Australian Broker Call

Morgan Stanley rates 360 as Overweight (1) -

As ride share and Life360's business have similar traits, Morgan Stanley looks at recent projections by management at Lyft for advertising revenue.

Lyft's monetisation targets are around 40x the broker's targets for Life360 on a per user basis. While there are certain points of difference favouring Lyft, it's thought Life360 needs only to monetise its user base at a fraction of Lyft's target rate to double its revenue base.

Overweight rating and $17.50 target price retained. Industry view: In-Line.

Target price is $17.50 Current Price is $13.78 Difference: $3.72
If 360 meets the Morgan Stanley target it will return approximately 27% (excluding dividends, fees and charges).

Current consensus price target is $16.97, suggesting upside of 18.6% (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: 1.0

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

Macquarie rates AIA as Outperform (1) -

Macquarie focuses in on the upcoming review draft report by the Commerce Commission on Auckland International Airport pricing which has historically concentrated on the company's targeted return.

The company is aiming for an 8.73% target return, highlights the broker.

Looking ahead, Macquarie notes passenger volumes are expected to recover to pre-covid levels by FY26, supporting revenue growth, while the potential sell-down of Auckland Council's remaining 11% shareholding is expected in the 2H2024.

There are no changes to the analyst's earnings estimates. Outperform and NZ$9.56 target retained.

Current Price is $7.04. Target price not assessed.

Current consensus price target is $8.25, suggesting upside of 16.5% (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: 0.5

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

Citi rates ASX as Neutral (3) -

Freshly returned from today's investor briefings, Citi analysts report the ASX has updated its capex guidance for FY24 to $135m from a previous $110m-140m range.

Capex guidance for FY25 is now for $160m-180m and expected to remain that high until FY27. As also illustrated by today's share price response, market expectations were a lot lower than the numbers communicated.

FY24 expense growth is now indicated at 15% from the prior range of 12-15%. For FY25, guidance is for 6-9%, or 4-7% ex depreciation and amortisation. Citi believes these indications are more in line with market forecasts.

Target $65.90. Neutral.

Target price is $65.90 Current Price is $63.20 Difference: $2.7
If ASX meets the Citi target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $62.68, suggesting upside of 7.8% (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 CDA as Initiation of coverage with Buy (1) -

UBS initiates coverage on Codan with a Buy rating and $13.10 target. The company develops electronics solutions for various markets, including government, corporate, NGO, and consumer sectors.

The broker forecasts a 28% three-year cash EPS compound annual growth rate, supported by an annual 150bps EBIT margin expansion in the Communication division and 10-15% organic revenue growth.

Over the last three years, management has invested heavily into its Communications fixed cost base via sales & marketing and increasing the headcount within Product Development, explains the analyst.

A strong balance sheet and new $150m debt facility provide additional support for valuation accretive M&A, in the broker's view.

Target price is $13.10 Current Price is $10.68 Difference: $2.42
If CDA meets the UBS target it will return approximately 23% (excluding dividends, fees and charges).

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

Bell Potter rates CXL as Speculative Buy (1) -

The LEILAC-2 development is progressing well, according to management at Calix, while the ZESTY pilot campaigns have highlighted competitive operational advantages to other green iron production methods, notes Bell Potter.

However, regarding the LEILAC valuation, the broker applies more conservative long-term technology adoption assumptions in the cement and lime industries. Consequently, the target is reduced to $2.40 from $5.10.

The Buy rating is retained.

Target price is $2.40 Current Price is $1.17 Difference: $1.235
If CXL meets the Bell Potter target it will return approximately 106% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 1.0

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

Citi rates DMP as Neutral (3) -

The analysts at Citi came away from the European investor trip hosted by Domino's Pizza Enterprises more optimistic that an improved performance in the region is realistic.

Counterbalancing some of this optimism by the broker is the level of company debt. A temporary increase in debt has resulted in an increased net leverage covenant to 3.5x from 3.0x.

Neutral rating. $44.50 target.

Target price is $44.50 Current Price is $38.04 Difference: $6.46
If DMP meets the Citi target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $47.08, suggesting upside of 23.6% (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

Macquarie rates EVN as Neutral (3) -

Evolution Mining reported the 4Q24 trading update with management highlighting weather impacts on Cowal and Mt Rawdon operations and seismic events impacting at Red Lake.

Macquarie points to a more probable FY24 miss on the guidance and earnings will not be assisted by the rise in all-in-sustaining-cost guidance of $1,445/oz.

Production is likely to be around 219koz for 4QFY24, below the previous expectation of 233koz, the broker states.

The analyst lowers the FY24 EPS estimate by -5% with no changes in FY25.

Macquarie lowers the target price to $4.00 from $4.10 and maintains a Neutral rating.

Target price is $4.00 Current Price is $3.73 Difference: $0.27
If EVN meets the Macquarie target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $4.32, suggesting upside of 16.1% (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

Morgan Stanley rates EVN as Overweight (1) -

Ongoing rainfall is impacting Evolution Mining's open-pit operations at both Cowal and Mt Rawdon, resulting in the processing of lower- grade stockpile ore at various stages in the past two months, notes Morgan Stanley.

The net impact on gold production in the quarter-to-date (to the end of May) is -26koz, according to management.

While there has been no change to FY24 guidance of 749koz, the broker suggests its forecast for 719koz will be closer to the mark. Consensus is currently sitting at 733koz.

The Overweight rating and $4.20 target are unchanged. Industry View: Attractive.

Target price is $4.20 Current Price is $3.73 Difference: $0.47
If EVN meets the Morgan Stanley target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $4.32, suggesting upside of 16.1% (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

Shaw and Partners rates GL1 as Buy (1) -

Global Lithium Resources reported a substantial resource boost at the Manna project, with a 43% increase in ore tonnes and a 26% lift in contained Li2O.

Shaw and Partners views this as offering upside benefits to the strong cathode demand and supply disruptions that have tightened the lithium market since the beginning of the year.

The broker highlights $29.9m of cash on hand for the company and zero debt which supports future work programs.

More results from resource expansion and ore results are expected in the September quarter this year, notes the analyst.

No changes have been made to financial forecasts. Buy and $2.20 target retained.

Target price is $2.20 Current Price is $0.31 Difference: $1.895
If GL1 meets the Shaw and Partners target it will return approximately 621% (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

Shaw and Partners rates HLO as Buy (1) -

The latest Australian Bureau of Statistics data for April 2024 provide a positive backdrop for Helloworld Travel, according to the analyst at Shaw and Partners.

The broker points to an increases in total arrivals increasing 19.3% year-on-year and short-term visitor arrivals up by 8.8%.

A strong recovery of international travel close to pre-covid levels is also highlighted by Shaw and Partners, with total departures rising 15.8% on the previous year.

Provisional data for May show a rise of 14% in total arrivals and 16% for departures. The Buy rating and $3.80 target are unchanged as are the analyst's earnings forecasts.

Target price is $3.80 Current Price is $2.09 Difference: $1.71
If HLO meets the Shaw and Partners target it will return approximately 82% (excluding dividends, fees and charges).

Current consensus price target is $3.72, suggesting upside of 73.0% (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

Morgans rates HMC as Hold (3) -

The acquisition of commercial real estate private credit platform, Payton Capital, will enable HMC Capital to execute its medium-term strategy of establishing a $5bn diversified private credit asset management platform, comments Morgans.

The broker explains the platform will be across real estate, corporate, mezzanine and infrastructure loans and should materially increase HMC's level of recurring earnings.

Payton is being acquired for -$127.5m and the issue of $28.5m of HMC Capital shares. To support the transaction, management has raised $100m via an underwritten institutional placement with a non-underwritten SPP set to raise a further $30m.

The SPP closes on June 18. Morgans raises its target to $7.79 from $7.25. Hold.

Target price is $7.79 Current Price is $7.37 Difference: $0.42
If HMC meets the Morgans target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $7.51, suggesting upside of 2.2% (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 NCK as Buy (1) -

The analysts at Citi returned from a recent UK trip slightly more cautious about Nick Scali’s prospects, and now notes DFS (a key competitor and UK market leader) has downgraded FY24 profit guidance by -51%.

Unlike DFS, Nick Scali’s Australian business shouldn't be impacted by Red Sea disruptions, and the broker only expects the UK to represent around 12% of sales for Nick Scali by FY25.

More negatively, Citi's projected recovery to profitability within 18 months for the company's recently acquired Fabb Furniture (in the UK) will likely be delayed.

The Buy rating and $17.30 target are unchanged.

Target price is $17.30 Current Price is $14.00 Difference: $3.3
If NCK meets the Citi target it will return approximately 24% (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 NIC as Overweight (1) -

Morgan Stanley sees potential risks to Nickel Industries' rotary kiln electric furnace (RKEF) plants as the Indonesian government is reviewing the termination of permits for RKEF smelters for producing ferro-nickel and NPI.

It's currently unclear if the review applies to existing permits, notes the analyst. The government is focused on the development of high-pressure acid leach (HPAL) smelters and smelters that produce nickel matte.

The 95c target is unchanged. Overweight. Industry View: Attractive. 

Target price is $0.95 Current Price is $0.85 Difference: $0.1
If NIC meets the Morgan Stanley target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $1.18, suggesting upside of 38.6% (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

Macquarie rates ORG as Outperform (1) -

The dividend policy for Origin Energy has been updated to a minimum of 50%, supporting growth, notes Macquarie.

APLNG's well performance allows deferral of drilling programs, maintaining low cash costs under $4/GJ and is expected to be a robust income generator, according to the analyst.

Management highlighted the energy markets business is generating earnings certainty with positive retail customer growth and benefiting from investments in batteries and virtual power plants.

Macquarie adjusts earnings forecasts by -0.11% in FY25 and lowers the DPS to 57.5c from 60c in FY24 and 60c in FY25 from 74c.

Outperform rating and $10.52 target unchanged.

Target price is $10.52 Current Price is $9.99 Difference: $0.53
If ORG meets the Macquarie target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $9.89, suggesting downside of -2.2% (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

Shaw and Partners rates PNC as Buy (1) -

Shaw and Partners highlights the AFR report of Pioneer Credit having agreed to terms for a $300m senior debt facility arranged by Nomura, with participation from Challenger ((CGF)) and Revolution Asset Management.

The size of the deal suggests to the broker the company has further growth opportunities and the new facility is estimated to save -$8m-$12m in annual interest expense charges, according to the media report.

A  macro backdrop for debt purchasing and collection is viewed as positive by the analyst. No changes to earnings estimates.

Buy rating retained with an 80c target price.

Target price is $0.80 Current Price is $0.51 Difference: $0.295
If PNC meets the Shaw and Partners target it will return approximately 58% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 1.0

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

Citi rates SDR as Buy (1) -

The partnership with Cloudbeds points to the strength and value offered by Siteminder’s core Channel Manager offering, in Citi's view.

The broker doesn't see a material opportunity for SiteMinder in the partnership as most of Cloudbed's 20,000 customers would already have a channel manager solution, and most likely the free bundled one from Cloudbeds.

Buy and $6.30 target retained.

Target price is $6.30 Current Price is $4.79 Difference: $1.51
If SDR meets the Citi target it will return approximately 32% (excluding dividends, fees and charges).

Current consensus price target is $6.52, suggesting upside of 34.0% (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

Bell Potter rates WTC as Hold (3) -

Bell Potter raises its target by 8% to $100 for WiseTech Global after management noted all six development priorities are progressing well and have a positive outlook, particularly in Landside logistics and Customs and compliance.

The broker feels these divisions represent bigger market opportunities than Freight forwarding, which is WiseTech's core market. FY25 and FY26 revenue and earnings forecasts are upgraded by 1% and 5%, respectively. Valuation multiples are also raised.

The Hold rating is maintained.

The other four development opportunities for the company are Neo, Digital documents, Warehouse and International eCommerce, explain the analysts.

Target price is $100.00 Current Price is $96.93 Difference: $3.07
If WTC meets the Bell Potter target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $95.06, suggesting downside of -3.9% (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