The biggest ASX broker upgrades, downgrades and price target changes

Welcome to our weekly review of the biggest broker moves on ASX stocks for the last week. Today’s snapshot represents all the major broker moves since our last catch up on 27 May.

It was another busy week as several companies that have a March/September financial year end reported results, plus the slew of AGMs held around this time. AGMs tend to mean FY24 market updates – and those can move share prices (and broker ratings and price targets) a great deal.

Stocks in focus among the brokers since our last update for the right reasons include cloud services and IT company Data#3 (ASX: DTL) and mining services and engineering group NRW Holdings (ASX: NWH). Each company received two rating upgrades, and new ratings were skewed towards buy.

When you get to the downgrades list, you’ll note a couple of clear standouts in Lovisa Holdings (ASX: LOV) and Peter Warren Automotive (ASX: PWR). Each company received four downgrades each this time – a pretty substantial feat in my experience.

Why the unanimous display of disdain from the brokers? Well, LOV announced that CEO Victor Herrero would be stepping down to be replaced by arguably less experienced John Chesterton.

Morgan Stanley noted “Herrero was highly regarded by the market, given his strong background in global retail, including 13 years at Inditex (owner of Zara); Cheston appears to have less experience outside of A&NZ”.

PWR fell foul of brokers after providing updated guidance for FY24. The revised figure of $20 million profit before tax (PBT) was significantly lower than consensus estimates for $39 million, as well as last year’s $35 million. If there’s a silver lining, it’s that PWR only ended up with one sell rating (the rest were neutral).

PWR also featured heavily in the major price target changes table as its price target was slashed between 27% and 41% among the brokers.

Also getting some harsh treatment with respect to price target cuts was Corporate Travel Management (ASX: CTD). No specific news to trigger the cuts here – just a sharp fall in the company’s shares causing a few brokers to adjust their targets.

Interestingly, the opposite was generally true for those stocks attracting the biggest price target upgrades. Pro Medicus (ASX: PME), Telix Pharmaceuticals (ASX: TLX), and Fisher & Paykel Healthcare (ASX: FPH) each received large price target increases, and each stands out as a stock that’s appreciated substantially over the last few months. Winners are grinners!

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 Monday 27 May

Biggest broker rating upgrades since Monday 27 May. Price Target Upside/Downside (“PT Upside%”) value in the last column are based on closing prices on Tuesday 4 June.

From the brokers:

Morgan Stanley upgrades Data#3 (ASX: DTL) to OVERWEIGHT from EQUAL-WEIGHT

• “DTL has pulled back circa 25% from all time highs on valuation and near term growth concerns. The former is now more compelling, while we see Services strength (in particular Managed Services) and resilient end customer exposures supporting the latter. Together with AI tailwinds [in the] medium term, we move OW.”

• The price target was increased to $8.40 from $8.10

Bell Potter upgrades Brickworks (ASX: BKW) to BUY from HOLD

• “The biggest driver of value in our BKW valuation is the company’s 26.1% shareholding in SOL, which we estimate represents around 50% of the current EV of the business…We think the implied SOL discount and rent growth outlook on offer is attractive and upgrade our rating to Buy.”

• The price target was increased to $29.50 from $29.00

Citi upgrades The Lottery Corporation (ASX: TLC) to BUY from NEUTRAL

• “Lottery Corp will accelerate the Powerball jackpot sequence to minimise the drop-off in FY25. Moreover, our scenario analysis indicates Lottery Corp has room to lift the dividend payout to 120% of NPAT while still retaining flexibility to debt fund a Victorian licence renewal payment of up to $1 billion. Our EBIT forecasts are raised by around 6% in FY24 and around 2% in FY25.”

• The price target was increased to $5.60 from $5.50

Broker downgrades since Monday 27 May

Biggest broker rating downgrades since Monday 27 May. Price Target Upside/Downside (“PT Upside%”) values in the last column are based on closing prices on Tuesday 4 June.

From the brokers:

Morgan Stanley downgrades Lovisa Holdings (ASX: LOV) to EQUAL-WEIGHT from OVERWEIGHT

• On new CEO: “Cheston is a highly regarded retail executive from Smiggle; however, Smiggle's track record has been mixed”

• “All leadership transitions come with risk, but we think Brett Blundy (chairman and major shareholder) will provide continuity”

•  “LOV shares have increased 53% over the last 6 months (vs. XSO +10%). We think the risk-reward is now evenly balanced, with the stock now trading on 29x FY25e P/E”

• The price target is cut to $30.25 from $32.50

Citi downgrades Nufarm (ASX: NUF) to NEUTRAL from BUY

• “Lingering uncertainty around pricing recovery. This summarises our take on NUF’s interim result and its accompanying commentaries”

• “For us to turn more positive, all else being equal, we would like to see more concrete evidence of price uplift in active ingredients which should then flow through to Crop Protection products.”

• The price target is cut to $4.80 from $5.80

Biggest broker price target changes since Monday 27 May

Biggest broker price target changes since Wednesday 27 May. Price Target Upside/Downside (“PT Upside%”) values in the last column are based on closing prices as on Tuesday 4 June.

From the brokers:

Shaw and Partners increases price target on AIC Mines (ASX: A1M) to $1.20 from $0.90 (+33%)

• “AIC Mines have raised $57.5m at $0.52. Funds raised will be used to develop the Jericho link drive directly from the Eloise decline…AIC has sufficient capacity to fund the upgrade from current liquidity and cash from operations over the next three years”

• “AIC remains a key pick in 2024”

• Rating is maintained at BUY

Bell Potter increases price target on Telix Pharmaceuticals (ASX: TLX) to $19.00 from $14.50 (+31%)

• On the company’s update regarding its ProstACT SELECT Phase I study investigating biodistribution, dosimetry, safety and efficacy of TLX591: “The data reduces the clinical trial risk attached to future revenues from TLX591 leading to an increase in the target price to $19.00.”

• “Regulatory approvals for Zircaix (renal) and Pixclara (Glioblastoma) remain on track for later in the year.”

• Rating is maintained at HOLD

Ord Minnett cuts price target on Corporate Travel Management (ASX: CTD) to $14.91 from $17.16 (-13.1%)

• “We have revised our revenue and EBITDA assumptions to reflect the deteriorating economic outlook and a more conservative approach to the UK asylum seeker contract.”

• “EPS estimates have been upgraded by 6% in FY24 but downgraded by 22% in FY25 and 17% in FY26”

• Rating is maintained at ACCUMULATE