These ASX shares won the broker upgrade lottery 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
Mentioned
KEY POINTS
- Brokers have had a busy time since our last update reviewing several high-profile profit guidance updates
- Lithium miners Core Lithium (CXO) and Pilbara Minerals (PLS) enjoyed ratings upgrades, as did gold miners Northern Star Resources (NST) and Regis Resources (RRL)
- Strong performers tended to receive big price target increases (like Xero (XRO)), while weak performers tended to receive big price target cuts (like Domino’s Pizza (DMP))
Welcome back to our weekly check up on the biggest moves from the biggest brokers covering ASX stocks.
Lithium and gold stocks garnered the most upgrades from the brokers since our last update, but that doesn’t mean the brokers think they’re a buy yet. It’s interesting, because for the most part, these two sectors of the Aussie market have gone in completely different directions over the past 12 months.
Over this time lithium prices have plummeted, gold prices have rocketed, and so too have gone the share prices respectively of ASX-listed companies in each sector. What makes this interesting is that it’s not exactly a case of brokers upgrading strength in either case.
For lithium stocks, the big picture message is that stock prices have fallen so much that they’re no longer outright sells (Core Lithium (ASX: CXO) to Neutral from Sell at Goldman Sachs).
For the gold stocks that received upgrades, Northern Star Resources (ASX: NST) and Regis Resources (ASX: RRL), brokers have increased their ratings to buy on two of the worst performers in the sector.
In neither case is it a matter of rewarding winners.
Downgrades were more company news specific. We’re still in the FY24 update/guidance zone, and we saw disappointing news on this front from Aussie Broadband (ASX: ABB), and a slight miss in expectations from wealth platform providers Hub24 (ASX: HUB) and Netwealth Group (ASX: NWL).
When you get to the price target changes list, you’ll see there are very few cuts to targets. As in, probably the fewest I’ve ever seen! Perhaps this has something to do with our share market making new highs?
Certainly, the likes of Perseus Mining (ASX: PRU), Xero (ASX: XRO), Aristocrat Leisure (ASX: ALL), and Biome Australia (ASX: BIO) have been doing so (not coincidentally each of these has been heavily featured in my ChartWatch ASX Scans uptrends lists).
In the losers list was ABB again, but three other perennial losers in Corporate Travel Management (ASX: CTD), Domino's Pizza Enterprises (ASX: DMP), and Orora (ASX: ORA) saw brokers apply some catch-up to their respective price targets (not coincidentally each of these have been heavily featured in my ChartWatch ASX Scans downtrends lists).
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 10 July
Company | Broker | New Rating | Old Rating | Price Target | PT Upside% |
|---|---|---|---|---|---|
Ampol (ALD) | Goldman Sachs | Neutral | Sell | $37.40 | 10.0% |
Core Lithium (CXO) | Goldman Sachs | Neutral | Sell | $0.08 | -27.3% |
Northern Star Resources (NST) | Citi | Buy | Neutral | $15.90 | 13.9% |
Pilbara Minerals (PLS) | E&P | Positive | Neutral | n/a | n/a |
Regis Resources (RRL) | Argonaut Securities | Buy | Hold | $2.40 | 25.0% |
Regis Resources (RRL) | Bank of America | Buy | Neutral | $2.30 | 19.8% |
Telstra Group (TLS) | Macquarie | Outperform | Neutral | $4.40 | 14.9% |
Woodside Energy (WDS) | Citi | Neutral | Sell | $28.00 | -4.7% |
Biggest broker rating upgrades since Wednesday 10 July. Price Target Upside/Downside (“PT Upside%”) values in the last column are based on closing prices on Tuesday 16 July.
From the brokers:
Citi upgrades Northern Star Resources (ASX: NST) to BUY from NEUTRAL
“NST has underperformed EVN by around 7% QTD and underperformed A$ gold by around 13%.”
“NST now screens attractive versus the underlying commodity as evidenced by the declining risk appetite, and we move to Buy.”
The price target was increased to $15.90 from $15.20
Macquarie upgrades Telstra Group (ASX: TLS) to OUTPERFORM from NEUTRAL
“Our key concern regarding the dividend has been resolved with this price increase. Near-term catalysts are negative, but the medium-term outlook is more positive with Telstra demonstrating new agility in its mobile pricing strategy.”
The price target was increased to $4.40 from $3.70.
Broker downgrades since Wednesday 10 July
Company | Broker | New Rating | Old Rating | Price Target | PT Upside% |
|---|---|---|---|---|---|
Aussie Broadband (ABB) | Wilsons | Market Weight | Overweight | $3.32 | 15.3% |
Australian Unity Office (AOF) | Ord Minnett | Accumulate | Buy | $1.37 | 6.2% |
Beach Energy (BPT) | Goldman Sachs | Sell | Neutral | $1.50 | -2.6% |
Hub24 (HUB) | Citi | Neutral | Buy | $46.40 | -0.2% |
Netwealth Group (NWL) | Jefferies | Underperform | Hold | $18.60 | -17.4% |
Biggest broker rating downgrades since Wednesday 10 July. Price Target Upside/Downside (“PT Upside%”) values in the last column are based on closing prices on Tuesday 16 July.
From the brokers:
Citi downgrades Hub24 (ASX: HUB) to NEUTRAL from BUY
“With HUB24’s hiring activity slowing further, we expect HUB24 to deliver operating leverage in 2H24e and FY25e; however given the strong share price run in recent months and with the stock trading on around 30x CAPEX-adjusted EBITDA in FY25e, we downgrade to Neutral.”
The price target was increased to $46.40 from $42.80
Biggest broker price target changes since Wednesday 10 July
Company | Broker | Rating | New PT | Old PT | PT Change% | PT Upside% |
|---|---|---|---|---|---|---|
Genetic Signatures (GSS) | Bell Potter | Buy | $1.10 | $0.75 | 46.7% | 44.7% |
Hastings Technology Metals (HAS) | Ord Minnett | Hold | $0.36 | $0.28 | 28.6% | -1.4% |
Perseus Mining (PRU) | Citi | Neutral | $2.80 | $2.30 | 21.7% | 1.8% |
Xero (XRO) | Morgan Stanley | Outperform | $170.00 | $140.00 | 21.4% | 21.0% |
Netwealth Group (NWL) | Unified Capital Partners | Hold | $21.20 | $17.65 | 20.1% | -5.9% |
Regis Resources (RRL) | Argonaut Securities | Buy | $2.40 | $2.00 | 20.0% | 25.0% |
Telstra Group (TLS) | Macquarie | Outperform | $4.40 | $3.70 | 18.9% | 14.9% |
Woodside Energy (WDS) | Citi | Neutral | $28.00 | $24.00 | 16.7% | -4.7% |
Coronado Global Resources (CRN) | Bell Potter | Buy | $1.85 | $1.60 | 15.6% | 33.1% |
Whitehaven Coal (WHC) | Bell Potter | Hold | $8.90 | $7.70 | 15.6% | 4.2% |
Nanosonics (NAN) | Bell Potter | Hold | $3.45 | $3.00 | 15.0% | 7.1% |
Flight Centre Travel (FLT) | Macquarie | Outperform | $26.80 | $23.35 | 14.8% | 21.6% |
Aristocrat Leisure (ALL) | Citi | Buy | $59.00 | $53.00 | 11.3% | 13.7% |
Biome Australia (BIO) | Bell Potter | Buy | $0.80 | $0.73 | 9.6% | 22.1% |
Genusplus Group (GNP) | Bell Potter | Buy | $2.40 | $2.20 | 9.1% | 10.1% |
Netwealth Group (NWL) | UBS | Buy | $24.50 | $22.50 | 8.9% | 8.7% |
Hub24 (HUB) | Citi | Neutral | $46.40 | $42.80 | 8.4% | -0.2% |
Australian Unity Office (AOF) | Ord Minnett | Accumulate | $1.37 | $1.45 | -5.5% | 6.2% |
Orora (ORA) | Macquarie | Outperform | $2.45 | $2.62 | -6.5% | 24.1% |
Domino's Pizza (DMP) | Morgan Stanley | Overweight | $47.00 | $52.00 | -9.6% | 30.1% |
Aussie Broadband (ABB) | E&P | Neutral | $4.00 | $4.50 | -11.1% | 38.9% |
Corporate Travel (CTD) | Macquarie | Neutral | $14.40 | $16.90 | -14.8% | 7.4% |
Aussie Broadband (ABB) | Jefferies | Hold | $3.10 | $3.75 | -17.3% | 7.6% |
Aussie Broadband (ABB) | Wilsons | Market Weight | $3.32 | $4.52 | -26.5% | 15.3% |
Biggest broker price target changes since Wednesday 10 July. Price Target Upside/Downside (“PT Upside%”) values in the last column are based on closing prices as on Tuesday 16 July.
From the brokers:
Bell Potter increases the price target for Genetic Signatures (ASX: GSS) to $1.10 from $0.75 (implies a 44% upside)
“FY25 is set to be a positive year for GSS following the appointment of a globally experienced CEO and improved balance sheet post the recent capital raise. First US sales are expected in 1H FY25 and Australian sales should revert to growth following the TGA’s clearance of the revised respiratory test in April.”
Rating is retained at BUY
Morgan Stanley increases price target for Xero to $170 from $140 (implies 21% upside)
“An attractive structural growth story with improved profitability and FCF. In this report, we explore how sustained HSD/lowDD ARPU growth + low churn + lower marketing will lift LTV/CAC ratios … and create shareholder value.”
Rating is maintained at OVERWEIGHT
Bell Potter increases price target on Coronado Global Resources (ASX: CRN) to $1.80 from $1.60 (implies 33% upside)
“Throughout 2024, CRN should realise improved production volumes and subsequent cost benefits following the self-funded investment across its Australian and US operations. We expect CRN to generate improved free cash flow and shareholder returns going forward.”
Rating is maintained at BUY
Macquarie cuts price target on Corporate Travel Management (ASX: CTD) to $14.40 from $16.90 (implies 7% upside)
“Given CTD's recent de-rating and potential for outer-year upgrades, we see some value emerging; however, we are not yet willing to step in ahead of a potential guidance cut. We expect FY25 guidance to be provided at the result which will quantify the impact of European project work.”
Rating is maintained at NEUTRAL
