Australian Broker Call

Citi rates BAP as Neutral (3) -

Following yesterday's profit downgrade (see also this Report's yesterday edition), Citi analysts have reduced FY24 to FY26 estimates by -21% to -8%.

At this stage, thr broker highlights, the FY25 EBIT estimate is $31m above FY24 as it is still assumed some BTB benefits will flow through, albeit delayed due to weaker sales.

In reflection of the rise in overall risk, the analysts have now applied a -30% discount (was -10%) in their PE relative valuation. Similarly, a -40% discount to trade (was -10%) and -50% discount to retail (was -30%) is now incorporated in the broker's Sum-of-the-Parts (SOTP) valuation.

Citi 's target price has fallen -26% to $4.70. Neutral rating remains unchanged.

Target price is $4.70 Current Price is $4.56 Difference: $0.14
If BAP meets the Citi target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $4.71, suggesting upside of 3.3% (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

Macquarie rates BAP as Outperform (1) -

Bapcor has guided FY24 pofit to be -16% lower than where Macquarie was forecasting. Revenue is nonetheless in line, but tradiing conditions in Retail are tough and "Better than Before" overheads and interest costs are headwinds, the broker notes.

Two days before starting, the incoming CEO decided not to join. Macquarie assumes the interim CEO will take a more active role.

Trading conditions and demand across end-markets remain robust with FY24 revenue tracking largely in line, however cost control is the key, the broker notes.

Target falls to $5.25 from $6.90, Outperform retained.

Target price is $5.25 Current Price is $4.56 Difference: $0.69
If BAP meets the Macquarie target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $4.71, suggesting upside of 3.3% (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 BAP as Equal-weight (3) -

Morgan Stanley remains Equal-weight on Bapcor noting intrinsic value is greater than the current share price and the broker's new target of $4.00, down from $5.75. Industry view is In-Line.

The lower target follows a material FY24 guidance downgrade by management, and is a result of the broker slashing its EPS forecasts for FY24-26 by -19.5%, -26% and -25.9%, respectively.

Management lowered FY24 profit guidance to between $93-97m (when consensus was sitting at $116m), implying to the analyst a 2H profit of $41m at the midpoint. The broker is concerned by implications for dividends and capex.

The company noted softer retail conditions, a miss on transformation benefits and higher overheads and interest cost, observes the broker. Management also pointed to specialist wholesale (SWS) margin compression.

Target price is $4.00 Current Price is $4.56 Difference: minus $0.56 (current price is over target).
If BAP meets the Morgan Stanley target it will return approximately minus 12% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.71, suggesting upside of 3.3% (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

Morgans rates BAP as Add (1) -

Bapcor announed a material downgrade in earnings guidance for the 2H24 of -25% on the 1H24, alongside possible impairments to assets.

The FY24 downgrade represents a -17%.5% miss on market expectations, highlights Morgans.

Management pointed to a suite of reasons for the downgrade - softness in retail; increased competition; margin pressure for wholesale; cost increases from worse than forecast business-to-business results, and higher interest costs.

A decision by the incoming CEO to cancel two days before the start date has left the interim CEO in the driver's seat.

EPS forecasts are downgraded by -18.6% for FY24 and -28.7% for FY25, but Morgans remains confident the balance sheet won't require a capital injection.

Add rating retained and the target price is reduced to $4.95 from $6.60.

Target price is $4.95 Current Price is $4.56 Difference: $0.39
If BAP meets the Morgans target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $4.71, suggesting upside of 3.3% (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

Ord Minnett rates BAP as Hold (3) -

Bapcor has announced a major profit downgrade, following weaker trading in the second half and unrealised cost benefits from its ‘Better than Before’ cost-out program.

Bapcor remains without a permanent CEO and CFO, while also having an outgoing Chair. With this backdrop, it remains difficult for Ord Minnett to mount a positive investment case, despite the recent underperformance.

The ‘Better than Before’ cost-out program, which is expected to yield $100m in earnings benefits in FY25, appears unlikely to be delivered or even maintained, the broker suggests. This is particularly the case given substantive management changes.

Target falls to $4.65 from $6.10, Hold retained.

Target price is $4.65 Current Price is $4.56 Difference: $0.09
If BAP meets the Ord Minnett target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $4.71, suggesting upside of 3.3% (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

UBS rates BAP as Neutral (3) -

UBS looks to lower revenue growth and higher costs for the 2H24 as the reason for the material downgrade in earnings guidance from Bapcor between -15% and -19% for FY24.

The withdrawal of the new CEO to take up the apppointment also puts in doubt any near tern restructuring to address the costs and margins issue, particularly in the business-to-business segment, notes the broker.

Post the earnings downgrade the stock is trading circa 16x prospective earnings, which UBS sees as indicative that the market is viewing the 2H24 as a cyclical earnings trough with scope for improvement in FY25.

The analyst is less than convinced, lowering the FY24 EPS forecasts by -16% and -25% for FY25.

A Neutral rating is retained and the target drops to $4.70 from $6.00.

Target price is $4.70 Current Price is $4.56 Difference: $0.14
If BAP meets the UBS target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $4.71, suggesting upside of 3.3% (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

Bell Potter rates CHN as Speculative Buy (1) -

Supporting the evaluation of a selective open-pit and underground mining operation for Chalice Mining, notes Bell Potter, management has released a small-scale, high grade sulphide Resource for its Gonneville project.

A high-grade Scoping Study Starter Case is currently underway and is expected to be completed in coming months.

Bell Potter forecasts a C1 cash operating margin of $75/t, demonstrating the robustness of the project at the current cyclical lows in palladium and platinum prices.

The Speculative Buy rating is maintained and the target falls to $5.00 from $5.40 after the analysts assume a smaller scale development scenario, lower the exploration valuation, and update for the company's last reported cash position.

Target price is $5.00 Current Price is $1.14 Difference: $3.865
If CHN meets the Bell Potter target it will return approximately 341% (excluding dividends, fees and charges).

Current consensus price target is $2.82, suggesting upside of 148.2% (ex-dividends)

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

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

Bell Potter rates CU6 as Speculative Buy (1) -

Clarity Pharmaceuticals therapeutic trial for SECuRE is progressing nicely, according to Bell Potter, with the announcement of the first complete responder (CR) overwhelmingly positive news.

The CR designation means no detectable lesion in the April 2024 CT Scan, explain the analysts. Additionally, there was no prostate-specific membrane antigen (PSMA) uptake in any lesion using 64CU-SAR-bisPSMA.

The Speculative Buy rating is maintained and target price rises to $4.00 from $3.90.

Target price is $4.00 Current Price is $3.65 Difference: $0.35
If CU6 meets the Bell Potter target it will return approximately 10% (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

Macquarie rates FBU as Underperform (5) -

Fletcher Building has underperformed the NZX50 since 2009 (1% per annum versus 10% pa gross return), Macquarie notes -- not for lack of activity, rather structural declines in NZ real pricing and lack of success in the mitigation strategies pursued.

While some fixes have been made, the broker has a long list of actions that need to be taken.

Target falls to NZ$3.23 from NZ$3.46, Underperform retained.

Current Price is $3.39. Target price not assessed.

Current consensus price target is $4.59, suggesting upside of 35.3% (ex-dividends)

The company's fiscal year ends in June.

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: 0.3

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

Ord Minnett rates HLO as Upgrade to Buy from Accumulate (1) -

Helloworld Travel's March Q trading update highlighted a company exposed to the right segment and age demographic within the travel industry, Ord Minnett suggests.

The key source of earnings is the sale of Outbound, and to a lesser extent, Domestic Travel to Australian consumers, typically in the 55+ age group.

Yesterday’s share price decline suggests to the broker that some in the market had been expecting an upgrade in guidance which
failed to materialise.

Ord Minnett has been cautious on the stock for some time given valuation considerations but views the current weakness as a buying
opportunity. Upgrade to Buy from Accumulate. Target slips to $3.10 from $3.16.

Target price is $3.10 Current Price is $2.49 Difference: $0.61
If HLO meets the Ord Minnett target it will return approximately 24% (excluding dividends, fees and charges).

Current consensus price target is $3.72, suggesting upside of 49.4% (ex-dividends)

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 HLO as Buy (1) -

Helloworld Travel reported a March quarter Total Transaction Value increase of 43% year on year. Management reiterated guidance for FY24 underlying earnings.

Helloworld network agents continue to experience high demand for leisure and corporate travel in A&NZ, Shaw and Partners notes. Demand for inbound services continues to recover.

Helloworld’s concert, theatre and event logistics business recovered in the quarter on the back of major events including Taylor Swift and others.

Shaw regards this to be a solid update, broadly consistent with its earnings forecasts. Buy and $3.80 target retained.

Target price is $3.80 Current Price is $2.49 Difference: $1.31
If HLO meets the Shaw and Partners target it will return approximately 53% (excluding dividends, fees and charges).

Current consensus price target is $3.72, suggesting upside of 49.4% (ex-dividends)

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 IFL as Sell (5) -

Citi maintains a Sell rating for Insignia Financial, lowering the target price to $2.20 from $2.35, as the March quarter update revealed advisors are jumping ship to greener pastures elsewhere.

The broker notes some advisors are dissatisfied with the forced transition to Insignia platforms from the MLC Wrap, with the latter contributing -$1.2bn of the total -$1.7bn in funds outflows during the March quarter.

Citi sees further outflows on the horizon. Additionally, with the new CEO potentially rebasing financial targets, the broker sees heightened uncertainties surrounding future financial guidance.

Target price is $2.20 Current Price is $2.36 Difference: minus $0.16 (current price is over target).
If IFL meets the Citi target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.60, suggesting upside of 10.2% (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

Morgan Stanley rates IFL as Underweight (5) -

While Morgan Stanley was disappointed by outflows, stronger financial markets protected 3Q revenues and funds under management and administration (FUMA) for Insignia Financial.

Platform outflows (including pension payments) of -$2.3bn were the largest in the past three years, driven by the MLC Advised channel due to the MLC wrap migration, explain the analysts. The outflows were greater than the broker's forecast for -$1.9bn.

Management noted the migration was successfully completed in early-April and outflows in this channel should improve over time.

Target $2.30. The Underweight rating is maintained with Morgan Stanley noting a better flow trajectory and a stronger balance sheet are needed before the share price can re-rate. Industry view: In-Line.

Target price is $2.30 Current Price is $2.36 Difference: minus $0.06 (current price is over target).
If IFL meets the Morgan Stanley target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.60, suggesting upside of 10.2% (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 IFL as Sell (5) -

Insignia Financial reported ongoing fund outflows for the 3Q24 which were masked by market gains, according to UBS, with FUMA slightly better than expected.

The integration of MLC was completed over Easter. The transitioning of MLC advisers could result in further fund outflows which reached -$1.2bn in the change from MLC Wrap to Expand.

Adviser numbers declined -8% and practice numbers fell -13%. UBS is forecasting ongoing net outflows from both Platforms and Asset Management.

EPS forecasts are adjusted marginally upwards by 5% and 7% for FY24 and FY25, respectively.

A Sell rating is retained with analyst concerns around execution risks and lack of transparency in restructuring.

The target price is raised to $2.30 from $2.20.

Target price is $2.30 Current Price is $2.36 Difference: minus $0.06 (current price is over target).
If IFL 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 $2.60, suggesting upside of 10.2% (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

Morgans rates IMR as Speculative Buy (1) -

Imricor Medical Systems reported in line cash flow for the 1Q24, according to Morgans, of US$0.1m in customer receipts and net cash outflow of -US$4.7m.

Cash on hand stands at US$1.2m with US$6.5m raised post the 1Q24.

The broker states other funding sources (North Dakota Commerce Department and the GEM Global Yield LLM) place the company in a strong fiscal position in the growing US$7bn electrophysiology ablation market.

The start of the US atrial flutter and European ventricular tachycardia clinical trials are viewed as a prime focus for investors, notes the broker.

There are no changes to the earnings forecasts. Speculative Buy rating and 96c target price unchanged.

Target price is $0.96 Current Price is $0.47 Difference: $0.49
If IMR meets the Morgans target it will return approximately 104% (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

Macquarie rates IRE as Neutral (3) -

Iress has modestly upgraded FY24 earnings guidance, largely driven by faster realisation of transformation benefits and a slight
benefit from the sale of the Platforms business, to a level similar to Macquarie's forecast.

Iress put through 5-6% price increases across much of its Australian business earlier this period. Last year a larger 9% price increase didn't stick across Xplan, the broker notes, with many users reducing the number of modules to manage their costs.

While less significant, industry feedback suggests advisers were still not happy with the quantum of the latest uplift, the broker warns.

On the sale of UK Mortgages, target rises to $8.85 from $8.55, Neutral retained.

Target price is $8.85 Current Price is $8.44 Difference: $0.41
If IRE meets the Macquarie target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $8.84, suggesting upside of 4.7% (ex-dividends)

The company's fiscal year ends in December.

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

Macquarie rates KAR as Outperform (1) -

Karoon Energy is set to harvest its market cap in free cash flow over about four years on Macquarie's below-curve oil price forecasts (excluding potential Neon project capex).

The broker expects Karoon to initiate a dividend, and for now incorporates a 30% payout ratio to forecasts.

A 24% free cash flow yield on Macquarie's forecasts, and 34% at spot oil in FY25, remains the core attraction. A dividend can support a re-rating, the broker suggests.

Outperform and $2.50 target retained.

Target price is $2.50 Current Price is $1.91 Difference: $0.59
If KAR meets the Macquarie target it will return approximately 31% (excluding dividends, fees and charges).

Current consensus price target is $2.66, suggesting upside of 39.3% (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: 0.8

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

Bell Potter rates MCE as Downgrade to Speculative Hold from Speculative Buy (3) -

Given recent share price strength, Bell Potter downgrades its rating for Matrix Composites & Engineering to Speculative Hold from Speculative Buy.

The broker highlights recent quarterly reporting by global subsea service providers (many of which are Matrix's customers), while upgraded medium-term outlooks indicate order backlogs remain strong.

Matrix is also leveraged to growing activity across the global offshore floating wind sector, note the analysts.

The 42c target is maintained.

Target price is $0.42 Current Price is $0.35 Difference: $0.07
If MCE meets the Bell Potter target it will return approximately 20% (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

Citi rates MQG as Sell (5) -

It is Citi's early assessment that Macquarie Group's FY24 performance fell in line with market consensus, though cash earnings missed the broker's estimate by some -4%, for which a higher tax rate is partially responsible.

Macquarie declared a sligthly better-than-expected dividend of 640c (full year). The broker is less pleased with the overall composition of today's results, deemed of "lower quality".

The broker suspects today's guidance for MAM is implicitly a downgrade to FY25 forecasts as the recovery in green assets is more muted.

Sell. Target price of $161.00.

Target price is $161.00 Current Price is $183.83 Difference: minus $22.83 (current price is over target).
If MQG meets the Citi target it will return approximately minus 12% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $187.08, suggesting upside of 1.8% (ex-dividends)

The company's fiscal year ends in March.

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 MQG as Overweight (1) -

Macquarie Group's FY24 is labeled "solid" in an initial response by analysts at Morgan Stanley, even though the net profit missed the broker's forecasts by some -5%. It was in line with market consensus, specify the analysts.

The outlook for FY25 should entail a clear earnings recovery, but market consensus is already positioned for 20% growth, states the broker. Morgan Stanley expects a public debate about the outlook and whether the numbers stack up post today's release.

For what it's worth, Morgan Stanley itself believes Macquarie is at the start of a multi-year upgrade cycle with global M&A recovering from a 30 year record low in 2023.

Overweight rating, target price of $225, Industry view: In-Line.

Target price is $225.00 Current Price is $183.83 Difference: $41.17
If MQG meets the Morgan Stanley target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $187.08, suggesting upside of 1.8% (ex-dividends)

The company's fiscal year ends in March.

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

UBS rates MQG as Neutral (3) -

In an initial response, UBS analysts state Macquarie Group's FY24 performance looks in line with forecasts, but the business divisions have missed expectations by some -3%. The current H2 run rate suggests FY25 consensus looks "achievable", suggests the broker.

A quick rundown of the major divisions and today's guidance provided:

-MAM: base fees expected to be broadly in line, while Net Other Income is expected to rise significantly due to higher green asset realisations

-MacCap: Transaction activity expected to rise significantly while investment income should also rise 

-CGM: commodities income expected to be broadly in line

-BFS: margin pressure due to competitive market dynamics 

Neutral rating and $185 target.

Target price is $185.00 Current Price is $183.83 Difference: $1.17
If MQG meets the UBS target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $187.08, suggesting upside of 1.8% (ex-dividends)

The company's fiscal year ends in March.

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

Citi rates NAB as Sell (5) -

Citi had already concluded in an initial response yesterday that National Australia Bank's interim result met forecasts by the broker and market consensus.

Citi maintains a Sell rating with a revised price target of $26.50, up from $25.75. The broker highlights NAB's focus on business and corporate banking now makes up about 72% of its profits, which may expose the bank disproportionately to a slowdown in business credit compared to its A&NZ peers.

The broker forecasts a tougher future with expected increases in operating costs by approximately 5.4% annually from FY24 to FY26. Earnings forecasts have been reduced by about -1% to- 6% for FY24 through FY26.

Target price is $26.50 Current Price is $34.40 Difference: minus $7.9 (current price is over target).
If NAB meets the Citi target it will return approximately minus 23% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $30.24, suggesting downside of -12.1% (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 NAB as Underperform (5) -

National Australia Bank's underlying first half result was broadly in line with Macquarie's expectations. Flat revenues and a 2% cost increase resulted in a -1% decline in pre-provision profit.

With minimal changes to pre-provision forecasts, the broker expects a -5% reduction in earnings in FY24. While lending pressures are moderating, Macquarie expects deposit-led margin headwinds to persist.

NAB's tier 1 capital is below peers, leaving a smaller buffer for potential credit quality deterioration or stronger balance sheet growth, hence the broker was surpised by the size of the announced buyback.

Underperform and $32.50 target retained.

Target price is $32.50 Current Price is $34.40 Difference: minus $1.9 (current price is over target).
If NAB meets the Macquarie target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $30.24, suggesting downside of -12.1% (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

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

National Australia Bank's 1H cash profit aligned with the consensus forecast, and the 84cps interim dividend matched Morgan Stanley's forecast.

The headline net interest margin (NIM) and impairment charges were better than the broker forecast. It's felt management's outlook commentary was encouraging and balance sheet settings remain strong.

Management retained FY24 expense growth guidance. The analysts think company commentary implies the margin will be flat-to-down in the 2H.

Morgan Stanley's Equal-weight rating is maintained given a full valuation and a modest EPS growth outlook. The target rises to $31.50 from $30.60. Industry View: In-Line.

Target price is $31.50 Current Price is $34.40 Difference: minus $2.9 (current price is over target).
If NAB 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 $30.24, suggesting downside of -12.1% (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

Morgans rates NAB as Hold (3) -

National Australia Bank reported a 1H24 -3% decline in cash earnings compared to the previous 2H23, lower than Morgans' forecasts but in line with consensus.

Around 83% of the bank's revenue was generated from net interest income, a slight beat on consensus.

Net interest margin (NIM) rose 1bp to 172bps, although Morgans forecasts the NIM to stabilise around the mid-160bps level.

Credit impairment charges (CIC) declined -11% against the 2H23 and are now forecast to be 4-6% across FY24-FY26, notes the broker.

Forecast cash EPS is lowered 2-3% for FY24 and the $1.68 dividend is retained.

Hold rating retained due to the valuation and the target lowered to $29.94 from $29.97. 

Target price is $29.94 Current Price is $34.40 Difference: minus $4.46 (current price is over target).
If NAB meets the Morgans target it will return approximately minus 13% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $30.24, suggesting downside of -12.1% (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

Ord Minnett rates NAB as Hold (3) -

National Australia Bank's first half profit eased -3% from the prior half, Ord Minnett notes. After being squeezed in the last half, the net interest margin firmed by one point.

Competitive lending rates and customer switching to more costly term deposits weighed on margins, but higher returns on deposit and capital hedges provided an offset. Bad debt expenses are again below expectation.

A capital ratio of 12.15% is above target but will move closer to the 11.5% target on the announced buyback, Ord Minnett notes.

While valuation is not extreme, Ord Minnett sees better value in Westpac ((WBC)) and ANZ Bank ((ANZ)). Hold and $31 target retained.

Target price is $31.00 Current Price is $34.40 Difference: minus $3.4 (current price is over target).
If NAB meets the Ord Minnett target it will return approximately minus 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $30.24, suggesting downside of -12.1% (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 NAB as Sell (5) -

National Australia Bank reported 1H24 results met expectations, reflecting higher net interest margin (NIM) income, although UBS points to ongoing cost inflation and competition as headwinds for the bank and the sector.

Mortgage lending slowed resulting in weaker volume growth from both the retail and institutional divisions.

An improvement in asset quality, combined with better NIM and revenue prospects results in UBS lifting the FY24 EPS by 3% and 5% for FY25.

Trading at circa 15.3x forward earnings which is a premium to the 10-year historical average, a Sell rating is unchanged on a slightly upgraded target price of $30 from $28.

Target price is $30.00 Current Price is $34.40 Difference: minus $4.4 (current price is over target).
If NAB meets the UBS target it will return approximately minus 13% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $30.24, suggesting downside of -12.1% (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 NST as Outperform (1) -

Northern Star Resources' annual resource and reserve statement showed resources up 7% and reserves up 4% net of mining depletion, Macquarie reports, with KCGM the key driver.

A maiden reserve for the Fimiston Underground is, in the broker's view, the first step in a long and considered plan to unlock the system's clearly large potential.

Timing and cost control of the KCGM mill expansion remain important for the miner, the broker suggests. Outperform and $17 target retained.

Target price is $17.00 Current Price is $14.33 Difference: $2.67
If NST meets the Macquarie target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $15.13, suggesting upside of 5.6% (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

Ord Minnett rates SQ2 as Hold (3) -

Reports have emerged that Block may be the subject of a federal investigation into its compliance practices. If true the consequences are difficult to predict, Ord Minnett suggests, but could lead to significant fines and increased compliance costs.

The broker is sticking with its Hold rating $128 target for now, but applies a "Very High" uncertainty risk caveat.

Target price is $128.00 Current Price is $116.44 Difference: $11.56
If SQ2 meets the Ord Minnett target it will return approximately 10% (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: 0.5

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

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

Following Wesfarmers' strategy day, Morgan Stanley highlights store traffic and bulk purchase activity at Bunnings remains strong, while all income cohorts at Kmart are growing, particularly for middle/high income.

For lithium, management believes pricing has troughed.

Current losses in One Digital are expected to be offset by subscription revenues over time, observe the analysts.

Equal-weight rating. Target price $55.30. Industry view: In line.

Target price is $55.30 Current Price is $68.31 Difference: minus $13.01 (current price is over target).
If WES meets the Morgan Stanley target it will return approximately minus 19% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $58.13, suggesting downside of -14.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: -0.2

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

UBS rates WES as Neutral (3) -

Wesfarmers' annual Strategy Briefing Day did not offer a trading update for investors, however, FY24 guidance was reiterated post the 1H24 results.

UBS makes slight adjustments to EPS forecasts with a 0.7% rise in FY24 EPS and 3.6% increase to FY25 EPS on the back of higher expected revenues across Bunnings, Kmart and Officeworks.

Management reiterated the strength of the balance sheet provides growth investment opportunities and, encouragingly, the Catch losses continue to decline, although One Digital and lithium remain loss-making.

Neutral rating retained. Target price rises to $66 from $61.

Target price is $66.00 Current Price is $68.31 Difference: minus $2.31 (current price is over target).
If WES 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 $58.13, suggesting downside of -14.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: -0.2

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

Citi rates WOW as Buy (1) -

Citi believes March quarter performance results were broadly in line with expectations, but Woolworths lagged behind key competitor Coles Group ((COL)) due to changes in promotional strategies and availability issues that have since been resolved.

Guidance on FY25 implementation costs for supply chain projects was higher than expected, leading to a roughly -2% reduction in earnings forecasts.

The report anticipates Coles will continue to lead in like-for-like growth into 4Q24 but the gap is expected to narrow.

Citi maintains a Buy rating with an unchanged price target of $39.00 as the broker remains optimistic about Woolworths' long-term prospects despite current challenges.

Today's report highlights the potential for gross margin improvement from initiatives in marketing and digital engagement. Earnings estimates have been reduced, including DPS.

Target price is $39.00 Current Price is $30.59 Difference: $8.41
If WOW meets the Citi target it will return approximately 27% (excluding dividends, fees and charges).

Current consensus price target is $33.45, suggesting upside of 9.3% (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

Macquarie rates WOW as Outperform (1) -

Woolworths Group has seen a uncharacteristically soft half relative to the prior year, Macquarie suggests, partially explained by difficult comparables but, more realistically, a rare miss on execution.

Woolworths Australia food saw 1.5% year on year growth in the March Q compared with Coles Group ((COL)) at 5.1%.

The broker highlights premium branding, lack of a collectables campaign, availability issues in fresh produce, headwinds in tobacco, tough comparapables, and a distracted management.

A $90-100m cost increase pa over FY25-26 due to commissioning of large supply chain and automation projects should lead to net benefit by FY28, the broker suggests.

Outperform and $35 target retained.

Target price is $35.00 Current Price is $30.59 Difference: $4.41
If WOW meets the Macquarie target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $33.45, suggesting upside of 9.3% (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

Morgan Stanley rates WOW as Underweight (5) -

Following Woolworths Group's 3Q sales update and management commentary, Morgan Stanley expects trading conditions will be challenging for the next year as inflation returns to a very low single digit, and as competition for customer shopping baskets heats up.

Inflation of 0.1% in Q3 compares to 4% and 1.9%, respectively, in Q1 and Q2. Same store sales growth in Australian Food was 1.5% versus the 5.6% achieved by Coles Group ((COL)), notes the analyst.

Management stated April trading in food was broadly in line with Q3.

Target $32. Underweight. Industry View: In-line.

Target price is $32.00 Current Price is $30.59 Difference: $1.41
If WOW meets the Morgan Stanley target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $33.45, suggesting upside of 9.3% (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 WOW as Lighten (4) -

Woolworths Group's supermarket sales growth of 1.5% in the March Q, starkly underperformed Coles Group ((COL)) on 5%. There are temporary factors for the divergence, Ord Minnett notes, including the timing of promotions and Coles' collectibles marketing.

With quarterly sales still tracking below the broker's expectations, forecasts are marginally lowered. Wage cost inflation and the cost of ramping up new distribution centres contribute to the broker's forecast operating margin decline. Big W is also struggling.

Lighten and $27.50 target retained.

Target price is $27.50 Current Price is $30.59 Difference: minus $3.09 (current price is over target).
If WOW meets the Ord Minnett target it will return approximately minus 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $33.45, suggesting upside of 9.3% (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

UBS rates WOW as Neutral (3) -

UBS points to weaker than expected core domestic food sales and pressure on EBIT margins in the 3Q24 as the reason for the downgrade in earnings estimates for Woolworths Group.

Total sales reported were slightly higher than consensus at $16.8bn, but insufficient to offset 1.5% Australian food sales growth, below the broker's 2% forecast.

Deflation came in below forecast; leadership in ecommerce was challenged due to recycling strength during the covid period and business costs remained elevated and a headwind.

UBS lowers FY24 EPS forecasts by -6.9% and -8.5% for FY25.

A Neutral rating is maintained and the target lowered to $32.50 from $33.50.

Target price is $32.50 Current Price is $30.59 Difference: $1.91
If WOW meets the UBS target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $33.45, suggesting upside of 9.3% (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

Macquarie rates XRO as Outperform (1) -

Xero has flagged price increases to both Partner & Business editions for Australian subscribers effective 1 July.

This simplifies the offering to subscribers, Macquarie suggests, presents upside from bundling seen before in payroll, and is in line with recent management commentary.

The broker notes bundling payroll in Australia has led to 3x the adoption in other markets.

Macquarie thinks churn risk is somewhat mitigated in Australia due to the greater than 70% weighting to the partner channel in this market.

Target rises to $154.60 from $152.60, Outperform retained.

Target price is $154.60 Current Price is $125.22 Difference: $29.38
If XRO meets the Macquarie target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $127.25, suggesting upside of 1.6% (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: 0.5

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