Australian Broker Call

Ord Minnett rates ADH as Hold (3) -

Given ongoing sales declines evident from Adairs' trading update, Ord Minnett's prior forecast for a return to modest profit growth in the 2H is looking less achievable.

Year-to-date group sales fell by -9%, lower than the broker's 1H forecast for -6%, with all three retail franchises reporting declines on the previous corresponding period.

While management noted $5m in targeted cost reductions for FY24 are on track, no FY24 guidance was provided.

Ord Minnett's target falls to $1.60 from $1.70. The Hold rating is retained as near-term trading conditions will likely remain difficult.

Target price is $1.60 Current Price is $1.49 Difference: $0.11
If ADH meets the Ord Minnett target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $1.55, suggesting upside of 0.0% (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 ADH as Neutral (3) -

UBS assesses a "soft" 1H trading update by Adairs for the first 21 weeks of FY24, as expected, in line with the decline in the first seven weeks of the financial year. Adairs brand sales slightly deteriorated while Mocka and Focus improved compared to the first seven weeks.

The $1.65 target is unchanged and the Neutral rating is retained partly due to a lack of earnings visibility and a breach of free cash flow  covenants in FY24, on the broker's forecast.

UBS also notes a potential upcoming operational risk with management only taking control of the national distribution centre in September.

Target price is $1.65 Current Price is $1.49 Difference: $0.16
If ADH meets the UBS target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $1.55, suggesting upside of 0.0% (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

Bell Potter rates APX as Hold (3) -

As part of Appen's trading update, management noted “the challenging external operating and macroeconomic conditions that were noted at the release of the 1HFY23 result have persisted into 2HFY23”.

The company announced both a further US$14m of cost reductions, on top of the US$46m already slated, and a fully underwritten $30m equity raising. Across FY24-26, the analysts downgrade revenue assumptions by -6%, -10% and -12%, respectively.

In line with management's objective to return to profitability, Bell Potter forecasts a return to a modest positive earnings (EBITDA) number in 2024.

After allowing for the lower forecasts, the equity raise and higher assumed risk-free rate, the broker's target is slashed to 65c from $1.70. Hold retained.

Target price is $0.65 Current Price is $0.60 Difference: $0.05
If APX meets the Bell Potter target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $1.31, suggesting upside of 111.8% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: -0.7

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

Citi rates ASG as Buy (1) -

Following a solid first half trading update from Autosports Group, Citi remains positive on the outlook for the second half despite ongoing cost pressures from rising rates.

The company is guiding to 23-25% revenue growth in the first half, ahead of Citi's expectations, and net profit of $50-52m.

The Buy rating and target price of $3.45 are retained.

Target price is $3.45 Current Price is $2.38 Difference: $1.07
If ASG meets the Citi target it will return approximately 45% (excluding dividends, fees and charges).

Current consensus price target is $3.27, suggesting upside of 49.8% (ex-dividends)

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 1.0

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

Ord Minnett rates BKW as Hold (3) -

Following an AGM trading update, Ord Minnett expects FY24 will be challenging for Brickworks due to a more difficult construction outlook, particularly in Australia.

Property valuations will also be impacted by cap rate expansion to 5.2% from 4.1%, note the analysts, which management expects will drive a -10% decline in the Industrial Property assets.

The broker points out the company's Property segment has been a key driver of Brickworks earnings over the past five years. The target falls to $27 from $28. Hold.

Dividends should be maintained given retained earnings of $2.99bn, explain the analysts.

Target price is $27.00 Current Price is $25.14 Difference: $1.86
If BKW meets the Ord Minnett target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $27.10, suggesting upside of 7.8% (ex-dividends)

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

Bell Potter rates C79 as Initiation of coverage with Buy (1) -

Bell Potter initiates coverage on Chrysos with a Buy rating and $8.70 target. The company is a provider of mining technology solutions to the global mining industry via the proprietary PhotonAssayTM technology, which was originally developed by CSIRO, a 19.4% shareholder.

Compared to traditional gold assaying methods, this disruptive technology displays materially faster testing times of assay samples, explain the analysts.

The technology also provides greater economic, environmental and safety benefits for the company's mining and Testing, Inspection and Certification (TIC) customer base, points out Bell Potter.

Around 2% market penetration is expected in the large gold assaying market by FY30.

Target price is $8.70 Current Price is $7.25 Difference: $1.45
If C79 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: 1.0

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

Morgans rates CAR as Hold (3) -

After reviewing the latest volumes data, Morgans updates forecasts for stocks under coverage in the classifieds space.

The broker sees a continuation of strong inventory levels for CAR Group and remains attracted to the long-term growth potential for the business.

Morgans' forecasts rise largely due to improved margin assumptions for the company's offshore businesses, Trader Interactive and webmotors, on a faster-than-expected improvement in segment margins.

The target rises to $28.10 from $26.60 and the Hold rating is unchanged.

Target price is $28.10 Current Price is $27.64 Difference: $0.46
If CAR meets the Morgans target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $28.86, suggesting upside of 4.3% (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

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

City Chic Collective's latest trading update was a disappointment to Morgan Stanley, with revenue declining -30% to date in the first half. With this in mind, the broker has lowered its forecasts through to FY26, anticipating a return to earnings profitability in the second half.

The broker warns long-term impacts on City Chic Collective's brands from aggressive discounting remains an unknown, and there is risk that gross margins are permanently impacted if discounts become entrenched.

The Equal-weight rating is retained and the target price decreases to 40 cents from 45 cents.

Target price is $0.40 Current Price is $0.37 Difference: $0.03
If CCX meets the Morgan Stanley target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $0.48, suggesting upside of 30.3% (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

Bell Potter rates CUV as Buy (1) -

Clinuvel Pharmaceuticals' Scenesse will continue to be the only approved treatment for erythropoietic protoporphyria (EPP) patients in the short-term, according to Bell Potter.

The broker arrives at this conclusion, given the potential delay of approval for a drug by the most advanced competitor, Mitsubishi Tanabe.

Even if a rival drug comes to market in several years, the analysts don't anticipate cannibalisation of Clinuvel’s product which has a
more than 90% long-term treatment continuation rate.

The Buy rating and $24 target are maintained.

Target price is $24.00 Current Price is $17.00 Difference: $7
If CUV meets the Bell Potter target it will return approximately 41% (excluding dividends, fees and charges).

Current consensus price target is $21.33, suggesting upside of 23.1% (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

Macquarie rates EBO as Outperform (1) -

From Ebos Group's latest trading update, and by comparison to its last trading update, Macquarie has inferred the company had a strong October.

Revenue and earnings for the first four months of the year are up 8.2% and 8.8% respectively year-on-year, compared to respective increases of 5.9% and 7.7% for the first three months.

October also proved strong for public orthopedic and spinal surgeries, according to Medicare data, but Macquarie is reluctant to extend this trend to the private sector.

The Outperform rating and target price of $38.52 are retained.

Target price is $38.52 Current Price is $32.04 Difference: $6.48
If EBO meets the Macquarie target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $35.49, suggesting upside of 10.0% (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

Morgans rates GHY as Speculative Buy (1) -

Management is confident laboratory testing will confirm high concentrations of hydrogen from the early-stage of exploration at the Ramsay 2 well, which would also confirm the drilling result for the first well, Ramsay 1.

Morgans stresses the overall high risk but potentially high reward opportunity, given Gold Hydrogen is looking to discover and develop a naturally occurring hydrogen deposit, something no other company has achieved previously.

The Speculative Buy rating is maintained and the target increased to $1.22 from 76c after the broker de-risked its valuation factor for Ramsay 1.

Target price is $1.22 Current Price is $0.78 Difference: $0.445
If GHY meets the Morgans target it will return approximately 57% (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

Morgan Stanley rates HLS as Upgrade to Equal-weight from Underweight (3) -

With Healius guiding to first half earnings of $14-17m, Morgan Stanley extrapolates the company's full year guidance suggests a sizeable earnings increase in the second half to $78-91m. The broker estimates full year earnings of $74m, below company guidance.

The company is not only anticipating a 6-8% volume increase in the second half, but has also suggested efficiencies will deliver a $15m benefit in the period.

With the share price trading closer to Morgan Stanley's target, the rating is upgraded to Equal-weight from Underweight and the target price decreases to $1.30 from $2.31.

Target price is $1.30 Current Price is $1.30 Difference: $0
If HLS meets the Morgan Stanley target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $1.83, suggesting upside of 35.6% (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

Bell Potter rates IGO as Buy (1) -

Bell Potter believes the IGO share price is oversold given the long-term earnings potential of the lithium assets and highlights how the Greenbushes project is the most valuable component of the company.

Should shares fall further, the broker suggests IGO may become a takeover target itself, given Greenbushes is the lowest-cost producer, and the synergies that would accrue by simplifying/focusing the business.

Research coverage is passed to a new analyst, and a target of $8.74 is set with a Buy recommendation.

Target price is $8.74 Current Price is $8.74 Difference: $0
If IGO meets the Bell Potter target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $11.78, suggesting upside of 38.6% (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

Macquarie rates LOV as Neutral (3) -

Like-for-like sales for Lovisa Holdings have weakened from declines earlier in the half, now down -6.2% to mid-November, as conditions have remained consistently tough, as Macquarie points out.

The broker is anticipating like-for-like sales will get easier for Lovisa Holdings over the June quarter, when the retailer is no longer cycling major price rises. Macquarie forecasts the like-for-like sales decline to moderate to -0.6% over the second half.

The Neutral rating is retained and the target price reduced to $18.50 from $18.70.

Target price is $18.50 Current Price is $18.28 Difference: $0.22
If LOV meets the Macquarie target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $22.99, suggesting upside of 27.4% (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

Bell Potter rates ORR as Speculative Hold (3) -

OreCorp and Silvercorp Metals Inc. have agreed to an amended Scheme of Arrangement, whereby the latter will increase the cash component of its offer to 19c/share from 15c/share. The scrip consideration of 0.0967 of Sivercorp share is unchanged.

At current prices and exchange rates, Bell Potter calculates a premium of 6.8% to OreCorp's last closing price, and notes the increased offer partially offsets a decline in the Silvercorp share price since the original offer.

The broker continues to view the offer as attractive, while the directors of OreCorp continue to unanimously recommend the offer.

The Speculative Hold rating and 53c target are unchanged.

Target price is $0.53 Current Price is $0.53 Difference: $0
If ORR meets the Bell Potter target it will return approximately 0% (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 PLS as Buy (1) -

Citi updates its model on Pilbara Minerals to mark to market lithium pricing, seeing the broker's full year earnings forecast decline -5%, and moves its cash tax period to align with income tax payments. 

The broker's estimated net asset value is now $4.62 per share. The Buy rating is retained and the target price decreases to $4.40 from $4.50.

Target price is $4.40 Current Price is $3.64 Difference: $0.76
If PLS meets the Citi target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $4.67, suggesting upside of 31.2% (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 QBE as Buy (1) -

In an initial look at QBE Insurance's third quarter, performance is largely as Citi had anticipated. The broker notes given a benign hurricane season in the US, the insurer retains US$380m in its catastrophe budget, meaning a positive variance at year's end is likely.

As Citi had previously highlighted, some benefits will be offset by an adverse crop result, as lower commodity prices cause some claims for crop, with the final outcome unlikely to be known until early December.

The Buy rating and target price of $18.00 are retained.

Target price is $18.00 Current Price is $15.30 Difference: $2.7
If QBE meets the Citi target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $17.16, suggesting upside of 9.4% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY23:

Forecast for FY24:

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

Morgans rates REA as Hold (3) -

After reviewing the latest volumes data, Morgans updates forecasts for stocks under coverage in the classifieds space.

The broker notes a resilient new listings environment for REA Group with 12% revenue growth for the Australian residential business on the previous corresponding period growth.

Yield has also benefited from the FY24 price rises (average 13% nationally), according to the analyst, and ongoing depth penetration.

Morgans makes no changes to the $155 target for the group, given the recent quarterly refresh of forecasts following a better-than-anticipated 1Q. The Hold rating is unchanged.

Target price is $155.00 Current Price is $156.59 Difference: minus $1.59 (current price is over target).
If REA meets the Morgans target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $157.50, suggesting upside of 0.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.0

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

Morgans rates SEK as Add (1) -

After reviewing the latest volumes data, Morgans updates forecasts for stocks under coverage in the classifieds space.

The broker highlights normalisation for job advertisement volumes following the robust previous corresponding period for Seek.

While the broker's forecasts remains within management's FY24 guidance for revenue, earnings and profit, FY24-26 EPS forecasts are lowered by around -1-2%.

The target falls to $27.80 from $28.10. Add.

Target price is $27.80 Current Price is $22.89 Difference: $4.91
If SEK meets the Morgans target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $26.54, suggesting upside of 16.7% (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

Bell Potter rates SHV as Buy (1) -

The FY23 earnings (EBITDA) loss of -$87m for Select Harvests was only slightly better than Bell Potter's -$88.7m forecast.

Due to higher cost estimates, the broker downgrades FY24 and FY24 operating earnings forecasts by -17% and -7%, respectively, and the target falls to $4.60 from $5.30.

Under more normal growing conditions, the analysts can see a material uplift in earnings should certain conditions be met, including the extraction of $15-25m in efficiencies via transformation initiatives in Project Horizon.

The Buy rating is maintained.

Target price is $4.60 Current Price is $3.91 Difference: $0.69
If SHV meets the Bell Potter target it will return approximately 18% (excluding dividends, fees and charges).

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 SHV as Neutral (3) -

A smaller crop size, depressed almond pricing and impairments weighed on FY23 results for Select Harvests, observes UBS.

The analyst anticipates much better earnings in FY24 partly due to a recovery in crop yields, better pricing and an improvement in value-add processing.

These positives are partly offset by a "surprising" step-up in almond costs, according to the analyst, despite the upgrade to strategic initiatives and lower fertiliser costs.

The Neutral rating is unchanged and the target falls to $4.50 from $4.70.

Target price is $4.50 Current Price is $3.91 Difference: $0.59
If SHV meets the UBS target it will return approximately 15% (excluding dividends, fees and charges).

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

Citi rates TWE as Neutral (3) -

US retail sales from Treasury Wine Estates continued to decline over October, down -2%, as the brand continued to underperform the wider industry. Citi points out the rate of decline did marginally improve from the -3% decline reported over the prior four weeks.

Elsewhere, exports to China declined around -26% year-on-year during the September quarter. The broker sees potential that this could partially be explained by winemakers holding on to inventories in anticipation of the removal of China tariffs.

Having only recently upgraded to a Neutral rating, Citi reiterates it would take further improvement in trading conditions to drive a more positive outlook on the stock. The Neutral rating and target price of $11.80 are retained.

Target price is $11.80 Current Price is $10.59 Difference: $1.21
If TWE meets the Citi target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $13.14, suggesting upside of 26.8% (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 VEE as Add (1) -

First half earnings and profit guidance provided as part of Veem's AGM trading update was well above Morgans expectations, despite the inclusion of one-off costs related to the Sharrow Engineering (propellers) project.

Management noted trading for the first four months of FY24 had been strong with momentum flowing through from the later months of FY23.

The broker raises FY24-26 earnings (EBITDA) forecasts by between 10-12% and increases the target for Veem to $1.00 from 91c. The Add rating is maintained. It's felt earnings are underpinned by recent deals with Sharrow and Strategic Marine (gyros).

Target price is $1.00 Current Price is $0.90 Difference: $0.1
If VEE meets the Morgans target it will return approximately 11% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 1.0

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

Ord Minnett rates VUK as Accumulate (2) -

Virgin Money UK's FY23 pre-provision profit result missed Ord Minnett's forecast by -8% with weaker-than-expected non interest income and both costs and bad debts near the top of guidance ranges.

Thanks to higher cash rates, notes the analyst, the net interest margin (NIM) increased by 6bps to 1.91% on flat loan balances, with growth in business and credit cards offsetting a -1% decline in mortgage balances.

The broker is expecting a higher cost/income ratio than management is budgeting for (less than 50%) because of ongoing digital investment and spending on compliance.

Ord Minnett retains an Accumulate rating with a $4.00 target.

Target price is $4.00 Current Price is $2.78 Difference: $1.22
If VUK meets the Ord Minnett target it will return approximately 44% (excluding dividends, fees and charges).

Current consensus price target is $3.60, suggesting upside of 29.0% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY24:

Forecast for FY25:

This company reports in GBP. 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 WTC as Overweight (1) -

WiseTech Global has reaffirmed full year revenue guidance of $1,040-1,095m (up 27-34% year-on-year) and earnings guidance of $455-490m (up 18-27% year-on-year).

Morgan Stanley points out the acquisitions of Matchbox Exchange and Sistemas Casa, alongside foreign exchange tailwinds, have helped the company navigate the tough macro backdrop and delayed product releases.

The Overweight rating and target price of $85.00 are retained.

Target price is $85.00 Current Price is $64.05 Difference: $20.95
If WTC meets the Morgan Stanley target it will return approximately 33% (excluding dividends, fees and charges).

Current consensus price target is $77.43, suggesting upside of 18.4% (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

UBS rates WTC as Buy (1) -

UBS considers macroeconomic conditions pose the biggest near-term risk for WiseTech Global, following reiteration of FY24 guidance at the company's AGM.

Management noted additional currency headwinds along with acquisition costs for the Matchbox Exchange and customs business in Mexico.

The target falls to $79.50 from $80 and the Buy rating is unchanged on the broker's assessment of medium-term growth opportunities.

Target price is $79.50 Current Price is $64.05 Difference: $15.45
If WTC meets the UBS target it will return approximately 24% (excluding dividends, fees and charges).

Current consensus price target is $77.43, suggesting upside of 18.4% (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