Broker Watch

Most loved/hated: The biggest ASX broker upgrades & downgrades last week

Mon 27 May 24, 12:27pm (AEST)
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Key Points

  • Building products group James Hardie Industries was punished after its fourth quarter results, as was Telstra after its recent trading update
  • Xero was generally lauded for its FY24 results, enjoying several rating upgrades and price target increases
  • The biggest price target increases last week were in copper, building, healthcare, technology and asset management stocks

Welcome to our weekly review of the biggest broker moves on ASX stocks for the last week. Given I didn’t get a chance to do an update last week, today’s snapshot represents all of the major broker moves since our last catch up on 15 May.

Most of the companies attracting the biggest upgrades/downgrades/price target changes provided FY24 market updates, generally at their AGMs, or reported results.

Building products group James Hardie Industries (ASX: JHX) slumped 17% after its fourth quarter FY24 results, but brokers were divided on their ratings, with two rating upgrades two and rating downgrades. Generally, JHX saw its price target cut among most of the brokers.

Telstra Group (ASX: TLS) was a clear loser with the brokers after it provided an update on its structural changes, FY24 progress, and the introduction of FY25 guidance. Three rating downgrades, two from buy to HOLD, and one from hold to REDUCE, ensued, as did several price target cuts.

There was one clear winner, however, accounting software group Xero (ASX: XRO) with its full year 2024 results. The 75% lift in EBITDA to $527 million was generally considered a beat, and this garnered three rating upgrades (each from hold to BUY), as well as several price target increases.

There are plenty of other interesting broker moves for the period - and you can only get this level of detail on what they’re up to from us - so let’s dive in!


How to read broker recommendations 🔎

Typically, there are two major components of a broker’s view:

Rating: A call to action, usually along the lines of buy, hold, or sell, but depending on the broker’s ratings system, can be somewhere in between (e.g., accumulate or add is typically between a hold and a buy).

Price target (PT): The price at which the broker expects the stock will be trading at some point in the future, generally within the next 12 months.


Broker upgrades since Wednesday 15 May

Company

Broker

New Rating

Old Rating

Price Target

PT Upside%

29METALS (29M)

Macquarie

Neutral

Underperform

$0.50

-1.0%

Auckland International Airport (AIA)

Jarden

Overweight

Neutral

$8.58

20.8%

Aeris Resources (AIS)

Macquarie

Neutral

Underperform

$0.30

7.1%

Aristocrat Leisure (ALL)

Jefferies

Hold

Underperform

$41.15

-8.6%

Aristocrat Leisure (ALL)

Morgans

Add

Hold

$50.00

11.1%

ALS (ALQ)

Jarden

Overweight

Buy

$14.90

6.3%

ARB Corporation (ARB)

Macquarie

Neutral

Underperform

$40.10

8.7%

Bendigo and Adelaide Bank (BEN)

CLSA

Outperform

Underperform

$11.20

2.8%

Breville Group (BRG)

Macquarie

Outperform

Neutral

$28.60

8.7%

Challenger (CGF)

UBS

Buy

Neutral

$8.00

20.8%

Cleanaway Waste Management (CWY)

Morgans

Add

Hold

$3.02

8.6%

Dicker Data (DDR)

Jarden

Buy

Overweight

$11.38

25.1%

Elders (ELD)

PAC Partners

Buy

Hold

$9.15

9.6%

Graincorp Class A (GNC)

RBC Capital Markets

Outperform

Underperform

$10.00

19.8%

Harvey Norman Holdings (HVN)

Macquarie

Outperform

Neutral

$5.30

22.4%

Incitec Pivot (IPL)

Jarden

Overweight

Neutral

$3.15

3.3%

JB HI-FI (JBH)

Macquarie

Outperform

Neutral

$63.00

10.0%

James Hardie Industries (JHX)

Jarden

Buy

Overweight

$54.00

14.3%

James Hardie Industries (JHX)

Macquarie

Outperform

Neutral

$55.00

16.4%

Pointsbet Holdings (PBH)

JP Morgan

Overweight

Neutral

$0.51

-1.9%

Qube Holdings (QUB)

UBS

Buy

Neutral

$4.15

14.0%

Ridley Corporation (RIC)

CLSA

Buy

Outperform

$2.80

36.6%

Scentre Group (SCG)

Macquarie

Outperform

Neutral

$3.37

8.4%

Sonic Healthcare (SHL)

E&P

Positive

Neutral

$28.00

13.5%

Smartgroup Corporation (SIQ)

Macquarie

Outperform

Neutral

$9.51

13.5%

Technology One (TNE)

Macquarie

Outperform

Neutral

$18.30

2.9%

Technology One (TNE)

Morgans

Add

Hold

$20.50

15.3%

Worley (WOR)

Goldman Sachs

Buy

Neutral

$17.50

16.7%

Xero (XRO)

Jarden

Overweight

Neutral

$141.00

7.5%

Xero (XRO)

Craigs Investment Partners

Overweight

Neutral

$129.41

-1.4%

Xero (XRO)

RBC Capital Markets

Outperform

Sector Perform

$155.00

18.1%

Biggest broker rating upgrades since Wednesday 15 May. Price Target Upside/Downside (“PT Upside%”) in last column based on closing prices as at Friday 24 May.

From the brokers:

Macquarie upgrades JB Hi-Fi (ASX: JBH) to OUTPERFORM from NEUTRAL

  • Broker believes consumer rush to embrace AI powered applications will require a significant upgrade cycle in hardware to facilitate, and this creates “upside risk” to the earnings of JB Hi-Fi, Harvey Norman (ASX: HVN) and Wesfarmers (ASX: WES)

  • Price target increased to $63 from $61 

Jarden upgrades James Hardie Industries (ASX: JHX) to BUY from OVERWEIGHT

  • Fourth quarter net income was a “slight miss” versus consensus, but it was the introduction of FY25 guidance that caused negative share price reaction

  • FY25 guidance represents “high-single to low double digit earnings downgrades”

  • Regardless of the above, the broker continues to view JHX’s business as “quality” and that there has been “no change to its business value proposition” given the company’s “long history of demonstrable, primary demand growth capabilities”.

  • Price target cut to $54 from $57

Macquarie upgrades Breville Group (ASX: BRG) to OUTPERFORM from NEUTRAL

  • “We believe the company's medium- and long-term revenue growth potential supports our upgrade based on higher expected earnings”

  • Broker raises earnings forecasts for FY25 and FY26 by 2.9% and 5.6% respectively to reflect their “confidence in medium and long-term revenue growth”

  • Price target increased to $63 from $61

Broker downgrades since Wednesday 15 May

Company

Broker

New Rating

Old Rating

Price Target

PT Upside%

APA Group (APA)

Jefferies

Hold

Buy

$9.12

5.6%

Eagers Automotive (APE)

E&P

Neutral

Neutral

$9.00

-15.2%

Eagers Automotive (APE)

Citi

Sell

Neutral

$9.55

-10.0%

Dicker Data (DDR)

Morgan Stanley

Equal-Weight

Overweight

$10.00

9.9%

DGL Group (DGL)

Morgans

Hold

Add

$0.65

12.1%

Elders (ELD)

CLSA

Outperform

Buy

$8.75

4.8%

Elders (ELD)

Macquarie

Neutral

Outperform

$8.35

0.0%

James Hardie Industries (JHX)

JP Morgan

Neutral

Overweight

$50.00

5.8%

James Hardie Industries (JHX)

Citi

Neutral

Buy

$53.40

13.0%

Macquarie Technology Group (MAQ)

Goldman Sachs

Neutral

Buy

$90.20

5.9%

Michael Hill International (MHJ)

Citi

Neutral

Buy

$0.68

43.2%

National Australia Bank (NAB)

Goldman Sachs

Neutral

Buy

$34.04

0.2%

Nufarm (NUF)

Citi

Neutral

Buy

$4.80

5.0%

Nufarm (NUF)

JP Morgan

Neutral

Overweight

$5.50

20.4%

PSC Insurance Group (PSI)

UBS

Neutral

Buy

$6.19

2.7%

Rio Tinto (RIO)

Citi

Neutral

Buy

$137.00

3.4%

Regis Resources (RRL)

Bank of America

Neutral

Buy

$2.30

21.1%

Sonic Healthcare (SHL)

RBC Capital Markets

Sector Perform

Outperform

$27.00

9.4%

Supply Network (SNL)

Ord Minnett

Accumulate

Buy

$22.50

2.3%

Supply Network (SNL)

Ord Minnett

Accumulate

Buy

$22.50

2.3%

Telstra Group (TLS)

Jefferies

Hold

Buy

$4.00

15.9%

Telstra Group (TLS)

Macquarie

Neutral

Outperform

$3.70

7.2%

Telstra Group (TLS)

Morgans

Reduce

Hold

$3.00

-13.0%

Westpac Banking Corporation (WBC)

Goldman Sachs

Sell

Neutral

$24.00

-9.6%

Wesfarmers (WES)

Morgan Stanley

Underweight

Equal-Weight

$56.20

-11.9%

Worley (WOR)

Jefferies

Hold

Buy

$16.80

12.0%

Biggest broker rating downgrades since Wednesday 15 May. Price Target Upside/Downside (“PT Upside%”) in last column based on closing prices as at Friday 24 May.

From the brokers:

Macquarie downgrades Elders (ASX: ELD) to NEUTRAL from OUTPERFORM

  • Downgrade follows release of company’s first half results, mainly on valuation grounds “stock trading close to TP with earnings growth and seasonal risks (dry in WA/SA/VIC) balanced in our view”

  • Broker notes strong potential earnings growth in FY25, but that 2H24 needs to be delivered first.

  • Price target increased to $8.35 from $8.25 

Goldman Sachs downgrades National Australia Bank (ASX: NAB) to NEUTRAL from BUY

  • Downgrade on “valuation grounds”

  • “With earnings risks more balanced, valuations skewed heavily to the downside”

  • Price target increased to $8.35 from $8.25 

Morgan Stanley downgrades Wesfarmers (ASX: WES) to UNDERWEIGHT from EQUAL-WEIGHT

  • “Multiple expansion has driven WES to all time highs. The absence of an earnings upgrade cycle makes us cautious on current valuations (peak multiples). We downgrade to UW”

  • Broker also trims FY24-FY26 earnings forecasts by an average 1.8%

  • Price target increased to $8.35 from $8.25

Biggest broker price target changes since Wednesday 15 May

Company

Broker

Rating

New PT

Old PT

PT Change%

PT Upside%

29METALS (29M)

Macquarie

Neutral

$0.50

$0.26

92.3%

-1.0%

CSR (CSR)

Morgan Stanley

Equal-Weight

$9.00

$5.60

60.7%

0.8%

Rex Minerals (RXM)

Macquarie

Outperform

$0.40

$0.26

53.8%

53.8%

Aeris Resources (AIS)

Macquarie

Neutral

$0.30

$0.20

50.0%

7.1%

Regis Healthcare (REG)

Macquarie

Outperform

$5.50

$3.85

42.9%

33.8%

Pinnacle Investment Management (PNI)

Macquarie

Outperform

$14.52

$10.64

36.5%

11.3%

Gentrack Group (GTK)

Shaw and Partners

Buy

$9.10

$6.90

31.9%

1.1%

Graincorp Class A (GNC)

RBC Capital Markets

Outperform

$10.00

$7.75

29.0%

19.8%

Xero (XRO)

Jarden

Overweight

$141.00

$110.00

28.2%

7.5%

Nuix (NXL)

Shaw and Partners

Buy

$3.00

$2.40

25.0%

-2.0%

Technology One (TNE)

Morgans

Add

$20.50

$16.50

24.2%

15.3%

ARB Corporation (ARB)

Macquarie

Neutral

$40.10

$32.30

24.1%

8.7%

Elders (ELD)

PAC Partners

Buy

$9.15

$7.53

21.5%

9.6%

Xero (XRO)

RBC Capital Markets

Outperform

$155.00

$130.00

19.2%

18.1%

Cleanaway Waste Management (CWY)

Morgans

Add

$3.02

$2.54

18.9%

8.6%

Qube Holdings (QUB)

UBS

Buy

$4.15

$3.53

17.6%

14.0%

Supply Network (SNL)

Ord Minnett

Accumulate

$22.50

$19.20

17.2%

2.3%

Supply Network (SNL)

Ord Minnett

Accumulate

$22.50

$19.20

17.2%

2.3%

Xero (XRO)

Macquarie

Outperform

$180.70

$154.60

16.9%

37.7%

OOH!Media (OML)

Morgan Stanley

Equal-Weight

$1.80

$1.55

16.1%

21.2%

DGL Group (DGL)

Morgans

Hold

$0.65

$0.77

-15.6%

12.1%

Sonic Healthcare (SHL)

CLSA

Outperform

$26.10

$31.00

-15.8%

5.8%

Nufarm (NUF)

Citi

Neutral

$4.80

$5.80

-17.2%

5.0%

Dicker Data (DDR)

UBS

Neutral

$9.65

$11.80

-18.2%

6.0%

Michael Hill International (MHJ)

Macquarie

Outperform

$0.85

$1.05

-19.0%

78.9%

Sonic Healthcare (SHL)

Citi

Neutral

$25.00

$31.00

-19.4%

1.3%

Nufarm (NUF)

Bell Potter

Hold

$5.10

$6.35

-19.7%

11.6%

Eagers Automotive (APE)

Ord Minnett

Buy

$12.80

$16.00

-20.0%

20.6%

Eagers Automotive (APE)

UBS

Neutral

$11.20

$14.10

-20.6%

5.6%

Sonic Healthcare (SHL)

RBC Capital Markets

Sector Perform

$27.00

$34.00

-20.6%

9.4%

James Hardie Industries (JHX)

JP Morgan

Neutral

$50.00

$63.00

-20.6%

5.8%

Michael Hill International (MHJ)

Citi

Neutral

$0.68

$0.86

-20.9%

43.2%

Dicker Data (DDR)

Morgan Stanley

Equal-Weight

$10.00

$13.00

-23.1%

9.9%

Eagers Automotive (APE)

Macquarie

Neutral

$10.60

$14.00

-24.3%

-0.1%

Telstra Group (TLS)

Morgans

Reduce

$3.00

$4.00

-25.0%

-13.0%

Eagers Automotive (APE)

E&P

Neutral

$9.00

$12.18

-26.1%

-15.2%

The Reject Shop (TRS)

Ord Minnett

Buy

$4.20

$5.80

-27.6%

24.3%

Galan Lithium (GLN)

Macquarie

Neutral

$0.25

$0.35

-28.6%

8.7%

Eagers Automotive (APE)

Citi

Sell

$9.55

$13.85

-31.0%

-10.0%

Pointsbet Holdings (PBH)

JP Morgan

Overweight

$0.51

$0.85

-40.0%

-1.9%

Biggest broker price target changes since Wednesday 15 May. Price Target Upside/Downside (“PT Upside%”) in last column based on closing prices as at Friday 24 May.

From the brokers:

Macquarie raises price target on 29Metals (ASX: 29M) to $0.50 from $0.26 (+92.3%)

  • “We update our earnings forecasts to incorporate the Macquarie Economics and Commodities Strategy teams’ latest Cu price outlook…The update increased copper prices 7%/9% across CY24/25 with an increase of 7% in our LT price to US$9,000/t”

  • “We upgrade 29M and AIS from UP to Neutral with both companies' leveraged balance sheets benefiting from higher copper prices. They now trade on prospective EV/Ebitda multiples of 4.5x in CY25 (29M) and 3.0x in FY25 (AIS)”

  • Rating NEUTRAL

Citi cuts price target on Eagers Automotive (ASX: APE) to $9.55 from $13.85 (-31%)

  • Citi is concerned about the “weakening retail market” and expects pressure on margins as a result of increased discounting, and rising costs.

  • “We downgrade to Sell as we expect near-term external/market conditions to outweigh current benefits from APE’s next 100 strategy” 

  • Rating downgraded to SELL from NEUTRAL

 

Written By

Carl Capolingua

Content Editor

Carl has over 30-years investing experience, helping investors navigate several bull and bear markets over this time. He is a well respected markets commentator who specialises in how the global macro impacts Australian and US equities. Carl has a passion for technical analysis and has taught his unique brand of price-action trend following to thousands of Aussie investors.

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