ASX 200 stocks with the biggest downside to analyst targets: Reece, Boral and CBA

Analysts continue to anticipate weakness in Boral (ASX: BLD) and Commonwealth Bank (ASX: CBA) shares – Despite the two companies posting better-than-expected FY23 results last week.

Shares in Boral rallied 16% between 10-14 August after the company reported full-year net profits of $143 million, which was 23% ahead of Goldman Sachs forecasts. The V-shaped move has caused the stock to rally well-beyond consensus expectations. This begs the question – Are analysts underestimating the high-potential turnaround for residential markets?

CBA delivered FY23 cash earnings of $10.2bn, which was 1-2% ahead of consensus expectations as well as better-than-expected net interest margins (2.03%), a $1bn buyback and stronger-than-expected dividend. Nevertheless, analysts continue to flag CBA’s premium valuation, notably its price-to-earnings of 18x vs. 12x for the other Big Four banks. 

Stocks with the biggest downside to consensus

‘Target price’ reflects an aggregate of all target prices within Refinitiv’s data base as at 15/08/2023. ‘Last Update’ reports the latest broker coverage on the stock – Stocks that have not received coverage in the past month are not included. Close price as at 14/08/2023 close (Table: Market Index | Source: Refinitiv)

New Editions

Four new stocks have popped up into the top 20 list.

#1 Breville Group (ASX: BRG): A few things to note from Macquarie’s ‘Kitchen Benchmark’ note from earlier this week.

• 'Macquarie Kitchen Benchmark' 2Q23 revenue was down ~4%, vs 1Q23 down ~12%. 85% of constituents by weight have reported 2Q23.

• “BRG revenue has 'outperformed' the benchmark by ~14% p.a. between CY18-CY22, implying modest upside risk to our +1.8% June half revenue forecast.”

• “The revenue growth headwind for suppliers from retailer inventory de- stocking is moderating and is expected to reduce further in 2H23.”

#2 AMP (ASX: AMP): AMP shares rallied 13.2% between 10-11 August after the company posted 1H23 earnings that were 5% ahead of Morgan Stanley expectations. Brokers continue to take a cautious approach to the company’s turnaround and capital return policy.

#3 CSR (ASX: CSR): CSR shares have rallied in recent days thanks to better-than-expected results from peers such as Boral and James Hardie. Macquarie reiterated an Underperform rating back in June, with the view that the company’s “pipeline is thinning and remain cautious on detached building activity in FY24 and FY25.”

#4 JB Hi-Fi (ASX: JBH): JB Hi-Fi shares rallied 5.3% between 13-14 August after posting better-than-expected full-year net profits ($524.6m, +3.4% vs. consensus) and margins. Morgan Stanley remained Underweight on the stock, with the view that “we see FY24 consensus as underestimating the downside risk created by a weaker consumer and the unwind of operational leverage.”