Broker Watch

These ASX stocks enjoyed the biggest broker upgrades this week

Wed 10 Jul 24, 1:06pm (AEST)
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Key Points

  • Several ASX lithium stocks received ratings upgrades (due to improved valuations after sharp share price declines), but their price targets were cut
  • Several ASX gold stocks received ratings downgrades as well as price target cuts
  • Several strong performers also saw their ratings trimmed, but in others, brokers aggressively increased their price targets

Welcome back to our weekly check up on the biggest moves from the biggest brokers that cover ASX stocks.

They were certainty busy this week, in particular, with plenty of updates to their ratings and price targets for Aussie mining stocks. Like most Aussie investors, you've probably got a least a few of the stocks mentioned in the tables below in your portfolio.

You're probably also acutely aware that the prices of several commodities key to Australia pulled back sharply in June. Generally, moves in commodity prices translates to updates to the assumptions that underpin ASX commodity stock valuations, as well as translating to moves in their share prices.

So, there are a couple of moving targets for brokers to contend with (valuations vs share prices). This conundrum is probably most pronounced in the ASX lithium sector where lithium prices and sector constituent prices have both plunged.

Very interestingly, this week share prices in the ASX lithium sector appear to have finally reached a level where the brokers are comfortable to upgrade their ratings.

I note that Core Lithium (ASX: CXO), IGO (ASX: IGO) x 2, Liontown Resources (ASX: LTR), and Pilbara Minerals (ASX: PLS) each received ratings upgrades. Good news, right? Any rating upgrade is usually a welcome development for a stock, but I note in each of these cases, brokers were only comfortable to go as far as a neutral/hold, up from sell.

Also note that the commentary accompanying each of these upgrades centred on the fact that share prices had fallen so far that sell ratings were no longer warranted. It wasn't a case of "stock specific positive developments have improved the value proposition in XYZ", if you get my drift.

A similar theme accompanied ratings upgrades to Deterra Royalties (ASX: DRR), Iluka Resources (ASX: ILU), Ebos Group (ASX: EBO), Lend Lease (ASX: LLC), and Mirvac Group (ASX: MGR), that is, share price plunges equals greater perceived value, equals rating upgrade. At least in the case of DRR, ILU, and MGR ratings went to buy/overweight.

On the downgrades front, I note several gold stocks saw their ratings shaved, mainly from buy to neutral (Gold Road Resources (ASX: GOR), Newmont Corporation (ASX: NEM), and Regis Resources (ASX: RRL)).

There were also a few that saw the reverse effect to commodity stocks – recent share price success saw brokers less enthusiastic about their present valuations (Generation Development Group (ASX: GDG), Goodman Group (ASX: GMG), GQG Partners (ASX: GQG), and Suncorp Group (ASX: SUN)).

In price target changes, it was very pleasant to see several stocks I follow very closely in my ChartWatch ASX Scans uptrends list garnering sizeable price target increases (Metro Mining (ASX: MMI), Austin Engineering (ASX: ANG), Pro Medicus (ASX: PME), Superloop (ASX: SLC), Tuas (ASX: TUA), and Whitehaven Coal (ASX: WHC) to name a few).

Going the other way, notably, those afore mentioned lithium stocks (note disparity between ratings upgrades and price target cuts!), and interestingly another two previously hot sector that has come off the boil – uranium stocks (Boss Energy (ASX: BOE)) and rare earths stocks (Arafura Rare Earths (ASX: ARU), and Lynas Rare Earths (ASX: LYC)).

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 πŸ”Ž

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, 3 July

Company

Broker

New Rating

Old Rating

Price Target

PT Upside%

CSL (CSL)

Citi

Buy

Neutral

$335.00

12.2%

Core Lithium (CXO)

Jarden

Neutral

Sell

$0.10

7.5%

Deterra Royalties (DRR)

Goldman Sachs

Buy

Neutral

$4.70

15.8%

Deterra Royalties (DRR)

UBS

Buy

Neutral

$4.90

20.7%

Ebos Group (EBO)

Citi

Neutral

Sell

$31.50

5.4%

Fortescue (FMG)

Jefferies

Hold

Underperform

$21.00

-3.9%

G8 Education (GEM)

Macquarie

Outperform

Neutral

$1.35

8.9%

IGO (IGO)

UBS

Neutral

Sell

$6.10

5.2%

IGO (IGO)

JP Morgan

Neutral

Underweight

$6.40

10.3%

Iluka Resources (ILU)

JP Morgan

Overweight

Neutral

$8.20

22.8%

Lendlease Group (LLC)

UBS

Neutral

Sell

$5.79

0.5%

Liontown Resources (LTR)

Citi

Neutral

Sell

$1.00

5.8%

Mirvac Group (MGR)

UBS

Buy

Neutral

$2.19

18.4%

Pilbara Minerals (PLS)

JP Morgan

Neutral

Underweight

$2.95

-2.0%

REA Group (REA)

Macquarie

Outperform

Neutral

$212.00

7.7%

Sims (SGM)

JP Morgan

Neutral

Underweight

$10.00

-5.1%

Vicinity Centres (VCX)

UBS

Neutral

Sell

$1.86

-3.9%

Biggest broker rating upgrades since Wednesday, 3 July. Price Target Upside/Downside (“PT Upside%”) values in the last column are based on closing prices on Tuesday, 9 July.

From the brokers:

Citi upgrades CSL (ASX: CSL) to BUY from neutral

  • “With several negative catalysts behind, we see less headline risks going into 2H CY24.”

  • “The stock offers reasonable value given the 14% NPATA CAGR between FY23 and FY27e, in-line with consensus.”

  • “We expect CSL to be able to deliver double-digit growth despite the increasingly competitive environment medium term.”

  • The price target was increased to $335 from $305

UBS upgrades Deterra Royalties to BUY from neutral

  • “DRR's recent share price performance is unjustified, in our view, with price falls accounting for more than 60% of the EV of Trident, while 90% of NAV and NPAT remains subject to the exceptional MAC royalty stream. ”

  • The price target was increased to $4.90 from $4.80

Macquarie upgrades REA Group (ASX: REA) to OUTPERFORM from neutral

  • “The fundamental outlook in the next 6-12 months should remain solid and underpin incremental earnings upgrades. Valuation support limited but relative valuation among marketplaces is starting to look supportive for REA.”

  • The price target was increased to $212 from $196.


Broker downgrades since Wednesday, 3 July

Company

Broker

New Rating

Old Rating

Price Target

PT Upside%

Arena Reit. (ARF)

UBS

Neutral

Buy

$3.94

2.3%

BWP Trust (BWP)

UBS

Neutral

Buy

$3.79

9.9%

Centuria Capital Group (CNI)

UBS

Sell

Neutral

$1.51

-3.2%

Clinuvel Pharmaceuticals (CUV)

Morgans

Hold

Add

$16.00

9.7%

Generation Development Group (GDG)

Morgans

Hold

Add

$2.57

11.3%

Goodman Group (GMG)

UBS

Sell

Neutral

$31.71

-9.1%

Gold Road Resources (GOR)

JP Morgan

Neutral

Overweight

$1.90

7.0%

GQG Partners Inc. (GQG)

Ord Minnett

Accumulate

Buy

$3.20

10.3%

Jumbo Interactive (JIN)

Jarden

Underweight

Neutral

$15.40

-5.9%

Monadelphous Group (MND)

Bell Potter

Hold

Buy

$14.00

9.0%

Macquarie Group (MQG)

Macquarie

Hold

Outperform

$201.00

-0.9%

Newmont Corporation (NEM)

JP Morgan

Neutral

Overweight

$66.00

0.7%

Regis Resources (RRL)

UBS

Neutral

Buy

$1.85

0.8%

Regis Resources (RRL)

Citi

Neutral

Buy

$1.90

3.5%

Scentre Group (SCG)

UBS

Sell

Neutral

$2.96

-6.9%

Sonic Healthcare (SHL)

Bank of America

Underperform

Buy

$23.50

-9.4%

Suncorp Group (SUN)

Macquarie

Neutral

Outperform

$15.80

-5.7%

Biggest broker rating downgrades since Wednesday 3 July. Price Target Upside/Downside (“PT Upside%”) values in the last column are based on closing prices on Tuesday 9 July.

From the brokers:

UBS downgrades Goodman Group (ASX: GMG) to SELL from neutral

  • “For GMG, we see very strong growth from the data centre strategy but move to Sell on valuation grounds/high investor expectations.”

  • The price target was increased to $31.71 from $29.25

JP Morgan downgrades Newmont Corporation (ASX: NEM) to NEUTRAL from overweight

  • “We still like gold, but downgrade NEM and GOR to Neutral, and prefer NST and EVN from a valuation perspective.”

  • The price target was lowered to $66 from $67


Biggest broker price target changes since Wednesday, 3 July

Company

Broker

Rating

New PT

Old PT

PT Change%

PT Upside%

Metro Mining (MMI)

Shaw and Partners

Buy

$0.13

$0.07

85.7%

124.1%

Austin Engineering (ANG)

Shaw and Partners

Buy

$0.75

$0.60

25.0%

23.0%

Insurance Australia Group (IAG)

Macquarie

Outperform

$8.00

$6.40

25.0%

14.9%

Pro Medicus (PME)

Citi

Sell

$95.00

$80.00

18.8%

-29.2%

Superloop (SLC)

JP Morgan

Overweight

$1.90

$1.60

18.8%

20.6%

Suncorp Group (SUN)

Morgan Stanley

Overweight

$20.20

$17.05

18.5%

20.5%

Tuas (TUA)

Citi

Buy

$5.25

$4.50

16.7%

11.7%

GQG Partners Inc. (GQG)

Ord Minnett

Accumulate

$3.20

$2.85

12.3%

10.3%

Regis Resources (RRL)

Citi

Neutral

$1.90

$1.70

11.8%

3.5%

Southern Cross Electrical Engineering (SXE)

Shaw and Partners

Buy

$2.00

$1.80

11.1%

13.6%

GQG Partners Inc. (GQG)

Goldman Sachs

Buy

$3.00

$2.73

9.9%

3.4%

CSL (CSL)

Citi

Buy

$335.00

$305.00

9.8%

12.2%

Coronado Global Resources Inc. (CRN)

Goldman Sachs

Buy

$1.70

$1.55

9.7%

20.6%

Whitehaven Coal (WHC)

Goldman Sachs

Neutral

$8.10

$7.40

9.5%

-9.7%

Whitehaven Coal (WHC)

UBS

Buy

$9.65

$8.85

9.0%

7.6%

GQG Partners Inc. (GQG)

Macquarie

Outperform

$3.05

$2.80

8.9%

5.2%

Goodman Group (GMG)

UBS

Sell

$31.71

$29.25

8.4%

-9.1%

New Hope Corporation (NHC)

Goldman Sachs

Sell

$3.90

$3.60

8.3%

-22.8%

Coronado Global Resources Inc. (CRN)

UBS

Buy

$1.95

$1.80

8.3%

38.3%

REA Group (REA)

Macquarie

Outperform

$212.00

$196.00

8.2%

7.7%

Gold Road Resources (GOR)

Goldman Sachs

Buy

$2.10

$1.95

7.7%

18.3%

Integral Diagnostics (IDX)

Macquarie

Outperform

$2.85

$2.65

7.5%

11.3%

South32 (S32)

Goldman Sachs

Buy

$4.30

$4.00

7.5%

15.6%

South32 (S32)

JP Morgan

Overweight

$4.40

$4.10

7.3%

18.3%

Lynas Rare Earths (LYC)

JP Morgan

Underweight

$4.70

$5.00

-6.0%

-26.7%

De Grey Mining (DEG)

JP Morgan

Overweight

$1.55

$1.65

-6.1%

33.6%

Genesis Minerals (GMD)

UBS

Buy

$2.15

$2.30

-6.5%

13.5%

Transurban Group (TCL)

Macquarie

Neutral

$12.81

$13.74

-6.8%

3.1%

Suncorp Group (SUN)

Macquarie

Neutral

$15.80

$17.00

-7.1%

-5.7%

Boss Energy (BOE)

Bell Potter

Buy

$5.90

$6.35

-7.1%

56.1%

Fortescue (FMG)

JP Morgan

Neutral

$25.00

$27.00

-7.4%

14.4%

Gold Road Resources (GOR)

UBS

Buy

$2.35

$2.55

-7.8%

32.4%

Regis Resources (RRL)

Goldman Sachs

Neutral

$2.10

$2.30

-8.7%

14.4%

Cyclopharm (CYC)

Bell Potter

Buy

$3.10

$3.40

-8.8%

85.1%

Monadelphous Group (MND)

Bell Potter

Hold

$14.00

$15.40

-9.1%

9.0%

Core Lithium (CXO)

JP Morgan

Underweight

$0.08

$0.09

-11.1%

-14.0%

Bluescope Steel (BSL)

Macquarie

Outperform

$26.10

$29.45

-11.4%

29.4%

Ramsay Health Care (RHC)

Citi

Neutral

$50.00

$56.50

-11.5%

7.4%

Adore Beauty Group (ABY)

Citi

Buy

$1.50

$1.70

-11.8%

76.5%

Regis Resources (RRL)

UBS

Neutral

$1.85

$2.10

-11.9%

0.8%

Northern Star Resources (NST)

UBS

Buy

$16.00

$18.50

-13.5%

23.3%

De Grey Mining (DEG)

UBS

Buy

$1.80

$2.10

-14.3%

55.2%

Liontown Resources (LTR)

Goldman Sachs

Neutral

$1.15

$1.35

-14.8%

21.7%

Fortescue (FMG)

UBS

Sell

$18.90

$22.30

-15.2%

-13.5%

Boss Energy (BOE)

Macquarie

Outperform

$5.00

$6.00

-16.7%

32.3%

Core Lithium (CXO)

Jarden

Neutral

$0.10

$0.12

-16.7%

7.5%

Sonic Healthcare (SHL)

Bank of America

Underperform

$23.50

$29.00

-19.0%

-9.4%

Liontown Resources (LTR)

Canaccord Genuity

Hold

$1.05

$1.30

-19.2%

11.1%

Clean Seas Seafood (CSS)

Bell Potter

Hold

$0.22

$0.27

-20.4%

2.4%

Meteoric Resources (MEI)

Macquarie

Outperform

$0.36

$0.46

-21.7%

176.9%

Arafura Rare Earths (ARU)

JP Morgan

Underweight

$0.10

$0.14

-28.6%

-48.7%

Cygnus Metals (CY5)

Shaw and Partners

Buy

$0.30

$0.50

-40.0%

597.7%

Biggest broker price target changes since Wednesday 3 July. Price Target Upside/Downside (“PT Upside%”) values in the last column are based on closing prices as of Tuesday, 9 July.

From the brokers:

Shaw and Partners increases price target for Metro Mining to $0.13 from $0.07 (implies 124% upside)

  • “We make no change to our FY24 production forecast (6.8Mt) or earnings forecasts post the site visit. June quarter production of 1.42Mt was a new record for the second quarter and, despite being below target, full-year guidance of 6.3-6.8Mt looks achievable.”

  • Rating is retained at BUY

Shaw and Partners increases price target for Austin Engineering to $0.75 from $0.60 (implies 23% upside)

  • “ANG is a very well-run company delivering impressive results under a revised strategy. The company remains attractively priced versus comparable companies.”

  • Rating is maintained at BUY

UBS increases price target on Coronado Global Resources (ASX: CSN) to $1.95 from $1.80 (implies 38.3% upside)

  • “We lift our price targets on WHC and CRN reflecting higher expected met-coal prices).”

  • Rating is maintained at BUY

 

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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