Australian Broker Call

Macquarie rates AD8 as Downgrade to Underperform from Neutral (5) -

Macquarie notes product mix is a material near-term driver for Audinate Group, with embedded software gross profit per unit suggesting headwinds and a recovery in Ultimo diluting revenue drivers.

The broker highlights the company controlled costs in a softer demand environment but the Rule of 40 still declined to -67% in 1H25. The broker expects soft demand to persist.

The broker cut the FY25 EPS forecast by -2% and FY26 by -27%. Target price drops to $6.30 from $8.70, and the rating is downgraded to Underperform from Neutral.

Target price is $6.30 Current Price is $6.81 Difference: minus $0.51 (current price is over target).
If AD8 meets the Macquarie target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $9.41, suggesting upside of 44.8% (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

Bell Potter rates ALK as Buy (1) -

Alkane Resources' 1H25 revenue was in line with Bell Potter's forecast but profit before tax missed due to higher amortisation charges. The broker increased depreciation and amortisation forecasts for FY25-26.

The broker also cut the FY27 production forecast to 99koz from 105koz after factoring in a six-month delay to the start of mining from the San Antino open pits at the Tomingley gold operations.

Target price cut to $1.20 from $1.25. Buy rating remains.

The broker maintains Alkane Resources is undervalued citing the valuation change for its Boda-Kaiser gold/copper project, given the spot gold price of $4,640/oz is significantly higher than $3,500/oz in the July 2024 scoping study.

Target price is $1.20 Current Price is $0.60 Difference: $0.605
If ALK meets the Bell Potter target it will return approximately 102% (excluding dividends, fees and charges).

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

Bell Potter rates ASB as Buy (1) -

Austal's completed $200m institutional placement at $3.80/share and will undertake up to $20m share purchase plan, both non-underwritten. The funds will be used for the expansion of the shipyard in Alabama where the capex is estimated to be -US$300m.

Bell Potter notes the company also announced a sell-down by former chairman John Rothwell of $50m, with share allocations beyond $200m used to complete the process.

The broker made upward revisions to capex forecasts which together with the dilutive effect of equity raise (including the yet-to-be-completed share purchase plan) drove -a 7% decline in the FY25 EPS forecast and -15% in FY26.

Target price reduces to $4.45 from $4.70. Buy retained.

Target price is $4.45 Current Price is $3.51 Difference: $0.94
If ASB meets the Bell Potter target it will return approximately 27% (excluding dividends, fees and charges).

Current consensus price target is $4.50, suggesting upside of 21.3% (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

Shaw and Partners rates AVL as Buy (1) -

Australian Vanadium's 1H results aligned with expectations held by Shaw and Partners.

The after-tax loss of -$6.1m is irrelevant, in the broker's view, prior to development of an end-to-end grid-scale Australian battery industry.

The analysts reiterate the scale of the opportunity ahead of the company is "massive".

The Buy, High Risk rating and 6 cent target are unchanged.

Target price is $0.06 Current Price is $0.01 Difference: $0.049
If AVL meets the Shaw and Partners target it will return approximately 445% (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

Bell Potter rates CRD as Speculative Buy (1) -

The Indonesian ministry has directed PT PLN Engi Primer Indonesia to finalise a gas sales agreement with Conrad Asia Energy for 100% offtake of Mako gas into the domestic market.

Bell Potter highlights this is a better deal for Conrad than the previous gas sales agreements, making a pathway to a final investment decision (mid-2025) easier.

The broker also notes Indonesia's focus on securing domestic gas bodes well for demand and Conrad's broader portfolio.

The broker cut target price to $1.60 from $1.90 pm on delays to final investment decision and development timing. Speculative Buy rating remains.

Target price is $1.60 Current Price is $0.80 Difference: $0.8
If CRD meets the Bell Potter target it will return approximately 100% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

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

Bell Potter rates ELD as Buy (1) -

Bell Potter highlights drivers for Elders' core business looked stronger in 1Q24 than the year before, with industry livestock turnoff up 68% y/y and staying elevated this quarter. Active ingredient and crop nutrient values are also tracking ahead of the broker's expectations.

The broker incorporated agency drivers into the forecasts and also pushed back settlement timing for the Delta Agribusiness acquisition.

This pushed FY25 EPS forecast lower by -4% and FY26 by -2%. Target price cut to $9.40 from $9.45 and Buy retained.

Target price is $9.40 Current Price is $6.91 Difference: $2.49
If ELD meets the Bell Potter target it will return approximately 36% (excluding dividends, fees and charges).

Current consensus price target is $9.42, suggesting upside of 36.1% (ex-dividends)

The company's fiscal year ends in September.

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

Ord Minnett rates FMG as Buy (1) -

Ord Minnett's discussions with Fortescue have reaffirmed capital expenditure and mid-term decarbonisation targets for 2025, despite operational expenditure pressures from energy and technology investments.

Management emphasised disciplined energy investments and a new revenue stream from decarbonisation technologies.

The company dismissed concerns over Simandou and China’s steel production cuts, highlights the broker, maintaining a positive outlook with expected price support above US$90 per tonne for 2025.

Energy investments are progressing cautiously, with some US projects scaled back due to regulatory uncertainties, observes the analyst. 

Decarbonisation efforts continue, with Fortescue Zero technologies generating US$90m in revenue Ord Minnett retains a Buy rating and $21 target.

Target price is $21.00 Current Price is $15.93 Difference: $5.07
If FMG meets the Ord Minnett target it will return approximately 32% (excluding dividends, fees and charges).

Current consensus price target is $18.16, suggesting upside of 14.8% (ex-dividends)

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: -0.1

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

Bell Potter rates IMD as Hold (3) -

Bell Potter's proxy indicator for exploration spending for gold and copper points to a 10.9% increase in 2025 vs a 5.1% rise in 2024. The broker estimates this could push up revenue for Imdex in 2025.

The broker highlights R6M Junior equity raisings increased 53% y/y in February, noting Juniors account for 15% of the company's revenue base through the cycle.

Target price rises to $2.75 from $2.70 on an optimistic outlook for 2025 exploration spend. Hold rating maintained.

Target price is $2.75 Current Price is $2.91 Difference: minus $0.16 (current price is over target).
If IMD meets the Bell Potter target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.93, suggesting upside of 1.7% (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

Ord Minnett rates MEI as Speculative Buy (1) -

Meteoric Resources' updated mineral resource estimate for Caldeira grew by 50% to 1.1bn tonnes at 2,413 parts per million (ppm), with the increase driven by drilling in three northern licences, explains Ord Minnett.

The broker's focus remains on funding the pre-feasibility and definitive feasibility studies rather than expanding resources.

The company has yet to report high-grade results from two other leases, Barra do Pacu and Agostinho, which could add further upside, according to the analysts. The pre-feasibility study is expected in the June quarter of 2025, which could act as a catalyst.

Cash reserves stood at $27m at the end of December, but with a spending rate of -$6-8m per quarter and additional commitments such as a demonstration plant in Brazil, Ord Minnett has concerns about funding before the DFS is completed.

The Speculative Buy rating and 20c target price are retained.

Target price is $0.20 Current Price is $0.07 Difference: $0.135
If MEI meets the Ord Minnett target it will return approximately 208% (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 MQG as Overweight (1) -

From day three of Macquarie Group's EMEA tour, Morgan Stanley highlights Macquarie Asset Management (MAM) is expected to be a key driver of the group's growth, particularly in the EMEA region.

MAM’s private credit assets under management (AUM) and equity to deploy in EMEA have grown to $31bn from $16bn in 2021, notes the broker.

The green energy business is accelerating its transition to an asset manager model, explain the analysts, with global energy transition funds under management rising to $19bn from $5bn in 2022.

The Overweight rating and $253 target are retained. The industry view remains In-Line.

Target price is $253.00 Current Price is $199.09 Difference: $53.91
If MQG meets the Morgan Stanley target it will return approximately 27% (excluding dividends, fees and charges).

Current consensus price target is $225.71, suggesting upside of 14.7% (ex-dividends)

The company's fiscal year ends in March.

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

Citi rates ORI as Neutral (3) -

Citi analysts report Orica's Investor Day provided a deep dive into the company's three business segments, which underpinned a more upbeat view on the company's outlook.

The broker thinks it is reasonable to assume Orica is pursuing value over volumes in the blast design and execution business, while the Terra Insights acquisition is expected to improve the robustness of the service offering for geosolutions.

In contrast, the move into the production phase, while potentially a larger segment than exploration, is also more challenging and is not viewed as a near-term investing catalyst for the stock, the analyst notes.

The broker also highlights additional clarification of 1H25 results ahead of expectations, with around a 45% skew to the half.

Neutral rated with a $19 target price.

Target price is $19.00 Current Price is $16.68 Difference: $2.32
If ORI meets the Citi target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $20.90, suggesting upside of 25.1% (ex-dividends)

The company's fiscal year ends in September.

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

Macquarie rates ORI as Outperform (1) -

Orica announced a $400m or 5% on-market share buyback beginning March 28 which was consistent with Macquarie's view.

The broker hasn't incorporated the buyback into forecasts but expects it to be 2.5% EPS accretive. The broker also sees the buyback lifting FY25-26 gearing estimates to 1.6x/1.4x respectively, within the new leverage policy target of 1.25-2.0x (ex leases). 

The broker suggests the company is well-placed to manage tariff risks with a global manufacturing and sourcing network.

Target price of $20.91 and Outperform rating maintained.

Target price is $20.91 Current Price is $16.68 Difference: $4.23
If ORI meets the Macquarie target it will return approximately 25% (excluding dividends, fees and charges).

Current consensus price target is $20.90, suggesting upside of 25.1% (ex-dividends)

The company's fiscal year ends in September.

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

Morgan Stanley rates ORI as Overweight (1) -

Orica’s investor day reaffirmed Morgan Stanley's expectations of strong earnings growth supported by a $400m buyback and a shift in capital management towards a leverage target from a gearing target.

Management maintained the 40-70% payout ratio but does not expect to generate franking credits until 2027.

Growth from Beyond Blasting is expected to drive future earnings, highlights the broker, with management targeting 50% of EBIT from this segment.

Digital Solutions is also projected to grow at a low double-digit annual rate, while Specialty Mining Chemicals is expected to see mid-single-digit growth.

Orica reported a strong start to the year, assesses the broker, reinforcing expectations of earnings growth for the upcoming result on 8 May.

It's felt the company is well-positioned due to favourable industry fundamentals and strong demand in mining markets.

Morgan Stanley maintains an Overweight rating, noting a compelling valuation, with a price target of $22.50. Industry View: In-Line. The company remains the broker's preferred Industrials pick.

Target price is $22.50 Current Price is $16.68 Difference: $5.82
If ORI meets the Morgan Stanley target it will return approximately 35% (excluding dividends, fees and charges).

Current consensus price target is $20.90, suggesting upside of 25.1% (ex-dividends)

The company's fiscal year ends in September.

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

Morgans rates ORI as Add (1) -

Orica’s trading update revealed a stronger-than-expected outcome for its Blasting Solutions business reflecting a solid uptake of its premium products and services, notes Morgans.

Orica also benefited from improved recontracting and up to $15m of carbon credits.

The company announced an on-market share buyback of up to $400m, reflecting confidence in its strong balance sheet, suggest the analysts.

The broker highlights Orica’s leverage to attractive industry fundamentals, strong earnings growth, and a market-leading position.

Morgans retains an Add rating. The target rises to $20.10 from $19.72.

Target price is $20.10 Current Price is $16.68 Difference: $3.42
If ORI meets the Morgans target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $20.90, suggesting upside of 25.1% (ex-dividends)

The company's fiscal year ends in September.

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

Ord Minnett rates ORI as Buy (1) -

Orica has announced a $400m on-market buyback starting on March 28, aiming for completion within twelve months.

The buyback with a pre-tax cost of debt between 5-7%, could enhance earnings per share by 1-2%, according to Ord Minnett.

Management's first-half earnings (EBIT) guidance of $468m is ahead of consensus estimate of $440m. Guidance is supported by favourable turnarounds, new assets coming online, and lower-than-expected weather impacts, notes the broker.

The Digital, Blasting, and Specialty Chemicals divisions are performing above Ord Minnett's expectations.

Ord Minnett retains a Buy rating and $22 target.

Target price is $22.00 Current Price is $16.68 Difference: $5.32
If ORI meets the Ord Minnett target it will return approximately 32% (excluding dividends, fees and charges).

Current consensus price target is $20.90, suggesting upside of 25.1% (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

Macquarie rates PMV as Neutral (3) -

Ahead of Premier Investments' 1H25 result, Macquarie has updated forecasts to reflect the sale of Apparel brands in exchange for shares in Myer ((MYR)).

The broker removed Just Group forecasts from 2H25 earnings, with 2H forecasts including only Peter Alexandar and Smiggle, both higher-margin brands.

The broker's FY26 gross margin forecasts rise to 67.2% from 62%, and EBIT margins increase to 25.4% from 18.1%.

EPS estimates fall by -12.3% in FY26 and -24.3% in FY26, with only 2H of FY25 impacted by the sale of Apparel Brands.

Target price drops to $21.60 from $29.00. Neutral maintained.

Target price is $21.60 Current Price is $21.31 Difference: $0.29
If PMV meets the Macquarie target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $28.29, suggesting upside of 35.9% (ex-dividends)

The company's fiscal year ends in July.

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

Ord Minnett rates RMS as Downgrade to Accumulate from Buy (2) -

Ramelius Resources’ new mine plan for Mt Magnet disappointed the market, notes Ord Minnett, with a weaker-than-expected outlook for production, costs, and capital expenditure.

These outcomes more than offset longer-term improvements expected beyond FY32, suggests the analysts.

The weaker outlook was driven by a slower-than-expected ramp-up of the Eridanus open-pit cutback at higher costs, explains the broker.

It's felt a declining production profile from FY26 to FY31 increases pressure to pursue inorganic growth opportunities. Ord Minnett lowers its target to $2.35 from $2.90 and downgrades to Accumulate from Buy.

Target price is $2.35 Current Price is $2.11 Difference: $0.24
If RMS meets the Ord Minnett target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $2.45, suggesting upside of 13.8% (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 WBC as Underweight (5) -

Morgan Stanley has an array of reasons for its Underweight rating on Westpac, including higher execution risk in 2025, below-system mortgage growth, emerging margin headwinds, and potential for higher-cost growth.

The broker also highlights unquantified and long-dated benefits from Project UNITE, less conviction on capital management, a shift in sentiment, and elevated trading multiples.

While the analysts also acknowledge positive factors such as improved banking performance, deposit repricing benefits, and an active buyback program, they see limited upside due to the high valuation and lack of near-term catalysts.

The target falls to $27.30 from $29.20. Underweight. Industry View: In-Line.

Target price is $27.30 Current Price is $30.07 Difference: minus $2.77 (current price is over target).
If WBC meets the Morgan Stanley target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $29.40, suggesting downside of -0.8% (ex-dividends)

The company's fiscal year ends in September.

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