Australian Broker Call

Morgan Stanley rates 360 as Overweight (1) -

Ahead of the reporting season, Life360 is on the list of key small/mid cap ideas where Morgan Stanley has conviction into earnings and on outperformance into FY25.

Core business execution is running ahead of plan, notes the broker, while advertising monetisation opens up new geographies (e.g, high population, low-income countries) where a US$10/month subscription is unrealistic.

Life360's 1H results are due on August 9.

Overweight rating. Target price $19.00. Industry view: In-Line.

Target price is $19.00 Current Price is $16.06 Difference: $2.94
If 360 meets the Morgan Stanley target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $18.14, suggesting upside of 11.6% (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

Citi rates A2M as Buy (1) -

New Zealand port data for June 2024 suggest to Citi strong momentum is likely to continue for a2 Milk Co.

Volumes to China increased by 112% in June on the previous corresponding period, up from the 28% rise in May, albeit off a lower base due to label transition in the previous corresponding period, explains the broker.

Hong Kong volume for the month was the highest in 28 months, pointing to strength in a2’s higher-margin English label sales, note the analysts.

Target $7.85. Buy.

Target price is $7.85 Current Price is $6.68 Difference: $1.17
If A2M meets the Citi target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $6.54, suggesting downside of -4.5% (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: 0.4

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

Citi rates AFG as Upgrade to Neutral from Sell (3) -

Citi remains Neutral on ASX listed non-bank lenders under research coverage as a slowing economy leads to elevated risk. The currently inverted yield curve is thought to outweigh some green shoots around mortgage credit and market share.

For Australian Finance Group, the broker upgrades its rating to Neutral from Sell after recent share price weakness and better-than-expected 4Q lodgements.

Buy-rated Liberty Financial is Citi's preferred exposure in the sector.

FNArena assumes an unchanged $1.50 target from the truncated research report available.

Target price is $1.50 Current Price is $1.41 Difference: $0.095
If AFG meets the Citi target it will return approximately 7% (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 AX1 as Buy (1) -

Following a trading update, Citi feels Accent Group is executing well, while a big like-for-like (LFL) sales beat suggests the potential passing of an inflexion point for the group.

Implying a significant 2H acceleration, LFL sales increased by 4.1% compared to the consensus forecast for a -0.7% decline, explain the analysts.

At the mid-point, underlying FY24 earnings (EBIT) -ex-Glue closure costs- were 5% ahead of the consensus forecast, notes Citi.

Buy retained, target rises to $2.47 from $2.43.

Target price is $2.47 Current Price is $2.22 Difference: $0.25
If AX1 meets the Citi target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $2.40, suggesting upside of 10.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.8

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

Macquarie rates CLW as Neutral (3) -

During the upcoming reporting season, Macquarie suggests FY25 guidance will be key for most ASX-listed stocks in the Property sector. Near-term outperformance is expected from groups with a more favourable growth outlook.

Initially, the broker anticipates the REIT sector will be supported over the remainder of 2024 by a US rate cut in September and a US market cycle shift to a slowdown.

Later on, the analysts forecast accelerating Australian GDP growth and RBA rate cuts will help offset the risk of a US market cycle downturn.

Macquarie likes the Residential sector the most and Office the least. Mirvac Group, Scentre Group and Charter Hall are preferred among large caps and Qualitas, Region Group and HMC Capital among the small/mid caps.

For Charter Hall Long WALE REIT, the target falls to $3.33 from $3.62 following around 25bps of forecast cap rate expansion and an update to the broker's income growth assumptions. The Neutral rating is retained.

This is a summary of research released yesterday by Macquarie.

Target price is $3.33 Current Price is $3.50 Difference: minus $0.17 (current price is over target).
If CLW meets the Macquarie target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.61, suggesting upside of 3.0% (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

Macquarie rates CQR as Neutral (3) -

During the upcoming reporting season, Macquarie suggests FY25 guidance will be key for most ASX-listed stocks in the Property sector. Near-term outperformance is expected from groups with a more favourable growth outlook.

Initially, the broker anticipates the REIT sector will be supported over the remainder of 2024 by a US rate cut in September and a US market cycle shift to a slowdown.

Later on, the analysts forecast accelerating Australian GDP growth and RBA rate cuts will help offset the risk of a US market cycle downturn.

Macquarie likes the Residential sector the most and Office the least. Mirvac Group, Scentre Group and Charter Hall are preferred among large caps and Qualitas, Region Group and HMC Capital among the small/mid caps.

For Charter Hall Retail REIT, the target falls to $3.40 from $3.61 after the broker assumes an incremental 25bps of cap rate expansion, partially offset by income growth. The Neutral rating is retained.

This is a summary of research released yesterday by Macquarie.

Target price is $3.40 Current Price is $3.32 Difference: $0.08
If CQR meets the Macquarie target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $3.73, suggesting upside of 11.8% (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

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

While 1H revenue of $24.1m was a record for DroneShield, Bell Potter was expecting around $30m, but the broker's long-term positive view is undiminished, and the target rises to $1.60 from $1.00.

Management expects the 2024 result will be heavily weighted to the 2H, yet the broker points out H1 only accounted for around 25% of Bell Potter's 2024 revenue forecast.

The current share price valuation may be excessive, suggest the analysts, who anticipate ongoing share price volatility due to short-term performance and future contract announcements. The rating is downgraded to Hold from Buy.

Target price is $1.60 Current Price is $1.55 Difference: $0.05
If DRO meets the Bell Potter target it will return approximately 3% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

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

Shaw and Partners rates DRO as Downgrade to Hold from Buy (3) -

DroneShield's June-quarter sales missed Shaw and Partners' forecasts, leading the broker to revise down FY24 sales forecasts and June-half earnings (EBITDA). 

The broker does not consider the result shoddy and retains its December-half forecasts.

June-half revenue rose 110%, and the broker is particularly taken with the company's growth prospects as it moves into Asia, where China's neighbours are likely to be receptive given the former's 70% share of the global drone manufacturing market. The broker expects the region could contribute to a doubling in the sales pipeline to $1.1bn.

Shaw and Partners says management expects contract sizes will become bigger and more frequent and the broker observes room for growth given market penetration remains at less than 1% of a potential $10bn market and geopolitical conflicts continue. The broker also expects the company to solidify its position as leader in the field.

The broker also expects DroneShield could well become an acquisition target given recent strong and continuing activity in the sector.

Rating is downgraded to Hold from Buy. Target price is $1.30 which compares with $1.40 in June.

Target price is $1.30 Current Price is $1.55 Difference: minus $0.25 (current price is over target).
If DRO meets the Shaw and Partners target it will return approximately minus 16% (excluding dividends, fees and charges - negative figures indicate an expected loss).

The company's fiscal year ends in December.

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 DSE as Buy (1) -

Dropsuite's June-quarter result sharply outpaced consensus' and Ord Minnett's forecasts, the company logging a sharp jump in annual recurring revenue, as paid user additions rose and parter growth outperformed.

Anuual revenue per unit proved a slight miss due to a change in product mix.

The broker observes the company's annual revenue is growing at more than 30% and has delivered positive free cash flow for nine quarters.

Buy rating retained. Target price jumps 14% to $3.84 from $3.38.

Target price is $3.84 Current Price is $3.40 Difference: $0.44
If DSE meets the Ord Minnett target it will return approximately 13% (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

Shaw and Partners rates DSE as Buy (1) -

Dropsuite's June-quarter update outpaced Shaw and Partners's forecasts yet again, paving the way for potential FY24 annual recurring revenue (ARR) growth in excess of the broker's 30% forecast.

The June first-half appears to be nosing out guidance, observes the broker, auguring a beat on FY24 profit and cash flow.

Management reiterated it was well placed to continue delivering strong ARR growth; would continue to pursue high conviction mergers and acquisitions; and that profitability and cash flow would broadly match that of FY23.

Buy rating and $4.10 target price retained.

Target price is $4.10 Current Price is $3.40 Difference: $0.7
If DSE meets the Shaw and Partners target it will return approximately 21% (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 rates DXI as Outperform (1) -

During the upcoming reporting season, Macquarie suggests FY25 guidance will be key for most ASX-listed stocks in the Property sector. Near-term outperformance is expected from groups with a more favourable growth outlook.

Initially, the broker anticipates the REIT sector will be supported over the remainder of 2024 by a US rate cut in September and a US market cycle shift to a slowdown.

Later on, the analysts forecast accelerating Australian GDP growth and RBA rate cuts will help offset the risk of a US market cycle downturn.

Macquarie likes the Residential sector the most and Office the least. Mirvac Group, Scentre Group and Charter Hall are preferred among large caps and Qualitas, Region Group and HMC Capital among the small/mid caps.

For Dexus Industria REIT, the target rises to $3.11 from $3.00 after the broker updates cap rate expansion and income growth assumptions. The Outperform rating is retained.

This is a summary of research released yesterday by Macquarie.

Target price is $3.11 Current Price is $2.88 Difference: $0.23
If DXI meets the Macquarie target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $3.04, suggesting upside of 5.8% (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

Macquarie rates DXS as Outperform (1) -

During the upcoming reporting season, Macquarie suggests FY25 guidance will be key for most ASX-listed stocks in the Property sector. Near-term outperformance is expected from groups with a more favourable growth outlook.

Initially, the broker anticipates the REIT sector will be supported over the remainder of 2024 by a US rate cut in September and a US market cycle shift to a slowdown.

Later on, the analysts forecast accelerating Australian GDP growth and RBA rate cuts will help offset the risk of a US market cycle downturn.

Macquarie likes the Residential sector the most and Office the least. Mirvac Group, Scentre Group and Charter Hall are preferred among large caps and Qualitas, Region Group and HMC Capital among the small/mid caps.

For Dexus, the target falls to $6.51 from $7.38 after the broker updates cap rate expansion and income growth assumptions. The Outperform rating is retained.

This is a summary of research released yesterday by Macquarie.

Target price is $6.51 Current Price is $6.75 Difference: minus $0.24 (current price is over target).
If DXS meets the Macquarie target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $7.80, suggesting upside of 15.2% (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

Ord Minnett rates GDG as Buy (1) -

Ord Minnett reviews Generation Development post the company's Lonsec purchase and operating update.

Generation Development's robust June-quarter funds under management nosed out Ord Minnett's forecast as inflows hit a record.

The company also logged an increase in active advisers, boosting the pipeline for the September quarter, observes the broker.

When it comes to the Lonsec deal, Ord Minnett expects it will contribute to a 30% EPS compound annual growth rate over two years.

After accounting for the Lonsec purchase, capital raising and strong result, EPS forecasts fall -2% to 7%.

Buy rating retained. Target price rises to $3 from $2.50.

Target price is $3.00 Current Price is $2.50 Difference: $0.5
If GDG meets the Ord Minnett 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: 0.5

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

Macquarie rates GPT as Outperform (1) -

During the upcoming reporting season, Macquarie suggests FY25 guidance will be key for most ASX-listed stocks in the Property sector. Near-term outperformance is expected from groups with a more favourable growth outlook.

Initially, the broker anticipates the REIT sector will be supported over the remainder of 2024 by a US rate cut in September and a US market cycle shift to a slowdown.

Later on, the analysts forecast accelerating Australian GDP growth and RBA rate cuts will help offset the risk of a US market cycle downturn.

Macquarie likes the Residential sector the most and Office the least. Mirvac Group, Scentre Group and Charter Hall are preferred among large caps and Qualitas, Region Group and HMC Capital among the small/mid caps.

For GPT Group, the target rises to $4.70 from $4.61 after the broker updates cap rate expansion and income growth assumptions. The Outperform rating is retained.

This is a summary of research released yesterday by Macquarie.

Target price is $4.70 Current Price is $4.36 Difference: $0.34
If GPT meets the Macquarie target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $4.75, suggesting upside of 8.0% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.8

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

Macquarie rates HCW as Outperform (1) -

During the upcoming reporting season, Macquarie suggests FY25 guidance will be key for most ASX-listed stocks in the Property sector. Near-term outperformance is expected from groups with a more favourable growth outlook.

Initially, the broker anticipates the REIT sector will be supported over the remainder of 2024 by a US rate cut in September and a US market cycle shift to a slowdown.

Later on, the analysts forecast accelerating Australian GDP growth and RBA rate cuts will help offset the risk of a US market cycle downturn.

Macquarie likes the Residential sector the most and Office the least. Mirvac Group, Scentre Group and Charter Hall are preferred among large caps and Qualitas, Region Group and HMC Capital among the small/mid caps.

For HealthCo Healthcare & Wellness REIT, the target falls to $1.29 from $1.45 after the broker updates cap rate expansion and income growth assumptions. The Outperform rating is retained.

This is a summary of research released yesterday by Macquarie.

Target price is $1.29 Current Price is $1.13 Difference: $0.165
If HCW meets the Macquarie target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $1.45, suggesting upside of 28.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.8

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

Macquarie rates HDN as Neutral (3) -

During the upcoming reporting season, Macquarie suggests FY25 guidance will be key for most ASX-listed stocks in the Property sector. Near-term outperformance is expected from groups with a more favourable growth outlook.

Initially, the broker anticipates the REIT sector will be supported over the remainder of 2024 by a US rate cut in September and a US market cycle shift to a slowdown.

Later on, the analysts forecast accelerating Australian GDP growth and RBA rate cuts will help offset the risk of a US market cycle downturn.

Macquarie likes the Residential sector the most and Office the least. Mirvac Group, Scentre Group and Charter Hall are preferred among large caps and Qualitas, Region Group and HMC Capital among the small/mid caps.

For HomeCo Daily Needs REIT, the target falls to $1.14 from $1.26 after the broker updates cap rate expansion and income growth assumptions. The Neutral rating is retained.

This is a summary of research released yesterday by Macquarie.

Target price is $1.14 Current Price is $1.25 Difference: minus $0.105 (current price is over target).
If HDN meets the Macquarie target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $1.30, suggesting upside of 4.6% (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 HMC as Outperform (1) -

During the upcoming reporting season, Macquarie suggests FY25 guidance will be key for most ASX-listed stocks in the Property sector. Near-term outperformance is expected from groups with a more favourable growth outlook.

Initially, the broker anticipates the REIT sector will be supported over the remainder of 2024 by a US rate cut in September and a US market cycle shift to a slowdown.

Later on, the analysts forecast accelerating Australian GDP growth and RBA rate cuts will help offset the risk of a US market cycle downturn.

Macquarie likes the Residential sector the most and Office the least. Mirvac Group, Scentre Group and Charter Hall are preferred among large caps and Qualitas, Region Group and HMC Capital among the small/mid caps.

For HMC Capital, the target rises to $8.37 from $7.97 after the broker updates cap rate expansion and income growth assumptions. The Outperform rating is retained.

This is a summary of research released yesterday by Macquarie.

Target price is $8.37 Current Price is $7.66 Difference: $0.71
If HMC meets the Macquarie target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $7.35, suggesting downside of -5.4% (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

Citi rates HVN as Buy (1) -

Citi highlights the top consumer PC brands have all announced a series of AI PCs to be released over 2024, with many only released in June 2024. As a result, consumer electronics retailers like Harvey Norman are expected to see a rebound in PC sales.

The introduction of AI PCs coincides with the replacement cycle post covid and the cessation of Windows 10 support in 2025, notes the broker. These factors reinforce the broker's above-consensus forecasts for Harvey Norman.

Target $5.50. Buy retained.

Target price is $5.50 Current Price is $4.51 Difference: $0.99
If HVN meets the Citi target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $4.76, suggesting upside of 3.9% (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 IFL as Upgrade to Neutral from Sell (3) -

Following a further review of yesterday's 4Q update by Insignia Financial, Citi raises its target to $2.65 from $2.20 and upgrades to Neutral from Sell on signs near-term news flow may be more positive than originally thought.

Due to the significant pressure of one-off cash costs, the broker would not be surprised by a dividend cut.

Yesterday's research is summarised below.

Today's 4Q update by Insignia Financial surprised the market with a cost-driven profit upgrade, suggests Citi. Management expects profit in the range of $212-218m, beating prior forecasts by the broker and consensus for $199.1m and $197.5m, respectively.

In an early assessment of the update, the broker notes net flows ex pension payments returned to positive territory -$162m- yet funds under administration (FuA) fell due to pension payments of -$994m and negative market movements of -$585m.

Despite better above-the-line costs, a further $135m after tax was added to the remediation provision, along with a further $11m associated with an enforceable undertaking with APRA, explains Citi.

Target price is $2.65 Current Price is $2.50 Difference: $0.15
If IFL meets the Citi target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $2.45, suggesting downside of -8.2% (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

Morgan Stanley rates IFL as Underweight (5) -

As part of a June quarter update, management at Insignia Financial provided new FY24 profit (UNPAT) guidance which beat Morgan Stanley and consensus forecasts by 14% and 9%, respectively.

In the June quarter, platform net outflows of -$831m were better than the -$1,729 anticipated by the broker. Funds under management (FUM) of $222bn also exceeded forecasts by the analysts and consensus for $218bn and $215bn, respectively.

Less positively, the broker suggests a new (material) $188m pre-tax increase in remediation provision (funded via an existing debt facility and cash) will stretch the balance sheet.

Underweight. Target $2.30. Industry view: In-Line.

Target price is $2.30 Current Price is $2.50 Difference: minus $0.2 (current price is over target).
If IFL 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 $2.45, suggesting downside of -8.2% (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

Ord Minnett rates IFL as Hold (3) -

Insignia Financial's June-quarter result proved a mixed bag, FUMA and flows broadly meeting Ord Minnett's forecasts and revenue outpacing but a huge increase in the company's remediation provision for products and advice infringement.

Management raised guidance to reflect improved revenue and operating margins and the broker upgrades EPS forecast 5% to 8% accordingly.

But the broker observes the company is still in flux with the benefits from platform upgrades, synergy realisation and Advice reset unlikely to land before FY26.

Hold rating retained. Target price inches up to $2.55 from $2.50.

Target price is $2.55 Current Price is $2.50 Difference: $0.05
If IFL meets the Ord Minnett target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $2.45, suggesting downside of -8.2% (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

UBS rates IFL as Sell (5) -

Insignia Financial's trading update sharply outpaced consensus' and UBS's forecasts, thanks to improved margins and funds flows, but the broker says the result was tainted by news of more APRA infringements and big remediation provisions.

While the broker observes industry-wide and company-specific funds flow momentum augurs potential upside risk, UBS says stronger earnings are concealing a weak cash profile with a new remediation provision of $135m after tax (8% of market cap) to be booked in FY24, weighing on free cash flow.

Far from ideal, opines the broker, give the company's already tight balance sheet and weak cash-flow. Sell rating and $2.30 target price retained.

Target price is $2.30 Current Price is $2.50 Difference: minus $0.2 (current price is over target).
If IFL meets the UBS target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.45, suggesting downside of -8.2% (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

Macquarie rates IPL as Neutral (3) -

Macquarie returns to Incitec Pivot from research restriction with a Neutral rating and $3 target price.

As expected, the company's $900m buyback has commenced and the broker forecasts $564m over 18 months.

Macquarie says the FY24 outlook appears consistent with the May results.

Looking ahead, Dyno Nobel is planning a global business transformation initiative with the goal of sharply improving return on investment capital.

EPS forecasts fall -0.4% in FY24; rise 1% in FY25; and fall -3% in FY26.

Target price is $3.00 Current Price is $2.84 Difference: $0.16
If IPL meets the Macquarie target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $3.07, suggesting upside of 7.7% (ex-dividends)

The company's fiscal year ends in September.

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 IRE as Neutral (3) -

Iress has adjusted June-half earnings (EBITDA) guidance to the top of its previous range heading into its August result, sharply outpacing consensus and Macquarie's forecasts, albeit tracking slightly below Macquarie at the full-year mark.

The broker says the focus will now be on earnings quality and items below the EBITDA line, suspecting higher capital expenditure may be on the cards but this should be at least partly offset by lower operating expenditure.

Neutral rating retained, the broker appreciating the company's execution on its transformation but considering it to be fairly valued. Target price rises to $9.70 from $8.85.

Target price is $9.70 Current Price is $9.85 Difference: minus $0.15 (current price is over target).
If IRE meets the Macquarie target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $10.01, suggesting downside of -0.7% (ex-dividends)

The company's fiscal year ends in December.

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

Morgans rates IRE as Add (1) -

Noting potential corporate appeal, Morgans believes the turnaround for Iress is on track after reviewing management's 1H trading update, which included adjusted earnings (EBITDA) guidance for the half of between $65-67m.

The broker anticipates H2 will benefit from a full half of product price increases, an ongoing focus on cost control, and the removal of losses associated with the divested Platforms business.

To reflect improved confidence in the earnings certainty and outlook for the group, the analysts increase the assumed earnings multiple, and also upgrade the FY24 forecast by over 10%.

The Add rating is maintained and the target rises to $10.74 from $9.85.

Target price is $10.74 Current Price is $9.85 Difference: $0.89
If IRE meets the Morgans target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $10.01, suggesting downside of -0.7% (ex-dividends)

The company's fiscal year ends in December.

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

Ord Minnett rates IRE as Accumulate (2) -

Iress has upgraded June-half guidance to roughly 10% ahead of consensus' and Ord Minnett's forecasts - up 50% year on year, observes the broker.

The strong result was struck on a faster than forecast realisation of cost saving and in-line revenue growth.

Given the June half is typically weaker for the company, the broker suspects full-year guidance could also prove interesting.

Accumulate rating and $11.30 target price compares with a Buy rating and $9.85 target price in May.

Target price is $11.30 Current Price is $9.85 Difference: $1.45
If IRE meets the Ord Minnett target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $10.01, suggesting downside of -0.7% (ex-dividends)

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

Citi rates JBH as Buy (1) -

Citi highlights the top consumer PC brands have all announced a series of AI PCs to be released over 2024, with many only released in June 2024. As a result, consumer electronics retailers like JB Hi-Fi are expected to see a rebound in PC sales.

The introduction of AI PCs coincides with the replacement cycle post covid and the cessation of Windows 10 support in 2025, notes the broker. These factors reinforce the broker's above-consensus forecasts for JB Hi-Fi.

The Buy rating is retained and the target increased to $74 from $65.

Target price is $74.00 Current Price is $65.89 Difference: $8.11
If JBH meets the Citi target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $58.22, suggesting downside of -13.9% (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 NSR as Neutral (3) -

During the upcoming reporting season, Macquarie suggests FY25 guidance will be key for most ASX-listed stocks in the Property sector. Near-term outperformance is expected from groups with a more favourable growth outlook.

Initially, the broker anticipates the REIT sector will be supported over the remainder of 2024 by a US rate cut in September and a US market cycle shift to a slowdown.

Later on, the analysts forecast accelerating Australian GDP growth and RBA rate cuts will help offset the risk of a US market cycle downturn.

Macquarie likes the Residential sector the most and Office the least. Mirvac Group, Scentre Group and Charter Hall are preferred among large caps and Qualitas, Region Group and HMC Capital among the small/mid caps.

For National Storage REIT, the target rises to $2.44 from $2.34 after the broker updates cap rate expansion and income growth assumptions. The Outperform rating is retained.

This is a summary of research released yesterday by Macquarie.

Target price is $2.44 Current Price is $2.41 Difference: $0.03
If NSR meets the Macquarie target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $2.40, suggesting downside of -1.6% (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

Bell Potter rates PDN as Buy (1) -

Bell Potter maintains its FY25 production and sales estimates of 4.5mlbs and 3.9mlbs, respectively, following June quarter production of 518klbs by Paladin Energy.

June was the maiden quarter after Langer Heinrich resumed production at the end of March.

Management anticipates production will be stronger in the 2H of FY25, with guidance maintained at between 4.0-4.5mlbs.

Buy. Target $15.70.

Target price is $15.70 Current Price is $12.43 Difference: $3.27
If PDN meets the Bell Potter target it will return approximately 26% (excluding dividends, fees and charges).

Current consensus price target is $16.29, suggesting upside of 35.2% (ex-dividends)

The company's fiscal year ends in June.

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

Morgan Stanley rates PDN as Overweight (1) -

Paladin Energy's 4Q production of 0.52mlbs beat the consensus forecast for 0.48mlbs and management's FY25 production guidance is unchanged, notes Morgan Stanley.

On July 12, the broker observes the first customer shipment of 0.32mlbs was sent (according to schedule), and 0.7mlbs has been shipped in the current quarter.

Overweight. Target $16.65. Industry view: Attractive.

Target price is $16.65 Current Price is $12.43 Difference: $4.22
If PDN meets the Morgan Stanley target it will return approximately 34% (excluding dividends, fees and charges).

Current consensus price target is $16.29, suggesting upside of 35.2% (ex-dividends)

The company's fiscal year ends in June.

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

Shaw and Partners rates PDN as Buy (1) -

Paladin Energy's June-quarter production nosed out Shaw and Partners' forecasts and the first shipment was logged after the June quarter.

The company closed the quarter with a cash balance of US$48.9m and US$70m of its US$150m was drawn down.

Management reconfirmed FY25 guidance for Langer Heinrich.

Buy recommendation and $16.80 target price retained.

Target price is $16.80 Current Price is $12.43 Difference: $4.37
If PDN meets the Shaw and Partners target it will return approximately 35% (excluding dividends, fees and charges).

Current consensus price target is $16.29, suggesting upside of 35.2% (ex-dividends)

The company's fiscal year ends in June.

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

Citi rates RMC as Neutral, High Risk (3) -

Citi remains Neutral on ASX listed non-bank lenders under research coverage as a slowing economy leads to elevated risk. The currently inverted yield curve is thought to outweigh some green shoots around mortgage credit and market share.

For Australian Finance Group, the broker upgrades its rating to Neutral from Sell after recent share price weakness and better-than-expected 4Q lodgments.

For Resimac Group, the broker assigns a Neutral, High Risk rating (previously Neutral) due the recent departure of longstanding CEO Scott McWilliam. 

Buy-rated Liberty Financial is Citi's preferred exposure in the sector.

FNArena assumes an unchanged $1.00 target from the truncated research report available.

Target price is $1.00 Current Price is $0.89 Difference: $0.11
If RMC meets the Citi target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $1.13, suggesting upside of 33.3% (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 RRL as Buy (1) -

Metrics within the updated definitive feasibility study (DFS) for the McPhillamys Gold Project in NSW came in ahead of Bell Potter's expectations.

Pre-production capex is at the lower end of the broker's forecasts while costs (AISC) are well below Bell Potter's estimates.

The Buy rating is maintained, and the analysts' target falls to $2.70 from $2.80 on lower medium-term production forecasts to match recent management guidance.

Target price is $2.70 Current Price is $1.91 Difference: $0.79
If RRL meets the Bell Potter target it will return approximately 41% (excluding dividends, fees and charges).

Current consensus price target is $2.17, suggesting upside of 15.9% (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

Citi rates RRL as Neutral (3) -

In Citi's view, the definitive feasibility study (DFS) plan selected by Regis Resources for McPhillamys adds to risk by prioritising gold production over margins. This outcome suggests to the analysts less likelihood for project approval.

The broker reiterates the question for management is whether to buy or build, with funding required for either option. Ongoing uncertainty is expected for the stock price and a Neutral rating is maintained. 

The $1.90 target is unchanged.

Target price is $1.90 Current Price is $1.91 Difference: minus $0.01 (current price is over target).
If RRL meets the Citi target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.17, suggesting upside of 15.9% (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 RRL as Overweight (1) -

Regis Resources has released the definitive feasibility study (DFS) for the McPhillamys project showing lower operating costs than Morgan Stanley anticipated, enabling a higher net present value (NPV) estimate by the broker.

Using an Australian dollar $3000/oz gold price, the analysts achieve a NPV of $28m due to higher assumed costs (AISC) and weighted average cost of capital (WACC).

The final investment decision is due in FY26, and Morgan Stanley expects first production in FY28.

Overweight rating. Target $2.10. Industry view is Attractive.

Target price is $2.10 Current Price is $1.91 Difference: $0.19
If RRL meets the Morgan Stanley target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $2.17, suggesting upside of 15.9% (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

Citi rates S32 as Upgrade to Buy from Neutral (1) -

In a further reaction to yesterday's news (see below) on Worsley Alumina, Citi lowers its target for South32 to $3.35 from $4.00 but upgrades to Buy from Neutral.

The broker believes the bad news is already captured after a share price fall and there may be some moderation in environmental conditions imposed by the EPA in Western Australia.

In an initial review yesterday of Q4 operational results, Citi suggested the market's focus will be on impairment expenses for South32's flagship asset Worsley Alumina. Saleable production at Worsley decreased by -2% in FY24, only achieving 94% of guidance.

Referring to Worley, management noted conditions imposed by the Western Australian Environmental Protection Authority create "significant operating challenges... and impact its long-term viability".

The broker believes a miss for copper production won’t surprise the market given KGHM has earlier published monthly data for April and May. Apart from copper, production was broadly in-line with management guidance, notes the analyst.

Target price is $3.35 Current Price is $2.99 Difference: $0.36
If S32 meets the Citi target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $3.83, suggesting upside of 28.6% (ex-dividends)

The company's fiscal year ends in June.

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 S32 as Outperform (1) -

Macquarie cuts earnings and valuation forecasts for South32 to reflect the affect of Worsley's approval risk on production, costs and impairments.

Overall the June-quarter result disappointed, despite a rare 5% beat on manganese. Sierra Gorda's production proved a miss and Cerro Matosa provided a beat.

But this was well overshadowed by the Worsley situation.

The company closed the quarter with net debt of US$0.8bn (down from US$0.9bn in the March quarter), suggesting cash generation, observes the broker.

EPS forecasts fall -28% for FY24; -14% for FY25; and -3% for FY26.

Outperform rating retained. Target price falls -11% to $4 from $4.50.

Target price is $4.00 Current Price is $2.99 Difference: $1.01
If S32 meets the Macquarie target it will return approximately 34% (excluding dividends, fees and charges).

Current consensus price target is $3.83, suggesting upside of 28.6% (ex-dividends)

The company's fiscal year ends in June.

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

Morgan Stanley rates S32 as Equal-weight (3) -

South32 is looking to appeal "conditions which are beyond reasonable" imposed by the Environmental Protection Agency in WA for the Worsley Alumina Mine development application.

Because of this situation, management will recognise a -US$554m (-US$389m post-tax) impairment against the development. This impairment reduces the carrying value to US$2,027m, which compares to Morgan Stanley pre-impairment valuation of US$3.5bn.

Separately, the broker highlights a weak Q4 resulting in an around -3% miss against Morgan Stanley's FY24 revenue forecast. FY25 production guidance was also broadly lower by between -6-17% across key assets due to higher costs.

Equal-weight. Target $3.80. Industry view: Attractive. 

Target price is $3.80 Current Price is $2.99 Difference: $0.81
If S32 meets the Morgan Stanley target it will return approximately 27% (excluding dividends, fees and charges).

Current consensus price target is $3.83, suggesting upside of 28.6% (ex-dividends)

The company's fiscal year ends in June.

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

Morgans rates S32 as Add (1) -

Increased risk at Worsley Alumina is largely offset by continuing metal price strength, suggests Morgans. From among South32's metal exposures, copper forecasts are the largest beneficiary of the broker's recent forecast upgrades.

During a Q4 trading update, a write down of Worsley’s carrying value by around -US$554m (pre-tax) was announced, along with plans to impair Cerro Matoso by circa -US$264m. 

Worsley has only received highly conditional approval on its next phase at Boddington, explain the analysts.

The Add rating is maintained and the target eases to $4.00 from $4.10. 

Target price is $4.00 Current Price is $2.99 Difference: $1.01
If S32 meets the Morgans target it will return approximately 34% (excluding dividends, fees and charges).

Current consensus price target is $3.83, suggesting upside of 28.6% (ex-dividends)

The company's fiscal year ends in June.

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

Ord Minnett rates S32 as Buy (1) -

South32 has announced a -US$554m impairment charge on its Worsley bauxite mine due to environmental regulation, and another -US$264m charge on its Cerra Matoso nickel operation in Columbia due to oversupply from cheap Indonesian metal, all of which, the broker comments, overshadowed an otherwise in-line June-quarter result.

Add to that disappointing alumina and copper production in the June quarter and a -6% downgrade of FY25 guidance for Worsley due to maintenance and delayed regulatory approvals, -7% for Sierra Gordo copper due to higher clay levels; and a -9% cut in Canningston zinc guidance, and the company's woes just keep mounting.

EPS and DPS forecasts fall -3% in FY24; -8% in FY25 and -11% in FY25

Ord Minnett believes the resulting share-price sell-off has been overdone. Buy rating retained. Target price falls to $4.05 from $4.75.

Target price is $4.05 Current Price is $2.99 Difference: $1.06
If S32 meets the Ord Minnett target it will return approximately 35% (excluding dividends, fees and charges).

Current consensus price target is $3.83, suggesting upside of 28.6% (ex-dividends)

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

UBS rates S32 as Buy (1) -

South32's June quarter result fell shy of consensus and UBS forecasts and management downgraded FY25 guidance for Worsely and Sierra Gorda.

Add to that a combined impairment of -US$818m at Worsley and Cerro Matoso, and the mood was dim.

The company managed to hit a couple of runs, logging a US$180m working capital reversal and the expectation the IMC sale will support a net cash position and cash returns in FY25, observes UBS, delivering.a spot cash-flow yield of 7% over FY25 and FY26.

Buy rating retained on valuation to reflect South32's commodity mix, restructuring and potential for cash returns and growth. Target price eases to $3.80 from $4.20.

Target price is $3.80 Current Price is $2.99 Difference: $0.81
If S32 meets the UBS target it will return approximately 27% (excluding dividends, fees and charges).

Current consensus price target is $3.83, suggesting upside of 28.6% (ex-dividends)

The company's fiscal year ends in June.

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 UNI as Buy (1) -

Universal Store is entering FY25 on a strong note, suggests Bell Potter, after reviewing management's FY24 trading update and early-FY25 trading numbers.

Post-AASB16 earnings (EBIT) guidance for FY24 of between $46-47m beat forecasts by the broker and consensus. Second half like-for-like sales for Universal Store (US banner), Perfect Stranger, and Thrills retail/online increased by 6.6%, 11.5% and 5.6%, respectively.

The Buy rating is maintained and the broker's target rises to $6.65 from $6.15 due to earnings upgrades and time creep.

Target price is $6.65 Current Price is $5.77 Difference: $0.88
If UNI meets the Bell Potter target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $6.50, suggesting upside of 10.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.8

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

Citi rates UNI as Buy (1) -

The Discretionary Retail sector may have passed an inflexion point, speculates Citi, following a better-than-expected trading update by Universal Store.

A faster-than-expected acceleration in like-for-like sales combined with better cost management resulting in an around 5% beat against the consensus forecast following FY24 earnings (EBIT) guidance.

Like-for-like sales for Universal Store accelerated to a rise of 8.7% in the final 19 weeks from the 1% increase in the first seven weeks, highlight the analysts.

The Buy rating is retained and the target price increases to $6.47 from $5.30 due to earnings upgrades and the broker's removal of a -20% valuation discount to reflect reduced risk to FY25 earnings.

Target price is $6.47 Current Price is $5.77 Difference: $0.7
If UNI meets the Citi target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $6.50, suggesting upside of 10.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.8

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

Macquarie rates UNI as Neutral (3) -

Universal Store's June-quarter result outpaced consensus and Macquarie's earnings (EBIT) forecasts despite inflation, thanks to strong like for like sales, particularly in Perfect Stranger and Thrills, and margin expansion.

This translates to strong 9.7% sales growth in FY24. The company closed June 30 with net cash of $14.3m.

The only shadow on the result was a slightly slower than expected store roll-out in the second half.

Despite the strong showing, Macquarie remains cautious given challenging macro conditions.

Neutral rating retained. Target price jumps to $6.30 from $4.80

Target price is $6.30 Current Price is $5.77 Difference: $0.53
If UNI meets the Macquarie target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $6.50, suggesting upside of 10.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.8

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

Macquarie rates VCX as Neutral (3) -

During the upcoming reporting season, Macquarie suggests FY25 guidance will be key for most ASX-listed stocks in the Property sector. Near-term outperformance is expected from groups with a more favourable growth outlook.

Initially, the broker anticipates the REIT sector will be supported over the remainder of 2024 by a US rate cut in September and a US market cycle shift to a slowdown.

Later on, the analysts forecast accelerating Australian GDP growth and RBA rate cuts will help offset the risk of a US market cycle downturn.

Macquarie likes the Residential sector the most and Office the least. Mirvac Group, Scentre Group and Charter Hall are preferred among large caps and Qualitas, Region Group and HMC Capital among the small/mid caps.

For Vicinity Centres, the target falls to $1.87 from $1.92 after the broker updates cap rate expansion and income growth assumptions. The Neutral rating is retained.

This is a summary of research released yesterday by Macquarie.

Target price is $1.87 Current Price is $1.97 Difference: minus $0.095 (current price is over target).
If VCX meets the Macquarie target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.04, suggesting upside of 2.0% (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

Citi rates WDS as Neutral (3) -

News flash: Woodside Energy has announced a 4% US$0.5bn increase in Scarborough capital expenditure to -US$12.5bn. Management says the project is on track for completion in 2026. 

At first glance, Citi aligns with its expectation of capital expenditure blowouts of US$1bn and doesn't believe this is the last downgrade.

The company's June-quarter report also revealed softer production across most assets, although cargo timings offset this impact. Weaker realised prices beat consensus but missed Citi's forecasts while the June-half gross trading margin of 44% proved a plus.

In a further research update on the Tellurian acquisition, Citi feels management at Woodside Energy will face difficulty in selling the merits of the deal, leaving a share price overhang until more information is provided by a final investment decision (FID).

The broker opens a short-term negative trading view on Woodside as the market won't credit management with the trading capabilities to earn an acceptably high return on the capital outlay, relative to other potential uses of capital.

The initial response by the analysts to the transaction yesterday was as follows:

In what appears (at first glance) to be a good price (to Citi), Woodside Energy has today announced an agreement to acquire US-based Tellurian at book value for around -US$900m in cash.

Woodside Energy will gain exposure to the target's fully permitted five train 27.6mtpa Driftwood LNG project in the US Gulf Coast, explain the analysts. 

The broker highlights material growth optionality from the transaction, and points to a simultaneous reduction in concentration risk attached to the Scarborough project.

For now, Neutral rating. Target price $28.

Target price is $28.00 Current Price is $28.60 Difference: minus $0.6 (current price is over target).
If WDS meets the Citi target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $31.92, suggesting upside of 15.9% (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: 0.5

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

Macquarie rates WDS as Outperform (1) -

Supported by a strong balance sheet, Woodside Energy has launched a bid for "distressed" US-listed Tellurian to own and operate the Driftwood LNG project, ownership of which would extend the company's capital expenditure cycle, says Macquarie.

The broker says strategically it makes sense but warns against capital returns until post 2030. The timing of the start - post 2029 - is good says Macquarie, given it is towards the end of the 2027-2030 glut-induced risk period for LNG markets.

Deploying capital into one of the lowest cost free-market regions to build where climate activist pressure is lower is a smart move, argues the broker.

All up, the deal represents a developer's margin play/opportunity observes Macquarie, while simultaneously placing production within Woodside Energy's control rather than the company turning to merchant offtakes and dealing with unpredictable market vagaries and contract complexities.

When it comes to margin, the broker says Woodside can preserve an option to sell infrastructure at more than double Woodside's earnings (EBITDA) multiple.

Outperform rating and $32 target price retained.

Target price is $32.00 Current Price is $28.60 Difference: $3.4
If WDS meets the Macquarie target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $31.92, suggesting upside of 15.9% (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: 0.5

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

Ord Minnett rates WDS as Hold (3) -

Woodside Energy has announced a -US$1.4bn cash acquisition for challenged US-listed Tellurian, directed at the latter's Driftwood LNG development on the US Gulf Coast.

Ord Minnett assesses the deal as attractive on some metrics - particularly the price (which values the development at historical investment costs) and the project's potential.

But it is too early for the broker to get excited given the project is not set to produce until 2028 (timing is ok, observes the broker, given Woodside's production declines after 2030).

Ord Minnett also questions the wisdom of adding more LNG into an oversupplied market prior to 2030 given the company's heavy exposure to the market.

There is also the question of capital expenditure which is likely to drag on near to mid-term shareholder returns, says the broker.

Hold rating and $29.50 target price.

Target price is $29.50 Current Price is $28.60 Difference: $0.9
If WDS meets the Ord Minnett target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $31.92, suggesting upside of 15.9% (ex-dividends)

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

UBS rates WDS as Neutral (3) -

Woodside Energy will buy US-listed Tellurian's Driftwood project in Louisiana for -$1.2bn cash with deal completion pegged for the December quarter.

UBS considers the deal to be a good strategic fit, adding scale and diversity to Woodside Energy's global LNG portfolio.

It is less certain that the project will meet the company's investment hurdle rates given the deal is infrastructure only with commodity exposure "providing no upstream supply for Woodside Energy to leverage its sub-surface expertise".

Nor does the broker appear impressed with the extension of the capital expenditure cycle. While the balance sheet can easily support the deal, the broker observes the acquisition will rein in free cash flow.

Management's task in the second half, observes the broker, is to find partners to sell down equity; lock in strong offtake counterparties favourable terms with contractors; articulate its marketing strategy to ameliorate risk; and secure upstream gas supply from a range of sources.

Neutral rating and $31 target price retained.

Target price is $31.00 Current Price is $28.60 Difference: $2.4
If WDS meets the UBS target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $31.92, suggesting upside of 15.9% (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: 0.5

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