Australian Broker Call

Citi rates ALL as Buy (1) -

Citi no longer sees material downside risk to consensus forecasts for Aristocrat Leisure's Digital earnings given the market has materially reduced its forecasts (particularly Social Casino) since the FY23 result.

The company's Social Casino portfolio grew by around 5% year-on-year in the three months to November, compared to a flat performance by the genre, points out the broker. Steady revenue growth and consistent outperformance versus the industry are noted.

Citi's $44.70 target and Buy rating are unchanged.

Target price is $44.70 Current Price is $39.70 Difference: $5
If ALL meets the Citi target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $45.24, suggesting upside of 13.8% (ex-dividends)

The company's fiscal year ends in September.

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

Macquarie rates BSL as Upgrade to Outperform from Neutral (1) -

With US steel prices holding strong, Macquarie anticipates the commencement of an earnings recovery for BlueScope Steel through the second half of FY24 as spot pricing supports 23% upside to earnings.

The broker anticipates pricing to recede as economies soften, but is confident in a recovery into FY25, and believes growing focus on this potential recovery could prove supportive to the stock, which continues to trade well below long-range averages.

The rating is upgraded to Outperform from Neutral and the target price increases to $24.00 from $19.00.

Target price is $24.00 Current Price is $21.47 Difference: $2.53
If BSL meets the Macquarie target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $20.78, suggesting downside of -5.7% (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

Citi rates CQR as Buy (1) -

Charter Hall Retail REIT has announced the sale of Southgate Square in South Australia and Rosebud Plaza in Victoria.

The sale raised a combined total of $225.5m, in line with June 23 book value, notes the broker.

Citi's Buy rating and target price of $4.10 are retained.

Target price is $4.10 Current Price is $3.52 Difference: $0.58
If CQR meets the Citi target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $3.65, suggesting upside of 2.8% (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 CQR as Neutral (3) -

Charter Hall Retail REIT has announced the divestment of two shopping centres for $225.5m. Macquarie finds the divestment a positive strategic move, reducing balance sheet pressures while not being materially dilutive to earnings.

The broker estimates the sale will be broadly earnings neutral in FY24, and a -1% drag to operating earnings per share in FY25, but notes it will potentially leave the REIT in a position to acquire assets over the medium-term, which may prove earnings accretive beyond FY25.

The Neutral rating is retained and the target price increases to $3.28 from $3.17.

Target price is $3.28 Current Price is $3.52 Difference: minus $0.24 (current price is over target).
If CQR meets the Macquarie target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.65, suggesting upside of 2.8% (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

Ord Minnett rates CQR as Accumulate (2) -

In a positive announcement for investors, assesses Ord Minnett, Charter Hall Retail REIT has announced the signing of contracts to sell two sub-regional shopping centres for a total of $225.5m.

The transactions reinforce the REIT's book values (as sales were in line with June 2023 valuations), and reduce pro-forma look-through gearing to the lower-end of management's range, explain the analysts.

The sale of Southgate Square (South Australia) and Rosebud Plaza in Victoria will be around 1% accretive (annualised) to earnings, suggest the broker.

The target rises to $3.62 from $3.55. Accumulate.

Target price is $3.62 Current Price is $3.52 Difference: $0.1
If CQR meets the Ord Minnett target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $3.65, suggesting upside of 2.8% (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

Morgans rates GUD as Initiation of coverage with Add (1) -

Morgans initiates coverage on automotive aftermarket manufacturer and distributor G.U.D. Holdings with an Add rating and $14.25 target price. Under coverage of the Auto Parts sector, G.U.D. is the broker's preferred exposure.

Core business operations are divided between the Automotive business and AutoPacific Group business which comprise around 70% and 30% of FY23 sales, respectively, explains the broker.

The analysts consider the investment case is compelling, based on a resilient earnings base of largely non-discretionary products and structural industry tailwinds. It is felt M&A and accretive bolt-on acquisitions create further upside potential.

Morgans also notes a favourable short term catalyst via the ongoing vehicle supply unwind.

Target price is $14.25 Current Price is $11.66 Difference: $2.59
If GUD meets the Morgans target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $13.15, suggesting upside of 11.7% (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 HLO as Buy (1) -

In good news for Helloworld Travel, according to Shaw and Partners, ABS data show total arrivals for October were 1,742,840, an annual increase of 529,990 versus October 2022.

For the four months to October 2023, total arrivals were up 51% versus the previous corresponding period, highlights the broker, and total departures were up 53%.

This latest data and Helloworld's strong start to FY24 tracks well versus the broker's FY24 forecasts.

The Buy rating and target price of $3.50 are retained.

Target price is $3.50 Current Price is $2.43 Difference: $1.07
If HLO meets the Shaw and Partners target it will return approximately 44% (excluding dividends, fees and charges).

Current consensus price target is $3.71, suggesting upside of 52.7% (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

Citi rates JLG as Buy (1) -

Citi highlights potential meaningful upside for Johns Lyng in New Zealand after the company reached an agreement to provide building repair services to Tower Insurance.

The broker believes Tower could award opportunities for Johns Lyng and others in excess of circa $150m per annum.

However, Johns Lyng may need to expand its footprint in New Zealand beyond Auckland and Christchurch to provide national coverage for Tower, suggest the analysts.

Buy and $7.00 target retained.

Target price is $7.00 Current Price is $5.95 Difference: $1.05
If JLG meets the Citi target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $7.18, suggesting upside of 21.4% (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

Ord Minnett rates MVF as Initiation of coverage with Accumulate (2) -

Ord Minnett initiates coverage on Monash IVF, the second largest provider of assisted reproductive technologies in Australia, with a $1.40 price target. Given a 30% share price rise over the last year, the analysts begin with an Accumulate recommendation.

The broker expects pricing power in FY24 will offset cost inflation and help preserve margins, and notes improving medium-term organic growth prospects from genetic carrier testing volumes.

The group delivers a full suite of fertility and related diagnostic services both domestically, where there is robust domestic cycle growth underpinned by strong share gains, and clinics in South-East Asia.

Target price is $1.40 Current Price is $1.35 Difference: $0.055
If MVF meets the Ord Minnett target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $1.39, suggesting upside of 2.6% (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 PLS as Initiation of coverage with Hold (3) -

Bell Potter has initiated coverage on Pilbara Minerals with a Hold rating. The company is the sole owner of the the world’s largest independent hard rock lithium project, Pilgangoora.

With a mineral resource estimate of 414m tonnes at 1.15% lithium, the project is responsible for around 8% of global lithium carbonate equivalent supply.

The company also holds an 18% interest in a South Korean lithium hydroxide conversion facility, a joint venture with POSCO Holdings, and a 55% interest in a joint venture with Calix ((CXL)) to develop and operate a lithium phosphate demonstration plant at Pilgangoora.

Pilbara Minerals, says Bell Potter, offers clean exposure to global lithium fundamentals, and while recent market weakness has seen heavy short selling of the stock, the broker considers this short sighted.

Target price is $3.90.

Target price is $3.90 Current Price is $3.50 Difference: $0.4
If PLS meets the Bell Potter target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $4.30, suggesting upside of 23.6% (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

Bell Potter rates PNV as Buy (1) -

PolyNovo has reported record sales of $8.8m in November, with US commercial sales up 74% year-on-year to $6.1m. As per Bell Potter, sales growth is attributed to increased utilisation by surgeons of the NovoSorb BTM products, and further supply to hospitals.

The broker is anticipating momentum will continue into 2024, as surgeons continue to explore uses for the NovoSorb products. Bell Potter estimates the US market will represent 75% of product sales in FY24, despite strong growth in markets outside the US.

The Buy rating is retained and the target price decreases to $1.80 from $2.05.

Target price is $1.80 Current Price is $1.47 Difference: $0.335
If PNV meets the Bell Potter target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $1.85, suggesting upside of 19.8% (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 SGM as Upgrade to Outperform from Neutral (1) -

With scrap prices rallying in recent weeks, Macquarie is anticipating the market's focus to turn to Sims' earnings per share recovery potential in FY25. The rally comes amid increased rebar demand in Turkey and restocking ahead of the new year.

The broker feels market expectations are low and the potential recovery under appreciated, remaining 27% ahead of consensus net profit forecasts for FY25.

The rating is upgraded to Outperform from Neutral and the target price increases to $17.30 from $13.20.

Target price is $17.30 Current Price is $14.49 Difference: $2.81
If SGM meets the Macquarie target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $13.90, suggesting downside of -5.8% (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

Morgans rates SIG as Add (1) -

Sigma Healthcare has entered into a proposed merger with Chemist Warehouse Group using Sigma Healthcare shares and $700m of cash for consideration. A new credit facility from ANZ Bank ((ANZ)) will be set up to help fund the transaction.

Upon merging, Chemist Warehouse Group will own 85.7% of shares and shareholders in Sigma the balance.

Management also announced an entitlement offer to raise $400m for increased working capital for the previously announced new supply contract with Chemist Warehouse Group and growth initiatives.

Morgans assumes the merger is successfully completed on July 31 next year, with six months contribution in FY25 and full contribution from FY26. The target rises to 85c from 83c. Add.

Target price is $0.85 Current Price is $0.77 Difference: $0.085
If SIG meets the Morgans target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $0.82, suggesting downside of -25.5% (ex-dividends)

The company's fiscal year ends in January.

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 SKT as Outperform (1) -

SKY Network Television has reported a solid first quarter, says Macquarie, and is on its way to delivering on its full year guidance.

The company also announced it has discontinued takeover discussions with a third party on valuation grounds.

The broker considers SKY Network Television one of the most undervalued stocks on the market, especially if it can deliver on its three-year plan which requires a 3-4% compound annual revenue growth rate.

The Outperform rating is retained and the target price increases to NZ$3.32 from NZ$3.15.

Current Price is $2.53. Target price not assessed.

The company's fiscal year ends in June.

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: 0.8

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

Ord Minnett rates SRG as Initiation of coverage with Buy (1) -

Ord Minnett initiates coverage of SRG Global with a Buy rating and 92c target. The company is a specialist contractor with three divisions: Asset Maintenance, Mining Services and Engineering & Construction.

Over the last three years work-in-hand and contract win momentum have experienced a step-change, highlights the broker, driven by the Asset Maintenance division.

Following a significant strategic transformation around 70% of earnings derive from recurring revenue style businesses and the broker believes there is now lower relative operational risk, resulting in more consistent profit margins and cash generation.

Ord Minnett sees the business trading at a significant discount to peers, despite material organic growth opportunities.

Target price is $0.92 Current Price is $0.65 Difference: $0.275
If SRG meets the Ord Minnett target it will return approximately 43% (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 TWE as Neutral (3) -

Citi analysts went on tour of a few of Treasury Wine Estates' vineyards in the Barossa Valley. A positive "vibe" was noted ahead of the upcoming 2024 vintage.

According to the analysts, innovation and technology is being utilised to increase yields/quality, improve cost efficiency, and lessen the twin risks of an aging workforce and weather.

The Neutral rating and target price of $11.80 are retained.

Target price is $11.80 Current Price is $10.60 Difference: $1.2
If TWE meets the Citi target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $13.11, suggesting upside of 25.8% (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 TWE as Overweight (1) -

Following a recent tour of the luxury wine-making facility at the Barossa Vineyard, Morgan Stanley expects to see an improvement in luxury inventory positioning for Treasury Wine Estates. This is expected to support gross profit margins.

An uplift in conversion and reduced grade slippage will underpin this mix shift to higher quality inventory, in the broker's opinion.

Overweight and $14.35 target retained. Sector view is In-Line.

Target price is $14.35 Current Price is $10.60 Difference: $3.75
If TWE meets the Morgan Stanley target it will return approximately 35% (excluding dividends, fees and charges).

Current consensus price target is $13.11, suggesting upside of 25.8% (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

UBS rates TWE as Buy (1) -

A recent investor tour of Treasury Wine Estates' Barossa winery and vineyards has left UBS "incrementally more confident" in the return on capital potential the luxury winemaking investment holds.

The Barossa winery came at a total investment of $165m, with key drivers of return on capital being the additional crushers, concentrators and fermenters installed to drive a one third increase to wine production.

The company also looks to a greater use of technology and changing processes to drive efficiency gains and reduce labour costs.

The Buy rating and target price of $13.75 are retained.

Target price is $13.75 Current Price is $10.60 Difference: $3.15
If TWE meets the UBS target it will return approximately 30% (excluding dividends, fees and charges).

Current consensus price target is $13.11, suggesting upside of 25.8% (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