Australian Broker Call

Ord Minnett rates AGL as Accumulate (2) -

AGL Energy has lots its "narrow moat" assessment at Morningstar, with Ord Minnett whitelabeling the research. The future is for lower electricity prices in Victoria, the analyst predicts, as the state government keeps coal-fired power stations in business for longer (specifically Loy Yang A).

Earnings forecasts have been downgraded. The research highlights some 80% of AGL Energy's power generation still comes from coal-fired power stations.

Accumulate. Fair value $11.50 (down from $12).

Target price is $11.50 Current Price is $8.75 Difference: $2.75
If AGL meets the Ord Minnett target it will return approximately 31% (excluding dividends, fees and charges).

Current consensus price target is $10.59, suggesting upside of 24.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.4

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

Citi rates AMC as Neutral (3) -

Chief Commercial Officer at Amcor, Peter Konieczny, will act as interim CEO after the incumbent CEO Ron Delia announced his intention to retire for health reasons.

In a modest positive, according to Citi, management also reitered FY24 guidance for both EPS and free cash flow (FCF).

The Neutral rating and target price of $15.50 are retained.

Target price is $15.50 Current Price is $13.97 Difference: $1.53
If AMC meets the Citi target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $15.66, suggesting upside of 12.4% (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: 0.3

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

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

Morgan Stanley has a more upbeat outlook for the consumer in Australia, citing positive jobs growth, lower taxes, migration, and flat interest rates that will eventually fall. All these tailwinds are relevant for the Bapcor outlook, note the analysts.

The rating is upgraded to Equal-weight from Underweight and the target increased to $5.75 from $5.00. Industry view: In-Line.

Given the 8% year-to-date share price rally for Bapcor, the broker believes the market is willing to forgive near-term earnings weakness and apply a more generous multiple.

The broker was not willing to upgrade all the way to Overweight due to a lack of conviction around near-term earnings and the growth trajectory.

Target price is $5.75 Current Price is $5.98 Difference: minus $0.23 (current price is over target).
If BAP meets the Morgan Stanley target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $6.24, suggesting upside of 1.6% (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

Citi rates CAR as Neutral (3) -

Adding around 1% to growth for CAR Group's Trader Interactive, forecasts Citi, RVTrader has recently put through a 15% price increase for Private listings.

The broker notes this latest price increase follows a 15% price increase for CycleTrader, Commercial Trucks, etc. earlier this year.

Private represents around 10% of Trader Interactive’s revenue and the analyst explains RVs represent approximately 75% of Private revenue.

Citi's $34.70 target and Neutral rating for CAR Group are unchanged.

Target price is $34.70 Current Price is $35.28 Difference: minus $0.58 (current price is over target).
If CAR 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 $34.02, suggesting downside of -4.8% (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

Macquarie rates CIA as Neutral (3) -

Champion Iron's recent capital markets day provided opportunity for the company to outline its premium direct reduced iron (DRI) strategy, with Macquarie noting project execution, as well as strategic downstream offtake, appear key value drivers for the company.

The broker explains there are tangible benefits to the company's ESG strategy, and that multiple levels of Canadian government should prove incentivised to see Champion Iron grow.

The Neutral rating and target price of $7.50 are retained.

Target price is $7.50 Current Price is $7.07 Difference: $0.43
If CIA meets the Macquarie target it will return approximately 6% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

Forecast for FY24:

Forecast for FY25:

This company reports in CAD. 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 COH as Underweight (5) -

Morgan Stanley lowers its target for Cochlear to $256 from $276 due to downside risk on three fronts.

The current share price implies mid-teen unit growth is sustainable for a multi-year period, as well as ongoing robust average selling price growth, both of which the broker questions.

Also, the analysts highlight risks around the potential future launch of Moderna's CMV vaccine, which reduces the incidence of hearing
impairment among the newborn population.

The Underweight rating is maintained. Industry view: In-Line.

Target price is $256.00 Current Price is $329.68 Difference: minus $73.68 (current price is over target).
If COH meets the Morgan Stanley target it will return approximately minus 22% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $257.75, suggesting downside of -21.6% (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 COL as Outperform (1) -

While six regulatory inquiries into Australian supermarkets over 2024 likely to weigh on sentiment, Macquarie believes risks are largely reflected in the valuation of Coles Group. The Overweight rating is retained.

The key risk, suggests the broker, is potential for increased working capital from enforced changes to invoicing practices. At present, Coles has an average accounts payable period of 56 days.

If accounts payable was capped at 30 days, it would increase working capital requirements by $2.2bn, and if funded through a bank
working capital facility an around -8% drag on earnings would arise, predicts the analyst.

The target falls by -2% to $17.50.

Target price is $17.50 Current Price is $16.51 Difference: $0.99
If COL meets the Macquarie target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $17.28, suggesting upside of 4.4% (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

Morgan Stanley rates EVN as Upgrade to Overweight from Equal-weight (1) -

Morgan Stanley upgrades its rating for Evolution Mining to Overweight from Equal-weight after raising the target price to $3.95 from $3.35. Industry view is Attractive.

From among the broker's coverage of the Gold sector, Evolution Mining has the largest upside to spot gold prices, aided by only around 5% of gold production being hedged. The company's implied gold price (around US$1,650/oz) is also the lowest under coverage.

Evolution's copper exposure (around 30-35% of Morgan Stanley's FY24 revenue forecast) could also benefit from current copper supply tightness, suggest the analysts.

Target price is $3.95 Current Price is $3.30 Difference: $0.65
If EVN meets the Morgan Stanley target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $3.75, suggesting upside of 7.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.9

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

Shaw and Partners rates GL1 as Buy, High Risk (1) -

Following the release of final results from the 2023 drilling campaign at the Manna Lithium project in the Goldfields region of WA, Shaw and Partners observes drilling continues to demonstrate continuity and high grades.

The broker considers lithium prices having bottomed and long-term demand growth rates are intact.

The Buy, High Risk rating is retained with a target price of $2.20.

Target price is $2.20 Current Price is $0.52 Difference: $1.68
If GL1 meets the Shaw and Partners target it will return approximately 323% (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 JHX as Buy (1) -

Citi sees upside risk for James Hardie Industries' volumes in the 4Q of FY24 and the 1Q of FY25 due to recent positive data points for single family housing starts and weather-related impacts on activity in January. Data on permits and starts are also trending favourably.

The broker cautions the above data is backward-looking and notes new threats are emerging around mortgage increases and pricing.

The Buy rating and $63 target are maintained.

Target price is $63.00 Current Price is $60.00 Difference: $3
If JHX meets the Citi target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $62.74, suggesting upside of 3.7% (ex-dividends)

The company's fiscal year ends in March.

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 JMS as Outperform (1) -

Jupiter Mines looks set to benefit from a shutdown at South32's ((S32)) GEMCO operations, which sustained damage from tropical cyclone Megan. Macquarie expects this production halt could drive tailwinds for manganese prices. 

With GEMCO supplying 10% of the global manganese market, Macquarie has lifted its manganese price forecasts by 16% and 5% across 2024 and 2025.

On upgraded forecasts, Macquarie assumes free cash flow yields for Jupiter Mines of 10%, 22% and 16% through to FY26, and dividend yields between 9-12% through the same period.

The Outperform rating is retained and the target price increases to 30c from 25c.

Target price is $0.30 Current Price is $0.20 Difference: $0.105
If JMS meets the Macquarie 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

Macquarie - Cessation of coverage

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

Macquarie - Cessation of coverage

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

Macquarie rates MVF as Outperform (1) -

Following strong growth in IVF cycles over November and December, Medicare has reported year-on-year cycle declines of -12.7% and -2.8% in January and February respectively. 

Despite the slow start Macquarie anticipates 3.9% cycle growth over the second half, in line with first half growth. The broker sees a number of tailwinds supporting IVF growth, including increased average maternal age, social egg freezing and decreased male fertility.

The broker anticipates Monash IVF to take a further 155 basis points in market share gains over the second half, slightly lower than market share gains in the two preceding halves.

The Outperform rating and target price of $1.55 are retained.

Target price is $1.55 Current Price is $1.44 Difference: $0.11
If MVF meets the Macquarie target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $1.56, suggesting upside of 7.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.9

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

Bell Potter rates ORR as Hold (3) -

Perseus Mining ((PRU)) has conditionally lifted its cash bid for OreCorp to 57.5 cents per share, from 55 cents per share, in a bid to compete with a cash and scrip offer from Silvercorp Metals that has an implied value of 59.7 cents per share. 

Bell Potter points out the increase is conditional on the OreCorp board recommending the amended offer to shareholders. The board has notified Silvercorp it will recommend the Perseus offer, which it sees as the superior bid, in absence of a higher offer.

The broker expects it is unlikely Silvercorp will be able to respond with a materially higher offer.

The Hold rating is retained and the target price increases to 57.5 cents from 55 cents.

Target price is $0.57 Current Price is $0.57 Difference: $0
If ORR meets the Bell Potter target it will return approximately 0% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.0

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

Citi rates PPM as Neutral (3) -

Back in July 2022, Pepper Money acquired a 65% stake in asset finance broker Stratton Finance and has now exercised a call option over the remaining 35% for -$42m.

As the 35% was purchased at the base price, and at close to its earliest option, suggests to Citi the business has underperformed initial expectations. The broker does, however, concede, financial conditions were materially different in 2022 at the time of acquisition.

Looking on the bright side, the analysts suggest gaining control at close to first opportunity allows for better execution, and the
strategic rationale of the transaction is still in play.

The $1.55 target and Neutral rating are maintained.

Target price is $1.55 Current Price is $1.68 Difference: minus $0.13 (current price is over target).
If PPM meets the Citi target it will return approximately minus 8% (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: 0.5

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

Citi rates PRU as Neutral (3) -

Perseus Mining has raised its all cash offer for OreCorp ((ORR)) to 0.575c/share from 55c/share, subject to the OreCorp board
recommending the revised offer in the absence of superior proposal.

Citi  notes the possibility competing overseas bidder Silvercorp has been checkmated. Silvercorp has until  March 27 to respond. Perseus Mining now holds a 22.01% interest in OreCorp compared to Silvercorp's 21.11% stake.

The Neutral rating and $1.85 target is unchanged.

Target price is $1.85 Current Price is $2.00 Difference: minus $0.15 (current price is over target).
If PRU meets the Citi target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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: 0.3

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

Macquarie rates S32 as Outperform (1) -

Operations at South32's GEMCO manganese mine have been suspended as the company assess the full damage caused by tropical cyclone Megan. Flooding has already been identified in the mining pits, as well as damages to a critical haul road bridge, and the wharf and port facilities.

The company has also withdrawn full year guidance as it works to develop a recovery plan. Macquarie is assuming operations will be on hold for three months, and estimates remediation work at around US$100m. 

The Outperform rating and the target price decreases to $3.80 from $3.90.

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

Current consensus price target is $3.73, suggesting upside of 25.7% (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 SHL as Add (1) -

Morgans is expecting an EPS boost from FY25 for Sonic Healthcare as a result of the announced acquisition of Switzerland-based Dr Risch, a full-service laboratory group. The target rises to $34.94 from $34.05.

Sonic will outlay $202m including $52m of scrip, with the remaining balance paid via existing cash and debt.

While the transaction is not material to the company, the broker notes it is a strategic expansion of the Swiss division, which already holds the leading position in the country.

The Add rating is maintained. Morgans highlights Sonic has ample liquidity for both capital management and any further M&A activity.

Target price is $34.94 Current Price is $27.29 Difference: $7.65
If SHL meets the Morgans target it will return approximately 28% (excluding dividends, fees and charges).

Current consensus price target is $31.71, suggesting upside of 12.7% (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

Bell Potter rates SMP as Buy (1) -

Bell Potter has observed a trade-down in SmartPay shares since the company's first half result, despite positive merchant data and growth in digital payments. The broker retains a positive look view on the company, reinforced by efforts to balance growth and profitability.

The broker points out certification and testing of next-generation Android terminals is complete, and roll out is imminent in Australia and expected by mid-year in New Zealand.

The units come at an increased customer acquisition cost, but presents a better back-book net present value opportunity for SmartPay according to the broker.

The Buy rating is retained and the target price increases to $1.76 from $1.75.

Target price is $1.76 Current Price is $1.37 Difference: $0.39
If SMP meets the Bell Potter target it will return approximately 28% (excluding dividends, fees and charges).

The company's fiscal year ends in March.

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: 1.0

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

UBS rates TLX as Buy (1) -

UBS's observations conclude large pharma companies are increasingly looking into acquiring and developing their own radiopharmaceuticals business, which would make Telix Pharmaceuticals a target too.

The latest example is AstraZeneca's intention to acquire Fusion Pharmaceuticals.

The broker has no concrete evidence Telix Pharmaceuticals is on anyone's radar, but notes management at the company has been clear in the past a partner is needed to commercialise some of Telix's therapeutic assets.

Buy. Target $18.50.

Target price is $18.50 Current Price is $12.50 Difference: $6
If TLX meets the UBS target it will return approximately 48% (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

Bell Potter rates TNE as Buy (1) -

Bell Potter sees plenty of runway for future growth for TechnologyOne, but also some key growth opportunities in the short to medium-term which it expects can drive strong top line growth.

These opportunities include a large market penetration increase in UK education, rollout of software as a service in Australia, and rollout of DXP LG and DXP SM. 

The broker anticipates a strong result from TechnologyOne over the first half, and expects it may prove a catalyst for the company.

The Buy rating and target price of $18.50 are retained.

Target price is $18.50 Current Price is $16.89 Difference: $1.61
If TNE meets the Bell Potter target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $16.07, suggesting downside of -4.7% (ex-dividends)

The company's fiscal year ends in September.

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

Morgan Stanley rates TUA as Overweight (1) -

First half revenue and earnings for Tuas (which has a July year end) beat Morgan Stanley's forecasts by 3% and 10%, respectively.

The broker highlights a first-time positive for free cash flow (FCF) and ongoing mobile net additions momentum along with an upside surprise for margins.

While 5G coverage was ahead of forecast, broadband subscriptions growth was slower-than-expected, though customer acquisition is set to ramp up, note the analysts.

The broker's target is increased to $4.30 from $3.15 due to higher earnings forecast across FY24-26 for mobile subscriptions higher mobile subscriptions and margins. The Overweight rating is maintained. Overweight. Industry view is In-Line.

Target price is $4.30 Current Price is $3.78 Difference: $0.52
If TUA meets the Morgan Stanley target it will return approximately 14% (excluding dividends, fees and charges).

The company's fiscal year ends in July.

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 WOW as Upgrade to Outperform from Neutral (1) -

Macquarie upgrades its rating on Woolworths Group to Outperform from Neutral, noting an opportunity for investors to build a position at current share price levels. 

The broker believes investors will be rewarded for embracing regulatory uncertainty and buying ahead of six regulatory inquiries into Australian supermarkets over 2024, the impacts of which are likely reflected in valuations already.

The target is reduced by -3% to $35. Macquarie believes the key risk is potential for increased working capital from enforced changes to invoicing practices.

Target price is $35.00 Current Price is $31.73 Difference: $3.27
If WOW meets the Macquarie target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $34.03, suggesting upside of 6.0% (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