Australian Broker Call

Morgan Stanley rates AD8 as Overweight (1) -

The analysts at Morgan Stanley admit they were wrong to be bullish leading into Audinate Group's FY24 unaudited FY24 result. Ultimately, inventory de-stocking and product transition headwinds were greater-than-anticipated.

While the FY24 results were broadly in line, management's FY25 outlook materially missed the broker's forecasts.

Management expects FY25 gross profit will be "marginally lower" than the US$44.5m in FY24 versus market expectations of circa 22% growth.

While FY25 revenues are expected to be down, the gross margin percentage should improve as the sales mix transitions from hardware to software, explain the analysts.

Morgan Stanley still believes Audinate's structural growth remains intact and doesn't feel its competitive position is under threat.

Overweight. Target reduced to $10 from $22. Industry view: In Line.

Target price is $10.00 Current Price is $8.48 Difference: $1.52
If AD8 meets the Morgan Stanley target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $15.90, suggesting upside of 90.6% (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 AD8 as Hold (3) -

Despite in-line FY24 results, Shaw and Partners slashes its target for Audinate Group to $9.30 from $17.90 after management’s outlook for FY25 revenue and gross profit missed the broker’s forecasts by -26 and -28%, respectively.

In a strong reminder that the majority of revenue is not recurring, the analysts explain the business is experiencing a contraction in demand post a heightened FY23/24 growth period that was unsustainable.

Management is guiding for gross profit to be “marginally lower than FY24”, which produced US$44.6m. The broker notes management has only two-to-three months of visibility on the pipeline, which makes forecasting difficult.

The Hold rating is unchanged.

Target price is $9.30 Current Price is $8.48 Difference: $0.82
If AD8 meets the Shaw and Partners target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $15.90, suggesting upside of 90.6% (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 ASX as Lighten (4) -

Lighten-rated Ord Minnett still finds it difficult to justify the current valuation for the ASX but notes a “solid” start to FY25 across the futures, trading, clearing, and settlement divisions.

For July, futures volumes jumped by 45% on the previous corresponding period, while average daily volumes (ADVs) increased by 32%.

Recent volatility provides a potential boost to trading volumes, along with uncertainty over the size and timing of interest rate cuts, explains the broker.

Unchanged $59.50 target.

Target price is $59.50 Current Price is $61.84 Difference: minus $2.34 (current price is over target).
If ASX meets the Ord Minnett target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $58.76, suggesting downside of -5.7% (ex-dividends)

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

Shaw and Partners rates BMT as Buy (1) -

Pre-announced FY24 results for Beamtree Holdings were in line with estimates by Shaw and Partners.

Highlights, according to the analysts, were better costs and working capital resulting in a closing cash balance of $5m versus the $3.5m expected.

FY25 guidance suggests to the broker a material step-up in annual recurring revenue (ARR) added and implies management’s free cash flow (FCF) milestone is now within reach. A $60m ARR target by 2026 was reiterated.

The Buy rating and 70c target are maintained.

Target price is $0.70 Current Price is $0.24 Difference: $0.46
If BMT meets the Shaw and Partners target it will return approximately 192% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 1.0

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

Morgans rates CRN as Speculative Buy (1) -

Morgans observes the 1H24 EBITDA from Coronado Global Resources with a US5c dividend were broadly in line with expectations.

Management retained the FY24 guidance, with the broker stressing the positive cost management looks set to be maintained into the second half.

With net debt still negative, the broker is not surprised by the company's emphasis on organic growth, rather than new asset acquisitions.

Speculative Buy and $1.85 target retained.

Target price is $1.85 Current Price is $1.27 Difference: $0.58
If CRN meets the Morgans target it will return approximately 46% (excluding dividends, fees and charges).

Current consensus price target is $1.87, suggesting upside of 43.8% (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: 0.9

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

Ord Minnett rates CRN as Accumulate (2) -

First half earnings (EBITDA) for Coronado Global Resources were in line with Ord Minnett’s forecast though profit was a slight miss due to a higher-than-forecast tax expense.

Management maintained FY24 production guidance for 16.4-17.2mt at a cost of between US$95-99/t.

During the current half, the analysts expect lower costs at Curragh and higher production in the US (with Powellton reopening/dual longwalls operating simultaneously). Free cash flow (FCF) is expected to rise to US$126m from the outflow of -US$110m in H1.

Accumulate. Target slips to $1.55 from $1.60.

Target price is $1.55 Current Price is $1.27 Difference: $0.28
If CRN meets the Ord Minnett target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $1.87, suggesting upside of 43.8% (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: 0.9

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

UBS rates CRN as Buy (1) -

Reported 1H earnings and the interim dividend for Coronado Global Resources were in line with expectations held by UBS.

While focusing on the organic growth pipeline, management will refrain from acquisitions and instead strengthen the balance sheet and then look to dividends, highlights the broker.

The Buy rating and $1.95 target are maintained.

Target price is $1.95 Current Price is $1.27 Difference: $0.68
If CRN meets the UBS target it will return approximately 54% (excluding dividends, fees and charges).

Current consensus price target is $1.87, suggesting upside of 43.8% (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: 0.9

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

Macquarie rates FPR as Neutral (3) -

FleetPartners Group's 3Q business update showed New Business Wins (NBW) rising by 32% so far in FY24 supported by improved supply and a reduced pipeline within Novated, observes Macquarie.

Within the End of Lease (EO) segment, the analyst points out used passenger vehicle pricing in particular has been resilient, as the "softening economic environment sees private buyers substitute purchases of new vehicles for used vehicles".

The target price falls to $3.46 from $3.60. Neutral.

Target price is $3.46 Current Price is $3.23 Difference: $0.23
If FPR meets the Macquarie target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $3.74, suggesting upside of 15.8% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.6

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

Macquarie rates LYC as Outperform (1) -

Macquarie raises its target for Lynas Rare Earths by 3% to $6.80 on an increased resource valuation estimate after management provided an upgraded resource and reserve estimate for Mt Weld. Outperform.

The analyst believes Lynas is well positioned for future production expansion following a material expansion in resource size and switch to a continuous mining position.

Separately, following a site visit to Kalgoorlie, the analyst also highlights cost performance is a near-term focus while the plant operates in a batch mode.

Target price is $6.80 Current Price is $5.83 Difference: $0.97
If LYC meets the Macquarie target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $6.69, suggesting upside of 12.1% (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 NWS as Outperform (1) -

Macquarie raises its EPS forecasts ahead of FY24 results for News Corp after noting books retailing was up 19% in the June quarter (industry data) and advertising markets have been more resilient than anticipated.

The broker forecasts 4Q earnings (EBITDA) of $383m, 7% ahead of the consensus estimate.

Outperform retained and the target is increased to $46 from $42.

Target price is $46.00 Current Price is $40.97 Difference: $5.03
If NWS meets the Macquarie target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $41.93, suggesting upside of 1.8% (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: 0.5

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

Citi rates PMT as Buy (1) -

Patriot Battery Metals updated its lithium resource to 142.6Mt adding 33Mt, putting a target 300-400Mt as possible which Citi believes will  position it among the largest lithium resources globally.

A preliminary economic assessment is due this quarter, with a feasibility study and reserve update due by September 2025, the broker highlights.

The Shaakichiuwaanaan project is observed by Citi as a stand out site due to its high-grade Nova Zone, which offers defensiveness and flexibility in production staging. 

Buy rating, High risk and 75c target unchanged.

Target price is $0.75 Current Price is $0.44 Difference: $0.31
If PMT meets the Citi target it will return approximately 70% (excluding dividends, fees and charges).

Current consensus price target is $1.26, suggesting upside of 174.5% (ex-dividends)

Forecast for FY25:

Forecast for FY26:

This company reports in CAD. 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

Bell Potter rates PYC as Speculative Buy (1) -

Bell Potter is encouraged by the second clinical data update from PYC Therapeutics reported for VP-001, targeting retinitis pigmentosa type 11, showed  with two out of three patients demonstrating efficacy signals after a single 30µg dose.

The broker points to potentially more good news flow as data from a higher 75µg dose cohort is expected soon.

There are no changes to the analyst's earnings forecasts. A Speculative Buy rating and 17c target retained.

Target price is $0.17 Current Price is $0.10 Difference: $0.07
If PYC meets the Bell Potter target it will return approximately 70% (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 RIO as Neutral (3) -

Citi adjusts earnings estimates for Rio Tinto by -1% for FY24 and -3.3% for FY25 on the back of updated base metal pricing assumptions.

The broker has reduced the aluminium price forecasts by -5% for FY25/FY26 due to slower global demand, but remains positive on cost controls.

The Neutral rating and $128 price target are unchanged.

Target price is $128.00 Current Price is $118.29 Difference: $9.71
If RIO meets the Citi target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $128.25, suggesting upside of 9.5% (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

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

After reviewing Reckon's 1H results, Morgan Stanley concludes strong operational discipline continues but growth remains hard to come by, and consensus will need to lower sales forecasts.

Sales of $28.4m for H1 missed the broker's estimate by -4.4% with only 1% subscription growth in the Business Group division and a revenue deceleration for Legal Group.

Target 65c. Equal-weight. Industry view: In-Line.

Target price is $0.65 Current Price is $0.53 Difference: $0.12
If RKN meets the Morgan Stanley 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:

Market Sentiment: 0.0

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

Morgans rates RMD as Add (1) -

Morgans assessed the ResMed 4Q results as meeting expectations with net profit up 30% on revenue growth of 9%.

The gross margin was much stronger than anticipated, lifting 330basis points to 59.1%, arising from better cost management.

Management stated the "softer" US device growth was a result of higher annual comparisons.

The analyst's FY25 EPS forecast is raised by 2.5% due to lower operating expenses and higher gross margins expectations.

Morgans revises its target price to $35.93 and leaves the Add rating unchanged.

Target price is $35.93 Current Price is $33.41 Difference: $2.52
If RMD meets the Morgans target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $35.06, suggesting upside of 4.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY25:

Forecast for FY26:

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: 0.6

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

Macquarie rates TWE as Outperform (1) -

Treasury Wine Estates is becoming a more focused luxury wine play, in Macquarie’s view, after management announced a restructuring of its Treasury Premium Brands (TPB). Brands and goodwill will be written down by -$354m (pre-tax).

The company will retain a focus on Wynn's, Pepperjack, Squealing Pig & 19Crimes as its Priority Premium Brands, notes the broker.

The Outperform rating and $14 target are retained.

Target price is $14.00 Current Price is $11.70 Difference: $2.3
If TWE meets the Macquarie target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $13.76, suggesting upside of 17.5% (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) -

Management at Treasury Wine Estates announced an upcoming divestment of the commercial brand portfolio and updated FY24 group earnings (EBITS) guidance to $658.1m, which now aligns with the consensus estimate, notes Morgan Stanley.

A non-cash impairment will be recognised in relation to the Treasury Premium Brands (TPB) portfolio of -$354m (-$290m post-tax).

The broker's Overweight rating and $14.60 target price are unchanged. Industry view: In-line.

Target price is $14.60 Current Price is $11.70 Difference: $2.9
If TWE meets the Morgan Stanley target it will return approximately 25% (excluding dividends, fees and charges).

Current consensus price target is $13.76, suggesting upside of 17.5% (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

Ord Minnett rates TWE as Hold (3) -

Largely due to write downs of goodwill and lower-level Commercial brands, explains Ord Minnett, Treasury Wine Estates will take a non-cash charge of -$354m (post tax -$290m) in upcoming FY24 results.

Management will focus on its luxury brands, which should strengthen the company’s position and underpin growth prospects, in the broker’s view.

Hold. Target $11.50.

Target price is $11.50 Current Price is $11.70 Difference: minus $0.2 (current price is over target).
If TWE meets the Ord Minnett target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $13.76, suggesting upside of 17.5% (ex-dividends)

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

UBS rates TWE as Buy (1) -

In line with the consensus expectation, notes UBS, management at Treasury Wine Estates announced earnings (EBITS) pre material items for FY24 would be $658.1m (unaudited), up 12.8% compared to the previous corresponding period.

A pre/post tax impairment of -$354m/$290m was also announced for Treasury Premium Brands (TPB), primarily relating to the write down of goodwill and brands, explains the broker.

Buy and $14.50 target retained.

Target price is $14.50 Current Price is $11.70 Difference: $2.8
If TWE meets the UBS target it will return approximately 24% (excluding dividends, fees and charges).

Current consensus price target is $13.76, suggesting upside of 17.5% (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 VGL as Neutral (3) -

Vista Group’s 1H earnings (EBITDA) missed estimates by Macquarie and consensus by -6 and -16%, respectively, and FY24 revenue guidance was lowered by -3%.

More positively, FY24 earnings margin guidance of between 13-14% beat forecasts by the broker and consensus by around 12%.

The target rises to NZ$$2.20 from NZ$2.10. Neutral. Macquarie remains cautious on valuation partly due to the speed of the SaaS transition.

Current Price is $2.19. Target price not assessed.

The company's fiscal year ends in December.

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

Shaw and Partners rates VGL as Buy (1) -

Vista Group’s 1H cost performance has more than offset softer-than-expected (non-recurring) revenue and a softer box office, explains Shaw and Partners.

The main game, according to the analysts, is the cloud migration which remains on track and is being executed more efficiently than expected.

Management also reiterated free cash flow (FCF) is on track to be positive in Q4 and NZ$175m of annual recurring revenue (ARR) will be delivered in FY25. FY25 EBITDA margin guide was also increased by 15%.

The Buy rating is maintained, and the target is increased to $3.00 from $2.20.

Target price is $3.00 Current Price is $2.19 Difference: $0.81
If VGL meets the Shaw and Partners target it will return approximately 37% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

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 VNT as Outperform (1) -

Ahead of 1H results for Ventia Services on August 21, Macquarie raises its target to $4.40 from $4.10 on slightly higher forecast Telco earnings. A -5% discount to global peers is now assumed, an improvement from -10%, due to more reliable earnings delivery.

The broker forecasts 1H profit (NPATA) of $108m, which would be a 14% increase on the previous corresponding period and would beat the FY24 guidance run-rate for 7-10% growth. 

The Outperform rating is maintained.

Target price is $4.40 Current Price is $4.10 Difference: $0.3
If VNT meets the Macquarie target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $4.23, suggesting upside of 2.0% (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

Citi rates WDS as Neutral (3) -

Citi is far from upbeat on the Woodside Energy acquisition of Beaumont, in blue ammonia, believing the company has moved too swiftly in an evolving technological space.

The broker also raises concerns on the expected 12% internal rate of return for the Driftwood project, highlighting shareholders may prefer share buybacks due to the stock's recent underperformance. 

Citi believes the recent acquisitions, including Beaumont, may increase gearing above the 20% target ceiling and the expansion is occurring at the wrong time in the cycle.

Higher gearing may challenge the 80% payout ratio. Neutral rating and $28 target price retained.

Target price is $28.00 Current Price is $25.12 Difference: $2.88
If WDS meets the Citi target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $31.08, suggesting upside of 21.9% (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

UBS rates WDS as Neutral (3) -

In line with strategy to invest $5bn in new energy by 2030 and to take FID on 5mtCO2-e of Scope 3 abatement capacity per annum, notes UBS, Woodside Energy has announced it will acquire a clean ammonia project in Beaumont, Texas.

Woodside will outlay -$2.35bn which covers all Phase 1 capex while Phase 2 could add a further -$1.2bn-$1.4bn capex from around 2027.

The broker is concerned by the addition of lower returning capex and notes gearing is now pushed towards the top end of management’s 10-20% target range, when the proposed Driftwood LNG deal is also included.

The Neutral rating and $31 target are maintained.

Target price is $31.00 Current Price is $25.12 Difference: $5.88
If WDS meets the UBS target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $31.08, suggesting upside of 21.9% (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