Average targets for the two larger companies in the ASX Technology Index, WiseTech Global and Pro Medicus, rose by 18% and 16%, respectively.
Following a blaze of negative media publicity surrounding former CEO Richard White and a downgrade in revenue and earnings guidance, brokers refocused on WiseTech’s positive longer-term prospects. Macquarie, Ord Minnett, and Morgans upgraded ratings for the company.
Pro Medicus received a 1.5% lift in average earnings from brokers after landing its biggest ever contract. Following this “shockingly large” $330m deal over 10 years, Morgans raised its target to $225 from $139, believing the magnitude of the transaction would raise the company’s profile even more versus competitors.
This Hold-rated broker felt the short period of time since the prior record contract win ($140m, 10-year contract with Baylor Scott & White Health in September last year) suggests such outcomes may not just be a once every five-year event.
As the contract with Trinity Health was announced towards the end of last week, only two of five covering brokers in the database had time to issue new research, and one of them, Ord Minnett, is awaiting more details before adjusting its target. This broker agreed with Morgans the deal may open the door to contract wins with other major players in the US health-care system.
While Ord Minnett kept its $140 target for now, the contract size compares to the analyst’s total contract value (TCV) forecasts for Pro Medicus of $189m and $201m in FY25 and FY26, respectively, implying imminent earnings upgrades are likely.
On the day prior to the Trinity win, management announced a $24m upgrade of services by existing client NYU Langone Health to the full stack of the company’s offering, adding the Archive and Worklist modules out to 2029, and extending the existing seven-year contract for Viewer by one year to the same date.
Highlighting potential upside to Sell-rated Citi’s target price in the coming week, this $24m upgrade was the first new contract for Pro Medicus in FY25 and the broker decided to keep its forecast for $30m in new business in FY25 (in research released prior to the $330m win).
Next on the positive change to target price table is Gentrack Group after management continued the half-yearly tradition over the last few years of exceeding market expectations, as market fears around falling non-recurring revenue proved unfounded.
Gentrack, which designs, develops, implements, and supports specialist software solutions for electricity, gas, and water utilities, as well as airports, beat the earnings consensus forecast by 5% due to higher-than-expected hardware sales in the airports division.
UBS continues to see value across the ASX gold sector after raising gold price forecasts from 2026 onwards to reflect diversification/haven flows and likely price resilience in an environment of higher macroeconomic volatility and geopolitical tension.
While the broker’s long-term gold price forecast last week remained unchanged at US$1,950/oz, across 2025-28 estimates are adjusted by -3%, 3%, 4% and 4%, respectively, to US$2,800/oz, US$2,850/oz, US$2,700/oz and US$2,400/oz.
As a result of these updated price forecasts, earnings estimates for De Grey Mining rose, and the target was raised to $2.20 from $2.15, alongside a Buy rating.
Bell Potter also has a Buy rating for De Grey and a $1.82 target after a review of its gold sector coverage following the Trump election win.
This broker views gold as an increasingly attractive store of wealth amid concerns over US dollar currency debasement driven by rising debt service and repayment obligations. Reduced tax revenue and higher inflation are expected to significantly expand the already massive US budget deficit, positioning gold as a key inflation hedge.
Bell Potter anticipates further gold price consolidation before macroeconomic factors drive the price higher and sees the outperformance of silver versus gold as a positive indicator for gold sentiment.
Star Entertainment led the earnings downgrades when it disclosed an unaudited earnings (EBITDA) loss of -$27m for the first four months of FY25, excluding significant items. This prompted Macquarie to lower its target price to 20c from 24c and downgrade to Underperform from Neutral.
The analyst expressed doubts over management’s ability to stabilise operations and achieve near-term profitability after the Chairman stated at the company’s AGM “near-term liquidity challenges, and the broader overall financial viability of the business, will remain the largest concerns for the Board and executive team”.
Superloop’s lower average earnings forecast (-22%) came after Citi initiated coverage with a Buy rating but with earnings forecasts lower than the average of three existing covering brokers in the FNArena database.
Analysts at Citi expect Superloop will capture additional share from incumbent telco players as it is well-positioned to exceed market growth due to competitive pricing, its own network infrastructure, and superior speed/latency performance.
Average earnings forecasts for Autosports Group also fell by around -15% last week after management’s first half profit before tax guidance missed forecasts by circa -24%.
Management’s decision to reduce vehicle inventory contributed to the downgrade, according to UBS, with like-for-like new car volumes flat year-on-year but outperforming the industry declines.
The analysts noted discounting and promotions to clear inventory suggested a decline in gross margin of -200bps year-on-year in the first half of FY25.
In the good books: Upgrades
Upgrades
AMCOR PLC ((AMC)) was upgraded to Outperform from Neutral by Macquarie. B/H/S: 1/5/0
Macquarie upgrades Amcor to Outperform from Neutral as the Berry acquisition, with synergies, gives the broker confidence in 8% compound earnings growth to FY29.
Amcor has a good record on cost synergy delivery, but Macquarie’s new forecasts do not include potential revenue synergies at this stage. The broker finds that after a period of near-term consolidation, Amcor’s share price did well during the synergy realisation period for both the Bemis and Alcan acquisitions.
Target rises to $18.04 from $16.30.
LOVISA HOLDINGS LIMITED ((LOV)) was upgraded to Hold from Lighten by Ord Minnett. B/H/S: 2/4/1
Ord Minnett assesses a disappointing FY25 trading update by Lovisa Holdings as cash-constrained consumers spent less on discretionary items and the rollout of new stores missed market expectations.
Like-for-like sales increased by only 1% in the first 20 weeks of FY25, while the addition of new stores lifted total sales by 10%, with Black Friday timing likely impacting sales growth, observes the analyst.
Management anticipates an acceleration in the store rollout pace, highlighting opportunities in the US and Canadian markets.
The broker lowers the target price to $29.20 from $30 and upgrades the rating to Hold from Lighten, following a -9% share price decline in November.
WISETECH GLOBAL LIMITED ((WTC)) was upgraded to Outperform from Neutral by Macquarie and to Add from Hold by Morgans and to Accumulate from Hold by Ord Minnett. B/H/S: 7/0/0
Macquarie upgrades WiseTech Global to Outperform from Neutral and raises the target price by 53% to $152.70.
The broker notes delays to new products have led to FY25 revenue guidance being revised down -6% at the midpoint and earnings down -7% at the midpoint. ComplianceWise has been released as expected, while Container Transport Optimisation has been delayed to 2H25 due to media disruptions.
The analyst emphasises no evidence of misconduct has been found, describing recent media stories as “short-term noise.” Industry insights suggest CargoWise has potential to expand beyond freight forwarding to Beneficial Cargo Owners, which represent the other 50% of global manufactured trade volumes. WiseTech is also increasing sales per customer.
Macquarie lowers EPS forecasts by -7% for FY25 and -4% for FY26.
The analyst highlights WiseTech’s “unassailable competitive advantage” through its CargoWise data set and views Container Transport Optimisation as a “whitespace opportunity” with no competitors.
Morgans raises its target for WiseTech Global to $135.30 from $114.20 and upgrades to Add from Hold, despite a downgrade to FY25 guidance at the AGM. The broker rolls forward its multiple-based valuation to FY26 to better reflect the ramp-up of the company’s new products.
The launch of the Container Transport Optimisation product will be delayed to 2H25 from 2Q25, due to recent distractions faced by founding CEO Richard White and the product’s large and globally complex nature, explains the analyst.
Guidance indicates FY25 earnings (EBITDA) of $600-660m, representing growth of 21-33% but an approximate -7.4% downgrade to the midpoint of prior guidance, notes Morgans.
Ord Minnett upgrades its rating to Accumulate from Hold, noting potential upside following the recent share price decline.
The target price rises to $137 from $120, reflecting the broker’s positive outlook on WiseTech’s products and its strong position in the logistics industry.
In the bad books: Downgrades
ADACEL TECHNOLOGIES LIMITED ((ADA)) was downgraded to Hold from Buy by Bell Potter. B/H/S: 0/1/0
Bell Potter lowers its target price for Adacel Technologies to 43c from 70c and downgrades the rating to Hold from Buy following the approval of a special resolution to delist from the ASX, effective January 8, 2025.
While no changes are made to forecasts, the broker’s valuation falls due to a shift in methodology, focusing solely on near-term earnings.
The analysts suggest fundamentals are no longer applicable and highlight abnormal selling pressure from shareholders unwilling to hold the stock post-delisting. This selling is expected to persist.
AVJENNINGS LIMITED ((AVJ)) was downgraded to Hold from Buy by Bell Potter. B/H/S: 0/1/0
Bell Potter reports that Proprium Capital Partners and AVID Property Group have submitted an unsolicited, incomplete, and non-binding proposal to acquire all shares in AV Jennings for 67c per share.
The AV Jennings Board has granted exclusivity until the end of January and intends to recommend and vote in favour of the offer, observes the broker.
Bell Potter raises its target price to 67c from 45c to reflect the offer price but downgrades its rating to Hold from Buy following a substantial share price rally.
GQG PARTNERS INC ((GQG)) was downgraded to Hold from Add by Morgans. B/H/S: 4/1/0
Shares in GQG Partners have declined by approximately -20% due to exposure to Adani vehicles, notes Morgans, with management currently reviewing details of charges against Adani executives in relation to fund holdings.
The company disclosed over 90% of funds under management (FUM) are unrelated to Adani vehicles, implying group exposure in the 5-10% range, according to the broker.
Morgans suggests fund flows may face pressure due to reputational damage and potential adverse effects on near-term investment performance for the EM fund.
The target price is reduced to $2.47 from $3.10, and the rating is downgraded to Hold from Add.
HUB24 LIMITED ((HUB)) was downgraded to Hold from Accumulate by Ord Minnett. B/H/S: 2/5/0
Despite lower EPS forecasts due to higher-than-expected D&A charges revealed at Hub24’s investor day, Ord Minnett raises its target to $73 from $68 and downgrades to Hold from Accumulate after recent share price strength.
The broker’s key takeaway from the investor day is the upside potential from the company’s low account balance platform, Discover, as the target market is substantial, and incumbent providers lack product features and flexibility.
HARVEY NORMAN HOLDINGS LIMITED ((HVN)) was downgraded to Neutral from Buy by UBS. B/H/S: 3/2/1
UBS has downgraded Harvey Norman shares to Neutral from Buy with an unchanged target price of $5. While the performance of franchisees has improved, the broker highlights competitors have been outperforming. Plus Retail New Zealand remains challenged.
The broker sees a subdued outlook for revenues, and this triggers a more cautious stance, as the prospect for significant margin expansion has reduced.
The shares have outperformed year-to-date, UBS highlights.
INSURANCE AUSTRALIA GROUP LIMITED ((IAG)) was downgraded to Accumulate from Buy by Ord Minnett. B/H/S: 3/3/0
Ahead of next week’s investor day, Ord Minnett raises its EPS estimates for Insurance Australia Group, driven primarily by increased bond yield forecasts.
The target price increases to $8.90 from $8.40, but following a 9% stock rally in November, the broker downgrades the rating to Accumulate from Buy.
The broker believes rising premium rates over recent years will enable the group to build a more comprehensive reinsurance program, lower its underlying loss metrics, and strengthen its capital position.
MEGAPORT LIMITED ((MP1)) was downgraded to Hold from Accumulate by Ord Minnett. B/H/S: 3/3/0
Ord Minnett maintains its $8.00 target price for Megaport but downgrades the rating to Hold from Accumulate following disappointing FY26 growth guidance provided at the AGM. FY25 guidance for revenue and earnings was reiterated.
The broker reduces FY26 and FY27 EPS forecasts by -20% and -28%, respectively, while raising the FY25 forecast slightly.
QANTAS AIRWAYS LIMITED ((QAN)) was downgraded to Neutral from Buy by UBS. B/H/S: 3/3/0
Qantas Airways shares have rallied by some 70% over the year past and UBS, in response, has now downgraded to Neutral from Buy.
The broker does believe general confidence in the sustainability of earnings post covid is allowing the share price to re-rate.
Price target lifts to $9. Adjusting for capex, the broker argues the PE multiple has now reached a mid-cycle level.
RESOLUTE MINING LIMITED ((RSG)) was downgraded to Hold from Accumulate by Ord Minnett. B/H/S: 1/1/0
Ord Minnett lowers its target for Resolute Mining to 50c from 90c and downgrades to Hold from Accumulate after allowing for a material increase in sovereign risk for the Syama gold mine in Mali.
Management has agreed to settle alleged tax and other claims (for -US$160m) made against the company by the governing military junta.
A new mining code allows the state to take up to 30% in new projects and removes tax exemptions for miners, explains the broker.
STAR ENTERTAINMENT GROUP LIMITED ((SGR)) was downgraded to Underperform from Neutral by Macquarie. B/H/S: 0/2/2
Macquarie lowers its target price for Star Entertainment to 20c from 24c and downgrades its rating to Underperform from Neutral following management’s disclosure of an unaudited earnings (EBITDA) loss of -$27m for the first four months of FY25, excluding significant items.
At the AGM, the Chairman highlighted “near-term liquidity challenges, and the broader overall financial viability of the business, will remain the largest concerns for the Board and executive team”.
Macquarie expresses doubt over management’s ability to stabilise operations and achieve near-term profitability.
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.
