sell rating and target price of $8.60 are retained.

Target price is $8.60 Current Price is $9.93 Difference: minus $1.33 (current price is over target).
If BEN meets the Citi target it will return approximately minus 13% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $9.16, suggesting downside of -8.7% (ex-dividends)

The company's fiscal year ends in June.

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 CVN as Outperform (1) -

Macquarie expects an update in coming months from Carnarvon Energy on the 20%-owned Dorado project as 80%-owner Santos ((STO)) is targeting a final investment decision (FID) in 2024.

The analysts also highlights management and the board now appear more focused on value preservation and achieving optimal value outcomes for its Bedout basin interest.

The Outperform rating is kept and the target price increases to 28c from 25c after the broker reviewed Dorado project cash flows.

Target price is $0.28 Current Price is $0.19 Difference: $0.09
If CVN meets the Macquarie target it will return approximately 47% (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 FPH as Neutral (3) -

Citi adjusts its forecasts following a full year net profit guidance lift from Fisher & Paykel Healthcare of 3% at the midpoint. 

The company is now guiding to net profits of NZ$260-265 and revenue of NZ$1.73bn.

The Neutral rating is retained and the target price increases to NZ$26.25 from NZ$24.00.

Current Price is $24.18. Target price not assessed.

Current consensus price target is $22.10, suggesting downside of -8.5% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY24:

Forecast for FY25:

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

Market Sentiment: 0.0

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

Macquarie rates FPH as Neutral (3) -

Last week, Fisher & Paykel Healthcare upgraded FY24 profit guidance to NZ$260-265m from $250-260m due to an improved operational performance that outweighed adverse currency movements, explains Macquarie.

Management is also expecting FY24 revenue of NZ$1.73bn, up from NZ$1.7bn.

While still below pre-covid levels, the broker anticipates improved Hospital device utilisation (i.e. greater consumables usage per device) in FY24 compared to FY23. 

Management noted strong performance from the Evora full mask, with positive initial feedback on the Solo mask.

The Neutral rating is retained and the target price increases to NZ$26.15 from NZ$24.40 due to the broker's increased revenue growth assumptions and updated currency forecasts.

Current Price is $24.18. Target price not assessed.

Current consensus price target is $22.10, suggesting downside of -8.5% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY24:

Forecast for FY25:

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

Market Sentiment: 0.0

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

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

Management at Fisher & Paykel Healthcare has upgraded FY24 profit guidance to NZ$260-265m from $250-260m due to a higher assumed NZD:USD exchange rate. Revenue guidance was also increased to NZ$1.73bn from NZ$1.7bn.

Morgan Stanley notes the top end of profit guidance suggests around 4% upside to consensus expectations.

Management also noted strong demand for hospital consumables as well as home consumables, supported by recent launches.

The $22.19 target and Equal-weight rating are maintained. Industry view: In-line.

Target price is $22.19 Current Price is $24.18 Difference: minus $1.99 (current price is over target).
If FPH meets the Morgan Stanley target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $22.10, suggesting downside of -8.5% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY24:

Forecast for FY25:

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

Market Sentiment: 0.0

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

Ord Minnett rates FPH as Hold (3) -

Due to strong demand for hospital consumables and the Evora full mask (launched in May 2022), explains Ord Minnett, management at Fisher & Paykel Healthcare upgraded FY24 guidance.

Guidance for revenue and underlying profit rose by 2% and 3%, respectively.

The broker's Hold rating is maintained on slight overvaluation of the company's shares. The target is increased to $22 from $21 largely due to the time value of money and a strong performance by Fisher & Paykel Healthcare in sales of consumables.

Target price is $22.00 Current Price is $24.18 Difference: minus $2.18 (current price is over target).
If FPH meets the Ord Minnett target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $22.10, suggesting downside of -8.5% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY24:

Forecast for FY25:

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

Market Sentiment: 0.0

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

UBS rates GMD as Neutral (3) -

The UBS Neutral rating and $1.75 target are maintained for Genesis Minerals following the release of a five-year strategic plan detailing the pathway to 300koz per annum.

The updated mine plans were largely in line with the analyst's expectations, and the broker's long-term gold forecast of US$1,600/oz.

While UBS predicted an early restart to milling at Laverton on low grade stockpiles, the late-FY25 now set by management was still ahead of expectations.

Target price is $1.75 Current Price is $1.80 Difference: minus $0.05 (current price is over target).
If GMD meets the UBS target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $1.91, suggesting upside of 6.3% (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

Citi rates QRI as Buy (1) -

Citi expects Qualitas Real Estate Income Fund will continue to reap the benefits of a decade high cash rate for a little longer, now assuming rate cuts will not be enacted until November this year. 

The broker had previously assumed cuts would emerge from August, but now sees risk that there will be no cuts within 2024 following better than expected employment growth over February.

Qualitas Real Estate Income Fund remains a beneficiary of variable rates through commercial real estate credit. 

The Buy rating and target price of $1.60 are retained.

Target price is $1.60 Current Price is $1.62 Difference: minus $0.015 (current price is over target).
If QRI meets the Citi target it will return approximately minus 1% (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: 1.0

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

Shaw and Partners rates RFG as Buy (1) -

With Retail Food emerging from a five-year turnaround and in a position to grow, Shaw and Partners has resumed coverage of the stock. The broker describes Retail Food as Australia's largest multi-brand food and beverage franchise owner.

The broker is expecting the emergence of e-commerce 'dark kitchens' to benefit Retail Food, seeing opportunity for the company to explore new brands or products within its existing portfolio, and offering benefits to franchisees by spreading costs across multiple revenue streams.

New CEO and board appointments have direct experience in franchising, and Shaw and Partners sees potential for the company's 'Franchise First' initiative, where multi-site owners are encouraged to participate in joint growth plans, to add up to $2m to earnings. 

The Buy rating are target price of 10 cents are retained.

Target price is $0.10 Current Price is $0.07 Difference: $0.026
If RFG meets the Shaw and Partners target it will return approximately 35% (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 SGM as Upgrade to Buy from Neutral (1) -

UBS upgrades its rating for Sims to Buy from Neutral on an improving scrap price and volume outlook and because share continue to trade at around 90-95% of book value. 

Also, the analyst sees ongoing improvement as the company moves away from low-margin dealer-sourced volumes, while simultaneously locking in more domestic buyers.

As the broker's FY25 EPS forecast rises due to increased North America Metals (NAM) EBIT/t margin expectations, the target increases to $14.50 from $13.60. 

With US mill lead times lifting, and service center inventories largely normalised, UBS expects tailwinds to emerge for Sims in the 2Q of 2024, which is a seasonally stronger period for US steel demand.

Target price is $14.50 Current Price is $11.90 Difference: $2.6
If SGM meets the UBS target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $14.00, suggesting upside of 14.8% (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

Morgan Stanley rates SGP as Overweight (1) -

While the ACCC reviews Stockland's proposed acquisition of Lendlease ((LLC)) communities, Morgan Stanley notes Stockland has flagged some overlap in two corridors, (in Illawarra and NW Perth) between existing sites and Lendlease lots.

Depending on how much of the acquisition has to be restructured, the broker is forecasting the impact on Stockland's FY25 funds from operations (FFO) could be between -0.4% to -4.4%.

April 18 is the due date for the ACCC decision.

The Overweight rating and $5.10 target are unchanged. In-Line Industry view.

Target price is $5.10 Current Price is $4.78 Difference: $0.32
If SGP meets the Morgan Stanley target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $4.91, suggesting upside of 3.2% (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

Ord Minnett rates SIG as Hold (3) -

Ord Minnett assesses a "weak" FY24 result for Sigma Healthcare due to fewer covid test sales, cost inflation and intense competition. 

More positively, the broker is predicting materially better earnings in coming years due to improved operating leverage, and an ongoing focus on both cost efficiencies and private label products.

Management reiterated its medium-term earnings (EBIT) margin expectation in the range of 1.5-2.5%. The analyst raises its margin forecast by 8bps as management announced it had developed over 250 private label products, 80% of which will launch in the 2H of FY25.

Ord Minnett points out the gross margin for private label products is typically six times higher than for branded products.

Ord Minnett retains a Hold rating and 78c target. The potential merger with Chemist Warehouse Group is not factored into the broker's forecasts as yet, due to the risk of regulatory intervention.

Target price is $0.78 Current Price is $1.20 Difference: minus $0.42 (current price is over target).
If SIG meets the Ord Minnett target it will return approximately minus 35% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $1.06, suggesting downside of -14.1% (ex-dividends)

The company's fiscal year ends in January.

Forecast for FY25:

Forecast for FY26:

Market Sentiment: -0.3

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

Ord Minnett rates SOL as Hold (3) -

First half results for WH Soul Pattinson were in line with Ord Minnett's expectations. A 10% uplift in net asset value was largely due to market value growth in the firm's strategic portfolio, explains the analyst.

The strategic portfolio comprises large stakes in Brickworks ((BKW)), New Hope ((NHC)) and TPG Telecom ((TPG)), and an increased holding in Perpetual ((PPT)), explains the broker. Around half of the private equity portfolio is comprised of agricultural assets.

A fully franked interim dividend of 40cps was declared.

The broker's new target of $33, up from $32, reflects the time value of money.

Target price is $33.00 Current Price is $35.01 Difference: minus $2.01 (current price is over target).
If SOL meets the Ord Minnett target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

The company's fiscal year ends in July.

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

UBS rates WEB as Buy (1) -

In the wake of a positive B2B strategy update, UBS highlights Webjet's ability to leverage technology, big data and AI projects (currently underway) to customise and increase delivery speed to customers.

As a result of theses initiatives, the broker is expecting material growth well in advance of consensus expectations.

The Buy rating is retained and the target price increased to $10.00 from $8.55 on stronger long-term forecasts to reflect the broker's increased confidence in Webjet's competitive advantage.

Target price is $10.00 Current Price is $8.74 Difference: $1.26
If WEB meets the UBS target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $9.43, suggesting upside of 6.0% (ex-dividends)

The company's fiscal year ends in March.

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