Reporting Season

Macquarie previews FY23 results for ASX tech, media and telco (including these big 5)

Fri 11 Aug 23, 12:45pm (AEST)
Depositphotos 65215255 L

Key Points

  • Why telco is Macquarie’s preference versus tech and media
  • Which of REA Group and Domain are its preferred property listings portal?
  • Three of the following 5 have OUTPERFORM ratings

The investment bank’s sell-side analysts have this week delved into the TMT companies they cover, ahead of each FY23 results announcement. The full document covers 20 companies and runs to more than 100 pages. So, in the following, I’ve picked out some key points about a handful of the companies that are set to report FY23 results by the end of next week (Friday 18 August).

Broadly speaking, Macquarie prefers the telecommunication stocks within the broader sector, because it believes the earnings risk for these companies are lower.

“Our residential market view also has turned more positive. We expect limited upside surprises from the software companies with moderating top-line growth in most companies under coverage – excluding WiseTech and NEXTDC,” Macquarie writes.

Five companies of note are:

REA Group (ASX: REA)


Price target: $135

Macquarie analysts have upgraded their price target for the property listings portal company by 48% ahead of the FY23 result. But it’s also called out as one that’s likely to see its costs come in ahead of consensus expectations.

They maintained their previous Underperform rating but lifted the price target from $91.

“We expect the equity markets will be negatively surprised on margins in FY23 with our expectation for a low-single-digit decline (operating deleverage) while the equity markets are forecasting ~200bps of expansion,” Macquarie says.

“From here, we think REA appears fully valued with limited upside remaining in our valuation and downside earnings risk to expectations on the cost base.”

REA Group reported its FY23 results on Friday 11 August.

REA Group's 12 month share price (Source: Market Index)

Carsales (ASX: CAR)


Price target: $27.40

From Australia’s largest automotive sales portal, which also has an expanding international footprint, Macquarie is keen to see what’s happening with the pace of CAR’s price increases – its high single-digit price increases delivered a 20% benefit in 1H23. “We expect the same pace to continue into 2H FY23,” say the analysts.

“We expect Carsales to provide the usual good, solid, strong and very strong growth metrics,” says Macquarie.

“Carsales offers a strong level of earnings certainty due to the cycle-agnostic nature of the business. Valuation support is limited, but we believe consensus / our estimates are conservative.”

Carsales is due to deliver its FY23 results on Monday 14 August

CAR's 12-month share price (Source: Market Index)

Seek (ASX: SEK)


Price target: $30

Macquarie has left its rating unchanged and shifted its price target only slightly, from $31 previously.

The analysts anticipate a “reasonably straightforward FY23 result” from SEK given the limited change in the SEEK job ad index in the last few months and a trading update was provided in early April.

From the result, Macquarie is watching for evidence of price increases from SEK’s dynamic pricing strategy, and whether increasing competition has hit the company’s revenue market share.

“Cost out should more than offset revenue declines in our view. SEEK is also attractive on a valuation front with the stock trading at a 1-standard-deviation low despite the cost base opportunity,” says Macquarie.

Seek is due to deliver its FY23 results on Tuesday 15 August

SEK's 12-month share price (Source: Market Index)

Telstra (ASX: TLS)


Price target: $4.64

Macquarie expects Telstra to meet FY23 EBITDA revenue and EBITDA guidance, anticipating potential declines in enterprise revenue growth as the key risk.

The key things it will be watching for in the result are mobile subscriber growth, the average revenue per user (which Macquarie expects to be up by 5.2% in FY23).

“Telstra offers stable cash flows and steady growth (3-year DPS CAGR: 5%). Key positive catalysts for the stock will be contracted price increases. For context, the market is expecting no more price increases after FY24,” says Macquarie.

Telstra is due to deliver its FY23 results on Thursday 17 August

Screenshot 2023-08-11 at 12.33.36 pm
Telstra's 12-month share price (Source: Market Index)

Domain Holdings (ASX: DHG)


Price target: $4

Macquarie analysts anticipate few top-line surprises from Domain’s result, with their view on operating cost bases the key difference between that of the consensus.

“Domain also guided for 2H FY23 interest costs to be slightly higher than 1H, although we note inaccurate forecasting of interest costs is a key theme heading into this reporting season,” Macquarie says.

“With our more positive stance on residential markets, we have a preference for Domain given its operating leverage which results in higher EBITDA growth compared to REA,”

Macquarie also likes Domain's relative share price valuation, but is also concerned about Domain’s cost base (just as it is for REA).

Domain is due to deliver its FY23 results on Thursday 17 August

Domain Holdings' 12-month share price (Source: Market Index)


Written By

Glenn Freeman

Content Editor

Glenn is a Content Editor at Livewire Markets and Market Index. Glenn has almost 20 years’ experience in financial services writing and editing. Glenn’s journalistic experience also spans energy and automotive, in both Australia and abroad – including the Middle East – where he edited an oil and gas publication in the United Arab Emirates.

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