Australian Broker Call

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

UBS believes market share of challenger NBN brands will grow to around 35% by FY30, up from 18% at present, but sees subscriber market share gains moderating for Aussie Broadband.

The broker initiates coverage with a Neutral rating, noting the market is already pricing in a strong earnings growth profile relative to Australian telco peers and a likely sizeable buyback scenario.

The analyst also mentions competition in NBN resale and some subscriber cannabilisation from the company's new budget brand, Buddy. The recent Origin Energy ((ORG)) wholesale contract loss is considered a further negative.

UBS starts with a $3.95 target price.

Target price is $3.95 Current Price is $3.85 Difference: $0.1
If ABB meets the UBS target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $4.11, suggesting upside of 7.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY25:

Forecast for FY26:

Market Sentiment: 0.7

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

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

Morgan Stanley raises its target for ARB Corp to $46 from $40.50 as OEM collaborations are taking further shape and US distribution is falling into place. The latter has been further boosted by the (conditional) acquisition by associate Off-Road Warehouse of 4 Wheel Parts.

The broker highlights management's strategic investments are leading to positive trends for the export order book. Incremental market share gains are also expected from domestic store expansion. Industry view: In-Line. 

Based on the above positives and more, ARB Corp makes the Morgan Stanley list of key small/mid-cap ideas.

Target price is $46.00 Current Price is $42.33 Difference: $3.67
If ARB meets the Morgan Stanley target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $42.80, suggesting upside of 0.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY25:

Forecast for FY26:

Market Sentiment: 0.3

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

Macquarie rates CSL as Outperform (1) -

Macquarie observes the favourable trial results for CSL's garadacimab, a factor Xlla-inhibiting monoclonal antibody for the treatment of hereditary angioedema.

The broker's forecasts include approval for garadacimab in late 2024 with revenue generation in the second half of 2025. The analyst  believes it will be a positive growth contributor to the medium/longer-term outlook for CSL.

Compared to current FDA approved products, Takhzyro and Haegarda, garadacimab has exhibited higher efficacy, 

Macquarie assumes conversion of existing Haegarda patients to the new treatment and forecasts CSL's market share in the prophylaxis market to increase to circa 20% by FY30.

Outperform and $330 target retained.

Target price is $330.00 Current Price is $301.51 Difference: $28.49
If CSL meets the Macquarie target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $327.46, suggesting upside of 9.2% (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: 0.9

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

Bell Potter rates DUR as Buy (1) -

Duratec announced two contracts, including $21.8m over two-years with Woodside Energy Group ((WDS)) in Dampier for remedial work to the KBSB wharf.

The second contract worth $54.8m is from the Department of Defence to 49% owned DDR Australia, for infrastructure.

The broker estimates the second contract could contribute $6m to DDR's gross profit or around $2m to associate income over the next three years.

Bell Potter emphasises the wins are positive but well short of the requirements to meet $600m in forecast revenue to replace finishing contracts.

Bell Potter increases FY25 EPS by 2.6% and 3% for FY26 with a lift in the target price to $1.58 from $1.52. Buy rating unchanged.

Target price is $1.58 Current Price is $1.40 Difference: $0.18
If DUR meets the Bell Potter target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $1.50, suggesting upside of 7.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY25:

Forecast for FY26:

Market Sentiment: 0.8

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

Shaw and Partners rates DUR as Buy (1) -

Duratec announced two new contracts, Shaw and Partners notes. A $21.8m worth with Woodside Energy Group ((WDS)) for the refurbishment of King Bay Supply Base wharf and a $54,7m contract with DDR the company JV from the Department of Defense in NT upgrades.

The analyst highlights revenue will be weighted to second half of 2024 and remains positive in the uplift in the order book which troughed in the first half of the calendar year.

Buy rated. High risk. $1.50 target price.

Target price is $1.50 Current Price is $1.40 Difference: $0.1
If DUR meets the Shaw and Partners target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $1.50, suggesting upside of 7.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY25:

Forecast for FY26:

Market Sentiment: 0.8

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

Citi rates HUB as Neutral (3) -

Citi raises its target for Hub24 to $56.70 from $47.00 after stronger-than-expected net inflows for early-FY25 revealed at FY24 results on August 20.

As expected by the analysts, headcount growth has meaningfully slowed in FY24, which should result in strong operating leverage in FY25.

The Neutral rating is kept on the currently stretched valuation, explains Citi.

Target price is $56.70 Current Price is $56.25 Difference: $0.45
If HUB meets the Citi target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $53.44, suggesting downside of -4.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY25:

Forecast for FY26:

Market Sentiment: 0.4

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

Citi rates MIN as Buy (1) -

As anticipated by Citi, the FIRB has approved the $1.3bn sell down of the Onslow iron ore haul road, and Mineral Resources is expected to receive the first $1.1bn cash payment this month.

In a further business update, management expects to ship an annualised 8.64mt in September which bodes well for FY25 guidance, suggest the analysts.

In other positives, management will reduce by -$180m the total capex of $1,945m previously planned. Opex is also lowered by -$120m, which represents around 3% of Citi's prior forecast.

The Buy rating and $50 target are unchanged.

Target price is $50.00 Current Price is $30.29 Difference: $19.71
If MIN meets the Citi target it will return approximately 65% (excluding dividends, fees and charges).

Current consensus price target is $52.94, suggesting upside of 50.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY25:

Forecast for FY26:

Market Sentiment: 0.4

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

Bell Potter rates NUF as Hold (3) -

Bell Potter observes the ongoing downward pressure in fish oil and fishmeal pricing with feed grade down -29% for 3Q24 on the previous quarter. A 13% rise in fish oil supply was the main cause of weakness.

The latest global reports reveal total average selling prices fell -8% in the June quarter, the fourth consecutive decrease while volumes have been positive, the analyst notes.

On balance the broker believes the headwinds from lower prices in 2024 have bottomed but the weakness in omega-3 pricing is a new "dynamic".

No change to Hold rating and $4.05 target price.

Target price is $4.05 Current Price is $3.83 Difference: $0.22
If NUF meets the Bell Potter target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $4.59, suggesting upside of 20.5% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: -0.1

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

Citi rates NXT as Buy (1) -

Given NextDC already had $2.7bn of liquidity to fund land acquisitions, Citi was surprised by the latest equity raise and labels it opportunistic, but not with a negative overtone.

Management's confidence in the demand pipeline is evident, suggests the broker, from the acquisition of another site in Sydney for a wholesale hyperscale facility (S7). FY25 capex has been raised by $400m to fund this land acquisition.

The company is also currently looking at seven sites in Asia. The proceeds from the equity raise ($550m) and SPP (up to $200m) will be used to fund the land acquisition for a hyperscale facility in Johor (Malaysia) and a metro co-location facility in Bangkok.

The Buy rating and $19.25 target are unchanged.

Target price is $19.25 Current Price is $17.84 Difference: $1.41
If NXT meets the Citi target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $19.98, suggesting upside of 18.5% (ex-dividends)

Forecast for FY25:

Forecast for FY26:

Market Sentiment: 0.9

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

Macquarie rates NXT as Outperform (1) -

The announcement by NextDC to raise another $750m is not a surprise to Macquarie via a fully underwritten pro-rata rights issue to existing shareholders (retail and institutional).

Management raised capex guidance by $400m for FY25 to $1.3bn-$1.6bn due strong demand for build-to-specification data centres and the development of S7 site discussions.

The broker believes the S7 site could be more than half a GW in size while the return on invested capital is mid-teens for enterprise customers and high-single-digit to low-double-digit for hyperscale. 

Macquarie raises FY24 EPS by 19% and lowers FY25 EPS by -4%.

Outperform rating and $21.20 target unchanged.

Target price is $21.20 Current Price is $17.84 Difference: $3.36
If NXT meets the Macquarie target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $19.98, suggesting upside of 18.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY25:

Forecast for FY26:

Market Sentiment: 0.9

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

Ord Minnett rates NXT as Accumulate (2) -

Ord Minnett notes NextDC has announced a $750m capital raising at $17.15 a share with $550m institutional and a $200m share purchase.

The funds are intended to invest in new data centre sites in Asia and overall corporate expenses,

NextDC also raised the capex spend in FY25 to $1.3bn-$1.5bn with acquisition of S7 site nearing completion, the analyst highlights. EBITDA guidance was retained.

The BK1 (Bangkok) and JB1 (Malaysia) sites are not included in the current capex guidance, Accumulate rating and $20 target price unchanged.

Target price is $20.00 Current Price is $17.84 Difference: $2.16
If NXT meets the Ord Minnett target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $19.98, suggesting upside of 18.5% (ex-dividends)

Forecast for FY25:

Forecast for FY26:

Market Sentiment: 0.9

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

UBS rates NXT as Buy (1) -

To fund NextDC's Asian expansion strategy, explains UBS, management has launched a fully underwritten placement and a non-underwritten share purchase plan for $550m and up to $200m, respectively.

The expansion includes ongoing site evaluation and negotiation in Bangkok, Thailand (BK1) and Johor, Malaysia (JB1), on top of the planning phase in Tokyo (TK1) and current construction in Kaula Lumpur (KL1), observes the broker.

Also, FY25 capex guidance has been increased by $400m to $1,300-1,500m in relation to the site acquisition in Sydney (S7).

The broker's Buy rating and $19.40 target are unchanged.

Target price is $19.40 Current Price is $17.84 Difference: $1.56
If NXT meets the UBS target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $19.98, suggesting upside of 18.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY25:

Forecast for FY26:

Market Sentiment: 0.9

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

Ord Minnett rates SCG as Accumulate (2) -

Scentre Group issued $900m in domestic subordinated notes at a low margin to buy back US$656m ($985m) in fixed rate notes.

Ord Minnett assess this permits the group to lower its funding costs and diversify its funding mix.

The pricing at 230bps over the bank bill swap rate suggests to the analyst there is further scope to lower the cost of debt refinancing.

With more debt refinancing anticipated over the next three years, Ord Minnett believes the weighted average debt margin will move to 200bps.

Target price increases to $3.80 from $3.50. Accumulate rating remains.

Target price is $3.80 Current Price is $3.54 Difference: $0.26
If SCG meets the Ord Minnett target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $3.55, suggesting downside of -0.6% (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

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

While Morgan Stanley acknowledges the risk of increased regulation and managing community expectations, recent media articles by the ABC are not new.

The articles have raised concerns around transparency, commissions and competition in the strata industry for which management commissioned an independent review in 2021, note the analysts.

The broker estimates the group's strata exposure in Agencies is just over 10% of group EBITA, with 100%-owned CHU Underwriting Agencies one of the largest strata insurance specialists in Australia.

Equal-weight rating. Target price $6.64. Industry view: In-Line. 

Target price is $6.64 Current Price is $5.32 Difference: $1.32
If SDF meets the Morgan Stanley target it will return approximately 25% (excluding dividends, fees and charges).

Current consensus price target is $6.75, suggesting upside of 22.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY25:

Forecast for FY26:

Market Sentiment: 0.6

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

UBS rates SLC as Initiation of coverage with Buy (1) -

UBS believes market share of challenger NBN brands will grow to around 35% by FY30, up from 18% at present, and initiates coverage on Superloop with a Buy rating and $2.20 target.

The broker anticipates a 45% three-year Cash EPS compound annual growth rate (CAGR) for Superloop and highlights the stock is currently trading at an attractive multiple.

This growth is underpinned by the analyst's forecast for a 93% increase in Group Connections to around 876,000 in FY27, or 10% market share.

Target price is $2.20 Current Price is $1.74 Difference: $0.465
If SLC meets the UBS target it will return approximately 27% (excluding dividends, fees and charges).

Current consensus price target is $2.07, suggesting upside of 20.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY25:

Forecast for FY26:

Market Sentiment: 1.0

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