Australian Broker Call

Morgan Stanley rates A1N as Underweight (5) -

On March 18, ARN Media and its private equity partner made a revised, indicative, non-binding offer for 100% of the shares of Southern Cross Media ((SXL)).

Morgan Stanley notes there is no certainty the transaction will complete. It's felt further media industry consolidation makes sense (given potential for one-off cost-out; increased scale), but is no magic wand to fix all of the structural challenges.

The broker's Underweight rating reflects both these structural (and cyclical) challenges for radio. ARN Media's mixed track record of capital allocation and M&A is also noted.

The 78c target is unchanged for ARN Media. Industry View: Attractive.

Target price is $0.78 Current Price is $0.87 Difference: minus $0.085 (current price is over target).
If A1N meets the Morgan Stanley target it will return approximately minus 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $0.90, suggesting upside of 4.3% (ex-dividends)

The company's fiscal year ends in December.

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

Ord Minnett rates AIS as Hold (3) -

A general preview to the upcoming quarterly production updates from ASX-listed resources producers shows Ord Minnett is still covering Aeris Resources and currently has a Hold rating for the shares.

Current Price is $0.27. Target price not assessed.

Current consensus price target is $0.19, suggesting downside of -29.6% (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

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

Bell Potter notes a worrying and unexplained decline in utilisation rates in the core burns market for Avita Medical after management downgraded 1Q revenues to between US$11.1-11.3m from the mid point of the prior range of US$15.2m.

While management has maintained its full year guidance, albeit now at the low end of the guidance range, the analysts don't share this optimism. The rating is downgraded to Speculative Hold from Speculative Buy and the target slashed to $3.50 from $6.85.

The broker speculates softness in the burns market may be due to overstocking of the channel in the December quarter and/or budget restraints within US hospitals in favour of cheaper treatment alternatives.

Also, burns adoption could have been flat with negligible uptake in full-thickness skin defects (FTSD), suggest the analysts.

Target price is $3.50 Current Price is $3.35 Difference: $0.15
If AVH meets the Bell Potter target it will return approximately 4% (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: 0.5

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

Macquarie rates CIA as Neutral (3) -

Ahead of Champion Iron's fourth quarter result release, Macquarie announces it is anticipating production and shipments to be largely in line with market estimates, expecting production of 3.6m tonnes and shipments of 3.2m tonnes.

Price-wise, Macquarie believes Champion Iron's contract book is more exposed to March monthly pricing. Given this lag, it expects realised prices to disappoint consensus by -5% at CAD$107 per tonne.

The Neutral rating is retained and the target price decreases by -3% to $7.30.

Target price is $7.30 Current Price is $6.88 Difference: $0.42
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

Ord Minnett rates CRN as Accumulate (2) -

A general preview to the upcoming quarterly production updates has revealed Coronado Global Resources' rating at Ord Minnett has changed to Accumulate from the prior Hold.

Target price is $1.60 Current Price is $1.19 Difference: $0.41
If CRN meets the Ord Minnett target it will return approximately 34% (excluding dividends, fees and charges).

Current consensus price target is $1.77, suggesting upside of 47.5% (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: 0.9

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

Citi rates DMP as Neutral (3) -

Citi has been left more cautious on Domino's Pizza Enterprises following the company's recent investor day. It was noted that with multiple markets facing facing external headwinds or in the process of rebuilding, store targets may need to be pushed out.

The company is currently targeting 7,100 stores by 2033, but the market is already factoring in just 6,346 stores by the same year. More positively, Domino's appeared comfortable with its balance sheet position. 

The Neutral rating and target price of $44.50 are retained.

Target price is $44.50 Current Price is $40.17 Difference: $4.33
If DMP meets the Citi target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $50.25, suggesting upside of 29.7% (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 DMP as Neutral (3) -

With a number of headwinds impacting on key markets, Domino's Pizza Enterprises management has flagged its targeted 7-9% annual organic store growth will be difficult to achieve in FY25. 

Currently, notes Macquarie, global franchisee profitability equates to $95,000 per store, but the company aims to return this to $130,000 per store which it believes will reignite store opening growth.

The broker suggests this will be achieved through new products with better margin profiles, but warns of muted growth in the business over the next couple of years amid reinvestment. 

The Neutral rating is retained and the target price decreases to $41.00 from $42.00.

Target price is $41.00 Current Price is $40.17 Difference: $0.83
If DMP meets the Macquarie target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $50.25, suggesting upside of 29.7% (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 EDV as Upgrade to Overweight from Equal-weight (1) -

Morgan Stanley upgrades Endeavour Group to Overweight from Equal-weight on an undemanding current valuation. It's also thought an uplift in earnings from Hotels will beat the consensus expectation and the company will continue to dominate in liquor retail.

The broker's target price rises to $6.40 from $5.80. Industry view is In-Line. Both the gaming regulatory outlook and management execution in hotels have the potential to derail the broker's positive thesis.

Morgan Stanley's forecasts Endeavour will attain $125m of its $150mn EBIT target compared to the consensus estimate for $85m.

Target price is $6.40 Current Price is $5.24 Difference: $1.16
If EDV meets the Morgan Stanley target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $5.87, suggesting upside of 10.4% (ex-dividends)

The company's fiscal year ends in June.

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

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

Consistent with its 4GW-by-2030 development strategy, according to management, Origin Energy will acquire the Yanco Delta Wind (1.5GW) and Battery (800MW) development in NSW.

If commissioned, Morgan Stanley believes plant output will be around 4.6TWh, or circa one third of Eraring's current output.

Origin is targeting commercial operations pre-2030 after an around four-year construction period, which the broker forecasts will cost circa -$4.5bn. Funding will be via project finance (around 65%), and third party capital, with Origin as the off-taker.

The Equal-weight rating and target price of $8.88 are retained. Industry view: Cautious.

Target price is $8.88 Current Price is $9.77 Difference: minus $0.89 (current price is over target).
If ORG meets the Morgan Stanley target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $9.46, suggesting downside of -3.0% (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 PRU as Outperform (1) -

With Perseus Mining now approaching completion of its OreCorp ((ORR)) acquisition, Macquarie has accounted for the purchase in its outlook. 

Based on Perseus Mining's offer, the broker prescribes OreCorp a value of $270m. Its key asset, the Nyanzaga gold project, is aiming for production of 242,000 ounces per year over its ten year mine life, as per its most recent definitive feasibility study.

Macquarie assumes first gold from the project towards the end of 2026.

The Outperform rating and target price of $2.70 are retained.

Target price is $2.70 Current Price is $2.35 Difference: $0.35
If PRU meets the Macquarie target it will return approximately 15% (excluding dividends, fees and charges).

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

Ord Minnett rates SBM as Hold (3) -

A general preview to the upcoming quarterly production updates from ASX-listed resources producers shows Ord Minnett is still covering St. Barbara and currently has a Hold rating for the shares.

Current Price is $0.30. Target price not assessed.

Market Sentiment: 0.0

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

Morgans rates SGR as Add (1) -

Morgans saw Star Entertainment releasing a rather weak trading update, also including higher operating costs. The one stand-out positive, suggests the broker, is the development of Queens Wharf Brisbane remains on schedule for August.

Estimates have been scaled back, with EBITDA forecast dropping by -15% for FY24. EPS estimates have gone down by -26% and -17% for this year and next.

The broker reiterates its Add rating with a revised price target of 65c (was 70c). No dividends are expected until FY26.

Target price is $0.65 Current Price is $0.51 Difference: $0.145
If SGR meets the Morgans target it will return approximately 29% (excluding dividends, fees and charges).

Current consensus price target is $0.69, suggesting upside of 41.3% (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

UBS rates SGR as Buy (1) -

UBS was disappointed by Star Entertainment's trading update. Earnings (EBITDA) in the March quarter fell -12% on a re-stated previous corresponding period, and slowed rapidly during the quarter due to softening revenues and growing opex.

The broker cuts its FY24 EBITDA forecast by -23%, though this represents a delayed recovery rather than structural reduction. The target falls to 52c from 57c. Buy.

Costs are tracking in line with the previous corresponding period despite Star having delivered a $100m per annum cost-out program. The latter appears to be offset by inflation, and reinvestment in risk controls and compliance, explains the broker.

Target price is $0.52 Current Price is $0.51 Difference: $0.015
If SGR meets the UBS target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $0.69, suggesting upside of 41.3% (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