Analysts see more than 30% upside in these ASX 200 stocks
West African Resources and Syrah Resources have some of the highest upsides to consensus.
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Mentioned
KEY POINTS
- Stocks with the highest upside against broker consensus have generally underperformed the market in the past month and year
- Stocks that have the highest potential upside have been exposed to various macro, capex and commodity-price related risks
- Life360 is one stock that bucks the trend with strong earnings and a strong share price performance
West African Resources (ASX: WAF), Syrah (ASX: SYR) and Silver Lake (ASX: SLR) have some of the highest potential upside according to consensus target prices – Unchanged from when we covered stocks with the most upside a month ago.
Stocks with the most upside
Ticker | Name | Close Price | 1-Month | 1-Year | Target price | Upside |
|---|---|---|---|---|---|---|
Syrah Resources | $0.56 | -9.0% | -70.4% | $1.21 | 118.0% | |
West African Resources | $0.83 | 5.1% | -27.5% | $1.58 | 90.4% | |
Silver Lake Resources | $0.88 | 3.5% | -21.8% | $1.57 | 78.4% | |
Cromwell Property Group | $0.43 | -14.9% | -43.1% | $0.74 | 72.1% | |
Polynovo | $1.31 | -13.5% | -3.3% | $2.07 | 58.0% | |
Chalice Mining | $2.81 | -43.6% | -29.6% | $4.41 | 56.9% | |
Link Administration | $1.37 | -2.5% | -60.7% | $2.05 | 50.2% | |
Qantas Airways | $5.51 | -12.1% | 4.0% | $8.27 | 50.1% | |
The Star Entertainment | $0.84 | -17.7% | -68.7% | $1.20 | 43.7% | |
Iress | $6.35 | -36.4% | -44.7% | $9.12 | 43.6% | |
Nickel Industries | $0.81 | 10.2% | -8.5% | $1.15 | 42.0% | |
Growthpoint Properties | $2.29 | -4.2% | -32.8% | $3.25 | 41.9% | |
De Grey Mining | $1.33 | -0.8% | 29.9% | $1.87 | 41.1% | |
Nufarm | $4.70 | -6.4% | -12.5% | $6.61 | 40.6% | |
Perseus Mining | $1.76 | 5.7% | 24.5% | $2.42 | 37.9% | |
Allkem | $12.68 | -4.7% | -15.9% | $17.39 | 37.1% | |
Core Lithium | $0.39 | -6.0% | -72.9% | $0.53 | 35.9% | |
Insignia Financia | $2.44 | -14.4% | -24.0% | $3.30 | 35.2% | |
Perpetual | $21.01 | -15.3% | -17.5% | $28.20 | 34.2% | |
IPH Limited | $7.28 | -7.3% | -20.7% | $9.74 | 33.8% | |
Life360 | $8.90 | 8.9% | 67.3% | $11.88 | 33.5% |
‘Target price’ reflects an aggregate of all target prices within Refinitiv’s data base as at 18/09/2023. Close price as at 17/09/2023 close (Table: Market Index | Source: Refinitiv)
Not so bullish performance
The average stock on the above list is down 8.3% in the past month (vs. ASX 200 +1.40%) and down 21.4% in the past year (vs. ASX 200 +7.3%).
While consensus target prices sit between 30% to 120%, the list of companies aren't exactly the ones with tailwinds and reporting better-than-expected results. In fact, it's quite the opposite.
At a glance you'll notice a few names standing out for the wrong reasons:
Syrah Resources: Falling graphite prices, forced to halt production at Balama Operations in May and June.
Chalice Mining: Released a scoping study for its Gonneville deposit in early September. Shares sold off 25% on the day of the announcement as the study opted for lofty commodity price assumptions such as US$2,000 an ounce for palladium compared to current levels of around US$1,250 an ounce.
Qantas: Nothing more needs to be said here.
Iress: First half FY23 earnings missed analyst expectations, suspended its dividend to preserve capital amid a period of high one-off costs. It also downgraded FY23 expectations reflecting cost challenges, reduced market trading volumes, and broader macro uncertainties.
Given the fundamental backdrop, you have to wonder: Is the path of least resistance to listen to broker targets or stay away due to recent controversies and earnings headwinds?
Stocks that buck the trend
Life360 is one of few names on the above list that buck the trend of poor earnings and miscellaneous headwinds. The stock is up 8.9% in the past month and up 67% in the past year.
It rallied 12.3% on the day of its second quarter results on 15 August, which delivered on sales, beat on operating leverage and rewarded in-line with tech peers that beat free cash flow expectations.
The company reiterated for "more than 50% year-on-year growth for core Life360 subscription revenue," and upgraded its EBITDA to $9-14 million from a prior guidance of $5-10 million.
Post earnings, Morgan Stanley reiterated an Overweight rating with a $10.50 target price, with the view that the stock "seems to have left room for more positive revisions depending on back-to-school and holiday trading."
Life360 12-month price chart (Source: Market Index)
