Australian Broker Call

Morgan Stanley rates A2M as Initiation of coverage with Equal-weight (3) -

Morgan Stanley initiates research coverage on a2 Milk Co with an Equal-weight rating and $5.90 target.

Significant risks include the challenging China infant milk formula (IMF) market (low birth rates and market volatility), supply chain stability and a competitive environment, suggest the analysts.

The broker believes achieving significant market share gains in the IMF market, the key source of growth, will be difficult.

More positively, the company has outperformed, becoming the No 5 China IMF player in FY24, with double-digit growth in China Label stage 1 IMF, explains Morgan Stanley. It's also felt the current valuation post a share price de-rating factors in material risks.

Target price is $5.90 Current Price is $5.64 Difference: $0.26
If A2M meets the Morgan Stanley target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $6.25, suggesting upside of 11.0% (ex-dividends)

The company's fiscal year ends in June.

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: 0.4

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

Bell Potter rates AHL as Buy (1) -

Bell Potter assesses Adrad's FY24 as "ordinary", impacted by two events including a product upgrade program with around -$1.5m in costs and a "customer project slippage", resulting in lower earnings for the heat transfer solutions business.

The analyst believes the outlook for FY25 is considerably better with growth in revenue of 6% forecast and EBITDA advancing 10% at the reported level.

Target price unchanged at $1.12 with a Buy rating maintained. The AGM is anticipated in Oct/Nov with no date announced yet.

Target price is $1.12 Current Price is $0.82 Difference: $0.3
If AHL meets the Bell Potter target it will return approximately 37% (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

Morgan Stanley rates CHC as Overweight (1) -

Hostplus and Charter Hall Retail REIT -each 50% owners in a Charter Hall vehicle- have made an off-market bid for Hotel Property Investments ((HPI)) at $3.65/share. The bid vehicle already has a 14.7% stake in the target.

Morgan Stanley suggests the deal would cease to be EPS accretive for Charter Hall Retail REIT at  between $4.15-4.25 per share.

At $3.65/share, gearing would lift to 37.5%. and management would need to sell around -$195m of assets to bring gearing back to the mid-point of the targeted range, explain the analysts.

Morgan Stanley highlights Charter Hall has previously shown discipline in walking away from deals, demonstrating the group's discipline when allocating its investors' capital.

Overweight rating. Target $15.80. Industry view: In-Line. 

Target price is $15.80 Current Price is $15.84 Difference: minus $0.04 (current price is over target).
If CHC meets the Morgan Stanley target it will return approximately minus 0% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $14.62, suggesting downside of -10.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY25:

Forecast for FY26:

Market Sentiment: 0.5

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

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

Hostplus and Charter Hall Retail REIT -each 50% owners in a Charter Hall vehicle- have made an off-market bid for Hotel Property Investments ((HPI)) at $3.65/share. The bid vehicle already has a 14.7% stake in the target.

Morgan Stanley suggests the deal would cease to be EPS accretive for Charter Hall Retail REIT at  between $4.15-4.25 per share.

At $3.65/share, gearing would lift to 37.5%. and management would need to sell around -$195m of assets to bring gearing back to the mid-point of the targeted range, explain the analysts.

Equal-weight. Target $3.88. Industry view: In Line.

Target price is $3.88 Current Price is $3.59 Difference: $0.29
If CQR meets the Morgan Stanley target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $3.75, suggesting upside of 3.6% (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

Macquarie rates IFT as No Rating (-1) -

Infratil, which owns 51% of Manawa Energy, has thrown support behind NZ-lisited Contact Energy's proposed acquisition of Manawa (also NZ-listed). Fellow 26.9% shareholder TECT also approves, lifting the combined approval above the 75% threshold, notes Macquarie.

Contact Energy's total offer price is NZ$5.95ps (19% cash/81% scrip) or a 48% premium to the most recent closing share price.

Due to research restrictions, Macquarie does not currently have a rating or target for Infratil.

Current Price is $11.26. Target price not assessed.

The company's fiscal year ends in March.

Forecast for FY25:

Forecast for FY26:

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

Bell Potter rates IMU as Speculative Buy (1) -

Bell Potter considers the interim trial data post 12-month ownership of Azer-cel as positive and results are "encouraging" in the most aggressive type of Non-Hodgkin Lymphoma, where there is no established standard of care for sufferers.

The analyst highlights the initial safety data were positive with the trial patients reporting low levels of cytokine release syndrome which is reported as typical of CAR-T therapy. The effects were noted as "transitory".

An additional 1-16 patients are expected to be enrolled in cohort B with a possible interim update to completion of the trial in 2025.

Speculative Buy rating remains. Target price slips to 10c from 15c.

Target price is $0.10 Current Price is $0.05 Difference: $0.05
If IMU meets the Bell Potter target it will return approximately 100% (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

Morgan Stanley rates JLG as Overweight (1) -

In a further review of Johns Lyng's FY24 result, Morgan Stanley highlights the -7.5% miss on the key Business as Usual (BAU) revenues ex Commercial Construction.

The analysts suggest inflection catalysts are likely more than six months away. It's felt the market is wanting for evidence that IB&RS BAU specifically is on track to deliver FY25 guidance.

Overweight. The target is slashed to $4.40 from $7.20. Industry view: In-Line.

Target price is $4.40 Current Price is $3.42 Difference: $0.98
If JLG meets the Morgan Stanley target it will return approximately 29% (excluding dividends, fees and charges).

Current consensus price target is $4.67, suggesting upside of 39.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY25:

Forecast for FY26:

Market Sentiment: 0.6

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

Macquarie rates KAR as Outperform (1) -

Macquarie slightly lowers its FY24 Who Dat production forecast after assuming a two-week (Karoon Energy expects one week) outage due to Hurricane Francine.

Separately, the broker notes Bauna production is recovering from July disruptions and notes life extension work will be a key value driver.

The Outperform rating and $2.15 target are unchanged.

Target price is $2.15 Current Price is $1.44 Difference: $0.71
If KAR meets the Macquarie target it will return approximately 49% (excluding dividends, fees and charges).

Current consensus price target is $2.32, suggesting upside of 56.5% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY24:

Forecast for FY25:

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: 0.8

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

Morgans rates MGH as Add (1) -

Bell Potter assesses the industrials FY24 results with a few key takeaways.

The broker likes alternative asset managers growing funds under management and materials business growing earnings, in an ever-declining investable universe of stocks.

Considering the expected total shareholder return, recent share price performance and valuations, Bell Potter's key stock picks are Regal Partners ((RPL)), Qualitas ((QAL)) and Maas Group Holdings.

The Add rating and $5.20 target for Maas Group are maintained.

Target price is $5.20 Current Price is $4.55 Difference: $0.65
If MGH meets the Morgans target it will return approximately 14% (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 MIN as Buy (1) -

Following a conference call with management at Mineral Resources, Citi updates yesterday's research.

After the haul road sell down, the broker notes management has realised 100% ownership of infrastructure is not required.

Also, Onslow is performing to the expected ramp-up profle, according to the company.

The Buy rating and $50 target are unchanged.

The FNArena summary of Citi's prior research follows.

As anticipated by Citi, the FIRB has approved the $1.3bn sell down of the Onslow iron ore haul road, and Mineral Resources is expected to receive the first $1.1bn cash payment this month.

In a further business update, management expects to ship an annualised 8.64mt in September which bodes well for FY25 guidance, suggest the analysts.

In other positives, management will reduce by -$180m the total capex of $1,945m previously planned. Opex is also lowered by -$120m, which represents around 3% of Citi's prior forecast.

Target price is $50.00 Current Price is $35.12 Difference: $14.88
If MIN meets the Citi target it will return approximately 42% (excluding dividends, fees and charges).

Current consensus price target is $52.93, suggesting upside of 38.8% (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

Morgan Stanley rates MIN as Overweight (1) -

Morgan Stanley keeps its Overweight rating for Mineral Resources noting the stock is cheap and offers material upside for value investors with a long-term horizon.

The broker sees no requirement for an equity raise unless both iron ore and lithium prices experience further significant price falls simultaneously, as management still has more levers to pull on opex and capex.

Target $70. Industry View: Attractive.

Target price is $70.00 Current Price is $35.12 Difference: $34.88
If MIN meets the Morgan Stanley target it will return approximately 99% (excluding dividends, fees and charges).

Current consensus price target is $52.93, suggesting upside of 38.8% (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

Ord Minnett rates MIN as Accumulate (2) -

Ord Minnett highlights Mineral Resources received Foreign Investment Review Board permission to divest a 49% stake in Onslow iron ore for $1.3bn to Morgan Stanley Infrastructure Partners.

Additionally, the company announced capex and operating cost reductions, all of which will assist the balance sheet as cashflows are managed for the prolonged "slump" in lithium prices.

The broker was reassured by commentary from the CEO about the strength of the balance sheet with minimal covenants on US bonds and additional scope to improve liquidity.

Accumulate rating with $56.50 target price.

Target price is $56.50 Current Price is $35.12 Difference: $21.38
If MIN meets the Ord Minnett target it will return approximately 61% (excluding dividends, fees and charges).

Current consensus price target is $52.93, suggesting upside of 38.8% (ex-dividends)

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

Macquarie rates NEM as Outperform (1) -

The sale of Telfer/Havieron project is the first move in Newmont Corp's US$2bn divestiture program and, in Macquarie's view, supports the case for the US$1b buyback to be fully deployed. The analyst now assumes the full $1bn buyback occurs before the end of 2025.

Newmont has agreed to sell both Telfer and the Havieron gold-copper project for up to US$475m.

After assuming no more production volumes from Telfer, management lowers group production guidance by -3% to 6,750koz.

The broker's target falls by -2% to $83 as the US$1.2bn net asset value (NAV) for Telfer/Havieron is replaced by US$0.4bn in consideration value. Outperform.

Target price is $83.00 Current Price is $76.84 Difference: $6.16
If NEM meets the Macquarie target it will return approximately 8% (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: 0.9

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

Citi rates NSR as Buy (1) -

National Storage has issued $300m of exchangeable notes at a coupon of 3.625% compared to current weighted average cost of funding of 5.14% and Citi analysts report this results in an estimated annualised funding cost reduction of some -$4.5m from diversifying funding sources.

Citi estimates this to result in an annualised earnings growth contribution of 2.7% off the FY24 underlying EPS and FFO base.

The broker has thus increased FY24, FY25 and FY26 underlying EPS estimates by 1.8%, 2.5% and 2.7% respectively on reduced finance costs from subordinated issuance. Buy.

Target price is $2.70 Current Price is $2.45 Difference: $0.25
If NSR meets the Citi target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $2.42, suggesting upside of 0.7% (ex-dividends)

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

Ord Minnett rates NXD as Speculative Buy (1) -

The government's student caps for NextEd Group have come in below Ord Minnett's expectations with the vocational education cap for the company down -45% against 2023.

The higher education cap has been reduced by -42% versus 2023.

Accordingly, the broker revises earnings forecasts and FY26 EBITDA falls by -13%.

Target price declines to 30c from 50c. Speculative Buy rating unchanged.

Target price is $0.30 Current Price is $0.11 Difference: $0.19
If NXD meets the Ord Minnett target it will return approximately 173% (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

Morgan Stanley rates PDN as Overweight (1) -

Accelerating the expansion into Canada, Paladin Energy is this month set to acquire Fission Uranium which owns the Patterson Lake South project. Paladin will now become an around 11.5mlbpa (attributable) multi-mine operator.

This move will result in multi-asset production faster than Paladin progressing its own Michelin project, note the analysts, given the lengthy approval process in Canada. Also, Patterson has higher-grade uranium, which could lead to lower costs, suggests the broker.

The target falls to $12.00 from $16.65 despite Fission contributing $2.40 after the broker updates the valuation for Langer Heinrich following the new technical study. Industry view: Attractive.

Target price is $12.00 Current Price is $8.97 Difference: $3.03
If PDN meets the Morgan Stanley target it will return approximately 34% (excluding dividends, fees and charges).

Current consensus price target is $14.93, suggesting upside of 51.7% (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

Morgans rates PIQ as Downgrade to Reduce from Speculative Buy (5) -

Morgans considers there are no penalties for the cancellation of Proteomics International Laboratories licensing agreement with Sonic Healthcare USA ((SHL)) to distribute its DKD test because of delays and performance targets not being achieved.

Until a commercialisation pathway is established, the broker is happy to "avoid" the company.

The stock is downgraded to Reduce from Speculative Buy. Target price slashed to 50c from 99c.

Target price is $0.50 Current Price is $0.70 Difference: minus $0.2 (current price is over target).
If PIQ meets the Morgans target it will return approximately minus 29% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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

Morgans rates QAL as Add (1) -

Bell Potter assesses the industrials FY24 results with a few key takeaways.

The broker likes alternative asset managers growing funds undermanagement and materials business growing earnings, in an ever-declining investable universe of stocks.

Considering the expected total shareholder return, recent share price performance and valuations, Bell Potter's key stock picks are Regal Partners, Qualitas and Maas Group Holdings ((MGH)).

Add rating with a $3.20 target price.

Target price is $3.20 Current Price is $2.30 Difference: $0.9
If QAL meets the Morgans target it will return approximately 39% (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

Bell Potter rates RPL as Buy (1) -

Bell Potter assesses the industrials FY24 results with a few key takeaways.

The broker likes alternative asset managers growing funds undermanagement and materials business growing earnings, in an ever-declining investable universe of stocks.

Considering the expected total shareholder return, recent share price performance and valuations, Bell Potter's key stock picks are Regal Partners, Qualitas ((QAL)) and Maas Group Holdings ((MGH)).

An Add rating for Regal Partners is retained with a $4.30 target price. The key factor for earnings, explains the broker, is advancing funds under management.

Target price is $4.30 Current Price is $3.25 Difference: $1.05
If RPL meets the Bell Potter target it will return approximately 32% (excluding dividends, fees and charges).

Current consensus price target is $4.30, suggesting upside of 27.2% (ex-dividends)

The company's fiscal year ends in December.

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 SDR as Overweight (1) -

SiteMinder makes it onto Morgan Stanley's list of key small/mid-cap ideas where the broker has high conviction on earnings and outlook following the reporting season.

The broker highlights the company's sales growth and outlook have remained resilient despite a softening for the global travel demand outlook.

An accelerating number of new product releases should drive higher customer retention and boost gross margins, suggest the analysts.

The Overweight rating and $6.80 target are unchanged. Industry view: In-Line. 

Target price is $6.80 Current Price is $4.88 Difference: $1.92
If SDR meets the Morgan Stanley target it will return approximately 39% (excluding dividends, fees and charges).

Current consensus price target is $6.73, suggesting upside of 36.0% (ex-dividends)

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