For the third week in a row, the top ten percentage falls in average target prices and average forecasts were consistently larger than rises. At the end of the week, cloud-based accounting software provider Xero reported FY25 results showing earnings in line with consensus, yet the company heads up the positive change to earnings table as brokers continue to anticipate longer-term upside.
Management is prioritising sales-driven dollar growth over percentage margins, noted Macquarie, with product velocity, accelerating payments, and international subscriber growth providing key tailwinds. This broker raised its target to $204 from $191.90. Citi highlighted annualised monthly recurring revenue infers a potential lift of 5% to consensus revenue forecasts for FY26, having grown 22% compared to a year earlier. Net additions in the UK and US were better than anticipated in the second half at 79,000 and 35,000, respectively.
Raising its target to $215 from $196, UBS stated Xero deserves a premium valuation as management is delivering on strategy, keeping the company as a member of the ‘Rule of 40 Club’. Following Xero on the earnings upgrade list, Macquarie Group also received two ratings upgrades from each of Morgans and Citi.
Positively, the group posted earnings in line with consensus for the first time in eight reporting periods, UBS noted, while also retaining guidance despite global uncertainty.
Turning to ratings downgrades, here Coronado Global Resources received two from separate brokers to Hold or equivalent from Buy. Both Coronado and Stanmore Resources fill the top two placings in both the negative change to target price and earnings tables largely because Morgans last week lowered its coal price forecasts. UBS also weighed in on Coronado, suggesting negative free cash flow for the next two years means new debt funding is likely to be expensive, particularly given the recent downgrade by Fitch Ratings of the company’s long-term issuer default rating. After allowing for cost-out and productivity improvements at Coronado, and a full drawdown of its US$96m asset-backed lending facility, the analysts assess new funding is required.
Paladin Energy and Vista International follow Coronado and Stanmore on the earnings downgrade table. Shaw and Partners lowered its FY25 earnings forecast for Paladin to account for a -US$20m impairment on ore stockpiles, which has reduced the carrying value to US$43.7m. but revised up its FY26 forecast due to lower amortisation charges. This broker was adjusting forecasts after the company’s first quarterly report containing full financials. Paladin is now dual listed on the ASX and Toronto Stock Exchange (TSX), with the latter requiring quarterly updates. The impairment wasn’t a surprise to Shaw, and a lot less in dollar terms than the hit the stock took when the issue was originally revealed in the September quarterly. After running a downside scenario analysis for uranium prices (US$70/lb term and US$63/lb spot price), Ord Minnett last week concluded Paladin’s free cash flow yield remained acceptable.
Regarding New Zealand-based global technology company Vista International, UBS is forecasting a weaker contribution from cinema due to slower recovery in US box office, and lower uptake in the cloud business. If management can execute on its payments go-to-market strategy, the analysts estimate potential valuation upside of between 20-90cps, all else remaining equal, although it is too early yet to factor this into the broker’s current NZ$3.90 price target.
Management is aiming to leverage its unified, cloud-based SaaS platform to deliver integrated payment solutions as part of its broader cinema management and entertainment industry offering.
Dyno Nobel and Aristocrat Leisure appear third and fourth on the negative change to average target price list with falls of around -5% apiece. Despite the lower target Dyno Nobel, formerly known as Incitec Pivot, reported consensus-beating first-half underlying earnings from its Explosives business.
The company realised $25m in net benefits from its Transformation Program and management touted key milestones achieved in the separation strategy announced in September.
While Aristocrat Leisure’s interim earnings disappointed largely due to a fall in average fee in the Gaming division, several brokers build a case for a stronger second half.
On the flipside, brokers raised average targets for tracking technology company Life360 and uranium miner Boss Energy by around 11% and 6%, respectively. Compared to consensus, Life360’s March quarter produced revenue and earnings beats of 3% and 75%, respectively. The company achieved an acceleration in subscribers and active users. RBC Capital noted potential for a reduction in fees charged by Apple.
Boss Energy’s average target received a boost from Ord Minnett, after the broker raised its target price to $6 from $4.50, citing strong momentum and the potential for a higher share price based on an ongoing short squeeze. Despite shares rallying by 66% in the past three weeks, short interest on the ASX still sits at 25% of shares outstanding. Boss Energy continues to generate attractive free cash flow yields from FY28 due to the low costs of its Honeymoon project, noted the analysts.
IN THE GOOD BOOKS: UPGRADES
BLUESCOPE STEEL LIMITED ((BSL)) was upgraded to Buy from Accumulate by Ord Minnett. B/H/S: 3/2/0
Ord Minnett has upgraded its rating for BlueScope Steel to Buy from Accumulate, following a model update reflecting stronger US steel spreads and weaker Australian spreads. The North Star business in the US has maintained steel spreads around US$500/t since February, while conditions in the Australian Steel Products division have softened, observes the analyst. As a result, the broker raised EPS forecasts by 7.6% for FY25 and 11.3% for FY26, with FY27 largely unchanged. Capital expenditure remains elevated due to major projects, but free cash flow is expected to improve from FY27 onwards as spending winds down. Ord Minnett’s target price is raised to $29 from $27.50, supported by a positive operational and cash flow outlook.
CATALYST METALS LIMITED ((CYL)) was upgraded to Buy from Hold by Bell Potter. B/H/S: 2/0/0
Catalyst Metals acquired Old Highway gold project from Sandfire Resources ((SFR)) for -$32.5m, and Bell Potter reckons it is a logical and value-accretive deal. The project is 40km from the company Plutonic gold operation, with a resource of 2.1Mt at 3g/t containing 206koz of gold. The company announced details for the Zone 400 deposit at the project, and the broker has updated the model with a forecast of 1H27 commencement. The broker expects the project will lift the company’s production to 200kozpa over a 10-year life from 170kozpa. Rating upgraded to Buy from Hold. Target rises to $7.05 from $6.30.
GOODMAN GROUP ((GMG)) was upgraded to Buy from Neutral by UBS. B/H/S: 5/1/0
UBS upgrades Goodman Group to Buy from Neutral, with a slightly lower target price of $36 from $36.80, due to increased confidence around the data centre funding outlook, reduced market expectations, and around 10% medium-term operating EPS growth, which UBS states is “unique” for a REIT. The analyst explains the market was too quick to discount the group’s data centre pipeline of 5GW at $100bn without accounting for funding constraints, so the $4bn equity raising came as a surprise, the broker believes. UBS estimates over $10bn in capital will be needed by FY29 to commence 5GW without joint venture agreements of circa $6bn. The latter can be funded via retained earnings and asset sales. The analyst has an upside target price case of $44.70, reflecting data centre pipeline growth above 5GW due to tailwinds from AI/cloud demand growth.
ILUKA RESOURCES LIMITED ((ILU)) was upgraded to Buy High Risk from Neutral High Risk by Citi. B/H/S: 3/2/0
Citi upgrades Iluka Resources to Buy/High Risk from Neutral/High Risk following a reassessment of the broker’s rare earths refinery valuation. The broker lifts its target to $5.30 from $4.60, incorporating the benefit of accelerated tax allowances it believes Iluka can access. The 12-month target price is raised to $5.20 from $4.40, with the risked refinery valuation now at 92cps and un-risked at $1.08cps based on a long-term NdPr price of US$90/kg. Citi notes peer Lynas Rare Earths ((LYC)) is priced off US$106/kg, highlighting potential valuation upside.
JUDO CAPITAL HOLDINGS LIMITED ((JDO)) was upgraded to Neutral from Sell by Citi. B/H/S: 4/2/0
Citi upgrades Judo Capital to Neutral from Sell, noting recent share price weakness offers a more balanced risk/reward. Shares have traded down around -35% from 2025 highs. Management reaffirmed FY25 guidance. The broker highlights risks around net interest margins (NIM) due to widening term deposit spreads and potential rate cuts. April’s volatility in swaps has pressured spreads, a risk Citi expects could persist. Slower gross loan growth reflects proactive portfolio risk management, though asset quality remains mixed. Peer banks show gradual deterioration, and Citi expects bad and doubtful debts (BDD) expenses to stay elevated across the sector. The target price eases slightly to $1.55 from $1.60.
LINDSAY AUSTRALIA LIMITED ((LAU)) was upgraded to Add from Hold by Morgans. B/H/S: 3/0/0
More M&A activity from Lindsay Australia, with the latest being the acquisition of a Tasmanian refrigerated transport business SRT Logistics, for -$108.2m. Morgans sees benefits from geographic and seasonal earnings diversification and via the leverage of shared assets. The company provided FY25 EBITDA guidance, representing a downgrade versus the consensus forecast as the Queensland business is impacted by weather and softer volumes in 2H. The broker lifted FY26-27 EPS forecasts by 12% and 5%, respectively, but lowered FY25 following the guidance. Target rises to 85c from 80c. Rating upgraded to Add from Hold.
LENDLEASE GROUP ((LLC)) was upgraded to Buy from Neutral by Citi. B/H/S: 2/2/1
Confirming media reports, Lendlease Group announced it is in late-stage negotiations for a joint venture development of its UK portfolio with The Crown Estate, for a 50:50 JV covering six developments. Citi highlights a successful deal could realise between $250m$300m for Lendlease and confirms the strategic position of a capital return, which the broker believes the market is currently not pricing in. No change to Neutral rating and $7.50 target price.
MACQUARIE GROUP LIMITED ((MQG)) was upgraded to Add from Hold by Morgans and to Neutral from Sell by Citi. B/H/S: 2/3/0
Morgans assesses Macquarie Group’s FY25 net profit as largely in-line, with net profit 1% ahead of consensus. The final ordinary dividend of $3.90/share was above the broker’s forecast of $3.80. Banking and Financial services result was the highlight, benefiting from loan portfolio and deposit growth. The broker notes the outlook for this segment is slightly more positive. Group operating expenses were well managed, but commodities and global market business saw a softer outcome on lower trading income and lower risk management. The broker lifted the net operating income forecasts for FY26-27, but also raised other costs estimates, resulting in a -2.4% decline to FY26 cash earnings and a -3.1% cut to FY27. EPS forecasts for FY26-27 cut while dividend forecasts raised. Rating upgraded to Add from Hold. Target price rises to $223.89 from $218.57.
On the back of Macquarie Group’s FY25 earnings report, Citi upgrades the stock to Neutral from Sell. The target price is raised to $200 from $177. The group reported net profit in line with both the broker’s and consensus estimate, and with such a substantial shift in global economic conditions post the March year-end, the focus was always on guidance. Citi believes the highest risks for earnings in the coming year lie in MAM net operating offset income, commodities, and investment-related income from MacCap. Commentary suggests there is possible upside from public market gains on sales, and commodities are coming off an “average” year. MacCap is expected to become more exposed to private credit.
The broker highlights management has multiple levers to increase return on equity, including a share buyback of around $1bn, exiting green assets, and reinvesting circa $3bn of gross proceeds from public markets. Reflecting reduced revenues from MAM and MacCap, the analyst lowers FY25/FY26 earnings assumptions by around -4%.
NRW HOLDINGS LIMITED ((NWH)) was upgraded to Buy from Buy/High risk by Citi. B/H/S: 3/1/0
Citi explains the ongoing saga of OneSteel and NRW Holdings’ position as a secured creditor. The South Australian government’s decision to vest ownership of assets to an entity under administration has undermined NRW’s position, such that the broker believes full recovery seems unlikely. The company has been impacted by this saga and weather-related disruptions to mining, with the market cap shrinking by -19% since February’s trading halt, the analyst highlights. A robust order book underpins a positive view from Citi, with the broker stressing the OneSteel Whyalla travails are already discounted in the share price following the downward revision in 1H25 earnings expectations. The rating is upgraded to Buy from Buy/High risk with a lower target price of $3.65 from $3.85,
RELIANCE WORLDWIDE CORP. LIMITED ((RWC)) was upgraded to Add from Hold by Morgans. B/H/S: 4/2/0
Morgans upgrades Reliance Worldwide to Add from Hold and lifts the target price to $5.45 from $4. The broker highlights trade negotiations in Geneva over the past weekend between China and the US, noting the decline in tariffs is a boost to Reliance Worldwide as some concerns are alleviated. In the May 8 update, management indicated around 48% of the Americas’ cost of goods sold were sourced outside the US and were potentially subject to tariffs. The company is transitioning its sourcing from China to Vietnam, Taiwan, Korea, and Thailand. Morgans now estimates the tariff impact to be around -US$6m in FY26. The analyst believes the balance of risks is now skewed to the upside.
XERO LIMITED ((XRO)) was upgraded to Add from Hold by Morgans. B/H/S: 5/1/0
The highlight of Xero’s FY25 result for Morgans was 25% y/y subscriber growth in North America, which beat its forecast and was also marginally above consensus. The broker notes this is important for the company’s growth ambitions. Tight cost management was also a positive, supporting incremental capital on sales and marketing going ahead, which, together with improved product profile, is expected to boost subscriber growth. Overall revenue was in line, and the “rule of 40” was exceeded with operating profit up 48% y/y. In 2H25 specifically, the broker also points to higher ARPU in North America, up 25% y/y, which lifted revenue up 28% y/y. The UK business saw ARPU grow 18% y/y and revenue lifted 26% y/y. The broker lifted FY26-27 expenses forecasts, leading to a cut in EPS forecasts. Target price rises to $215 from $188 on an increase in DCF-based valuation and roll forward. Rating upgraded to Add from Hold.
IN THE BAD BOOKS: DOWNGRADES
AVITA MEDICAL INC ((AVH)) was downgraded to Speculative Buy from Add by Morgans. B/H/S: 1/1/0
Morgans lowers its target for Avita Medical to $3.76 from $4.36 and downgrades to Speculative Buy from Add, citing heightened balance sheet risk. Although first quarter revenue grew by 67% year-on-year to US$18.5m, it was flat quarter-on-quarter and missed the broker’s expectations around cash burn and progression toward breakeven. Operating expenses were higher than forecast at -US$27.5m, and the cash balance of US$25.8m leaves less than two quarters of runway, note the analysts, raising concerns about a potential capital injection. Cost-saving measures and new product launches are expected to support a path to breakeven by the end of 3Q25, suggests the broker, assuming 13% quarterly sales growth and a reduced cost base. Despite recent challenges, the broker highlights the company’s product pipeline and retains a positive long-term view.
CHARTER HALL RETAIL REIT ((CQR)) was downgraded to Neutral from Outperform by Macquarie. B/H/S: 3/1/0
Following attendance at Charter Hall Retail REIT’s investor day and tour of some assets in Sydney, Macquarie has left forecasts unchanged.
The REIT believes its portfolio and capital structure are positioned for growth, but the broker is forecasting -0.2% operating EPS compounded annual growth in FY24-27 due to interest expense headwinds. The broker acknowledges portfolio improvement following the acquisition of Hotel Property Investments and noted the REIT is currently working on 10 capital recycling opportunities. Target unchanged at $3.51. Rating downgraded to Neutral from Outperform for valuation reasons.
CORONADO GLOBAL RESOURCES INC ((CRN)) was downgraded to Neutral from Buy by UBS and Downgrade to Hold from Speculative Buy by Morgans. B/H/S: 0/5/0
Coronado Global Resources cops a downgrade to Neutral from Buy at UBS with a decline in the target price to 19c from 31c. The broker explains Coronado’s operational and financial leverage to the coal market as the outlook has continued to soften. Post the miner’s 1Q25 trading update, the analyst points to ongoing margin pressure despite achieving productivity and cost gains and assessing a number of variable assumptions. The analyst forecasts larger cost outs of -US$150m in 2025 compared to guidance of US$100m. UBS concludes further funding will be needed. Specifically, deferral of investment spending now kicks the can down the road and will require sustained capital investment to compensate in the longer term. The broker lowers EPS estimates substantially, doubling the expected loss for FY25. Morgans remains of the view coal prices have found their floor, and the risk is for upside, but moderated its outlook for prices, resulting in cuts to target prices for coal stocks.
The broker believes worsening supply-side dynamics, rather than demand, will nudge prices higher. Downside risk looks limited given current prices are becoming uneconomic for miners. Queensland PHCC price forecast for FY25 cut by -2% to US$198.6, and for FY26 trimmed by -5% to US$201. Newcastle thermal coal price forecast cut by -5% to US$120.4 for FY25 and by -13% to US$108.1 for FY26.
In the near term, the broker expects companies to focus on costs and delay capex, and highlights cuts to dividends are likely Sharp cut in Coronado Global Resources’ target price to 18c from 90c as the broker sees valuation risk on liquidity challenges. Rating downgraded to Hold from Speculative Buy.
TREASURY WINE ESTATES LIMITED ((TWE)) was downgraded to Neutral from Outperform by Macquarie. B/H/S: 4/2/0
Treasury Wine Estates has announced current CEO Tim Ford will step down in September, with Sam Fischer, formerly of Lion and Diageo, to take over in October. While Macquarie views the appointment positively, the unexpected leadership change introduces uncertainty around the company’s medium-term strategy, particularly for the key Penfolds segment. No update was provided on FY25 guidance, which had already been downgraded in February. With the new CEO not starting until late October, the broker does not expect any near-term strategic shifts and remains cautious on the group’s outlook.
Macquarie’s earnings forecasts for FY26 and FY27 are cut by -5.3% and -9.5% respectively, reflecting reduced confidence in recovery and long-term growth. Growth expectations for Penfolds have also been lowered. After lowering its target by -24% to $8.90, thy broker downgrades the rating for Treasury Wine Estates to Neutral from Outperform.
EARNINGS FORECASTS
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.
