The ASX companies enjoying the biggest broker upgrades and price target increases this week

Welcome back to our weekly check up on the biggest moves from the biggest brokers covering ASX stocks. There were several important news and company specific event related items that triggered research report updates from the brokers since last week's update.

ACCC takes Coles and Woolworths to court

• The ACCC commenced separate proceedings in the Federal Court against Woolworths Group (ASX: WOW) and Coles Group (ASX: COL) for allegedly breaching the Australian Consumer Law by misleading consumers through discount pricing claims on hundreds of common supermarket products. The final report from the ACCC is due to be released on 28 February, 2025.

• Brokers: Several price target (PT) cuts for COL and WOW, plus one rating downgrade for COL

Webjet splits into B2C and B2B

• Travel services group Webjet demerged its wholesale and consumer businesses into WEB Travel Group (ASX: WEB) and Webjet Group (ASX: WJL) respectively.

• Brokers: Several rating and PT adjustments for WEB to account for lower value of retained business, initiations for WJL.

Beleaguered Star Entertainment Group plunges on big loss

• The Star Entertainment Group (ASX: SGR) reports a $1.7 billion loss for FY24 on a 10% drop in revenue and a 45% plunge in EBITDA. The business was EBITDA negative in July and August. Management blamed "challenging trading conditions as well as various recent and upcoming regulatory changes". Shares plunged 44% on the news to fresh all-time lows.

• Brokers: Several large PT cuts

Select Harvests reaps capital, shares plunge

• Select Harvests (ASX: SHV) announced an $80m capital raising at $3.80 or a -16% discount to the last closing price prior to the offer. Shares plunged nearly 18%.

• Brokers: Several rating downgrades as well as several large PT cuts

Healius sells Lumus

• Healius (ASX: HLS) has sold its Lumus Imaging unit to Affinity Equity Partners for $965m.

• Brokers: Two rating upgrades and several PT increases (two of them substantial)

Fletcher Building bolsters balance sheet

• Fletcher Building (ASX: FBU) announced a NZ$700m capital raise including an institutional placement of NZ$282m and a NZ$418m rights issue at NZ$2.40.

• Brokers: 2 rating upgrades to BUY equivalents

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!

Broker upgrades since Tuesday 24 Sep

Biggest broker rating upgrades since Tuesday 24 Sep. Price Target Upside/Downside (“PT Upside%”) values in the last column are based on closing prices on Wednesday 2 October.

Fletcher Building (FBU)

• Citi upgrade to BUY from SELL: "Balance sheet concerns have been eased...With the potential for quick monetary policy transmission and added liquidity to manage pipes/NZICC, we turn cautiously optimistic and Buy rated". PT NZ$3.30 (8.2% upside)

Light and Wonder (ASX: LNW)

• UBS upgrade to BUY from NEUTRAL: 18% share price plunge following Nevada Court injunction on company's Dragon Train game has created better value. Broker is more positive on gaming revenue potential in the USA and expects LNW to increase its market share in slot revenue. PT $166 (30.9% upside)

Whitehaven Coal (ASX: WHC)

• Citi upgrade to BUY from NEUTRAL: Upgrade on "valuation grounds", sees rebound in coking coal prices as market price is now "close to marginal cost" as well as strong seasonal demand from India. PT $7.60 (4.8% upside)

Webjet Group (WJL)

• Morgans initiated at ADD: The broker noted the business was a market leader, but given its already strong position the growth outlook is relatively lesser than for WEB. Still, Morgans backed this unit's strong track record. PT $0.95 (10.5% upside)

• Other initiations for WJL included CLSA at HOLD with a $0.90 price target implying 4.7% upside, and Jarden at OVERWEIGHT with a $1.10 price target implying a 27.9% upside.

Broker downgrades since Tuesday 24 Sep

Biggest broker rating downgrades since Tuesday 24 Sep. Price Target Upside/Downside (“PT Upside%”) values in the last column are based on closing prices on Wednesday 2 October.

Brickworks (ASX: BKW)

• Bell Potter downgrade to HOLD from BUY: Broker cites valuation / recent price increase as the reason for the downgrade, but notes FY24 results generally beat its expectations. PT $31 (7.6% upside)

Select Harvests (SHV)

• UBS downgrade to NEUTRAL from BUY: Broker highlights delays in export documentation, customer deliveries, and cash collections. PT $4 (10.2% upside)

• Ord Minnett downgrade to NEUTRAL from BUY: Broker cites "freight delays", but notes improvements in volumes, crop quality, and higher almond prices. PT $4.35 (19.8% upside)

Biggest broker price target increases since Tuesday 24 Sep

Biggest broker price target increases since Tuesday 24 Sep. Price Target Upside/Downside (“PT Upside%”) values in the last column are based on closing prices as on Wednesday 2 October.

Life 360 (ASX: 360)

• Goldman Sachs increases PT to $21.85 from $19.75: Broker says, "We lift our estimates and valuation ahead of Life360’s 3Q24 result driven by strong momentum in its core Subscription business, growth in high-margin Indirect revenue streams, and operating leverage given Life360’s cost discipline". PT implies 13.7% upside, BUY rating retained.

Charter Hall Group (ASX: CHC)

• Morgan Stanley increases PT to $18.50 from $15.80: Broker swings bullish as global interest rates / market yields start to decline. The current valuation is more than justified. PT implies 18.7% upside, OVERWEIGHT rating retained.

Macquarie Group (ASX: MQG)

• Morgan Stanley increases PT to $250 from $234: Broker says, "We think MQG offers multi-year double digit earnings growth, justifying the recent re-rating. The faster Fed cut gives us more confidence in global M&A recovery and we think the street is missing MQG's operating leverage plus new growth options". PT implies 10.5% upside, OVERWEIGHT rating retained.

Biggest broker price target cuts since Tuesday 24 Sep

Biggest broker price target cuts since Tuesday 24 Sep. Price Target Upside/Downside (“PT Upside%”) values in the last column are based on closing prices as on Wednesday 2 October.

The Star Entertainment Group (SGR)

• Macquarie cuts PT to $0.24 from $0.45: Broker says, "We expect a significant degradation in FY25 earnings given multiple headwinds...We envisage the play book to restore equity value is cost-out and asset sales creating significant execution risk". Rating NEUTRAL, PT implies 12.7% downside.

WEB Travel Group (WEB)

• Note: These aren't really price cuts, or at least not likely to the full extent shown in the table above. The brokers are simply removing the value attributable to the demerged WJL businesses.

Coles Group (COL) / Woolworths Group (WOW)

• Goldman Sachs: Broker says, "While we do not take any view on the final outcome, we remain of the view that earnings and valuation risks from the Inquiries are sufficiently priced in". The broker rates COL as NEUTRAL (PT $18 implies 1% upside) and WOW as BUY (PT $40.10 implies 21.6% upside).

• Macquarie: Broker sees a larger potential risk: "Three out of the five focus areas have a "medium" level risk of impacting profitability for [COL and WOW]. In particular, we see changes to promotional practices and supplier trade income as a key area of risk, with potential negative impacts in the ability to drive sales and foot traffic through promotional activity, as well as risks to gross margins". The broker rates COL as OUTPERFORM (PT $20.20 implies 13.4% upside) and WOW as NEUTRAL (PT $37 implies 12.2% upside)

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.