Australian Broker Call

Ord Minnett rates AGL as Hold (3) -

The Australian Energy Regulator's (AER) draft default market offer determination for FY26 is favourable for both AGL Energy and Origin Energy ((ORG)), given their higher exposure to non-Victorian states, notes Ord Minnett.

The AER's draft recommends price increase of 2.5-8.9% for retail customers and 4.2-8.2% for small businesses and factors in cost increases across all components. The Victorian draft market offer proposes flat electricity prices for FY26.

The broker lifted AGL Energy's EPS forecast for FY26 by 2%. Target price rises to $12 from $11. Hold retained.

Target price is $12.00 Current Price is $10.26 Difference: $1.74
If AGL meets the Ord Minnett target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $11.92, suggesting upside of 12.2% (ex-dividends)

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 ARB as Neutral (3) -

Citi highlights ARB Corp's founders, Roger and Andrew Brown, have purchased around $1m of ARB shares, raising their position by 1% to around 6% of the company.

The broker views the purchase as reflecting ongoing confidence in the longer-term prospects for the business.

Citi recently downgraded the stock to Neutral from Buy due to the outlook for the Australian aftermarket division and concerns about market share losses to the BYD Shark.

The analyst also points to the launch of a plug-in hybrid Cannon next month by Chinese OEM GWM, which has a similar price point to the Shark and 40% more towing capacity.

Target price $39.54.

Target price is $39.54 Current Price is $33.26 Difference: $6.28
If ARB meets the Citi target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $40.95, suggesting upside of 22.6% (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

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

Morgan Stanley notes Boss Energy has acquired a further 9% stake in Laramide Resources, bringing its total interest to 18.4%, in a deal valued at -$3.9m in cash and -$11.7m in Boss Energy scrip.

The broker points out Laramide's Queensland project is affected by a uranium mining ban. Laramide has another project, Crownpoint-Churchrock in New Mexcio.

The broker sees minimal immediate impact but highlights the risk of further acquisitions, including in jurisdictions with uranium mining bans, which could dilute shareholders' Honeymoon exposure.

The Equal-weight rating and $2.95 target are maintained. Industry View: Attractive.

Target price is $2.95 Current Price is $2.21 Difference: $0.74
If BOE meets the Morgan Stanley target it will return approximately 33% (excluding dividends, fees and charges).

Current consensus price target is $3.98, suggesting upside of 70.8% (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 BOE as Buy (1) -

Boss Energy is raising its stake in Laramide Resources ((LAM)) to 18.4% by acquiring 23.5m shares for CA60c through a combination of -$3.9m cash and 5.2m shares.

Ord Minnett had flagged the possibility of M&A in its initiation report but is surprised the company didn't target offshore producers.

Target price cut to $4.80 from $4.85 on dilution and cash outflow. Buy maintained.

Target price is $4.80 Current Price is $2.21 Difference: $2.59
If BOE meets the Ord Minnett target it will return approximately 117% (excluding dividends, fees and charges).

Current consensus price target is $3.98, suggesting upside of 70.8% (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

UBS rates BOE as Buy (1) -

Given Qld continues to have a moratorium on uranium mining, UBS questions the speed at which Boss Energy is increasing its stake in Laramide Resources ((LAM)).

Boss announced it acquired a further 9% of issued shares at C$0.60 for $15.5m, bringing its shareholding to around 18.4%.

The broker notes Laramide provided an updated mineral resource estimate for Westmoreland of 49.1mlbs at an average U3O8 grade of 770ppm, using a break-even price of US$80/lb, which compares to UBS’s long-term U3O8 price of US$77/lb.

It appears the analyst considers it a high-quality project compared to Paladin Energy's ((PDN)) Langer Heinrich project, but it fails to meet the standards of Canada's Athabasca Basin.

Buy rating retained with a $3.20 target price.

Target price is $3.20 Current Price is $2.21 Difference: $0.99
If BOE meets the UBS target it will return approximately 45% (excluding dividends, fees and charges).

Current consensus price target is $3.98, suggesting upside of 70.8% (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

Citi rates CHC as Upgrade to Buy from Neutral (1) -

Citi reminds investors expected lower interest rates, in Australia and globally over 2025, typically results in multi-year positive share price performance for REITs.

While uncertainty in trade policies and the expectation of higher inflation has resulted in the recent selldown of Australian REITs, the broker highlights longer-term bond yields have largely remained stable.

For Charter Hall, the broker retains its $18.50 target and upgrades to Buy from Neutral, expecting the return of equity flows into Australia.  Multiples tend to expand in periods of funds under management (FUM), note the analysts.

Target price is $18.50 Current Price is $16.05 Difference: $2.45
If CHC meets the Citi target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $17.23, suggesting upside of 5.5% (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

Citi rates COL as Buy (1) -

Citi points to the ongoing market share decline of Coles Group and Woolworths Group in household cleaning, pet care, and personal care but sees no way for the supermarkets to stop the slide.

The broker attributes the market share loss to significant price gaps between major supermarkets and lower-cost competitors like Chemist Warehouse ((SIG)), Amazon, and Bunnings ((WES)).

Non-food items account for roughly 20% of supermarket sales, note the analysts, and typically deliver higher gross margins than packaged foods and fresh produce.

For Coles Group, the Buy rating and $21.00 target are unchanged.

Target price is $21.00 Current Price is $18.81 Difference: $2.19
If COL meets the Citi target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $21.44, suggesting upside of 14.7% (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

Bell Potter rates CU6 as Speculative Buy (1) -

Bell Potter notes Clarity Pharmaceuticals is advancing its Secure trial, targeting pre-chemotherapy and pre-hormone therapy patients with metastatic castration-resistant prostate cancer.

The broker highlights strong clinical data, with 62% of pre-chemotherapy patients achieving prostate-specific antigen (PSA) reductions of at least -50%, outperforming industry benchmarks.

Management expects expansion cohort data in late 2025 or early 2026, which could support future M&A interest.

House rules at Bell Potter determine valuations on speculative stocks are limited to 100% upside from market price, hence the valuation for Clarity Pharmaceuticals is reduced to $5.20 from $10.00. Speculative Buy rating retained.

Target price is $5.20 Current Price is $2.62 Difference: $2.58
If CU6 meets the Bell Potter target it will return approximately 98% (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 EDV as Overweight (1) -

Morgan Stanley prefers Staples to Discretionary on relative valuation appeal in the Australian Consumer space on the ASX.

The broker points to generally underwhelming results in the February reporting season, with FY25 and FY26 earnings forecasts revised lower.

Additional promotions and above-trend cost inflation resulted in companies relying on increased efficiencies to protect margins, highlight the analysts. It's noted those companies with value-oriented customers or scale players were better able to manage costs.

For Endeavour Group, Morgan Stanley lowers its assumed valuation multiple to reflect ongoing weakness in the Australian retail alcohol segment, where trading down is outweighing the structural benefits of premiumisation.

The broker also reduces its terminal growth rate forecast, citing structural declines in the alcohol industry and uncertainty surrounding management and the CEO transition.

Overweight. The target falls to $5.30 from $5.90. Industry View: In-line.

Target price is $5.30 Current Price is $4.14 Difference: $1.16
If EDV meets the Morgan Stanley target it will return approximately 28% (excluding dividends, fees and charges).

Current consensus price target is $4.58, suggesting upside of 11.0% (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 HLI as Downgrade to Underperform from Neutral (5) -

Macquarie sees two risks for Helia Group -- normalisation of claims and some uncertainty over the renewal of its LMI contract with CommBank ((CBA)).

The broker's base case is the contract will be renewed but Macquarie also believes investors need to factor in the risk of changes like pricing or even that the contract might be dropped.

The broker re-iterates its view claims will remain low in the near term but doesn't think the negative claims trend is sustainable.

Rating downgraded to Underperform from Neutral. No changes to forecasts and target price maintained at $4.20.

Target price is $4.20 Current Price is $5.62 Difference: minus $1.42 (current price is over target).
If HLI meets the Macquarie target it will return approximately minus 25% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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 IEL as Overweight (1) -

Morgan Stanley prefers Staples to Discretionary on relative valuation appeal in the Australian Consumer space on the ASX.

The broker points to generally underwhelming results in the February reporting season, with FY25 and FY26 earnings forecasts revised lower.

Additional promotions and above-trend cost inflation resulted in companies relying on increased efficiencies to protect margins, highlight the analysts. It's noted those companies with value-oriented customers or scale players were better able to manage costs.

For IDP Education, the broker lowers its assumed valuation multiple to account for the persistent uncertainties around global migration and the impacts it is having on student mobility.

Morgan Stanley's longer-term margin assumptions are also reduced given the regulatory backdrop. Overweight rating. The target falls to $17.95 from $20.40. Industry view: In Line.

Target price is $17.95 Current Price is $9.35 Difference: $8.6
If IEL meets the Morgan Stanley target it will return approximately 92% (excluding dividends, fees and charges).

Current consensus price target is $14.74, suggesting upside of 51.8% (ex-dividends)

The company's fiscal year ends in June.

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 ILU as Equal-weight (3) -

Morgan Stanley notes Iluka Resources is positioned to benefit from shifting market dynamics in titanium dioxide (TiO2) and zircon, with EU tariffs on Chinese pigment supporting Western demand.

The broker highlights TiO2 feedstock inventories remain elevated but expects a drawdown over 2025 as demand stabilises, while zircon pricing remains weak due to lower Chinese demand, though potential recovery is anticipated later in the year.

Iluka’s rare earth oxide (REO) production from monazite stockpiles at Eneabba is expected to commence in 2027, highlight the analysts, with strategic partnerships under consideration to optimise processing.

The broker sees key risks in zircon pricing volatility, TiO2 demand fluctuations, and execution challenges in the rare earths business, though potential upside exists if pricing trends improve.

The $4.45 target and Equal-weight rating are maintained. Industry View: Attractive.

Target price is $4.45 Current Price is $4.06 Difference: $0.39
If ILU meets the Morgan Stanley target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $5.58, suggesting upside of 36.1% (ex-dividends)

The company's fiscal year ends in December.

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 JBH as Underweight (5) -

Morgan Stanley prefers Staples to Discretionary on relative valuation appeal in the Australian Consumer space on the ASX.

The broker points to generally underwhelming results in the February reporting season, with FY25 and FY26 earnings forecasts revised lower.

Additional promotions and above-trend cost inflation resulted in companies relying on increased efficiencies to protect margins, highlight the analysts. It's noted those companies with value-oriented customers or scale players were better able to manage costs.

For JB Hi-Fi, Morgan Stanley raises its assumed valuation multiple given ongoing execution and sales momentum, along with stable margins relative to domestic peers.

The analysts also like the company's higher relative exposure to above-system, fast growing categories such as AI PCs.

The target rises to $73.60 from $70.70. Underweight rating maintained. Industry View: In-line.

Target price is $73.60 Current Price is $86.99 Difference: minus $13.39 (current price is over target).
If JBH meets the Morgan Stanley target it will return approximately minus 15% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $94.94, suggesting upside of 7.9% (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 LIC as Upgrade to Buy from Neutral (1) -

Citi reminds investors expected lower interest rates, in Australia and globally over 2025, typically results in multi-year positive share price performance for REITs.

While uncertainty in trade policies and the expectation of higher inflation has resulted in the recent selldown of Australian REITs, the broker highlights longer-term bond yields have largely remained stable.

For Lifestyle Communities, the broker upgrades to Buy from Neutral and maintains its $9.70 target, highlighting management's renewed focus on balance sheet strength and the appointment of a new CEO as additional positives.

The broker also feels Lifestyle Communities is a potential takeover target.

Target price is $9.70 Current Price is $8.07 Difference: $1.63
If LIC meets the Citi target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $9.57, suggesting upside of 15.4% (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

Shaw and Partners rates MMI as Buy, High Risk (1) -

Following an operational update containing all good news, according to Shaw and Partners, the broker expects Metro Mining to benefit from favourable bauxite market conditions, supported by strong Chinese demand and pricing.

The company has outlined plans to expand the Bauxite Hills mine, targeting higher production volumes, which the analysts see as a key growth catalyst.

Costs (AISC) remain a focus, notes Shaw, with Metro aiming for operational efficiencies to mitigate inflationary pressures.

Shaw reiterates its 17c target and Buy, High Risk rating for Metro Mining.

Target price is $0.17 Current Price is $0.05 Difference: $0.116
If MMI meets the Shaw and Partners target it will return approximately 215% (excluding dividends, fees and charges).

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 MQG as Overweight (1) -

Morgan Stanley highlights Macquarie Group’s Commodities and Global Markets (CGM) division is diversifying growth, with the EMEA region now contributing 33% of global income, second only to the Americas at 40%.

The broker notes subdued trading conditions due to lower market volatility, though CGM's asset finance and lending businesses are expanding, with management targeting a 40-45% contribution to divisional earnings from 36% currently.

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

Target price is $253.00 Current Price is $196.72 Difference: $56.28
If MQG meets the Morgan Stanley target it will return approximately 29% (excluding dividends, fees and charges).

Current consensus price target is $225.71, suggesting upside of 14.3% (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 NCK as Buy (1) -

Citi observes Nick Scali's UK competitior DFS which is expecting a recovery in the market with upholstery demand trading below pre-covid levels by -20%, due to interest rate cuts and growth in housing transactions.

The analyst is estimating sales per store lift of 41% in the company's UK stores between FY25-FY28 with the bulk of the growth generated from the refurbishment program.

Eight more stores are to be completed in 2H25 while the broker notes DFS trading for the first ten weeks of 2H25 has remained strong with year-to-date orders rising 11% against 10% growth in the previous half year.

Citi believes market conditions will improve in Australia beyond the next six months.

Buy rated with $20.64 target price.

Target price is $20.64 Current Price is $15.33 Difference: $5.31
If NCK meets the Citi target it will return approximately 35% (excluding dividends, fees and charges).

Current consensus price target is $18.35, suggesting upside of 18.2% (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 NST as Neutral (3) -

Citi takes away a number of key points from the De Grey Mining ((DEG)) scheme book for Northern Star Resources.

First gold production has been delayed from the December 2024 proforma deck of FY29, with FY27 expected to offer more clarity on the development timeframe.

There has been a rise in exploration and evaluation assets, which is expected to increase the tax shield, the analyst explains. De Grey has -$132m in tax losses, which Northern Star should be able to utilise.

Citi also notes De Grey's ramp-up profile of 95% design 10mtpa throughput in the first year is "optimistic," and 75% would be more realistic.

Target price is lifted by 10c to $18 with a Neutral rating.

Target price is $18.00 Current Price is $17.39 Difference: $0.61
If NST meets the Citi target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $19.34, suggesting upside of 7.7% (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

Ord Minnett rates ORG as Buy (1) -

The Australian Energy Regulator's (AER) draft default market offer determination for FY26 is positive for both Origin Energy and AGL Energy ((AGL)), given their higher exposure to non-Victorian states, notes Ord Minnett.

The AER's draft recommends price increase of 2.5-8.9% for retail customers and 4.2-8.2% for small businesses and factors in cost increases across all components. The Victorian draft market offer proposes flat electricity prices for FY26.

The broker lifted Origin's FY26 EPS forecast by 9%. No change to $11 target price. Buy maintained.

Target price is $11.00 Current Price is $10.19 Difference: $0.81
If ORG meets the Ord Minnett target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $10.68, suggesting upside of 2.7% (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

Bell Potter rates SEK as Initiation of coverage with Buy (1) -

Bell Potter initiates coverage on Seek with a Buy rating, highlighting its position as the market leader in A&NZ online employment classifieds, with a strong presence across Asia.

The broker sees upside from a cyclical listing recovery, supported by RBA rate cuts, and long-term structural growth through yield optimisation, placements, and deeper monetisation of jobseeker data.

Seek’s platform unification project, completed slightly under management's $180m budget, will enhance scalability by centralising Asian operations onto the A&NZ platform, highlight the analysts.

Management targets $2bn in revenue by 2028, with earnings (EBITDA) margins expected to expand towards 50%, up from the current 43.3%.

A $27.00 target is set.

Target price is $27.00 Current Price is $22.53 Difference: $4.47
If SEK meets the Bell Potter target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $28.01, suggesting upside of 24.2% (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

Ord Minnett rates SEK as Buy (1) -

Ord Minnett has incorporated into its forecasts Seek's guidance for flat growth revenue growth in Asia, higher FY25 revenue in Australia/New Zealand but lower volume growth in FY26, and lower cost forecasts in FY26 but higher D&A.

Net profit forecasts for FY26-27 were lowered by -8-11%. 

Target price unchanged at $27 and Buy rating remains.

Target price is $27.00 Current Price is $22.53 Difference: $4.47
If SEK meets the Ord Minnett target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $28.01, suggesting upside of 24.2% (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

Citi rates SGM as Neutral (3) -

Citi highlights Toyota Tsusho America, an affiliate of Toyota Group, has announced an agreed offer for Radius Recycling at a circa 115% premium.

Radius is a competitor of Sims in the US.

Based on the implied enterprise valuation of the acquisition, the broker believes this is positive for Sims valuation too.

Neutral rated with a $15.50 target price.

Target price is $15.50 Current Price is $13.80 Difference: $1.7
If SGM meets the Citi target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $13.92, suggesting downside of -4.7% (ex-dividends)

The company's fiscal year ends in June.

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

UBS rates TLX as Buy (1) -

UBS highlights Telix Pharmaceuticals has announced the development and validation of technology for the production of lead-212 and has completed its first production.

The analyst explains this development is significant because bringing an alpha-emitting isotope in-house allows for potential applications in targeted alpha therapy, a cancer treatment that employs radioactive isotopes to deliver precise radiation to cancer cells while minimising damage to healthy tissues.

UBS points to other companies in the space with lead capability and projects, such as Perspective Therapeutics.

No change to Buy rating and $36 target price.

Target price is $36.00 Current Price is $26.99 Difference: $9.01
If TLX meets the UBS target it will return approximately 33% (excluding dividends, fees and charges).

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 TWE as Overweight (1) -

Morgan Stanley prefers Staples to Discretionary on relative valuation appeal in the Australian Consumer space on the ASX.

The broker points to generally underwhelming results in the February reporting season, with FY25 and FY26 earnings forecasts revised lower.

Additional promotions and above-trend cost inflation resulted in companies relying on increased efficiencies to protect margins, highlight the analysts. It's noted those companies with value-oriented customers or scale players were better able to manage costs.

Accounting for the negative impact of the persistently weak US wine market backdrop on Treasury Wine Estates, Morgan Stanley lowers its valuation multiple.

The target falls to $12.90 from $14.60. Overweight rating. Industry View: In-line.

Target price is $12.90 Current Price is $9.61 Difference: $3.29
If TWE meets the Morgan Stanley target it will return approximately 34% (excluding dividends, fees and charges).

Current consensus price target is $12.98, suggesting upside of 32.3% (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

Morgan Stanley rates WES as Underweight (5) -

Morgan Stanley prefers Staples to Discretionary on relative valuation appeal in the Australian Consumer space on the ASX.

The broker points to generally underwhelming results in the February reporting season, with FY25 and FY26 earnings forecasts revised lower.

Additional promotions and above-trend cost inflation resulted in companies relying on increased efficiencies to protect margins, highlight the analysts. It's noted those companies with value-oriented customers or scale players were better able to manage costs.

For Wesfarmers, Morgan Stanley raises its valuation multiple give the appeal to value-conscious customers of products at Kmart and Bunnings, and the opportunity for cost efficiencies and leverage afforded by scale.

Target rises to $66.70 from $60.80. Underweight rating maintained. Industry view: In line.

Target price is $66.70 Current Price is $69.08 Difference: minus $2.38 (current price is over target).
If WES meets the Morgan Stanley target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $71.29, suggesting upside of 2.3% (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

Citi rates WOW as Neutral (3) -

Citi points to the ongoing market share decline of Coles Group and Woolworths Group in household cleaning, pet care, and personal care but sees no way for the supermarkets to stop the slide.

The broker attributes the market share loss to significant price gaps between major supermarkets and lower-cost competitors like Chemist Warehouse, Amazon, and Bunnings.

Non-food items account for roughly 20% of supermarket sales, note the analysts, and typically deliver higher gross margins than packaged foods and fresh produce.

For Woolworths Group, the Neutral rating and $33 target are unchanged.

Target price is $33.00 Current Price is $27.94 Difference: $5.06
If WOW meets the Citi target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $32.15, suggesting upside of 15.3% (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