Australian Broker Call

Morgan Stanley rates AGL as Overweight (1) -

In a neutral outcome for AGL Energy's near-term earnings and prospects, assesses Morgan Stanley, the company has signed a new power purchase agreement (PPA) with the Portland Smelter in Victoria.

The broker anticipates Smelter PPA pricing will remain confidential but would likely be below market pricing in view of bargaining power.

The Overweight rating and $12.88 target are maintained. Industry view: Cautious.

Target price is $12.88 Current Price is $11.83 Difference: $1.05
If AGL meets the Morgan Stanley target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $12.22, suggesting upside of 2.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY25:

Forecast for FY26:

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 AVL as Buy (1) -

Shaw and Partners revisits the investment case for Australian Vanadium which is developing an Australian battery industry utilising Vanadium Flow Batteries that, unlike lithium, are suitable for grid scale storage.

The broker highlights commentary from the International Energy Agency suggesting the installed capacity of battery storage will need to rise to more than a terawatt by 2030 and 5TW by 2050 if the world is to stay on course for net-zero emissions.

Currently, the installed capacity of battery storage is less than 200GW in 2023, points out the analyst.

Shaw retains a Buy rating with an 8c target price.

Target price is $0.08 Current Price is $0.01 Difference: $0.066
If AVL meets the Shaw and Partners target it will return approximately 471% (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 BHP as Buy (1) -

It is easy to draw a comparison with the situation in 2016, the last time China brought out the big bazooka to stimulate its economy and propelled commodity prices substantially higher following a prolonged period of weakness.

Citi, however, emphasises how the basic set-up today is so different from back then. Firstly, shares in BHP are not as cheaply priced as they were back then, but also China's stimulus this time around is not the same bazooka as was used back then.

As things stand right now, Citi analysts argue the bias remains for weaker commodity prices in the months ahead, not a big surge as happened back then.

Buy rating and $46 target retained.

Target price is $46.00 Current Price is $45.96 Difference: $0.04
If BHP meets the Citi target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $45.47, suggesting upside of 2.0% (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: 0.8

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

Bell Potter rates DVP as Buy (1) -

Develop Global reported FY24 results with a 117% rise in revenue because of higher mining services for the Bellevue Gold ((BGL)) mine, Mt Marion contract and Beta Hunt site, Bell Potter observes. EBITDA turned positive after a loss of -$2m in FY23.

The company announced the final investment decision on the restart of Woodlawn with the first concentrate anticipated in mid-2025 the broker notes.

Bell Potter lowers earnings forecasts for a six-month delay in the Woodlawn and Sulphur Springs production announcement, alongside higher operating expenses.

Buy rating unchanged. Target price falls to $3.20 from $3.50.

Target price is $3.20 Current Price is $2.48 Difference: $0.72
If DVP meets the Bell Potter target it will return approximately 29% (excluding dividends, fees and charges).

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

Bell Potter rates EBR as Speculative Buy (1) -

Bell Potter notes EBR Systems has raised $50m for initial commercialisation for its WiSE-CRT cardiac pacing system with FDA approval expected in 1Q2025.

The funding is highlighted as pre-emptive the broker believes, providing sufficient cash for the next 18-months to cover a sales and marketing team, building up the manufacturing system, with more R&D into rechargeable battery capabilties.

Bell Potter still views a second funding raising as necessary to reach cashflow positive with the next raising possibly post the 2Q2026 results. The estimated amount is circa $66m at $1 per share.

Speculative Buy rating unchanged. Target rises to $2.01 from $1.96.

Target price is $2.01 Current Price is $0.87 Difference: $1.14
If EBR meets the Bell Potter target it will return approximately 131% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

Forecast for FY24:

Forecast for FY25:

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

Market Sentiment: 1.0

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

Morgans rates MCE as Initiation of coverage with Speculative Buy (1) -

Morgans initiates research coverage on Matrix Composites & Engineering which engages in the design, engineering and manufacturing of engineered polymer products for the energy, mining and resource, and defence industries. 

The broker begins with a Speculative Buy rating and 44c target. For FY25, Morgans forecasts EBITDA growth of 21% and EPS growth of 41%.

Matrix should benefit from tailwinds in oil & gas (which may be supplemented by further market share gains) as it manufactures specialised engineered products that are critical for buoyancy.

Floating offshore wind also presents a large opportunity, particularly from 2030, suggests the analyst.

Target price is $0.44 Current Price is $0.35 Difference: $0.09
If MCE meets the Morgans target it will return approximately 26% (excluding dividends, fees and charges).

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

Morgans rates PER as Speculative Buy (1) -

In an important catalyst, highlights Morgans, no new or unexpected toxicities were observed in Percheron Therapeutics' nine-month study on ATL1102 in non-human primates.

Management will now package and present the data to the FDA along with top-line results from its Ph2b trial in duchennes muscular dystrophy (DMD) in early-2025.

The Speculative Buy rating and 24c target are retained.

Target price is $0.24 Current Price is $0.11 Difference: $0.135
If PER meets the Morgans target it will return approximately 129% (excluding dividends, fees and charges).

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

Ord Minnett rates QOR as Buy (1) -

Ord Minnett views the $30m capital raising by Qoria as a positive, helping to alleviate pressure on the balance sheet and assist in working capital requirements.

The company also announced the acquisition of OctopusBI, an Ai SaaS platform for processing education data the broker highlights.

Ord Minnett forecasts annual recurring revenue to increase by 2%-3% from FY25 to FY27, with an accompanying fall of -1% in EBITDA in FY25, rising to 5% growth through FY26-FY27.

Target rises to 47c from 44c, Buy retained.

Target price is $0.47 Current Price is $0.41 Difference: $0.06
If QOR meets the Ord Minnett target it will return approximately 15% (excluding dividends, fees and charges).

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

Macquarie rates REA as Outperform (1) -

Following a fourth rejection by Rightmove, REA Group will no longer pursue a takeover, thereby removing the recent overhang on the REA Group share price (associated with new equity issued), suggests Macquarie.

Separately, the group's listings are up around 5% in the September quarter as compared to guidance for flat growth, highlights the analyst.

Outperform. Target is tweaked to $230 from $229.

Target price is $230.00 Current Price is $201.00 Difference: $29
If REA meets the Macquarie target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $218.60, suggesting upside of 4.1% (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

Citi rates RIO as Neutral (3) -

Citi offers feedback on a site visit to Rio Tinto's titanium operation Sorel-Tracy with a focus on carbon emission reductions.

The analyst believes the commercialisation and pathway to BlueSmelting is "shorter" and would enable Rio Tinto to cut CO2 emissions and costs. 

Currently titanium produces circa 1mt p.a. of CO2, equal to 3% of total emissions which is high considering it is powered by hydro, the broker notes.

Neutral rating and $123 target price maintained.

Target price is $123.00 Current Price is $129.13 Difference: minus $6.13 (current price is over target).
If RIO meets the Citi target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $127.42, suggesting upside of 1.7% (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: 0.7

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

Bell Potter rates RMY as Speculative Buy (1) -

Bell Potter believes the new CEO for RMA Global has shifted the strategic direction of the company as evidenced in the partnership with Realty ONE Group, which has around 20k US agents and eight brokerages in the top 500 transaction sales in 2023.

The deal will enable RMA Global's platform to be phased into Realty One's technology stack, the broker notes.

Bell Potter expects more deals of this nature with the CEO bringing valuable US platform experience to the company.

Speculative Buy rating unchanged. Target price lifts to 11c from 10c.

Target price is $0.11 Current Price is $0.06 Difference: $0.049
If RMY meets the Bell Potter target it will return approximately 80% (excluding dividends, fees and charges).

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

Citi rates SDR as Buy (1) -

Citi's meetings within the hotel industry confirmed revenue management solutions are under-utilised, but the uptake is increasing which is a positive post the launch of SiteMinder's DR-plus. 

The analyst points to the positive partnership with IDeaS but reliance on another party to function is highlighted as a risk.

Pricing of DR-plus has yet to be implemented, Citi notes, with most hotel software systems functioning on a room per month subscription basis, not on a percentage of booking volume-based pricing.

Buy rating unchanged. Target price lifts to $7.20 from $6.60 due to a higher valuation multiple in line with market peers.

Target price is $7.20 Current Price is $6.32 Difference: $0.88
If SDR meets the Citi target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $6.85, suggesting upside of 7.0% (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

Ord Minnett rates SGR as Hold (3) -

Ord Minnett re-assess the fiscal position and risks associated with Star Entertainment post the reinstatement of the stock's trading, the lodgement of FY24 financial accounts, debt refinancing and a "new" strategic plan.

The broker outlines a suite of challenges for the company, including uncertainty around earnings, liquidity challenges, cashless gaming, regulators fines, tax penalties and class actions. 

Earnings forecasts are lowered substantially post -$750m in cost cutting, funds from asset sales and fines of $400m.

Ord Minnett retains a Hold rating with a 30c target price, emphasising Star Entertainment's asset base on any sale proceeds likely exceeds the target.

Note from the broker: Via various entities, Bruce Mathieson beneficially holds a major shareholding in Ord Minnett, Endeavour Group and Star Entertainment.

Target price is $0.30 Current Price is $0.30 Difference: $0.005
If SGR meets the Ord Minnett target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $0.44, suggesting upside of 62.0% (ex-dividends)

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 SM1 as Hold (3) -

Bell Potter observes the FY24 results for Synlait Milk were in line with expectations.Management offered no guidance excluding the absence of non-recurring costs and market issues in FY25. 

The company is aiming for net debt of NZ$200m-NZ$250m at year-end and will offer South Island farmers a one-off NZ$0.20/kg milk solids bonus for 2025-26 to help secure milk supplies.

The broker revises EBITDA forecasts up in FY25 and down slightly in FY26 for the NZ$18m capital raising with lower financing costs leading to lower EPS estimated losses in FY25/FY26.

Hold rating maintained. Target price declines to 42.5c from 47c.

Target price is $0.43 Current Price is $0.38 Difference: $0.045
If SM1 meets the Bell Potter target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $0.43, suggesting upside of 14.9% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY25:

Forecast for FY26:

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

Market Sentiment: -0.3

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

Macquarie rates SM1 as Underperform (5) -

Synlait Milk's FY24 reported loss was -$182m given further impairments, but the net debt outlook improved, notes Macquarie, partly due to an equity raise.

Margins will be diluted over FY25, explains the broker, as an additional milk payment to retain supply will not be recouped
from product pricing or customer contracts with pass-through.

The target falls to NZ37c from NZ45c. The broker's Underperform rating is kept given risks around the speed and shape of the recovery, milk retention, volume risks around a2 Milk Co ((A2M)), and limited valuation appeal.

Current Price is $0.38. Target price not assessed.

Current consensus price target is $0.43, suggesting upside of 14.9% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY25:

Forecast for FY26:

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

Market Sentiment: -0.3

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

Macquarie rates STX as Neutral (3) -

Macquarie lowers its Walyering valuation following a reduction in independently certified 2P/3P reserves by -16% and -19%, respectively.

Separately, management has delayed the final investment decision (FID) on West Erregulla to FY25 from the 3Q this year.

The analyst harbours concern around a lack of alignment between Strike and Hancock Prospecting on the FID in its current form,
particularly given increased M&A potential in the Perth Basin.

Neutral rating and 23c target unchanged. 

Target price is $0.23 Current Price is $0.22 Difference: $0.01
If STX meets the Macquarie target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $0.29, suggesting upside of 38.1% (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

Ord Minnett rates STX as Buy (1) -

Strike Energy's FY24 loss came in well below Ord Minnett's expectations of $10m in net profit and $22m for the market expectations.

The main culprit was a higher depreciation/amortisation charge post the Talon Energy acquisition for $145m. Adjusting for the charge, the results were broadly in line with the broker's forecasts.

Ord Minnett observes investor sentiment has soured because of cuts to reserve estimates and worse-than-expected drilling results, but the analyst remains upbeat on the core assets, Waylering, and the cash position of 7c per share.

Buy rating unchanged. Target price is raised to 32c from 31c.

Target price is $0.32 Current Price is $0.22 Difference: $0.1
If STX meets the Ord Minnett target it will return approximately 45% (excluding dividends, fees and charges).

Current consensus price target is $0.29, suggesting upside of 38.1% (ex-dividends)

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

Macquarie rates SVW as Outperform (1) -

Macquarie raises its target for Outperform-rated Seven Group to $47.80 from $43.90 after gaining a deeper appreciation on key assets WesTrac, Boral and Coates, and raising their respective multiples to align with peers.

The medium-term growth outlook remains compelling, in the broker's opinion, especially as growth acceleration is supported by monetary policy shifts.

Positives include WesTrac growth, the ongoing Boral turnaround and capital discipline at Coates, summarises Macquarie.

Target price is $47.80 Current Price is $42.88 Difference: $4.92
If SVW meets the Macquarie target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $46.27, suggesting upside of 5.4% (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

Citi rates VCX as Neutral (3) -

Should media reports prove correct around the potential disposal of Vicinity Centres' Roselands Shopping centre to HMC Capital ((HMC)), Citi notes management will have achieved a large portion of its targeted -$250m disposal pipeline.

Vicinity's stake is currently valued at around $142m, notes the broker.

Neutral rating. Target $2.20.

Target price is $2.20 Current Price is $2.21 Difference: minus $0.01 (current price is over target).
If VCX meets the Citi target it will return approximately minus 0% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.14, suggesting downside of -4.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY25:

Forecast for FY26:

Market Sentiment: 0.0

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

Citi rates XRO as Buy (1) -

Citi observes some key points from competitor Intuit's investor day for Xero, highlighting an opportunity for the company to concentrate on the smaller end of the market, one to twenty employees, as Intuit scales more into the mid-sized market with QBO Advanced.

The analyst believes Xero needs to invest more in Gen.Ai with Intuit's current product offering viewed as "superior".

Internationally, the lack of focus on this from Intuit was noted by Citi as interesting. Xero is also expected to expand more into the 'large mid-market', twenty to one hundred employees, as signalled via the Syft acquisition.

Citi retains a Buy rating and $158.20 target price.

Target price is $158.20 Current Price is $149.44 Difference: $8.76
If XRO meets the Citi target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $161.43, suggesting upside of 7.6% (ex-dividends)

Forecast for FY25:

Forecast for FY26:

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

Market Sentiment: 0.8

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