The ASX stocks the big brokers loved and hated this week
The ASX stocks that enjoyed the biggest upgrades and price target increases this week (plus those shunned with downgrades and cuts!)
Source: Shutterstock, Market Index
Mentioned
Welcome back to our weekly check-up on the biggest moves from the biggest brokers covering ASX stocks. Note this edition covers the period Thursday 17 - Thursday 24 October inclusive. Here's a quick summary of the stocks that grabbed the brokers' attention over the last week:
BOQ bounces back, still unloved
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Bank of Queensland (BOQ) chart
Bank of Queensland (ASX: BOQ) posted FY24 earnings last week, and, for the most part, the big brokers liked what they saw. Top-line profit – driven by an improved second-half net interest margin (NIM) of 1.57% – was generally ahead of consensus forecasts. Management also guided to flat costs in FY25, which met with broad broker approval.
However, despite plenty of price target increases for BOQ (see table below), and a big pop in its share price after the result, brokers appeared to remain circumspect about the company's outlook. The only rating upgrade came from CLSA (NEUTRAL from UNDERPERFORM), while most other brokers retained sell-equivalent ratings (Citi, Ord Minnett & UBS SELL, JP Morgan & Morgan Stanley UNDERWEIGHT, and Macquarie UNDERPERFORM).
Here are a few spicy comments from the brokers with respect to BOQ's outlook:
"BOQ remains in a tough position, given the need to reduce expenses and improve profitability while still investing for the future... BOQ still appears expensive on our numbers... Additionally, the risk profile has increased as management looks to pivot the business." ––Macquarie
"The 2H24 result and outlook commentary drive upgrades to our earnings estimates and price target. However, BOQ remains our least preferred smaller bank." ––Morgan Stanley
"[We] are not convinced the slated changes to the business model will remedy the problems it faces. There are significant execution risks." ––Ord Minnett
A Perpetual dog finally has its day
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Perpetual Ltd (PPT)
Perennial share price underperformer Perpetual Ltd (ASX: PPT) provided a First Quarter FY25 Business Update last week that was well received by brokers – earning it the honour of the only double-upgrade recipient in today's update.
The wealth manager turned around two successive quarters of net funds outflows in September, adding $400 million to its assets under management (AUM). These positive net inflows, plus strong global financial markets, helped drive a 3.4% overall increase in PPT's AUM to $223 billion.
Brokers also scrutinised the proposed separation of the business into its trustee and asset management arms, noting that while there wasn't any progress yet on the pending tax ruling, it would likely proceed at some stage and help unlock greater value for shareholders.
One of the upgrading brokers, Citi, had this to say about PPT's first quarter update: "We believe this uncertainty [proposed separation] should be resolved one way or the other relatively soon and, with the stock potentially inexpensive whether or not the transaction goes ahead, we lift our call to Buy."
JP Morgan also upgraded PPT to a buy-equivalent (OVERWEIGHT from NEUTRAL), joining Jarden at OVERWEIGHT and Bell Potter & UBS at BUY. Macquarie (NEUTRAL) & Morgan Stanley (EQUAL-WEIGHT) chose to remain neutral-rated.
Flight Centre and WEB Travel double nose-dive
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Flight Centre Travel Group (FLT) chart
Not one but two travel-related companies found themselves on the wrong side of investor sentiment regarding respective trading updates. Flight Centre Travel Group (ASX: FLT) nose-dived following a presentation by CEO and co-founder Graham Turner at an investor conference held by Morgan's on Friday.
Details of the company's performance in the September quarter were vague by most broker accounts – and that probably contributed to subsequent investor nerves. Most brokers agreed FLT had delivered a profit warning by saying that total transaction value (TTV), margin, and underlying profit were only “marginally above” the same period last year.
Ironically, only Morgans chose to downgrade FLT (HOLD from ADD – thanks for coming!), but there were several very large price target cuts applied, the greatest being -22% from Wilsons ($22.29 from $28.56, retain OVERWEIGHT).
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WEB Travel Group (WEB)
WEB Travel Group (ASX: WEB) hasn't been around for long, having only been spun out of Webjet Group just last month, but you could say that it has had a "turbulent" start to life as a standalone company. WEB's share price plunged following a surprise warning to the market that its European business was struggling, and that this would significantly negatively impact the company's FY25 earnings.
This week's 44% price target cut from UBS ($5.60 from $10.00, retain BUY) and 12.5% cut from Macquarie ($4.48 from $5.12, retain NEUTRAL) were catch-ups to multiple rating downgrades and other price target cuts for WEB we reported in last week's Broker Moves update.
Audible disappointment for Audinate
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Audinate Group (AD8)
On Tuesday, audio-visual technology solutions company Audinate Group (ASX: AD8) held its AGM and provided a trading update for the September quarter. The company warned of "several challenges" it was presently facing, including shorter order lead times, increased inventory, slower response times from its manufacturing customers, and (possibly the worst bit...) "softer than expected demand" from its customers. Oops.
Morgan Stanley called it a "large downgrade" and a "material miss" versus market expectations, noting the broker's analysts were left with several important unanswered questions after the update. Still, Morgan Stanley chose to retain its OVERWEIGHT rating on the stock and its $10.50 price target.
Jefferies wasn't so gun-shy in firing off a rating downgrade, they cut to HOLD from BUY. The broker also applied a sizeable price target cut, slicing -25% from AD8's valuation ($9 from $12), as did several other brokers.
Victims of their success...
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AMP (AMP)
AMP (ASX: AMP) also featured in the rating downgrades table below, but unlike FLT and WEB, it delivered a significantly better than expected trading update. Citi (NEUTRAL from BUY) and Ord Minnett (HOLD from ACCUMULATE) downgraded their respective ratings not because of disappointment over the update, but rather due to the broader market's appreciation of it via AMP's share price.
Translation: AMP's share price spiked after the news, causing each broker to see far less value in AMP's shares. You'll notice that AMP appears several times in the price target increases list below, meaning brokers generally liked what they saw.
Despite Citi and Ord's downgrades, they did have some nice things to say about AMP, for example:
"In our view, AMP’s 3Q provides more evidence that its businesses have turned a corner with significantly improved platform flows" ––Citi
"The quarterly update was positive, with the businesses stabilising" ––Ord Minnett
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Evolution Mining (EVN)
Evolution Mining (ASX: EVN) also copped the ire of the big brokers this week, suffering two rating downgrades. But, like AMP, it also enjoyed several large price target increases.
As far as the price target increases go, brokers responded positively to the company's very solid September quarter production and activities report – but also to EVN's massive recent share price run-up (approx. 17% since the start of this month).
Macquarie downgraded EVN to NEUTRAL from OUTPERFORM despite noting the company beat consensus estimates for production and met consensus estimates for costs. The sticking point, noted Mac, was the company's recent share price appreciation that had left EVN "fairly valued" at best.
JP Morgan downgraded EVN to UNDERWEIGHT from NEUTRAL, also acknowledging a broadly in-line update – but again cited a stretched valuation. The broker also noted there few near term catalysts to drive valuation upside.
There are plenty of other interesting broker moves for the period, and keep scrolling because we have summarised the major moves in the tables below. Remember, you can only get this level of detail on what brokers up to from us – so let’s dive in!
Broker UPGRADES since Thursday 17 Oct
Company | Broker | New Rating | Old Rating | Price Target | PT Upside% |
|---|---|---|---|---|---|
Bank of Queensland (BOQ) | CLSA | Hold | Underperform | $6.40 | -7.1% |
Beach Energy (BPT) | Canaccord Genuity | Hold | Sell | $1.25 | -4.6% |
EVT (EVT) | Citi | Buy | Neutral | $12.73 | 14.6% |
Incitec Pivot (IPL) | RBC Capital Markets | Outperform | Sector Perform | $3.60 | 16.1% |
Jumbo Interactive (JIN) | Citi | Buy | Neutral | $14.70 | 16.0% |
Perpetual (PPT) | Citi | Buy | Neutral | $22.50 | 11.2% |
Perpetual (PPT) | JP Morgan | Overweight | Neutral | $23.50 | 16.2% |
REA Group (REA) | JP Morgan | Overweight | Neutral | $240.00 | 4.5% |
Treasury Wine Estates (TWE) | Citi | Buy | Neutral | $12.97 | 10.4% |
Wisetech Global (WTC) | CLSA | Outperform | Hold | $121.00 | 21.8% |
Biggest broker rating upgrades since Thursday 17 Oct. Price Target Upside/Downside (“PT Upside%”) values in the last column are based on closing prices on Thursday 24 Oct.
Broker DOWNGRADES since Thursday 17 Oct
Company | Broker | New Rating | Old Rating | Price Target | PT Upside% |
|---|---|---|---|---|---|
Atlantic Lithium (A11) | Macquarie | Neutral | Outperform | $0.30 | 17.6% |
Audinate Group (AD8) | Jefferies | Hold | Buy | $9.00 | 4.4% |
AMP (AMP) | Citi | Neutral | Buy | $1.70 | 19.3% |
AMP (AMP) | Ord Minnett | Hold | Accumulate | $1.55 | 8.8% |
Bellevue Gold (BGL) | Ord Minnett | Lighten | Hold | $1.35 | -17.7% |
Bank of Queensland (BOQ) | Ord Minnett | Sell | Lighten | $5.00 | -27.4% |
Bluescope Steel (BSL) | Citi | Neutral | Buy | $23.00 | 11.9% |
Data#3 (DTL) | UBS | Neutral | Buy | $8.00 | 10.3% |
DUG Technology (DUG) | E&P | Neutral | Positive | $2.86 | 48.2% |
Evolution Mining (EVN) | JP Morgan | Underweight | Neutral | $4.10 | -21.2% |
Evolution Mining (EVN) | Macquarie | Neutral | Outperform | $4.60 | -11.5% |
Flight Centre Travel (FLT) | Morgans | Hold | Add | $18.50 | 16.6% |
Arcadium Lithium (LTM) | Citi | Neutral | Buy | $8.60 | 3.5% |
Lynas Rare Earths (LYC) | Bell Potter | Hold | Buy | $8.00 | 7.5% |
Mineral Resources (MIN) | Citi | Neutral | Buy | $50.00 | 39.2% |
Metcash (MTS) | Goldman Sachs | Sell | Neutral | $3.10 | -6.1% |
Nick Scali (NCK) | Ord Minnett | Accumulate | Buy | $15.00 | 4.5% |
Netwealth (NWL) | Morgan Stanley | Equal-Weight | Overweight | $27.50 | 1.1% |
Rio Tinto (RIO) | Macquarie | Neutral | Outperform | $119.00 | 1.0% |
St Barbara (SBM) | Macquarie | Neutral | Outperform | $0.49 | 6.5% |
Seek (SEK) | Ord Minnett | Accumulate | Buy | $27.00 | 5.5% |
Ventia Services (VNT) | CLSA | Hold | Outperform | $4.45 | -5.1% |
Biggest broker rating downgrades since Thursday 17 Oct. Price Target Upside/Downside (“PT Upside%”) values in the last column are based on closing prices on Thursday 24 Oct.
Biggest broker price target INCREASES since Thursday 17 Oct
Company | Broker | Rating | New PT | Old PT | PT Change% | PT Upside% |
|---|---|---|---|---|---|---|
St Barbara (SBM) | Macquarie | Neutral | $0.49 | $0.33 | 48.5% | 6.5% |
PYC Therapeutics (PYC) | Bell Potter | Buy | $0.25 | $0.17 | 47.1% | 28.2% |
29METALS (29M) | CLSA | Underperform | $0.39 | $0.30 | 30.0% | -10.3% |
MA Financial (MAF) | Morgans | Add | $7.02 | $5.46 | 28.6% | 7.7% |
REA Group (REA) | JP Morgan | Overweight | $240.00 | $190.00 | 26.3% | 4.5% |
Bank of Queensland (BOQ) | CLSA | Hold | $6.40 | $5.10 | 25.5% | -7.1% |
Pantoro (PNR) | Ord Minnett | Buy | $0.15 | $0.12 | 25.0% | 20.0% |
Beforepay Group (B4P) | Shaw and Partners | Buy | $2.15 | $1.75 | 22.9% | 104.8% |
Qoria (QOR) | Wilsons | Overweight | $0.55 | $0.45 | 22.2% | 27.9% |
Aristocrat Leisure (ALL) | Macquarie | Outperform | $67.00 | $55.00 | 21.8% | 16.7% |
29METALS (29M) | Macquarie | Neutral | $0.46 | $0.38 | 21.1% | 5.7% |
Evolution Mining (EVN) | CLSA | Hold | $5.05 | $4.20 | 20.2% | -2.9% |
Mirvac Group (MGR) | Macquarie | Outperform | $2.46 | $2.07 | 18.8% | 11.3% |
Sims (SGM) | Macquarie | Outperform | $15.40 | $13.00 | 18.5% | 16.8% |
AMP (AMP) | Citi | Neutral | $1.70 | $1.45 | 17.2% | 19.3% |
Dropsuite (DSE) | Shaw and Partners | Buy | $4.80 | $4.10 | 17.1% | 18.2% |
Netwealth Group (NWL) | Morgan Stanley | Equal-Weight | $27.50 | $23.50 | 17.0% | 1.1% |
Galan Lithium (GLN) | Macquarie | Neutral | $0.14 | $0.12 | 16.7% | -9.7% |
AMP (AMP) | Jefferies | Buy | $1.80 | $1.55 | 16.1% | 26.3% |
Generation Development (GDG) | Ord Minnett | Buy | $3.90 | $3.40 | 14.7% | 13.0% |
Praemium (PPS) | Ord Minnett | Hold | $0.63 | $0.55 | 14.5% | -4.5% |
Xero (XRO) | UBS | Buy | $175.00 | $154.00 | 13.6% | 19.7% |
Stockland (SGP) | CLSA | Reduce | $5.72 | $5.04 | 13.5% | 9.6% |
REA Group (REA) | UBS | Buy | $263.00 | $232.20 | 13.3% | 14.6% |
Stockland (SGP) | Citi | Buy | $6.00 | $5.30 | 13.2% | 14.9% |
Incitec Pivot (IPL) | RBC Capital Markets | Outperform | $3.60 | $3.20 | 12.5% | 16.1% |
EVT (EVT) | Citi | Buy | $12.73 | $11.32 | 12.5% | 14.6% |
AMP (AMP) | UBS | Sell | $1.20 | $1.07 | 12.1% | -15.8% |
Evolution Mining (EVN) | RBC Capital Markets | Underperform | $3.80 | $3.40 | 11.8% | -26.9% |
REA Group (REA) | Goldman Sachs | Buy | $245.00 | $221.00 | 10.9% | 6.7% |
JB HI-FI (JBH) | Morgan Stanley | Underweight | $67.10 | $60.60 | 10.7% | -15.9% |
Catalyst Metals (CYL) | Bell Potter | Buy | $4.30 | $3.90 | 10.3% | 23.9% |
Seek (SEK) | Goldman Sachs | Sell | $21.50 | $19.50 | 10.3% | -16.0% |
Bank of Queensland (BOQ) | Macquarie | Underperform | $5.50 | $5.00 | 10.0% | -20.2% |
Biggest broker price target increases since Thursday 17 Oct. Price Target Upside/Downside (“PT Upside%”) values in the last column are based on closing prices as on Thursday 24 Oct.
Biggest broker price target CUTS since Thursday 17 Oct
Company | Broker | Rating | New PT | Old PT | PT Change% | PT Upside% |
|---|---|---|---|---|---|---|
Webjet (WEB) | UBS | Buy | $5.60 | $10.00 | -44.0% | 39.3% |
Smartpay (SMP) | Bell Potter | Hold | $0.75 | $1.30 | -42.3% | 21.0% |
DUG Technology (DUG) | E&P | Neutral | $2.86 | $3.99 | -28.3% | 48.2% |
Audinate Group (AD8) | Jefferies | Hold | $9.00 | $12.00 | -25.0% | 4.4% |
Mineral Resources (MIN) | Ord Minnett | Accumulate | $42.00 | $54.00 | -22.2% | 17.0% |
Flight Centre Travel (FLT) | Wilsons | Overweight | $22.29 | $28.56 | -22.0% | 40.5% |
DUG Technology (DUG) | Ord Minnett | Buy | $2.67 | $3.39 | -21.2% | 38.3% |
Metcash (MTS) | Goldman Sachs | Sell | $3.10 | $3.80 | -18.4% | -6.1% |
Cygnus Metals (CY5) | Shaw and Partners | Buy | $0.25 | $0.30 | -16.7% | 78.6% |
Flight Centre Travel (FLT) | Ord Minnett | Buy | $22.51 | $26.79 | -16.0% | 41.9% |
Aruma Resources (AAM) | Shaw and Partners | Buy | $0.16 | $0.19 | -15.8% | 213.7% |
Flight Centre Travel (FLT) | Jefferies | Hold | $17.00 | $20.00 | -15.0% | 7.2% |
Serko (SKO) | Citi | Buy | $3.40 | $4.00 | -15.0% | 38.2% |
Flight Centre Travel (FLT) | JP Morgan | Neutral | $19.50 | $22.80 | -14.5% | 23.0% |
Nick Scali (NCK) | CLSA | Outperform | $15.50 | $18.00 | -13.9% | 7.9% |
Impedimed (IPD) | Ord Minnett | Buy | $0.13 | $0.15 | -13.3% | 128.1% |
NIB Holdings (NHF) | Morgan Stanley | Equal-Weight | $6.40 | $7.35 | -12.9% | 7.7% |
Audinate Group (AD8) | Canaccord Genuity | Buy | $10.50 | $12.00 | -12.5% | 21.8% |
Webjet (WEB) | Macquarie | Neutral | $4.48 | $5.12 | -12.5% | 11.4% |
Flight Centre Travel (FLT) | UBS | Buy | $23.50 | $26.80 | -12.3% | 48.2% |
Perpetual (PPT) | Bell Potter | Buy | $24.76 | $27.60 | -10.3% | 22.4% |
Audinate Group (AD8) | Moelis Australia | Hold | $9.45 | $10.50 | -10.0% | 9.6% |
Playside Studios (PLY) | Shaw and Partners | Buy | $0.90 | $1.00 | -10.0% | 89.5% |
Nick Scali (NCK) | Ord Minnett | Accumulate | $15.00 | $16.50 | -9.1% | 4.5% |
Biggest broker price target cuts since Thursday 17 Oct. Price Target Upside/Downside (“PT Upside%”) values in the last column are based on closing prices as on Thursday 24 Oct.
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.
