Australian Broker Call

Ord Minnett rates APA as Accumulate (2) -

The Australian Energy Regulator is currently reviewing whether long-distance gas pipelines should be fully regulated starting with APA Group's South West Queensland Pipeline.

Ord Minnett notes earnings downside is limited for APA because regulated returns are linked to government bond yields, which have risen strongly in recent years.

The Accumulate rating and $9.30 target are unchanged.

Target price is $9.30 Current Price is $8.45 Difference: $0.85
If APA meets the Ord Minnett target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $8.81, suggesting upside of 4.3% (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 BRE as Initiation of coverage with Speculative Buy (1) -

Ord Minnett initiates coverage of rare earth stocks (REO) as the prices are depressed.

The broker initiates coverage on Brazilian Rare Earths with a Speculative Buy rating and highlights the company has an excellent resource quality.

Ord Minnett highlights Chinese buyers will need to become more acquainted with the "unusual apatite-britholite" minerals, with seemingly normal processing.

Specutive Buy. $6.10 target price.

Target price is $6.10 Current Price is $3.05 Difference: $3.05
If BRE meets the Ord Minnett target it will return approximately 100% (excluding dividends, fees and charges).

Market Sentiment: 1.0

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

Ord Minnett rates BWP as Hold (3) -

BWP Trust is looking to compulsorily acquire the remaining shares in Newmark Property REIT ((NPR)), having already secured a 93% stake.

The broker believes Newmark has an attractive portfolio, with nine relatively new big-box retail properties mostly leased to Bunnings and other Wesfarmers tenants including Officeworks and Kmart.

The Hold rating and $3.60 target price are retained.

Target price is $3.60 Current Price is $3.64 Difference: minus $0.04 (current price is over target).
If BWP meets the Ord Minnett target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.65, suggesting upside of 0.3% (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

Shaw and Partners rates CTD as Buy (1) -

Shaw and Partners reassesses the earnings forecasts for Corporate Travel Management in light of the share price underperformance since the 1H24 results and the guidance downgrade.

The analyst attributes investors concerns on a number of issues, including uncertainty on the value of the UK Bridging Contract and potential macro-economic issues in North America, as well as rising unemployment in Australia.

Adjusting for more conservative forecasts, the broker retains the FY24 estimates around management guidance and lowers FY26 by -16%.

The Buy rating is unchanged and the target price lowered to $17.30 from $20.

Target price is $17.30 Current Price is $13.32 Difference: $3.98
If CTD meets the Shaw and Partners target it will return approximately 30% (excluding dividends, fees and charges).

Current consensus price target is $18.58, suggesting upside of 39.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.7

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

Citi rates FPH as Neutral (3) -

Citi assesses the Fisher & Paykel Healthcare FY24 results were in line with guidance, with net profit of NZ$132.6m impacted by one-off items.

The company’s guidance for FY25 was also in line with the consensus expectations and with revenue of NZ$1.9-2.0bn and net profit of NZ$310-360m, driven by mid-teens growth in hospital consumables and strong OSA mask sales.

Gross margin recovery is on track to reach around 65% by FY27, with operating margin expected to recover to circa 30% by FY28 or FY29, according to the analyst.

Citi leaves FY25 forecasts unchanged and lifts FY26 EPS estimate by 2% and acknowledges the earnings momentum is robust for the next three years at 20%-plus.

Neutral rating and the target is raised to NZ$28.75 from NZ$26.25.

Current Price is $26.39. Target price not assessed.

Current consensus price target is $23.06, suggesting downside of -12.6% (ex-dividends)

The company's fiscal year ends in March.

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: -0.2

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

Macquarie rates FPH as Neutral (3) -

Macquarie highlights Fisher & Paykel Healthcare has guided FY25 net profit guidance growth of 27%, supported by forex tailwinds of 9%.

The analyst points to new applications growth remaining robust, particularly in anaesthesia, rising 53% year-on-year (yoy), and other new apps (NIV/NHF) rising 13% yoy.

Gross margin improved to 61.1%, a 216bps lift YoY, due to lower freight costs, manufacturing efficiencies, and improved pricing.

The broker highlights a favourable growth outlook and margin expansion already captured within the current share price. Neutral rating retained.

The broker adjusts EPS forecasts by -1% and 1% for FY25 and FY26. Target price adjusted to NZ$27.85 from NZ$26.15.

Current Price is $26.39. Target price not assessed.

Current consensus price target is $23.06, suggesting downside of -12.6% (ex-dividends)

The company's fiscal year ends in March.

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: -0.2

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

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

Fisher & Paykel Healthcare's FY24 revenue was in line with management guidance, but first time FY25 guidance implies 8% upside to Morgan Stanley's current forecast.

In FY24, the company achieved a gross profit margin of 61.1% (excluding the provision of a product recall) compared to 59.3% for FY23 due to lower freight, manufacturing efficiencies and pricing, explain the analysts.

Consumable sales were a highlight, according to the broker, with a 2% beat from hospital other consumables and homecare consumables.

Regarding Hardware, hospitals delivered a 7% beat versus consensus while homecare disappointed with an -8% miss.

Target $23.11. Equal-weight rating. Industry view: In-line.

Target price is $23.11 Current Price is $26.39 Difference: minus $3.28 (current price is over target).
If FPH meets the Morgan Stanley target it will return approximately minus 12% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $23.06, suggesting downside of -12.6% (ex-dividends)

The company's fiscal year ends in March.

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: -0.2

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

Ord Minnett rates FPH as Lighten (4) -

Fisher & Paykel Healthcare's FY24 result was stronger-than-expected by Ord Minnett driven by higher revenue, good cost control and better-than-expected gross margin expansion.

The underlying gross margin increased by 216bps to 61% due to lower freight rates, manufacturing efficiencies and increased pricing, which more than offset inflationary pressures, explains the analyst.

A NZ23.5c final dividend was declared, a 2% rise on FY23.

Management guides to revenues of between NZ$1.9-2bn in FY25.

The target rises to $23 from $22. The Lighten rating is retained on valuation 

Target price is $23.00 Current Price is $26.39 Difference: minus $3.39 (current price is over target).
If FPH meets the Ord Minnett target it will return approximately minus 13% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $23.06, suggesting downside of -12.6% (ex-dividends)

The company's fiscal year ends in March.

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: -0.2

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

Macquarie rates FSF as Outperform (1) -

Fonterra Shareholders Fund has upgraded FY24 EPS guidance to NZ60-NZ70c from NZ50-NZ65c, driven by resilient margins in the Consumer and Foodservice (C&F) segments at the 3Q24 earings update, Macquarie notes.

For the 9-months ending 3Q24, EBIT came in at NZ$1,440m, down -6% year-on-year, with continued strong cash flow margins offset by weaker ingredients prices.

The broker raises estimates with FY24 EPS up 8% and FY25 EPS forecasts up 2%. Outperform rating unchanged. Target lifted to NZ$4.26 from NZ$4.01.

Current Price is $3.60. Target price not assessed.

The company's fiscal year ends in July.

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

Ord Minnett rates HAS as Hold (3) -

Ord Minnett initiates coverage of rare earth stocks (REO) as the prices are depressed.

Ord Minnett views Hastings Technology Metals as a 'low grade, high-cost" company and emphasies the stock is priced for "failure" alluding to anything else provides upside.

However, the broker also stresses the company is very "hig risk" and could go to nothing with downside risks from dilution due to equity raising for mine funding.

Hold rating with a "stay clear" caveat and 27cent target.

Target price is $0.27 Current Price is $0.24 Difference: $0.03
If HAS meets the Ord Minnett target it will return approximately 13% (excluding dividends, fees and charges).

Market Sentiment: 0.0

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

Shaw and Partners rates IPG as Buy (1) -

Shaw and Partners confirms the FY24 trading update from IPD Group proved in line with the broker's and consensus forecasts and points to a strong 2H24, with EBITDA growth of around 60% (including acquisitions) compared to 23% in the 1H24.

The analyst highlights the positive impact of strategic acquisitions like EX Engineering and CMI Operations, and the merging of the Addelec and Gemtek businesses, substantially boosting the company's EV structure.

No changes have been made to the broker's earnings forecasts. Buy rating and $5.50 target unchanged.

Target price is $5.50 Current Price is $4.53 Difference: $0.97
If IPG meets the Shaw and Partners target it will return approximately 21% (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

Morgans rates JIN as Add (1) -

Morgans highlights the strength in the lottery markets over the 1H2024, with 12 large jackpots over $15m against 7 in the previous corresponding period, including this past week's $150m Powerball draw and the $40m Oz Lotto draw.

Accordingly, the broker has adjusted the large jackpot forecast for both Lottery Corp ((TLC)) and Jumbo Interactive to 60 from 48 in FY2024.

Morgans adjusts earnings forecasts for Jumbo Interactive with EPS for FY24 rising 4% and -0.9% in FY25.

Add rating and the target raised to $19.20 from $18.70.

Target price is $19.20 Current Price is $16.11 Difference: $3.09
If JIN meets the Morgans target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $17.56, suggesting upside of 9.0% (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 LLC as Neutral (3) -

Lendlease Group has begun executing its new strategy by agreeing to sell its US East Coast construction operations to Consigli Construction Co, subject to due diligence and customary conditions, highlights Citi.

The sale includes 45 projects, though the price and other contract terms have not been disclosed.

According to the broker, settlement is expected in 1HFY25 and the company had a $2.6bn construction backlog in the Americas division as of December 2023.

No changes have been made to earnings forecasts.

Citi views the announcement as positive but price details will be essential for investors to gauge how management is doing on achieving the $4.5bn capital raising from divestments.

Neutral rating and $6.90 target unchanged.

Target price is $6.90 Current Price is $6.09 Difference: $0.81
If LLC meets the Citi target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $7.12, suggesting upside of 16.9% (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

Ord Minnett rates LYC as Initiate coverage with Buy (1) -

Ord Minnett initiates coverage on Rare Earths (REO) due to the depressed prices of the stocks.

The broker views Lynas Rare Earths as the "blue-ribbon" company and management has proven resilience to lower costs and raise productivity in the face of years of low prices.

As per the broker, the company has succeeded in becoming the non-Chinese producer of critical rare earths. Buy rating. $8 target.

Target price is $8.00 Current Price is $6.73 Difference: $1.27
If LYC meets the Ord Minnett target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $6.68, suggesting downside of -0.7% (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

Ord Minnett rates MIN as Hold (3) -

Ord Minnett cuts the earnings forecasts "sharply" for  Mineral Resources by -73% and -38% in FY24 and FY25, respectively, due to higher operating costs for iron ore from sticky inflation.

The analyst also revises lower the expectations for spodumene production and the impact of persistently low prices.

Despite the earnings downgrades, the broker points out the cyclical nature of the business means short term volatility in iron ore and lithium prices.

Ord Minnett stresses the $3bn Onslow project (60% owned) has delivered its first iron ore ahead of schedule and the project will ramp to 35mt of capacity by June 2025.

Hold maintained. Target is $67.

Target price is $67.00 Current Price is $73.67 Difference: minus $6.67 (current price is over target).
If MIN meets the Ord Minnett target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $74.71, suggesting upside of 1.4% (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

Ord Minnett rates NEM as Accumulate (2) -

Ord Minnett continues to assess Newmont Corp as "fundamentally undervalued" despite the 43% share price rally since February 2024.

The analyst is looking for production problems to be resolved, which should improve margins and profitability.

The Accumulate rating and $78 target are unchanged.

Target price is $78.00 Current Price is $63.40 Difference: $14.6
If NEM meets the Ord Minnett target it will return approximately 23% (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: 0.6

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

Ord Minnett rates NTU as Initiation of coverage with Hold (3) -

Ord Minnett initiates coverage of rare earth stocks (REO) as the prices are depressed.

The broker initiates coverage of Northern Minerals with a Hold rating and 3.6 cents target price.

The analyst describes Northern Minerals as a "fortune cookie" where it cannot be read until after June 6 where Chinese investors are aiming to join the board and take control of the company at the AGM.

It is unknown whether potential Chinese control of Hastings Rare Earths and Northern Minerals is a threat to supplies for the Iluka Resources ((ILU)) refinery, planned at Eneabba.

Hold. $3.6c target.

Target price is $0.04 Current Price is $0.03 Difference: $0.002
If NTU meets the Ord Minnett target it will return approximately 6% (excluding dividends, fees and charges).

Market Sentiment: 0.0

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

Morgans rates PER as Speculative Buy (1) -

Morgans highlights Percheron Therapeutics has successfully completed recruitment for its pivotal Phase 2b trial in Duchenne Muscular Dystrophy (DMD) with 48 non-ambulant boys enrolled.

This milestone gives certainty to the timeline, the broker suggests, with top-line results expected in December 2024.

The broker notes the potential for increased investor interest and a possible stock re-rating if management delivers a positive result on the Phase 2b DMD trials.

No changes have been made to earnings forecasts. 

The Speculative Buy rating and 23c target are maintained.

Target price is $0.23 Current Price is $0.08 Difference: $0.155
If PER meets the Morgans target it will return approximately 207% (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

Shaw and Partners rates RMS as Buy (1) -

Shaw and Partners investigates the recent application with the Australian Takeovers Panel regarding Westgold Resources' (WGX) acquisition of Karora Resources (KRR) by Ramelius Resources.

The company aims to amend the break fee and challenge Westgold's synergy estimates, potentially disrupting the merger and opening opportunities for Ramelius, highlights the broker.

Ramelius Resources had $407m cash in hand and bullion at the end of the March 2024 quarter.

No changes have been made to the broker's earnings forecasts. 

Buy rating and $2.33 target unchanged.

Target price is $2.33 Current Price is $1.91 Difference: $0.42
If RMS meets the Shaw and Partners target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $2.21, suggesting upside of 15.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.7

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

Ord Minnett rates STG as Speculative Buy (1) -

Ord Minnett assesses the FY24 revenue results for Straker as marginally worse than expectations. Revenue declined -16% on the previous corresponding period, but overall the earnings were in line with forecasts.

The company experienced tough trading conditions over the period and management reduced costs, which helped lift gross margins to around 64%.

Management highlighted trading conditions in FY25 to date are "solid", notes the analyst, and Ai-only transactions with the added option of human verification have been added.

Ord Minnett tweaks its earnings forecasts for FY26. Speculative Buy unchanged and the target raised to 89c from 86c.

Target price is $0.89 Current Price is $0.51 Difference: $0.383
If STG meets the Ord Minnett target it will return approximately 76% (excluding dividends, fees and charges).

The company's fiscal year ends in March.

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 STO as Outperform (1) -

Santos announced the  signing of a 0.4mtpa 10-year LNG offtake agreement with Hokkaido Gas, which reduces the company's spot LNG exposure to 35% from 40% between 2027-2030, Macquarie observes.

The broker expects the contract will act to mitigate risks associated with global LNG capacity additions.

Due to issues with upstream contractors and budget overruns, the capital expenditure for the Papua LNG project has been increased to -US$14bn from -US$11bn, with the final investment decision now delayed to the end of 2025.

Economics for Dorado project have improved, suggests the broker, with a reduction in capital expenditure and acceleration of the timeline to first oil in 1 to 2 years.

Earnings forecasts are tweaked by 1% for FY25, and FY24 is left unchanged notes the broker.

The Outperform rating is retained and the target is lifted 1% to $9.20.

Target price is $9.20 Current Price is $7.63 Difference: $1.57
If STO meets the Macquarie target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $9.01, suggesting upside of 18.1% (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: 0.4

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

Morgans rates TLC as Add (1) -

Morgans highlight the strength in the lottery markets over the 1H2024, with 12 large jackpots over $15m against 7 in the previous corresponding period, including this past weeks $150m Powerball draw and the $40m Oz Lotto draw.

Accordingly, the broker has adjusted the large jackpot forecast for both Lottery Corp and Jumbo Interactive ((JINN) to 60 from 48 in FY2024.

The analyst upgrades EPS forecasts for Lottery Corp by 9.7% in FY24 and reduces by -1.1% for FY25 to account for the strong jackpot backdrop.

The target is raised to $5.60 from $5.40 with an Add rating.

Target price is $5.60 Current Price is $4.86 Difference: $0.74
If TLC meets the Morgans target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $5.41, suggesting upside of 11.3% (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