Australian Broker Call

Macquarie rates ALQ as Outperform (1) -

Macquarie believes ALS Ltd's trading update was disappointing but reflective of the stage in the minerals/commodities cycle with 1H25 EBIT expected to be down -5%.

The recovery in exploration has yet to materialise the broker highlights with different geographies experiencing varying performances. Australia and LATAM are weak, North America is growing, and Africa looks robust.

Margins for minerals appear to be stable at an "impressive" 30% while environmental is viewed as a positive area reporting double digit organic revenue growth in 1H25.

The broker lowers EPS forecasts by -9% for FY25 and -7% for FY26, resulting in a fall in the target price to $15 from $16.15,

Outperform rating retained.

Target price is $15.00 Current Price is $13.67 Difference: $1.33
If ALQ meets the Macquarie target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $15.43, suggesting upside of 11.5% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY25:

Forecast for FY26:

Market Sentiment: 0.9

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

Ord Minnett rates ALQ as Accumulate (2) -

ALS Ltd announced a downgrade in earnings guidance with 1H25 EBIT expected to fall -5% on the previous corresponding period.

Ord Minnett highlights the company is experiencing volumes declines in Australia and Latin America due to political uncertainty. Higher interest costs of -$80m-plus compared to previous market expectations of -$67m are also impacting.

Weaker demand from China played a role with increased delays form clients raising capital before exploration projects can commence.

Life sciences with the environmental business performed well.

EPS forecasts fall by -8% in FY25 and -4% in FY26, the analyst notes, with an according fall in the target price to $14.90 from $15.10.

Accumulate rating unchanged.

Target price is $14.90 Current Price is $13.67 Difference: $1.23
If ALQ meets the Ord Minnett target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $15.43, suggesting upside of 11.5% (ex-dividends)

Forecast for FY25:

Forecast for FY26:

Market Sentiment: 0.9

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

UBS rates ALQ as Buy (1) -

UBS lowers its earnings forecasts for ALS Ltd to reflect higher interest and copper/China uncertainty weighing on exploration activity, following a 1H trading update by management.

New 1H guidance is for underlying EBIT "slightly ahead" of the previous corresponding period and underlying profit down by around -5%.

July and August volumes for the Commodities business were weaker, while interest costs are tracking higher-than-expected.

The target falls to $16.30 from $17.00. Buy.

Target price is $16.30 Current Price is $13.67 Difference: $2.63
If ALQ meets the UBS target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $15.43, suggesting upside of 11.5% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY25:

Forecast for FY26:

Market Sentiment: 0.9

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

Shaw and Partners rates BCB as Buy (1) -

Shaw and Partners observes Bowen Coking Coal has entered a heads of agreement with Taurus and New Hope Corp ((NHC)) to restructure its debt.

This is expected to alleviate pressure on the company's balance sheet with no debt payments due until March 2025.

As part of the agreement, Bowen Coking Coal will need to raise $25m in equity. The broker expects a $70m equity raising at 1c per share.

Shaw and Partners believes the stock is expensive until the refinancing is finished.

Target price falls to 5c from 24c for the equity issuance dilution. Buy rating, High Risk.

Target price is $0.05 Current Price is $0.01 Difference: $0.04
If BCB meets the Shaw and Partners target it will return approximately 400% (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 COL as Initiation of coverage with Buy (1) -

Bell Potter initiates coverage of Coles Group with a Buy rating and a $21.55 target price.

The broker highlights the group has reported compound growth in dividends of 4.2% p.a. since FY20 and envisages growth levers out to FY27.

Management is targeting around $1bn in operational improvements via Simplify & Save. Some $238m in savings were achieved in FY24.

eCommerce sales advanced to 9.5% in 4Q24 from 5.8% in 1Q21 with ongoing investment in two customer fulfillment centres for the Sydney and Melbourne markets.

Population growth, ongoing market share gains with digital marketing and automated distribution centres are expected growth drivers, the analyst explains.

Buy rated. Target $21.55.

Target price is $21.55 Current Price is $19.19 Difference: $2.36
If COL meets the Bell Potter target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $20.11, suggesting upside of 4.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY25:

Forecast for FY26:

Market Sentiment: 0.6

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

Morgan Stanley rates CPU as Downgrade to Equal-weight from Overweight (3) -

Due to the backdrop of falling interest rates, Morgan Stanley lowers its target for Computershare to $27.70 from $30.00 and downgrades to Equal-weight from Overweight. Industry view is In-Line.

The broker also anticipates downside risks to consensus forecasts for the company due to a delay in the recovery of corporate activity, as evidenced by a falling number of deals.

One way to deliver EPS growth is via an acquisition, suggest the analysts, given around US$2.6bn of balance sheet capacity.

Target price is $27.70 Current Price is $26.15 Difference: $1.55
If CPU meets the Morgan Stanley target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $29.57, suggesting upside of 16.4% (ex-dividends)

The company's fiscal year ends in June.

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

Shaw and Partners rates FFM as Buy (1) -

Shaw and Partners expects two resource updates from FireFly Metals over the next six months, making the stock "catalyst rich", the broker emphasises.

Step-up drilling and down hole EM survey results are flagged as potential drivers of an upward move in the share price.

The target price lifts to $1.50 from $1.10 on valuation grounds. Buy rating, High Risk retained.

Target price is $1.50 Current Price is $1.03 Difference: $0.47
If FFM meets the Shaw and Partners target it will return approximately 46% (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

Shaw and Partners rates HSN as Buy (1) -

Shaw and Partners believes Hansen Technologies is fundamentally "mispriced" post reporting season with the share price down -5% since the start of August despite reporting double digit cash earnings upgrades.

The analyst stresses management's guidance offered the best outlook for the core business in years including organic revenue growth of around 8%, year-on-year.

Hansen Technologies' purchase of Powercloud has also been negatively perceived by the market. The broker highlights FY24 results were better to in line with guidance and the price paid is not extreme with a positive outlook for FY25.

No change to the Buy rating, High Risk and $7.20 target price with, on the broker's assessment, the stock not having been this cheap since 2020.

Target price is $7.20 Current Price is $4.33 Difference: $2.87
If HSN meets the Shaw and Partners target it will return approximately 66% (excluding dividends, fees and charges).

Current consensus price target is $6.53, suggesting upside of 48.5% (ex-dividends)

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 JHX as Neutral (3) -

Citi takes a glance at US housing starts for August which were "strong" but on the back of what were unusually weak July results.

On a two-month basis starts were down -5% year-on-year and permits have grown since June which the broker notes as probably the bottom.

Housing starts appear to be generating low-to-mid single digit growth for James Hardie Industries' 3Q25 the broker notes, which is better than consensus data at a fall of -4% in volumes.

Neutral rating and $50.90 target price unchanged.

Target price is $50.90 Current Price is $56.41 Difference: minus $5.51 (current price is over target).
If JHX meets the Citi target it will return approximately minus 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $56.94, suggesting downside of -1.8% (ex-dividends)

The company's fiscal year ends in March.

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: 0.7

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

Ord Minnett rates LTM as Buy (1) -

Ord Minnett notes the first strategy day for Arcadium Lithium in New York on September 19.

The analyst believes management is seeking to reset expectations post project delays, capital expenditure reductions and mine closures.

A decision on whether Fenix 1B or Sal de Vida in Argentina will be deferred is expected with the analyst viewing Sal de Vida 1 as the most likely candidate.

Target price $5.70 with a Buy rating unchanged. 

Target price is $5.70 Current Price is $3.72 Difference: $1.98
If LTM meets the Ord Minnett target it will return approximately 53% (excluding dividends, fees and charges).

Current consensus price target is $5.80, suggesting upside of 55.9% (ex-dividends)

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

Citi rates MND as Buy (1) -

Monadelphous Group announced $230m in new contracts in engineering & construction and maintenance & industrial services, Citi observes, which the broker estimates brings unsatisfied performance obligations to $2.410m excluding work done year-to-date in FY25.

This compares to the broker's forecast revenue of $2,160m versus consensus at $2,193m.

Citi highlights the fall in share price of -7% since the FY24 market update and believes concerns over a slowdown in iron ore construction activities is overdone with near-term iron ore opportunities in replacement and sustaining capex.

Citi retains a Buy rating and $16.20 target price.

Target price is $16.20 Current Price is $12.45 Difference: $3.75
If MND meets the Citi target it will return approximately 30% (excluding dividends, fees and charges).

Current consensus price target is $14.39, suggesting upside of 16.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY25:

Forecast for FY26:

Market Sentiment: 0.4

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

UBS rates NAB as Sell (5) -

After lowering credit loss forecasts for all but ANZ Bank ((ANZ)) among the big four major Australian banks, UBS' price targets rise for both National Australia Bank and Westpac, while the ratings for all four are unchanged.

So far in 2024, lower than expected credit charges have driven around 4% earnings upgrades for the banks with circa 85% of the share price performance supported by multiple expansion, explains the broker.

The target for National Australia Bank rises to $35 from $33. Sell.

Target price is $35.00 Current Price is $39.50 Difference: minus $4.5 (current price is over target).
If NAB meets the UBS target it will return approximately minus 11% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $32.94, suggesting downside of -16.6% (ex-dividends)

The company's fiscal year ends in September.

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

Macquarie rates ORI as Outperform (1) -

Orica offered a trading update ahead of the November 14 FY24 results with Macquarie pointing to EBIT growth for 1H24 ahead of expectations and up 13%.

The company noted robust demand for blasting service products with growth in APAC and EMEA. There was some softness in North America with weaker activity in coal. US infrastructure spending is positive for the longer-term outlook according to management.

Digital solutions were strong, the analyst notes, with re-segmentation revealing higher margins for specialised mining chemicals versus blasting solutions.

The broker tweaks EPS forecasts down by -1.6% for FY24 and -0.6% for FY26.

Outperform rating remains with the target price lowered post EPS changes to $19.76 from $20.05.

Target price is $19.76 Current Price is $17.86 Difference: $1.9
If ORI meets the Macquarie target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $19.65, suggesting upside of 11.9% (ex-dividends)

The company's fiscal year ends in September.

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 PMV as Neutral (3) -

Regarding FY24 results due on September 25 for Premier Investments, UBS forecasts total sales of $1.60bn, earnings (EBIT) pre AASB16 of $367m and profit of $270m. Consensus is expecting $1.62bn, $380m and $273m, respectively, notes the analyst.

The broker's Neutral rating and $33 target are maintained.

Target price is $33.00 Current Price is $34.32 Difference: minus $1.32 (current price is over target).
If PMV meets the UBS target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $33.25, suggesting downside of -2.6% (ex-dividends)

The company's fiscal year ends in July.

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

Shaw and Partners rates QOR as Buy (1) -

Shaw and Partners notes the acquisition of Schools Broadband, the UK's largest managed service provider for kindergarten through to Year 12 by Qoria.

The analyst believes the acquisition will expand the company's addressable market and "validates" its product Monitor which is the earnings driver for the company including access to an additional 3000 schools and around 1.5m students in the UK.

First quarter results in October are expected to be strong, the broker notes, with new business in Texas alongside a notable improvement in operational cashflow, including the first quarter of positive free cashflow.

The Buy rating, High risk and 52c target are retained.

Target price is $0.52 Current Price is $0.39 Difference: $0.13
If QOR meets the Shaw and Partners target it will return approximately 33% (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

Ord Minnett rates RHC as Hold (3) -

Ord Minnett reviews the valuation of Ramsay Health Care post the fall in the company's share price of -15% over the last month.

Applying a sum of the parts for the company using the Healthscope hospitals sale in 2023 as a base, the broker concludes the Australian properties are worth between $6.1bn to $7.5bn. At the lower end this equates to $29 a share.

Based on the peer UK-listed Spire, the valuation for the Australian operating business is worth $1.8bn or $7.82 a share. The broker views the property assets as a strong "foundational" support to the valuation. Sante the European business has a $1.4bn valuation.

Ord Minnett believes the market's FY25 earnings growth forecast of 30% is too optimistic. Hold rating unchanged with a $42.40 target price.

Target price is $42.40 Current Price is $40.37 Difference: $2.03
If RHC meets the Ord Minnett target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $46.98, suggesting upside of 16.7% (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 SDF as Outperform (1) -

Macquarie considers the vertical integration of the strata management industry for Steadfast Group post media scrutiny.

The broker highlights the group does not own strata managers directly but has around a 2.1% shareholding in Johns Lyng Group ((JLG)) which owns 80% of Bright & Duggan.

Macquarie believes this is "immaterial" but the CEO of Steadfast Group is on the Johns Lyng board lifting the perception of conflicts of interest.

Regarding underwriting agencies, the analyst points to the group's circa 51.7% market share, viewing divestment as reducing competition and resulting in higher costs for customers. 

Steadfast Group has a 67% share of the broker market but only a "portion" are owned. No change to Outperform rating and $6.80 target price.

Target price is $6.80 Current Price is $5.66 Difference: $1.14
If SDF meets the Macquarie target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $6.75, suggesting upside of 18.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY25:

Forecast for FY26:

Market Sentiment: 0.6

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

Macquarie rates SGM as No Rating (-1) -

Macquarie upgrades earnings forecasts post the 1Q25 trading update from Sims.

The analyst observes a material improvement in North America over the quarter with an uplift in forecast  FY25 EBIT to $59.5m from $18.9m previously.

A&NZ continue to experience challenging conditions due to high China steel exports and a weakening domestic market.

Macquarie raises EPS forecast by 11% for FY25 and forecast FY26 EPS falls by -3%.

The broker is under restriction. No target price or rating.

Current Price is $12.40. Target price not assessed.

Current consensus price target is $12.85, suggesting upside of 3.0% (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

UBS rates SGM as Downgrade to Neutral from Buy (3) -

While UBS keeps its $13.50 target for Sims, the rating is downgraded to Neutral from Buy following recent share price strength and yesterday's trading update by management.

The update showed the NAM strategy is gaining traction though weakness in A&NZ is providing an offset, explains the analyst.

The broker comments initial improvements from the North America Metals (NAM) strategy are priced in, while end markets will likely remain tough for the remainder of FY25.

A Buy rating and $13.50 target price are retained.

Target price is $13.50 Current Price is $12.40 Difference: $1.1
If SGM meets the UBS target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $12.85, suggesting upside of 3.0% (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

Ord Minnett rates SMR as Buy (1) -

Site visits to Stanmore Resources' Poitrel and Isaac Plans by the Ord Minnett analyst confirmed the company's growth projects are on track.

Poitrel's production of 2.1mt year-to-date is on track to meet guidance and the broker's 13.4mt forecast. Recently purchased tenements should be able to extend Isaac Plains' operations, the broker adds.

The cashflow outlook is expected to improve post the October debt refinancing. Ord Minnett points to a dividend uplift if coal prices improve as forecast.

Target price lifts to $5 from $4.80. Buy rating unchanged.

Target price is $5.00 Current Price is $2.74 Difference: $2.26
If SMR meets the Ord Minnett target it will return approximately 82% (excluding dividends, fees and charges).

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: 1.0

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

UBS rates WBC as Neutral (3) -

After lowering credit loss forecasts for all but ANZ Bank ((ANZ)) among the big four major Australian banks, UBS's price targets rise for both National Australia Bank and Westpac, while the ratings for all four are unchanged.

So far in 2024, lower than expected credit charges have driven around 4% earnings upgrades for the banks with circa 85% of the share price performance supported by multiple expansion, explains the broker.

The target for Westpac rises to $33 from $30. Neutral.

Target price is $33.00 Current Price is $33.37 Difference: minus $0.37 (current price is over target).
If WBC meets the UBS target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $27.76, suggesting downside of -17.2% (ex-dividends)

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 WEB as Equal-weight (3) -

Ahead of approval for Webjet's de-merger of B2C, Morgan Stanley sees scope for a B2B re-rating. It's felt both businesses will be cleaner standing alone, with greater management focus and accountability.

The broker's proforma discounted cash flow (DCF) valuations for the B2C and B2B businesses are 65c and $7.00, respectively. The $7.65 falls short of the current $8.15 target for Webjet largely due to increased corporate costs. explain the analysts.

Morgan Stanley's bull case for B2B has geographic expansion and market consolidation driving scale, a higher total transaction value (TTV) and an improved take rate.

The Equal-weight rating is maintained. Industry View: In-line.

Target price is $8.15 Current Price is $8.07 Difference: $0.08
If WEB meets the Morgan Stanley target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $9.86, suggesting upside of 20.7% (ex-dividends)

The company's fiscal year ends in March.

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