Australian Broker Call

Citi rates 29M as Neutral (3) -

Following news that production has been suspended at Capricorn Copper due to wet weather, Citi sees little scope for 29Metals to rebound without news on resumption of the project. However, the broker feels the March quarter is the best period for the disruption to occur, given processing run-rates were already impacted by tailings capacity. 

Operations are expected to be suspended for three to four weeks, and Citi anticipates a more than -$100m cash burn for the full year. 

The Neutral rating is retained and the target price decreases to $1.50 from $2.00.

Target price is $1.50 Current Price is $1.47 Difference: $0.03
If 29M meets the Citi target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $1.45, suggesting upside of 2.8% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: -0.6

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

Macquarie rates 29M as Underperform (5) -

Production and non-essential activity has been put on hold at 29Metals' Capricorn asset following extreme rainfall which totaled 370mm in the first week of March. The company warns  of an extended loss of access to the site by road, which will impact on delivery of production consumables.

While the company has stated it will keep the market informed of any updates to full year guidance, Macquarie has reduced its production expectations and downgraded earnings per share -9% for the year. 

The Underperform rating is retained and the target price decreases to $1.30 from $1.40.

Target price is $1.30 Current Price is $1.47 Difference: minus $0.17 (current price is over target).
If 29M meets the Macquarie target it will return approximately minus 12% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $1.45, suggesting upside of 2.8% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: -0.6

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

Morgan Stanley rates 29M as Underweight (5) -

Extreme rainfall around the Capricorn Copper operations will impact overall production at  29Metals by -24% with a greater impact on profit, notes Morgan Stanley, due to diminished economies of scale.

The company has suspended production and non-essential activities at the site, which may last three to four weeks.

The broker retains its Underweight rating and $1.50 target. Industry view: Attractive.

Target price is $1.50 Current Price is $1.47 Difference: $0.03
If 29M meets the Morgan Stanley target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $1.45, suggesting upside of 2.8% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: -0.6

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

Credit Suisse rates ALX as Underperform (5) -

Potential drivers have adopted a more permanent work from home regimen, which has limited the expected rebound for Dulles Greenway traffic, reports management.

As a result of this shift, Credit Suisse cuts its FY23 Dulles Greenway traffic forecast by around -4%. The $6.00 target and Underperform rating are retained.

The broker also notes there have been more delays to renegotiating with the State of Virginia on tolling and concession period metrics for the motorway.

Target price is $6.00 Current Price is $6.70 Difference: minus $0.7 (current price is over target).
If ALX meets the Credit Suisse target it will return approximately minus 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $6.40, suggesting downside of -5.6% (ex-dividends)

Forecast for FY23:

Forecast for FY24:

Market Sentiment: -0.3

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

Credit Suisse rates CAR as Outperform (1) -

For an asset that has grown at an around 28% compound annual growth rate for earnings, Credit Suisse believes the acquisition price paid by Carsales for an additional 40% of WebMotors is attractive.

According to management, the increase in ownership to 70% from 30% will drive margin expansion after implementation of a range of initiatives. WebMotors' 2022 earnings margin was 40%, well below the Carsales margin of 64%.

Once the broker includes both the acquisition and the associated $500m equity raise into its forecasts, the target price falls to $25.20 from $25.40. Outperform.

Target price is $25.20 Current Price is $22.64 Difference: $2.56
If CAR meets the Credit Suisse target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $25.03, suggesting upside of 10.6% (ex-dividends)

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.7

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

Morgans rates CAR as Hold (3) -

A recent strong performance by 30%-owned Brazilian auto digital marketplace WebMotors has tempted Carsales (believes Morgans) to increase its stake to 70%. 

The acquisition price is around -$353m and Carsales has announced a $500m equity raise to fund the purchase.

The analyst considers the multiple paid is broadly reasonable given growth prospects for the business and certain operational levers Carsales can pull to sustain that growth.

The target rises to $24.40 from $24.30. Hold.

Target price is $24.40 Current Price is $22.64 Difference: $1.76
If CAR meets the Morgans target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $25.03, suggesting upside of 10.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.7

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

Citi rates CCX as Neutral (3) -

City Chic Collective reported its first month of positive web traffic growth since September in February, with traffic up 5% year-on-year. Citi considers website visits an important driver of online sales for City Chic, with online sales accounting for 75% of the retailers total revenue in the last fiscal year. 

The broker does highlight elevated discounting could see web traffic outperform sales in the near-term. 

The Neutral rating and target price of $0.56 are retained.

Target price is $0.56 Current Price is $0.47 Difference: $0.09
If CCX meets the Citi target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $0.60, suggesting upside of 29.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.0

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

Citi rates CXO as Sell (5) -

Having received its first revenue receipts from a shipment received in January, totaling $20m, first concentrate sales for Core Lithium appear imminent, expected in late April. 

On the company's first half, the net loss was anticipated by Citi, with the company reporting a -$9.2m loss. The broker warns a further -$7m loss is expected from capital expenditure overruns. 

The Sell rating and target price of $0.90 are retained.

Target price is $0.90 Current Price is $1.00 Difference: minus $0.1 (current price is over target).
If CXO meets the Citi target it will return approximately minus 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $1.04, suggesting upside of 9.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.0

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

Macquarie rates CXO as Outperform (1) -

With Core Lithium announcing first production from its Finniss project in February, Macquarie expects company focus to be on improving product grades ahead of its first shipment. 

For the broker, pace of the project ramp up is a key risk to its near-term outlook given it is taking place during the wet season. It continues to assume first shipment in the first quarter of FY24. 

On the company's first half, Macquarie notes a narrower than expected loss and in-line free cash flow. The Outperform rating is retained and the target price decreases to $1.30 from $1.50.

Target price is $1.30 Current Price is $1.00 Difference: $0.3
If CXO meets the Macquarie target it will return approximately 30% (excluding dividends, fees and charges).

Current consensus price target is $1.04, suggesting upside of 9.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.0

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

Morgan Stanley rates MQG as Overweight (1) -

Macquarie Group's investor presentation covered the Commodities & Global Markets division on the third day in the US.

Morgan Stanley believes Commodities revenues will continue to be supported by ongoing, structural volatility factors including US pipeline constraints compared to growing gas production, as well as US storage constraints.

The group derives 39% of revenues from the Americas and the analyst expects revenue from the AMEA region will grow from the 28% level across FY20-22.

Overweight and $231 target retained. Industry view: In-Line

Target price is $231.00 Current Price is $190.78 Difference: $40.22
If MQG meets the Morgan Stanley target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $199.13, suggesting upside of 7.8% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.3

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

Ord Minnett rates MYR as Downgrade to Lighten from Hold (4) -

Ord Minnett has a dimmer view on the outlook for consumer demand than the general market and believes current demand for apparel and homewares is unsustainable.

The broker feels Myer's jump in share price after pre-released 1H results yesterday was a reaction to the company's solid balance sheet, which allowed an interim and special dividend of 4cps each.

The analyst also points out sales momentum slowed over January and February and should progressively worsen. The rating is lowered to Lighten from Hold, while the 75c target is maintained.

Target price is $0.75 Current Price is $1.13 Difference: minus $0.38 (current price is over target).
If MYR meets the Ord Minnett target it will return approximately minus 34% (excluding dividends, fees and charges - negative figures indicate an expected loss).

The company's fiscal year ends in July.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: -1.0

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

UBS rates QAN as Downgrade to Neutral from Buy (3) -

While continuing to see upside to its valuation of Qantas Airways, UBS highlights the stock is less than compelling following a 40-50% lift over the last year. The broker expects earnings to prove resilient into the next fiscal year, and feels balance sheet strength is sufficient to support a return of dividends.

The broker does anticipate record capital expenditure is ahead for the airline, following a number of years of below-average investment. It expects Qantas Airways will be looking to replace aircrafts reaching retirement age, alongside growing capacity at a rate of 3.3% per annum, and that the scale of this spend may surprise the market. 

The rating is downgraded to Neutral and the target price decreases to $7.60 from $7.75.

Target price is $7.60 Current Price is $6.80 Difference: $0.8
If QAN meets the UBS target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $7.59, suggesting upside of 16.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.7

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

UBS rates S32 as Buy (1) -

South32's future facing pivot remains on track, says UBS, with the sale of the company's thermal coal operations and acquisition of the Sierra Gorda copper asset both supporting the shift. 

A feasibility study for the addition of a fourth line at the Sierra Gorda site is expected at the end of 2023, potentially lifting throughput to 58m tonnes per annum from 48-49 tonnes per annum.

The Buy rating and target price of $5.70 are retained.

Target price is $5.70 Current Price is $4.48 Difference: $1.22
If S32 meets the UBS target it will return approximately 27% (excluding dividends, fees and charges).

Current consensus price target is $4.96, suggesting upside of 15.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

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

Macquarie rates SDF as Outperform (1) -

In a bid to move further in line with peers, Macquarie has moved to calculate earnings per share forecasts for Steadfast Group based on net profit after tax and amortisation, noting the difference is the exclusion of non-cash amortisation of customer lists.

This sees earnings per share forecasts list 21%, 23% and 22% through to FY25, and 19-22% thereafter. 

The Outperform rating and target price of $6.50 are retained.

Target price is $6.50 Current Price is $5.82 Difference: $0.68
If SDF meets the Macquarie target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $6.34, suggesting upside of 10.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.8

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

Morgan Stanley rates SHL as Overweight (1) -

January Medicare data revealed a further decline in covid testing benefits and a recovery in momentum for Diagnostic Imaging, while IVF fresh cycles maintained elevated levels, explains Morgan Stanley.

The broker retains Sonic Healthcare as its preferred exposure for domestic healthcare services.

The Overweight rating and $34.80 target are unchanged.

Target price is $34.80 Current Price is $33.75 Difference: $1.05
If SHL meets the Morgan Stanley target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $34.81, suggesting upside of 3.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.5

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

Ord Minnett rates TLC as Downgrade to Lighten from Hold (4) -

Ord Minnett lowers its rating for Lottery Corp on valuation after a recent share price rise.

Forecasts are unchanged and the broker's $4.70 target is maintained.

Target price is $4.70 Current Price is $5.32 Difference: minus $0.62 (current price is over target).
If TLC meets the Ord Minnett target it will return approximately minus 12% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.29, suggesting upside of 1.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.5

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

Macquarie rates TWE as Outperform (1) -

Treasury Wine Estates expects an ongoing trend shift towards luxury and premium wines should be beneficial given it has concentrated its portfolio in that area in recent years. Macquarie highlights the company reaffirmed FY25 targets at its recent investor day.

The company intends to further expand into key categories including younger consumers, sparkling wine and rose, and low- to no-alcohol wines.

The Outperform rating and target price of $14.90 are retained. 

Target price is $14.90 Current Price is $13.35 Difference: $1.55
If TWE meets the Macquarie target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $14.27, suggesting upside of 9.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.4

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

Morgan Stanley rates TWE as Overweight (1) -

Treasury Wine Estates reiterated 2025 financial targets at its 2023 investor day.

Morgan Stanley notes other themes were explored including product innovation and bringing new customers into the wine category, as reflected by brand innovation in 19 Crimes and One by Penfolds.

The Overweight rating and $15.40 target are maintained. Industry view: In-line.

Target price is $15.40 Current Price is $13.35 Difference: $2.05
If TWE meets the Morgan Stanley target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $14.27, suggesting upside of 9.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.4

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

Citi rates XRO as Buy (1) -

Citi considers Xero's announced intention to reduce its headcount by -15% as an obvious approach for the company given growth is expected to slow over the coming year. Given average employee spend, the broker is expecting this to result in a total operational expenditure reduction of -$115m.

The broker anticipates Xero can deliver an earnings compound annual growth rate above 35% over the next three years, reflecting 19% revenue growth. 

The Buy rating is retained and the target price increases to $105.70 from $92.40.

Target price is $105.70 Current Price is $87.00 Difference: $18.7
If XRO meets the Citi target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $88.76, suggesting upside of 2.3% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY23:

Forecast for FY24:

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 XRO as Neutral (3) -

Xero has announced a cost reduction program, targeting a reduction of operational expenditure in FY24 to equate to 75% of revenues. As noted by Macquarie, this compares to 80-85% in the current fiscal year. 

While the company has guided to cost reductions to be enacted across multiple disciplines and geographies, Macquarie anticipates a majority will come from international business. 

The Neutral rating is retained and the target price increases to $90.00 from $80.00.

Target price is $90.00 Current Price is $87.00 Difference: $3
If XRO meets the Macquarie target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $88.76, suggesting upside of 2.3% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY23:

Forecast for FY24:

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

Morgans rates XRO as Add (1) -

The new aim to target profitable growth by newly-arrived CEO Sukhinder Singh Cassidy should result in higher free cashflow and profits in FY24 and beyond, believes Morgans.

The focus has moved to reducing costs and moving to growth at a reasonable price (GARP) from growth at any price (GAAP), which the analyst feels will attract a broader range of investors. The headcount will be cut by -700-800 roles or -15%.

The broker considers these changes mark a strategic turning point for the business and slashes its expense forecast by -10%,which results in its profit forecast rising by 130% to $125m in FY24.

The target jumps to $97 from $87. Add.

Target price is $97.00 Current Price is $87.00 Difference: $10
If XRO meets the Morgans target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $88.76, suggesting upside of 2.3% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY23:

Forecast for FY24:

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

Ord Minnett rates XRO as Downgrade to Sell from Lighten (5) -

Ord Minnett downgraded its rating for Xero to Sell from Lighten on valuation after yesterday's strong share price rise.

Forecasts are unchanged and the broker's $54 target is retained.

Note: the downgrade looks more dramatic in the FNArena database as Ord Minnett formerly sourced research from JP Morgan, which previously had an Accumulate rating.

Target price is $54.00 Current Price is $87.00 Difference: minus $33 (current price is over target).
If XRO meets the Ord Minnett target it will return approximately minus 38% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $88.76, suggesting upside of 2.3% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY23:

Forecast for FY24:

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

UBS rates XRO as Neutral (3) -

Xero has announced an intended reduction in its workforce of -15%, or around 700-800 roles, in a move UBS finds to be a positive indicator that the company is focusing on balancing growth and productivity ahead of uncertain macro conditions. 

Alongside a redesign of the company's technology function flagged for the upcoming quarter, which offers potential improved efficiencies, this sees the broker lift its earnings forecasts by an  average of 17% through to FY26. 

The Neutral rating is retained and the target price increases to $90.85 from $73.65.

Target price is $90.85 Current Price is $87.00 Difference: $3.85
If XRO meets the UBS target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $88.76, suggesting upside of 2.3% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY23:

Forecast for FY24:

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