Australian Broker Call

UBS rates BGA as Neutral (3) -

It looks like Bega Cheese's fortune has improved significantly over the past three months with UBS analysts reporting the weighted basket of exported Dairy commodities has risen to being 20% above the average FY24 level.

For the first time in three years an index for those commodities has moved above the domestic farmgate price that is paid to farmers.The broker reminds investors the consequences for a company such as Bega Cheese can be quite significant.

The last time something similar happened the company's Bulk commodity division operated on EBITDA margins of 8% versus -2% in FY24 and UBS's forecast for a 3% margin in FY25.

The broker's target price has increased to $5.55 from $4.80 but the Neutral rating is retained with the broker awaiting tangible improvement in key financial metrics including return on funds employed.

Plus the share price has already rallied. Forecasts have been upgraded on the basis of the above, including DPS estimates.

Target price is $5.55 Current Price is $5.46 Difference: $0.09
If BGA meets the UBS target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $5.33, suggesting downside of -2.6% (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

UBS rates DEG as Buy (1) -

De Grey Mining announced early-stage results for underground mining at Hemi, UBS notes.

The analyst views the update as indicative of the project's optionality, with high-level estimates of 4-5mtpa and annual production rates of 200-250koz per annum.

Regarding cost and timing, UBS highlights it will require a few years of drilling and studies to progress, but it is one of the "value levers," the broker states, for Northern Star Resources ((NST)).

Buy rated with a $2.20 target price.

Target price is $2.20 Current Price is $1.79 Difference: $0.41
If DEG meets the UBS target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $2.12, suggesting upside of 20.6% (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 DTL as Overweight (1) -

Morgan Stanley views the Microsoft incentive changes as a one-off rebasing of earnings for Data#3.

Management indicated an impact of -3% on gross profit margin if the change had occurred in FY24. No specific FY25 guidance was provided.

The broker lowers EPS forecasts by -3% for FY25 and -8% for FY26, highlighting total incentives were at a record high before the changes, and enterprise incentives had already been declining.

Morgan Stanley foresees market share opportunities as license solution partners are "de-authorised."

The Overweight rating is retained as the stock has de-rated. Industry View: In Line.

Target price falls to $7.90 from $10.

Target price is $7.90 Current Price is $6.45 Difference: $1.45
If DTL meets the Morgan Stanley target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $7.95, suggesting upside of 23.4% (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

Citi rates IGO as Neutral (3) -

Citi acknowledges it has been a challenging year for lithium companies, underperforming the physical commodity. Juniors/developers have declined -70%, with producers down between -40% and -50% year-to-date.

Valuations appear more "reasonable," but the analyst struggles to identify a re-rating catalyst, aside from a post-Chinese New Year restock.

The broker prefers Pilbara Minerals ((PLS)), a net cash producer, for lithium exposure in the ASX200. In small caps, Citi favours Patriot Battery Metals ((PMT)) for its "strategic appeal."

IGO Ltd is rated Neutral and target price slips to $5.30 from $5.70. The broker believes investors should watch IGO as there are some potentially positive "catalysts" which might be forthcoming.

Target price is $5.30 Current Price is $4.90 Difference: $0.4
If IGO meets the Citi target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $5.70, suggesting upside of 16.8% (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 JHX as Neutral (3) -

Citi assesses the change in the Federal Reserve's dot plots to just -50bps of cuts in 2025 for James Hardie Industries and any implications for mortgage rates, suggesting the 30-year mortgage rate may average around 6% through 2025.

The broker believes this increases the likelihood of a slower recovery in James Hardie Industries' main market, repair and remodelling, through FY26.

The stock is Neutral rated with an unchanged $56 target price.

Target price is $56.00 Current Price is $51.03 Difference: $4.97
If JHX meets the Citi target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $59.84, suggesting upside of 17.4% (ex-dividends)

The company's fiscal year ends in March.

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

Citi rates LTR as Upgrade to Neutral from Sell (3) -

Citi acknowledges it has been a challenging year for lithium companies, underperforming the physical commodity. Juniors/developers have declined -70%, with producers down between -40% and -50% year-to-date.

Valuations appear more "reasonable," but the analyst struggles to identify a re-rating catalyst, aside from a post-Chinese New Year restock.

The broker prefers Pilbara Minerals ((PLS)), a net cash producer, for lithium exposure in the ASX200. In small caps, Citi favours Patriot Battery Metals ((PMT)) for its "strategic appeal."

Citi upgrades Liontown Resources to Neutral from Sell, downgrades the target to 60c from 75c, and retains concerns around costs.

Target price is $0.60 Current Price is $0.54 Difference: $0.06
If LTR meets the Citi target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $0.78, suggesting upside of 46.2% (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

Citi rates MIN as Neutral (3) -

Citi acknowledges it has been a challenging year for lithium companies, underperforming the physical commodity. Juniors/developers have declined -70%, with producers down between -40% and -50% year-to-date.

Valuations appear more "reasonable," but the analyst struggles to identify a re-rating catalyst, aside from a post-Chinese New Year restock.

The broker prefers Pilbara Minerals ((PLS)), a net cash producer, for lithium exposure in the ASX200. In small caps, Citi favours Patriot Metals ((PMT)) for its "strategic appeal."

Citi sees a governance overhang for Mineral Resources and a new Chair is anticipated before or at the 2025 AGM.

Target price lifts to $35 from $33 on changes to iron ore price assumptions. Neutral rating unchanged.

Target price is $35.00 Current Price is $33.03 Difference: $1.97
If MIN meets the Citi target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $43.36, suggesting upside of 31.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY25:

Forecast for FY26:

Market Sentiment: 0.2

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

Macquarie rates MVF as Outperform (1) -

Macquarie observes total IVF cycles rose 3.5% in November compared to the previous year, with fresh cycles up 1.7% and frozen cycles increasing 6%.

Approximately 114k carrier screening tests have been conducted since it was added to the medical benefit scheme, with Monash IVF anticipating volume growth from carrier screening.

The broker forecasts 15bps of market share growth, driven by 2H25 gains of 30bps.

Macquarie believes Monash IVF is well positioned to benefit from structural growth and sees upside from genetic testing in the medium term.

Outperform rating and $1.50 target are retained. No changes to earnings forecasts.

Target price is $1.50 Current Price is $1.22 Difference: $0.28
If MVF meets the Macquarie target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $1.45, suggesting upside of 17.1% (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 NEC as Buy (1) -

Ord Minnett has downgraded EPS estimates for Nine Entertainment following a -9% year-on-year decline in the metropolitan TV market, despite favourable annual comparisons.

The broker lowers EPS forecasts by -14% for FY25 and -12% for FY26, resulting in a downward revision of the target price to $1.60 from $1.70.

Advertising continues to face challenges due to changes in media content consumption and macroeconomic headwinds from a higher cost of living.

The Buy rating is retained on a valuation basis and the potential "upside" to the target price.

Target price is $1.60 Current Price is $1.24 Difference: $0.36
If NEC meets the Ord Minnett target it will return approximately 29% (excluding dividends, fees and charges).

Current consensus price target is $1.70, suggesting upside of 35.8% (ex-dividends)

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 PDN as Buy (1) -

In positive news for Paladin Energy, Citi notes the company has received takeover approval for the acquisition of Fission Uranium Corp, with the transaction expected to close in early January.

Paladin will become the third-largest uranium resource in the listed universe of companies, with 544mlb post-acquisition. The Fission acquisition is expected to boost production for the company in a timely manner.

The broker believes listing on the Toronto Stock Exchange will enhance international market exposure.

Citi raises the target price to $13.50 from $11.50 incorporating the share swap deal, whereby Fission shareholders will receive 0.1076 Paladin shares for each Fission share.

Adjusting for the increase in corporate costs, Citi lowers EPS forecasts by -19.8% in 2025 and -27.5% in 2026, including an increase in debt of US$200m.

The stock is seen as offering value at current levels and is Buy rated.

Target price is $13.50 Current Price is $7.81 Difference: $5.69
If PDN meets the Citi target it will return approximately 73% (excluding dividends, fees and charges).

Current consensus price target is $11.88, suggesting upside of 54.3% (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: 1.0

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

Morgan Stanley rates PDN as Overweight (1) -

Paladin Energy announced approval under the Investment Canada Act to acquire Fission Uranium, with the deal set to complete in January 2025.

Morgan Stanley views this as positive news and the removal of an overhang on the stock price. Fission's Patterson Lake South project enhances Paladin's Canadian expansion and accelerates its development profile beyond the Michelin plans.

Paladin has agreed not to use any China-sourced finance to fund Patterson as part of the takeover conditions. The broker notes funding issues for Patterson are not anticipated until 2027, by which time Langer Heinrich restart issues should be resolved and cash flows are in place.

Overweight rated. Target price unchanged at $10.50. Industry view: Attractive.

Target price is $10.50 Current Price is $7.81 Difference: $2.69
If PDN meets the Morgan Stanley target it will return approximately 34% (excluding dividends, fees and charges).

Current consensus price target is $11.88, suggesting upside of 54.3% (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: 1.0

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

Citi rates PLS as Neutral (3) -

Citi acknowledges it has been a challenging year for lithium companies, underperforming the physical commodity. Juniors/developers have declined -70%, with producers down between -40% and -50% year-to-date.

Valuations appear more "reasonable," but the analyst struggles to identify a re-rating catalyst, aside from a post-Chinese New Year restock.

The broker prefers Pilbara Minerals, a net cash producer, for lithium exposure in the ASX200. In small caps, Citi favours Patriot Battery Metals ((PMT)) for its "strategic appeal."

Citi lowers the target price on Pilbara Minerals to $2.40 from $2.90 and notes the CEO purchased $1.1m in stock this week at $2.23.

Neutral rated.

Target price is $2.40 Current Price is $2.13 Difference: $0.27
If PLS meets the Citi target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $2.71, suggesting upside of 30.3% (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 PMT as Buy (1) -

Citi acknowledges it has been a challenging year for lithium companies, underperforming the physical commodity. Juniors/developers have declined -70%, with producers down between -40% and -50% year-to-date.

Valuations appear more "reasonable," but the analyst struggles to identify a re-rating catalyst, aside from a post-Chinese New Year restock.

The broker prefers Pilbara Minerals ((PLS)), a net cash producer, for lithium exposure in the ASX200. In small caps, Citi favours Patriot Battery Metals for its "strategic appeal."

A Buy rating is retained. The broker believes Patriot Battery Metals retains the best greenfields discovery this cycle. Target price 50c.

Target price is $0.50 Current Price is $0.37 Difference: $0.135
If PMT meets the Citi target it will return approximately 37% (excluding dividends, fees and charges).

Current consensus price target is $0.81, suggesting upside of 113.2% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY25:

Forecast for FY26:

This company reports in CAD. 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

UBS rates PMT as Buy (1) -

UBS notes the CA$69m strategic investment from Volkswagen for 100ktpa of spodumene for Patriot Battery Metals. The deal marks Volkswagen's first step into upstream lithium minerals and helps de-risk Patriot Battery Metals' project.

Despite the submission of an Environmental Impact Statement and a definitive feasibility study in September 2025, with the final investment decision expected in 2027, UBS considers Patriot Battery Metals to be "far too cheap."

Buy rated with a 60c target price.

Target price is $0.60 Current Price is $0.37 Difference: $0.235
If PMT meets the UBS target it will return approximately 64% (excluding dividends, fees and charges).

Current consensus price target is $0.81, suggesting upside of 113.2% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY25:

Forecast for FY26:

This company reports in CAD. 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 RDY as Initiation of coverage with Buy (1) -

Ord Minnett initiates coverage of ReadyTech Holdings with a Buy rating and a $3.97 target price, preferring it as an exposure to the enterprise software sector over TechnologyOne ((TNE)).

The analyst believes the ERP market is supported by higher digitalisation rates and globalisation, including increased compliance requirements and security needs.

Cloud ERP is expected to grow at approximately 15% p.a. until the end of the decade. ReadyTech Holdings is preferred on valuation grounds.

Buy rated. Target $3.97.

Target price is $3.97 Current Price is $3.05 Difference: $0.92
If RDY meets the Ord Minnett target it will return approximately 30% (excluding dividends, fees and charges).

Current consensus price target is $4.08, suggesting upside of 31.5% (ex-dividends)

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

Morgan Stanley rates S32 as Overweight (1) -

Morgan Stanley observes road blockages from civil unrest have largely ceased, allowing South32 to progress with the transportation of alumina to Mozal Aluminium from the port.

The company expects alumina stocks to be replenished over the next few days. However, the election of Mozambique's Constitutional Council on December 23 could lead to further unrest, the broker notes.

Morgan Stanley highlights an estimated 8% of earnings will be generated from Mozal in FY25. The smelter directly employs around 2,000 people and indirectly supports approximately 20,000.

Overweight. Target $3.90. Industry View: Attractive.

Target price is $3.90 Current Price is $3.36 Difference: $0.54
If S32 meets the Morgan Stanley target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $4.11, suggesting upside of 23.4% (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

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

Ord Minnett initiates coverage of TechnologyOne with a Hold rating and a $28.44 target price. The broker prefers ReadyTech Holdings ((RDY)) over TechnologyOne.

The analyst believes the ERP market is driven by higher digitalisation rates and globalisation, including increased compliance requirements and security needs.

Cloud ERP is expected to grow at approximately 15% p.a. until the end of the decade. ReadyTech Holdings is preferred on valuation grounds.

Hold rated. Target price: $28.44.

Target price is $28.44 Current Price is $30.22 Difference: minus $1.78 (current price is over target).
If TNE meets the Ord Minnett target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $29.19, suggesting downside of -2.8% (ex-dividends)

Forecast for FY25:

Forecast for FY26:

Market Sentiment: 0.1

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

Macquarie rates VAU as Outperform (1) -

Vault Minerals announced the expansion of the Koth mill to a nameplate capacity of 6mtpa, with commissioning expected in 4Q 2026, Macquarie notes.

The capital cost was confirmed at -$80m with a 15-month construction period, which is nine months later than the analyst's expectations and -$33m worse in capital cost.

The broker notes Vault Minerals retains a robust balance sheet with $523m in cash and bullion at the end of the September quarter.

Target price remains at 57c. Outperform rated.

Target price is $0.57 Current Price is $0.33 Difference: $0.245
If VAU meets the Macquarie target it will return approximately 75% (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 VEE as Initiation of coverage with Buy (1) -

Ord Minnett initiates coverage of Veem with a Buy rating and a $1.90 target price.

The broker highlights Veem is a designer and manufacturer of marine propulsion and stabilisation systems for the luxury motor yacht, fast ferry, commercial workboat, and defence industries.

Following an excellent FY24, the company has downgraded 1H25 earnings expectations, with growth expected to return to historical levels in 2H25, the analyst states.

Ord Minnett believes Veem can achieve over a 6% compound annual growth rate in earnings, supported by submarine and defence services, growth in core markets, and the commercialisation of the inboard propeller, Sharrow.

Buy rated. Target $1.90.

Target price is $1.90 Current Price is $1.24 Difference: $0.66
If VEE meets the Ord Minnett target it will return approximately 53% (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 WDS as Sell (5) -

Citi highlights Woodside Energy and Chevron have agreed to an asset swap. Woodside will acquire Chevron's interest in the North West Shelf (NWS), NWS Oil, and Angel carbon capture and storage.

In return, Chevron will acquire Woodside's interest in Wheatstone and Julimar-Brunello.

The broker estimates the deal is neutral for Woodside's valuation, but a final investment decision on Browse would be earnings-positive due to the tolling revenue.

Citi views the deal as cashflow-positive for Woodside and notes it will result in lower peak gearing of over 300bps.

The analyst raises 2024 earnings estimates by 5% and 2025 forecasts by 9% following an increase in Okha production. 2026 earnings are expected to be 54% higher off a low base from the asset swap. The dividend outlook also improves.

No change to the Sell rating and $23 target price.

Target price is $23.00 Current Price is $23.10 Difference: minus $0.1 (current price is over target).
If WDS 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 $27.63, suggesting upside of 18.0% (ex-dividends)

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: 0.0

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

Macquarie rates WDS as Neutral (3) -

Woodside Energy's agreement for the company to increase its interest in the North West Shelf project to 50%, the NWS Oil project to 66.67%, and Angel carbon capture and storage to 40%, in exchange for its interests in Wheatstone and Julimar-Brunello, is positive, according to Macquarie.

Chevron will pay Woodside US$400m to bridge the valuation gap in the asset swap.

The broker believes the deal simplifies Woodside's business by exiting a non-operated asset while alleviating pressure on the company's balance sheet.

The $27 target price and Neutral rating are maintained.

Target price is $27.00 Current Price is $23.10 Difference: $3.9
If WDS meets the Macquarie target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $27.63, suggesting upside of 18.0% (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: 0.0

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

Ord Minnett rates WDS as Hold (3) -

Ord Minnett believes the asset swap between Woodside Energy and Chevron is strategically sound and will release $400m in cash to Woodside.

Woodside will receive Chevron's 17% interest in the North West Shelf oil and gas project and its 20% stake in Angel carbon capture and storage.

In exchange, Chevron will receive Woodside's 13% stake in Wheatstone and its 65% holding in Julimar-Brunello.

Ord Minnett maintains a Hold rating and a $27.50 target price. No changes to the broker's earnings forecasts.

Target price is $27.50 Current Price is $23.10 Difference: $4.4
If WDS meets the Ord Minnett target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $27.63, suggesting upside of 18.0% (ex-dividends)

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: 0.0

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