Ratings adjustments were dominated by an upbeat Property sector report released by Macquarie, resulting in an equal number of upgrades and downgrades (six) for the broker’s research coverage of 22 stocks.
Pointing to prospects for interest rate cuts and accelerating GDP growth in 2025, Macquarie analysts believe the residential market will benefit from the broker’s forecast for a -75bps reduction in the RBA cash rate during the year, with the first cut anticipated in February.
It’s thought downside risks in the office market are already priced into valuations.
Macquarie’s preferred exposures are Mirvac Group, Dexus, GPT Group, Centuria Industrial REIT, Dexus Industria REIT, and Qualitas.
Beyond the property sector, Macquarie and Bell Potter downgraded their ratings for Capricorn Metals on valuation grounds, following a 22% share price gain since January 1st, also raising 12-month targets by approximately 4% following a strong second quarter operational update.
Sales for Capricorn came in higher-than-expected by Macquarie, and all-in-sustaining costs were lower than forecast.
Highlighting strong cash generation, Bell Potter now expects a stronger second half will allow management to meet re-affirmed production guidance.
The tables below show negative revisions to average earnings forecasts last week significantly outweighed positive adjustments, while changes by brokers to average target prices were broadly balanced.
HMC Capital received the largest percentage upgrade to average target price after UBS raised its target to $10.85 from $7.95 and upgraded to Buy from Neutral following significant recent initiatives in both the digital infrastructure and energy transition space.
In the last few months of 2024, HMC management announced the establishment and listing of the DigiCo Infrastructure REIT (data centres in Australia and the US), and the acquisition of Neoen’s Victorian renewable generation and storage portfolio for -$950m.
UBS also identified other areas of potential upside for HMC Capital within existing verticals (involving consumer-facing assets and alternative real estate) following recent guidance upgrades by similar exposures, Baby Bunting and Ingenia Communities, as well as the growth potential across both HMC’s Energy Transition and Private Credit platforms.
The asset manager also appears third on the positive change to earnings forecast table below, behind Synlait Milk and Boss Energy.
Macquarie forecast higher profits for Synlait Milk (July year-end) in FY25, following inaugural first-half earnings (EBITDA) guidance of NZ$58-63m through to the end of January.
This Underperform-rated broker noted an improvement around new business development in Advanced Nutrition products, as well as currency and mix benefits for Ingredients.
Management is also reducing costs through lower consultancy expenses, headcount reductions, and North Island asset optimisation, highlighted Macquarie.
Following Boss Energy’s “solid” operational results in quarter two, Bell Potter suggested a re-rate is in the wind given undervaluation versus peers, and the potential for shorters of the stock to reverse positions.
The analysts believe management is well placed to beat FY25 production guidance of 850klbs as both drummed production and production in circuit are now operating at nameplate capacity.
Macquarie was pleasantly surprised by lower-than-expected costs at the Honeymoon mine, while Morgan Stanley highlighted better-than-anticipated sales in the December quarter, exceeding consensus expectations.
Bellevue Gold’s average earnings forecast rose around 18% last week. Brokers generally made only minor adjustments to earnings forecasts following the company’s quarterly operational result, but Bell Potter raised its target to $2.00 from $1.90 due to higher Australian dollar gold price forecasts.
Turning to negative outcomes last week, Autosports Group and COG Financial Services suffered falls in average targets of -16% and -12%, respectively.
While remaining positive on the long-term growth outlook for COG Financial Services, Bell Potter lowered its earnings estimates to reflect near-term headwinds after a “mixed” trading update.
This broker highlighted a weaker-than-expected outcome for aggregation in the second quarter. The company’s aggregation service provides access to a broad panel of lenders and financial products, enabling finance brokers to offer competitive financing solutions to clients without needing direct relationships with multiple lenders.
Regarding Autosports Group, management downgraded first half profit before tax and revenue guidance, having previously downgraded as recently as last November.
UBS explained lower guidance reflected weaker new vehicle volumes over November and December, though noted a marginal share price decline in reaction to the ASX release suggested the market is looking through the cycle to future RBA rate cuts, with margins at or near the bottom of the cycle.
Citi attributed some of the downward revision to industrial action at ports but viewed weaker retail demand as the more probable cause due to “excess” new vehicle inventories.
The group also appears fifth on the table for negative change to earnings forecasts, below three lithium miners and gold producer Perseus Mining.
Brokers highlighted a strong second quarter operationally for Perseus Mining, but management announced lower-than-anticipated second half production guidance and weaker costs, highlighted Macquarie.
In the good books: upgrades
In the bad books: downgrades
ABACUS GROUP ((ABG)) was upgraded to Outperform from Neutral by Macquarie. B/H/S: 4/0/0
Macquarie holds a favourable outlook for the ASX Property sector in 2025, supported by prospects for interest rate cuts and accelerating GDP growth.
The residential market will benefit from the broker’s forecast of a -75bps reduction in the RBA cash rate during 2025, with the first cut anticipated in February. It’s thought downside risks in the office market are already priced into share valuations.
From coverage of 22 stocks in the Property sector, Macquarie prefers Mirvac Group, Dexus, GPT Group, Centuria Industrial REIT, Dexus Industria REIT, and Qualitas.
For Abacus Group, the broker raises its target to $1.26 from $1.15 and upgrades to Outperform from Neutral, noting a deep discount to fundamental value.
AGL ENERGY LIMITED ((AGL)) was upgraded to Outperform from Neutral by Macquarie. B/H/S: 3/1/0
Macquarie upgrades AGL Energy to Outperform from Neutral with a higher target price of $12.08, up from $11.67, due to an improved earnings outlook driven by higher NSW power prices.
The analyst explains 1H25 results should benefit from government rebates, customer relief programs, and stronger prices. FY26 and FY27 pricing outlooks of $120-$125/MWh for SA and NSW are around $10/MWh higher than the broker’s previous forecast.
Macquarie envisions battery arbitrage revenue could have a material impact over the next two years as Neoen and Liddell batteries come online.
The broker highlights political uncertainty in the energy sector, noting a potential government change could extend the “need for coal” and possibly lead to AGL developing an open cycle gas turbine.
Macquarie lifts EPS estimates by 2.5% for FY25 and 7.5% for FY26. Outperform rating retained with a $12.08 target price.
CENTURIA INDUSTRIAL REIT ((CIP)) was upgraded to Outperform from Neutral by Macquarie. B/H/S: 3/3/0
Macquarie holds a favourable outlook for the ASX Property sector in 2025, supported by prospects for interest rate cuts and accelerating GDP growth.
For Centuria Industrial REIT, the broker’s target rises to $3.32 from $3.20 due to updates to economic forecasts and the rating is upgraded to Outperform from Neutral.
CHARTER HALL RETAIL REIT ((CQR)) was upgraded to Outperform from Neutral by Macquarie. B/H/S: 3/2/0
Macquarie holds a favourable outlook for the ASX Property sector in 2025, supported by prospects for interest rate cuts and accelerating GDP growth.
For Charter Hall Retail REIT, the target rises to $3.45 from $3.42. The broker upgrades to Outperform from Neutral on greater comfort around balance sheet metrics, noting potential corporate action upside.
DEXUS ((DXS)) was upgraded to Outperform from Neutral by Macquarie. B/H/S: 3/1/1
Macquarie holds a favourable outlook for the ASX Property sector in 2025, supported by prospects for interest rate cuts and accelerating GDP growth.
For Dexus, the target rises to $7.74 from $6.52 and the broker’s rating is upgraded to Outperform from Neutral given shares are trading at an around -24% discount to net tangible assets as at June 2024.
GROWTHPOINT PROPERTIES AUSTRALIA ((GOZ)) was upgraded to Outperform from Neutral by Macquarie. B/H/S: 3/0/0
Macquarie holds a favourable outlook for the ASX Property sector in 2025, supported by prospects for interest rate cuts and accelerating GDP growth.
For Growthpoint Properties Australia, the target rises to $2.61 from $2.35. The broker’s rating is upgraded to Outperform from Neutral as shares are thought to be trading at a deep discount to value.
HMC CAPITAL LIMITED ((HMC)) was upgraded to Buy from Neutral by UBS. B/H/S: 2/3/0
UBS upgrades HMC Capital to Buy from Neutral, citing recent share price underperformance, strong momentum across existing assets, and growth potential in increasingly diversified verticals.
The broker sees opportunities for raising new capital within these verticals, contrasting with the challenges faced by traditional, lower-growth real estate fund managers.
A $10.85 target is set, up from the $7.95 recorded in a summary of the broker’s last update on August 23, 2024, in the FNArena database.
LENDLEASE GROUP ((LLC)) was upgraded to Outperform from Neutral by Macquarie. B/H/S: 2/3/0
Macquarie holds a favourable outlook for the ASX Property sector in 2025, supported by prospects for interest rate cuts and accelerating GDP growth.
For Lendlease Group, the broker’s target eases to $6.98 from $7.00 and the rating is upgraded to Outperform from Neutral on valuation grounds, including a better-than-expected delivery so far of management’s stated strategy.
MONADELPHOUS GROUP LIMITED ((MND)) was upgraded to Outperform from Neutral by Macquarie. B/H/S: 2/3/0
Macquarie lifts its target for Monadelphous Group to $15.93 from $14.80 and upgrades to Outperform from Neutral after management pre-announced 1H profit in the range of $40-43m, ahead of the broker’s $33m estimate.
The analyst attributes margin improvement largely to good project delivery along with better terms and conditions of work, and believes the company is beginning to benefit from an improving labour environment.
The broker estimates a 1H EBITDA margin of 6.65%, up 57bps versus the previous corresponding period, and forecasts a further 5bps improvement to 6.70% in H2.
SANDFIRE RESOURCES LIMITED ((SFR)) was upgraded to Neutral from Sell by UBS. B/H/S: 1/4/1
Following a 2Q operational update, UBS raises its target for Sandfire Resources to $10.45 from $9.85 and upgrades to Neutral from Sell after a -13% share price retreat from October-highs.
The broker highlights a “very good’ cost performance and maintenance of FY25 production guidance, despite slightly softer copper production outcomes at both Matsa and Motheo during the quarter.
Management’s projections for the Motheo plant prompts the analyst to add 3-4ktpa of copper production to near-term forecasts.
ZIP CO LIMITED ((ZIP)) was upgraded to Buy from Neutral by Citi. B/H/S: 3/0/0
Citi believes the sell-off in the Zip Co share price post the 2Q25 trading update was overdone and upgrades the stock to Buy from Neutral, with a target price of $3, down from $3.30.
The analyst lowers earnings estimates by -8% to -12% for FY25-FY27 due to lower-than-expected A&NZ revenue and marginally higher costs.
Growth in the US business is forecast to slow to 35% in 2H25, which may prove to be conservative, Citi highlights.
Buy. Target $3.
AMPOL LIMITED ((ALD)) was downgraded to Neutral from Outperform by Macquarie. B/H/S: 1/3/0
Macquarie lowers its target for Ampol to $31 from $33.75 and downgrades to Neutral from Outperform after 2024 profit guidance missed expectation, implying a softer 4Q in refining, Fuels & Infrastructure and international.
While the broker notes a solid performance in Convenience Retail, supported by premium fuel margin expansion, international trading remained weaker than pre-2022 levels.
The analyst’s earnings forecasts for 2024 and 2025 are reduced by -13% and -8%, respectively, due to lower fuels and infrastructure margins and higher capital expenditure expectations. Macquarie expects a refining recovery by 2026.
ARENA REIT ((ARF)) was downgraded to Neutral from Outperform by Macquarie. B/H/S: 1/3/0
Macquarie holds a favourable outlook for the ASX Property sector in 2025, supported by prospects for interest rate cuts and accelerating GDP growth.
For Arena REIT, the broker lowers the target to $3.99 from $4.15 due to updated economic forecasts and downgrades to Neutral from Outperform on valuation.
ASX LIMITED ((ASX)) was downgraded to Underweight from Equal weight by Morgan Stanley. B/H/S: 0/3/2
Morgan Stanley downgrades ASX to Underweight from Equal-weight, citing the company’s expected low single-digit EPS growth, which does not compare favourably with other stocks in the broker’s coverage.
The broker highlights capital market peers, Computershare ((CPU)) and Macquarie Group ((MQG)), are expected to achieve mid-to-high single-digit or better EPS growth, while five covered insurance stocks are forecast to generate double-digit earnings growth in 2025, trading on sub-20 times price-to-earnings ratios.
Morgan Stanley notes ASX might achieve “modest” revenue surprises from two new product launches in 1H25.
Underweight. Target price falls to $55.05 from $58. Industry View: In-Line.
ACCENT GROUP LIMITED ((AX1)) was downgraded to Neutral from Buy by Citi. B/H/S: 4/1/0
On first inspection, Citi highlights an apparent reduction in Accent Group’s sales growth and gross margins since the AGM in the latest 1H25 trading update.
Accounting for the unexpected one-off -$3.3m non-recurring item, the update was broadly in line with consensus expectations.
The analyst notes a decline in like-for-like sales growth to 2.0% versus an estimate of 3.5% and 3.5% in the first 20 weeks. Increased promotions saw the gross margin shrink -100bps in 1H25, above the -70bps decline in the first four months.
Management indicated “inventory is clean.” Citi lowers net profit after tax forecast by -5% for FY25 and -12% for FY26.
Accent Group is downgraded to Neutral from Buy. Target price falls -2% to $2.43 from $2.47.
CREDIT CORP GROUP LIMITED ((CCP)) was downgraded to Neutral from Outperform by Macquarie. B/H/S: 1/1/0
Macquarie downgrades Credit Corp to Neutral from Outperform with a lower target price of $16.27 from $19.62 post 1H25 update.
The company generated net profit after tax below consensus and the analyst’s forecasts by -4% and -5%, respectively. Macquarie points to the US as the key “disappoint” despite ongoing improvement in operational performance.
US collections rose 12% year-on-year with improved labour productivity of 29%, the broker explains.
Management reconfirmed FY25 net profit after tax guidance of $90m-$100m.
The broker lowers EPS estimates by -3.4% and -2.8% for FY25/FY26, respectively. The stock is downgraded due to collection rates and the absence of US debt buying, Macquarie stresses.
CHARTER HALL GROUP ((CHC)) was downgraded to Neutral from Outperform by Macquarie. B/H/S: 2/2/1
Macquarie holds a favourable outlook for the ASX Property sector in 2025, supported by prospects for interest rate cuts and accelerating GDP growth.
For Charter Hall, the broker’s target rises to $15.71 from $15.43 and the rating is downgraded to Neutral from Outperform on valuation grounds.
CAPRICORN METALS LIMITED ((CMM)) was downgraded to Underperform from Neutral by Macquarie and to Hold from Buy by Bell Potter. B/H/S: 1/1/1
Macquarie downgrades Capricorn Metals to Underperform from Neutral due to the 22% appreciation in the share price in 2025 to date.
The broker notes many of the miner’s 2Q25 metrics were pre-released. Sales came in higher than expected, and all-in-sustaining costs were lower than the analyst’s forecast.
At quarter-end, Capricorn had cash and bullion of $363m. Management confirmed FY25 guidance at the midpoint of 110-120koz of production.
Macquarie lifts EPS forecasts by 4% for FY25 and lowers FY26 by -4%. Target price rises 3% to $7.30.
Bell Potter raises its target price for Capricorn Metals to $7.84 from $7.54 following its second-quarter operational update and downgrades to Hold from Buy after recent share price appreciation.
Gold production from the 100%-owned Karlawinda Gold Project in WA reached 28.7koz, exceeding the broker’s 27.8koz forecast, due to higher mill throughput and recoveries, while costs (AISC) were broadly in line.
The broker highlights strong cash generation and expects a stronger second half will allow management to meet unchanged production guidance.
CENTURIA CAPITAL GROUP ((CNI)) was downgraded to Neutral from Outperform by Macquarie. B/H/S: 2/2/1
Macquarie holds a favourable outlook for the ASX Property sector in 2025, supported by prospects for interest rate cuts and accelerating GDP growth.
For Centuria Capital, the target eases to $1.85 from $1.87 and the broker’s rating is downgraded to Neutral from Outperform partly due to potential ongoing asset devaluations.
DROPSUITE LIMITED ((DSE)) was downgraded to Hold from Buy by Ord Minnett. B/H/S: 1/1/0
Ord Minnett notes Dropsuite has entered a scheme of arrangement for NinjaOne LLC to acquire 100% of the company at $5.90 per share.
The price represents a 34% premium to the last closing price.
Dropsuite’s board has unanimously recommended shareholders vote in favour of the scheme.
The broker also highlights 4Q24 metrics were “exceptionally strong” and well above forecasts.
Target price increases to $5.90 from $4.09. Stock is downgraded to Hold from Buy.
MEDADVISOR LIMITED ((MDR)) was downgraded to Hold from Buy by Bell Potter. B/H/S: 0/1/0
Bell Potter cuts its target price for MedAdvisor to 21c from 40c and downgrades to Hold from Buy, due to reduced earnings forecasts and a lower assumed valuation multiple.
Second quarter revenue fell short of the growth expectations set by management at the start of FY25, with US revenue declining by -29% in the first half due to lower vaccine contract revenue, which the broker sees as the most significant factor.
Non-vaccine revenue for H1 also dropped by -24% year-on-year, while Australian revenue rose by just 2%. Management did not reiterate its FY25 positive earnings (EBITDA) guidance from the December trading update.
REGION GROUP ((RGN)) was downgraded to Underperform from Outperform by Macquarie. B/H/S: 3/0/2
Macquarie holds a favourable outlook for the ASX Property sector in 2025, supported by prospects for interest rate cuts and accelerating GDP growth.
For Region Group, the target falls to $2.03 from $2.28 and the rating is downgraded to Underperform from Outperform. Despite attractive defensive characteristics, the broker highlights near-term DPS growth is anaemic.
SCENTRE GROUP ((SCG)) was downgraded to Neutral from Outperform by Macquarie. B/H/S: 3/1/1
Macquarie holds a favourable outlook for the ASX Property sector in 2025, supported by prospects for interest rate cuts and accelerating GDP growth.
For Scentre Group, the target falls to $3.37 from $3.60 and the rating is downgraded to Neutral from Outperform on changes to the broker’s economic forecasts.
STOCKLAND ((SGP)) was downgraded to Underperform from Neutral by Macquarie. B/H/S: 2/2/1
Macquarie holds a favourable outlook for the ASX Property sector in 2025, supported by prospects for interest rate cuts and accelerating GDP growth.
For Stockland, the target falls to $5.15 from $5.26 on changes to the broker’s economic forecasts, and the rating is downgraded to Underperform from Neutral.
SIGMA HEALTHCARE LIMITED ((SIG)) was downgraded to Hold from Accumulate by Ord Minnett. B/H/S: 1/2/1
Ord Minnett downgrades Sigma Healthcare to Hold from Accumulate on valuation grounds, with a higher target price of $2.70, up from $2.15.
The broker notes a strong trading update for 1H25, including 19% growth in new store rollouts and a 10.3% like-for-like sales increase. The analyst highlights improvements in margins compared to the previous year.
Ord Minnett raises EPS estimates by 20%-24% for FY26 and FY27, respectively.
Sigma Healthcare is set to report earnings in March, with upside potential, the broker highlights due to ASX index changes in March.
Earnings forecast
Listed below are the companies that have had their forecast current year earnings raised or lowered by the brokers last week. The qualification is that the stock must be covered by at least two brokers. The table shows the previous forecast on an earnings per share basis, the new forecast, and the percentage change.
