Australian Broker Call

UBS rates 360 as Initiation of coverage with Neutral (3) -

UBS has initiated coverage of Life360 (US listing) with a Neutral rating and a price target of US$32.

The broker highlights attractive revenue growth opportunities via the company's tiered subscription roll-out to international markets, scaling user acquisition marketing budgets, and ramping advertising efforts.

However, the analyst notes at 37x estimated FY25 EBITDA the shares are pricing in circa 25% FY25 revenue growth, requiring Life360 to deliver US$0.50 of ad ARPU to achieve the 25% growth rate.

UB'sS financial forecasts show a 20% 5-year revenue CAGR estimate, driven by Paying Circle and advertising revenue growth. 

Current Price is $15.44. Target price not assessed.

Current consensus price target is $16.97, suggesting upside of 7.4% (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 ABC as No Rating (-1) -

Morgan Stanley ceases research coverage of Adbri following the proposed acquisition by CRH.

Current Price is $3.19. Target price not assessed.

Market Sentiment: 0.0

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

Citi rates AIA as Buy (1) -

Citi highlights the latest Auckland International Airport air traffic results revealed weaker domestic traffic in May, at -14% below FY19 levels, against -13% in March.

The broker points to improved international traffic to -11% below 2019 levels against -14% in April on 2019 levels.

Citi revises down FY24 traffic forecasts, but anticipates earnings forecasts will come in around the NZ$260NZ$280m.

Although the analyst highlights investor concerns around possible pricing changes, the Buy rating is retained, with a NZ$9.20 target price.

Current Price is $6.92. Target price not assessed.

Current consensus price target is $8.25, suggesting upside of 17.5% (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

Macquarie rates ALQ as Outperform (1) -

Macquarie believes PFAS (per-and polyfluoroalkyl substances), which is gaining investor focus as regulatory standards tighten, is a material potential opportunity for ALS Ltd. Management has more than 15 years of PFAS experience.

The recent large settlement by 3M Company to address PFAS pollution in public water supplies indicates the direction of public/
legal sentiment re the "forever chemicals", suggests the analyst.

The Outperform rating and $15.20 target are unchanged.

Target price is $15.20 Current Price is $14.05 Difference: $1.15
If ALQ meets the Macquarie target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $13.59, suggesting downside of -6.2% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY25:

Forecast for FY26:

Market Sentiment: 0.3

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

Bell Potter rates AVG as Hold (3) -

The trading update from Australian Vintage revealed flat sales guidance for FY24 with EBITDA guidance lowered to $29m-$31m from $35m due to persistent cost inflation, UK retailer de-stocking, and heavy discounting in bulk wine segments, Bell Potter highlights.

Additionally, core net debt expectations for FY24 have been increased to $70-$75m from $43-$50m, the broker notes.

A dilutive equity issue also is taking place by Australian Vintage, with retail applications up to $4.9m closing on July 2, 2024.

The broker's EPS forecasts have been lowered by -39% for FY24 and -49% for FY25.

Accordingly, the target price is revised to 21c from 41c. Hold.

Target price is $0.21 Current Price is $0.19 Difference: $0.025
If AVG meets the Bell Potter target it will return approximately 14% (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

Shaw and Partners rates BC8 as Buy (1) -

Shaw and Partners highlights the $36m equity raising, through a two-tranche placement of 133.3m shares at $0.27 per share for Black Cat Syndicate.

The first tranche was completed on June 13 and the second is subject to shareholder approval at the AGM on July 23, 2024.

The analyst expects the funds will be used to refurbish the Paulsens project, with first gold expected by December 2024.

The company is making significant progress towards becoming a gold producer in Western Australia, notes Shaw and Partners.

There are no changes to the broker's earnings forecasts, but the target is lifted to 86c for a less dilutionary issue. High Risk. Buy rating unchanged.

Target price is $0.86 Current Price is $0.27 Difference: $0.59
If BC8 meets the Shaw and Partners target it will return approximately 219% (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 BTH as Downgrade to Equal-weight from Overweight (3) -

Morgan Stanley downgrades Bigtincan Holdings to Equal-weight from Overweight and reduces the target to 10c from 35c due to a lack of earnings visibility. Industry view: In line.

While management has reiterated its free cash flow (FCF) target), equity was also raised (a 1-for-3 entitlement offer) and an expensive debt facility (which had an effective interest rate of at least 16%) was extended.

The analysts have other concerns including an elevated rate of churn, declining revenue, and the withdrawal of offers by multiple potential suitors with access to more detailed data than Morgan Stanley.

Target price is $0.10 Current Price is $0.10 Difference: $0
If BTH meets the Morgan Stanley 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

Ord Minnett rates CAJ as Buy (1) -

Integral Diagnostics' proposed merger with Capitol Health would establish a clear No 3 player in the Australian Diagnostic Imaging sector and create value for shareholders of both companies, highlights Ord Minnett.

Apart from cost synergies, a larger scale and an improved balance sheet, Integral Diagnostics will emerge with a step-change in its partially licensed and unlicensed MRI fleet ahead of funding deregulation.

100% of Capitol's shares will be potentially acquired via Integral scrip at an implied exchange ratio of 0.12849 Integral shares per Capitol share. This translates to a valuation of $0.326/share for Capitol, notes the broker, a 33% premium compared to the prior close.

Completion of the all-scrip deal will be predicated on a supportive Integral Diagnostics share price, with further weakness (beyond the -4% fall on the day of the announcement) increasing the risk of a third party bid, note the analysts.

There is potential for a superior offer, notes Ord Minnett, given Capitol's strong market position in Victoria, efficient operating model and desirable MRI fleet (10 partially licensed and 14 unlicensed).

The Buy rating and 32c target are maintained for Capitol Health.

Target price is $0.32 Current Price is $0.27 Difference: $0.05
If CAJ meets the Ord Minnett target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $0.31, suggesting upside of 3.3% (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 CCR as Buy (1) -

Credit Clear upgraded EBITDA guidance  to “in excess of $3.7m” from “in excess of $3.0m,” indicating solid market position and customer wins, Shaw and Partners emphasises.

Management also upgraded guidance for revenue to the upper end of $40-$42m, reflecting approximately 20% growth year-on-year.

The broker forecasts Credit Clear to have 18 Tier 1 accounts by the end of FY24, up from 9 at the start of FY23, further supporting revenue growth.

The broker highlights the domestic market for accounts receivable and debt collection in improving. Buy rating and 40c target are retained. High Risk.

Target price is $0.40 Current Price is $0.26 Difference: $0.14
If CCR meets the Shaw and Partners target it will return approximately 54% (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 CLG as Buy (1) -

The broker highlights the expansion of Close the Loop's relationship with HP, including broader laptop refurbishment in the USA and potential geographic expansion in Europe and the Middle East.

Shaw and Partners notes this expansion could add significant revenue, with the HP 30-day plus old laptop refurbishment opportunity estimated to be ablle to generate US$25m.

The company's ISP Tek division, responsible for refurbishing laptops, is expected to account for 45% of the company's revenue by FY25 and is estimated to generate US$85m in FY30 from US$66m currently.

No changes have been made to the broker's earnings estimates. The Buy rating and target price of 70c are retained.

Target price is $0.70 Current Price is $0.34 Difference: $0.36
If CLG meets the Shaw and Partners 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

Macquarie rates CSC as Initiation of coverage with Outperform (1) -

Capstone Copper is a compelling investment opportunity, according to Macquarie, and joins Sandfire Resources ((SFR)) as a quality ASX200 copper pure play. Capstone is considered to have an attractive valuation relative to Sandfire.

Research coverage is initiated with an Outperform rating and $9.80 target.

The company is a Canadian-based metals mining company with a strong focus on copper and operates several long-life copper mines in the Americas.

These mines are Pinto Valley in Arizona, Cozamin in Zacatecas, Mexico.Mantos Blancos in Antofagasta, Chile and Mantoverde in Atacama, Chile.

The company offers strong organic growth (no requirement for M&A activity), declining costs, and future ASX300 index inclusion potential, explains the broker.

Target price is $9.80 Current Price is $9.80 Difference: $0
If CSC meets the Macquarie target it will return approximately 0% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

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 - Cessation of coverage

Forecast for FY25:

Forecast for FY26:

Market Sentiment: -0.2

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

Bell Potter rates CUV as Buy (1) -

Bell Potter notes ongoing Phase 3 trials for Clinuvel Pharmaceuticals' Scenesse's label expansion, including patients with vitiligo.

The analyst estimates the directly addressable US vitiligo market at around 65,000-70,000 patients, translating into potential sales growth if trials succeed.

A smooth trial period would see the first results in the 2H2025 and a potential FDA submission in the later part of 2026 and possible approval by the end of 2027, the broker highlights. 

Clinuvel Pharmaceuticals is also pursuing other rare disease indications and developing a generic ACTH drug, further diversifying its portfolio, Bell Potter adds.

Unchanged Buy rating and $22.25 target price.

Target price is $22.25 Current Price is $14.60 Difference: $7.65
If CUV meets the Bell Potter target it will return approximately 52% (excluding dividends, fees and charges).

Current consensus price target is $18.75, suggesting upside of 25.0% (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 IDX as Outperform (1) -

Integral Diagnostics is aiming to acquire 100% of Capitol Health's ((CAJ)) shares at a 33% premium to the target's previous share price close.

This move would reduce Integral's leverage to circa 2.6x, from around 3x at December 2023 and provide management with greater flexibility for further growth initiatives, suggests the broker.

The analyst sees potential for around 12% EPS accretion in FY25 and 11% in FY26, on a full year run-rate basis. Management expects at least -$10m annual pre-tax net cost synergies from the merger, to be achieved by end of year two.

Macquarie makes no changes to earnings forecasts and retains the Outperform rating and $2.65 target.

Target price is $2.65 Current Price is $2.43 Difference: $0.22
If IDX meets the Macquarie target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $2.35, suggesting downside of -6.4% (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 IDX as Buy (1) -

Integral Diagnostics' proposed merger with Capitol Health would establish a clear No 3 player in the Australian Diagnostic Imaging sector and create value for shareholders of both companies, highlights Ord Minnett.

Apart from cost synergies, a larger scale and an improved balance sheet, Integral Diagnostics will emerge with a step-change in its partially licensed and unlicensed MRI fleet ahead of funding deregulation.

100% of Capitol's shares will be potentially acquired via Integral scrip at an implied exchange ratio of 0.12849 Integral shares per Capitol share. This translates to a valuation of $0.326/share for Capitol, notes the broker, a 33% premium compared to the prior close.

Completion of the all-scrip deal will be predicated on a supportive Integral Diagnostics share price, with further weakness (beyond the -4% fall on the day of the announcement) increasing the risk of a third party bid, note the analysts.

The Buy rating and $2.70 target are maintained for Integral Diagnostics.

Target price is $2.70 Current Price is $2.43 Difference: $0.27
If IDX meets the Ord Minnett target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $2.35, suggesting downside of -6.4% (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 IRI as Buy (1) -

Bell Potter is anticipating a trading update from Integrated Research around the middle of July.

With earnings guidance ranges already in place from mid-May, the broker expects a further "narrowing" of the guidance estimates from management.

The analyst emphasises the in-house forecasts are at the lower end of the range currently.

Integrated Research's strong renewal pipeline, including its largest contract with JPMC, underpins FY25 revenue growth, according to Bell Potter, and expected cash of $30m at June end, should facilitate the restarting ot dividend payments.

Buy rating and 95c target unchanged.

Target price is $0.95 Current Price is $0.73 Difference: $0.22
If IRI meets the Bell Potter target it will return approximately 30% (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 MQG as Overweight (1) -

Morgan Stanley's recently held US Financials Conference supported the broker's view the capital markets recovery is firmly on track, and Macquarie Group stands out among the broker's Australian research coverage as the greatest beneficiary.

A stable cost of capital is aiding the M&A recovery, and a US rate cut could accelerate this to full speed, note the analysts, while the fund raising backdrop is also improving.

The Overweight rating and $215 target are maintained. Industry view: In-Line.

Target price is $215.00 Current Price is $190.62 Difference: $24.38
If MQG meets the Morgan Stanley target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $193.08, suggesting downside of -1.5% (ex-dividends)

The company's fiscal year ends in March.

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

UBS rates NEM as Upgrade to Buy from Neutral (1) -

UBS continues to be positive on the gold price and believes Newmont Corp, a serial underperformer since 2019 against the gold price and peers, can now be re-rated.

The broker expects significant earnings upgrades including funds from US$2-US$4bn divestments over the next 12 months, accelerating deleveraging and cash returns.

The UBS gold price forecast sits around 30% above consensus for 2025. The broker anticipates it could underpin earnings upgrades for the company in FY25.

EPS forecasts are lifted higher with an according revision in the price target to $75 from $60.

Rating upgraded to Buy from Neutral.

Target price is $75.00 Current Price is $61.10 Difference: $13.9
If NEM meets the UBS target it will return approximately 23% (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: 0.9

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

Morgan Stanley rates RIO as Overweight (1) -

Should media reports prove correct, and the Serbian government is nearing approval for the Jadar lithium deposit, Morgan Stanley believes such news will be well received by the market. It's thought the project would unlock further growth optionality for Rio Tinto.

The Serbian government revoked the license for Jadar in January 2022 on grounds of environmental concerns and public discontent.

The analysts now conservatively incorporate 25% of the project's value (around US$1bn) in forecasts.

Overweight retained, target $137.50. Industry view is Attractive.

Target price is $137.50 Current Price is $118.16 Difference: $19.34
If RIO meets the Morgan Stanley target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $128.08, suggesting upside of 7.6% (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: 0.0

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

Ord Minnett rates SUL as Lighten (4) -

Ord Minnett increases its moat rating for Super Retail reflecting an improved view on the competitive cost advantage of the core Supercheap business, which provides around half of the group's earnings.

Incumbent omni channel retailers like Super Retail are benefiting from structural e-commerce growth and auto parts retailing is proving more resilient to online competition, explains the broker. Amazon's lack of progress in the US for this category is noted.

The analyst highlights material scale benefits for the Supercheap Auto chain which help offset profit pressures in the smaller sporting and leisure goods segments.

The Lighten rating is maintained and the target increased to $11.00 from $10.50.

Target price is $11.00 Current Price is $13.28 Difference: minus $2.28 (current price is over target).
If SUL meets the Ord Minnett target it will return approximately minus 17% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $14.67, suggesting upside of 6.7% (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 TAH as Accumulate (2) -

Ord Minnett doesn't expect any dramatic strategy shift following the appointment of Gillon McLachlan as CEO of Tabcorp Holdings, noting the previous incumbent departed due to personal behavioural issues, not mismanagement.

The broker believes shares in the company are materially undervalued and retains the Buy rating and target price of $1.05.

Target price is $1.05 Current Price is $0.66 Difference: $0.39
If TAH meets the Ord Minnett target it will return approximately 59% (excluding dividends, fees and charges).

Current consensus price target is $0.97, suggesting upside of 44.8% (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 TWE as Overweight (1) -

At the upcoming Penfolds market update on June 20, Morgan Stanley expects Treasury Wine Estates to reiterate FY24 guidance of EBITS growth of mid-to-high single digit EPS growth ex-DAOU vineyards.

Following removal of the China wine tariffs, management will update on various matters including the Penfolds global pricing strategy and the Penfolds Australian country of origin portfolio China re-establishment strategy, explains the broker.

Overweight rating and $14.50 target price retained. Industry view: In-line.

Target price is $14.50 Current Price is $11.99 Difference: $2.51
If TWE meets the Morgan Stanley target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $13.54, suggesting upside of 12.1% (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 XRO as Outperform (1) -

Macquarie anticipates a positive impact for Xero of a Partner Edition to Business Edition mix shift, and notes an ongoing favourable plan mix from bundling drives higher average revenue per users (ARPUs).

Due to price rises in FY25, average Business Edition prices will be 7.8x Partner Edition prices, explains the broker.

The analyst raises earnings forecasts. The Outperform rating is maintained and the target increased to $184.40 from $180.70.

Target price is $184.40 Current Price is $129.22 Difference: $55.18
If XRO meets the Macquarie target it will return approximately 43% (excluding dividends, fees and charges).

Current consensus price target is $141.43, suggesting upside of 8.4% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY25:

Forecast for FY26:

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